exv10w37








EXHIBIT
10.37



***  Text omitted and Filed Separately  

Confidential Treatment Requested





MASTER CONTRIBUTION AND SALE AGREEMENT




dated as of August 10, 2006




among




FOREST CITY ENTERPRISES, INC.,




CERTAIN ENTITIES AFFILIATED WITH

FOREST CITY ENTERPRISES, INC.,




FOREST CITY MASTER ASSOCIATES III, LLC,




CERTAIN ENTITIES AFFILIATED WITH

FOREST CITY MASTER ASSOCIATES III, LLC,




CERTAIN ENTITIES AFFILIATED WITH

BRUCE C. RATNER




and




CERTAIN INDIVIDUALS AFFILIATED WITH

BRUCE C. RATNER




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE I TRANSFERS OF INTERESTS; CONSENTS; LOANS; PRELIMINARY TRANSACTIONS	 	 	4	 
	1.1
	 	Transfers of Interests	 	 	4	 
	1.2
	 	Consents	 	 	5	 
	1.3
	 	Continuing Loans	 	 	6	 
	1.4
	 	No Representations	 	 	6	 
	1.5
	 	Release	 	 	6	 
	1.6
	 	Preliminary Transactions	 	 	8	 
	1.7
	 	Master III Operating Agreement	 	 	8	 
	 
	 	 	 	 	 	 
	ARTICLE II CONSIDERATION	 	 	8	 
	2.1
	 	Funding of Master III	 	 	8	 
	2.2
	 	Initial Consideration	 	 	9	 
	2.3
	 	Stabilization of Development Properties	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE III TITLE AND OTHER PROPERTY RELATED MATTERS	 	 	17	 
	3.1
	 	Title to the Properties	 	 	17	 
	3.2
	 	Condemnation	 	 	20	 
	3.3
	 	Destruction or Damage	 	 	20	 
	 
	 	 	 	 	 	 
	ARTICLE IV COVENANTS	 	 	21	 
	4.1
	 	Appointment of BCR Representative	 	 	21	 
	4.2
	 	Commercially Reasonable Efforts	 	 	22	 
	4.3
	 	Post-Closing HSR Act Filings	 	 	22	 
	4.4
	 	Conduct of Business	 	 	22	 
	4.5
	 	Registration Rights Agreement	 	 	23	 
	4.6
	 	Tax Protection Agreement	 	 	23	 
	4.7
	 	Voting Agreement	 	 	23	 
	4.8
	 	BCR Employment Agreement; FCRC Operations	 	 	23	 
	4.9
	 	Limitation on Actions by Forest City	 	 	23	 
	4.10
	 	Expenses	 	 	24	 
	4.11
	 	Intentionally Omitted	 	 	24	 
	4.12
	 	Tax Treatment	 	 	24	 
	4.13
	 	Estoppel Certificates	 	 	25	 
	4.14
	 	Reservation of FCEI Stock	 	 	25	 
	4.15
	 	Treatment of Certain Priority Payments	 	 	26	 
	4.16
	 	Nets Loan	 	 	26	 
	4.17
	 	Certain Amendments	 	 	26	 
	4.18
	 	Contribution of Additional FCE Interests	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE V CLOSING	 	 	28	 
	5.1
	 	Closing	 	 	28	 






 









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	5.2
	 	Deferred Closing	 	 	28	 
	5.3
	 	Principal Closing and Deferred Closing Deliveries by BCR Entities	 	 	29	 
	5.4
	 	Principal Closing and Deferred Closing Deliveries by Forest City	 	 	32	 
	5.5
	 	Development Property Closing Deliveries by BCR Entities	 	 	34	 
	5.6
	 	Development Property Closing Deliveries by Forest City	 	 	36	 
	 
	 	 	 	 	 	 
	ARTICLE VI CONDITIONS PRECEDENT TO CLOSING	 	 	38	 
	6.1
	 	Conditions Precedent to Obligation of Forest City	 	 	38	 
	6.2
	 	Conditions Precedent to Obligations of the BCR Entities and BCR Individuals	 	 	40	 
	 
	 	 	 	 	 	 
	ARTICLE VII REPRESENTATIONS AND WARRANTIES	 	 	41	 
	7.1
	 	Representations and Warranties of Forest City	 	 	41	 
	7.2
	 	Representations and Warranties of BCR Entities	 	 	46	 
	7.3
	 	Forest City’s Representations and Warranties with Respect to Development Properties	 	 	52	 
	7.4
	 	BCR Entities’ Representations and Warranties with Respect
to Development Properties and the Nets, Atlantic Yards, Bloomfield and Metrotech Associates	 	 	52	 
	7.5
	 	Notice of Breach	 	 	53	 
	 
	 	 	 	 	 	 
	ARTICLE VIII INDEMNIFICATION	 	 	53	 
	8.1
	 	Survival Period	 	 	53	 
	8.2
	 	Obligation of Forest City to Indemnify	 	 	54	 
	8.3
	 	Obligation of BCR Entities to Indemnify	 	 	54	 
	8.4
	 	Notice and Resolution of Claims	 	 	55	 
	8.5
	 	Limitations on Forest City’s Recovery	 	 	56	 
	8.6
	 	Limitation on BCR Entities’ Recovery	 	 	58	 
	 
	 	 	 	 	 	 
	ARTICLE IX TERMINATION	 	 	60	 
	9.1
	 	Intentionally Omitted	 	 	60	 
	9.2
	 	Failure to Satisfy Certain Conditions Prior to the Principal Closing	 	 	60	 
	9.3
	 	Default Prior to Principal Closing	 	 	61	 
	9.4
	 	Default Prior to Deferred Closing	 	 	61	 
	9.5
	 	Default Prior to Development Property Closing	 	 	62	 
	 
	 	 	 	 	 	 
	ARTICLE X MISCELLANEOUS	 	 	62	 
	10.1
	 	Further Assurances	 	 	62	 
	10.2
	 	Notices	 	 	63	 
	10.3
	 	Assignment	 	 	64	 
	10.4
	 	Binding Obligation	 	 	64	 
	10.5
	 	Waiver	 	 	64	 
	10.6
	 	Incorporation of Recitals and Schedules	 	 	64	 
	10.7
	 	Confidentiality; Press Releases	 	 	64	 
	10.8
	 	Merger	 	 	65	 
	10.9
	 	GOVERNING LAW	 	 	65	 
	10.10
	 	Jurisdiction	 	 	65	 






-ii-









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	10.11
	 	Captions	 	 	65	 
	10.12
	 	Counterparts	 	 	65	 
	10.13
	 	Severability	 	 	66	 
	10.14
	 	Prior Negotiations; Construction	 	 	66	 
	10.15
	 	Litigation Expenses	 	 	66	 
	10.16
	 	No Recordation	 	 	66	 
	10.17
	 	WAIVER OF TRIAL BY JURY	 	 	66	 






-iii-









 





	 	 	 
	EXHIBITS	 	 
	EXHIBIT A

	 	Master III Operating Agreement
	EXHIBIT B-1

	 	Form Interest Contribution Agreement
	EXHIBIT B-2

	 	Form Interest Transfer Agreement
	EXHIBIT C-1

	 	Form Registration Rights Agreement
	EXHIBIT C-2

	 	Form Addendum to Registration Rights Agreement
	EXHIBIT D-1

	 	Form Tax Protection Agreement
	EXHIBIT D-2

	 	Form Addendum to Tax Protection Agreement
	EXHIBIT E

	 	Form Voting Agreement
	EXHIBIT F

	 	Estoppel Certificate Standards
	EXHIBIT G-1

	 	Form Amended Operating Agreement or Partnership Agreement
relating to Operating Properties
	EXHIBIT G-2

	 	Form Amended Operating Agreement or Partnership Agreement
relating to Development Properties
	EXHIBIT H

	 	Form Legal Opinion






-iv-









 






	 	 	 
	SCHEDULES	 	 
	SCHEDULE P-1A

	 	FCE Entities
	SCHEDULE P-1B

	 	Master III Entities
	SCHEDULE P-2A

	 	BCR Entities
	SCHEDULE P-2B

	 	BCR Individuals
	SCHEDULE P-3A

	 	Properties
	SCHEDULE P-3B

	 	Property Owners and Organizational Charts
	SCHEDULE P-3C

	 	Development Property Owners and Organizational Charts
	SCHEDULE P-3D

	 	Nets, Atlantic Yards, Bloomfield and Metrotech Associates
and Organizational Charts
	SCHEDULE P-3E

	 	Service Companies and Organizational Charts
	SCHEDULE P-4

	 	Preliminary Transactions
	SCHEDULE P-5A

	 	Nets, Atlantic Yards, Bloomfield and Metrotech Associates
Transfers
	SCHEDULE P-5B

	 	Service Company Transfers
	SCHEDULE P-6A

	 	BCR Contributed Interests in Operating Properties
	SCHEDULE P-6B

	 	BCR Sold Interests in Operating Properties
	SCHEDULE P-6C

	 	FCE Contributed Interests in Operating Properties
	SCHEDULE P-7A

	 	BCR Contributed Interests in Development Properties
	SCHEDULE P-7B

	 	FCE Contributed Interests in Development Properties
	SCHEDULE P-7C

	 	BCR Sold Interests in Development Properties
	SCHEDULE 1.2A

	 	Ground Lease Consents
	SCHEDULE 1.2B

	 	Development Property Consents
	SCHEDULE 1.3(b)

	 	Certain Lender and Third Party Consents
	SCHEDULE 2.3(c)

	 	Determination of Value
	SCHEDULE 3.1(a)

	 	Existing Title Policies
	SCHEDULE 3.1(b)

	 	New Title Commitments
	SCHEDULE 4.13-1

	 	Anchors
	SCHEDULE 4.13-2

	 	Ground Lessors
	SCHEDULE 4.13-3

	 	Reciprocal Easement Agreements
	SCHEDULE 4.17

	 	Amended Operating Agreements or Partnership Agreements
	SCHEDULE 4.18A

	 	“Heldback” FCE Interests
	SCHEDULE 4.18B

	 	Certain Outside Investors and Outside Interests
	SCHEDULE 5.3(j)

	 	Outside Investor Consents
	SCHEDULE 5.4(j)

	 	Non-Consolidation Opinions
	SCHEDULE 6.1(d)

	 	Required Estoppel Certificates and Required BCR Consents
	SCHEDULE 7.1(a)

	 	FCE Entities Organization
	SCHEDULE 7.1(e)

	 	Capitalization of FCEI
	SCHEDULE 7.1(r)

	 	Individuals Comprising “Knowledge of Forest City”
	SCHEDULE 7.2(a)

	 	BCR Entities Organization
	SCHEDULE 7.2(c)

	 	Consents
	SCHEDULE 7.2(f)

	 	Non-Compliance with Laws
	SCHEDULE 7.2(g)

	 	Pending Tax Claims and Audits
	SCHEDULE 7.2(j)

	 	List of Ground Leases and Anchor Tenant Leases and
Defaults Under Ground Leases and Anchor Tenant Leases






-v-









 






	 	 	 
	SCHEDULES	 	 
	SCHEDULE 7.2(k)

	 	Unpaid Leasing Commissions, Fees and Tenant Improvement
Allowances
	SCHEDULE 7.2(l)

	 	Defaults under Operating Contracts
	SCHEDULE 7.2(m)

	 	Defaults under Continuing Loans
	SCHEDULE 7.2(n)

	 	Environmental Reports
	SCHEDULE 7.2(o)

	 	Financial Information Letter
	SCHEDULE 7.2(p)

	 	FCRC Form 10-K Information
	SCHEDULE 7.2(t)

	 	Individuals Comprising “Knowledge of BCR Entities”
	SCHEDULE 9.2(c)

	 	Certain Waivers






-vi-









 





INDEX OF DEFINED TERMS




	 	 	 	 	 
	 	 	 	Page	 
	2005 Form 10-K
	 	 	44	 
	2006 Form 10-Qs
	 	 	44	 
	80 DeKalb
	 	 	17	 
	80 DeKalb Value
	 	 	18	 
	Additional Units
	 	 	13	 
	Agreement
	 	 	1	 
	Anchor Tenant Leases
	 	 	50	 
	Anchors
	 	 	26	 
	Appraisal Notice
	 	 	11	 
	Atlantic Yards
	 	 	2	 
	BCR
	 	 	1	 
	BCR Contributed Interests
	 	 	4	 
	BCR Employment Agreement
	 	 	24	 
	BCR Entities
	 	 	1	 
	BCR Individuals
	 	 	1	 
	BCR Interests
	 	 	3	 
	BCR Master I Interests
	 	 	1	 
	BCR Master II Interests
	 	 	1	 
	BCR Material Adverse Change
	 	 	47	 
	BCR Release Date
	 	 	7	 
	BCR Representative
	 	 	22	 
	BCR Service Company Interest
	 	 	2	 
	BCR Sold Interests
	 	 	4	 
	BCR Transferor Party
	 	 	7	 
	BCR Transferred Interests
	 	 	4	 
	BCR Units
	 	 	13	 
	Beekman
	 	 	17	 
	Bloomfield
	 	 	2	 
	BR Master
	 	 	1	 
	Claims
	 	 	8	 
	Claims Notice
	 	 	56	 
	Class A Additional Common Units
	 	 	13	 
	Class A Initial Common Units
	 	 	9	 
	Class B Initial Common Units
	 	 	9	 
	Closing
	 	 	29	 
	Closing Date
	 	 	29	 
	Code
	 	 	25	 
	Commercially Reasonable Efforts
	 	 	6	 
	Commission
	 	 	44	 
	Condemnation
	 	 	20	 
	Consideration
	 	 	10	 






-vii-









 






	 	 	 	 	 
	 	 	 	Page	 
	Continuing Loan
	 	 	6	 
	Contributed Interests
	 	 	4	 
	Deferred Closing
	 	 	29	 
	Deferred Closing Date
	 	 	29	 
	Development Property
	 	 	1	 
	Development Property Closing
	 	 	14	 
	Development Property Joint Venture
	 	 	15	 
	Development Property Owner
	 	 	2	 
	Encumbrance
	 	 	18	 
	Environmental Reports
	 	 	51	 
	Estoppel Certificate
	 	 	26	 
	Exchange Act
	 	 	44	 
	Exchange Rights
	 	 	25	 
	Excluded Property
	 	 	29	 
	Existing Title Policy
	 	 	18	 
	FCCH
	 	 	1	 
	FCE Contributed Interests
	 	 	4	 
	FCE Contributor Party
	 	 	8	 
	FCE Entities
	 	 	1	 
	FCE Interests
	 	 	2	 
	FCE Master I Interests
	 	 	1	 
	FCE Master II Interests
	 	 	1	 
	FCE Material Adverse Change
	 	 	42	 
	FCE Release Date
	 	 	8	 
	FCE Service Company Interest
	 	 	2	 
	FCEI
	 	 	1	 
	FCEI Stock
	 	 	14	 
	FCRC
	 	 	23	 
	FCRC Form 10-K Information
	 	 	52	 
	FCRPC
	 	 	33	 
	Forest City
	 	 	1	 
	Forest City Indemnified Parties
	 	 	55	 
	Governmental Authority
	 	 	40	 
	Greenhill
	 	 	46	 
	Ground Leases
	 	 	50	 
	Ground Lessor
	 	 	26	 
	Holding Entities
	 	 	1	 
	HSR Act
	 	 	22	 
	Indemnification Claim
	 	 	56	 
	Indemnified Party
	 	 	56	 
	Indemnifying Party
	 	 	56	 
	Initial Units
	 	 	9	 
	Interest Contribution Agreement
	 	 	4	 
	Interest Transfer Agreement
	 	 	5	 
	Interests
	 	 	2	 
	Liability Claim
	 	 	56	 






-viii-









 






	 	 	 	 	 
	 	 	 	Page	 
	Litigation Conditions
	 	 	56	 
	Loan Documents
	 	 	51	 
	Losses
	 	 	55	 
	Master I
	 	 	1	 
	Master I Interests
	 	 	1	 
	Master II
	 	 	1	 
	Master II Interests
	 	 	1	 
	Master III
	 	 	1	 
	Master III Entities
	 	 	1	 
	Master III Operating Agreement
	 	 	3	 
	Metrotech Associates
	 	 	2	 
	Nets
	 	 	2	 
	Nets Loan
	 	 	27	 
	New Title Commitment
	 	 	18	 
	Operating Contracts
	 	 	50	 
	Operating Property
	 	 	1	 
	Opinion of Counsel
	 	 	25	 
	Outside Interests
	 	 	28	 
	Outside Investor
	 	 	2	 
	Preliminary Transactions
	 	 	3	 
	Principal Closing
	 	 	29	 
	Principal Closing Date
	 	 	29	 
	Property
	 	 	1	 
	Property Owner
	 	 	1	 
	PTP
	 	 	25	 
	Registration Rights Agreement
	 	 	23	 
	Required BCR Consents
	 	 	40	 
	Required Estoppel Certificates
	 	 	40	 
	SEC Filings
	 	 	45	 
	Securities Act
	 	 	44	 
	Service Company
	 	 	2	 
	Special Committee
	 	 	43	 
	Stabilization Date
	 	 	10	 
	Stabilization Notice
	 	 	11	 
	Stabilized Closing Date
	 	 	13	 
	Stabilized Net Operating Income
	 	 	10	 
	Stabilized Value
	 	 	11	 
	Substantial Casualty
	 	 	21	 
	Substantial Condemnation
	 	 	21	 
	Tax Protection Agreement
	 	 	23	 
	Unit Transfer
	 	 	25	 
	Units
	 	 	13	 
	Voting Agreement
	 	 	24	 






-ix-









 





MASTER CONTRIBUTION AND SALE AGREEMENT




     THIS MASTER CONTRIBUTION AND SALE AGREEMENT (this “Agreement”) is made as of the
10th day of August, 2006, by and among FOREST CITY ENTERPRISES, INC., an Ohio
corporation (“FCEI”), the entities affiliated with FCEI that are identified on Schedule P-1A (FCE
Entities) (the “FCE Entities”; FCEI and the FCE Entities are collectively referred to as “Forest
City”), Forest City Master Associates III, LLC, a New York limited liability company (“Master
III”), the entities affiliated with Master III or FCEI that are identified on Schedule P-1B (Master
III Entities) (the “Master III Entities”), the entities affiliated with Bruce C. Ratner, an
individual (“BCR”), that are identified on Schedule P-2A (BCR Entities) (the “BCR Entities”) and
the individuals affiliated with Bruce C. Ratner that are identified on Schedule P-2B (BCR
Individuals) (the “BCR Individuals”).



W
I T N E S S E
T H:




     WHEREAS, Forest City Commercial Holdings, Inc., a New York corporation (“FCCH”), and BR Master
Limited Partnership, a New York limited partnership (“BR Master”), are general partners of Forest
City Master Associates, a New York general partnership (“Master I”), and Master Associates II, a
New York general partnership (“Master II”) (Master I, Master II and Master III are collectively
referred to as the “Holding Entities”). The partnership interests of Master I owned by FCCH and BR
Master are referred to as the “FCE Master I Interests” and the “BCR Master I Interests,”
respectively (collectively, the “Master I Interests”). The partnership interests of Master II
owned by FCCH and BR Master are referred to as the “FCE Master II Interests” and the “BCR Master II
Interests,” respectively (collectively, the “Master II Interests”).



     WHEREAS, certain of the FCE Entities and certain of the BCR Entities, directly or through
affiliates, own partnership or limited liability company interests in the owners of real estate
identified on Schedule P-3A (Properties) (each, a “Property,” and collectively, the “Properties”).



     WHEREAS, certain Properties have been developed prior to the date hereof (each, an “Operating
Property,” and collectively, the “Operating Properties”) while certain other Properties either have
not stabilized or will be developed following the date hereof (each, a “Development Property,” and
collectively, the “Development Properties”).



     WHEREAS, each of the Operating Properties is owned by a separate partnership or limited
liability company that is identified on Schedule P-3B (Property Owners) (each, a “Property Owner,”
and collectively, the “Property Owners”) and the organizational chart for each such Property Owner
is included as part of Schedule P-3B (Property Owners). Each of the Development Properties is
owned by a separate partnership or
limited liability company that is identified on Schedule P-3C (Development Property Owners)
(each, a “Development Property Owner,” and collectively, the “Development Property Owners”) and the
organizational chart for each such Development Property Owner is included as part of Schedule P-3C
(Development Property Owners).



1









 





     WHEREAS, certain of the BCR Entities own direct or indirect interests in Nets Sports and
Entertainment, LLC, a Delaware limited liability company (the “Nets”), Atlantic Yard Development
Company, LLC, a Delaware limited liability company (“Atlantic Yards”), FC Bloomfield Associates,
LLC, a New Jersey limited liability company (“Bloomfield”), and Forest City Metrotech Associates
Limited Partnership, a New York limited partnership (“Metrotech Associates”). The organizational
chart for the Nets, Atlantic Yards, Bloomfield and Metrotech Associates is included as part of
Schedule P-3D (Nets, Atlantic Yards, Bloomfield and Metrotech Associates).



     WHEREAS, in certain instances the BCR Individuals own indirect interests in the Properties.



     WHEREAS, certain non affiliated-investors (each, an “Outside Investor,” and collectively, the
“Outside Investors”) also own direct or indirect interests in certain of the Property Owners,
Development Property Owners, the Nets, Atlantic Yards and Metrotech Associates.



     WHEREAS, certain of the BCR Entities and BCR Individuals collectively own a fifty percent
(50%) interest (each a “BCR Service Company Interest” and, collectively, the “BCR Service Company
Interests”) and certain of the FCE Entities own a fifty percent (50%) interest (each a “FCE Service
Company Interest” and, collectively, the “FCE Service Company Interests”) in companies that provide
services to the Property Owners and Properties (each a “Service Company” and, collectively, the
“Service Companies”). The organizational chart for each Service Company is included as part of
Schedule P-3E (Service Companies).



     WHEREAS, the organizational charts included as part of Schedule P-3B (Property Owners),
Schedule P-3C (Development Property Owners), Schedule P-3D (Nets, Atlantic Yards, Bloomfield and
Metrotech Associates) and Schedule P-3E (Service Companies) identify the interests owned, directly
or indirectly, by the FCE Entities, the BCR Entities, the BCR Individuals and the Outside Investors
in each of the Properties, Service Companies, the Nets, Atlantic Yards, Bloomfield and Metrotech
Associates (each will be referred to herein as an “Interest”, and collectively as the “Interests”).
The Interest in each of the Property Owners, the Development Property Owner and the Service
Companies that are owned, directly or indirectly, by the FCE Entities (including, without
limitation, the FCE Master I Interests and the FCE Master II Interests) are collectively referred
to as the “FCE Interests.” The Interests in each of the Property Owners, Development Property
Owners, Service Companies, the Nets, Atlantic Yards, Bloomfield and Metrotech Associates that are
owned, directly or indirectly, by the BCR Entities and BCR Individuals (including, without
limitation, the BCR Master I Interests and the BCR Master II Interests) are referred to as the
“BCR Interests.”



     WHEREAS, prior to the Principal Closing, Forest City will cause the members of Master III to
amend and restate the operating agreement for Master III to be in the form set forth in Exhibit A
(the “Master III Operating Agreement”).



     WHEREAS, prior to the Principal Closing, Forest City and the BCR Entities will (i) cause each
of FC Harlem Center, LLC and FC Harlem Center Office, LLC to appoint an entity wholly-owned and
controlled by BCR as the managing member of each such entity, provided



2









 




that the entity appointed as
managing member will only have a de minimus economic interest in either FC Harlem Center, LLC or FC
Harlem Center Office, LLC and (ii) perform or cause to be performed the transfers identified on
Schedule P-4 (Preliminary Transactions) (items (i) and (ii) collectively being the “Preliminary
Transactions”).




     WHEREAS, at the applicable Closing, (a) with respect to the Nets, Atlantic Yards, Bloomfield
and Metrotech Associates, each of the BCR Entities and BCR Individuals, as identified in “Column
(I)” of Schedule P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers), will
sell or otherwise transfer to the entity identified in “Column (IV)” of Schedule P-5A (Nets,
Atlantic Yards, Bloomfield and Metrotech Associates Transfers) the interest identified in “Column
(II)” of Schedule P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers) owned
by such BCR Entity or BCR Individual in the entity identified in “Column (III)” of Schedule P-5A
(Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers) and (b) with respect to the
Service Companies, each of the BCR Entities, BCR Individuals and FCE Entities identified in “Column
(I)” of Schedule P-5B (Service Company Transfers) will sell or otherwise transfer to Master III the
Service Company Interest identified in “Column (II)” of Schedule P-5B (Service Company Transfers)
owned by such BCR Entity, BCR Individual or FCE Entity in the Service Company identified in “Column
(III)” of Schedule P-5B (Service Company Transfers).



     WHEREAS, at the Principal Closing, with respect to each Operating Property, (a) each of the
BCR Entities and BCR Individuals, as identified in “Column (I)” of Schedule P-6A (BCR Contributed
Interests in Operating Properties), will contribute to the entity identified in “Column (IV)” of
Schedule P-6A (BCR Contributed Interests in Operating Properties) the interest identified in
“Column (II)”of Schedule P-6A (BCR Contributed Interests in Operating Properties) owned by such BCR
Entity or BCR Individual in the entity identified in “Column (III)” of Schedule P-6A (BCR
Contributed Interests in Operating Properties), (b) each of the BCR Entities and BCR Individuals,
as identified in “Column (I)” of Schedule P-6B (BCR Sold Interests in Operating Properties), will
sell to the entity identified in “Column (IV)” of Schedule P-6B (BCR Sold Interests in Operating
Properties) the interest identified in “Column (II)”of Schedule P-6B (BCR Sold Interests in
Operating Properties) owned by such BCR Entity or BCR Individual in the entity identified in
“Column (III)” of Schedule P-6B (BCR Sold Interests in Operating Properties) and (c) each of the
FCE Entities, as identified in “Column (I)” of Schedule P-6C (FCE Contributed Interests in
Operating Properties), will contribute to the entity identified in “Column (IV)” of Schedule P-6C
(FCE Contributed Interests in Operating Properties) the interest identified in “Column (II)”of
Schedule P-6C (FCE Contributed Interests in Operating
Properties) owned by such FCE Entity in the entity identified in “Column (III)” of Schedule
P-6C (FCE Contributed Interests in Operating Properties).



     WHEREAS, with respect to each Development Property, upon the occurrence of the Stabilization
Date for such Development Property, the parties will determine the Stabilized Value of such
Development Property and otherwise deal with such Development Property as set forth in greater
detail herein.



     WHEREAS, the FCE Service Company Interests and the FCE Interests being contributed, as
described on Schedules P-5B (Service Company Transfers), P-6C (FCE Contributed Interests in
Operating Properties) and P-7B (FCE Contributed Interests in



3









 




Development Properties), by the FCE
Entities are collectively referred to as the “FCE Contributed Interests”, the BCR Interests being
contributed, as described on Schedules P-6A (BCR Contributed Interests in Operating Properties) and
P-7A (BCR Contributed Interests in Development Properties), by the BCR Entities and BCR
Individuals, are referred to as the “BCR Contributed Interests”, and the BCR Service Company
Interests and the BCR Interests being sold or otherwise transferred, as applicable, pursuant to
Schedules P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers), P-5B (Service
Company Transfers), P-6B (BCR Sold Interests in Operating Properties) and P-7C (BCR Sold Interests
in Development Properties) are referred to as the “BCR Sold Interests,” and together with the BCR
Contributed Interests, the “BCR Transferred Interests.” The BCR Transferred Interests and the FCE
Contributed Interests collectively are known as the “Contributed Interests.”




     NOW, THEREFORE, in consideration of the representations, warranties and covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:



ARTICLE I




TRANSFERS OF INTERESTS;

CONSENTS; LOANS; PRELIMINARY TRANSACTIONS




     1.1 Transfers of Interests. Subject to and on the terms and conditions hereinafter
set forth, on the date and at the time and place provided for in Section 5.1 or Section 5.2, and,
to the extent applicable, Section 2.3:



          (a) Each applicable BCR Entity and each applicable BCR Individual will contribute, transfer
and assign to the entity identified on
Schedule P-6A (BCR Contributed Interests in Operating
Properties) all of such BCR Entity’s or BCR Individual’s BCR Contributed Interests related to the
Operating Properties, as are identified on
Schedule P-6A (BCR Contributed Interests in Operating
Properties), in each case pursuant to an Interest Contribution Agreement in the form attached as
Exhibit B-1 (each such agreement, an “Interest Contribution Agreement”).




          (b) Each applicable FCE Entity will contribute, transfer and assign to the entity identified
on Schedule P-6C (FCE Contributed Interests in Operating Properties) all of such FCE Entity’s FCE
Contributed Interests related to the Operating Properties, as are
identified on
Schedule P-6C (FCE
Contributed Interests in Operating Properties), in each case pursuant to an Interest Contribution
Agreement.




          (c) Each applicable BCR Entity and each applicable BCR Individual will sell, transfer and
assign to the entity identified on
Schedule P-6B (BCR Sold Interests in Operating Properties) all
of such BCR Entity’s or BCR Individual’s BCR Sold Interests related to the Operating Properties, as
are identified on
Schedule P-6B (BCR Sold Interests in Operating Properties), in each case pursuant
to an Interest Transfer Agreement in the form attached as Exhibit B-2 (each such agreement, an
“Interest Transfer Agreement”).





4









 








          (d) Each applicable BCR Entity and each applicable BCR Individual will sell, transfer and
assign to Master III all of such BCR Entity’s or BCR Individual’s BCR Service Company Interests, as
are identified on Schedule P-5B (Service Company Transfers), in each case pursuant to an Interest
Transfer Agreement.




          (e) Each applicable FCE Entity will contribute, transfer and assign to Master III all of such
FCE Entity’s FCE Service Company Interests, as are identified on Schedule P-5B (Service Company
Transfers), in each case pursuant to an Interest Contribution Agreement.




          (f) Each applicable BCR Entity and each applicable BCR Individual will sell, transfer and
assign to the entity identified on Schedule P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech
Associates Transfers) all of such BCR Entity’s or BCR Individual’s BCR Sold Interests related to
the Nets, Atlantic Yards, Bloomfield and/or Metrotech Associates, as are identified on Schedule
P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers), in each case pursuant
to an Interest Transfer Agreement.




          (g) With respect to each Development Property, to the extent Forest City has elected to pursue
the option set forth in Section 2.3(g)(i), on the Stabilization Closing Date for such Development
Property:





          (i) Each applicable BCR Entity and each applicable BCR Individual will
contribute, transfer and assign to Master III all of such BCR Entity’s or BCR Individual’s
BCR Contributed Interests related to the applicable Development Property, as are identified
on Schedule P-7A (BCR Contributed Interests in Development Properties), in each case
pursuant to an Interest Contribution Agreement.




          (ii) Each applicable BCR Entity and each applicable BCR Individual will sell,
transfer and assign to the entity identified on Schedule P-7C (BCR Sold Interests in
Development Properties) all of such BCR Entity’s and/or BCR Individual’s BCR Sold Interests
related to the applicable Development Property, as are identified on Schedule P-7C (BCR Sold
Interests in Development Properties), in each case pursuant to an Interest Transfer
Agreement.




          (iii) Each applicable FCE Entity will contribute, transfer and assign to
Master III all of such FCE Entity’s FCE Contributed Interests related to the applicable
Development Property, as are identified on Schedule P-7B (FCE Contributed Interests in
Development Properties), in each case pursuant to an Interest Contribution Agreement.


The parties agree to amend Schedules P-3C (Development Property Owners and Organizational Charts),
P-7A (BCR Contributed Interests in Development Properties), P-7B (FCE Contributed Interests in
Development Properties) and P-7C (BCR Sold Interests in Development Properties) and any other
schedules hereto to the extent necessary to reflect any changes in the direct or indirect ownership
of all or any portion of any Development Property and correlative changes to the description of the
Contributed Interests related to such Development Property.




        1.2 Consents. From the date of this Agreement until the Principal Closing Date, the
BCR Entities will use commercially reasonable efforts, subject to the terms of Sections 4.2 and
4.10 hereof with respect to the allocation of related costs, to obtain the consent of each Outside



5









 




Investor identified on Schedule 5.3(j) and each ground lessor identified on Schedule 1.2A. The BCR
Entities will also use commercially reasonable efforts, subject to the terms of Sections 4.2 and
4.10 hereof with respect to the allocation of related costs, to obtain the consents related to the
Development Properties set forth on Schedule 1.2B prior to the Principal Closing Date. The BCR
Entities will update FCEI upon request on the status of their efforts to obtain such consents.
Forest City will have the right to approach any such third party directly and to participate in any
meeting or negotiation held in order to obtain such consent. If Forest City exercises its right to
approach any such third party directly, it will notify the BCR Representative prior to approaching
such third party and will advise the BCR Representative promptly of all actions taken by it and the
results thereof. For purposes of this Agreement, but subject to the terms of Sections 4.2 and 4.10
hereof with respect to the allocation of costs and Schedule 1.3(b), “commercially reasonable
efforts” does not require the initiation or settlement of litigation, disproportionate payouts to
any investor, the payment of money (other than usual and customary expenses associated with
negotiating and closing transactions or participation payments, consent or assumption fees,
prepayment fees or other similar payments required by existing contracts) or reallocations of the
consideration or any component thereof among Properties or transferors of any Contributed
Interests.




     1.3 Continuing Loans.



          (a) The parties currently expect that each of the loans secured by Operating Properties will
remain outstanding following the Principal Closing. Each such loan that remains outstanding after
the Principal Closing is referred to as a “Continuing Loan,” and, collectively, such loans are
referred to as the “Continuing Loans.”




          (b) If any lender or third party identified on Schedule 1.3(b) is unwilling to grant its
consent to the transactions contemplated by this Agreement on terms that are acceptable to Forest
City (subject to the obligations set forth on Schedule 1.3(b)), then, notwithstanding anything in
this Agreement to the contrary, Forest City and the BCR Entities agree to the transactions set
forth in Schedule 1.3(b) with respect to the relevant Operating Property.




     1.4 No Representations. EXCEPT AS SET FORTH IN THIS AGREEMENT OR IN ANY EXHIBIT OR
SCHEDULE ATTACHED HERETO, OR ANY OTHER DOCUMENT REQUIRED HEREIN, THE BCR ENTITIES, BCR INDIVIDUALS
AND THE FCE ENTITIES ARE TRANSFERRING THEIR RESPECTIVE INTERESTS AND, INDIRECTLY, THE PROPERTIES,
SERVICE COMPANIES, THE NETS, ATLANTIC YARDS, BLOOMFIELD AND METROTECH ASSOCIATES “AS IS, WHERE IS
AND WITH ALL FAULTS.” EXCEPT FOR THE REPRESENTATIONS EXPRESSLY SET FORTH HEREIN, NONE OF THE BCR
ENTITIES, THE BCR INDIVIDUALS OR FOREST CITY IS RELYING ON ANY REPRESENTATIONS OR WARRANTIES,
WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, FROM THE OTHER PARTIES OR ANY
OF THEIR AFFILIATES, ASSOCIATES, PARTNERS, MEMBERS, SHAREHOLDERS, PRINCIPALS, OFFICERS, EMPLOYEES,
ATTORNEYS, AGENTS OR BROKERS, REGARDING THE INTERESTS, THE PROPERTIES, SERVICE COMPANIES, THE NETS,
ATLANTIC YARDS, BLOOMFIELD OR METROTECH ASSOCIATES.



     1.5 Release



6









 





          (a) Effective as of the date on which a BCR Transferred Interest is transferred pursuant to
this Agreement (each a “BCR Release Date”), Forest City, for itself, the Holding Entities, the
Master III Entities, the Service Companies, the Nets, Atlantic Yards, Bloomfield, Metrotech
Associates, the Property Owners, the Development Property Owners and any other entity transferred,
whether directly or indirectly, by the BCR Entities or any BCR Individual pursuant to this
Agreement, and any of their respective subsidiaries, successors and assigns, irrevocably waives its
right to recover from, and forever releases and discharges and covenants not to file or otherwise
pursue any legal action against, (i) any of the BCR Entities or any of their respective affiliates,
associates, partners, members, trustees, principals, stockholders, officers, employees or agents,
(ii) each of BCR, Michael Ratner and Ellen Ratner and their respective immediate family members and
(iii) each of the Ellen Ratner 2000 Trust, Brooklyn One Trust, Brooklyn Two Trust and Brooklyn
Three Trust (each, a “BCR Transferor Party,” and collectively, the “BCR Transferor Parties”) with
respect to any Claims (as defined below) arising prior to the relevant BCR Release Date and that
relate to the BCR Interests transferred, whether directly or indirectly, on the relevant BCR
Release Date or the Properties or other assets to which such BCR Interests relate, including any
breach of any partnership agreement, operating agreement or other constituent documents of any
Property Owner, Development Property Owner, Service Company, the Nets, Atlantic Yards, Bloomfield,
Metrotech Associates or other entity that is transferred, whether directly or indirectly, on the
relevant BCR Release Date or any Claim arising prior to the relevant BCR Release Date to enforce
any right or obligation under any such partnership agreement, operating agreement or other
constituent document; except that neither Forest City nor any of the other entities granting the
release contemplated by this Section 1.5(a), nor any of their successors and assigns, waives its
rights to recover from, or releases, discharges or covenants not to bring any action against, (i)
any BCR Transferor Party for any act of the BCR Transferor Party that constitutes fraud, (ii) any
of the BCR Entities for any breach of the representations, warranties or covenants set forth in
this Agreement or in any exhibit or schedule attached hereto, or in any other document required
herein, subject to the limitations and conditions provided herein and therein or (iii) any of the
BCR Transferor Parties for any breach of any partnership agreement, operating agreement or other
constituent document of any
Property Owner or other entity owning an Interest related to an Operating Property that is
excluded from the transactions contemplated by this Agreement or any Claim to enforce any right or
obligation under any such partnership agreement, operating agreement or other constituent document,
subject to the limitations and conditions provided herein and therein. The term “Claims” means any
suits, actions, proceedings, investigations, demands, liabilities, fines, penalties, liens,
judgments, losses, damages or other claims, whether direct or indirect, known or unknown,
contingent or otherwise, including attorneys’ fees and expenses.




          (b) Effective as of the date on which an FCE Contributed Interest is contributed pursuant to
this Agreement (each an “FCE Release Date”), the BCR Contributor Parties, BCR Individuals and any
of their respective subsidiaries, successors and assigns, irrevocably waive their right to recover
from, and forever release and discharge and covenant not to file or otherwise pursue any legal
action against, FCEI, the FCE Entities, the Holding Entities, the Master III Entities, the Service
Companies, the Property Owners, the Development Property Owners, the Nets, Atlantic Yards,
Bloomfield, Metrotech Associates and any other entity contributed by the FCE Entities pursuant to
this Agreement, and any of their respective affiliates, associates, partners, member, shareholders,
principals, officers, employees or agents (each, a “FCE Contributor Party,” and collectively, the
“FCE Contributor Parties”), with respect to any




7









 







Claims arising prior to the relevant FCE Release
Date and that relate to the FCE Interests contributed, whether directly or indirectly, on the
relevant FCE Release Date, or the Properties or other assets to which such FCE Interests relate,
including any breach of any partnership agreement, operating agreement or other constituent
documents of any Property Owner, Development Property Owner, Service Company or other entity that
is contributed, whether directly or indirectly, on the relevant FCE Release Date or any Claim
arising prior to the relevant FCE Release Date to enforce any right or obligation under any such
partnership agreement, operating agreement or other constituent documents; except that none of the
BCR Entities, BCR Individuals or the other BCR Contributor Parties, nor any of their successors and
assigns, waives its rights to recover from, or releases, discharges or covenants not to bring any
action against, (i) any FCE Contributor Party for any act of the FCE Contributor Party that
constitutes fraud, (ii) FCEI or any of the FCE Entities for any breach of the representations,
warranties or covenants set forth in this Agreement or in any exhibit or schedule attached hereto,
or in any other document required herein, subject to the limitations and conditions provided herein
and therein or (iii) any of the FCE Contributor Parties for any breach of any partnership
agreement, operating agreement or other constituent documents of any Property Owner or other entity
owning an interest related to a Operating Property that is excluded from the transactions
contemplated by this Agreement or any Claim to enforce any right or obligation under any such
partnership agreement, operating agreement or other constituent document, subject to the
limitations and conditions provided herein and therein.



          (c) In connection with this Section 1.5, Forest City and the BCR Entities, for themselves and
each of the BCR Transferor Parties and FCE Contributor Parties, expressly waive the benefits of any
provision or principle of federal or state law or regulation that may limit the scope or effect of
the foregoing waivers and releases.




     1.6 Preliminary Transactions. Prior to the Principal Closing, Forest City, the BCR
Entities and the BCR Individuals will perform, or will cause to be performed, the Preliminary
Transactions.



     1.7 Master III Operating Agreement. Prior to the Principal Closing, Forest City will
cause the members of Master III to amend and restate the operating agreement for Master III to be
in the form of the Master III Operating Agreement.



ARTICLE II




CONSIDERATION




     2.1 Funding of Master III. On the Principal Closing Date, assuming satisfaction of
the conditions set forth in Article VI (including the delivery of all items required by Sections
6.1(a) and 6.1(d)) and assuming that the BCR Representative has advised Forest City in writing that
the BCR Entities are prepared to consummate the Principal Closing, Forest City will contribute to
Master III an amount of cash, payable by wire transfer of immediately available funds to a bank
account maintained by Master III, sufficient to pay the cash portion of the Consideration payable
by Master III to the BCR Entities and BCR Individuals. Until payment of the cash to the BCR
Entities and BCR Individuals, all interest earned thereon will be for the benefit of Forest City.



8









 





     2.2 Initial Consideration



          (a) On the Principal Closing Date, assuming satisfaction of the conditions set forth in
Article VI and subject to adjustment as provided in this Article II, Forest City will cause the
recipients of any BCR Contributed Interests or FCE Contributed Interests to:





          (i) issue to the contributors of the BCR Contributed Interests an aggregate of
3,894,232 Class A Initial Common Units of Master III (as defined in the Master III Operating
Agreement);




          (ii) issue to the contributors of the FCE Contributed Interests an aggregate
of 7,277,171 Class B Common Units of Master III (as defined in the Master III Operating
Agreement); and




          (iii) admit the contributors of the BCR Contributed Interests and the FCE
Contributed Interests to Master III as additional members of Master III.


The Class A Initial Common Units of Master III being delivered to the BCR Entities and BCR
Individuals at the Principal Closing are sometimes referred to as “Class A Initial Common Units,”
and the Class B Common Units of Master III being delivered to the FCE Entities at the Principal
Closing are sometimes referred to as “Class B Initial Common Units”. The Class A Initial Common
Units and the Class B Initial Common Units are collectively referred to as the “Initial Units.”




          (b) On the Principal Closing Date, assuming satisfaction of the conditions set forth in
Article VI (including the delivery of the items required by Sections 6.1(a) and 6.1(d)) and subject
to adjustment as provided in this Article II, Forest City will cause the entity or entities
acquiring the BCR Sold Interests to deliver to the appropriate BCR Entities and BCR Individuals, as
consideration for the BCR Sold Interests, an aggregate of Forty Six Million Three
Hundred Thirty Five Thousand Five Hundred and Thirty One Dollars ($46,335,531), payable in
cash by wire transfer of immediately available funds to the bank accounts designated by the BCR
Entities in writing to Forest City at least three (3) days prior to the Principal Closing Date;
provided, however, that a portion of the cash consideration payable to RRG Hanson Office, LLC in
the amount of Ten Million Five Hundred Thousand Dollars ($10,500,000) will be payable on January 2,
2007.




          (c) The cash and the Units to be delivered in connection with the Principal Closing are
collectively referred to as the “Consideration.” The Consideration will be issued or paid, as the
case may be, among the specific BCR Contributed Interests, BCR Sold Interests and FCE Contributed
Interests in accordance with Schedules P-5B (Service Company Transfers), P-6A (BCR Contributed
Interests in Operating Properties), P-6B (BCR Sold Interests in Operating Properties) and P-6C (FCE
Contributed Interests in Operating Properties).




          (d) If less than all of the BCR Transferred Interests and FCE Contributed Interests related to
the Operating Properties or Service Companies are included in the Principal Closing, the amount of
cash to be contributed to Master III by Forest City, and the Consideration to be delivered in
connection with the Principal Closing, will be reduced by the sum of the amounts set forth on
Schedules P-5B (Service Company Transfers), P-6A (BCR Contributed





9









 







Interests in Operating
Properties), P-6B (BCR Sold Interests in Operating Properties) and P-6C (FCE Contributed Interests
in Operating Properties) opposite the names of the excluded Contributed Interests or as otherwise
agreed between Forest City and the BCR Entities.




     2.3 Stabilization of Development Properties.



          (a) Intentionally omitted.




          (b) As used herein, the term “Stabilization Date” means the later of (i) the first day of the
February immediately following the earlier of (A) the first calendar quarter in which at least
ninety percent (90%) of the leaseable area of the Development Property is rented and occupied and
(B) the third (3rd) anniversary of the “grand opening” of the Development Property, (ii) the date
on which each of the consents set forth on Schedule 1.2B with respect to the relevant Development
Property (to the extent such consents are still required under the applicable agreement with such
parties) have been obtained by the BCR Entities and (iii) the date on which the conditions
precedent to Forest City’s obligation to consummate the transactions related to the Development
Property set forth in Sections 6.1(e) and 6.1(f), and the conditions precedent to the BCR Entities’
and BCR Individuals’ obligations to consummate the transactions related to the Development Property
set forth in Sections 6.2(f) and 6.2(g), have been satisfied.




          (c) For purposes of this Agreement, the “Stabilized Net Operating Income” of any Development
Property will mean the stabilized net operating income of the Development Property calculated, to
the extent practicable, on the same basis as was used in the determination of net operating income
for purposes of ascertaining the amount of Consideration payable under Section 2.2, as outlined in
Schedule 2.3(c), which
sets forth the adjustments made and steps followed in determining net operating income and net
asset value for such purposes.




          (d) Promptly (and in no event later than thirty (30) days) after the Stabilization Date of
each Development Property, the BCR Representative will give FCEI written notice (the “Stabilization
Notice”) that the Stabilization Date has occurred with respect to such Development Property and
provide FCEI with (i) a spreadsheet showing the calculation of Stabilized Net Operating Income of
the related Development Property and (ii) the BCR Representative’s computation of the stabilized
value of the Development Property (the “Stabilized Value”). To the extent practicable, Stabilized
Value will be determined on the same basis as was used in determining net asset value for purposes
of ascertaining the amount of Consideration payable under Section 2.2, as outlined in Schedule
2.3(c).




          (e) No later than thirty (30) days after delivery of the Stabilization Notice, FCEI and the
BCR Representative will meet (either telephonically or in person) to attempt in good faith to agree
upon the Stabilized Value of the Development Property. The terms, supporting documentation and
discussions between FCEI and the BCR Representative with respect to Stabilized Value, including the
BCR Representative’s computation of Stabilized Value in the Stabilization Notice, may not be shared
with any third party (other than on a confidential basis to counsel, accountants and other advisors
in connection with the performance of this Section 2.3), including any arbitrator appointed
pursuant to this Section 2.3(e), without the prior written consent of both FCEI and the BCR
Representative, which consent may be withheld in a party’s sole discretion. If FCEI and the BCR
Representative are unable, within sixty (60) days





10









 







after delivery of the Stabilization Notice, to
agree upon the Stabilized Value of the Development Property, either party at any time following
such sixtieth (60th) day may notify the other party (an “Appraisal Notice”) that it
desires to refer the dispute to an arbitrator for resolution. FCEI and the BCR Representative will
attempt in good faith to agree upon an arbitrator for the determination of the Stabilized Value.
If they are unable within ten (10) days after delivery of the Appraisal Notice to agree upon an
arbitrator, FCEI and the BCR Representative will accept the appointment of an arbitrator selected
by the American Arbitration Association. The arbitration proceeding will be subject to the
following:





          (i) The arbitrator will be a disinterested person of recognized competence who
is an MAI appraiser with at least five (5) years of experience in appraising commercial real
estate properties in New York City, New York, or such other locale where the Development
Property is located.




          (ii) The arbitrator will, to the extent practicable, determine Stabilized
Value on the same basis as was used in determining net asset value for purposes of
ascertaining the amount of Consideration payable under Section 2.2, as set forth in Schedule
2.3(c) and in accordance with the terms of this Agreement. The arbitrator may not consider
any position taken by the BCR Representative in the Stabilization Notice nor by either of
the parties during the negotiation period following the delivery of the Stabilization Notice
unless otherwise instructed by both FCEI and the BCR Representative in writing prior to the
engagement of the arbitrator.




          (iii) FCEI and the BCR Representative will each be required to submit a
written statement setting forth its or his position on the issues in dispute and any
information outlined in Schedule 2.3(c) that was used by the party submitting such statement
to calculate Stabilized Net Operating Income. The parties will submit such statements
within ten (10) days following the appointment of the arbitrator. No party will be able to
review the other party’s statement until after it has submitted its own statement to the
arbitrator. The arbitrator may, in his or her sole discretion, conduct a hearing at which
FCEI and the BCR Representative are given an opportunity to present further evidence and
answer questions. Unless otherwise agreed by FCEI and the BCR Representative, any such
hearing will take place in New York, New York.




          (iv) The arbitrator must select either FCEI’s or the BCR Representative’s
determination of Stabilized Value as submitted to the arbitrator in FCEI’s or the BCR
Representative’s Arbitration Statement.




          (v) The arbitrator will render his or her decision as soon as practicable (and
in no event later than forty-five (45) days after his or her appointment) and will deliver
such decision to both FCEI and the BCR Representative.




          (vi) Forest City and the BCR Entities will each pay one half (1/2) of the fees
and reimbursable expenses of the arbitrator.



11









 






          (vii) Subject to Section 2.3(f) below, the determination by the arbitrator
will be final and binding on Master III, FCEI, the FCE Entities, the BCR Individuals and the
BCR Entities.




          (viii) Issues other than the Stabilized Value of the Development Property will
not, unless otherwise agreed by FCEI and the BCR Representatives, be submitted to the
arbitrator for resolution, but will be resolved in accordance with Section 10.10.



          (f) At any time after the sixtieth (60th) day after delivery of the Stabilization
Notice but before the end of the tenth (10th) day following delivery by the arbitrator
of its decision, FCEI or the BCR Representative may, in its sole discretion, elect to solicit a
bona fide third-party offer to purchase the Development Property (or, if Forest City and the BCR
Entities do not have the right to cause the sale of the Development Property, the Interests of the
applicable Development Property Joint Venture (as defined in Section 2.3(g)(iv)) in the relevant
Development Property Owner), provided the party electing to solicit such offer delivers to the
other party a written notice of such election. For the avoidance of doubt, the existence of any
right of first refusal, right of first offer or “due on sale” provision in any partnership
agreement or loan document affecting a Development Property will not be deemed to be an impediment
to the sale of a Development Property. If either FCEI or the BCR Representative elects to solicit
a bona fide third-party offer, the arbitration process contemplated by Section 2.3(e) will
immediately terminate. Any such bona fide third-party offer must be received, with a copy
delivered to both FCEI and the BCR Representative, within one hundred twenty (120) days after
delivery of the notice of the election to solicit a bona fide third-party offer. Regardless of
which party elects to solicit the bona fide offer, the BCR Representative will be the party
actually pursuing the bona fide offer. Any such bona fide offer must be in a writing signed by the
offeror, must set forth the price and other principal terms of the acquisition of the
Development Property (or Interest of the Development Property Joint Venture in the relevant
Development Property Owner), and must be supported by evidence, reasonably satisfactory to the
parties, demonstrating that the third party has sufficient financing or access to financing to
acquire the Development Property (or Interest of the Development Property Joint Venture in the
relevant Development Property Owner). If a bona fide third-party offer meeting these criteria is
not received within such one hundred twenty (120) day period, the Stabilized Value of the
Development Property determined by the arbitrator will be final and binding on Master III, FCEI,
the FCE Entities, the BCR Individuals and the BCR Entities; if the arbitration process had been
terminated prior to delivery by the arbitrator of its decision, FCEI and the BCR Representative
will recommence the arbitration process and proceed with the arbitration until a decision is
delivered. If a bona fide third-party offer meeting these criteria is received within such one
hundred twenty (120) day period, the price set forth in the bona fide third-party offer will be the
Stabilized Value of the Development Property and will be binding on Master III, FCEI, the FCE
Entities, the BCR Individuals and the BCR Entities.




          (g) Once the Stabilized Value for the relevant Development Property has been determined,
Forest City will elect, at its sole discretion, one of the following options, which election
(subject to subsection (ii) below) will be final and binding on Master III, FCEI, the FCE Entities,
the BCR Individuals and the BCR Entities:





12









 









          (i) to cause the relevant BCR Entities, BCR Individuals and FCE Entities to
proceed with the contribution of the applicable BCR Contributed Interests and FCE
Contributed Interests to Master III, and, to the extent applicable, the sale of the relevant
BCR Sold Interests to the appropriate entity identified on Schedule P-7C (BCR Sold Interests
in Development Properties), in accordance with the terms of this Agreement and the
following:




          (A) On the Stabilization Closing Date of the relevant Development Property, (i)
Master III will issue (A) Class A Additional Common Units (as defined in the Master
III Operating Agreement) (the “Class A Additional Common Units”) to the BCR Entity
and/or BCR Individual contributing the BCR Contributed Interests related to the
relevant Development Property Owner to Master III and (B) Class B Common Units (the
Class B Units issued on any Stabilization Closing Date, together with the Class A
Additional Common Units, the “Additional Units”) to the FCE Entity contributing the
FCE Contributed Interests in the relevant Development Property Owner to Master III
and (ii) Master III will cause the operating agreement or partnership agreement for
the relevant Development Property Owner to be amended and restated in the form
attached hereto as Exhibit G-1. The Class A Initial Common Units and the Class A
Additional Common Units are collectively referred to as the “BCR Units.” The BCR
Units and the Class B Common Units are collectively referred to as the “Units.”
Each actual date on which Master III issues Additional Units will be deemed the
“Stabilization Closing Date” for the related Development Property and the issuance
of Additional Units by Master III on each Stabilization Closing Date will
be the “Development Property Closing” with respect to the applicable
Development Property.




          (B) The value attributable to each BCR Contributed Interest in the related
Development Property will be the product of (s) the Stabilized Value multiplied by
(t) the BCR Contributed Interest (expressed as a decimal to four (4) decimal places)
as set forth on Schedule P-7A (BCR Contributed Interests in Development Properties),
the value attributable to any BCR Sold Interest in the related Development Property
will be the product of (u) the Stabilized Value multiplied by (v) each BCR Sold
Interest (expressed as a decimal to four (4) decimal places) as set forth in
Schedule P-7C (BCR Sold Interests in Development Properties), and the value
attributable to the FCE Contributed Interest in the related Development Property
will be the sum of (i) the product of (w) the Stabilized Value multiplied by (x) the
FCE Contributed Interest (expressed as a decimal to four (4) places) as set forth in
Schedule P-7B (FCE Contributed Interests in Development Properties) and (ii) the
product of (y) the value of the applicable FCE Entity’s preferred capital in such
Development Property Joint Venture multiplied by (z) such FCE Contributed Interests
(expressed as a decimal to four (4) places) in the Development Property as set forth
in Schedule P-7B (FCE Contributed Interests in Development Properties).




          (C) The number of Class A Additional Common Units to be delivered to the BCR
Entities and BCR Individuals in connection with the



13









 







stabilization of the Development
Property will equal the quotient of (i) the value attributable to the BCR
Contributed Interests in the related Development Property divided by (ii) the
average of the closing prices of Class A Common Stock of FCEI (“FCEI Stock”) as
reported by the New York Stock Exchange for each of the twenty (20) days on which
trading in such stock was reported immediately prior to the Stabilization Date (or
such other price as may be agreed to in writing by the parties). The number of
Class B Common Units to be delivered to the FCE Entity in connection with the
stabilization of the Development Property will equal the quotient of (i) the value
attributable to the FCE Contributed Interest in the related Development Property
divided by (ii) such average of the closing prices of the FCEI Stock (or such other
price that may be agreed to in writing by the parties).




          (ii) to cause Master III to purchase the relevant BCR Transferred Interests from the
relevant BCR Entity and/or BCR Individual for an amount of cash equal to the sum of the
product of the Stabilized Value of such Development Property multiplied by each BCR
Transferred Interest (expressed as a decimal to four (4) decimal places) as set forth on
Schedule P-7A (BCR Contributed Interests in Development Properties) and P-7C (BCR Sold
Interests in Development Properties), and on other terms and conditions as are reasonably
satisfactory to Forest City and the BCR Representative or, in the case that the Stabilized
Value of the applicable Development Property was determined pursuant to a bona fide
third-party offer, are substantially the same as those set forth in the third-party offer,
and Forest City will cooperate with the relevant BCR Entity and/or BCR Individual to conduct
a “like-kind” exchange of such BCR
Transferred Interests in accordance with Section 1031 of the Code, or other tax efficient
structure, provided there is no incremental cost to Forest City in connection with such an
exchange. Notwithstanding the foregoing, to the extent a “like kind” exchange resulting in
deferral income taxes to such BCR Entity and/or BCR Individual cannot be effected, in the
reasonable judgment of the BCR Representative, the BCR Representative may override Forest
City’s election with respect to all or any portion of such BCR Transferred Interests to
pursue the option set forth in this Section 2.3(g)(ii) and instead pursue the option set
forth in Section 2.3(g)(iv) with respect to all or any portion of the BCR Transferred
Interests as elected by the BCR Representative in its sole discretion, except that the
“Continuation Option” (as defined in the operating agreement or partnership agreement for
each Development Property Joint Venture) will not be deemed to have occurred in the event
the BCR Representative elects to pursue the option set forth in Section 2.3(g)(iv) in
accordance with this Section 2.3(g)(ii). If the BCR Representative elects to override
Forest City’s election to pursue the option set forth in this Section 2.3(g)(ii) only with
respect to a portion of the relevant BCR Transferred Interests, prior to the purchase of
such BCR Transferred Interests, to the extent requested by the relevant BCR Entities,
members or partners of such BCR Entities will be admitted to the relevant Development
Property Joint Venture as substitute partners or members for an aggregate interest equal to
the portion of the BCR Transferred Interests that are acquired in accordance with this
Section 2.3(g)(ii), so that such BCR Transferred Interests will be acquired directly from
such substitute members or partners rather than the BCR Entities;



14









 






          (iii) in the case of a bona fide third-party offer, to cause the relevant Development
Property Owner to proceed with the sale of the Development Property to the third party
according to the terms contained in the bona fide third-party offer (or more favorable
terms), or, if Forest City and the BCR Entities do not have the right to cause the sale of
the Development Property, to cause the relevant Development Property Joint Venture to
proceed with the sale of its Interests in the relevant Development Property Owner. Forest
City and the relevant BCR Entity and BCR Individual will cooperate to conduct a “like-kind”
exchange of such Development Property (or if applicable, Interests in a Development Property
Joint Venture) in accordance with Section 1031 of the Code, or other tax efficient
structure, provided there is no incremental cost to either Forest City, the relevant BCR
Entity, the relevant BCR Individual or the relevant Development Property Owner in connection
with such an exchange or other structure. Forest City will not be entitled to elect the
option set forth in this Section 2.3(g)(iii) if the Stabilized Value of the applicable
Development Property (or, if applicable, Interests in a Development Property Joint Venture)
was determined by an agreement of the parties under Section 2.3(e); or




          (iv) to cause the Development Property to remain directly or indirectly owned by the
relevant joint venture between the BCR Entity and/or BCR Individuals and the FCE Entity (the
“Development Property Joint Venture”), subject to the terms and conditions contained in the
organization documents for such Development Property Joint Venture (including, without
limitation, the “buy-sell” option in favor of the BCR Entity following the fifth anniversary
of the Stabilization Closing Date), and the “Continuation Option” (as defined in the
operating or
partnership agreement for each Development Property Joint Venture) will be deemed to have
occurred.


Notwithstanding the above, if a BCR Entity elects to solicit a bona fide third-party offer to
determine the Stabilized Value for the relevant Development Property pursuant to Section 2.3(f)
above, the BCR Entities will be deemed to have consented to pursuing option (iii) above (the sale
of the Development Property to a third party) if Forest City desires to sell such Development
Property to a third party, and regardless of the ability to perform a Section 1031 of the Code
“like-kind” exchange or the existence of incremental costs in connection with such exchange.
Similarly, if Forest City elects to solicit a bona fide third-party offer to determine the
Stabilized Value for the relevant Development Property pursuant to Section 2.3(f) above, Forest
City will be deemed to have consented to pursuing option (iii) above (the sale of the Development
Property to a third party) if the BCR Entities desire to sell such Development Property to a third
party, and regardless of the ability to perform a Section 1031 of the Code “like-kind” exchange or
the existence of incremental costs in connection with such exchange.



In the event that Forest City has not elected one of the options set forth in Sections 2.3(g)(i)
through (iv) within twenty (20) days following the determination of Stabilized Value, the BCR
Representative will provide written notice to Forest City of the expiration of such twenty (20) day
period. In the event Forest City does not elect one of the options set forth in Sections 2.3(g)(i)
through (iv) within five (5) days of receiving such notice from the BCR Representative, Forest City
will be deemed to have elected the option set forth in Section 2.3(g)(iv) with respect to the
relevant Development Property. The options described in Section 2.3(g)(i), Section 2.3(g)(ii) or
Section 2.3(g)(iii) will occur as soon as commercially practicable after the




15









 







determination of
Stabilized Value (whether pursuant to Section 2.3(e) or Section 2.3(f)), but in no event, (A) with
respect to the option described in Section 2.3(g)(i) or Section 2.3(g)(ii), more than thirty (30)
days following the determination of Stabilized Value and (B) with respect to the option set forth
in Section 2.3(g)(iii), more than ninety (90) days following the determination of Stabilized Value.



In the event that Forest City elects the option set forth in Section 2.3(g)(i), Forest City, the
BCR Entities and the BCR Individuals acknowledge that Forest City may obtain, at Forest City’s sole
discretion and at its expense, an opinion from a financial advisor stating that the market price of
the FCEI Stock as of the relevant Stabilization Closing Date reasonably reflects the fair market
value of the FCEI Stock as of such date. Forest City will use commercially reasonable efforts to
obtain such an opinion within twenty (20) days of the date on which Forest City notifies the BCR
Entities of its election to pursue the option set forth in Section 2.3(g)(i). In the event that
Forest City seeks, but is not able to obtain, an opinion from a financial advisor within such
twenty (20) day period, Forest City will elect either the option set forth in Section 2.3(g)(ii) or
the option set forth in Section 2.3(g)(iv) with respect to the relevant Development Property.



With respect to any payments of cash consideration by Master III as the result of the election of
the option set forth in Section 2.3(g)(i) or Section 2.3(g)(ii), Forest City will contribute to
Master III an amount of cash, payable by wire transfer of immediately available funds to a bank
account maintained by Master III, sufficient to pay such cash consideration to the BCR Entities and
BCR Individuals in connection with such election.




          (h) Prior to the relevant Stabilization Closing Date, and subject to Section 2.3(k), each of
the Development Properties will continue to be owned by a single purpose entity and the Interests
of each of the FCE Entities and BCR Entities in each Development Property will not be modified in
any way except as may be agreed to by both parties.




          (i) The development project referred to as Beekman Street Residential Tower (“Beekman”) is
owned in part by (i) certain of the FCE Entities, (ii) certain of the BCR Entities and (iii)
certain affiliates of FCEI and the BCR Entities whose interests in such project are not Contributed
Interests. Notwithstanding anything in this Agreement to the contrary, (y) the Stabilization Date
for Beekman means the later of (A) the first day of the February immediately following the earlier
of (1) the first calendar quarter in which at least ninety percent (90%) of the rental units of
Beekman are rented and occupied and (2) the fourth (4th) anniversary of the “grand
opening” of the rental portion of Beekman and (B) the date on which the conditions precedent to
Forest City’s obligation to consummate the transactions related to Beekman set forth in Sections
6.1(e) and 6.1(f), and the conditions precedent to the BCR Entities’ and BCR Individuals’
obligations to consummate the transactions related to Beekman set forth in Sections 6.2(f) and
6.2(g), have been satisfied, and (z) the determination of Stabilized Value for Beekman will be the
Stabilized Value of the rental portion of Beekman.




          (j) Notwithstanding anything in this Agreement to the contrary, with respect to any
Development Property that is developed in two or more phases, (i) each phase must be capable of
being financed separately and, prior to the Stabilization Date for the first phase, each phase must
be owned by a separate Development Property Owner, unless otherwise agreed by Forest City and the
relevant BCR Entity, with the right to cross-collateralize and cross-default, (ii) each phase will
be treated as if it is a separate Development Property and have its own





16









 







Stabilization Date and
Stabilized Value determined in accordance with this Section 2.3, (iii) in determining Stabilized
Value for each phase, project costs allocable to multiple phases will be allocated among such
phases in a manner agreed to by both Forest City and the relevant BCR Entity, (iv) each phase will
be valued and treated in accordance with this Section 2.3 at such time as such phase has reached a
Stabilization Date and (v) the aggregate value of the Additional Units and any additional
consideration that may be payable with respect to each phase will equal the Stabilized Value for
such phase.




          (k) The parties intend to separately develop a portion of the Operating Property referred to
as 10 Metrotech Center (a/k/a 625 Fulton Street) abutting DeKalb Avenue (“80 DeKalb”).
Accordingly, the parties have applied for the creation of a separate tax lot for 80 DeKalb. Upon
satisfaction or waiver of any applicable conditions for a release of 80 DeKalb from the Continuing
Loan affecting 10 Metrotech Center and upon attainment of a permanent separate tax lot for 80
Dekalb, the parties will cooperate to facilitate the treatment of 80 DeKalb as a Development
Property in a tax efficient manner that is owned by a separate Development Property Owner. All
costs in connection with obtaining the separate tax lot and developing 80 DeKalb will be borne by
the FCE Entity that is a member of the new Development Property Owner and be credited to the
capital account of such FCE Entity in such new Development Property Owner. The terms of the
limited liability company operating agreement of the new Development Property Owner for 80 DeKalb
will be in the form of Exhibit G-2 to this Agreement. The parties will use good faith efforts to
agree upon a feasible development project for 80 DeKalb prior to the third (3rd)
anniversary of the Principal Closing
Date. If, during such three (3) year period, the parties are able to agree upon a feasible
development project for 80 DeKalb, the parties will proceed to complete such development, and upon
the Stabilization Date for such Development Property, same will be treated in a manner similar to
the other Development Properties as described in this Section 2.3. If, notwithstanding such good
faith efforts, the parties are unable to agree upon a feasible development project for 80 DeKalb,
the value for 80 DeKalb will be determined in accordance with the process described in Section
2.3(e) and Section 2.3(f) (the “80 DeKalb Value”). Once the 80 DeKalb Value has been determined,
Forest City will elect, at its sole discretion, one of the options set forth in Section 2.3(g).




ARTICLE III




TITLE AND

OTHER PROPERTY RELATED MATTERS




     3.1 Title to the Properties.



          (a) The BCR Entities have made available to Forest City for review the title policies listed
on Schedule 3.1(a) with respect to each of the Operating Properties (each, an “Existing Title
Policy,” and collectively, “Existing Title Policies”).




          (b) The BCR Entities have obtained, and have made available to Forest City for review, the
title commitments issued by Fidelity National Title Insurance Company and the title certifications
issued by New York Land Services identified on Schedule 3.1(b) with respect to each of the
Operating Properties (each, a “New Title Commitment,” and collectively, the





17









 







“New Title
Commitments”). Forest City and the BCR Entities acknowledge that all of the exceptions identified
in the Existing Title Policies and the New Title Commitments are acceptable to them and require no
adjustment in the Consideration to be delivered under this Agreement.




          (c) If, prior to the Principal Closing, any lien, restriction, security interest or other
encumbrance of record (each, an “Encumbrance”) is discovered with respect to any Operating Property
(i) that is not reflected in the Existing Title Policy or New Title Commitment for such Operating
Property and (ii) for which a tenant is responsible under the terms of the lease or other binding
obligation of the tenant to the related Property Owner, notwithstanding the existence of such
Encumbrance, the Operating Property will be included in the transactions contemplated by this
Agreement without any delay in the Principal Closing, adjustment in the Consideration to be
delivered pursuant to this Agreement or liability or claim post-Closing under the indemnification
provisions set forth in Article VIII, provided that the tenant still occupies all or any portion of
the premises covered by the lease on the Principal Closing Date. If the tenant does not occupy the
premises on the Principal Closing Date, the value of the Consideration to be delivered to the BCR
Entities and BCR Individuals related to such Property Owner will be decreased by the product of (A)
the BCR Transferred Interests in the Operating Property (expressed as a decimal to four (4) decimal
places) as indicated on Schedules P-6A (BCR Contributed Interests in Operating Properties) and P-6B
(BCR Sold Interests in Operating Properties) and (B) the amount of the Encumbrance, if the
Encumbrance is monetary, or the amount by which the Encumbrance diminishes the value of the
Operating
Property (as set forth on Schedule P-6A (BCR Contributed Interests in Operating Properties),
Schedule P-6B (BCR Sold Interests in Operating Properties) and P-6C (FCE Contributed Interests in
Operating Properties)), if the Encumbrance is not monetary, and the value of the Class B Common
Units to be delivered to the FCE Entities related to such Property Owner will be decreased by the
product of (A) the FCE Contributed Interests in the Operating Property (expressed as a decimal to
four (4) decimal places) as indicated on Schedule P-6C (FCE Contributed Interests in Operating
Properties) and (B) the amount of the Encumbrance, if the Encumbrance is monetary, or the amount by
which the Encumbrance diminishes the value of the Operating Property (as set forth on Schedule P-6A
(BCR Contributed Interests in Operating Properties), Schedule P-6B (BCR Sold Interests in Operating
Properties) and P-6C (FCE Contributed Interests in Operating Properties)), if the Encumbrance is
not monetary. For purposes of this Section 3.1(c), the amount by which a non-monetary Encumbrance
diminishes the value of an Operating Property will be determined by an arbitrator in accordance
with the arbitration process set forth in Section 2.3(e). In no case will the reduction in the
value of the Consideration payable to the BCR Entities and/or BCR Individuals, on the one hand, or
the FCE Entities, on the other hand, with respect to any specific Operating Property exceed the
aggregate value of the BCR Transferred Interests or FCE Contributed Interests (as applicable)
related to such Property as set forth on Schedules P-6A (BCR Contributed Interests in Operating
Properties), P-6B (BCR Sold Interests in Operating Properties) and P-6C (FCE Contributed Interests
in Operating Properties). Any reduction in Consideration payable to the BCR Entities and/or BCR
Individuals pursuant to this Section 3.1(c) will be allocated between Consideration and BCR Units
on a pro rata basis relative to the amount of cash and BCR Units initially scheduled to be
delivered to the BCR Entities with respect to the relevant Operating Property. If, after the
Principal Closing Date, the Encumbrance is removed other than at the expense of the relevant
Property Owner, Master III or other relevant entity will deliver the cash Consideration and/or
issue the BCR Units to the BCR





18









 







Entities and/or BCR Individuals (as applicable) and/or issue Class B
Initial Common Units to the FCE Entities not delivered or issued at the Principal Closing pursuant
to this Section 3.1(c), and Master III will pay the Class A Distribution Preference and the Class B
Distribution Amount (as defined in the Master III Operating Agreement) that would have been payable
with respect to any such Units in accordance with the terms of the Master III Operating Agreement
if such Units had been issued on the Principal Closing Date. With respect to any payments of cash
consideration by Master III in connection with this Section 3.1(c), Forest City will contribute to
Master III an amount of cash, payable by wire transfer of immediately available funds to a bank
account maintained by Master III, sufficient to pay such cash consideration to the BCR Entities and
BCR Individuals pursuant to this Section 3.1(c).




          (d) If, prior to the Principal Closing, the relevant BCR Entity breaches the covenant
contained in Section 4.4(c) or any Encumbrance (other than an Encumbrance subject to Section
3.1(c)) is discovered with respect to such Operating Property that is not reflected in the Existing
Title Policy or New Title Commitment for such Operating Property, the value of the Consideration to
be delivered to the BCR Entities and/or BCR Individuals related to such Operating Property will be
decreased by the product of (A) the BCR Transferred Interests in the Operating Property (expressed
as a decimal to four (4) decimal places) as indicated on Schedules P-6A (BCR Contributed Interests
in Operating Properties) and P-6B (BCR Sold Interests in Operating Properties) and (B) the amount
of the Encumbrance, if the Encumbrance is monetary, or the amount by which the Encumbrance
diminishes the value of the Operating Property (as set
forth on Schedule P-6A (BCR Contributed Interests in Operating Properties), Schedule P-6B (BCR
Sold Interests in Operating Properties) and P-6C (FCE Contributed Interests in Operating
Properties)), if the Encumbrance is not monetary. If, after the Principal Closing Date, such
Encumbrance is removed other than at the expense of the relevant Property Owner, Master III or
other relevant entity will deliver the cash Consideration and/or issue the BCR Units to the BCR
Entities and/or BCR Individuals (as applicable) not delivered or issued at the Principal Closing
pursuant to this Section 3.1(d), and Master III will pay the Class A Distribution Preference that
would have been payable with respect to any such BCR Units in accordance with the terms of the
Master III Operating Agreement if such BCR Units had been issued on the Principal Closing Date.
With respect to any payments of cash consideration by Master III in connection with this Section
3.1(d), Forest City will contribute to Master III an amount of cash, payable by wire transfer of
immediately available funds to a bank account maintained by Master III, sufficient to pay such cash
consideration to the BCR Entities and BCR Individuals pursuant to this Section 3.1(d). In no case
will the reduction in the value of the Consideration payable to the BCR Entities and/or BCR
Individuals with respect to any specific Operating Property exceed the aggregate value of the BCR
Transferred Interests related to such Operating Property as set forth on Schedules P-6A (BCR
Contributed Interests in Operating Properties) and P-6B (BCR Sold Interests in Operating
Properties). Any reduction in Consideration payable to the BCR Entities and/or BCR Individuals
pursuant to this Section 3.1(d) will be allocated between Consideration and BCR Units on a pro rata
basis relative to the amount of cash and BCR Units initially scheduled to be delivered to the BCR
Entities with respect to the relevant Operating Property.




          (e) Forest City acknowledges that it will not be entitled to exclude any Operating Property
from the Principal Closing because of the discovery of any Encumbrances not reflected in an
Existing Title Policy or New Title Commitment, but that its remedies for the





19









 







discovery of any
Encumbrances not reflected in an Existing Title Policy or New Title Commitment will be limited as
expressly set forth in this Section 3.1.




          (f) Notwithstanding anything in this Section 3.1 to the contrary, the BCR Entities will not be
responsible (in any way) for any Encumbrances caused by FCEI, the FCE Entities or any of their
affiliates or by the Outside Investors with Interests related to the Operating Property known as
Queenswood Apartments.




     3.2 Condemnation



          (a) In the event that any Governmental Authority commences any condemnation action or any
taking by power of eminent domain (such action, a “Condemnation”) against any Operating Property or
threatens in writing to do so prior to the Principal Closing, the BCR Entities will notify Forest
City of such action or threatened action promptly upon obtaining knowledge thereof. If any
Operating Property or portion thereof is taken in a Condemnation or a transfer in lieu thereof and
the action (i) deprives the related Property Owner of 20% or more of the gross area owned or ground
leased by the Property Owner at the Operating Property, (ii) deprives the affected Operating
Property of access to public roads in a manner that materially and adversely affects the value of
the Operating Property taken as a whole, (iii) permits any Anchor at that Operating Property to
terminate its operating covenant with respect to that Operating Property under the applicable
Anchor Tenant Leases, and the Anchor does not affirmatively waive its right to terminate the
operating
covenant, (iv) constitutes or causes an event of default under the terms of the mortgage loan
then encumbering the Operating Property, and the lender does not affirmatively waive the default,
or (v) deprives the Operating Property of parking area such that the Operating Property is no
longer in compliance with the parking count requirements of any of the Anchor Tenant Leases in
force at the Operating Property or any applicable laws (any such Condemnation, a “Substantial
Condemnation”), and following such occurrence the BCR Entities and the relevant Property Owner are
unwilling or unable to restore the Operating Property to substantially the same condition as
existed on the date of this Agreement (or, in the case of a reduction in parking area, to
substantially the same condition and number of spaces as is required by the relevant Anchor Tenant
Leases and applicable law) by the Principal Closing Date, Forest City will have the right to
exclude that Operating Property from the transactions contemplated by this Agreement.




          (b) If a Condemnation occurs with respect to an Operating Property and (i) the Condemnation
constitutes a Substantial Condemnation but Forest City does not elect to exclude the Operating
Property as permitted in Section 3.2(a) or (ii) the Condemnation does not constitute a Substantial
Condemnation, then in either case this Agreement will remain in full force and effect with respect
to the affected Operating Property, and the BCR Transferred Interests and the FCE Contributed
Interests in the relevant Operating Property will be transferred on the terms and conditions set
forth in this Agreement and the related Interest Contribution Agreement and, if applicable,
Interest Transfer Agreement, and the related Property Owner will be entitled to receive all
Condemnation and rent insurance proceeds. The BCR Entities and the FCE Entities, as the case may
be, will promptly remit to the applicable Property Owner any such proceeds received by them.




     3.3 Destruction or Damage



20









 





          (a) If any Operating Property or portion thereof is destroyed or damaged by any casualty in a
manner that: (i) deprives the related Property Owner of 20% or more of the gross area owned or
ground leased by the Property Owner at the Operating Property, (ii) deprives the affected Operating
Property of access to public roads in a manner that materially and adversely affects the value of
the Operating Property taken as a whole, (iii) permits any Anchor at that Operating Property to
terminate its operating covenant with respect to that Operating Property under the applicable
Anchor Tenant Leases, and the Anchor does not affirmatively waive its right to terminate the
operating covenant, (iv) constitutes or causes an event of default under the terms of the mortgage
loan then encumbering the Operating Property, and the lender does not affirmatively waive the
default, or (v) deprives the Operating Property of parking area such that the Operating Property is
no longer in compliance with the parking count requirements of any of the Anchor Tenant Leases in
force at the Operating Property or any applicable laws (any such casualty, a “Substantial
Casualty”), and following such occurrence the BCR Entities and the relevant Property Owner are
unwilling or unable to restore the Operating Property to substantially the same condition as
existed on the date of this Agreement (or, in the case of a reduction in parking area, to
substantially the same condition and the number of spaces as is required by the relevant Anchor
Tenant Leases and applicable law) by the Principal Closing Date, Forest City will have the right to
exclude that Operating Property from the transactions contemplated by this Agreement.




          (b) If (i) any Substantial Casualty occurs at an Operating Property and Forest City does not
elect to exclude the affected Operating Property from the Principal Closing as permitted in Section
3.3(a), or (ii) damage or destruction occurs at an Operating Property that does not constitute a
Substantial Casualty, then in either case this Agreement will remain in full force and effect with
respect to the affected Operating Property, and the BCR Transferred Interests and the FCE
Contributed Interests in the relevant Operating Property will be transferred on the terms and
conditions set forth in this Agreement and the related Interest Contribution Agreement and, if
applicable, Interest Transfer Agreement, and the relevant Property Owner will be entitled to
receive all insurance proceeds relating to such damage or destruction. The BCR Entities and the
FCE Entities, as the case may be, will promptly remit to the applicable Property Owner any such
proceeds received by them.




ARTICLE IV




COVENANTS




     4.1 Appointment of BCR Representative. Each of the BCR Entities and BCR Individuals
hereby appoints BR Retail Member, LLC (sometimes referred to in this Agreement as the “BCR
Representative”) as its representative for all purposes of this Agreement and the transactions
contemplated hereby, including signing the Master III Operating Agreement, Interest Contribution
Agreements, Interest Transfer Agreements, Tax Protection Agreement, Registration Rights Agreement
and other agreements and documents contemplated by this Agreement. The BCR Entities and BCR
Individuals acknowledge that Forest City is entitled to rely upon the action or failure to act of
the BCR Representative as fully and completely as if the action or failure to act with respect to
any particular matter was the action or failure to act of the BCR Entities and BCR Individuals.
Without limiting the generality of the foregoing, Forest City



21









 




may notify any or all of the BCR
Entities and BCR Individuals by notice given to the BCR Representative.




     4.2 Commercially Reasonable Efforts. Forest City and the BCR Entities will use
commercially reasonable efforts to take or cause to be taken all actions, and to do or cause to be
done all things necessary or appropriate to consummate and make effective the transactions
contemplated by this Agreement, the Interest Contribution Agreements, Interest Transfer Agreements,
Tax Protection Agreement, Registration Rights Agreement and the other agreements being executed
pursuant to this Agreement, including using commercially reasonable efforts to satisfy any
conditions precedent to the Principal Closing as promptly as possible and to cause Master III and
any other direct and indirect subsidiaries of FCEI to obtain any approvals, qualifications,
licenses or permits necessary for the acceptance by Master III and such subsidiaries of FCEI of the
Contributed Interests and indirectly the Properties, Service Companies, the Nets, Atlantic Yards,
Bloomfield and Metrotech Associates; provided, however, that the cost of obtaining any such
approvals, qualifications, licenses or permits will be paid by FCEI.



     4.3 Post-Closing HSR Act Filings. Upon exchange of any BCR Units, Forest City, Master
III, the BCR Entities and the BCR Individuals will make any filings and use commercially reasonable
efforts to obtain any requisite clearances that may be required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR Act”). If at any time HSR Act filings are required,
Forest City, Master III, the BCR Entities and the BCR Individuals will use commercially reasonable
efforts to make such filings in a timely fashion and to comply with all lawful requests of
Governmental Authorities for additional information and documents pursuant to the HSR Act as
expeditiously as possible. Forest City will bear all costs and expenses incurred by the BCR
Entities and/or BCR Individuals in order to comply with the covenants contained in this Section
4.3.



     4.4 Conduct of Business. Between the date of this Agreement and the applicable
Closing or Development Property Closing: (a) each of the Properties controlled, managed or operated
by the BCR Entities as of the date hereof will be operated in a manner consistent with past
practices, the terms of the organizational documents of the related Property Owner or Development
Property Owner, as the case may be, and the terms of any existing management and other agreements
relating to the Property, and in compliance with law; (b) each Property Owner, Development Property
Owner, Service Company, the Nets, Atlantic Yards, Bloomfield, Metrotech Associates, each other
entity jointly owned by the FCE Entities and the BCR Entities that holds a direct or indirect
interest in a Property Owner or Development Property Owner and Forest City Ratner Companies, a New
York general partnership (“FCRC”), will continue to make distributions and otherwise continue to
operate in a manner consistent with past practices, the terms of their respective organizational
documents and the terms of the existing management and other agreements; and (c) the BCR Entities
will cause each of the Property Owners and each of the Development Property Owners related to
Properties controlled, managed or operated by the BCR Entities as of the date hereof to refrain
from taking any action that would result in the creation of any Encumbrance on any Property without
the prior written consent of Forest City. BCR, the management team of FCRC and the relevant
Property Owner (as applicable) will continue to dedicate a reasonable amount of time operating any
Operating Property or property



22









 




jointly owned by affiliates of the BCR Entities and FCEI that is
excluded from the transactions contemplated by this Agreement.




     4.5 Registration Rights Agreement. At the Principal Closing, FCEI will execute and
deliver a Registration Rights Agreement in the form attached hereto as Exhibit C-1 (the
“Registration Rights Agreement”) with and for the benefit of each Holder (as defined in the
Registration Rights Agreement) receiving or entitled to receive any BCR Units as a result of the
contributions contemplated by this Agreement. Upon each issuance of Additional Units and upon any
transfer permitted by the Master III Operating Agreement, the relevant BCR Entity, BCR Individual
or the permitted transferee, as applicable, will execute and deliver to Master III an addendum to
the Registration Rights Agreement in the form attached hereto as Exhibit C-2.



     4.6 Tax Protection Agreement. At the Principal Closing, FCEI, Master III and certain
other entities affiliated with FCEI will execute and deliver a tax protection agreement in the form
attached hereto as Exhibit D-1 (the “Tax Protection Agreement”) with BCR and for the benefit of
each of the Persons receiving or entitled to receive any BCR Units at the Principal Closing as a
result of the contributions contemplated by this Agreement and the Interest Contribution
Agreements. Upon each transfer of BCR Units that does not terminate the obligations of FCEI,
Master III and certain other entities affiliated with FCEI under the Tax Protection Agreement with
respect to the transferee of such BCR Units, the transferee of such BCR Units will execute and
deliver an addendum to the Tax Protection Agreement in the
form attached hereto as Exhibit D-2 so as to become a Protected Party (as defined in the Tax
Protection Agreement).



     4.7 Voting Agreement. At the Principal Closing, FCEI, BCR and a sufficient number of
Forest City Principals (as defined in the Voting Agreement) will execute and deliver a Voting
Agreement in the form attached hereto as Exhibit E (the “Voting Agreement”).



     4.8 BCR Employment Agreement; FCRC Operations. At the Principal Closing, FCEI and BCR
will enter into an employment agreement that is acceptable to both of them (the “BCR Employment
Agreement”). Following the Principal Closing, FCRC will be a strategic business unit of FCEI and
will operate in a manner that is consistent with FCEI’s corporate policies and requirements for all
of FCEI’s strategic business units. To the knowledge of Forest City, FCRC, as currently operated,
is operating in a manner that is consistent with FCEI’s corporate policies and requirements
applicable to FCEI’s strategic business units as of the date hereof. For the avoidance of doubt,
nothing in this Section 4.8 may be interpreted as prohibiting or restricting FCEI’s right to amend,
modify, adopt or rescind any corporate policy or requirement applicable to FCRC or any other
strategic business unit of FCEI after the Principal Closing Date.



     4.9 Limitation on Actions by Forest City. Between the date of this Agreement and the
Principal Closing Date, FCEI will continue to operate its business in a manner consistent with past
practices but will not engage in any transaction (other than the transactions contemplated by this
Agreement) that requires approval by its shareholders without the prior written consent of the BCR
Entities. During the period from the date hereof until the date on which all Interests in all
Development Properties have been transferred pursuant to this Agreement, neither Forest City nor
any then existing subsidiary or affiliate of FCEI will enter into any contract or take any action
that would materially interfere with the BCR Entities and/or Forest City’s legal right to perform
its obligations under this Agreement.



23









 





     4.10 Expenses. Each party will pay its own expenses (including the fees and expenses
of its own attorneys, accountants and other advisers) in connection with its due diligence,
negotiating this Agreement and any related documents or agreements and otherwise preparing for the
Principal Closing, any Deferred Closing or any Development Property Closing. In addition to the
expenses to be paid by FCEI pursuant to Sections 1.2 and 4.2 of this Agreement and Schedule 1.3(b),
FCEI will be responsible for transfer and recording taxes, the cost of obtaining New Title
Commitments and all filing fees (including any fees incurred in connection with any filings made
pursuant to the HSR Act) and expenses arising in connection with the contributions contemplated by
this Agreement or the exercise of the Exchange Rights (as that term is defined in the Master III
Operating Agreement). FCEI will pay all fees and expenses associated with obtaining the
non-consolidation opinions contemplated by Section 5.4(j), the cost of obtaining certified copies
of organizational documents and good standing certificates required by this Agreement and any
participation payments that may be required as a result of the transactions contemplated by this
Agreement or the exercise of the Exchange Rights. The parties will cooperate with each other in
connection with the preparation and filing of all transfer tax returns, affidavits and other
similar instruments required in connection with the payment of the foregoing expenses.



     4.11 Intentionally Omitted.



     4.12 Tax Treatment.



          (a) Forest City and the BCR Entities will cause the initial and all subsequent tax returns of
Master III to be filed to reflect that (i) the contributions of the FCE Contributed Interests and
the BCR Contributed Interests are contributions of property governed by Section 721 of the Internal
Revenue Code of 1986, as amended (the “Code”) and (ii) the Units are membership interests in Master
III, unless FCEI determines, in its reasonable discretion, that as a result of a change of law
there is not at least a “reasonable basis” for such treatment (as defined in Section 6662 of the
Code and the Treasury Regulations promulgated thereunder). If FCEI makes such a determination, it
will advise the BCR Representative in advance of taking such position, and any dispute regarding
such position will be resolved in the manner provided in the Tax Protection Agreement.




          (b) Forest City and the BCR Entities will report the transactions contemplated by this
Agreement, for federal and state income tax purposes (including the filing of federal and state
income tax returns), in a manner consistent with (i) the allocation of Consideration among the BCR
Entities, the BCR Individuals and the BCR Contributed Interests established pursuant to Section
2.2(c) hereof.




          (c) Forest City and the BCR Entities will use commercially reasonable efforts to ensure that
(i) Master III is not treated, as a “publicly traded partnership” as that term is used in Section
7704(b) of the Code (a “PTP”), (ii) the “Exchange Rights” (as that term is defined in the Master
III Operating Agreement) associated with the BCR Units will not be amended unless FCEI receives an
opinion of independent tax counsel (an “Opinion of Counsel”) to the effect that exercises of the
Exchange Rights will not cause Master III to be treated as a PTP, (iii) neither FCEI nor Master III
will waive any restrictions with respect to the exercise of any Exchange Right unless the waiver is
with respect to either (A) a transaction that qualifies as a “private





24









 







transfer” described in
Treasury Regulations Section 1.7704-1(e), or (B) a transaction with respect to which FCEI and
Master III have received an Opinion of Counsel concluding that the transaction will not cause
Master III to be treated as a PTP, (iv) Master III will not permit a transfer of Units other than
pursuant to an exercise of Exchange Rights (a “Unit Transfer”) unless either (A) the Unit Transfer
qualifies as a “private transfer” described in Treasury Regulations Section 1.7704-1(e), (B) FCEI
and Master III have received an Opinion of Counsel to the effect that the Unit Transfer will not
cause Master III to be treated as a PTP or (C) the transfer occurs within twelve (12) months of the
death of a person that held a direct or indirect interest in the units at the time of death,
provided that the transferor may not make more than two transfers under this clause (C) that are
not described in clause (A) during such twelve (12) month period; and (v) to the extent that an
Opinion of Counsel received by FCEI and Master III in connection with the requirements of this
Section 4.12(c) is based upon assumptions regarding subsequent transfers of interests in Master
III, whether pursuant to Exchange Rights or otherwise, Master III will not permit transfers other
than in accordance with such assumptions unless FCEI and Master III obtain a new Opinion of Counsel
to the same effect as the original Opinion of Counsel, taking into account the variations from such
assumptions. Notwithstanding the above, neither FCEI nor Master III will be required to receive an
opinion of counsel that a Unit Transfer would not result
in Master III becoming a PTP if (i) all Units in Master III have been issued in a transaction
(or transactions) that did not require the registration of the Units under the Securities Act and
(ii) Master III has not had more than one hundred (100) members.




     4.13 Estoppel Certificates. Commencing promptly after the date hereof, the BCR
Entities agree to prepare and deliver an estoppel certificate to (i) each of the tenants listed on
Schedule 4.13-1 (the “Anchors”), (ii) each landlord under a ground lease pursuant to which any
Property Owner has access to space at any Operating Property that is listed on Schedule 4.13-2
(each such landlord, a “Ground Lessor”) and (iii) to the extent not covered above, each entity
identified on Schedule 4.13-3 that is a party to a reciprocal easement agreement encumbering or
benefiting any Operating Property. With respect to Development Properties, following the
Stabilization Date for the applicable Development Property, Forest City may require that the BCR
Entities prepare and deliver an estoppel certificate to each landlord under a ground lease relating
to a Development Property that is listed on Schedule 4.13-2. Each such estoppel certificate will
include a provision addressing each of the matters set forth on Exhibit F, and each such estoppel
certificate will be completed to reflect the relevant terms of the lease, ground lease or
reciprocal easement agreement to which it relates (each such estoppel certificate, an “Estoppel
Certificate”). The BCR Entities agree to use commercially reasonable efforts, but without being
required to incur any material expense (other than the administrative expense customarily incurred
in preparing, distributing and collecting such certificates), to obtain signed Estoppel
Certificates from each such Anchor, Ground Lessor and party to reciprocal easement agreement on or
before the Principal Closing Date or, as applicable, the relevant Stabilization Closing Date.



     4.14 Reservation of FCEI Stock. Commencing on or prior to the Principal Closing and
at all times thereafter until all of the BCR Units (including any Additional Units) have been
exchanged, FCEI will reserve and keep available, free from preemptive rights, out of its authorized
but unissued FCEI Stock or FCEI Stock held in treasury, solely for the purpose of issuance upon
exchange of the BCR Units (including any Additional Units), the full number of shares of FCEI Stock
then deliverable upon exchange of all of the BCR Units (including the Additional Units) then
outstanding. Prior to the first date upon which any of the BCR Units may



25









 




be exchanged to FCEI
Stock, FCEI will obtain all consents, approvals, authorizations, orders, clearances and
qualifications of any Governmental Authority or stock exchange authorities for the issuance and
subsequent trading of the FCEI Stock issuable upon exchange of the BCR Units (including any
Additional Units) (other than the registration of the FCEI Stock with the SEC, which registration
will be governed by the terms of the Registration Rights Agreement).




     4.15 Treatment of Certain Priority Payments. With respect to certain Property Owners,
Development Property Owners or other entities jointly owned by certain of the FCE Entities and
certain of the BCR Entities (or their respective affiliates), Forest City has funded development
and other costs through capital contributions and, upon distribution of net cash flow, financing
proceeds or net sales proceeds by such Property Owners, Development Property Owners or jointly
owned entities and, before distributions to the members or other owners of the Property Owners,
Development Property Owners or jointly owned entities in accordance with their respective
percentage interests, is entitled to receive amounts consisting of these unreturned capital
contributions and a return on such unreturned capital contributions (“Priority Payments”). By way
of illustration, and without limiting the meaning of Priority Payments under the standard
form of Property Owner Agreement prescribed by the Second Amended and Restated Partnership
Agreement of FCRC, dated as of February 1, 2004, Priority Payments consist of a Section 3.01(c)
Return, Unreturned Capital attributable to Section 3.01(c) Contributions and a Priority Return (as
these terms are defined in the form of Property Owner Agreement). Forest City acknowledges that
the consideration received under this Agreement includes consideration on account of their
contributing of a portion of the right to receive Priority Payments (as set forth on Schedules P-6C
(FCE Contributed Interests in Operating Properties) and P-7B (FCE Contributed Interests in
Development Properties) that have accrued through January 31, 2006 and that would otherwise be
payable to the relevant FCE Entities by the Property Owners, Development Property Owners or jointly
owned entities. The portion not contributed will continue to be owned by Forest City, pari passu
with Master III, and the relevant Property Owner, Development Property Owner or other jointly owned
entity will make its distributions accordingly.



     4.16 Nets Loan. BR Basketball, LLC received a loan from Forest City Sports, LLC in
order to fund BR Basketball, LLC’s capital contributions in FCR Sports, LLC (the “Nets Loan”).
Forest City and the BCR Entities acknowledge that (i) as set forth in Schedule P-5A (Nets, Atlantic
Yards, Bloomfield and Metrotech Associates Transfers), the BCR Sold Interests related to the Nets
will be acquired by the entity identified on Schedule P-5A (Nets, Atlantic Yards, Bloomfield and
Metrotech Associates Transfers) at the Deferred Closing (without regard to the Cure Cut-off Date)
at such time that all conditions precedent to the transfer of such BCR Sold Interests have been
satisfied and (ii) BR Basketball, LLC will use the consideration received for such BCR Sold
Interests to repay the Nets Loan at the Deferred Closing.



     4.17 Certain Amendments. At the Principal Closing, the operating agreement or
partnership agreement for each of the entities identified on Schedule 4.17 will be amended by the
members or partners of each such entity. The form of partnership agreement or operating agreement
for each such entity related to an Operating Property, as amended, will be substantially in the
form set forth in Exhibit G-1, and the form of partnership agreement or operating agreement for
each such entity related to a Development Property, as amended, will be substantially in the form
set forth in Exhibit G-2.



26









 





     4.18 Contribution of Additional FCE Interests.



     (a) Except as provided in Section 4.18(b) below, in no event will Forest City or Master III
have any obligation to acquire any Interests that are owned, directly or indirectly, by an Outside
Investor with respect to any Property. In the event that any such Interest owned by an Outside
Investor has not been acquired by Master III prior to the third anniversary of the Principal
Closing Date or Stabilization Closing Date for the relevant Property, (a) the FCE Entity owning
Interests in the relevant Property Owner, Development Property Owner or other entity in which such
FCE Entity contributed Interests on the Principal Closing Date or Stabilization Closing Date
related to such Property will promptly contribute an additional amount of Interests in such
Property Owner, Development Property Owner or other entity equal to the Interests in such Property
that are owned by such Outside Investor as of the date hereof and (b) Master III will issue to such
FCE Entity an amount of Class B Common Units equal to the value of the Interests being contributed
by such FCE Entity determined as of the day of the closing of the
contribution of the other Interests related to the applicable Property. In the event that FCEI or
a subsidiary thereof desires to acquire such Interest owned by an Outside Investor prior to the
third anniversary of the Principal Closing Date or Stabilization Closing Date, FCEI or such
subsidiary may, in its sole discretion, either (x) contribute to Master III the consideration
necessary to acquire such Interest from the Outside Investor and cause Master III or its
wholly-owned subsidiary to acquire such Interest or (y) acquire such Interest directly from the
Outside Investor and contribute such Interest to Master III or its wholly-owned subsidiary,
provided that the option selected by FCEI does not create any tax liability for the BCR Entities or
the BCR Individuals. In the case of subsection (x) and subsection (y) above, Master III will issue
to FCEI or such other subsidiary a number Class B Common Units that is equal to the quotient of (i)
the value of the consideration or Interests (determined as of the date of such contribution)
contributed to Master III pursuant to this Section 4.18 divided by (ii) the average of the closing
prices of the FCEI Stock as reported by the New York Stock Exchange for each of the twenty (20)
days on which trading in such stock was reported immediately prior to the date of such
contribution. Schedule 4.18A contains a list of each of Interests held by any FCE Entities which
are to be contributed for Class B Common Units upon the third anniversary of the Principal Closing
or Development Property Closing to the extent same have not been acquired by Master III prior to
such date (the “Outside Interests”).



     (b) With respect to the Outside Investors and Outside Interests identified on Schedule 4.18B,
in the event that any or all of such Outside Investors desire to sell its or their entire Outside
Interests to FCEI or Master III, FCEI (or its subsidiary or Master III) will acquire such Interests
by electing either option (x) or (y) described in Section 4.18(a) above; provided, however, that
(i) the option selected by FCEI may not create any tax liability for the BCR Entities or the BCR
Individuals, (ii) in no event will FCEI or Master III, as applicable, be obligated to pay an amount
for each such Outside Interest that is greater than the pro rata portion of the amount set forth on
Schedule 4.18B attributable to such Outside Interest and (iii) in no event will FCEI (or its
subsidiary or Master III) be obligated to acquire such Outside Interests following the date on
which the BCR Transferred Interests with respect to the Property to which such Outside Interests
relate have been transferred in accordance with this Agreement. Pursuant to penultimate sentence
of Section 4.18(a), in connection with the acquisition of any such Outside Interests, Master III
will issue to the entity acquiring such Outside Interests and



27









 




contributing same to Master III or
contributing cash to Master III, as applicable, an amount of Class B Common Units calculated in
accordance with such penultimate sentence of 4.18(a).




ARTICLE V




CLOSING




     5.1 Closing. Subject to the terms and conditions of this Agreement, the Principal
Closing will take place at the office of Thompson Hine LLP, 127 Public Square, 3900 Key Center,
Cleveland, Ohio 44114, at and as of 9:00 A.M., E.S.T. on the fifth (5th) business day
following the date on which each of the conditions stated in Article VI has been satisfied or
waived, except for those conditions that may only be satisfied at the Principal Closing or on the
Principal Closing Date, or at such other place, time and date as the BCR Entities and Forest City
may agree. Forest City and the BCR Entities will advise each other on a regular basis of the
progress in satisfying the as yet unmet conditions precedent to the Principal Closing.
Notwithstanding the foregoing, in the event that the Principal Closing has not occurred by December
15, 2006 other than as a result of a default by any party to this Agreement, this Agreement will
automatically terminate and none of Forest City, Master III, the Master III Entities, the BCR
Entities or the BCR Individuals will have any further obligations under this Agreement other than
any obligation that expressly survives any such termination. As used in this Agreement, the term
“Principal Closing” means the transfers contemplated by Sections 1.1(a) through 1.1(f) with respect
to the Operating Properties and the Service Companies, Atlantic Yards, Bloomfield and Metrotech
Associates and the performance by each party hereto of the obligations on its part then to be
performed under and in accordance with this Agreement with respect to the Operating Properties, the
Service Companies, Atlantic Yards, Bloomfield and Metrotech Associates. The term “Principal
Closing Date” means the date on which the Principal Closing occurs, as the same may be extended by
Forest City or the BCR Entities pursuant to this Agreement. The parties will conduct a
“pre-closing” commencing on the third business day preceding the Principal Closing Date, and will
use commercially reasonable efforts to finalize the closing statement for the Principal Closing at
least forty-eight (48) hours prior to the Principal Closing Date. As used in this Agreement, the
term “Closing” means the transfer of Contributed Interests as contemplated hereby at the Principal
Closing or the Deferred Closing, and the performance by each party of the obligations on its part
then to be performed under and in accordance with this Agreement, and the term “Closing Date” means
the date on which a Closing is to occur as the same may be extended by FCEI or the BCR Entities
pursuant to this Agreement.



     5.2 Deferred Closing. Operating Properties as to which a Substantial Condemnation or
Substantial Casualty has occurred that cannot be cured prior to the Principal Closing Date will be
excluded from the Principal Closing (any such Operating Property excluded or removed because it is
subject to a Substantial Condemnation or a Substantial Casualty, an “Excluded Property”). The
parties acknowledge that the BCR Sold Interests with respect to FCR Sports, LLC will not be
transferred at the Principal Closing but will be included in a subsequent Closing (the “Deferred
Closing”) at such time as all conditions precedent to the sale of such BCR Sold Interests have been
satisfied. The BCR Entities will use commercially reasonable efforts to satisfy any conditions
precedent to (including obtaining all third party consents required to be



28









 




obtained in advance of)
the transfer of the BCR Sold Interests with respect to FCR Sports, LLC pursuant to this Agreement.
The Deferred Closing will be held at a date to be mutually agreed between the BCR Entities and
Forest City, but not later than thirty (30) days after the date on which all conditions precedent
to the transfer of the BCR Sold Interests with respect to FCR Sports, LLC have been satisfied (the
“Deferred Closing Date”). The BCR Entities will advise Forest City on a regular basis of the
progress in satisfying the as yet unmet conditions or circumstances to the Deferred Closing and
will cooperate in scheduling the Deferred Closing Date as soon as practical after those conditions
or circumstances are met. Notwithstanding the foregoing, in the event that the BCR Entities
determine in good faith that they will not be able to satisfy all conditions precedent to the
transfer of the BCR Sold Interests with respect to the Nets by June 30, 2007, the BCR Entities will
notify Forest City in writing of such determination, this Agreement automatically will terminate
with respect to the Nets, and neither Forest City nor the
BCR Entities will have any further obligation hereunder in respect of the Nets, except as may
expressly be provided to survive any such termination.




     5.3 Principal Closing and Deferred Closing Deliveries by BCR Entities. At the
Principal Closing and at the Deferred Closing, the BCR Entities (and to the extent applicable, the
BCR Individuals) transferring the BCR Transferred Interests at such Closing will execute,
acknowledge where appropriate and deliver, or cause to be delivered, each of the following
instruments and documents:



          (a) Operating Agreement. In the case of the Principal Closing, the Operating
Agreement for Master III duly executed by the BCR Entities and BCR Individuals (or by the BCR
Representative on behalf of the BCR Entities and BCR Individuals) contributing BCR Contributed
Interests at the Principal Closing.




          (b) Interest Contribution Agreements and Interest Transfer Agreements. In the case of
the Principal Closing, (i) an Interest Contribution Agreement providing for the contribution of the
BCR Contributed Interests contributed at the Principal Closing, and all certificates, agreements
and other documents required to be delivered thereunder, each duly executed by the appropriate
transferee and the appropriate BCR Entity or BCR Individual (or by the BCR Representative on behalf
of the BCR Entities and BCR Individuals) and (ii) an Interest Transfer Agreement providing for the
transfer of the BCR Sold Interests transferred at the Principal Closing, and all certificates,
agreements and other documents required to be delivered thereunder, each duly executed by the
appropriate transferee and the appropriate BCR Entity or BCR Individual (or by the BCR
Representative on behalf of the BCR Entities and BCR Individuals). In the case of the Deferred
Closing, an Interest Transfer Agreement providing for the transfer of the BCR Sold Interests
transferred at such Deferred Closing, and all certificates, agreements and other documents required
to be delivered thereunder, each duly executed by the appropriate transferee and the appropriate
BCR Entity or BCR Individual (or by the BCR Representative on behalf of the BCR Entities and BCR
Individuals).




          (c) Tax Protection Agreement. In the case of the Principal Closing, the Tax
Protection Agreement duly executed by BCR.




          (d) Registration Rights Agreement. In the case of the Principal Closing, the
Registration Rights Agreement duly executed by the BCR Entities and BCR Individuals (or by





29









 







the BCR
Representative on behalf of the BCR Entities and BCR Individuals) contributing BCR Contributed
Interests at the Principal Closing.




              (e) BCR Employment Agreement. In the case of the Principal Closing, the BCR
Employment Agreement duly executed by BCR.




              (f) Intentionally Omitted.




              (g) Certificates.





          (i) A letter, dated not earlier than thirty (30) business days prior to the
relevant Closing Date, from CT Corporation confirming that (A) CT Corporation has completed
a search of publicly available sources from the secretary of state of each state
in which the BCR Entities transferring BCR Transferred Interests at such Closing have
been organized and (B) the result of such search indicated that each such BCR Entity is in
good standing under the laws of such jurisdiction.




          (ii) A duly executed certificate of each of the BCR Entities transferring BCR
Transferred Interests at such Closing, dated as of such Closing Date, certifying:




          (A) that the general partner, board of directors or other similar authority of
such BCR Entity has adopted resolutions approving the transactions contemplated
hereunder and authorizing such BCR Entity to execute and deliver this Agreement, the
Interest Contribution Agreement or Interest Transfer Agreement and each other
agreement and instrument necessary for the consummation of the transactions
contemplated by this Agreement and the Interest Contribution Agreement or Interest
Transfer Agreement (which resolutions will be attached to or incorporated in such
certificate), that such action by such general partner, board of directors or other
similar authority constitutes the only authorization required for such execution,
delivery and consummation by the BCR Entity, and that it has not been revoked or
otherwise withdrawn and remains in full force and effect.




          (B) as to a true and complete copy of the partnership agreement and certificate
of limited partnership, or operating agreement and certificate of formation, or
other similar organizational documents, as the case may be, of the BCR Entity, that
the same have not been amended (except as noted therein) and that they are in full
force and effect as of such Closing Date, and also certifying as to the incumbency
of the officers of the BCR Entity executing and delivering this Agreement, the
Interest Contribution Agreement or Interest Transfer Agreement and the other
documents and instruments provided herein to be executed and delivered by the BCR
Entity.




          (iii) In the case of the Principal Closing, a duly executed certificate signed
by or on behalf of the BCR Entities transferring BCR Transferred Interests at the Principal
Closing, dated as of the Principal Closing Date, certifying that the representations and
warranties made by the BCR Entities (other than those relating solely to the BCR Entities,
BCR Individuals and BCR Transferred Interest and the Properties,



30









 






Development Property Owners
and other jointly owned entities that are not part of the Principal Closing) are true and
correct as if remade on and as of the Principal Closing Date, or, if made as of a specified
date, as of that date (with all qualifications in the specific representations and
warranties as to materiality disregarded), except where the failure of any such
representation or warranty to be true and correct on the Principal Closing Date would not
reasonably be expected to result in a BCR Material Adverse Effect (with appropriate
modifications of those representations and warranties to reflect actions taken by or on
behalf of the BCR Entities in accordance with the provisions of this Agreement or
identifying any representation or warranty that was not or no longer is true and correct and
explaining the state of facts giving rise to the change).




          (iv) In the case of the Deferred Closing, a duly executed certificate signed
by or on behalf of the BCR Entities transferring BCR Transferred Interests at such Deferred
Closing, dated as of the Deferred Closing Date, certifying that the representations and
warranties made by the BCR Entities with respect to such BCR Entities and BCR Transferred
Interests, the Nets and any other jointly owned entities that are part of the Deferred
Closing are true and correct as if remade on and as of the Deferred Closing Date, or, if
made as of a specified date, as of that date (with all qualifications in the specific
representations and warranties as to materiality disregarded), except where the failure of
any such representation or warranty to be true and correct on the Deferred Closing Date
would not reasonably be expected to result in a BCR Material Adverse Effect (with
appropriate modifications of those representations and warranties to reflect actions taken
by or on behalf of the BCR Entities in accordance with the provisions of this Agreement or
identifying any representation or warranty that was not or no longer is true and correct and
explaining the state of facts giving rise to the change).



          (h) Estoppel Certificates. In the case of the Principal Closing, all executed
Estoppel Certificates obtained by the BCR Entities pursuant to Section 4.13.




          (i) Lender Consents. Any lender consents obtained pursuant to Section 1.3.




          (j) Outside Investor Consents. The consent of each Outside Investor identified on
Schedule 5.3(j) with respect to a Property included in such Closing whose consent, as identified on
Schedule 5.3(j), is required in respect of the consummation of the transactions at such Closing,
which consents will be acceptable to Forest City acting reasonably; provided, however, that all
Outside Investor consents constituting Required BCR Consents will be delivered at or prior to the
Principal Closing.




          (k) Ground Lease Consents. In the case of the Principal Closing, the consent of each
ground lessor identified on Schedule 1.2A, which consents will be acceptable to Forest City acting
reasonably.




          (l) Other Documents. All other instruments and documents, if any, required to be
executed, acknowledged or delivered by the BCR Entities and BCR Individuals pursuant to and in
accordance with any of the other provisions of this Agreement or the Interest Contribution
Agreements and Interest Transfer Agreements, and such other documents or instruments as




31









 







Forest City
may reasonably request to effect the transactions contemplated in this Agreement and the Interest
Contribution Agreements and Interest Transfer Agreements.




     5.4 Principal Closing and Deferred Closing Deliveries by Forest City. At the
Principal Closing and at the Deferred Closing, FCEI and/or the relevant FCE Entities transferring
the FCE Contributed Interests at such Closing will execute, acknowledge where appropriate and
deliver, or cause to be executed, acknowledged where appropriate and delivered, each of the
following instruments, documents and payments:



          (a) Consideration. The Consideration, or portion of the Consideration allocated to
the BCR Transferred Interests being transferred in connection with such Closing as provided for in
Section 2.2 of this Agreement, as set forth on the closing statement for such
Closing to be prepared and agreed to in writing by the BCR Entities and Forest City at least
forty-eight (48) hours prior to such Closing.




          (b) Operating Agreement. In the case of the Principal Closing, the Operating
Agreement for Master III duly executed by the FCE Entities contributing FCE Contributed Interests
at the Principal Closing.




          (c) Interest Contribution Agreements. In the case of the Principal Closing, an
Interest Contribution Agreement providing for the contribution of the FCE Contributed Interests
contributed at the Principal Closing, and all certificates, agreements and other documents required
to be delivered thereunder, each duly executed by the applicable transferee and the appropriate FCE
Entity.




          (d) Registration Rights Agreement. In the case of the Principal Closing, the
Registration Rights Agreement duly executed by FCEI.




          (e) Tax Protection Agreement. In the case of the Principal Closing, the Tax
Protection Agreement duly executed by Master III, FCEI and certain other entities affiliated with
FCEI.




          (f) BCR Employment Agreement. In the case of the Principal Closing, the BCR
Employment Agreement duly executed by FCEI.




          (g) Voting Agreement. In the case of the Principal Closing, the Voting Agreement duly
executed by FCEI and a sufficient number of the Forest City Principals.




          (h) Certificates.





          (i) In the case of the Principal Closing, a certificate, dated not earlier
than thirty (30) business days prior to the Principal Closing Date, from the Secretary of
State of Ohio certifying as to the good standing of FCEI and Forest City Rental Properties
Corporation (“FCRPC”).




          (ii) In the case of the Principal Closing, a duly executed certificate of FCEI
and each of the FCE Entities that are contributing FCE Contributed Interests at such
Closing, dated as of the Principal Closing Date, certifying:



32









 






          (A) in the case of FCEI, that the board of directors of FCEI has adopted
resolutions approving the transactions contemplated hereunder and authorizing FCEI
to execute and deliver this Agreement and each other agreement and instrument
necessary for the consummation of the transactions contemplated by this Agreement
and the Interest Contribution Agreement (which resolutions will be attached to or
incorporated in such certificate), that such action by the board of directors
constitute the only authorization required for such execution, delivery and
consummation by FCEI, and that it has not been revoked or otherwise withdrawn and
remains in full force and effect.




          (B) in the case of each of the FCE Entities that are contributing FCE
Contributed Interests at such Closing, that the general partner, board of directors
or other similar authority of such FCE Entity has adopted resolutions approving the
transactions contemplated hereunder and authorizing the FCE Entity to execute and
deliver this Agreement, the Interest Contribution Agreement and each other agreement
and instrument necessary for the consummation of the transactions contemplated by
this Agreement and the Interest Contribution Agreement (which resolutions will be
attached to or incorporated in such certificate), that such action by such general
partner, board of directors or other similar authority constitutes the only
authorization required for such execution, delivery and consummation by the FCE
Entity, and that it has not been revoked or otherwise withdrawn and remains in full
force and effect.




          (C) as to a true and complete copy of the partnership agreement and certificate
of limited partnership, or operating agreement and certificate of formation, or
other similar organizational documents, as the case may be, of FCEI or the FCE
Entity, that the same have not been amended (except as noted therein) and that they
are in full force and effect as of such Closing Date, and also certifying as to the
incumbency of the officers of FCEI or the FCE Entity, as the case may be, executing
and delivering this Agreement, the Interest Contribution Agreement and the other
documents and instruments provided herein to be executed and delivered by FCEI or
the FCE Entity.




          (iii) In the case of the Principal Closing, a duly executed certificate signed
by or on behalf of FCEI and the FCE Entities transferring FCE Contributed Interests at the
Principal Closing, dated as of the Principal Closing Date, certifying that the
representations and warranties made by Forest City (other than those relating solely to the
FCE Entities, FCE Contributed Interest, Properties, Development Property Owners and other
jointly owned entities that are not part of the Principal Closing) are true and correct as
if remade on and as of the Principal Closing Date, or, if made as of a specific date, as of
that date (with all qualifications in the specific representations and warranties as to
materiality disregarded), except where the failure of any such representation or warranty to
be true and correct on the Principal Closing Date would not reasonably be expected to result
in an FCE Material Adverse Effect (with appropriate modifications of those representations
and warranties to reflect actions taken by or on behalf of the FCE Entities in accordance
with the provisions of this Agreement or identifying any



33









 






representation or warranty that was
not or no longer is true and correct and explaining the state of facts giving rise to the
change).



          (i) Legal Opinion. In the case of the Principal Closing, an opinion of the General
Counsel of FCEI as to the matters identified on Exhibit H attached hereto.




          (j) Non-Consolidation Opinions. In the case of the Principal Closing, a
non-consolidation opinion with respect to each of the loans listed on Schedule 5.4(j).




          (k) Other Documents. All other instruments and documents, if any, required to be
executed, acknowledged and/or delivered by Forest City pursuant to and in accordance
with any of the other provisions of this Agreement or the Interest Contribution Agreements and
such other documents or instruments as the BCR Entities may reasonably request to effect the
transactions contemplated in this Agreement and the Interest Contribution Agreements.




     5.5 Development Property Closing Deliveries by BCR Entities. At each Development
Property Closing, the BCR Entities and/or BCR Individuals transferring the BCR Transferred
Interests at such Development Property Closing will execute, acknowledge where appropriate and
deliver, or cause to be delivered, each of the following instruments and documents:



          (a) Operating Agreement. The Operating Agreement for Master III duly executed by the
BCR Entities and BCR Individuals (or by the BCR Representative on behalf of the BCR Entities and
BCR Individuals) contributing BCR Contributed Interests to Master III at such Development Property
Closing.




          (b) Interest Contribution Agreements and Interest Transfer Agreements. An Interest
Contribution Agreement providing for the contribution of the BCR Contributed Interests related to
the Development Property included in such Development Property Closing, and all certificates,
agreements and other documents required to be delivered thereunder, each duly executed by the
appropriate transferee and the appropriate BCR Entity or BCR Individual (or by the BCR
Representative on behalf of the BCR Entities and BCR Individuals), and an Interest Transfer
Agreement providing for the transfer of the BCR Sold Interests transferred at such Development
Property Closing, and all certificates, agreements and other documents required to be delivered
thereunder, each duly executed by the appropriate transferee and the appropriate BCR Entity or BCR
Individual (or by the BCR Representative on behalf of the BCR Entities and BCR Individuals).




          (c) Registration Rights Agreement. An addendum to the Registration Rights Agreement
duly executed by each BCR Entity and BCR Individual (or by the BCR Representative on behalf of each
such BCR Entity and BCR Individual) contributing BCR Contributed Interests to Master III at such
Development Property Closing.




          (d) Certificates.





          (i) A certificate, dated not earlier than thirty (30) business days prior to
such Stabilization Closing Date, from the secretary of state of each state in which the BCR
Entities transferring BCR Transferred Interests at such Development Property



34









 






Closing have
been organized certifying as to the good standing of each such BCR Entity under the laws of
such jurisdiction.




          (ii) A duly executed certificate of each BCR Entity transferring BCR
Transferred Interests at such Development Property Closing, dated as of such Stabilization
Closing Date, certifying:




          (A) that the general partner, board of directors or other similar authority of
such BCR Entity has adopted resolutions approving the transactions contemplated
hereunder and authorizing the BCR Entity to execute and deliver this Agreement, the
Interest Contribution Agreement or Interest Transfer
Agreement and each other agreement and instrument necessary for the
consummation of the transactions contemplated by this Agreement and the Interest
Contribution Agreement or Interest Transfer Agreement (which resolutions will be
attached to or incorporated in such certificate), that such action by such general
partner, board of directors or other similar authority constitutes the only
authorization required for such execution, delivery and consummation by the BCR
Entity, and that it has not been revoked or otherwise withdrawn and remains in full
force and effect.




          (B) as to a true and complete copy of the partnership agreement and certificate
of limited partnership, or operating agreement and certificate of formation, or
other similar organizational documents, as the case may be, of the BCR Entity, that
the same have not been amended (except as noted therein) and that they are in full
force and effect as of such Stabilization Closing Date, and also certifying as to
the incumbency of the officers of the BCR Entity executing and delivering this
Agreement, the Interest Contribution Agreement or Interest Transfer Agreement and
the other documents and instruments provided herein to be executed and delivered by
the BCR Entity.




          (iii) A duly executed certificate of the BCR Representative, dated as of the
Stabilization Closing Date, certifying that each of the representations and warranties of
the BCR Entities contemplated by Section 7.4 of this Agreement is true and correct as of
such Stabilization Closing Date. For purposes of the delivery of the certificate
contemplated by this Section 5.5(d)(iii), the references to the BCR Entities, BCR
Transferred Interests, or Development Property Owners or other jointly owned entities in the
relevant representations and warranties will be deemed to be references only to the BCR
Entities, BCR Transferred Interests, and Development Property Owners and other jointly owned
entities included in the Development Property Closing at hand.



              (e) Other Documents. All other instruments and documents, if any, required to be
executed, acknowledged or delivered by the BCR Entities and BCR Individuals transferring BCR
Transferred Interests at such Development Property Closing pursuant to and in accordance with any
of the other provisions of this Agreement or the Interest Contribution Agreements or Interest
Transfer Agreements, and such other documents or instruments (including any Estoppel Certificate
relating to a Development Property identified on Schedule 4.13-2) as Forest City may





35










 






reasonably request to effect the transactions contemplated in this Agreement and the
Interest Contribution Agreements or Interest Transfer Agreements.




          5.6 Development Property Closing Deliveries by Forest City. At each Development
Property Closing, FCEI and/or the relevant FCE Entities transferring the FCE Contributed Interests
at such Development Property Closing will execute, acknowledge where appropriate and deliver, or
cause to be executed, acknowledged where appropriate and delivered, each of the following
instruments, documents and payments:




               (a) Additional Consideration. The portion of the Additional Units allocated to the
BCR Contributed Interests being contributed at such Development Property Closing as provided for in
Section 2.3 of this Agreement, together with any cash consideration payable with respect to any BCR
Sold Interests being transferred at such Development Property Closing, as provided for in Section
2.3 of this Agreement.



               (b) Operating Agreement. The Operating Agreement for Master III duly executed by the
FCE Entities contributing FCE Contributed Interests to Master III at such Development Property
Closing.



               (c) Interest Contribution Agreements. An Interest Contribution Agreement providing
for the contribution of the FCE Contributed Interests in the related Development Property Owner to
Master III, and each certificate, agreement and other document required to be delivered thereunder,
each duly executed by Master III and the appropriate FCE Entity.



               (d) Registration Rights Agreement. An addendum to the Registration Rights Agreement
duly executed by FCEI.



               (e) Certificates. With respect to each FCE Entity contributing FCE Contributed
Interests at a Development Property Closing for a Development Property:




               (i) A certificate, dated not earlier than thirty (30) business days prior to
such Stabilization Closing Date, from the secretary of state of each state in which FCEI,
FCRPC (or, to the extent FCRPC is no longer a principal borrower under FCEI’s principal
revolving credit facility, such principal borrower) and any of the FCE Entities contributing
FCE Contributed Interests to Master III at such Development Property Closing have been
organized certifying as to the good standing of FCEI, FCRPC (or, to the extent FCRPC is no
longer a principal borrower under FCEI’s principal revolving credit facility, such principal
borrower) and the FCE Entities under the laws of such jurisdiction.




               (ii) A duly executed certificate of FCEI and each FCE Entity contributing FCE
Contributed Interests to Master III at such Development Property Closing, dated as of such
Stabilization Closing Date, certifying:




               (A) in the case of FCEI, that the board of directors of FCEI has adopted
resolutions approving the transactions contemplated hereunder and authorizing FCEI
to execute and deliver this Agreement, the Interest Contribution Agreement and each
other agreement and instrument necessary for the



36









 







consummation of the transactions contemplated by this Agreement and the
Interest Contribution Agreement (which resolutions will be attached to or
incorporated in such certificate), that such action by the board of directors
constitutes the only authorization required for such execution, delivery and
consummation by FCEI, and that it has not been revoked or otherwise withdrawn and
remains in full force and effect.




               (B) in the case of each of the FCE Entities, that the general partner, board of
directors or other similar authority of such FCE Entity has adopted resolutions
approving the transactions contemplated hereunder and authorizing the FCE Entity to
execute and deliver this Agreement, the Interest Contribution Agreement and each
other agreement and instrument necessary for the consummation of the transactions
contemplated by this Agreement and the Interest Contribution Agreement (which
resolutions will be attached to or incorporated in such certificate), that such
action by such general partner, board of directors or other similar authority
constitutes the only authorization required for such execution, delivery and
consummation by the FCE Entity, and that it has not been revoked or otherwise
withdrawn and remains in full force and effect.




               (C) as to a true and complete copy of the partnership agreement and certificate
of limited partnership, or operating agreement and certificate of formation, or
other similar organizational documents, as the case may be, of FCEI or the FCE
Entity, that the same have not been amended (except as noted therein) and that they
are in full force and effect as of such Stabilization Closing Date, and also
certifying as to the incumbency of the officers of FCEI or the FCE Entity, as the
case may be, executing and delivering this Agreement, the Interest Contribution
Agreement and the other documents and instruments provided herein to be executed and
delivered by FCEI or the FCE Entity.




               (iii) A duly executed certificate of FCEI, dated as of the Stabilization
Closing Date, certifying that each of the representations and warranties of Forest City
referenced in Section 7.3 of this Agreement is true and correct as of such Stabilization
Closing Date. For purposes of the delivery of the certificate contemplated by this Section
5.6(e)(iii), the references to the FCE Entities, FCE Contributed Interests, Development
Property Owners or other jointly owned entities in the relevant representations and
warranties will be deemed to be references only to the FCE Entities, FCE Contributed
Interests, Development Property Owners and other jointly owned entities included in the
Development Property Closing at hand.



               (f) Legal Opinion. An opinion of the General Counsel of FCEI as to the matters
identified on Exhibit H attached hereto.



               (g) Other Documents. All other instruments and documents, if any, required to be
executed, acknowledged and/or delivered by Forest City pursuant to and in accordance with any of
the other provisions of this Agreement or the Interest Contribution Agreements and such other
documents or instruments as the BCR Entities may reasonably request to effect the transactions
contemplated in this Agreement and the Interest Contribution Agreements.



37









 





ARTICLE VI




CONDITIONS PRECEDENT TO CLOSING




          6.1 Conditions Precedent to Obligation of Forest City. The obligation of Forest City
to consummate the transactions contemplated by this Agreement will be subject to the fulfillment on
or before the Principal Closing Date, the Deferred Closing Date or any Stabilization Closing Date,
as applicable, of the following conditions, any or all of which may be waived by Forest City in its
sole discretion:




               (a) Preliminary Transactions; Delivery of Documents. The BCR Entities and the BCR
Individuals have performed, or have caused to be performed, each of the Preliminary Transactions
required to be performed, or caused to be performed, by them. Except for the delivery of the
Required Estoppel Certificates and the Required BCR Consents, which is governed by Section 6.1(d)
below, the BCR Entities and BCR Individuals transferring BCR Transferred Interests at such Closing
or Development Property Closing have delivered all of the items required to be delivered to Forest
City pursuant to Section 5.3 (other than deliveries under Sections 5.3(h), 5.3(i) and 5.3(j) and
5.3(k)) or Section 5.5 for such Closing or Development Property Closing.



               (b) Accuracy of Representations and Warranties.




               (i) In the case of the Principal Closing, the representations and warranties of the BCR
Entities in Section 7.2 of this Agreement are true and correct as originally made and, if
applicable, as remade on and as of the Principal Closing Date (or, if made as of a specified
date, as of such date), as the same may be modified to reflect any actions taken by or on
behalf of the BCR Entities as permitted herein, except where a breach of such
representations and warranties would not result in a BCR Material Adverse Effect.




               (ii) In the case of the Deferred Closing, the representations and warranties of the BCR
Entities in Section 7.4(b) of this Agreement are true and correct as if made as of the date
of each such Deferred Closing (or, if made as of a specified date, as of such date), as the
same may be modified to reflect any actions taken by or on behalf of the BCR Entities as
permitted herein, except where a breach of such representations and warranties would not
result in a BCR Material Adverse Effect.




               (iii) In the case of each Development Property Closing, the representations and
warranties of the BCR Entities referenced in Section 7.4 of this Agreement are true and
correct as of the date of each such Development Property Closing (or, if made as of a
specified date, as of such date).




               (iv) For purposes of this condition precedent, (i) the references in Section 7.2 and
Section 7.4 to the BCR Entities, BCR Transferred Interests, Operating Properties,
Development Properties, Service Companies, Property Owners or Development Property Owners or
any other jointly owned entities will be deemed to be references only to the BCR Entities,
BCR Transferred Interests, Operating Properties,



38









 







Development Properties, Service Companies, Property Owners, Development Property Owners or
any other jointly owned entities included in the Closing or Development Property Closing at
hand and (ii) in the case of the Principal Closing and the Deferred Closing, all
qualifications in the specific representations and warranties as to materiality will be
disregarded and merged into the concept of a BCR Material Adverse Effect.



               (c) Observance of Covenants. The BCR Entities transferring BCR Transferred Interests
at such Closing or Development Property Closing have performed and observed all covenants and
agreements in this Agreement to be performed and observed by such BCR Entities as of the applicable
Closing Date or Stabilization Closing Date, except where the failure to perform or observe any such
covenant has not resulted in a BCR Material Adverse Effect.



               (d) Required Estoppel Certificates; Required BCR Consents. With respect to the
Principal Closing, the BCR Entities have delivered to Forest City (i) Estoppel Certificates for the
Anchors listed on Schedule 6.1(d) (collectively, the “Required Estoppel Certificates”) and (ii)
those Outside Investor and ground lessor consents listed on Schedule 6.1(d) (collectively, the
“Required BCR Consents”).



               (e) No Injunction. No action, suit or legal or administrative proceedings have been
instituted by or before any agency, bureau, commission, court, department, official, political
subdivision, tribunal or other instrumentality of any government, whether federal, state or local,
domestic or foreign (referred to herein as “Governmental Authority”), seeking to enjoin the
transactions contemplated by this Agreement and intended to occur at the related Closing or
Development Property Closing, other than any such proceeding initiated by or on behalf of Forest
City or any of its affiliates.



               (f) Transactions Not Prohibited. No statute, rule, regulation, temporary restraining
order, preliminary or permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation by the BCR
Entities, BCR Individuals, Forest City or Master III of the transactions contemplated by this
Agreement and the Interest Contribution Agreements and Interest Transfer Agreements to occur at the
related Closing or Development Property Closing is in effect or, if applicable, has been threatened
by any Governmental Authority or any third party, other than any such order or other legal
restraint or prohibition or threat thereof obtained or instituted by or on behalf of Forest City or
any of its affiliates.



               (g) Intentionally Omitted.



               (h) Market Price of FCEI Stock. In the case of the Principal Closing, the average of
the closing prices of the FCEI Stock as reported by the New York Stock Exchange for each of the
twenty (20) days on which trading in such stock was reported immediately prior to the Principal
Closing Date (assuming that all others conditions precedent to the occurrence of the Principal
Closing will have been satisfied or waived) is not greater than Fifty Five and 86/100 Dollars
($55.86) per share.



39









 





          6.2 Conditions Precedent to Obligations of the BCR Entities and BCR Individuals. The
obligation of the BCR Entities and the BCR Individuals to consummate the transactions contemplated
herein will be subject to the fulfillment on or before the Principal Closing Date, the Deferred
Closing Date and any Stabilization Closing Date, as applicable, of the following conditions, any or
all of which may be waived by the BCR Entities in their sole discretion:




               (a) Receipt of Consideration or Additional Units. Forest City has delivered and has
caused Master III or affiliates of Master III to deliver the consideration or Additional Units for
the BCR Transferred Interests included in such Closing or Development Property Closing, as adjusted
pursuant to and payable in the manner provided for in this Agreement and the Interest Contribution
Agreements and Interest Transfer Agreements.



               (b) Preliminary Transactions; Delivery of Documents. Forest City has performed, or
has caused to be performed, each of the Preliminary Transactions required to be performed, or
caused to be performed, by them. Forest City has delivered all of the items required to be
delivered to the BCR Entities pursuant to Section 5.4 or Section 5.6 for such Closing or
Development Property Closing.



               (c) Accuracy of Representations and Warranties.




               (i) In the case of the Principal Closing, the representations and warranties of Forest
City contained in Section 7.1 of this Agreement are true and correct as originally made and
as remade on and as of the Principal Closing Date (or, if made as of a specified date, as of
that date) as the same may be modified to reflect any actions taken by or on behalf of
Forest City as permitted herein, except where a breach of such representations and
warranties would not result in an FCE Material Adverse Effect.




               (ii) In the case of each Development Property Closing, the representations and
warranties of Forest City contained in Section 7.3 of this Agreement are true and correct as
of the date of such Development Property Closing (or, if made as of a specified date, as of
that date).




               (iii) For purposes of this condition precedent, (i) the references in Section 7.1 and
Section 7.3 to the FCE Entities and FCE Contributed Interests will be deemed to be
references only to the FCE Contributed Interests included in the Closing at hand and (ii) in
the case of the Principal Closing, all qualifications in the specific representations and
warranties as to materiality will be disregarded and merged into the concept of an FCE
Material Adverse Effect.



               (d) Observance of Covenants. Forest City has performed and observed all covenants and
agreements in this Agreement to be performed and observed by Forest City as of such Closing Date or
Stabilization Closing Date, except where the failure to perform or observe any such covenant has
not resulted in an FCE Material Adverse Effect.



               (e) Market Price of FCEI Stock. In the case of the Principal Closing, the average of
the closing prices of the FCEI Stock as reported by the New York Stock Exchange for each of the
twenty (20) days on which trading in such stock was reported immediately prior to the Principal
Closing Date (assuming that all others conditions precedent to the occurrence of the



40









 







Principal Closing will have been satisfied or waived) is not less than Forty Five and 86/100
Dollars ($45.86) per share.



               (f) No Injunction. No action, suit or legal or administrative proceedings have been
instituted by or before any court or Governmental Authority seeking to enjoin the transactions
contemplated by this Agreement and intended to occur at the related Closing or Development Property
Closing, other than any such proceeding initiated by or on behalf of the BCR Entities.



               (g) Transactions Not Prohibited. No statute, rule, regulation, temporary restraining
order, preliminary or permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation by the BCR
Entities, BCR Individuals, Forest City or Master III of the transactions contemplated by this
Agreement and the Interest Contribution Agreements and Interest Transfer Agreements to occur at the
related Closing or Development Property Closing is in effect or, if applicable, has been threatened
by any Governmental Authority or by any third party, other than any such order or other legal
restraint or prohibition or threat thereof obtained or initiated by or on behalf of the BCR
Entities.



               (h) Intentionally Omitted.



               (i) No Suspension of Trading of FCEI Stock. In the case of the Principal Closing,
there has been no suspension in the trading of FCEI Stock on the New York Stock Exchange at any
time between the date of this Agreement and the Principal Closing Date, other than a temporary
suspension (no longer than one day) in order to give the market time to assimilate the announcement
of material information.



               (j) FCEI Stock. In the case of the Principal Closing, the board of directors of FCEI
has reserved for issuance, free from preemptive rights, out of FCEI’s authorized but unissued FCEI
Stock, solely for the purpose of issuance upon exchange of the BCR Units into FCEI Stock, the full
number of shares of FCEI Stock deliverable upon exchange of all of the BCR Units (including the
Additional Units).



ARTICLE VII




REPRESENTATIONS AND WARRANTIES




          7.1 Representations and Warranties of Forest City. In order to induce the BCR
Entities and the BCR Individuals to carry out the transactions contemplated by this Agreement, as
of the date of this Agreement, Forest City represents and warrants to, and agrees with, each of the
BCR Entities and each of the BCR Individuals as follows:




               (a) Organization, Good Standing and Authority. FCEI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio. Schedule 7.1(a) sets
forth a complete and correct list reflecting the full legal name, type of legal entity and the
jurisdiction in which each of the FCE Entities is organized. Master III and each of the Master III
Entities is either a limited liability company or a corporation, as the case may be, duly
organized, validly existing and in good standing under the laws of the State of New York.



41









 




Each of the FCE Entities is duly organized, validly existing and in good standing under the
laws of the jurisdiction indicated with respect to it on Schedule 7.1(a). Each of FCEI, the FCE
Entities, Master III and the Master III Entities is duly qualified to do business in all
jurisdictions where such qualification is necessary to carry on its business as now conducted,
except where failure to do so would not result in an FCE Material Adverse Effect. Each of FCEI,
the FCE Entities, Master III and Master III Entities has all necessary power to execute and
deliver, and perform its obligations under, this Agreement and all documents contemplated hereunder
to be executed by it. “FCE Material Adverse Effect” means any change or effect that (i) is, or is
reasonably likely to be, materially adverse to the business, operations or financial condition of
FCEI, the FCE Entities, Master III and the Master III Entities, taken as a whole, or (ii)
materially delays or hinders, or is reasonably likely materially to delay or hinder, the completion
of the transactions contemplated by this Agreement.




               (b) Authorization and Binding Effect. This Agreement has been, and all documents
contemplated hereunder to be executed by Forest City, Master III and the Master III Entities when
executed and delivered will be, duly authorized by all requisite action on the part of Forest City,
Master III and the Master III Entities, including approval by the Special Committee of FCEI’s Board
of Directors appointed to consider and act upon this Agreement and the transactions contemplated
hereby (the “Special Committee”). Shareholder approval is not required for the consummation of the
transactions contemplated by this Agreement, including the issuance of FCEI Stock upon exchange of
the BCR Units (including any Additional Units). This Agreement and each such document is, or upon
execution and delivery will be, the valid and legally binding obligation of FCEI, the FCE Entities,
Master III or the Master III Entities, as the case may be, enforceable in accordance with its
respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity (including concepts of materiality, reasonableness,
good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law.



               (c) No Conflicts. Neither the execution and delivery of this Agreement nor any
documents contemplated hereunder to be executed by Forest City, Master III or the Master III
Entities, nor the performance by Forest City, Master III or the Master III Entities of any of their
respective obligations hereunder or thereunder, including the contribution of the FCE Contributed
Interests and the issuance of the FCEI Stock upon exchange of the BCR Units, will (i) violate any
law or regulation of any Governmental Authority that is applicable to FCEI, Master III, the Master
III Entities or any of the FCE Entities or the FCE Interests, (ii) violate any order or decree of
any court, arbitrator or other Governmental Authority against or binding upon FCEI, Master III, the
Master III Entities or any of the FCE Entities; (iii) violate any provision of the articles of
incorporation, bylaws or other organizational documents of FCEI, Master III, the Master III
Entities, any of the FCE Entities or any entity that is jointly owned by Forest City and any of the
BCR Entities, (iv) require Forest City, Master III or the Master III Entities to obtain any
consent, approval or action of, or make any filing with or give any notice to, any Governmental
Authority or any other Person, except for (A) the consents set forth on Schedule 7.2(c) attached
hereto, (v) conflict with or result in a breach of, or constitute a default or accelerate any right
under, any agreement or instrument to which FCEI, Master III, the Master III Entities or any of the
FCE Entities is a party or by which FCEI or any of the FCE Entities or FCE Interests are bound, or
(vi) result in, or require the creation or imposition of, any lien upon



42









 







or with respect to any of the FCE Interests, except in the case of clauses (i), (ii), (iv) and
(v) above, for such violations, consents, approvals, notices, conflicts, breaches or defaults as
could not reasonably be expected to result in an FCE Material Adverse Effect. To the knowledge of
Forest City, Schedule 7.2(c) identifies all of the consents under agreements effective as of the
date hereof that are required as a result of the transactions contemplated by this Agreement,
except that Forest City makes no representation or warranty regarding the third-party consents
identified on Schedule 7.2(c) that Forest City and the BCR Entities agree are not required in
connection with the transactions contemplated by this Agreement.



               (d) FCE Contributed Interests. The organizational charts included as part of Schedule
P-3B (Property Owners and Organizational Charts) and Schedule P-3E (Service Companies and
Organizational Charts) are true and correct to the extent they reflect the direct or indirect
ownership by FCEI or any of the FCE Entities in the Operating Properties and the Service Companies.
The FCE Interests have been duly authorized and validly issued in accordance with the
organizational documents of the issuer thereof and applicable law. Immediately preceding the
Principal Closing, the contributors of the FCE Contributed Interests will own the FCE Contributed
Interests to be contributed at such Closing free and clear of all rights, liens, claims and
encumbrances other than claims or encumbrances arising pursuant to the organizational documents of
the relevant issuer of such FCE Contributed Interests and claims arising pursuant to this
Agreement, and subject to restrictions on transfer under federal and state securities laws. None
of the FCE Entities has pledged its FCE Contributed Interests or consented to the pledge or
encumbrance of any of the FCE Contributed Interests.



               (e) FCEI Stock. Schedule 7.1(e) and the 2005 Form 10-K set forth as of July 21, 2006
(i) the authorized capital stock of FCEI, (ii) the total number of shares of each class of capital
stock outstanding and (iii) the total number of options and warrants to acquire such capital stock
and any commitments to issue or grant any of the foregoing. All of the outstanding shares of the
capital stock of FCEI are duly and validly issued, fully paid and non-assessable and not subject to
any preemptive rights. When issued, the FCEI Stock issuable upon exchange of the BCR Units,
including the Additional Units, will be duly authorized, validly issued, fully paid and
non-assessable and not subject to any preemptive rights. The FCEI Stock issued upon exchange of
the BCR Units, including the Additional Units, (a) will be free and clear of all liens and other
claims other than those suffered or permitted or granted by the contributors of the BCR Contributed
Interests in consideration of the BCR Units (including the potential restrictions contained in the
Master III Operating Agreement and the Voting Agreement), and (b) will not require any approval or
consent of any Person except any such approval or consent that will be obtained on or prior to the
Principal Closing Date (other than the registration of such FCEI Stock, which will be governed by
the Registration Rights Agreement).



               (f) Private Offering. Neither FCEI, any of the FCE Entities, Master III nor any
Person acting on their behalf has taken or will take any action (including, without limitation, any
offering of any securities of Master III or FCEI under circumstances which would require the
integration of such offering with the issuance of the Units under the Securities Act of 1933, as
amended (the “Securities Act”)) which might subject the Units, or the issuance of FCEI Stock upon
exchange of any BCR Units, including the Additional Units, to the registration requirements of
Section 5 of the Securities Act.



43









 





               (g) SEC Filings. FCEI has filed with the Securities and Exchange Commission (the
“Commission”) its annual report on Form 10-K for the fiscal year ended January 31, 2006 (such
annual report, and all documents incorporated by reference therein, are referred to the “2005 Form
10-K”) and since February 1, 2006, has made all material filings required by the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the
Commission promulgated thereunder. From the date of this Agreement through the Principal Closing
Date, FCEI may file one or more quarterly reports on Form 10-Q (“2006 Form 10-Qs” and, together
with the 2005 Form 10-K and any current reports on Form 8-K filed from January 31, 2006 through the
Principal Closing Date, the “SEC Filings”). Except as provided in the final sentence of this
Section 7.1(g), each of the SEC Filings, as of its filing date, (i) complied or will comply in all
material respects with the requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder and (ii) did not (or will not) contain any untrue statement of a
material fact or omit (or will omit) to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
are made, not misleading, other than any misstatements or omissions in an SEC filing that were
corrected in a subsequent SEC Filing filed prior to the date hereof. Notwithstanding anything in
this Section 7.1(g) to the contrary, to the extent the SEC Filings relate to the Property Owners,
the Operating Properties or the operations of FCRC, the representations and warranties contained in
this Section 7.1(g) are limited to the knowledge of Forest City.



               (h) Forest City Financial Statements. Except as provided in the final sentence of
this Section 7.1(h), the consolidated financial statements of FCEI for the fiscal year ended
January 31, 2006, and the consolidated financial statements of FCEI included in the SEC Filings,
(i) present or will present in all material respects the consolidated financial condition of Forest
City as of the dates thereof, and their consolidated results of operations and cash flows for the
periods then ended, in accordance with generally accepted accounting principles, consistently
applied, and (ii) complied, or with respect to those not yet filed, will comply, as to form in all
material respects with the published rules and regulations of the Commission with respect thereto
in effect at the time such SEC Filings were or are filed, except in either event in the case of
quarterly financial statements, for normal audit adjustments. Notwithstanding anything in this
Section 7.1(h) to the contrary, to the extent such financial statements relate to the Property
Owners, the Operating Properties or the operations of FCRC, the representations and warranties
contained, in this Section 7.1(h) are limited to the knowledge of Forest City.



               (i) RMS Limited Partnership. RMS Limited Partnership currently controls the voting of
74.6% of the outstanding Class B Common Stock of FCEI. FCEI is not party to any voting trust,
shareholders agreement or similar arrangement governing the voting of either Class A Common Stock
or Class B Common Stock of FCEI.



               (j) Redemption of FCEI Stock. FCEI is not party to any material commitment or
obligation to redeem or otherwise acquire any Class A Common Stock or Class B Common Stock of FCEI.



               (k) Sarbanes-Oxley and NYSE Rules. FCEI is in substantial compliance with the
provisions of the Sarbanes-Oxley Act of 2002 and the listing and corporate governance rules of the
NYSE.



44









 





               (l) Antitakeover. FCEI has not adopted any shareholder rights plan or other similar
plan. No action by the Board of Directors or shareholders of FCEI is required in order to exempt
the transactions contemplated by this Agreement, the Voting Agreement, the Master III Operating
Agreement or any other document contemplated hereunder to be executed by Forest City from Chapter
1704 of the Ohio Revised Code, Section 1701.831 of the Ohio General Corporation Law or any other
antitakeover statute or similar statute that is applicable to Forest City, including, without
limitation, any “moratorium,” “control share,” “fair price,” “affiliate transaction” or “business
combination” laws and regulations or FCEI’s Articles of Incorporation or Bylaws.



               (m) Form S-3 Eligible. FCEI is eligible to file a Form S-3 registration statement
under the Securities Act, as contemplated by the Registration Rights Agreement.



               (n) Fairness Opinion. The Special Committee has received an opinion from Greenhill &
Co., its financial advisor (“Greenhill”), stating that the consideration paid by FCEI in connection
with the transactions contemplated by this Agreement is fair to FCEI from a financial point of
view.



               (o) Brokers. Except for fees and commissions owed to Greenhill and that will be paid
by FCEI, no broker, investment banker, financial advisor or other Person is entitled to any
broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or on behalf of FCEI or
any of the FCE Entities.



               (p) Private Offering. Each of the FCE Entities acknowledges that:




               (i) The Class B Common Units will not be registered under the Securities Act
and will be issued in reliance on an exemption from registration under Section 4(2) and
Regulation D of the Securities Act or other applicable exemptions. The Class B Common Units
cannot be resold without registration, or an exemption from registration, under the
Securities Act.




               (ii) The Class B Common Units will be acquired for investment purposes only
and not with a view to the resale or distribution in violation of the Securities Act. Each
of the FCE Entities is an “accredited investor” (as defined in Rule 501 of Regulation D of
the Securities Act). Each of the FCE Entities has the requisite knowledge and experience in
tax, financial and business matters and financial resources such that it is capable of
evaluating the merits and risks of acquiring the Class B Common Units and bearing all risks
associated with an investment in the Class B Common Units for an indefinite period of time,
including the complete loss of its investment in the Class B Common Units.




               (iii) None of the FCE Entities nor any person acting on their behalf has
taken, or will prior to the Principal Closing Date, take any action that could reasonably be
expected to subject the Class B Common Units issued on such Closing Date to the
registration requirements of Section 5 of the Securities Act.



45









 





               (q) Jointly Owned Entities. To the knowledge of Forest City, no affiliate of FCEI
(including any FCE Entity), as partner or member of any entity jointly owned with any of the BCR
Entities (including, without limitation, any Service Company or Property Owner), is in breach of,
or default under, the organizational documents of such jointly owned entity.



               (r) Forest City’s Knowledge. As used in this Agreement, the words “to the knowledge
of Forest City” and other words of similar tenor mean the actual knowledge of the individuals
listed on Schedule 7.1(r), without any further duty of inquiry.



          7.2 Representations and Warranties of BCR Entities. In order to induce Forest City to
carry out the transactions contemplated by this Agreement, as of the date of this Agreement, the
BCR Entities represent and warrant to and agree with Forest City as follows:




               (a) Organization, Good Standing and Authority of BCR Entities. Schedule 7.2(a) sets
forth a complete and correct list reflecting the full legal name, type of legal entity and the
jurisdiction in which each of the BCR Entities is organized. Each of the BCR Entities is duly
organized, validly existing and in good standing under the laws of the jurisdiction indicated with
respect to it on Schedule 7.2(a). Each of the BCR Entities is duly qualified to do business in all
jurisdictions where such qualification is necessary to carry on its business as now conducted,
except where failure to do so would not result in a BCR Material Adverse Effect. Each of the BCR
Entities has all necessary power to execute and deliver, and perform its obligations under, this
Agreement and all documents contemplated hereunder to be executed by it. “BCR Material Adverse
Effect” means any event occuring or condition existing on or before the applicable Closing Date or
Stabilization Closing Date that (i) has had, or is reasonably likely to have, a material adverse
effect on the business, operations or financial condition of the Service Companies, the Property
Owners, Development Property Owners, the Properties, the Nets, Atlantic Yards, Bloomfield or
Metrotech Associates, whether before or after the applicable Closing Date or Stabilization Closing
Date (exclusive of any rights of any Outside Investors in or to any of the foregoing), taken as a
whole, assuming, however, with respect to the business, operations or financial condition of such
entities or assets after the applicable Closing Date or Stabilization Closing Date, that the
operations of such entities or assets from and after the applicable Closing Date or Stabilization
Closing Date are identical in all material respects to the operations of such entities or assets as
of the date hereof, or (ii) materially delays or hinders, or is reasonably likely materially to
delay or hinder, the completion of the transactions contemplated by this Agreement.



               (b) Authorization and Binding Effect. This Agreement has been, and all documents
contemplated hereunder to be executed by the BCR Entities when executed and delivered will be, duly
authorized by all requisite action on the part of the BCR Entities. This Agreement and each such
document is, or upon execution and delivery will be, the valid and legally binding obligation of
the BCR Entities, enforceable in accordance with its respective terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights generally and to
general principles of equity (including concepts of materiality, reasonableness, good faith
and fair dealing), regardless of whether considered in a proceeding in equity or at law.



46









 





               (c) No Conflicts. Neither the execution and delivery of this Agreement or any
documents contemplated hereunder to be executed by any of the BCR Entities, nor the performance by
the BCR Entities of any of their obligations hereunder or thereunder, including the contribution of
the BCR Contributed Interests and the transfer of the BCR Sold Interests by the BCR Entities, will
(i) violate any law or regulation of any Governmental Authority that is applicable to any of the
BCR Entities, BCR Interests, Service Companies, Property Owners or Operating Properties, (ii)
violate any order or decree of any court, arbitrator or other Governmental Authority against or
binding upon any of the BCR Entities or any of the Service Companies, Property Owners or Operating
Properties; (iii) violate any provision of the organizational documents of any of the BCR Entities,
Service Companies, Property Owners or any other entity that is jointly owned by the BCR Entities
and any of the FCE Entities, (iv) require any of the BCR Entities or Service Companies to obtain
any consent, approval or action of, or make any filing with or give any notice to, any Governmental
Authority, except for those consents required to be given by any Governmental Authority in its
capacity as ground lessor, tenant or lender in connection with the transactions contemplated by
this Agreement, (v) conflict with or result in a breach of, or constitute a default or accelerate
any right under, any agreement or instrument to which any of the BCR Entities or Service Companies
is a party or by which any of the BCR Entities, BCR Interests, or Service Companies are bound, or
(vi) result in, or require the creation or imposition of, any lien upon or with respect to any of
the BCR Interests, Service Companies, Property Owners, or Operating Properties, except in the case
of clauses (i), (ii), (iv) and (v) above for such violations, consents, approvals, notices,
conflicts, breaches or defaults as would not result in a BCR Material Adverse Effect. Schedule
7.2(c) sets forth (x) each third-party consent that will be sought by the BCR Entities in
connection with the transactions contemplated by this Agreement and (y) certain third-party consent
that Forest City and the BCR Entities agree are not required in connection with the transactions
contemplated by this Agreement. To the knowledge of the BCR Entities, Schedule 7.2(c) identifies
all of the consents under agreements effective as of the date hereof that are required as a result
of the transactions contemplated by this Agreement, except that the BCR Entities make no
representation or warranty regarding the third-party consents referred to in clause (y) of the
preceding sentence.



               (d) BCR Transferred Interests. The organizational charts included as part of Schedule
P-3B (Property Owners) and Schedule P-3E (Service Company Transfers) are true and correct to the
extent they reflect the direct or indirect ownership by BCR, the BCR Individuals or any of the BCR
Entities in the Operating Properties and the Service Companies. The BCR Transferred Interests have
been duly authorized and validly issued in accordance with the organizational documents of the
issuers thereof and applicable law. Immediately preceding the Principal Closing, the transferors
of the BCR Transferred Interests will own the BCR Transferred Interests to be transferred in such
Closing free and clear of all rights, liens, claims and encumbrances other than claims or
encumbrances arising pursuant to the organizational documents of the relevant issuer of such BCR
Transferred Interests and claims arising pursuant to this Agreement, and subject to restrictions on
transfer under federal and state securities laws. None of the BCR Entities has pledged its BCR
Transferred Interests or consented to the pledge or encumbrance of any of the BCR Transferred
Interests.



               (e) Adverse Claims, Litigation and Proceedings. There are no material actions,
claims, suits, investigations, arbitrations or other proceedings pending against any of the



47









 







BCR
Entities or, to the knowledge of the BCR Entities, any of the Service Companies, Property Owners or
Operating Properties other than those (i) described in the letter attached hereto as Schedule
7.2(o) or (ii) as have been disclosed by FCEI to employees of the BCR Entities in periodic
litigation summaries. To the knowledge of the BCR Entities, no material actions, claims, suits,
investigations, arbitrations or other proceedings are threatened against any of the BCR Entities,
Service Companies, Property Owners or Operating Properties other than those, if any, (x) described
in the letter attached hereto as Schedule 7.2(o) or (y) as have been disclosed by FCEI to employees
of the BCR Entities in periodic litigation summaries.



               (f) Compliance with Laws. None of the BCR Entities and, to the knowledge of the BCR
Entities, none of the Service Companies or Property Owners is, in any material respect, in
violation of any law, regulation, order or decree of any Governmental Authority or any court order,
decision, ruling, order or arbitration award other than non-material departmental violations
affecting the Operating Properties or Property Owners. Except as set forth on Schedule 7.2(f), the
BCR Entities have not received, and to the knowledge of the BCR Entities none of the Service
Companies or Property Owners has received, notice of any such material violation or claimed
material violation, or of any pending regulatory proceeding, action or investigation with respect
thereto, or of any threat by any Governmental Authority to take regulatory action against any of
the BCR Entities, Service Companies or Operating Properties by reason of any such material
violation or claimed material violation.



               (g) Taxes.




               (i) All tax returns required to be filed on or before the date hereof
(including any valid extensions of time to file such tax returns) with respect to each
Operating Property and by or on behalf of each Service Company, Property Owner, and each
other entity relating to an Operating Property or Service Company which is being directly or
indirectly transferred to Master III or a wholly-owned subsidiary thereof or of FCEI
pursuant to this Agreement (other than tax returns filed by Forest City on behalf of such
Service Company or Property Owner) have been timely filed in accordance with all applicable
laws. Except as set forth on Schedule 7.2(g), no action, suit or proceeding is pending
against any of the Service Companies, Property Owners or other such entities with respect to
any such tax returns, nor has any claim for additional taxes been asserted by any Government
Authority with respect to any such tax returns. All taxes due with respect to tax returns
have been paid, unless such taxes are being contested in good faith and adequate reserves
for the payment of such taxes have been established by the applicable Service Company,
Property Owner or other such entity.




               (ii) As of the date hereof, and except as set forth on Schedule 7.2(g), there
is no pending or, to the knowledge of the BCR Entities, threatened in writing tax audit of
any such tax return.



               (h) Permits. To the knowledge of the BCR Entities, each of the Service Companies and
Property Owners has all material permits that are necessary, in the case of the Service Companies,
for the performance of all services it performs, and, in the case of the
Property Owners, for the ownership, use, operation and management of its Properties (other
than any permits required by any tenants in connection with their operations). The BCR Entities
have



48









 







not received, and, to the knowledge of the BCR Entities, none of the Service Companies or
Property Owners has received, written notice of any material violation or claimed material
violation of any such permit, or of any pending regulatory proceeding, action or investigation with
respect thereto, or of any threat by any Governmental Authority to revoke any such material permit
or to take regulatory action against any of the Service Companies, BCR Entities, Property Owners or
any of the Operating Properties by reason of any such material violation or claimed material
violation.



               (i) Property Owners and Service Companies. To the knowledge of the BCR Entities, (i)
none of the Service Companies or Property Owners is in breach of, or default under, the
organizational documents of such Service Company or Property Owner, and (ii) no BCR Entity, as
partner or member of any Service Company or Property Owner, is in breach of, or default under, the
organizational documents of such Service Company or Property Owner.



               (j) Ground Leases; Anchor Tenant Leases. The BCR Entities have delivered or otherwise
made available to Forest City true, correct and complete copies in all material respects of each
ground lease to which a Property Owner is a party (collectively, the “Ground Leases”) and each of
the leases with the anchor tenants listed on Schedule 7.2(j) (collectively, the “Anchor Tenant
Leases”). To the knowledge of the BCR Entities, each of the Ground Leases and the Anchor Tenant
Leases is in full force and effect. Except as set forth on Schedule 7.2(j) or with respect to any
breach or default for which Forest City has received written notice prior to the date hereof, none
of the Property Owners is in material breach of, or default under, any monetary obligation under
any of the Ground Leases or Anchor Tenant Leases, which breach or default remains uncured on the
date hereof, and, to the knowledge of the BCR Entities, none of the Property Owners, ground lessors
under Ground Leases or tenants under Anchor Tenant Leases is in material breach of, or default
under, any non-monetary obligation under any of the Ground Leases or Anchor Tenant Leases, which
breach or default remains uncured on the date hereof. Except as set forth on Schedule 7.2(j) or
with respect to any breach or default for which Forest City has received written notice prior to
the date hereof, and to the knowledge of the BCR Entities none of the Property Owners has received,
any written notice that the Property Owner is in material breach of, or default under, any of the
Ground Leases or Anchor Tenant Leases, which breach or default remains uncured on the date hereof.
For purposes of this Section 7.2(j), all Ground Lease and Anchor Tenant Lease documents that are
accessible to Forest City through FCRC’s AMT document management system have been deemed to be
“made available” to Forest City.



               (k) Leasing Commissions, Fees and Tenant Improvement Allowances. All leasing
commissions, fees and tenant improvement allowances unconditionally payable (other than for the
mere passage of time) by the Property Owners with respect to the current unexpired leases
applicable to each Operating Property have been paid in full except as set forth on Schedule
7.2(k).



               (l) Operating Contracts. The BCR Entities have delivered or otherwise made available
to Forest City complete and correct copies in all material respects of each management, service,
operating, listing, brokerage, supply and maintenance agreement, equipment lease or
other contract or agreement between any Service Company, Property Owner, or any of their
respective affiliates, and any other party relating to the operation of the Operating Properties as



49









 







of the date hereof that provides for the payment or receipt of consideration in excess of $500,000
in any twelve (12) month period, has a term that extends for more than one year after the date of
this Agreement and is cancelable without penalty only on 365 days’ or greater advance notice
(“Operating Contracts”). To the knowledge of the BCR Entities, each of the Operating Contracts is
in full force and effect. Except as set forth on Schedule 7.2(l) or with respect to any breach or
default for which Forest City has received written notice prior to the date hereof, none of the
Service Companies, Property Owners or other parties thereto is in material breach of, or default
under, any monetary obligation under any of the Operating Contracts which breach or default remains
uncured on the date hereof, and, to the knowledge of the BCR Entities, none of the Service
Companies, Property Owners or other parties thereto is in material breach of, or default under, any
non-monetary obligation under any of the Operating Contracts which breach or default remains
uncured on the date hereof. Except as set forth on Schedule 7.2(l) or with respect to any breach
or default for which Forest City has received written notice prior to the date hereof, none of the
BCR Entities has received, and to the knowledge of the BCR Entities none of the Service Companies
or Property Owners has received, any written notice that such Service Company or Property Owner is
in material breach of, or default under, any of the Operating Contract, which breach or default
remains uncured on the date hereof. For purposes of this Section 7.2(l), all Operating Contract
documents that are accessible to Forest City through FCRC’s AMT document management system have
been deemed to be “made available” to Forest City.



               (m) Continuing Loans. The BCR Entities have delivered or otherwise made available to
Forest City complete and correct copies in all material respects of all loan agreements and other
documents relating to the Continuing Loans, as amended to date (the “Loan Documents”). The
applicable Property Owners are current in all payments of principal and interest due under each
Continuing Loan through the most recent scheduled payment date. To the knowledge of the BCR
Entities, each of the Loan Documents is in full force and effect. To the knowledge of the BCR
Entities and except with respect to any breach or default for which Forest City has received
written notice prior to the date hereof, none of the Property Owners or lenders is in material
breach of, or default under, any of the Loan Documents, which breach or default remains uncured on
the date hereof. Except as set forth on Schedule 7.2(m) or with respect to any breach or default
for which Forest City has received written notice prior to the date hereof, none of the BCR
Entities has received, and to the knowledge of the BCR Entities none of the Property Owners has
received, any written notice that such Property Owner is in material breach of, or default under,
any of the Loan Documents, which breach or default remains uncured on the date hereof. For
purposes of this Section 7.2(m), all Continuing Loan documents that are accessible to Forest City
through FCRC’s AMT document management system have been deemed to be “made available” to Forest
City.



               (n) Environmental Reports. Schedule 7.2(n) contains a list of all environmental and
hazardous waste reports relating to the Operating Properties that are dated after January 1, 2001
that are in the possession of the BCR Entities or the Property Owners (collectively, the
“Environmental Reports”). A true, correct and complete copy of each Environmental Report has been
delivered or made available to Forest City. Except as set forth on Schedule 7.2(n), to knowledge
of the BCR Entities, (i) as of the date
hereof there are no material violations of any applicable environmental law or regulation with
respect to the Operating Properties and (ii) none of the BCR Entities, Property Owners or Service
Companies



50









 







has received notice of any material violation of any applicable environmental laws from
any Governmental Authority with respect to the Operating Properties not otherwise identified on the
Environmental Reports, other than any notices which Forest City has independently received written
notice of prior to the date hereof.



               (o) Financial Information. To the knowledge of the BCR Entities, the information set
forth in the representation letter which is attached hereto as Schedule 7.2(o), was accurate in all
material respects as of the date thereof.



               (p) Information in Form 10-K. Schedule 7.2(p) identifies each section of the Form
10-K that contains information relevant to the Property Owners, the Development Property Owners,
the Operating Properties and the operations conducted by FCRC (the “FCRC Form 10-K Information”).
To the knowledge of the BCR Entities, at the time the Form 10-K was filed, the FCRC Form 10-K
Information did not contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.



               (q) Private Offering. Each of the BCR Entities acknowledges that:




               (i) The BCR Units will not be registered under the Securities Act and will be
issued in reliance on an exemption from registration under Section 4(2) and Regulation D of
the Securities Act or other applicable exemptions. The BCR Units, and the FCEI Stock
issuable upon exchange of the BCR Units, cannot be resold without registration, or an
exemption from registration, under the Securities Act.




               (ii) The BCR Units, and the FCEI Stock issuable upon exchange of the BCR
Units, will not be acquired with a view to the resale or distribution in violation of the
Securities Act. Each of the BCR Entities is an “accredited investor” (as defined in Rule
501 of Regulation D of the Securities Act). Each of the BCR Entities has the requisite
knowledge and experience in tax, financial and business matters and financial resources such
that it is capable of evaluating the merits and risks of acquiring the BCR Units, and the
FCEI Stock issuable upon exchange of the BCR Units, and bearing all risks associated with an
investment in the BCR Units, and the FCEI Stock issuable upon exchange of the BCR Units, for
an indefinite period of time, including the complete loss of its investment in the BCR
Units.




               (iii) None of the BCR Entities nor any person acting on their behalf has
taken, or will prior to the Principal Closing Date take, any action that could reasonably be
expected to subject the BCR Units issued on such Closing Date, or the issuance of FCEI Stock
upon exchange of any BCR Units, to the registration requirements of Section 5 of the
Securities Act, except as provided in the Registration Rights Agreement.



               (r) Queenswood Apartments, Worth Street. Notwithstanding any other provisions of this
Agreement, all representations and warranties made in Section 7.2(c) and
Sections 7.2(e) through 7.2(p) with respect to the Properties referred to as Queenswood
Apartments and Worth Street and the related Property Owners of such Operating Properties are
subject to the limitation that the BCR Entities have no reason to believe that such representations



51









 







and warranties are not true and correct as of the date hereof, notwithstanding the absence or
presence of any qualifier limiting such representation to the knowledge of the representing party.



               (s) Brokers. No broker, investment banker, financial advisor or other Person is
entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon arrangements made by or
on behalf of BCR or any of the BCR Entities.



               (t) BCR Entities’ Knowledge. As used in this Agreement, the words “to the knowledge
of the BCR Entities” and other words of similar tenor mean the actual knowledge of the designees of
the BCR Entities listed on Schedule 7.2(t), without any further duty of inquiry.



          7.3 Forest City’s Representations and Warranties with Respect to Development
Properties. Notwithstanding anything in this Agreement to the contrary, the representations
and warranties contained in Section 7.1 will be made by Forest City in connection with each
Development Property Closing on and as of the applicable Stabilization Closing Date, except that,
to the extent that the representations and warranties relate to Operating Properties, Property
Owners, Interests in Property Owners and other jointly owned entities, such representations and
warranties will be deemed to relate to the Development Properties, Development Property Owners,
Interests in the Development Property Owners and other jointly owned entities through which
Development Properties are owned that relate to the Development Property that is the subject of
applicable Development Property Closing.




          7.4 BCR Entities’ Representations and Warranties with Respect to Development Properties
and the Nets, Atlantic Yards, Bloomfield and Metrotech Associates.




               (a) Notwithstanding anything in this Agreement to the contrary, (i) none of the
representations and warranties contained in Section 7.2 (except for the representations and
warranties contained in Section 7.2(p)) will be made by the BCR Entities on or as of the Principal
Closing Date with respect to the Development Properties, Development Property Owners or Interests
in the Development Property Owners or other jointly owned entities through which Development
Properties are owned, and (ii) the representations and warranties contained in Section 7.2 will be
made by the BCR Entities in connection with each Development Property Closing on and as of the
applicable Stabilization Closing Date, except that (A) to the extent that the representations and
warranties relate to Operating Properties, Property Owners, Interests in Property Owners and other
jointly owned entities, such representations and warranties will be deemed to relate to the
Development Properties, Development Property Owners, Interests in the Development Property Owners
and other jointly owned entities through which Development Properties are owned that relate to the
Development Property that is the subject of applicable Development Property Closing and (B) all
such representations and warranties that are deemed to relate to the Development Properties,
Development Property Owners, Interests in the Development Property Owners and other jointly owned
entities through which Development Properties are owned will be limited to the knowledge of the BCR
Entities, and the BCR Entities will have no liability or other responsibility for a breach of any
such representations and
warranties to the extent that, at or prior to the Stabilization Closing Date, the representations
and warranties were incorrect to the knowledge of Forest City.



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               (b) None of the representations and warranties of the BCR Entities contained in Section 7.2
apply to the transactions contemplated by this Agreement with respect to the Nets, Atlantic Yards,
Bloomfield or Metrotech Associates, except that the representations and warranties contained in
Sections 7.2(a) (Organization, Good Standing and Authority), 7.2(b) (Authorization and Binding
Effect), 7.2(c) (No Conflicts) and 7.2(d) (BCR Transferred Interests) will be made by the BCR
Entities transferring the BCR Sold Interests with respect to the Nets, Atlantic Yards, Bloomfield
and Metrotech Associates on and as of the relevant Closing Date for the Closing at which the BCR
Sold Interests in the Nets, Atlantic Yards, Bloomfield or Metrotech Associates are transferred to
Forest City pursuant to this Agreement.



          7.5 Notice of Breach. If, after the date of this Agreement and prior to the Principal
Closing or the Deferred Closing, either Forest City or the BCR Entities becomes aware that any of
their respective representations or warranties contained in this Agreement that are required to be
made or remade at and as of the applicable Closing are untrue, inaccurate or incorrect in any
material respect, or will be untrue, inaccurate or incorrect if required to be remade at such
Closing, Forest City or the BCR Representative will provide written notice of the potential breach
of such representation or warranty to the other party promptly after obtaining such knowledge.
Except as expressly set forth herein to the contrary, any such notice will not constitute a waiver
of the breach, whether or not the Closing occurs.




ARTICLE VIII




INDEMNIFICATION




          8.1 Survival Period. The representations, warranties and covenants made or to be made
by Forest City and the BCR Entities in this Agreement, and in each of the documents contemplated
hereunder to be executed by them, will survive the Principal Closing, each Deferred Closing and
each Development Property Closing, although any claim for indemnification with respect to the
breach of any such representations, warranties or covenants must be brought within the following
periods:




               (a) With respect to any covenants, without limitation as to time, except as prescribed by the
applicable statute of limitations.



               (b) With respect to the representations and warranties in the next to last sentence of Section
7.1(a) (Organization, Good Standing and Authority), (Section 7.1(b) (Authorization and Binding
Effect), Section 7.1(d) (FCE Contributed Interests), Section 7.1(e) (FCEI Stock), Section 7.1(f)
(Private Offering), the next to last sentence in Section 7.2(a) (Organization, Good Standing and
Authority of BCR Entities), Section 7.2(b) (Authorization and Binding Effect), Section 7.2(d) (BCR
Contributed Interests) and Section 7.2(q) (Private Offering) (and as such representations are
modified by Section 7.3 and 7.4 with respect to any Development Property Closing, the Nets,
Atlantic Yards, Bloomfield or Metrotech Associates), without limitation as to time, except as
prescribed by the applicable statute of limitations.



               (c) With respect to all representations and warranties other than those specified in Section
8.1(b), within a period of twelve (12) months following the applicable Closing Date or
Stabilization Closing Date.



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Any claim for indemnification for which written notice is given within the applicable period
described above will continue to survive until it is resolved, provided litigation is, or
adjudication proceedings are, instituted within one hundred twenty (120) days following receipt of
a Claims Notice delivered in accordance with Section 8.4.




          8.2 Obligation of Forest City to Indemnify. Subject to Sections 8.1 and 8.6, FCEI and
the FCE Entities will jointly and severally indemnify, defend and hold harmless each of the BCR
Transferor Parties from and against all costs, damages, liabilities and expenses (including,
without limitation, reasonable attorneys’ fees and disbursements but excluding consequential and
other indirect damages) (“Losses”) imposed upon, incurred by (whether by way of judgment, award,
decree, settlement payment or otherwise) or suffered by any of them by reason of (a) any breach or
inaccuracy of any representation or warranty of Forest City contained in this Agreement or in any
other document contemplated herein to be executed by FCEI or any of the FCE Entities, (b) any
breach of any covenant of Forest City, Master III or the Master III Entities contained herein or
any other document contemplated herein to be executed by FCEI, Master III, the Master III Entities
or any of the FCE Entities or (c) the conduct of the business of the Service Companies, the
Property Owners, Development Property Owners and the Properties after the applicable Closing Date
or Stabilization Closing Date (as applicable), except (i) to the extent the Losses are
caused by BCR or the BCR Entities, (ii) for Losses arising out of any lawsuit filed by BCR, the BCR
Entities or the BCR Individuals in connection with this Agreement, (iii) for Losses attributable to
the recognition of any taxable income or gain, or in tax terminations under Section 708(b)(1)(B) of
the Code, or other adverse tax consequences resulting from the transactions contemplated by this
Agreement and (iv) for Losses incurred by directors and officers of FCEI and its subsidiaries that
are governed by the indemnification provisions of FCEI’s Articles of Incorporation. Except as set
forth in Section 9.3(b), the BCR Entities acknowledge that the indemnification provisions in this
Section 8.2 are the sole and exclusive remedies available to them with respect to any and all
claims arising from any breach by FCEI or any of the FCE Entities of any representation, warranty
or covenant contained in this Agreement or in any other document contemplated herein to be executed
by FCEI or any of the FCE Entities.




          8.3 Obligation of BCR Entities to Indemnify. Subject to Sections 8.1 and 8.5, the BCR
Entities will jointly and severally indemnify, defend and hold harmless FCEI and the FCE Entities
(the “Forest City Indemnified Parties”) from and against all Losses imposed upon, incurred by
(whether by way of judgment, award, decree, settlement payment or otherwise) or suffered by the
Forest City Indemnified Parties by reason of any (a) breach or inaccuracy of any representation or
warranty of the BCR Entities contained in this Agreement or in any other document contemplated
herein to be executed by any of the BCR Entities or (b) breach of any covenant of the BCR Entities
contained herein or any other document contemplated herein to be executed by any of the BCR
Entities. Except as set forth in Section 9.3(a), Forest City acknowledges that the indemnification
provisions in this Section 8.3 are the sole and exclusive remedies available to it with respect to
any and all claims arising from any breach by any of the BCR Entities of any representation,
warranty or covenant contained in
this Agreement or in any other document contemplated herein to be executed by any of the BCR
Entities or BCR Individuals. In no event will the BCR Individuals have any personal liability in
connection with the transactions contemplated by this Agreement. Subject to the limitations set
forth in Section 8.5 below, the BCR Entities and the BCR Individuals acknowledge that the BCR
Entities will be

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responsible for (i) any breach of any representation or warranty relating to any
Interests being contributed or sold by any BCR Individual pursuant to this Agreement and (ii) any
breach of any covenant by any of the BCR Individuals or the failure of any of the BCR Individuals
to perform any their respective obligations in connection with the transactions contemplated by
this Agreement.




          8.4 Notice and Resolution of Claims.




               (a) As soon as is reasonably practicable after a party entitled to indemnification pursuant to
Section 8.2 or 8.3 becomes aware of any claim that it has under Section 8.2 or 8.3, as applicable,
that may result in a Loss (an “Indemnification Claim”), such party (the “Indemnified Party”) will
give notice thereof (a “Claims Notice”) to the party from which indemnity is sought (the
“Indemnifying Party”). A Claims Notice will describe the Indemnification Claim in reasonable
detail, and will indicate the amount (estimated, if necessary and to the extent feasible) of the
Loss that has been or may be suffered by the Indemnified Party. No delay in or failure to give a
Claims Notice by the Indemnified Party to the Indemnifying Party pursuant to this Section 8.4(a)
will adversely affect any of the other rights or remedies which the Indemnified Party has under
this Agreement, or alter or relieve the Indemnifying Party of its obligation to indemnify the
Indemnified Party, to the extent that such delay or failure has not materially prejudiced the
Indemnifying Party.



               (b) If an Indemnification Claim pursuant to Section 8.2 or 8.3 arises from any action that
involves a claim involving a third party (a “Liability Claim”), the Indemnifying Party will have
the right, exercisable by written notice to the Indemnified Party within thirty (30) days of
receipt of the Claims Notice for such Liability Claim, to assume and conduct the defense of such
Liability Claim in accordance with the limits set forth in this Agreement with counsel selected by
the Indemnifying Party and reasonably acceptable to the Indemnified Party; provided that (i) the
defense of such Liability Claim by the Indemnifying Party will not, in the reasonable judgment of
the Indemnified Party, have a material adverse effect on the Indemnified Party; (ii) the
Indemnifying Party has sufficient financial resources, in the reasonable judgment of the
Indemnified Party, to satisfy the amount of any adverse monetary judgment that is reasonably likely
to result from such Liability Claims; (iii) such Liability Claim solely seeks (and continues to
seek) monetary damages; and (iv) the Indemnifying Party expressly agrees in writing that as between
the Indemnifying Party and the Indemnified Party, the Indemnifying Party may only satisfy and
discharge such Liability Claim in accordance with terms of this Agreement (the conditions set forth
in clauses (i) through (iv) are, collectively, the “Litigation Conditions”). In the event that the
Indemnified Party believes, after consulting with legal counsel, that use of counsel of the
Indemnifying Party’s choice with respect to any Liability Claim would give rise to a conflict of
interest, the Indemnified Party will retain the right to employ its own counsel and participate in
the defense of such Liability Claim, and the Indemnifying Party will be liable for all reasonable
costs or expenses paid or incurred in connection with the retention by the Indemnified Party of its
own counsel. If the Indemnifying Party does not assume the defense of such Liability Claim in
accordance with this Section 8.4(b), the Indemnified Party may continue to defend the Liability
Claim. If the Indemnifying Party has assumed the defense of a Liability Claim as provided in this
Section 8.4(b), the Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof; except that if any of the
Litigation Conditions ceases to be met or the Indemnifying Party fails to



55









 







take reasonable steps
necessary to defend diligently such Liability Claim, the Indemnified Party may assume its own
defense, and the Indemnifying Party will be liable for all reasonable costs or expenses paid or
incurred in connection therewith. The Indemnifying Party or the Indemnified Party, as the case may
be, will have the right to participate in (but not control), at its own expense, the defense of any
Liability Claim which the other is defending as provided in this Agreement. The Indemnifying
Party, if it has assumed the defense of any Liability Claim as provided in this Agreement, will
not, without the prior written consent of the Indemnified Party, consent to a settlement of, or the
entry of any judgment arising from, any such Liability Claim which (i) does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party a
complete release from all liability in respect of such Liability Claim, or (ii) grants any
injunctive or equitable relief, or (iii) may reasonably be expected to have a material adverse
effect on the affected business of the Indemnified Party. The Indemnified Party will not settle
any Liability Claim, without the prior written consent of the Indemnifying Party, which consent
will not be unreasonably withheld.



          8.5 Limitations on Forest City’s Recovery.




               (a) With respect to a breach of the representations and warranties by the BCR Entities in
Section 7.2(c) (to the extent they relate to the Property Owners, Service Companies or Properties)
and in Sections 7.2(e) through (q) relating to any specific Property Owner, Service Company or
Property (and as such representations and warranties are modified by Section 7.4 with respect to
any Development Property), the amount of the Losses for which Forest City is entitled to
indemnification will be limited to the product of (i) the aggregate BCR Transferred Interest
(expressed as a decimal to four (4) decimal places) as set forth in Schedules P-5B (Service Company
Transfers), P-6A (BCR Contributed Interests in Operating Properties), P-6B (BCR Sold Interests in
Operating Properties), P-7A (BCR Contributed Interests in Development Properties) and P-7C (BCR
Sold Interests in Development Properties) related to the relevant Property Owner, Development
Property Owner, Property or Service Company that was transferred pursuant to Section 1.1 and (ii)
the aggregate amount of the Losses attributable to the relevant Property Owner, Development
Property Owner, Property or Service Company.



               (b) The Forest City Indemnified Parties will not be entitled to any indemnification pursuant
to Section 8.3(a) for breach or inaccuracy of any representations or warranties (other than the
representations and warranties referred to in Section 8.5(d)) unless: (i) with respect to claims
for breach or inaccuracy of any representations or warranties relating to Operating Properties and
Service Companies, the aggregate amount of all valid claims for indemnification of the Forest City
Indemnified Parties for breach or inaccuracy of such representations and warranties exceeds One
Million Dollars ($1,000,000.00); or (ii) with respect to claims for breach or inaccuracy of any
representation or warranty relating to a Development Property, the aggregate amount of all valid
claims for indemnification of the Forest City Indemnified Parties for breach or inaccuracy of
representations and warranties relating to such
Development Property exceeds an amount equal to the product of (A) a fraction, the numerator
of which is the sum of the product of the Stabilized Value of such Development Property (determined
in accordance with Section 2.3 hereof) multiplied by each BCR Transferred Interest (expressed as a
decimal to four (4) decimal places) applicable to such Development Property as set forth on
Schedule P-7A (BCR Contributed Interests in Development Properties) and P-7C (BCR Sold Interests in
Development Properties), and the denominator of which is Two Hundred



56









 







Thirty Two Million Seven
Hundred Thirteen Thousand Five Hundred and One Dollars ($232,713,501) and (B) One Million Dollars
($1,000,000.00). For purposes of determining whether the applicable threshold for indemnification
has been met, all qualifications in specific representations and warranties as to materiality will
be disregarded. Once the aggregate amount of all valid claims for indemnification of the Forest
City Indemnified Parties for breach or inaccuracy of such representations and warranties exceeds
the applicable threshold, the Forest City Indemnified Parties will be entitled to indemnification
only for amounts in excess of the applicable threshold amount. For the avoidance of doubt,
determining whether the applicable threshold for indemnification has been met with respect to each
Development Property in Section 8.5(b)(ii) is independent of the amount of claims for breach or
inaccuracy of any representation or warranty with respect to the Operating Properties, Service
Companies or any other Development Properties. In no event will (y) any claims for breach or
inaccuracy of any representations or warranties relating to an Operating Property, Service Company
or any other Development Property be applied towards determining whether the applicable threshold
for indemnification has been met with respect to any claims for breach or inaccuracy of any
representation or warranty with respect to any Development Property and (z) any claim for breach or
inaccuracy of any representation or warranty relating to a Development Property be applied towards
determining whether the applicable threshold for indemnification has been met with respect to any
claims for a breach or inaccuracy of any representations or warranties with respect to the
Operating Properties, Service Companies or any other Development Properties.



               (c) In no event will the BCR Entities be liable under Section 8.3(a) for breach or inaccuracy
of any representations or warranties (other than the representations and warranties referred to in
Section 8.5(d)): (i) with respect to claims for breach or inaccuracy of representations or
warranties relating to Operating Properties and Service Companies, an amount in excess of Ten
Million Dollars ($10,000,000.00) in the aggregate for all such claims for indemnification of the
Forest City Indemnified Parties; or (ii) with respect to claims for breach or inaccuracy of any
representation or warranty relating to a Development Property, an amount in excess of the amount
equal to the product of (A) a fraction, the numerator of which is the sum of the product of the
Stabilized Value of such Development Property (determined in accordance with Section 2.3 hereof)
multiplied by each BCR Transferred Interest (expressed as a decimal to four (4) decimal places)
applicable to such Development Property as set forth on Schedule P-7A (BCR Contributed Interests in
Development Properties) and P7-C (BCR Sold Interests in Development Properties), and the
denominator of which is Two Hundred Thirty Two Million Seven Hundred Thirteen Thousand Five Hundred
and One Dollars ($232,713,501) and (B) Ten Million Dollars ($10,000,000.00). For the avoidance of
doubt, the maximum liability for breach or inaccuracy of any representation or warranty with
respect to each Development Property in Section 8.5(c)(ii) is independent of the maximum liability
for breach or inaccuracy of any representations or warranties with respect to the Operating
Properties, Service Companies and any other Development Properties. In no event will (y) any
claims for breach or inaccuracy of any representations or warranties relating to an Operating
Property, Service Company or any
other Development Property be subject to, or be applied towards, the maximum liability for a
breach or inaccuracy of any representation or warranty with respect to each Development Property
and (z) any claim for breach or inaccuracy of any representation or warranty relating to a
Development Property be subject to, or be applied towards, the maximum liability for a breach or
inaccuracy of any representations or warranties with respect to the Operating Properties, Service
Companies or any other Development Properties.



57









 





               (d) The limitations in Section 8.5(b) and 8.5(c) do not apply to claims by the Forest City
Indemnified Parties (i) for indemnification under Section 8.3(b) for breach of any covenant of the
BCR Entities contained herein or any other document contemplated herein to be executed by any of
the BCR Entities or (ii) for indemnification under Section 8.3(a) for beach of any of the
representations and warranties contained in Section 7.2(a) (Organization, Good Standing and
Authority of BCR Entities), 7.2(b) (Authorization and Binding Effect), 7.2(d) (BCR Interests) or
7.2(q) (Private Offering) (and as such representations and warranties are modified by Section 7.4
with respect to any Development Property, the Nets, Atlantic Yards, Bloomfield or Metrotech
Associates).



               (e) Claims for indemnification pursuant to Section 8.3 will be reduced by the amount of any
insurance proceeds actually received by the Forest City Indemnified Parties with respect to such
claim, less the present value of any premium increase that results from the assertion of the
insurance claim resulting in the receipt of such insurance proceeds.



               (f) The amount of any satisfied required capital contributions pursuant to Section 2.7 of the
Master III Operating Agreement or the value of any eliminated Units resulting from a failure to
satisfy any such required capital contribution, as such value is determined pursuant to the Master
III Operating Agreement, will on a dollar-for-dollar basis be included in any determinations
concerning the limitations on Forest City’s recovery set forth in this Section 8.5 and the
satisfaction of any valid indemnification claim brought by any of the Forest City Indemnified
Parties pursuant to this Article VIII.



          8.6 Limitation on BCR Entities’ Recovery.




               (a) The BCR Transferor Parties will not be entitled to any indemnification pursuant to Section
8.2(a) for breach or inaccuracy of any representations or warranties (other than the
representations and warranties referred to in Section 8.6(c)) unless: (i) with respect to claims
for breach or inaccuracy of any representations or warranties relating to Operating Properties and
Services Companies, the aggregate amount of all valid claims for indemnification of the BCR
Contributor Parties for breach or inaccuracy of such representations and warranties exceeds One
Million Dollars ($1,000,000.00); or (ii) with respect to claims for breach or inaccuracy of any
representation or warranty relating to a Development Property, the aggregate amount of all valid
claims for indemnification of the BCR Transferor Parties for breach or inaccuracy of
representations and warranties relating to such Development Property exceeds an amount equal to the
product of (A) a fraction, the numerator of which is the sum of the product of the Stabilized Value
of such Development Property (determined in accordance with Section 2.3 hereof) multiplied by each
FCE Contributed Interest (expressed as a decimal to four (4) decimal places) applicable to such
Development Property as set forth on Schedule P-7B (FCE Contributed Interests in Development
Properties), and the denominator of which is Three
Hundred Forty Eight Million Two Hundred Eighty Five Thousand Four Hundred and Four Dollars
($348,285,404) and (B) One Million Dollars ($1,000,000.00). For purposes of determining whether
the applicable threshold for indemnification has been met, all qualifications in specific
representations and warranties as to materiality will be disregarded. Once the aggregate amount of
all valid claims for indemnification of the BCR Transferor Parties for breach or inaccuracy of such
representations and warranties exceeds the applicable threshold, the BCR Transferor Parties will be
entitled to indemnification only for amounts in excess of the



58









 







applicable threshold amount. For the
avoidance of doubt, determining whether the applicable threshold for indemnification has been met
with respect to each Development Property in Section 8.6(a)(ii) is independent of the amount of
claims for breach or inaccuracy of any representation or warranty with respect to the Operating
Properties, Service Companies and any other Development Properties. In no event will (y) any
claims for breach or inaccuracy of any representations or warranties relating to an Operating
Property, Service Company or any other Development Property be applied towards determining whether
the applicable threshold for indemnification has been met with respect to any claims for breach or
inaccuracy of any representation or warranty with respect to any Development Property and (z) any
claim for breach or inaccuracy of any representation or warranty relating to a Development Property
be applied towards determining whether the applicable threshold for indemnification has been met
with respect to any claims for a breach or inaccuracy of any representations or warranties with
respect to the Operating Properties, Service Companies or any other Development Properties.



               (b) In no event will Forest City be liable under Section 8.2(a) for breach or inaccuracy of
any representations or warranties (other than the representations and warranties referred to in
Section 8.6(c)): (i) with respect to claims for breach or inaccuracy of representations or
warranties relating to Operating Properties and Service Companies, an amount in excess of Ten
Million Dollars ($10,000,000.00) in the aggregate for all such claims for indemnification of the
BCR Contributor Parties; or (ii) with respect to claims for breach or inaccuracy of any
representation or warranty relating to a Development Property, an amount in excess of the amount
equal to the product of (A) a fraction, the numerator of which is the sum of the product of the
Stabilized Value of such Development Property (determined in accordance with Section 2.3 hereof)
multiplied by each FCE Contributed Interest (expressed as a decimal to four (4) decimal places)
applicable to such Development Property as set forth on Schedule P-7B (FCE Contributed Interests in
Development Properties), and the denominator of which is Three Hundred Forty Eight Million Two
Hundred Eighty Five Thousand Four Hundred and Four Dollars ($348,285,404) and (B) Ten Million
Dollars ($10,000,000.00). For the avoidance of doubt, the maximum liability for breach or
inaccuracy of any representations or warranties with respect to each Development Property in
Section 8.6(b)(ii) is independent of the maximum liability for breach or inaccuracy of any
representation or warranty with respect to the Operating Properties, Service Companies and any
other Development Properties. In no event will (y) any claim for breach or inaccuracy of any
representation or warranty relating to an Operating Property, Service Company or any other
Development Property be subject to, or be applied towards, the maximum liability for a breach or
inaccuracy of any representation or warranty with respect to each Development Property and (z) any
claim for breach or inaccuracy of any representation or warranty relating to a Development Property
be subject to, or be applied towards, the maximum liability for a breach or inaccuracy of any
representations or warranties with respect to the Operating Properties, Service Companies or any
other Development Properties.



               (c) The limitations in Section 8.6(a) and 8.6(b) do not apply to claims by the BCR Transferor
Parties (i) for indemnification under Section 8.2(b) for breach of any covenant of the BCR Entities
contained herein or any other document contemplated herein to be executed by any of the BCR
Entities or (ii) for indemnification under Section 8.2(a) for breach of any of the representations
and warranties contained in Section 7.1(a) (Organization, Good Standing and Authority of BCR
Entities), 7.1(b) (Authorization and Binding Effect), 7.1(d) (FCE Interests) or



59









 







7.1(e) (FCEI Stock)
or 7.1(f) (Private Offering) (and as such representations and warranties are modified by Section
7.3 with respect to any Development Property).



               (d) Claims for indemnification pursuant to Section 8.2 will be reduced by the amount of any
insurance proceeds actually received by the BCR Transferor Parties with respect to such claim, less
the present value of any premium increase that results from the assertion of the insurance claim
resulting in the receipt of such insurance proceeds.



ARTICLE IX




TERMINATION




          9.1 Intentionally Omitted.




          9.2 Failure to Satisfy Certain Conditions Prior to the Principal Closing.




               (a) If the conditions precedent to the obligations of Forest City set forth in Section 6.1(b)
or Sections 6.1(d) through (h) are not satisfied on or before December 15, 2006, and Forest City is
unwilling to waive the unmet conditions, then Forest City will have the right to terminate this
Agreement. In such event, none of Forest City, Master III, the Master III Entities, the BCR
Entities or the BCR Individuals will have any further obligations under this Agreement.



               (b) If the conditions precedent to the obligations of the BCR Entities and the BCR Individuals
set forth in Section 6.2(c), Sections 6.2(e) through (i) are not satisfied on or before December
15, 2006, and the BCR Entities and BCR Individuals are unwilling to waive the unmet conditions,
then the BCR Entities will have the right to terminate this Agreement. In such event, none of
Forest City, Master III, the Master III Entities, the BCR Entities or the BCR individuals will have
any further obligations under this Agreement.



               (c) Notwithstanding anything in this Section 9.2 to the contrary, in the event that the BCR
Entities have failed to (x) either satisfy the condition precedent set forth in Section 6.1(d) as a
result of the BCR Entities delivering to Forest City one or more Required Estoppel Certificates
that identify a violation, breach or default that, in the aggregate, could not reasonably be
expected to result in a valid claim of Five Million Dollars ($5,000,000.00) or more or the BCR
Entities not delivering to Forest City an Estoppel Certificate (other than a Required Estoppel
Certificate) or (y) deliver to Forest City a waiver with respect to the matter identified in
Schedule 9.2(c), and Forest City is unwilling to waive the same and elects to terminate this
Agreement, Forest City will pay to the BCR Entities, as liquidated damages, reimbursement for all
reasonable documented out-of-pocket costs incurred by the BCR Entities in connection with this
transaction up to a maximum of Three Million Dollars ($3,000,000.00) within ten (10) days after
receipt of a demand for such payment by wire transfer of immediately available funds to an
account designated by the BCR Entities. Upon payment of the same, none of Forest City, the
BCR Entities or the BCR Individuals will have any further obligations under this Agreement. In the
event that Forest City elects to waive the satisfaction of the condition precedent set forth in
Section 6.1(d), the BCR Entities acknowledge that Forest City will be entitled to be indemnified
against any Losses incurred as a result of any claim that may arise from or that is related to such
waiver, subject to the limitations set forth in Sections 8.1, 8.5(b) and 8.5(c).



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          9.3 Default Prior to Principal Closing.




               (a) If the conditions precedent to the obligations of Forest City set forth in Sections 6.1(a)
or 6.1(c) are not satisfied on or before December 15, 2006, and Forest City is unwilling to waive
the unmet conditions, then Forest City will have the right either:




               (i) to terminate this Agreement and receive from the BCR Entities, as
liquidated damages, reimbursement for all reasonable documented out-of-pocket costs incurred
by Forest City in connection with this transaction up to a maximum of Three Million Dollars
($3,000,000.00); or




               (ii) to sue for specific performance of the BCR Entities’ obligations under
this Agreement.


If Forest City elects the remedy in clause (i) above, the BCR Entities will pay the amount of the
liquidated damages to Forest City within ten (10) days after demand therefore by wire transfer to
an account designated by FCEI. Upon payment of the liquidated damages, none of Forest City, Master
III, the Master III Entities, the BCR Entities or the BCR Individuals will have any further
obligations under this Agreement.




               (b) If the conditions precedent to the obligations of the BCR Entities and BCR Individuals set
forth in Sections 6.2(a), Section 6.2(b), Section 6.2(d) or Section 6.2(j) are not satisfied on or
before December 15, 2006, and the BCR Entities and BCR Individuals are unwilling to waive the unmet
conditions, then the BCR Entities will have the right to terminate this Agreement and receive from
Forest City, as liquidated damages, reimbursement for all reasonable documented out-of-pocket costs
incurred by the BCR Entities and BCR Individuals in connection with this transaction up to a
maximum of Three Million Dollars ($3,000,000.00). If the BCR Entities elect this remedy, FCEI will
pay the amount of the liquidated damages to the BCR Entities and the BCR Individuals within ten
(10) days after demand therefore by wire transfer to an account designated by the BCR Entities.
Upon payment of the liquidated damages, none of Forest City, the BCR Entities or the BCR
Individuals will have any further obligations under this Agreement.



               (c) The parties acknowledge that: (i) the amount payable pursuant to Sections 9.2(c), 9.3(a)
or 9.3(b) is a reasonable estimate of and bear a reasonable relationship to the damages that would
be suffered and the costs that would be incurred as a result of the failure of the Closing to occur
for the reasons specified; (ii) the actual damages suffered and costs incurred as a result of such
failure to close would be extremely difficult and impractical to determine; (iii) each party seeks
to limit its liability under this Agreement to the amount of such liquidated damages in the event
this Agreement is terminated and the transactions contemplated by this
Agreement do not close for the reasons specified; and (iv) the amount payable under Section
9.2(c), 9.3(a) or Section 9.3(b) above constitutes valid liquidated damages.



          9.4 Default Prior to Deferred Closing.




               (a) If the conditions precedent to the obligations of Forest City set forth in Section 6.1(a)
or Section 6.1(c) are not satisfied on or before June 30, 2007, and Forest City is



61









 







unwilling to
waive the unmet conditions, then Forest City will have the right to sue for specific performance of
the BCR Entities’ obligations under this Agreement related to the Nets.



               (b) If the conditions precedent to the obligations of the BCR Entities and BCR Individuals set
forth in Section 6.2(a), Section 6.2(b) or Section 6.2(d) are not satisfied on or before June 30,
2007, and the BCR Entities are unwilling to waive the unmet conditions, then the BCR Entities and
the BCR Individuals will have the right to terminate this Agreement with respect to the Nets as the
sole and exclusive remedy for Forest City’s failure to satisfy such conditions precedent.



          9.5 Default Prior to Development Property Closing.




               (a) If the conditions precedent to the obligations of Forest City set forth in Section 6.1(a)
or Section 6.1(c) are not satisfied prior to the expiration of the applicable time period
established in the third to final paragraph of Section 2.3(g), and Forest City is unwilling to
waive the unmet conditions, then Forest City will have the right to sue for specific performance of
the BCR Entities’ obligations under this Agreement related to the applicable Development Property.



               (b) If the conditions precedent to the obligations of the BCR Entities and BCR Individuals set
forth in Section 6.2(a), Section 6.2(b) or Section 6.2(d) are not satisfied prior to the expiration
of the applicable time period established in the third to final paragraph of Section 2.3(g), and
the BCR Entities and the BCR Individuals are unwilling to waive the unmet conditions, then the BCR
Entities and the BCR Individuals will have the right to terminate this Agreement with respect to
the applicable Development Property and, as the sole and exclusive remedy for Forest City’s failure
to satisfy such conditions precedent, the ownership of the applicable Development Property will
remain unchanged, except that (i) the “Continuation Option,” as such term is defined in the
organizational documents for the relevant Development Property Joint Venture, will be deemed to
have occurred and (ii) such organizational documents will be amended to provide that the relevant
BCR Entity and the BCR Individuals will be entitled to immediately exercise the “buy-sell” option
and the “Put Right” with respect to the relevant Development Property Owner or other jointly owned
entity pursuant to the terms of Section 5.05 and Section 8.04, respectively, of the relevant
organizational document.



ARTICLE X




MISCELLANEOUS




          10.1 Further Assurances. The BCR Entities, Master III (and its subsidiaries) and
Forest City will, at any time and from time to time after the Principal Closing, execute,
acknowledge where appropriate and deliver such further instruments and documents and take
such other action as the other party may reasonably request in order to carry out the intent
and purpose of this Agreement, at the expense of the party making such request, except that,
neither the BCR Entities, Master III nor Forest City will, in connection with the foregoing, be
obligated to incur any liabilities or obligations other than those expressly contemplated in this
Agreement.




62









 








          10.2 Notices. All notices, demands, consents, requests or other communications
provided for or permitted to be given hereunder by a party hereto must be in writing, may be
delivered in person, confirmed facsimile transmission, registered or certified mail, return receipt
requested, or overnight courier, and will be deemed to have been properly given or served upon
actual receipt (with rejection of delivery by addressee to constitute receipt) by such party as
follows:



If to FCEI, Master III (or any of its affiliates) or any of the FCE Entities:



Forest City Enterprises, Inc.

1100 Terminal Tower

50 Public Square

Cleveland, OH 44113-2203

Attention: James A. Ratner

Fax: (216) 263-6208



with a copy sent simultaneously to:



Forest City Enterprises, Inc.

1360 Terminal Tower

50 Public Square

Cleveland, OH 44113-2203

Attention: General Counsel

Fax: (216) 263-6206



If to any of the BCR Entities or any of the BCR Individuals:



BR Retail Member, LLC

c/o Forest City Ratner Companies

1 Metrotech Center North

11th Floor

Brooklyn, NY 11201

Attention: Joanne Minieri

Fax: (718) 923-8788



with a copy sent simultaneously to:



BR Retail Member, LLC

c/o Forest City Ratner Companies

1 Metrotech Center North

11th Floor

Brooklyn, NY 11201

Attention: David Berliner

Fax: (718) 923-8705




63









 







with a second copy sent simultaneously to:



Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019

Attention: Eugene A. Pinover

Fax: (212) 728-9254



Any of the parties may change its address for the receipt of notices, demands, consents, requests
and other communications by giving written notice to the other parties in the manner provided for
above.




          10.3 Assignment. None of the parties to this Agreement will have the right to assign,
transfer, convey or otherwise sell (or enter into any agreement to do the same), directly or
indirectly, any interest it may have in or under this Agreement without first having obtained the
written consent of the other parties, which consent may be withheld in the other parties’ sole
discretion.




          10.4 Binding Obligation. The provisions of this Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective legal representatives, successors
and permitted assigns, but will not inure to the benefit of, or be enforceable by, any other
Person.




          10.5 Waiver. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by the party against
whom the enforcement of the change, waiver, discharge or termination is sought or, in the case of a
default, by the non-defaulting party or parties.




          10.6 Incorporation of Recitals and Schedules. The Recitals to this Agreement and the
Exhibits and Schedules attached hereto are hereby incorporated by reference into the body of this
Agreement and made a part hereof.




          10.7 Confidentiality; Press Releases. None of Forest City, Master III, the Master III
Entities, the BCR Entities or the BCR Individuals will disclose the contents of this Agreement to
any third parties or issue any press release with respect thereto or any Closing hereunder without
the consent of the other parties, except (i) as may be required or, based on the advice of counsel,
advisable to ensure compliance with any applicable laws, rules or regulations of the Commission or
any Governmental Authority having jurisdiction over such party, (ii) as is expressly
authorized or required by the terms of this Agreement (e.g., in connection with soliciting
FCEI shareholder approval or obtaining any required third-party consents or approvals) or (iii) if
and to the extent such contents have already been publicly disclosed (other than by the party
seeking to disclose and in a manner not permitted by this Section 10.7). Nothing contained in this
Section 10.7 will be construed as prohibiting the parties from disclosing the contents of this
Agreement (A) on a confidential basis to the their counsel, accountants and other advisors, or (B)
to regulatory authorities having jurisdiction over them, or (C) to Persons from which it is seeking
financing. The BCR Entities and Forest City will consult with and cooperate with the other parties
on the content and timing of the initial press release to be issued with respect to the





64









 







transactions contemplated by this Agreement and all subsequent press releases and other public
announcements relating to the transactions contemplated by this Agreement.




          10.8 Merger. All understandings and agreements heretofore had between the parties
hereto with respect to the transactions contemplated herein are merged in this Agreement and the
instruments and documents referred to herein, which fully and completely express their agreements
with respect to the transactions contemplated herein, and supersede all prior agreements, written
or oral, with respect thereto.




          10.9 GOVERNING LAW. AS PERMITTED BY SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK, THE PARTIES HERETO AGREE THAT THIS AGREEMENT WILL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.




          10.10 Jurisdiction. Each of the parties submits to the jurisdiction of any New York
State Court or Federal Court of the United States of America sitting in the borough of Manhattan,
and any appellate court from any such court, in any suit, action or proceeding arising out of or
relating to this Agreement (other than issues submitted to an arbitrator for resolution under
Section 2.3), or for recognition or enforcement of any judgment. All claims in respect of any such
suit, action or proceeding may be brought, heard and determined in such New York State Court or, to
the extent permitted by law, in such Federal Court. Final judgment in any such suit, action or
proceeding will be conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Each of the parties waives, to the fullest extent it may
legally and effectively do so, any objection that it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Agreement in any New
York State Court or Federal Court sitting in the borough of Manhattan. Each of the parties waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of
such suit, action or proceeding in any such court. Nothing contained in this Section 10.10 will be
construed as preventing any of the parties from (i) objecting to the jurisdiction of any New York
State Court on the ground that the matter involved exceeds the statutory jurisdiction of such court
or (ii) from seeking to remove any suit, action or proceeding from a New York State Court to a
Federal Court sitting in the borough of Manhattan, or vice versa.




          10.11 Captions. The captions and Article headings included in this Agreement and the
table of contents are for convenience only, do not constitute part of this Agreement and will not
be considered or referred to in interpreting the provisions of this Agreement.




          10.12 Counterparts. This Agreement may be executed in two or more counterparts, each
of which will be deemed to be an original, but all of which will constitute one and the same
instrument. The submission of a signature page transmitted by facsimile, .pdf file or similar
electronic transmission facility will be considered as an “original” signature page for purposes of
this Agreement.




65









 








          10.13 Severability. If any provision hereof is held invalid or not enforceable to its
fullest extent, such provision will be enforced to the extent permitted by law, and the validity of
the remaining provisions hereof will not be affected thereby.




          10.14 Prior Negotiations; Construction. No negotiations concerning or modifications
made to prior drafts of this Agreement will be construed in any manner to limit, reduce or impair
the rights, remedies, duties and obligations of the parties under this Agreement or to restrict or
expand the meaning of any of the provisions of this Agreement or to construe any of the provisions
of this Agreement in any party’s favor. The parties acknowledge that each party and its counsel
have reviewed and revised this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party will not be employed in the
interpretation of this Agreement or any amendment, Schedule or Exhibit hereto.




          10.15 Litigation Expenses. In the event that either the BCR Entities, the BCR
Individuals, Master III, the Master III Entities or Forest City is required to employ an attorney
because any litigation arises out of this Agreement between the parties hereto, the non-prevailing
party or parties (other than the BCR Individuals) will pay the prevailing party or parties all
reasonable fees and expenses, including attorneys’ fees and expenses, incurred in connection with
such litigation.




          10.16 No Recordation. Neither this Agreement nor any memorandum or notice hereof will
be recorded. Forest City will not file any notice of pendency or other instrument (other than a
judgment or lis pendens filed by Forest City in connection with Forest City’s enforcement of its
rights hereunder) against any of the Properties or any portion thereof in connection herewith.




          10.17 WAIVER OF TRIAL BY JURY. THE BCR ENTITIES, THE BCR INDIVIDUALS, MASTER III, THE
MASTER III ENTITIES AND FOREST CITY HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY THE BCR ENTITIES, THE BCR
INDIVIDUALS, MASTER III, THE MASTER III ENTITIES OR FOREST CITY, WHETHER IN CONTRACT, TORT OR
OTHERWISE, WHICH RIGHT OR CLAIM RELATES DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, ANY DOCUMENTATION
RELATED THERETO, OR ANY ACTS OR OMISSIONS IN CONNECTION WITH THIS AGREEMENT. THIS WAIVER HAS BEEN
AGREED TO AFTER CONSULTATION WITH LEGAL COUNSEL SELECTED BY FOREST CITY, MASTER III, THE MASTER III
ENTITIES, THE BCR ENTITIES AND THE BCR INDIVIDUALS.




[signature pages follow]





66









 








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



	 	 	 	 	 
	FOREST CITY ENTERPRISES, INC.,

an Ohio corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ CHARLES A. RATNER
 

Charles A. Ratner,

President & Chief Executive Officer
	 	 






	 	 	 	 	 	 	 	 	 
	FOREST CITY MASTER ASSOCIATES III, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	FC Master Associates III, Inc.,	 	 
	 

	 	 	 	 	 	a New York corporation and its sole member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ LAYTON MCCOWN
 

Layton McCown, Vice President
	 	 






FCE ENTITIES




	 	 	 	 	 
	FOREST CITY B.U.G. BUILDING, INC.,

a New York corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN
 

Layton McCown, Vice President
	 	 
	 
	 	 	 	 
	FOREST CITY S.I.A.C. BUILDING, INC.,

a New York corporation
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN
 

Layton McCown, Vice President
	 	 
	 
	 	 	 	 
	FOREST CITY FLATBUSH, INC.,

a New York corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN
 

Layton McCown, Vice President
	 	 
	 
	 	 	 	 
	F.C. MEMBER, INC.,

a New York corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN
 

Layton McCown, Vice President
	 	 






[signatures continued on next page]




 









 








	 	 	 	 	 
	FOREST CITY FULTON STREET BUILDING, INC.,

a New York corporation
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN
 

Layton McCown, Vice President
	 	 
	 
	 	 	 	 
	FOREST CITY TECH PLACE, INC.,

a New York corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN
 

Layton McCown, Vice President
	 	 
	 
	 	 	 	 
	FOREST CITY PIERREPONT, INC.,

a New York corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN	 	 
	 

	 	 	 	 
	 

	 	Layton McCown, Vice President	 	 
	 
	 	 	 	 
	FOREST CITY COMMERCIAL HOLDINGS, INC.,

a New York corporation
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN	 	 
	 

	 	 	 	 
	 

	 	Layton McCown, Vice President	 	 
	 
	 	 	 	 
	FOREST CITY BLUFFSIDE CORPORATION,

an Ohio corporation
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN	 	 
	 

	 	 	 	 
	 

	 	Layton McCown, Vice President	 	 






	 	 	 	 	 	 	 	 	 	 	 
	CLEVELAND/NY RESIDENTIAL, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Forest City Residential Group, Inc.,	 	 
	 	 	 	 	 	 	an Ohio corporation and its sole member	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ JAMES J. PROHASKA
 

James J. Prohaska,

Executive Vice President and COO
	 	 






[signatures continued on next page]




 









 








	 	 	 	 	 
	FOREST CITY EQUITY SERVICES, INC.,

an Ohio corporation
	 
	 	 	 	 
	By:

	 	/s/ JAMES J. PROHASKA
 

James J. Prohaska

Executive Vice President and COO
	 	 
	 
	 	 	 	 
	FIRST NEW YORK MANAGEMENT COMPANY, INC.,

a New York corporation
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN	 	 
	 

	 	 	 	 
	 

	 	Layton McCown, Vice President	 	 
	 
	 	 	 	 
	FOREST CITY N.Y., INC.,

a New York corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN	 	 
	 

	 	 	 	 
	 

	 	Layton McCown, Vice President	 	 
	 
	 	 	 	 
	FOREST CITY N.Y. GROUP, INC.,

a New York corporation
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN	 	 
	 

	 	 	 	 
	 

	 	Layton McCown, Vice President	 	 
	 
	 	 	 	 
	FC 8 SOUTH, INC.,

a New York corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN	 	 
	 

	 	 	 	 
	 

	 	Layton McCown, Vice President	 	 






MASTER III ENTITIES




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FC NEW FLATBUSH, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Forest City Master Associates III, LLC,	 	 
	 	 	 	 	 	 	a New York limited liability company and its sole member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	By:	 	FC Master Associates III, Inc.,


a New York corporation and its sole member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	By:
	 	/s/ LAYTON MCCOWN
 

Layton McCown, Vice President
	 	 






[signatures continued on next page]




 









 








	 	 	 	 	 	 	 	 	 	 	 	 	 
	FC NEW TECH, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	Forest City Master Associates III, LLC,	 	 
	 	 	 	 	a New York limited liability company and

its sole member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	FC Master Associates III, Inc.,

a New York corporation and its sole
member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:
	 	/s/ LAYTON MCCOWN
 

Layton McCown, Vice President
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	FC NEW KERA, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	Forest City Master Associates III, LLC,	 	 
	 	 	 	 	a New York limited liability company and


its sole member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	FC Master Associates III, Inc.,

a New York corporation and its sole
member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:
	 	/s/ LAYTON MCCOWN
 

Layton McCown, Vice President
	 	 






	 	 	 	 	 
	MASTER III FC/BCR HOLDINGS, INC.,

a New York corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ LAYTON MCCOWN	 	 
	 

	 	 

Layton McCown, Vice President
	 	 






[signatures continued on next page]




 









 








BCR ENTITIES




	 	 	 	 	 
	Brooklyn One Trust,

a New York Trust
	 
	 	 	 	 
	By:

	 	/s/ MICHAEL D. RATNER
 

Michael D. Ratner, solely as trustee
	 	 
	 

	 	of Brooklyn One Trust, and not	 	 
	 

	 	individually	 	 
	 
	 	 	 	 
	Brooklyn Two Trust,

a New York Trust
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER	 	 
	 

	 	 	 	 
	 

	 	Bruce C. Ratner, solely as trustee	 	 
	 

	 	of Brooklyn Two Trust, and not	 	 
	 

	 	individually	 	 
	 
	 	 	 	 
	Brooklyn Three Trust,

a New York Trust
	 
	 	 	 	 
	By:

	 	/s/ MICHAEL D. RATNER	 	 
	 

	 	 	 	 
	 

	 	Michael D. Ratner, solely as trustee	 	 
	 

	 	of Brooklyn Three Trust, and not	 	 
	 

	 	individually	 	 
	 
	 	 	 	 
	RRG New B.U.G., LLC,

a New York limited liability company
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER	 	 
	 

	 	 	 	 
	 

	 	Bruce C. Ratner	 	 
	 

	 	Managing Member	 	 
	 
	 	 	 	 
	RRG New S.I.A.C., LLC,

a New York limited liability company
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER	 	 
	 

	 	 	 	 
	 

	 	Bruce C. Ratner	 	 
	 

	 	Member	 	 






[signatures continued on next page]




 









 








	 	 	 	 	 	 	 	 	 	 	 
	RRG Flatbush Associates, L.P.,

a New York limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	RRG Flatbush, Inc.,	 	 
	 	 	 	 	a New York corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	 	 	 	 	 	 	President	 	 






	 	 	 	 	 
	RRG Myrtle, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	Managing Member	 	 






	 	 	 	 	 	 	 	 	 	 	 
	RRG Fulton Associates, L.P.,

a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	RRG Fulton Corp.,	 	 
	 	 	 	 	a New York corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	 	 	 	 	 	 	President	 	 






	 	 	 	 	 	 	 	 	 
	RRG Tech Place Associates, L.P.,

a New York limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	By:	 	RRG Tech, Inc.,	 	 
	 	 	 	 	a New York corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	 	 	 	 	President	 	 






	 	 	 	 	 
	RRG Harlem Office, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	Member	 	 






[signatures continued on next page]




 









 








	 	 	 	 	 
	RRG Hanson Office, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	Managing Member	 	 






	 	 	 	 	 	 	 	 	 	 	 
	BR Master Limited Partnership,

a New York limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	BR Retail Member, LLC,	 	 
	 	 	 	 	a New York limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	 	 	 	 	 	 	Managing Member	 	 






	 	 	 	 	 
	RRG Queens Place, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	Member	 	 
	 
	 	 	 	 
	RRG Retail Properties, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER	 	 
	 

	 	 	 	 
	 

	 	Bruce C. Ratner	 	 
	 

	 	Managing Member	 	 
	 
	 	 	 	 
	RRG Hanson, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER	 	 
	 

	 	 	 	 
	 

	 	Bruce C. Ratner	 	 
	 

	 	Member	 	 
	 
	 	 	 	 
	RRG Gowanus Canal, Inc.,

a New York corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER	 	 
	 

	 	 	 	 
	 

	 	Bruce C. Ratner	 	 
	 

	 	President	 	 






[signatures continued on next page]





 










 







	 	 	 	 	 	 	 	 	 
	FC Quartermaster Retail II, L.P.,

a New York limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	By:	 	RRG Quartermaster Retail II, LLC,	 	 
	 	 	a
Pennsylvania limited liability company
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	 	 	 	 	Managing Member	 	 






	 	 	 	 	 
	RRG Quartermaster II, LLC,

a Pennsylvania limited liability company	 	 
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	Managing Member	 	 






	 	 	 	 	 	 	 	 	 
	FC Quartermaster Retail III, L.P., 

a New York limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	By:	 	RRG Quartermaster Retail II, LLC,	 	 
	 	 	a New York limited liability company
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	 	 	 	 	Managing Member	 	 






	 	 	 	 	 
	RRG Quartermaster III, LLC,

a Pennsylvania limited liability company	 	 
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	Managing Member	 	 






	 	 	 	 	 	 	 	 	 
	FC Quartermaster Retail, L.P.,

a New York limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	By:	 	RRG Quartermaster Retail, LLC,	 	 
	 	 	a New York limited liability company
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	 	 	 	 	Managing Member	 	 






[signatures continued on next page]




 









 








	 	 	 	 	 	 	 	 	 
	FC Quartermaster Retail IV, L.P.,

a Pennsylvania limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	By:	 	RRG Quartermaster Retail IV, LLC,	 	 
	 	 	a New York limited liability company
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	 	 	 	 	Managing Member	 	 






	 	 	 	 	 
	RRG New Residential Properties, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	Managing Member	 	 






	 	 	 	 	 
	The Ellen Ratner 2000 Trust,

a New York trust	 	 
	 
	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner, solely as Trustee of
	 	 
	 

	 	The Ellen Ratner 2000 Trust, and not

individually	 	 
	 
	 	 	 	 
	By:

	 	/s/ MICHAEL D. RATNER
 

Michael D. Ratner, solely as Trustee of
	 	 
	 

	 	The Ellen Ratner 2000 Trust, and not

individually	 	 






	 	 	 	 	 	 	 	 	 
	FC Forest Avenue Retail, LLC,

a New York limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	By:	 	BR Retail Member, LLC,	 	 
	 	 	a New York limited liability company
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	 	 	 	 	Managing Member	 	 






[signatures continued on next page]





 










 







RRG Court Street Retail, LLC,

a New York limited liability company




	 	 	 	 	 	 	 	 	 
	By:	 	BR Retail Member, LLC,

     a New York limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	 	 	 	 	Managing member	 	 






RRG Steinway Street Retail, LLC,

a New York limited liability company




	 	 	 	 	 	 	 	 	 
	By:	 	BR Retail Member, LLC,

     a New York limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	 	 	 	 	Title:	 	 






	 	 	 	 	 	 	 
	RRG Bloomfield, LLC,

a New York limited liability company	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 	 	 
	 

	 	Managing Member	 	 	 	 
	 
	 	 	 	 	 	 
	BR Basketball, LLC,

a New York limited liability company	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 	 	 
	 

	 	Managing Member	 	 	 	 
	 
	 	 	 	 	 	 
	BR Land, LLC,

a New York limited liability company	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 	 	 
	 

	 	Managing Member	 	 	 	 






[signatures continued on next page]




 









 








BR First New York, L.P.,

a New York limited partnership




	 	 	 	 	 	 	 	 	 
	By:	 	RRG First New York Corp.,

     a New York corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner

President
	 	 






Ratner Realty Group, Inc.,

a New York corporation




	 	 	 	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner

President
	 	 	 	 






BR 42 Hotel, LLC,

a New York limited liability company




	 	 	 	 	 	 	 	 	 
	By:	 	BCR 42, LLC,

     a New York limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 
	 

	 	 	 	 	 	Managing Member	 	 






	 	 	 	 	 	 	 
	BR 8 South, LLC,

a New York limited liability company	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 	 	 
	 

	 	Managing Member	 	 	 	 
	 
	 	 	 	 	 	 
	RRG East River, LLC,

a New York limited liability company	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 	 	 
	 

	 	Managing Member	 	 	 	 






[signatures continued on next page]




 









 








	 	 	 	 	 	 	 
	RRG Yonkers, LLC,

a New York limited liability company	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 	 	 
	 

	 	Managing Member	 	 	 	 
	 
	 	 	 	 	 	 
	RRG 330 Jay Office, LLC,

a New York limited liability company	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 	 	 
	 

	 	Managing Member	 	 	 	 
	 
	 	 	 	 	 	 
	RRG
Mill Basin, LLC,

a New York limited liability company
	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 	 	 
	 

	 	Managing Member	 	 	 	 






RRG Tilden Associates, L.P.,

a New York limited partnership




	 	 	 	 	 	 	 	 	 
	By:	 	RRG Tilden, Inc.,

     a New York corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner

President
	 	 






	 	 	 	 	 	 	 
	RRG Tilden, Inc.,

a New York corporation	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner

President
	 	 	 	 
	 
	 	 	 	 	 	 
	BR Retail Member, LLC,

a New York limited liability company	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ BRUCE C. RATNER
 

Bruce C. Ratner
	 	 	 	 
	 

	 	Managing Member	 	 	 	 






[signatures continued on next page]




BCR INDIVIDUALS




 









 








	 	 	 	 	 
	/s/ BRUCE C. RATNER
 

BRUCE C. RATNER

	 	 	 	 
	 
	 	 	 	 
	/s/ MICHAEL D. RATNER
 

MICHAEL D. RATNER

	 	 	 	 
	 
	 	 	 	 
	/s/ ELLEN RATNER
 

ELLEN RATNER

	 	 	 	 






[end of signatures]





 









 







EXHIBIT A




AMENDED AND RESTATED




LIMITED LIABILITY COMPANY OPERATING AGREEMENT




OF




FOREST CITY MASTER ASSOCIATES III, LLC




                    , 2006





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	ARTICLE I DEFINITIONS, ETC.	 	 	2	 
	 
	 	1.1.	 	Definitions	 	 	2	 
	 
	 	 	 	Act	 	 	2	 
	 
	 	 	 	Administrative Expenses	 	 	2	 
	 
	 	 	 	Affiliate	 	 	3	 
	 
	 	 	 	Agreement	 	 	3	 
	 
	 	 	 	Articles of Organization	 	 	3	 
	 
	 	 	 	Assignee	 	 	3	 
	 
	 	 	 	Bankruptcy	 	 	4	 
	 
	 	 	 	BCR	 	 	4	 
	 
	 	 	 	BCR Entities	 	 	4	 
	 
	 	 	 	Capital Account	 	 	4	 
	 
	 	 	 	Class A Additional Common Units	 	 	5	 
	 
	 	 	 	Class A Common Units	 	 	5	 
	 
	 	 	 	Class A Cumulative Distribution Shortfall	 	 	5	 
	 
	 	 	 	Class A Distribution Preference	 	 	5	 
	 
	 	 	 	Class A Initial Common Units	 	 	7	 
	 
	 	 	 	Class A Member Representative	 	 	7	 
	 
	 	 	 	Class B Common Units	 	 	7	 
	 
	 	 	 	Class B Cumulative Distribution Shortfall	 	 	8	 
	 
	 	 	 	Class B Distribution Amount	 	 	8	 
	 
	 	 	 	Class B Member Representative	 	 	8	 
	 
	 	 	 	Code	 	 	8	 
	 
	 	 	 	Common Units	 	 	8	 
	 
	 	 	 	Company	 	 	8	 
	 
	 	 	 	Control	 	 	8	 
	 
	 	 	 	Conversion Factor	 	 	9	 
	 
	 	 	 	Current Per Share Market Price	 	 	9	 
	 
	 	 	 	Depreciation	 	 	10	 
	 
	 	 	 	Development Property Closing	 	 	10	 
	 
	 	 	 	Entity	 	 	10	 
	 
	 	 	 	ERISA	 	 	10	 
	 
	 	 	 	Exchange Consideration	 	 	10	 
	 
	 	 	 	Exchange Notice	 	 	10	 
	 
	 	 	 	Exchange Right	 	 	10	 
	 
	 	 	 	FCE Borrower	 	 	10	 
	 
	 	 	 	FCE Entities	 	 	10	 
	 
	 	 	 	FCEI	 	 	10	 
	 
	 	 	 	FCEI Stock	 	 	10	 
	 
	 	 	 	Fiscal Quarter	 	 	10	 
	 
	 	 	 	Fiscal Year	 	 	11	 
	 
	 	 	 	Gross Asset Value	 	 	11	 
	 
	 	 	 	Immediate Family	 	 	12	 
	 
	 	 	 	Indemnified Party	 	 	12	 






i









 






	 	 	 	 	 	 	 	 	 
	 
	 	 	 	Initial BCR Entities	 	 	12	 
	 
	 	 	 	Initial Capital Contribution	 	 	12	 
	 
	 	 	 	Initial FCE Entities	 	 	13	 
	 
	 	 	 	Interest	 	 	13	 
	 
	 	 	 	Key Management	 	 	13	 
	 
	 	 	 	Liens	 	 	13	 
	 
	 	 	 	Liquidating Event	 	 	13	 
	 
	 	 	 	Loss	 	 	13	 
	 
	 	 	 	Majority-in-Interest of the Members	 	 	13	 
	 
	 	 	 	Managing Member	 	 	13	 
	 
	 	 	 	Master Contribution Agreement	 	 	13	 
	 
	 	 	 	Member Representatives	 	 	13	 
	 
	 	 	 	Members	 	 	14	 
	 
	 	 	 	Net Cash Flow	 	 	14	 
	 
	 	 	 	Net Distributable Cash	 	 	14	 
	 
	 	 	 	Net Financing Proceeds	 	 	14	 
	 
	 	 	 	Net Income	 	 	15	 
	 
	 	 	 	Net Loss	 	 	15	 
	 
	 	 	 	Net Sale Proceeds	 	 	16	 
	 
	 	 	 	Person	 	 	17	 
	 
	 	 	 	Principal Closing	 	 	17	 
	 
	 	 	 	Priority Return	 	 	17	 
	 
	 	 	 	Demand Note	 	 	17	 
	 
	 	 	 	Properties	 	 	17	 
	 
	 	 	 	Property Owners	 	 	17	 
	 
	 	 	 	Regulations	 	 	17	 
	 
	 	 	 	Treasury Regulations	 	 	17	 
	 
	 	 	 	Treas. Reg	 	 	17	 
	 
	 	 	 	Safe Harbor Rate	 	 	17	 
	 
	 	 	 	SEC	 	 	17	 
	 
	 	 	 	Securities Act	 	 	18	 
	 
	 	 	 	Service Companies	 	 	18	 
	 
	 	 	 	Stabilized Value	 	 	18	 
	 
	 	 	 	Subsequent BCR Entities	 	 	18	 
	 
	 	 	 	Subsequent FCE Entities	 	 	18	 
	 
	 	 	 	Substituted Member	 	 	18	 
	 
	 	 	 	Tax Matters Member	 	 	18	 
	 
	 	 	 	Trading Day	 	 	18	 
	 
	 	 	 	Transfer	 	 	18	 
	 
	 	 	 	Units	 	 	19	 
	 
	 	 	 	Unreturned Capital	 	 	19	 
	 
	 	1.2.	 	Exhibits, Etc.	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II ORGANIZATION	 	 	19	 
	 
	 	2.1.	 	Limited Liability Company	 	 	19	 
	 
	 	2.2.	 	Name	 	 	19	 
	 
	 	2.3.	 	Character of the Business	 	 	19	 






ii









 






	 	 	 	 	 	 	 	 	 
	 
	 	2.4.	 	Location of the Principal Place of Business	 	 	20	 
	 
	 	2.5.	 	Registered Agent and Registered Office	 	 	20	 
	 
	 	2.6.	 	Issuance of Common Units; Member Acceptance	 	 	20	 
	 
	 	2.7.	 	Class A Special Common Units	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III TERM	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV CONTRIBUTIONS TO CAPITAL	 	 	23	 
	 
	 	4.1.	 	Initial Capital Contributions	 	 	23	 
	 
	 	4.2.	 	Capital Accounts	 	 	23	 
	 
	 	4.3.	 	Liability for Deficits in Capital Accounts	 	 	23	 
	 
	 	4.4.	 	Common Units Have Not Been Registered	 	 	24	 
	 
	 	4.5.	 	Future Capital Contributions	 	 	24	 
	 
	 	4.6.	 	No Third Party Beneficiary	 	 	25	 
	 
	 	4.7.	 	No Interest; No Return	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V ALLOCATIONS, DISTRIBUTIONS, AND OTHER TAX AND ACCOUNTING MATTERS	 	 	25	 
	 
	 	5.1.	 	Allocations	 	 	25	 
	 
	 	5.2.	 	Distributions	 	 	26	 
	 
	 	5.3.	 	Redemption or Repurchase of Common Units	 	 	28	 
	 
	 	5.4.	 	Books of Account	 	 	28	 
	 
	 	5.5.	 	Reports	 	 	28	 
	 
	 	5.6.	 	Tax Elections and Returns	 	 	29	 
	 
	 	5.7.	 	Tax Matters Partner	 	 	30	 
	 
	 	5.8.	 	Risk Insurance	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI RIGHTS, DUTIES AND RESTRICTIONS OF THE MANAGING MEMBER	 	 	32	 
	 
	 	6.1.	 	Expenditures by the Company	 	 	32	 
	 
	 	6.2.	 	Powers and Duties of Managing Member	 	 	33	 
	 
	 	6.3.	 	Promissory Notes	 	 	34	 
	 
	 	6.4.	 	Decisions Requiring Vote of Majority-in-Interest of Members	 	 	36	 
	 
	 	6.5.	 	Reliance by Third Parties	 	 	38	 
	 
	 	6.6.	 	Title Holder	 	 	38	 
	 
	 	6.7.	 	Compensation of the Managing Member	 	 	38	 
	 
	 	6.8.	 	Waiver and Indemnification	 	 	39	 
	 
	 	6.9.	 	Member Representatives	 	 	40	 
	 
	 	6.10.	 	Other Matters Concerning the Managing Member	 	 	40	 
	 
	 	6.11.	 	Certain Restrictions on Property Owners and Service Companies	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII DISSOLUTION, LIQUIDATION AND WINDING-UP	 	 	42	 
	 
	 	7.1.	 	Accounting	 	 	42	 
	 
	 	7.2.	 	Distribution on Dissolution	 	 	42	 
	 
	 	7.3.	 	Timing Requirements	 	 	42	 
	 
	 	7.4.	 	Net Sale Proceeds; Sale of Properties	 	 	43	 
	 
	 	7.5.	 	Distributions in Kind	 	 	43	 






iii









 






	 	 	 	 	 	 	 	 	 
	 
	 	7.6.	 	Documentation of Liquidation	 	 	44	 
	 
	 	7.7.	 	Dissolution	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII TRANSFER OF UNITS	 	 	45	 
	 
	 	8.1.	 	Transfers by Members	 	 	45	 
	 
	 	8.2.	 	Restrictions on Transfer	 	 	46	 
	 
	 	8.3.	 	Attempted Transfers That Do Not Comply with this Article VIII	 	 	48	 
	 
	 	8.4.	 	Record of Transfers; Certificates for Units	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX RIGHTS AND OBLIGATIONS OF THE MEMBERS	 	 	49	 
	 
	 	9.1.	 	No Participation in Management	 	 	49	 
	 
	 	9.2.	 	Rights to Obtain Certain Documents and Information	 	 	49	 
	 
	 	9.3.	 	No Withdrawal	 	 	50	 
	 
	 	9.4.	 	Limited Liability	 	 	50	 
	 
	 	9.5.	 	Other Ventures	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE X GRANT OF EXCHANGE RIGHTS TO MEMBERS	 	 	51	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XI GENERAL PROVISIONS	 	 	51	 
	 
	 	11.1.	 	Notices	 	 	51	 
	 
	 	11.2.	 	Successor	 	 	53	 
	 
	 	11.3.	 	Effect and Interpretation	 	 	53	 
	 
	 	11.4.	 	Counterparts	 	 	53	 
	 
	 	11.5.	 	Members Not Agents	 	 	53	 
	 
	 	11.6.	 	Entire Understanding	 	 	53	 
	 
	 	11.7.	 	Amendments	 	 	53	 
	 
	 	11.8.	 	Severability	 	 	54	 
	 
	 	11.9.	 	Pronouns and Headings	 	 	54	 
	 
	 	11.10.	 	Assurances	 	 	54	 
	 
	 	11.11.	 	Expenses	 	 	55	 
	 
	 	11.12.	 	Waiver of Partition	 	 	55	 
	 
	 	11.13.	 	GOVERNING LAW	 	 	55	 
	 
	 	11.14.	 	Jurisdiction	 	 	55	 
	 
	 	 	 	 	 	 	 	 
	ADDENDUM	 	 	59	 









 




	 	 	EXHIBITS
	 
	EXHIBIT A

	 	Terms of Exchange Rights
	EXHIBIT B

	 	Form of Promissory Note
	EXHIBIT C

	 	Form of Assignment and Assumption of Units
	EXHIBIT D

	 	Illustration of Class A Distribution Preference






iv









 









	 	 	SCHEDULES
	 
	SCHEDULE A

	 	BCR Entities
	SCHEDULE B

	 	FCE Entities
	SCHEDULE C

	 	BCR Persons
	SCHEDULE D

	 	Tax Matters
	SCHEDULE E

	 	Initial Capital Accounts







v









 







THE UNITS REFERRED TO IN THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, NO UNITS MAY
BE RESOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS SUBSEQUENTLY REGISTERED UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN EXEMPTION FROM REGISTRATION
IS AVAILABLE, AND UNLESS THE OTHER TRANSFER RESTRICTIONS CONTAINED HEREIN HAVE BEEN SATISFIED.
REFERENCE IS MADE TO ARTICLE VIII OF THIS AGREEMENT FOR PROVISIONS RELATING TO VARIOUS RESTRICTIONS
ON THE SALE OR OTHER TRANSFER OF THESE UNITS.




AMENDED AND RESTATED

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

FOREST CITY MASTER ASSOCIATES III, LLC




     THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this
“Agreement”) of Forest City Master Associates III, LLC, a New York limited liability
company (the “Company”), is made and entered into as of the ___day of ___, 2006 by
and among the entities affiliated with Forest City Enterprises, Inc., an Ohio corporation
(“FCEI”), that are identified on Schedule B (the “Initial FCE Entities”),
the entities affiliated with Bruce C. Ratner, an individual (“BCR”), that are identified on
Schedule A and the individuals identified on Schedule A (including BCR) (the
“Initial BCR Entities”) and any other Persons who become Members after the date hereof.
This Agreement supersedes the Limited Liability Company Operating Agreement of the Company dated
___, 2006.



W I T N E S S E T H:




     WHEREAS, the Company, FCEI, the Initial FCE Entities, certain other entities affiliated with
FCEI, the Initial BCR Entities and certain other entities affiliated with BCR have entered into a
Master Contribution and Sale Agreement, dated as of ___, 2006 (as amended from time to
time, the “Master Contribution Agreement”).



     WHEREAS, the Company was formed as a limited liability company by filing Articles of
Organization with the Secretary of State of New York on July 25, 2006.



1









 





     WHEREAS, pursuant to the Master Contribution Agreement, the Initial BCR Entities as of the
date hereof are contributing to the Company or certain wholly owned subsidiaries thereof certain
Interests in Property Owners (as defined below) in exchange for an aggregate of ___Class A
Initial Common Units and the Initial FCE Entities as of the date hereof are contributing to the
Company cash and certain Interests in Property Owners and Service Companies in exchange for an
aggregate of ___Class B Common Units.



     WHEREAS, upon and subject to the terms of this Agreement, the Company has or will admit the
Initial BCR Entities and the Initial FCE Entities as Members of the Company.



     NOW, THEREFORE, in consideration of the covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:



ARTICLE I




DEFINITIONS, ETC.




     1.1. Definitions. Each of the following terms will have the meaning set forth
below:



     “Act” means the Limited Liability Company Law (Chapter 34 of the Consolidated
Laws) enacted in the State of New York, and as the same may hereafter be amended from time to time
and any successor to such statute.



     “Administrative Expenses” means (i) all administrative and operating costs and
expenses incurred by the Company, (ii) all administrative, operating and other costs and expenses
incurred by the Property Owners or Service Companies that are to be paid, advanced or reimbursed by
the Company pursuant to the partnership agreements, operating agreements or other governing
documents of the Property Owners or the Service Companies, (iii) all salaries paid to officers of
the Company and the Managing Member,
and all accounting and legal expenses undertaken by



2









 







the Company and the Managing Member, in
each case on behalf or for the benefit of the Company, (iv) costs and expenses relating to the
formation and continuity of existence of the Company, including taxes, fees and assessments
associated therewith, (v) costs and expenses associated with compliance by the Company and the
Managing Member (to the extent solely related to its capacity as Managing Member of the Company)
with laws, rules and regulations promulgated by any regulatory body, and (vi) all other operating
or administrative costs of the Company and the Managing Member incurred in the ordinary course of
its business on behalf of the Company.



     “Affiliate” means, with respect to any Person, (i) any member of the Immediate Family
of such Person; (ii) any trust established for the benefit of such Person or member of the
Immediate Family of such Person or such Person’s or member of the Immediate Family of such Person’s
estate; or (iii) any Entity in which such Person, Immediate Family member and/or trust, in the
aggregate, own of record and beneficially a majority of the capital or economic interests, and such
Person or Immediate Family member or trust is the managing member, sole general partner or
otherwise controls the management.



     “Agreement” means this Amended and Restated Limited Liability Company Operating
Agreement of Forest City Master Associates III, LLC, as originally executed and as hereafter
amended, supplemented or restated from time to time as the context requires.



     “Articles of Organization” means the Articles of Organization establishing the
Company, filed with the office of the Secretary of State of New York on July 25, 2006, as they may
be amended from time to time in accordance with the terms of this Agreement and the Act.



     “Assignee” means a Person to whom one or more Common Units have been transferred, but
who has not been admitted as a Substitute Member.



3









 





     “Bankruptcy” means, with respect to any Person, (i) the commencement by such Person of
any proceeding seeking relief under any provision of the federal Bankruptcy Code, U.S.C. §101
et. seq., as the same may be amended from time to time, or any other federal or
state law relating to insolvency, bankruptcy or reorganization, (ii) an adjudication that such
Person is insolvent or bankrupt, (iii) the entry of an order for relief under the federal
Bankruptcy Code with respect to such Person, (iv) the filing of any petition with respect to such
Person under the Bankruptcy Code or any other federal or state law relating to insolvency,
bankruptcy or reorganization, unless the proceeding initiated by the petition is stayed or
dismissed within ninety (90) days from the date of such filing, (v) the filing of an answer by such
Person admitting the allegations of any such petition, (vi) the appointment of a trustee, receiver
or custodian for all or substantially all of the assets of such Person, unless such appointment is
stayed, vacated or dismissed within ninety (90) days from the date of such appointment, (vii) the
execution by such Person of a general assignment for the benefit of creditors, (viii) the levy,
attachment, execution or other seizure of substantially all of the assets of such Person, unless
such seizure is discharged within thirty (30) days thereafter, or (ix) the admission by such Person
in writing of its inability generally to pay its debts as they mature or that it is generally not
paying its debts as they become due.



     “BCR” is defined in the preamble to this Agreement.



     “BCR Entities” means any Initial BCR Entities, Subsequent BCR Entities and any
entities or individuals affiliated with BCR that become party
to this Agreement after the date hereof and are identified as BCR Entities on an amendment of
Schedule A.



     “Capital Account” means, with respect to any Member, the separate “book” account that
the Company will establish and maintain for such Member in accordance with Section 704(b) of



4









 







the
Code and Section 1.704-1(b)(2) (iv) of the Regulations and such other provisions of Section
1.704-1(b) of the Regulations that must be complied with in order for the Capital Accounts to be
determined in accordance with the provisions of such Regulations. In furtherance of the foregoing,
the Capital Accounts will be maintained in compliance with Section 1.704-1(b)(2)(iv) of the
Regulations, and the provisions hereof will be interpreted and applied in a manner consistent
therewith. In the event that a Unit is transferred in accordance with the terms of this Agreement,
the Capital Account of the transferor, at the time of the transfer, attributable to the transferred
interest will carry over to the transferee.



     “Class A Additional Common Units” means the Units issued to the Subsequent BCR
Entities at any Development Property Closing under the Master Contribution Agreement.



     “Class A Common Units” means the Class A Initial Common Units and the Class A
Additional Common Units. The Class A Initial Common Units and the Class A Additional Common Units
will rank pari passu. The terms of the Class A Initial Common Units and the Class A Additional
Common Units will be identical, except as provided in the definition of “Class A Distribution
Preference.”



     “Class A Cumulative Distribution Shortfall,” with respect to each outstanding Class A
Common Unit, means the
excess, if any, of (i) the Class A Distribution Preference for any Fiscal Quarter over (ii)
the amount actually distributed by the Company to Members holding the Class A Common Units for that
Fiscal Quarter, together with a return at a rate of ten percent (10%) per annum on the unpaid
amount, compounded quarterly, and combined with any such unpaid shortfall and return for prior
Fiscal Quarters.



     “Class A Distribution Preference” for any Fiscal Quarter ending prior to ___,
2011, with respect to each outstanding Class A Initial Common Unit, means the sum of (i) the



5









 







product of (A) the dividends paid with respect to one share of FCEI Stock (other than dividends
paid in shares of FCEI common stock and rights, options, warrants or convertible or exchangeable
securities entitling the holders to subscribe for or purchase additional shares of FCEI common
stock, other securities or property) for that quarter multiplied by (B) Conversion Factor and (ii)
an amount equal to the quotient of (A) $2.5 million divided by (B) four times the total number of
Class A Initial Common Units to be issued by the Company at the Principal Closing under the Master
Contribution Agreement (including any Class A Initial Common Units issued after the Principal
Closing pursuant to Section 3.1 of the Master Contribution Agreement, as and when any such Class A
Initial Common Unit are issued); except that, the Class A Distribution Preference for the
Fiscal Quarter with respect to each outstanding Class A Initial Common Unit that includes the date
on which the Class A Initial Common Units is issued (unless such date is the first day of a Fiscal
Quarter) will be such sum multiplied by a fraction, the numerator of which is the number of days
from the date of this Agreement to and including the last day of the Fiscal Quarter and the
denominator of which is the full number of days in the Fiscal Quarter. “Class A Distribution
Preference” for any Fiscal Quarter ending on or after ___, 2011, with respect to each
outstanding Class A Initial
Common Unit, means the product of (x) the dividends paid with respect to one share of FCEI
Stock (other than dividends paid in shares of FCEI common stock and rights, options, warrants or
convertible or exchangeable securities entitling the holders to subscribe for or purchase
additional shares of FCEI common stock, other securities or property) for that quarter multiplied
by (y) Conversion Factor. “Class A Distribution Preference” for any Fiscal Quarter with
respect to each outstanding Class A Additional Common Unit means the product of (x) the dividends
paid with respect to one share of FCEI Stock (other than dividends paid in shares of FCEI common
stock



6









 







and rights, options, warrants or convertible or exchangeable securities entitling the holders
to subscribe for or purchase additional shares of FCEI common stock, other securities or property)
for that quarter multiplied by (y) Conversion Factor; except that, the Class A Distribution
Preference for the Fiscal Quarter with respect to each outstanding Class A Additional Common Unit
that includes the date on which the Class A Additional Common Unit is issued (unless such date is
the first day of a Fiscal Quarter) will be such amount multiplied by a fraction, the numerator of
which is the number of days from the date of issuance to and including the last day of the Fiscal
Quarter and the denominator of which is the full number of days in the Fiscal Quarter. An
illustration of how the Class A Distribution Preference is to be determined is set forth in Exhibit
D. The Class A Distribution Preference is not subject to the continued employment of BCR or any
member of Key Management with FCEI or any of its Affiliates.



     “Class A Initial Common Units” means the Units issued to the Initial BCR Entities at
the Principal Closing under the Master Contribution Agreement (including any Class A Special Common
Units (as described in Section
2.7)) and any Units issued to the Initial BCR Entities after the Principal Closing pursuant to
Section 3.1 of the Master Contribution Agreement.



     “Class A Member Representative” means Bruce C. Ratner, or such other individual or
Entity appointed as successor pursuant to Section 6.9.



     “Class B Common Units” means the Units issued to the Initial FCE Entities in the
Principal Closing or pursuant to Section 4.18 of the Master Contribution Agreement, Units issued to
the Subsequent FCE Entities in any Development Property Closing under the Master Contribution
Agreement and Units issued to or acquired by FCEI upon exchange of Offered Units in accordance with
Paragraph 3 of Exhibit A.



7









 





     “Class B Cumulative Distribution Shortfall,” with respect to each outstanding Class B
Common Unit, means the excess, if any, of (i) the Class B Distribution Amount for any Fiscal
Quarter over (ii) the amount actually distributed to the holders of the Class B Common Units for
that Fiscal Quarter, together with a return at a rate of twelve percent (12%) per annum on the
unpaid amount, compounded quarterly, and combined with any such unpaid shortfall and return for
prior Fiscal Quarters.



     “Class B Distribution Amount” for any Fiscal Quarter, with respect to each outstanding
Class B Common Unit, means the Priority Return with respect to such Class B Common Unit for the
Fiscal Quarter.



     “Class B Member Representative” means James A. Ratner, or such other individual or
Entity appointed as successor pursuant to Section 6.9.



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



     “Common Units” means the Class A Common Units, the Class B Common Units or both, as
the context requires.



     “Company” is defined in the preamble to this Agreement.



     “Control” means the ability, whether by the direct or indirect ownership of shares or
other equity interests, by contract or otherwise, to elect a majority of the directors of a
corporation, to select the managing partner of a partnership, to select the managing member of a
limited liability company or otherwise to select a majority of those persons exercising governing
authority over an Entity. In the case of a limited partnership, the sole managing partner, all of
the general partners to the extent they have equal management control and authority, or the
managing general partner or managing general partners thereof will be deemed to have control of



8









 







such partnership, and, in the case of a trust, any trustee of the trust or any Person having the
right to select any such trustee or to revoke the trust will be deemed to have control of such
trust.



     “Conversion Factor” means one (1.0); except that, if FCEI (i) makes a
distribution to all holders of its FCEI Class A Stock or FCEI Class B Stock that is payable in FCEI
Common Stock, (ii) subdivides or splits its outstanding FCEI Common Stock or (iii) combines or
reverse splits its outstanding FCEI Common Stock into a smaller number of shares of FCEI Common
Stock (in each case, unless the Company makes a comparable distribution, subdivision, split,
combination or reverse split with respect to the Class A Common Units), the Conversion Factor in
effect immediately preceding such event will be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which is the number of shares of FCEI Common Stock issued and
outstanding on the record date for such distribution, subdivision, split, combination or reverse
split (assuming for such purposes that
such distribution, subdivision, split, combination or reverse split occurred as of the record
date), and the denominator of which is the number of shares of FCEI Common Stock (determined
without such assumption) issued and outstanding on the record date for such distribution,
subdivision, split, combination or reverse split. Any adjustment to the Conversion Factor will
become effective immediately after the record date for such event in the case of the dividend or
distribution or the effective date in the case of a subdivision, split, combination or reverse
split.



     “Current Per Share Market Price” on any date means the average of the closing price of
the FCEI Stock as reported by the principal national securities exchange on which the FCEI Stock is
listed or admitted to trading for the five (5) consecutive Trading Days ending on and including
such date (or if such date is not a Trading Day, ending on the immediately preceding Trading Day).



9









 





     “Depreciation” means, with respect to any asset of the Company, for any fiscal year or
other period, the depreciation or amortization, as the case may be, allowed or allowable for
federal income tax purposes in respect of such asset for such fiscal year or other period;
except that, if there is a difference between the Gross Asset Value and the adjusted tax
basis of such asset, Depreciation means “book depreciation or amortization” as determined under
Section 1.704-l (b)(2) (iv) (g) (3) of the Regulations.



     “Development Property Closing” is defined in the Master Contribution Agreement.



     “Entity” means any general partnership, limited partnership, corporation, joint
venture, limited liability company, trust, business trust, cooperative or association.



     “ERISA” means the Employee Retirement Income Security Act of 1974 or any corresponding
provisions of succeeding laws, as amended from time to time.



     “Exchange Consideration” is defined in Exhibit A.



     “Exchange Notice” is defined in Article X.



     “Exchange Right” is defined in Article X.



     “FCE Borrower” is defined in Section 6.3.



     “FCE Entities” means the Initial FCE Entities, Subsequent FCE Entities and any
Entities affiliated with FCEI that become party to this Agreement after the date hereof and are
identified as FCE Entities on an amendment of Schedule B.



     “FCEI” is defined in the preamble to this Agreement.



     “FCEI Stock” means the Class A Common Stock, $.33-1/3 par value, of FCEI.



     “Fiscal Quarter” means the three-month period ending on April 30, July 31, October 31
or January 31 in each year, except that the Managing Member may, from time to time,
designate



10









 







different fiscal quarters corresponding to any new Fiscal Year designated by the Managing
Member.



     “Fiscal Year” means the twelve-month period ending on January 31 in each year,
except that the Managing Member may, from time to time, designate a different annual period
as the Fiscal Year.



    “Gross Asset Value” means, with respect to any asset of the Company, such asset’s
adjusted basis for federal income tax purposes, except as follows:




     (a) the Gross Asset Value of any Interest in a Property Owner or Service Company
contributed by a Member to the Company will, at the time of contribution, be the amount set
forth under the column entitled “Value of Capital Contributions” on Schedule A and
Schedule B;




     (b) if the Managing Member reasonably determines that an adjustment is necessary or
appropriate to reflect the relative economic interests of the Members, the Gross Asset
Values of all assets of the Company will be adjusted to equal their respective gross fair
market values, as determined by the Managing Member using a reasonable method of valuation,
as of the following times:




     (i) a capital contribution (other than a de minimis capital
contribution) to the Company;




     (ii)
the distribution by the Company to a Member of more than a de minimis amount of property of the Company as consideration for the exchange
of Common Units; and




     (iii) the liquidation of the Company within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Regulations;




     (c) the Gross Asset Values of assets of the Company distributed to any Member will be
the gross fair market values of such assets (without taking Section 7701(g) of the Code into
account) as reasonably determined by the Managing Member as of the date of distribution; and




     (d) the Gross Asset Values of assets of the Company will be increased (or decreased) to
reflect any adjustments to the adjusted basis of such assets pursuant to Sections 734(b) or
743(b) of the Code, but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Section 1.704-1(b) (2) (iv) (m) of the Regulations;
except that, Gross Asset Values will not be adjusted pursuant to this paragraph to the
extent that the Managing Member reasonably determines that an adjustment pursuant to
subparagraph (b) above is necessary or appropriate in



11









 







connection with a transaction that
would otherwise result in an adjustment pursuant to this subparagraph (d).


At all times, Gross Asset Values will be adjusted by any Depreciation taken into account with
respect to the Company’s assets for purposes of computing Net Income and Net Loss. Any adjustment
to the Gross Asset Values of property of the Company will require an adjustment to
the Members’ Capital Accounts; as for the manner in which such adjustments are allocated to the
Capital Accounts, see subparagraph (c) of the definition of Net Income and Net Loss in the case of
adjustment by Depreciation, and subparagraph (d) of such definition in all other cases.




     “Immediate Family ” of a Person means the lineal predecessors (i.e., parents and
grandparents), step-parents, spouse, brothers and sisters, lineal descendants (whether by blood or
adoption) and step-children of that Person and, in the case of BCR and members of Key Management,
the Persons identified on Schedule C. BCR and members of Key Management will have the
right, subject to the limitations set forth on Schedule C, to amend Schedule C from
time to time.



     “Indemnified Party” is defined in Section 6.8.



     “Initial BCR Entities” is defined in the preamble to this Agreement.



     “Initial Capital Contribution” means, with respect to any Member, the amount of any
money and the value of the Interests in Property Owners and Service Companies contributed by the
Member (a) in connection with the initial capitalization of the Company, as set forth under the
column entitled “Value of Capital Contributions” in Schedule A and Schedule B, (b)
pursuant to Section 4.18 of the Master Contribution Agreement and (c) in connection with the
contribution of Interests in any Development Property Owners, in accordance with the Master
Contribution Agreement. When Interests are transferred or issued pursuant the Master
Contribution
Agreement or Exhibit A or Interests in Development Property Owners are



12









 







contributed to the
Company at any Development Property Closing, Schedule A and Schedule B will be
amended to reflect the Interests being contributed.



     “Initial FCE Entities” is defined in the preamble to this Agreement.




     “Interest” means an equity interest in an Entity.



     “Key Management” means key employees of FCEI’s New York strategic business unit who
are designated from time to time by BCR.



     “Liens” means any liens, security interests, mortgages, deeds of trust, charges,
claims, encumbrances, pledges, options, rights of first offer or first refusal and any other
encumbrances.



     “Liquidating Event” is defined in Section 7.7.



     “Loss” is defined in Section 6.8(a).



     “Majority-in-Interest of the Members” means Members who hold in the aggregate more
than fifty percent (50%) of the then outstanding Class A Common Units and Members who hold in the
aggregate more than fifty percent (50%) of the then outstanding Class B Common Units; except
that, whenever the number of outstanding Class A Common Units constitutes less than five (5%)
of the total number of outstanding Common Units, “Majority-in-Interest of the Members” will
mean Members who hold in the aggregate more than fifty percent (50%) of the then outstanding Common
Units (treating the Class A Common Units and the Class B Common Units as the same for this
purpose).



     “Managing Member” means ___, a ___corporation.



     “Master Contribution Agreement” is defined in the preamble to this Agreement.



     “Member Representatives” means the Class A Member Representative and the Class B
Member Representative.



13









 





     “Members” means (i) the Initial BCR Entities and the Initial FCE Entities, (ii) the
Subsequent BCR Entities and the Subsequent FCE Entities, when they are admitted as members such
pursuant to Section 2.6, and (iii) all Substituted Members.



     “Net Cash Flow” means, with respect to any Fiscal Quarter, the excess, if any, of
“Receipts” over “Expenditures.” For purposes hereof, the term “Receipts” means the sum of
all cash receipts of the Company from all sources for such period (excluding Net Sale Proceeds, Net
Financing Proceeds and net proceeds from any condemnation or casualty, including insurance
proceeds). The term “Expenditures” means the sum of (a) all cash expenditures of the
Company for such period, (b) the amount of all payments of principal of and interest on account of
any indebtedness of the Company, and (c) such additions to cash reserves as of the last day of such
period as may be required by any third-party lender or, provided the additions to the reserves do
not result in any Class A Cumulative Distribution Shortfall or inability to pay Exchange
Consideration, as may be customary and reasonable, but the term “Expenditures” does not include any
expense paid from a cash reserve previously established by the Company.



     “Net Distributable Cash” means the sum of Net Cash Flow, Net Sales Proceeds and Net
Financing Proceeds.



     “Net Financing Proceeds” means the cash proceeds received by the Company in connection
with any borrowing or refinancing of borrowing by or on behalf of the Company or by or on behalf of
any Property Owner or Service Company (whether or not secured), after deduction of all costs and
expenses incurred by the
Company, Property Owner or Service Company in connection with such borrowing or refinancing,
and after deduction of that portion of such proceeds used (i) to finance any improvements to the
Property with respect to which any such borrowing was incurred, and (ii) to repay any other
indebtedness of the Company, Property



14









 







Owners or Service Companies with respect to which any such
refinancing or borrowing was incurred, together with accrued interest thereon. For this purpose,
cash proceeds received by a Property Owner or Service Company will not be deemed to be received or
available to the Company until (i) the distribution of such proceeds is actually received by the
Company or (ii) under the terms of the Property Owner’s or Service Company’s partnership agreement
or operating agreement, the Company controls the timing of the Property Owner’s or Service
Company’s distributions and then only to the extent of the Company’s entitlement to such
distributions.



     “Net Income” or “Net Loss” means, for each Fiscal Year or other applicable
period, an amount equal to the Company’s net income or loss for such period as determined for
federal income tax purposes by the Managing Member, determined in accordance with Section 703 (a)
of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703 (a) of the Code will be included in taxable income or loss),
with the following adjustments: (a) by including as an item of gross income any tax-exempt income
received by the Company; (b) by treating as a deductible expense any expenditure of the Company
described in Section 705 (a) (2) (B) of the Code (including amounts paid or incurred to organize
the Company, unless an election is made pursuant to Code Section 709 (b), or to promote the sale of
interests in the Company) and by treating deductions for any losses incurred in connection with the
sale or exchange of property of the



15









 







Company disallowed pursuant to Section 267 (a) (i) or
Section 707 (b) of the Code as expenditures described in Section 705 (a) (2) (B) of the Code;
(c) in lieu of depreciation, amortization and other cost recovery deductions taken into account in
computing total income or loss, there will be taken into account Depreciation; (d) gain or loss
resulting from any disposition of property of the Company with respect to which gain or loss is
recognized for federal income tax purposes will be computed by reference to the Gross Asset Value
of such property rather than its adjusted tax basis; (e) in the event of an adjustment of the Gross
Asset Value of any asset of the Company which requires that the Capital Accounts of the Company be
adjusted pursuant to Regulation Sections 1.704-l (b) (2) (iv) (e) , (f) and (m), the amount of such
adjustment is to be taken into account as additional Net Income or Net Loss pursuant to
Schedule D; and (f) excluding any items specially allocated pursuant to Schedule D.
Once an item of income, gain, loss or deduction has been included in the initial computation of
Net Income or Net Loss or is subject to the special allocation rules in Schedule D, Net
Income or Net Loss will be recomputed without regard to such item.



     “Net Sale Proceeds” means the cash proceeds received by or available to the Company in
connection with a sale, condemnation or casualty of, or other capital event with respect to, any
asset by or on behalf of the Company, a Property Owner or a Service Company, after deduction of any
costs or expenses incurred by the Company, the Property Owner or the Service Company with respect
to, or payable specifically out of the proceeds of, such transaction (including any repayment of
any indebtedness required to be repaid as a result of such sale together with accrued interest
thereon and any sales commissions or other costs and expenses due and payable to any Person in
connection with a sale, including to a Member or its Affiliates). For this purpose, cash proceeds
received by a Property Owner or Service Company will not be deemed to be received or available to
the
Company until (i) the distribution of such proceeds is actually received by the Company or
(ii) under the terms of the partnership agreement, operating agreement or other governing documents
of the Property Owner or Service Company, the



16









 







Company controls the timing of the Property Owner’s
or Service Company’s distributions and then only to the extent of the Company’s entitlement to such
distributions.



     “Person” means any individual or Entity.



     “Principal Closing” is defined in the Master Contribution Agreement.



     “Priority Return,” with respect to each outstanding Class B Common Unit for any Fiscal
Quarter, means a return at the rate of twelve percent (12%) per annum on the Unreturned Capital of
the Member holding the Class B Common Unit at the beginning of the Fiscal Quarter (or, in the case
of the Priority Return for the Fiscal Quarter in which the Class B Common Unit is first issued, the
Capital Account of such Member on the date of the issuance of the Class B Common Unit). The
“Priority Return” for any Fiscal Quarter will be zero if the Unreturned Capital of such Member, at
the beginning of the Fiscal Quarter, is zero.



     “Promissory Note” is defined in Section 6.3.



     “Properties” or “Property” means any real property in which the Company,
directly or indirectly, holds or acquires ownership of a fee, mortgage or leasehold interest.



     “Property Owners” means any partnership or other Entity in which the Company is or
becomes a partner or holds an equity interest and which is or was formed for the purpose of
acquiring, leasing, developing or owning a Property or any Entity that directly or indirectly owns
or leases a Property.



     “Regulations,” “Treasury Regulations” and “Treas. Regs.” means the
final or temporary Income Tax Regulations promulgated pursuant to the Code by the U.S. Department
of the Treasury or any successor regulations.



     “Safe Harbor Rate” is defined in Section 5.2(e) hereof.



     “SEC” means the Securities and Exchange Commission.



17









 





     “Securities Act” means the Securities Act of 1933, as amended and the rules and
regulations promulgated thereunder or any successor act.



     “Service Companies” is defined in the Master Contribution Agreement.



     “Stabilized Value” is defined in the Master Contribution Agreement.



     “Subsequent BCR Entities” means the Entities and individuals identified on Schedule
B-2, which the parties anticipate will be contributing Interests in Development Property Owners to
the Company at a Development Property Closing, as provided in the Master Contribution Agreement.



     “Subsequent FCE Entities” means the Entities and individuals identified on Schedule
A-2, which the parties anticipate will be contributing Interests in Development Property Owners to
the Company at a Development Property Closing, as provided in the Master Contribution Agreement.



     “Substituted Member” means any Person admitted to the Company as a Member pursuant to
Section 8.1.



     “Tax Matters Member” is defined in Section 5.7.



     “Trading Day” means a day on which the principal national securities exchange on which
the FCEI Stock is listed or admitted to trading is open for the transaction of business or, if the
FCEI Stock is not listed or admitted to trading on any national securities exchange, means any day
other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.



     “Transfer” as a noun, means any sale, assignment, conveyance, pledge, hypothecation,
gift, encumbrance or other transfer, including a transfer by operation of law or through the laws
of inheritance and succession, and as a verb, means to sell, assign, convey, pledge, hypothecate,



18









 







give, encumber or otherwise transfer, including by operation of law or through the laws of
inheritance and succession.



     “Units” mean Common Units and any other ownership interest in the Company that
entitles the holder to the distributions under Section 5.2 or Section 7.2 or to rights of consent
under Section 6.4 and Section 11.7.



     “Unreturned Capital,” for purposes of determining the Priority Return on Class B
Common Units, means an amount equal to the Capital Account of the Member holding the Class B Common
Units after reversing all Net Losses that were allocated to that Member under Section 5.1(b) but
not previously reversed by an allocation of Net Income under Section 5.1(a).



     1.2. Exhibits, Etc. References to an “Exhibit” or to a “Schedule” are, unless
otherwise specified, to one of the Exhibits or Schedules attached to this Agreement, and references
to an
“Article” or a “Section” are, unless otherwise specified, to one of the Articles or Sections
of this Agreement.



ARTICLE II




ORGANIZATION




     2.1. Limited Liability Company. The Company was formed as a limited liability company
under the Act by the filing Articles of Organization with the Secretary of State of New York on
July 25, 2006. The rights and liabilities of the Members will be as provided in the Act except as
otherwise expressly provided in this Agreement or the Articles of Organization.



     2.2. Name. The name of the Company is Forest City Master Associates III,
LLC.



     2.3. Character of the Business. The purpose of the Company is: to acquire,
hold, own, develop, redevelop, construct, improve, maintain, operate, manage, sell, lease, rent,
transfer, encumber, mortgage, convey, exchange and otherwise dispose of, deal with, foreclose



19









 







upon
or exercise rights with respect to, any of the Properties and any other real, personal or
intangible property; to exercise all of the powers of a partner, member or owner of the Property
Owners and Service Companies; and to undertake such other activities as may be necessary,
advisable, desirable or convenient to carry out the foregoing purposes.



     2.4. Location of the Principal Place of Business. The location of the principal
place of business of the Company will be at 1360 Terminal Tower, 50 Public Square, Cleveland, Ohio
44113-2203, or such other location as may be selected from time to time by the Managing
Member.



     2.5. Registered Agent and Registered Office. The registered agent of the Company
will be CT Corporation System or such other Person as the Managing Member may select. The
registered office of the Company will be 111 Eighth Avenue, New York, New York 10011, or such
other location as the Managing Member may select.



     2.6. Issuance of Common Units; Member Acceptance.




     (a) Upon contribution of Interests in Property Owners and Service Companies to the
Company or certain wholly owned subsidiaries thereof at the Principal Closing as provided in
the Master Contribution Agreement, the Company is issuing (i) to each of the Initial FCE
Entities contributing Interests in Property Owners or Service Companies at the Principal
Closing the number of Class B Common Units set forth opposite its name under the column
entitled “Number of Units” on Schedule B, and (ii) to each of the Initial BCR
Entities contributing Interests in Property Owners at the Principal Closing the number of
Class A Initial Common Units set forth opposite its name under the column entitled “Number
of Units” on Schedule A. Any Class A Common Units or Class B Common Units issued
after the Principal Closing pursuant to Section 3.1 of the Master Contribution Agreement
shall be added to Schedule A or Schedule B, as applicable, upon the issuance
of any such units. The Company accepts each such Initial FCE Entity and Initial BCR Entity
as a Member of the Company.




     (b) Class B Common Units will be issued pursuant to Section 4.18 of the Master
Contribution Agreement.




     (c) When the Stabilized Value of Development Properties are determined and Interests in
the Development Properties are contributed at a Development Property Closing as provided in
the Master Contribution Agreement, the Company will issue (i) to each of the Subsequent FCE
Entities contributing Interests in the Development Property



20









 







Owners the number of Class B
Common Units to which it is entitled under the Master Contribution Agreement and (ii) to
each of the Subsequent BCR Entities contributing Interests in the Development Property
Owners the number of Class A Additional Common Units to which it is entitled under the
Master Contribution Agreement. The Company will accept such Subsequent FCE Entities and
Subsequent BCR Entities as Members of the Company upon execution of instruments by which
they confirm to the Company that they accept and adopt the provisions of this Agreement
applicable to them.



     2.7. Class A Special Common Units. The Members acknowledge and agree that 208,943 of
the Class A Initial Common Units shall be deemed to be Class A Special Common Units. The subset of
the Class A Initial Common Units comprising the Class A Special Common Units is identified on
Schedule A annexed hereto. Notwithstanding the above, the Class A Member Representative,
in its sole discretion, may from time to time redesignate which of the Class A Initial Common Units
shall comprise the Class A Special Common Units. The terms of
the Class A Special Common Units will be identical to the terms of the other Class A Initial
Common Units, except that: (x) no Member may Transfer or exercise Exchange Rights with respect to
any Class A Special Common Units and (y) the Members holding Class A Special Common Units
collectively will be required to make a capital contribution to the Company in an amount equal to
any final, non-appealable order, judgment, decree or decision of a court of competent jurisdiction
concerning an Indemnification Claim under the Master Contribution Agreement, or an amount as to
which FCEI and the BCR Representative may agree to in settlement of such Indemnification Claim,
subject to the limitations thereon set forth in Section 8.5 of the Master Contribution Agreement.
Any capital contributions made pursuant to this Section 2.7 shall not be added to a Members Capital
Account nor result in the issuance of additional Common Units. In the event that the Members
holding Class A Special Common Units fail to satisfy their obligation to make a required capital
contribution to the Company under this Section 2.7 within fifteen (15) days after demand therefor
by the Class B Member Representative, the Company, as its sole and exclusive remedy with respect to
the failure to



21









 







make such required capital contribution, as permitted by Section 502(c) of the Act,
will be entitled to eliminate Class A Special Common Units, valued at the Current Per Share Market
Price as of the date of the expiration of such 15-day period, in an amount equal to the required
capital contribution. The Class A Member Representative may designate the specific order in which
Class A Special Common Units are to be eliminated within such 15-day period. In the event the
Class A Member Representative has not designated which Class A Special Common Units are to be
eliminated within such 15-day period, the Class B Member Representative will determine which Class
A Special Common Units are to be eliminated. On the first anniversary of the Principal Closing,
all then outstanding Class A Special Common Units automatically shall
be deemed ordinary Class A Initial Common Units, and the terms and provisions of this Section
2.7 shall thereafter terminate; provided, however, that with respect to any Indemnification Claims
asserted prior to the first anniversary of the Principal Closing that are pending as of the first
anniversary of the Principal Closing, an amount of Class A Special Common Units, based on the per
unit value set forth on Schedule A, with an aggregated value equal to the disputed
Indemnification Claim (subject to the limitations thereon set forth in Section 8.5 of the Master
Contribution Agreement) will continue to remain as Class A Special Common Units until either FCEI
and the BCR Representative have settled such Indemnification Claim or a final, non-appealable
order, judgment, decree or decision of a court of competent jurisdiction is issued as to whether or
not payment is owed under such Indemnification Claim.



ARTICLE III




TERM




     The Company’s term began upon the filing Articles of Organization with the Secretary of State
of New York on July 25, 2006, and will continue until the Company is dissolved and its



22









 







affairs
wound up in accordance with the provisions of this Agreement or the Act. The Company will have a
perpetual existence unless terminated as stated above.



ARTICLE IV




CONTRIBUTIONS TO CAPITAL




     4.1. Initial Capital Contributions. Each Member has made, or concurrently with its
acceptance as a Member will make, an Initial Capital Contribution to the Company as set forth under
the column entitled “Value of Capital Contributions” in Schedule A and Schedule B.
When Interests are transferred or issued pursuant to the Master Contribution Agreement or
Exhibit A or Interests in Development Property Owners are contributed to the Company at any
Development Property Closing, Schedule A and Schedule B will be amended to
reflect the value of the Interests being contributed, as determined by the Master Contribution
Agreement.



     4.2. Capital Accounts. The Company will establish and maintain a separate Capital
Account for each Member. The initial Capital Accounts of the Members will be as set forth in
Schedule E. When Interests are transferred or issued pursuant to the Master Contribution
Agreement or Exhibit A or Interests in Development Property Owners are contributed to the
Company at any Development Property Closing, Schedule E will be amended to reflect the
initial Capital Accounts of the newly admitted Members, as determined by the Master Contribution
Agreement. Except as provided in Section 5.2 or Section 7.2, no Member will have the right to the
distribution or payment of its Capital Account.



     4.3. Liability for Deficits in Capital Accounts. A Member will not be liable to
the Company for all or a portion of any deficit in its Capital Account unless it elects to be
liable for such deficit or a portion thereof. Any election to be liable for a Capital Account
deficit may be for either a limited or an unlimited amount and may be amended or withdrawn at any
time. The



23









 







election, and any amendment thereof, will be made by written notice to the Managing
Member stating that the Member elects to be liable, and specifying the limitations, if any, on the
maximum amount or duration of such liability. Such election, or amendment thereof, will be
effective only from the date the written notice is received by the Managing Member and will
terminate upon the date, if any, specified therein as a termination date or upon delivery to the
Managing Member of a subsequent written notice withdrawing or otherwise amending such election. A
withdrawal, or an amendment reducing the Member’s maximum liability, will not be effective to avoid
responsibility for any loss incurred prior to such amendment or withdrawal.



     4.4. Common Units Have Not Been Registered. Each of the Members acknowledges
that the Common Units were issued in transactions that were exempt from the registration
requirements of the Securities Act of 1933, as amended, have not been registered under any federal
or state securities laws and, as a result thereof and in addition to the limitations on Transfer
set forth in Article VIII, may not be sold or otherwise Transferred unless such Transfer is exempt
from registration under such laws or the Transfer is registered under such laws.



     4.5. Future Capital Contributions. No Member will be required to make any loans
to the Company or capital contribution, other than the Initial Capital Contributions, without such
Member’s prior written consent, unless such Member otherwise is required to make a capital
contribution (other than its Initial Capital Contribution) pursuant to this Agreement or the Master
Contribution Agreement. No Member will be permitted to make any such additional capital
contribution unless requested to do so by the Managing Member. Members do not have the right to
participate, on a pro rata basis or otherwise, in any such additional capital contributions. No
Member will be permitted to make any loans to the Company without the consent of a
Majority-in-Interest of the Members, which consent is not to be unreasonably withheld.



24









 





     4.6. No Third Party Beneficiary. No creditor or other third party having dealings
with the Company will have the right to enforce any right or obligation of any Member to make
capital contributions, pay any deficit in its Capital Account, make loans to the Company or pursue
any other right or remedy hereunder; the provisions of this Agreement are solely for the benefit
of, and may be enforced only by, the parties hereto and their respective successors and
assigns.



     4.7. No Interest; No Return. No Member will be entitled to interest on its
capital contributions or its Capital Account. Except as provided herein or by law or in this
Agreement,
no Member will have any right to demand or receive the return of its capital contribution or
its Capital Account from the Company or from any of the other Members.



ARTICLE V




ALLOCATIONS, DISTRIBUTIONS, AND OTHER TAX AND ACCOUNTING MATTERS




     5.1. Allocations.




       (a) Except as otherwise required by the relevant provisions of the Code and the
Regulations, Net Income for each Fiscal Year will be allocated to the Members in the
following order:




     (i) First, to reverse any allocation of Net Losses under Section 5.1(b)(vi) in
excess of amounts previously allocated under this clause (i).




     (ii) Second, to reverse any allocation of Net Losses under Section 5.1(b)(v) in
excess of amounts previously allocated under this clause (ii).




     (iii) Third, to reverse any allocation of Net Losses under Section 5.1(b)(iv)
in excess of amounts previously allocated under this clause (iii).




     (iv) Fourth, to Members holding Class A Common Units to the extent of the Class
A Distribution Preference accrued during the Fiscal Year and prior Fiscal Years in
excess of amounts previously allocated under this clause (iv).




     (v) Fifth, to the Members holding Class B Common Units to the extent of the
Class B Distribution Amount accrued during the Fiscal Year and prior Fiscal Years in
excess of amounts previously allocated under this clause (v).



25









 






     (vi) Sixth, five percent (5%) to Members holding Class A Common Units and
ninety-five percent (95%) to Members holding Class B Common Units.




       (b) Except as otherwise required by the relevant provisions of the Code and the
Regulations, Net Losses for each Fiscal Year will be allocated to the Members in the
following order:




     (i) First, to reverse any allocation of Net Income under Section 5.1(a)(vi) in
excess of amounts previously allocated under this clause (i).




     (ii) Second, to reverse any allocation of Net Income under Section 5.1(a)(v)
not previously distributed in excess of amounts previously allocated under this
clause (ii).




     (iii) Third, to reverse any allocation of Net Income under Section 5.1(a)(iv)
not previously distributed in excess of amounts previously allocated under this
clause (iii).




     (iv) Fourth, to the extent of any positive balance of the Capital Account of
each Member holding Class B Common Units.




     (v) Fifth, to the extent of any positive balance of the Capital Account of each
Member holding Class A Common Units.




     (vi) Sixth, five percent (5%) to Members holding Class A Common Units and
ninety-five percent (95%) to Members holding Class B Common Units.




       (c) Other tax matters will be as set forth in Schedule D.



     5.2. Distributions.




       (a) The Managing Member will cause the Company to distribute Net Distributable Cash to
the Members at such times and in such amounts, consistent with this Agreement, as the
Managing Member may from time to time determine; except that, the Managing Member
will cause the Company to distribute, within forty-five days after the end of each Fiscal
Quarter, Net Distributable Cash in an amount equal to the lesser of (i) the amount of any
Class A Cumulative Distribution Shortfall and the Class A Distribution Preference for such
Fiscal Quarter and (ii) the entire amount of the Net Distributable Cash for the Fiscal
Quarter.




       (b) Subject to Sections 5.2(a) and 7.2, all distributions of Net Distributable Cash
will be made in accordance with the following order of priority:




     (i) First, to the Members holding the Class A Common Units to the extent of any
Class A Cumulative Distribution Shortfall;



26









 






     (ii) Second, to the Members holding the Class A Common Units to the extent of
the Class A Distribution Preference on account of the Fiscal Quarter for which the
distribution is made;




     (iii) Third, to the Members holding the Class B Common Units to the extent of
the Class B Cumulative Distribution Shortfall;




     (iv) Fourth, to the Members holding the Class B Common Units to the extent of
the Class B Distribution Amount on account of the Fiscal Quarter for which the
distribution is made;




     (v) Fifth, to the Members holding the Class B Common Units to the extent of the
positive balance of their Capital Accounts;




     (vi) Sixth, to the Members holding the Class A Common Units to the extent of
the positive balance of their Capital Accounts; and




     (vii) Seventh, ninety-five percent (95%) to the Members holding Class B Common
Units, and five percent (5%) to the Members holding Class A Common Units.




       (c) If the amount being distributed is not sufficient to pay in full the amount that
the Members holding Class A Common Units or Class B Common Units, as the case may be, would
otherwise be entitled to receive, the distribution will be made pro rata, based on the
number of Common Units held by each such Member.




       (d) Only Members that, according to the books and records of the Company, are holders
of Common Units as of the close of business on the last day of the last Fiscal Quarter prior
the date on which a distribution under this Section 5.2 is made will be entitled to receive
the distribution. If Common Units are transferred of record prior to the close of business
on the last day of a Fiscal Quarter, the transferor will be entitled to receive all
distributions with respect to such Common Units for any Fiscal Quarter ended prior to the
transfer, and the transferee will be entitled to receive all distributions with respect to
the Common Units for the Fiscal Quarter in which the transfer is made. If Class A Common
Units are exchanged or redeemed pursuant to Exhibit A, the holder of the Class A
Common Units will be entitled to receive all distributions with respect to the Class A
Common Units for any Fiscal Quarter ended prior to the exchange and a pro rata portion
(based on the number of days in the Fiscal Quarter elapsed prior to the exchange or
redemption, as applicable) of the distributions with respect to the Class A Common Units for
the Fiscal Quarter in which the exchange or redemption occurs, except that, if the
Class A Common Units are exchanged for FCEI Stock prior to the record date for the
determination of shareholders entitled to receive dividends payable on the FCEI Stock in the
Fiscal Quarter in which the exchange occurs, the pro rata portion of any Class A
Distribution Preference to be received by the holder with respect to such Fiscal Quarter
will not include any amount corresponding to the dividends payable on the FCEI Stock.




       (e) Notwithstanding the provisions of this Section 5.2, if the distributions with
respect to the Common Units made on or prior to the second anniversary of the issuance



27









 







of
the Common Units would result in any holder of a Common Unit receiving an annual return on
such holder’s “unreturned capital” (as defined for purposes of Regulation Section
1.707-4(a)) for a tax year (treating the Company tax year in which such second anniversary
occurs as ending on such date) in excess of the Safe Harbor Rate (as defined below), then
the distributions to such holder in excess of such Safe Harbor Rate will be deferred, will
continue to cumulate and will be payable on the earlier to occur of (i) the disposition of
the Common Units to which such deferred distributions relate in a transaction in which the
disposing holder recognizes taxable gain thereon or (ii) the first distribution payment date
with respect to the Common Units following the second anniversary of the issuance of the
Common Units. For purposes of the foregoing, the “Safe Harbor Rate” will equal 150% of the
highest applicable Federal rate, based on quarterly compounding, in effect for purposes of
Section 1274(d) of the Code at any time between the date of the issuance of the Common Units
and the date on which the relevant distribution payment is made.



     5.3. Redemption or Repurchase of Common Units. The Company has no right to redeem or
repurchase Common Units without the consent of the Member holding the Common Units being redeemed
or repurchased. The Company may not, without the consent of the Managing Member and Members
holding a majority of the Class A Common Units then outstanding, repurchase any of the Class B
Common Units. The Company may not repurchase Common Units unless it first pays in full the amount
of any Class A Cumulative Distribution Shortfall.



     5.4. Books of Account. At all times during the continuance of the Company, the
Managing Member will maintain or cause to be maintained books of account in accordance with this
Agreement, including Exhibit A. In addition, the Company will keep all records as required
to be kept pursuant to the Act. Each Member will at all reasonable times have access to such books
and records and the right to inspect the same.



     5.5. Reports. The Managing Member will submit, or cause to be submitted to the
Class A Member Representative and the Class B Member Representative, and otherwise make available
to other Members, not later than July 31 of each year (provided FCEI’s New York strategic business
unit furnishes on a timely basis all requisite information) (a) a consolidated



28









 







balance sheet,
statement of income, statement of members’ equity and statement of cash flows for the Company, the
Properties, the Property Owners and the Service Companies for the prior Fiscal Year, prepared in
accordance with generally accepted accounting principles, (b) a consolidated budget for the
Company, the Properties, the Property Owners and the Service Companies for the current Fiscal Year,
(c) a copy of the federal, state and local income tax returns for such Entities for the prior
Fiscal Year and (d) for each Person to which the Company has made a loan pursuant to Section 6.3,
the name of the Person that received the loan and the
aggregate amount outstanding under such loan. As soon as practicable after the end of each
fiscal quarter (other than the fourth quarter), the Managing Member will also submit to the Class A
Member Representative and the Class B Member Representative, and otherwise make available to the
other Members, (a) a consolidated balance sheet, statement of income, statement of members’ equity
and statement of cash flows for the Company, the Properties, the Property Owners and the Service
Companies for the fiscal quarter, prepared in accordance with generally accepted accounting
principles, (b) an adjusted consolidated budget for the Company, Properties, the Property Owners
and the Service Companies for the Fiscal Year and (c) at the end of each fiscal quarter (including
the fourth quarter) a statement showing, for each FCE Entity that has received a distribution
pursuant to Section 5.2, the aggregate amount distributed to such Entity and the date of the
distribution to such FCE Entity.



     5.6. Tax Elections and Returns. Except as otherwise provided in this Agreement
or the Tax Protection Agreement, all elections required or permitted to be made by the Company
under any applicable tax law will be made by the Managing Member in its sole discretion; without
limiting the foregoing, with respect to any federal income tax year of the Company (other than the
Company’s federal income tax year including the Principal Closing Date), the



29









 







Company will, at the
request of the Class A Member Representative, make or cause to be made an election under section
754 of the Code for the Company and any Entity in which the Company holds a direct or indirect
interest, if (i) such election does not adversely affect the Company and (ii) the Company has the
ability to make such election or cause such election to be made. The Managing Member will prepare
and file, or cause to be prepared and filed, all state and federal tax returns on a timely basis.
The Managing Member will, on a timely basis, provide the Members with the tax information required
by them to prepare their tax returns, including a
Form K-1. The Company will provide the Class A Member Representative annually for his review
a draft of the federal income tax return of the Company as soon as is reasonably practical
following the end of the Company’s fiscal year, but in no event later than forty five (45) days
before its final due date for the Company’s initial federal income tax return and thirty (30) days
before the final due date for each fiscal year thereafter. The Company will give due consideration
to any requests for changes to the income tax return by the Class A Member Representative.



     5.7. Tax Matters Partner. The Managing Member is hereby designated as the tax matters
partner (the “Tax Matters Member”) within the meaning of Section 6231(a) (7) of the Code
for the Company; except that, (a) in exercising its authority as Tax Matters Member it will
be limited by the provisions of this Agreement; (b) the Managing Member will consult with (but is
not required to obtain the approval of) the Member Representatives regarding the filing of a Code
Section 6227(b) administrative adjustment request with respect to the Company or a Property or a
Service Company before filing such request, it being understood that the provisions hereof will not
be construed to limit the ability of any Member, including the Managing Member, to file an
administrative adjustment request on its own behalf pursuant to



30









 







Section 6227(a) of the Code; (c)
the Managing Member will consult with (but is not required to obtain the approval of) the Member
Representatives regarding the filing of a petition for judicial review of an administrative
adjustment request under Section 6228 of the Code, or a petition for judicial review of a final
partnership administrative judgment under Section 6226 of the Code, relating to the Company before
filing such petition; (d) the Managing Member will give prompt notice to the Member Representatives
of the receipt of any written notice that the Internal Revenue Service or any state or local taxing
authority intends to examine the Company’s income
tax returns for any year, receipt of written notice of the beginning of an administrative
proceeding at the Company level relating to the Company under Section 6223 of the Code, receipt of
written notice of the final administrative adjustment relating to the Company pursuant to Section
6223 of the Code and receipt of any request from the Internal Revenue Service for waiver of any
applicable statute of limitations with respect to the filing of any tax return by the Company; and
(e) the Managing Member will promptly notify the Member Representatives if the Managing Member does
not intend to file for judicial review with respect to the Company. The Managing Member, in acting
on behalf of the Company as Tax Matters Member of a Property Owner or Service Company, will afford
the Members the same rights with respect to Property Owner or Service Company tax matters as
afforded to the Members under this Section 5.7. Each of the Members will give prompt written
notice to the Managing Member of the receipt of any written notice that the Internal Revenue
Service or any state or local taxing authority intends to examine the Member’s income tax returns
for any year, the receipt of written notice of the beginning of an administrative proceeding
relating to the Member under Section 6223 of the Code and the receipt of written notice of the
final administrative adjustment relating to the Member pursuant to Section 6223 of the Code,
provided the examination,



31









 







proceeding or adjustment relates to such Member’s Interest in the
Company. In connection with any dispute potentially affecting the tax liability of a Member, at
the election of and expense of the Class A Member Representative, counsel or an accountant selected
by the Class A Member Representative shall have the right to be present at and participate in any
litigation with or administrative hearing before the Internal Revenue Service, and the Company will
not settle any such dispute without first consulting with the Class A Member Representative and
giving full, fair and deliberate consideration to its recommendations and suggestions. As the
Company
makes its decision with respect to any litigation or administrative hearing with the Internal
Revenue Service, the Company will consider the intentions of the Members as reflected in this
Agreement and the relative economic impact of the proposed settlement on the Members such that the
settlement is as neutral to the Members as possible.



     5.8. Risk Insurance. The Managing Member will, at the expense of the Company,
maintain risk insurance with respect to the Property Owners and Properties with financially sound
and established reputable insurers in amounts that are reasonable and customary in the industry for
Property Owners and Properties of comparable sizes and activities.



ARTICLE VI




RIGHTS, DUTIES AND RESTRICTIONS OF THE MANAGING MEMBER




     6.1. Expenditures by the Company. The Managing Member is hereby authorized to pay
compensation for accounting, administrative, legal, technical, management and other services
rendered to the Company. All such Administrative Expenditures will be made on behalf of the
Company, and the Managing Member will be entitled to reimbursement by the Company for any such
Administrative Expenditures. The Company will also assume, and pay when due, all Administrative
Expenses.



32









 





     6.2. Powers and Duties of Managing Member. The Managing Member will be
responsible for the management of the Company’s business and affairs. Except as otherwise
expressly provided in this Agreement, and subject to Sections 6.3 and 6.4, the Managing Member will
have, and is hereby granted, full power and authority to take all actions, for and on behalf of the
Company, as the Managing Member, in its sole discretion, deems necessary or appropriate to carry
out the purposes for which the Company was organized. Without limiting the foregoing, except as
otherwise expressly provided in this Agreement, and subject to
Sections 6.3 and 6.4, the Managing Member will have the power and authority, in its sole
discretion:




     (a) To own, develop, redevelop, manage, operate, provide services to, improve,
remodel, alter, repair, maintain, grant easements appurtenant to and otherwise deal with all
or any part of the Properties;




     (b) To lease, extend or renew leases and amend the terms of leases with respect to all
or any part of the Properties;




     (c) To acquire any additional property, whether personal, real or intangible, or any
interest therein;




     (d) To borrow any funds, to refinance any indebtedness, to repay or settle any
indebtedness and enter into related contracts and arrangements, including interest rate
swaps, caps and hedges;




     (e) To encumber, subdivide, partition, sell, transfer, exchange for other property,
vacate or otherwise dispose of all or any part of the Properties or any interest therein;




     (f) To employ Persons for the operation and management of the Company’s business or to
contract with other Persons for such operation and management;




     (g) To enter into, perform, amend, cancel or rescind contracts and other obligations on
behalf of the Company, including insurance contracts;




     (h) To conduct banking transactions; to draw, sign, accept, endorse, guarantee,
deliver, receive and pay any checks, drafts, bills of exchange, acceptances, notes and other
instruments for or relating to the payment of money; to make deposits into and withdrawals
from the Company’s bank accounts; and to negotiate or discount commercial paper,
acceptances, negotiable instruments, bills of exchange and drafts;



33









 






     (i) To demand, sue for, receive and otherwise take steps to collect or settle any
debts, rents and other amounts owed to the Company; to commence, prosecute, defend and
settle any legal proceedings or arbitration in which the Company is or may hereafter have an
interest;




     (j) To prepare and deliver, or cause to be prepared and delivered, all financial and
other reports with respect to the operations of the Company and all federal and state tax
returns and reports;




     (k) To do all acts that are necessary, customary or appropriate for the protection and
preservation of the Company’s assets, including the establishment of reserves; and




     (l) In general, to exercise all of the rights, privileges and powers permitted to be
had and exercised by a managing member under the provisions of the Act.


Except to the extent expressly set forth herein, the Managing Member, in its capacity as such, will
not be required to expend its own funds to pay any obligation to third parties on behalf of the
Company or to undertake any individual liability or obligation on behalf of the Company.




     6.3. Promissory Notes. The Managing Member will have the authority, in its
discretion, to cause the Company from time to time to make loans to Forest City Rental Properties
Corporation, provided Forest City Rental Properties Corporation is a principal borrower under
FCEI’s principal revolving credit facility, or to FCEI or another wholly owned subsidiary of FCEI
that is a principal borrower under such credit facility (Forest City Rental Properties Corporation,
FCEI or such other subsidiary, the “FCE Borrower”), but in each case only if no Class A
Cumulative Distribution Shortfall exists at the time the loans are made. Each such loan will be
represented by a promissory note payable to the Company and executed by the FCE Borrower, which
promissory note will be in the form attached hereto as Exhibit B (a “Promissory
Note”). Each Promissory Note will bear interest at a commercially reasonable rate. The
obligations of the borrower under each Promissory Note may, if the Managing Member deems necessary
or appropriate, be subordinated to the obligations of FCEI and the FCE



34









 







Borrower under FCEI’s and
the FCE Borrower’s principal revolving credit facilities. Any such subordination of the Promissory
Notes will be evidenced by a subordination agreement in form and substance satisfactory to the
lenders under such credit facilities, provided that any such subordination agreement does not
preclude the repayment of the Promissory Notes in accordance with their terms and this Agreement
unless there is a default under such credit facility. If the FCE Borrower that signs any
Promissory Note ceases at any time to be a principal borrower under FCEI’s principal revolving
credit facility, FCEI will immediately cause the Promissory
Note to be assumed by FCEI or another wholly owned subsidiary of FCEI that is a principal
borrower under such credit facility. If a Class A Cumulative Distribution Shortfall occurs while
any Promissory Notes are outstanding, the Managing Member will cause the Company to demand payment
of the Promissory Notes in an amount equal to the lesser of (a) the amount of the Class A
Cumulative Distribution Shortfall and (b) the unpaid principal balance of all Promissory Notes then
outstanding. If the Company receives an Exchange Notice and either (i) elects to pay the Exchange
Consideration in cash rather than assign the obligation to pay the Exchange Consideration to FCEI
and does not have enough cash to pay the Exchange Consideration in full, (ii) elects to assign the
obligation to pay the Exchange Consideration to FCEI, but FCEI declines to assume the obligation
and the Company does not have enough cash to pay the Exchange Consideration in full or (iii) the
Company is being dissolved and its assets are being liquidated, the Managing Member will cause the
Company to demand payment of the Promissory Notes in an amount equal to the lesser of (x) the
amount needed to pay the Exchange Consideration in full (if applicable) and (y) the unpaid
principal balance of all Promissory Notes then outstanding. In the event that the Managing Member
does not cause the Company to demand payment of the Promissory Notes pursuant to the foregoing two
sentences, the Members



35









 







holding a majority of the then outstanding Class A Common Units will have
the right to cause the Company to demand payment and enforce its rights under the Promissory Notes.
In addition to the Company’s obligations under Section 5.5, upon the request of a Member holding
Class A Common Units, the Managing Member will provide such Member with the principal amount of
each loan outstanding pursuant to this Section 6.3, together with a copy of the Promissory Note
evidencing each such loan and any subordination agreements.



     6.4. Decisions Requiring Vote of Majority-in-Interest of Members. The following
actions require the consent of a Majority-in-Interest of the Members:




     (a) A general assignment for the benefit of creditors or appointment or
acquiescence in the appointment of a custodian, receiver or trustee for all or any part of
the assets of the Company.




     (b) Commencement of any proceeding for Bankruptcy on behalf of the Company.




     (c) Liquidation and dissolution of the Company or (except as required by law) the
filing of a petition or initiation of any other proceeding that seeks a decree of judicial
dissolution of the Company pursuant to the provisions of the Act.




     (d) Issuance of any Units, except as provided in this Agreement or the Master
Contribution Agreement.




     (e) Entering into any contract or taking any action, or permitting any Property Owner
or Service Company from entering into any contract or taking any action, that would
materially interfere with the Company’s legal right to perform its obligations under the
Exchange Rights or that would otherwise alter such Exchange Rights.




     (f) Entering into any contract or taking any action, or permitting any Property Owner
or Service Company from entering into any contract or taking any action, that would
materially interfere with the Company’s legal right to make the allocations and
distributions to the holders of Class A Common Units in accordance with Article V or that
would otherwise alter such allocation and distribution rights.




     (g) Making an investment in the securities of any Entity, other than investments in the
Promissory Notes and Interest in Property Owners and Service Companies, deposits in bank
accounts and other customary investments of cash balances, and other investments permitted
by the terms of this Agreement.



36









 






     (h) Using the Properties or the Service Companies to secure the debts or obligations of
any Person other than the Company, the Property Owners or the Service Companies.




     (i) Loaning funds to any Entity, except for loans evidenced by Promissory Notes in
accordance with Section 6.3.




     (j) Settling any claim or action involving the Members holding Class A Common Units
unless the settlement includes an unconditional release of such Members with respect to such
claim or action.




     (k) Admitting new Members, except as provided in Section 2.6 and for Substitute
Members.




     (l) Admitting any additional or successor Managing Member, except in connection with a
reorganization, merger, consolidation or sale involving FCEI, its outstanding equity
securities or a substantial portion of its assets.




     (m) A transfer of ownership of the Managing Member, except for transfers (i) to an
Entity that is, directly or indirectly, wholly owned by FCEI and (ii) in connection with a
reorganization, merger, consolidation or sale involving FCEI, its outstanding equity
securities or a substantial portion of its assets.




     (n) Permitting any Property Owner or Service Company not to distribute cash available
for distribution to the Company on a current basis if the failure to distribute such cash
will result in a Class A Cumulative Distribution Shortfall or inability to pay Exchange
Consideration.




     (o) Permitting any Property Owner or Service Company to establish cash reserves except
as may be required by any third-party lender or, provided the reserves do not result in any
Class A Cumulative Distribution Shortfall or inability to pay Exchange Consideration, as may
be customary and reasonable.


Except as specifically provided in this Agreement, including this Section 6.4 and Section 11.7, the
Members will have no right to vote on any matter concerning the business and affairs of the
Company. For the consideration received by them under this Agreement, including the rights and
preferences pertaining to the respective Common Units held by them, the Members waive, to the
maximum extent permitted by law, any right that they might have, without the approval of a
Majority-in-Interest of the Members, to file a petition or initiate any other proceeding that seeks
a decree of judicial dissolution of the Company.




37









 








     6.5. Reliance by Third Parties. Any Person dealing with the Company will be entitled
to assume that the Managing Member has full power and authority to encumber, sell or otherwise use
any and all assets of the Company and to enter into any contracts on behalf of the Company, and
such Person will be entitled to deal with the Managing Member as if it were the Company’s sole
party in interest, both legally and beneficially. Each Member hereby waives any and all defenses
or other remedies that may be available against such Person to contest, negate or disaffirm any
action of the Managing Member in connection with any such dealing. In no event
will any Person dealing with the Managing Member or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire into the necessity
or expedience of any act or action of the Managing Member or its representatives. Each
certificate, document or other instrument executed on behalf of the Company by the Managing Member
will be conclusive evidence in favor of any Person relying thereon or claiming thereunder that (a)
at the time of the execution and effect of such certificate, document or instrument, this Agreement
(or prior versions thereof) was in full force and effect; (b) the Managing Member was authorized
and empowered to execute and deliver such certificate, document or instrument on behalf of the
Company; and (c) such certificate, document or instrument is binding upon the Company.



     6.6. Title Holder. To the extent allowable under applicable law, title to all or
any part of the assets of the Company may be held in the name of the Company or in the name of any
other Person that is (a) a special purpose Entity, (b) wholly owned, directly or indirectly, by the
Company and (c) disregarded as a separate Entity for federal tax purposes.



     6.7. Compensation of the Managing Member. The Managing Member will not be
entitled to any compensation for services rendered to the Company solely in its capacity as



38









 




Managing Member except with respect to reimbursement of expenditures pursuant to Section 6.1.




     6.8. Waiver and Indemnification.




     (a) None of the Members, including the Managing Member, their respective Affiliates and
any Person acting on their behalf (each an “Indemnified Party”) will be liable,
responsible or accountable in damages or otherwise to the Company or to any other Member for
any acts or omissions performed or omitted to be performed by them within the scope of the
authority conferred upon them by this Agreement and the Act, provided that, the
Indemnified Party’s conduct or omission to act was taken in good faith and in the belief
that such conduct or omission was in the best interests of the Company and did not
constitute fraud, gross negligence, willful misconduct or recklessness. The
Company will indemnify and hold harmless the Indemnified Parties from any liability,
demand, claim, action or cause of action, assessment, loss, fine, penalty, cost, damage and
expense, including reasonable attorneys’ and accountants’ fees and expenses (each a
“Loss”) incurred by them by reason of any acts or omissions performed or omitted to
be performed by them within the scope of the authority conferred upon them by this Agreement
and the Act and in accordance with the standards set forth above or in enforcing the
provisions of this indemnity.




     (b) The Indemnified Parties will be entitled to receive, upon application therefor,
advances to cover the costs of defending any proceeding against them by reason of any act or
omission performed or omitted to be performed by them within the scope of the authority
conferred upon them by this Agreement and the Act; provided that, such advances will
be repaid to the Company, without interest, if such Person is found by a court of competent
jurisdiction upon entry of a final judgment not to be entitled to such indemnification. All
rights to indemnification hereunder will survive the dissolution of the Company. The
indemnification rights contained in this Agreement will be cumulative of, and in addition
to, any and all other rights, remedies and recourse to which the Indemnified Party may be
entitled, whether at law or at equity.




     (c) The Managing Member will give written notice to the other Members whenever any
Indemnified Party asserts a claim for indemnification or expenses advancement under this
Section 6.8.




     (d) No Member will have any personal liability with respect to the foregoing
indemnification, which will be satisfied solely out of the assets of the Company.




     (e) The indemnification provided by this Section 6.8 will be in addition to any other
rights to which an Indemnified Party or any other Person may be entitled under any
agreement, as a matter of law or otherwise, will continue after an Indemnified Party ceases
to be a Member and will inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnified Party unless otherwise provided in a written agreement
with such Indemnified Party.



39









 






     (f) The provisions of this Section 6.8 are for the benefit of the Indemnified Parties,
their heirs, successors, assigns and administrators. Any amendment, modification or repeal
of this Section 6.8 or any provision hereof will be prospective only and will not affect the
rights of any Indemnified Party under this Section 6.8 as in effect immediately prior to
such amendment, modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.



     6.9. Member Representatives. By signing this Agreement, the Members holding Class A
Common Units hereby appoint Bruce C. Ratner as the Class A Member Representative, and the Members
holding Class B Common Units appoint James A. Ratner as the Class B
Member Representative. The Member Representatives will have full authority to act on behalf
of the Members that they represent, including receiving any notices or reports, granting any
consents or taking any other actions permitted or required to be taken by the Members under this
Agreement. A successor Member Representative may be appointed by the written consent of Members
holding a majority of the Class A Common Units, in the case of a Class A Member Representative, or
Members holding a majority of the Class B Common Units, in the case of a Class B Member
Representative. The Managing Member will not be required to recognize the authority of any
successor Member Representative until the Managing Member has received written notice, signed by or
on behalf of Members holding a sufficient number of Common Units to appoint such successor.



     6.10. Other Matters Concerning the Managing Member.




     (a) The Managing Member upon good faith may rely, and will be protected in acting or
refraining from acting, upon any resolution, certificate, statement, instrument, opinion,
report or other document believed by it to be genuine and to have been signed or presented
by the proper party or parties.




     (b) The Managing Member may consult with legal counsel, accountants, appraisers,
management consultants, investment bankers and other consultants and advisers selected by
it, and any act taken or omitted to be taken in reliance upon the opinion of such Persons as
to matters that the Managing Member reasonably believes to




40









 








be within such Person’s
professional expertise will be conclusively presumed to have been done or omitted in good
faith and in accordance with such opinion.




     (c) The Managing Member will have the right, in respect of any of its powers or
obligations hereunder, to act through any of its duly authorized officers and any attorney
or attorneys-in-fact duly appointed by the Managing Member. Each such attorney will, to the
extent provided by the Managing Member in the power of attorney, have full power and
authority to do and perform any act and duty that is permitted or required to be done by the
Managing Member hereunder.



     6.11. Certain Restrictions on Property Owners and Service Companies. For so long as
the number of outstanding Class A Common Units constitutes five percent (5%) or more of the total
number of outstanding Common Units, the Managing Member shall cause the
organizational documents of any Property Owners and Service Companies in which a third party
is not a member or partner to provide (to the extent permissible) that to the extent the amount
being distributed in the aggregate to the Company from all Property Owners and Service Companies is
not sufficient to pay currently the Class A Distribution Preference and pay in full any then
outstanding Class A Cumulative Distribution Shortfall, distributions of distributable cash under
such organizational documents are to be distributed in accordance with the respective percentage
interests of the members or partners of such entity prior to the repayment of any member loans
(including the payment of any interest thereon) made after the date hereof, accrued and unpaid
priority returns, priority equity, accrued and unpaid preferred returns and preferred equity,
until such time as the Company receives distributions from the Property Owners and Service
Companies in an aggregate amount sufficient to pay currently the Class A Distribution Preference
and pay in full any then outstanding Class A Cumulative Distribution Shortfall.



41









 





ARTICLE VII




DISSOLUTION, LIQUIDATION AND WINDING-UP




     7.1. Accounting. In the event of the dissolution, liquidation and winding-up of the
Company, a proper accounting will be made of the Capital Account of each Member and of the Net
Income or Net Losses of the Company from the date of the last accounting prior to the date of
dissolution. Financial statements presenting such accounting will include a report of a national
certified public accountant selected by the Managing Member.



     7.2. Distribution on Dissolution. In the event of the liquidation and dissolution of
the Company for any reason, the assets of the Company will be distributed in the following order
and priority:




     (a) First, payment of creditors of the Company (other than Members) in the order of
priority as provided by law;




     (b) Second, establishment by the Managing Member of reasonable reserves to provide for
contingent liabilities, if any, as and to the extent required by law;




     (c) Third, payment of debts of the Company to Members, if any, in the order of priority
provided by law; and




     (d) Fourth, pro rata to the Members in accordance with the positive balances of their
respective Capital Accounts.


Whenever the Managing Member reasonably determines that any reserves established pursuant to
paragraph (b) above are in excess of the reasonable requirements of the Company, the amount
determined to be excess will be distributed to the Members in accordance with the order and
priority set forth above.




     7.3. Timing Requirements. In the event that the Company is “liquidated” within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations, any and all distributions to the
Members pursuant to Sections 7.2(c) through (f) will be made no later than the later to occur of



42









 




(i) the last day of the taxable year of the Company in which such liquidation occurs or (ii) ninety
(90) days after the date of such liquidation.




     7.4. Net Sale Proceeds; Sale of Properties. Net Sale Proceeds will be distributed as
part of Net Distributable Cash in accordance with Section 5.2(b), unless the sale of the assets by
or on behalf of the Company, the Property Owners or the Service Companies is made contemporaneously
with, and as part of a plan for, the liquidation and dissolution of the Company. In the event of
the liquidation and dissolution of the Company, the Managing Member may sell assets of the Company,
or (subject to the terms of the operating agreement, partnership agreement or other governing
documents of the Property Owners or Service Companies) cause the Property Owners or Service
Companies to sell Properties and other assets, on the best terms and conditions as the Managing
Member in good faith believes are reasonably
available at the time and under the circumstances and on a non-recourse basis to the Members.
The liquidation of the Company will not be deemed completed until the Company has received cash
payments in full with respect to obligations such as notes, installment sale contracts or other
similar receivables received by the Company in connection with the sale of assets of the Company
and all obligations of the Company have been satisfied, released or assumed by the Managing Member.
The Managing Member will continue to act to enforce all of the rights of the Company pursuant to
any such obligations until such obligations are paid in full or otherwise satisfied.



     7.5. Distributions in Kind. To the extent practicable, all distributions under
Section 7.2 will be paid in cash. In the event that it becomes necessary to make a distribution of
property of the Company in kind, the Managing Member may Transfer and convey such property to the
distributees as tenants in common, subject to any liabilities attached thereto, so as to vest



43









 







in them undivided interests in the whole of such property in proportion to their respective rights to
share in the proceeds of the sale of such property (other than as a creditor) in accordance with
the provisions of Section 7.2.



     7.6. Documentation of Liquidation. Upon the completion of the dissolution and
liquidation of the Company, the Company will terminate and the Managing Member will have the
authority to execute and record any and all documents or instruments required to effect the
dissolution, liquidation and termination of the Company.



     7.7. Dissolution. The Company will not be dissolved by the admission of a Member or
Substitute Member or by the admission of a successor Managing Member in accordance with the terms
of this Agreement. Upon the withdrawal of the Managing Member, any successor Managing Member
selected in accordance with the terms of this Agreement will continue the
business of the Company without dissolution. However, the Company will dissolve, and its
affairs will be wound up, upon the first to occur of any of the following (a “Liquidating Event”):




     (a) as set forth in Section 6.4(c) above, an election to dissolve the Company made by
the Managing Member and a Majority-in-Interest of the Members; and




     (b) entry of a decree of judicial dissolution of the Company pursuant to the provisions
of the Act, provided that the filing of any petition or the initiation of any other
proceeding that results in the entry of the decree was (except as required by law) approved
by a Majority-in-Interest of the Members pursuant to Section 6.4.



     Upon the occurrence of a Liquidating Event, the Company will continue solely for the purposes
of winding up its affairs in an orderly manner, liquidating its assets and satisfying the claims of
its creditors and Members.



     The Members acknowledge that the business of the Company includes the ownership of interests
in the Properties, and the ownership of direct and indirect interests in other real property; and
that so long as the Company owns, or is seeking to acquire, any such interests, no Member will seek
judicial dissolution of the Company.



44









 





ARTICLE VIII




TRANSFER OF UNITS



8.1. Transfers by Members.




     (a) Subject to the provisions of Section 6.4 and Section 8.2, each holder of Class B
Common Units may Transfer all or a portion of its Class B Common Units to another Member or
to an Entity that is, directly or indirectly, wholly owned by FCEI (or, in the event of a
reorganization, merger, consolidation or sale involving FCEI, its outstanding equity
securities or a substantial portion of its assets, to an Entity that is, directly or
indirectly, wholly owned by FCEI or by the Entity that is the surviving or resulting Entity
in the reorganization, merger or consolidation or is the Entity that acquires a substantial
portion of FCEI’s assets), and the Managing Member may Transfer all or a portion of its
Interest in the Company to an Entity that is, directly or indirectly, wholly owned by FCEI
(or, in the event of a reorganization, merger, consolidation or sale involving FCEI, its
outstanding equity securities or a substantial portion of its assets, to an Entity that is,
directly or indirectly, wholly owned by FCEI or by the Entity that is the surviving or
resulting Entity in the merger or consolidation or is the Entity that acquires a substantial
portion of FCEI’s assets). Holders of Class A Common Units may Transfer all or a portion of
its Common Units to any Person that is:




     (i) another Member;




     (ii) BCR or a member of the Immediate Family of BCR;




     (iii) an Affiliate of BCR or FCEI;




     (iv) a member of Key Management or an Affiliate of a member of Key Management;




     (v) an institutional lender, or another Entity reasonably acceptable to the
Managing Member that customarily loans money or provides other financial products
secured by REIT OP-type units, in either case as security for a bona fide obligation
of such Member; or




     (vi) a charitable organization,


provided that, in each such case prior written notice of the proposed Transfer is
delivered to the Managing Member.




     (b) Any Person to whom Common Units are transferred in accordance with the first
sentence of Section 8.1(a) or clause (i), (ii) or (iii) of Section 8.1(a) automatically will
be admitted as a Substituted Member upon the filing with the Company of a duly executed
instrument of assignment and assumption among the transferor, the transferee and the Company
substantially in the form attached to this Agreement as Exhibit C.



45









 






     (c) Any Person to whom Common Units are transferred in accordance with clause (iv), (v)
or (vi) of Section 8.1(a) will be deemed to be an Assignee and, as such, will be entitled
only to receive distributions under Section 5.2 and Section 7.2 that the Member transferring
the Common Units would otherwise have been entitled to receive and, in the case of Class A
Common Units, to the benefit of the Exchange Right; except that, the Exchange Rights
held by members of Key Management or Affiliates of a member of Key Management, charitable
organizations, institutional lenders and other Entities that customarily loan money or
provide other financial products secured by REIT OP-type units will be subject to the
provisions set forth in Paragraph 8 of Exhibit A. An Assignee will have no right
(i) to receive notices or to vote on any matter requiring the consent or approval of
Members, (ii) to demand or receive any account of the Company’s business, (iii) to inspect
the Company’s books and records or (iv) to any right or privilege under this Agreement of
the Member transferring the Common Unit other than the right to receive such distributions
and, if applicable, the benefit of the Exchange Right. In addition, the Member transferring
the Common Units will not be relieved of any of its obligations under this Agreement.




     (d) Except as set forth in Section 8.1(a), no Transfer of Class A Common Units may be
effected without the consent of the Managing Member, which consent may be given, withheld or
conditioned in the Managing Member’s sole discretion. Except as set forth in Section
8.1(a), no Transfer of Class B Common Units may be effected without the approval of the
holders of a majority of the Class A Common Units then outstanding, which consent may be
given, withheld or conditioned in such holders’ sole
discretion. The Managing Member or the holders of Class A Common Units, as the case
may be, may in their discretion consent to a transfer under this Section 8.1(d), but not
consent to the admission of the transferee as a Substituted Member, in which case the
transferee will be deemed to be an Assignee. If the Managing Member or the holders of the
Class A Common Units, as the case may be, consent to the transferee becoming a Substitute
Member, the transferee will become a Substituted Member only upon the execution and deliver
of an instrument of assignment and assumption among the transferor, the transferee and the
Company substantially in the form attached to this Agreement as Exhibit C.



     8.2. Restrictions on Transfer. In addition to any other restrictions on Transfer
herein contained, in no event may any Transfer of a Common Unit by any Member be made (i) to any
Person or Entity who or which, in each case, to the knowledge of the transferring Member, lacks the
legal right, power or capacity to own a Common Unit, or, except with the prior written consent of
the Managing Member, to a Person or Entity that is not either (x) an “Accredited Investor” within
the meaning of Regulation D



46









 







promulgated by the SEC under the Securities Act or (y) a Person with a
“Purchaser Representative” within the meaning of Regulation D promulgated by the SEC under the
Securities Act; (ii) in violation of this Agreement; (iii) in violation of applicable law; (iv) of
any component portion of a Common Unit, such as the Capital Account, or rights to Net Cash Flow,
separate and apart from other components of the Common Unit; (v) if such Transfer would cause a
termination of the Company for federal income tax purposes; (vi) if such Transfer would, in the
opinion of counsel to the Company, cause the Company to cease to be classified as a partnership for
federal income tax purposes; (vii) if such Transfer would, in the opinion of counsel to the
Company, cause the Company to become, with respect to any employee benefit plan subject to Title 1
of ERISA, a “party-in-interest” (as defined in Section 3(14) of ERISA) or a “disqualified person”
(as defined in Section 4975(c) of the Code), (viii) if such Transfer would, in the opinion of
counsel to the Company, cause any portion of the assets of the Company to constitute assets of any
employee benefit plan pursuant to Department of Labor Regulations Section 2510.3-101; (ix) if such
Transfer would result in the transferor or the transferee owning Common Units having a value (computed as of
the date of such proposed Transfer by multiplying the FCEI Stock Amount for such Common Units by
the Current Per Share Market Price) of less than $20,000, unless either (A) such Common Units
constitute all of the Common Units then owned by the transferor, (B) the transferee is an existing
Member or (C) the Managing Member has consented to such transfer; (x) if such Transfer may not be
effected without registration of such Common Units under the Securities Act or would otherwise
violate any federal, state or foreign securities laws or regulations applicable to the Company or
such Common Units; (xi) to a lender to the Company or any Person who is related (within the meaning
of Section 1.752-4(b) of the Regulations) to any lender to the Company whose loan constitutes a
“nonrecourse liability” (within the meaning of Section 1.752-1(a)(2) of the Regulations) without
the consent of the Managing Member,



47









 







unless the Company’s basis for tax purposes would not be
reduced as a result of such Transfer; (xii) except with the express written consent of the Managing
Member, if such Transfer, in the opinion of counsel to the Managing Member, would result in either
the Company having more than one hundred Members or in the Company being classified as a “publicly
traded partnership” within the meaning of the Code and the Regulations; (xiii) except with the
express written consent of the Managing Member, to any Entity that is a partnership, grantor trust
or S corporation if (A) substantially all of the value of the interest of a person owning an
interest in such Entity is attributable to the Entity’s (direct or indirect) interest in a Common
Unit, and (B) a principal purpose of the use of the tiered arrangement is to permit the Company to
satisfy the 100-person limitation in paragraph (h) (i) (ii) of Section 1.7704-1 of the Regulations;
(xiv) except with respect to (A) transfers qualifying as a “private transfer” for purposes of
Regulations Section 1.7704-1(e) or any successor provision or (B) up to two Transfers
(excluding for this purpose, transfers qualifying as “private transfers”) of interests
directly or indirectly held by the estate of or other successor to, a person that has died within
the preceding twelve (12) months, if the Managing Member determines in its reasonable discretion
that if it permitted such transfer the Company would be unable to obtain an opinion of counsel
recognized standing to the effect that the Company should not be treated as a “publicly traded
partnership” within the meaning of Section 7704(b) of the Code or (xv) if the Transfer would result
in the payment of a participation or transaction fee under the terms of any agreement in existence
on the date of this Agreement, unless the transferor first reimburses the Company for the amount of
the fee.



     8.3. Attempted Transfers That Do Not Comply with this Article VIII. Any attempt to
Transfer Common Units that does not comply with this Article VIII will be ineffective. In the



48









 







event of any such attempted Transfer, the Managing Member may, in its discretion, upon written
notice to the transferring Member with a thirty (30) day period for the transferring Member to
cure, withhold any distributions, decline to honor any Exchange Rights or refuse to recognize any
other rights of ownership of the Common Units purported to be transferred until the attempted
Transfer is rescinded or a Transfer in compliance with this Article VIII is made.



     8.4. Record of Transfers; Certificates for Units. The Managing Member will maintain a
record of all Transfers of Units. None of the Units will be represented by certificates.



ARTICLE IX




RIGHTS AND OBLIGATIONS OF THE MEMBERS




     9.1. No Participation in Management. Except as expressly permitted hereunder, the
Members, in their capacities as Members of the Company, will not take part in the management of the
Company’s business, transact any business in the Company’s name or have the power to
sign documents for or otherwise bind the Company; except that, this provision is not
intended to limit the authority of the Managing Member or to prohibit or preclude any Member or its
Affiliates from serving as an officer, director or employee of the Company or any Property Owner or
Service Company.



     9.2. Rights to Obtain Certain Documents and Information. In addition to other rights
provided by this Agreement, including, without limitation, Section 5.5 and Section 6.3, or by the
Act, each Member will have the right, for a purpose reasonably related to such Member’s interest as
a Member, upon written demand with a statement of the purpose of such demand and at such Member’s
own expense (including such copying and administrative charges as the Managing Member may establish
from time to time):




     (a) to obtain a copy of the Company’s federal, state and local income tax returns for
each Fiscal Year;



49









 






     (b) to obtain a current list of the name and last known business, resident or mailing
address of each Member; and




     (c) to obtain a copy of this Agreement and the Articles of Organization.



     9.3. No Withdrawal. No Member may withdraw from the Company without the prior written
consent of the Managing Member, other than as expressly provided in this Agreement or in the Act.



     9.4. Limited Liability. No Member will be bound, or personally liable for, the
expenses, liabilities or obligations of the Company, except as provided by this Agreement or the
Act.



     9.5. Other Ventures. Members (other than Members who are employees of FCEI or an
Affiliate of FCEI or a director of FCEI during the term of such employment or directorship), and
any assignees, officers, directors, members, employees, agents, trustees, affiliates or
stockholders of such Member are permitted to engage in other business ventures and investments
and are not required to present corporate opportunities to the Company, FCEI or their
Affiliates, even if such opportunities directly or indirectly compete with FCEI, the Company or
their Affiliates. Neither FCEI, the Company, the other Members nor their Affiliates will have any
rights in or to such opportunities, and such opportunities are hereby renounced. Members who are
employees of FCEI or of an Affiliate of FCEI during the term of such employment will be subject to
the restrictions on participating in business ventures and investments, and to the requirements for
presenting corporate opportunities, that are set forth in FCEI’s Code of Legal and Ethical Conduct,
as amended from time to time. Any Member who is a director of FCEI during the term of such
directorship will also be subject to the restrictions on participating in business ventures and
investments, and to the requirements for presenting corporate opportunities, that are set forth in
FCEI’s Corporate Governance Guidelines, as amended from



50









 







time to time. Such Members acknowledge
that the Code of Legal and Ethical Conduct and the Corporate Governance Guidelines may also
restrict conduct by their Affiliates.



ARTICLE X




GRANT OF EXCHANGE RIGHTS TO MEMBERS




     The Company hereby grants to each Member holding Class A Common Units the exchange right (the
“Exchange Right”) set forth in Exhibit A. The Exchange Right may be exercised by
delivery to the Company of a notice of exchange (an “Exchange Notice”) in accordance with
Exhibit A.



ARTICLE XI




GENERAL PROVISIONS




     11.1. Notices. All notices, demands, consents, requests or other communications
provided for or permitted to be given hereunder by a party hereto must be in writing, may be
delivered in person, confirmed facsimile transmission, registered or certified mail, return
receipt requested, or overnight courier, and will be deemed to have been properly given or served
upon actual receipt (with rejection of delivery by addressee to constitute receipt) by such party.
For purposes of this Section 11.1:



     The address of the Managing Member is:


c/o Forest City Enterprises, Inc.

1360 Terminal Tower

50 Public Square

Cleveland, OH 44113-2203

Attention: Mr. James A. Ratner

Fax: (216) 263-6208




51









 







with a copy sent simultaneously to:



Forest City Enterprises, Inc.

1360 Terminal Tower

50 Public Square

Cleveland, OH 44113-2203

Attention: General Counsel

Fax: (216) 263-6206




     The address of the Class A Member Representative is:


Mr. Bruce C. Ratner

Forest City Ratner Companies

One MetroTech Center North

Brooklyn, New York 11201

Fax: (___) ___-____



with a copy sent simultaneously to:



Forest City Ratner Companies

One MetroTech Center North

Brooklyn, New York 11201

Attention: General Counsel

Fax: (___) ___-____




     The address of the Class B Member Representative is:


Mr. James A. Ratner

Forest City Enterprises, Inc.

1360 Terminal Tower

50 Public Square

Cleveland, OH 44113-2203

Fax: (216) 263-6208



with a copy sent simultaneously to:



Forest City Enterprises, Inc.

1360 Terminal Tower

50 Public Square

Cleveland, OH 44113-2203

Attention: General Counsel

Fax: ((216) 263-6206



The address of any party hereto may be changed by a notice in writing given in accordance with the
provisions hereof.




52









 








     11.2. Successor. This Agreement and all the terms and provisions hereof will be
binding upon and will inure to the benefit of the Company, the Members and their legal
representatives, heirs, successors and permitted assigns, except as otherwise provided in this
Agreement.



     11.3. Effect and Interpretation. This Agreement will be governed by and construed in
conformity with the laws of the State of New York.



     11.4. Counterparts. This Agreement may be executed in counterparts, each of which
will be an original, but all of which will constitute one and the same instrument.



     11.5. Members Not Agents. Nothing contained in this Agreement will be construed to
constitute any Member as the agent of another Member or of the Company.



     11.6. Entire Understanding. Subject to the terms of the Master Contribution
Agreement, this Agreement constitutes the entire agreement and understanding among the
Members regarding the subject matter of this Agreement and supersedes any prior understandings
and written or oral agreements among them respecting the subject matter.



     11.7. Amendments.




     (a) Except as provided in Section 11.7(b), this Agreement may not be amended unless
such amendment is approved by the Managing Member and a Majority-in-Interest of the Members.
No amendment may, without the approval of all of the affected Members, (i) modify the
limited liability of any Member, (ii) modify the Exchange Rights in a manner adverse to any
Member, (iii) modify the provisions of Section 5.2, Section 6.4, Section 6.8 or Section 7.2,
or any of the definitions used therein, in a manner adverse to any Member or (iv) otherwise
modify or repeal the provisions of this Agreement in a manner that would adversely affect in
any material respect the Members disproportionately with respect to their rights as holders
of Common Units.




     (b) The Managing Member will have the power, without the consent of any Member, to
amend this Agreement as may be required to facilitate or implement any of the following:




     (i) to add to the obligations of the Managing Member or surrender any right or
power granted to the Managing Member or any Affiliate of the Managing Member;



53









 






     (ii) to reflect the admission, substitution or withdrawal of Members in
accordance with this Agreement;




     (iii) to reflect any change that does not adversely affect the Members in any
material respect, to cure any ambiguity or to correct or supplement any defective
provision in this Agreement; and




     (iv) to satisfy any requirements, conditions or guidelines contained in any
order, directive, opinion, ruling or regulations of a federal or state agency or
contained in federal or state law.




     (c) This Section 11.7 may not be amended except with the prior written consent of all
of the Members.



     11.8. Severability. If any provision of this Agreement, or the application of any
provision to any person or circumstance, is held to be invalid by a court of competent
jurisdiction, the remainder of this Agreement, or the application of the provision to persons or
circumstances other than those to which it is held invalid by such court, will not be affected
thereby.



     11.9. Pronouns and Headings. As used herein, all pronouns will include the masculine,
feminine and neuter, and all defined terms will include the singular and plural thereof wherever
the context and facts require such construction. The headings, titles and subtitles herein are for
convenience of reference only and are to be ignored in any construction of the provisions hereof.
Any references in this Agreement to “including” will be deemed to mean “including without
limitation.”



     11.10. Assurances. Each of the Members will hereafter execute and deliver such
further instruments and do such further acts and things as may be reasonably required or useful to
carry out the intent and purpose of this Agreement and as are not inconsistent with the terms
hereof, at the expense of the party making such request, except that no Member will, in connection
with the foregoing, be obligated to incur any liabilities or obligations other than those expressly
contemplated in this Agreement.



54









 





     11.11. Expenses. Each of the parties will pay its own expenses, including expenses of
counsel, incurred in connection with the negotiation, drafting and execution of this Agreement and
the schedules and exhibits hereto.



     11.12. Waiver of Partition. Except as otherwise expressly provided in this Agreement,
no Member will, either directly or indirectly, take any action to require partition or appraisement
of the Company or any of its assets or properties or cause the sale of any assets of the Company or
property, and notwithstanding any provision of applicable law to the contrary, each Member (for
itself and its legal representatives, successors and assigns) hereby irrevocably waives any and all
right to partition, or to maintain any action for partition, or to compel any sale with respect to
its interest in, or with respect to, any assets or properties of the Company, except as expressly
provided in this Agreement.



     11.13. GOVERNING LAW. AS PERMITTED BY SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK, THE PARTIES HERETO AGREE THAT THIS AGREEMENT WILL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.



     11.14. Jurisdiction. Each of the parties submits to the jurisdiction of any New York
State Court or Federal Court of the United States of America sitting in the borough of Manhattan,
and any appellate court from any such court, in any suit, action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment. All claims in
respect of any such suit, action or proceeding may be brought, heard and determined in such New
York State Court or, to the extent permitted by law, in such Federal Court. Final judgment in any
such suit, action or proceeding will be conclusive and may be enforced in other



55









 







jurisdictions by
suit on the judgment or in any other manner provided by law. Each of the parties waives, to the
fullest extent it may legally and effectively do so, any objection that it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or relating to this
Agreement in any New York State Court or Federal Court sitting in the borough of Manhattan. Each
of the parties waives, to the fullest extent permitted by law, the defense of an inconvenient forum
to the maintenance of such suit, action or proceeding in any such court. Nothing contained in this
Section 11.14 will be construed as preventing any of the parties from (i) objecting to the
jurisdiction of any New York State Court on the ground that the matter involved exceeds the
statutory jurisdiction of such court or (ii) from seeking to remove any suit, action or proceeding
from a New York State Court to a Federal Court sitting in the borough of Manhattan, or vice versa.



56









 





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



[signature blocks to be added]




57









 





ADDENDUM TO AMENDED AND RESTATED

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

FOREST CITY MASTER ASSOCIATES III, LLC




     FOREST CITY ENTERPRISES, INC., an Ohio corporation, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, covenants and agrees with the Company and
Members holding Class A Common Units as follows:



     1. Definitions. Each of the defined terms used in this Addendum has the meaning given
to it in the foregoing Amended and Restated Limited Liability Company Operating Agreement of Forest
City Master Associates III, LLC (the “Operating Agreement”).



     2. Reservation of FCEI Stock. Commencing on the date hereof and at all times
thereafter until all of the Class A Common Units have been exchanged, FCEI will reserve and keep
available, free from preemptive rights, out of its authorized but unissued FCEI Stock or FCEI Stock
held in treasury, solely for the purpose of issuance upon exchange of the Class A Common Units, the
full number of shares of FCEI Stock then deliverable upon exchange of all of the Class A Common
Units then outstanding. Prior to the first date upon which any portion of the Class A Common Units
may be converted to FCEI Stock, FCEI will obtain all consents, approvals, authorizations, orders,
clearances and qualifications of any Governmental Authority (as defined in the Master Contribution
Agreement) or stock exchange authorities for the issuance and subsequent trading of the FCEI Stock
issuable upon exchange of the Class A Common Units (other than the registration of the FCEI Stock
with the SEC, which registration will be governed by the terms of the Registration Rights Agreement
(as defined in the Master Contribution Agreement)).



     3. Assumption of Exchange Right. If the Company assigns to FCEI the Company’s right
to acquire the Offered Units (as defined in Exhibit A of the Operating Agreement) and its



58









 







obligation to pay the Exchange Consideration, FCEI may, in its sole and absolute discretion,
elect to assume that right and obligation, acquire the Offered Units and pay the Exchange
Consideration in accordance with the terms of Exhibit A. Any Offered Units acquired by
FCEI upon exercise of the Exchange Rights will be immediately converted into Class B Common Units
and remain outstanding, and FCEI will succeed to the Capital Account attributable to such Offered
Units. For these purposes, the Capital Account attributable to such Offered Units will be a
pro rata portion (based on the ratio of the number of such Offered Units over the total number of
Class A Common Units held by the Exercising Holder immediately prior to the exchange) of the
Capital Accounts attributable to all of the Class A Common Units held by the Exercising Holder
immediately prior to the exchange. Any such acquisition by FCEI of Offered Units will be treated
by the parties as a purchase of partnership interests for federal income tax purposes.



     4. Clawback. If the Company receives an Exchange Notice and either (i) elects to pay
the Exchange Consideration in cash rather than assign the obligation to pay the Exchange
Consideration to FCEI and does not have enough cash to pay the Exchange Consideration in full or
(ii) elects to assign the obligation to pay the Exchange Consideration to FCEI, but FCEI declines
to assume the obligation and the Company does not have enough cash to pay the Exchange
Consideration in full, FCEI will, and will cause each of the FCE Entities and any other Affiliates
of FCEI that have received distributions from the Company under Section 5.2 of the Operating
Agreement to, make capital contributions to the Company in an aggregate amount equal to the lesser
of (x) the amount of all distributions previously paid to FCEI, the FCE Entities and any other
Affiliates of FCEI and (y) the amount of cash needed by the Company to pay the Exchange
Consideration.



59









 





     IN WITNESS WHEREOF, FCEI has executed this Addendum as of the ___day of ___,
2006.



	 	 	 	 	 
	 	FOREST CITY ENTERPRISES, INC.

 	 
	 	By:  	 	 
	 	 	    Name:  	 	 
	 	 	    Title:  	 	 
	 




60









 





EXHIBIT A TO THE MASTER III OPERATING AGREEMENT




EXCHANGE RIGHTS




     1. Definitions. Each capitalized term that is used in this Exhibit A and is not
otherwise defined has the meaning given to it in the Amended and Restated Limited Liability Company
Operating Agreement of Forest City Master Associates III, LLC (the “Operating Agreement”).
In addition, each of the following terms has the meaning set forth below:




     (a) “Business Day” means days other than a Saturday, a Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law or
executive order to close.




     (b) “Exchange Consideration” means the product of (i) the FCEI Stock Amount
with respect to the Offered Units and (ii) the Current Per Share Market Price, each computed
as of the date on which the Exchange Notice was delivered to the Company.




     (c) “FCEI Class A Stock” means the Class A Common Stock, $.33-1/3 par value, of
FCEI; “FCEI Class B Stock” means the Class B Common Stock, $.33-1/3 par value, of
FCEI; and “FCEI Common Stock” means, collectively, the FCEI Class A Stock and the
FCEI Class B Stock.




     (d) “FCEI Stock Amount” means the number of shares of FCEI Class A Stock equal
to the number of Offered Units multiplied by the Conversion Factor; except that, if
FCEI issues to all holders of FCEI Class A Stock rights, options, warrants or convertible or
exchangeable securities entitling the shareholders to subscribe for
or purchase additional shares of FCEI Common Stock, other securities or property of FCEI (collectively,
“additional rights”), then the FCEI Stock Amount will also include such additional
rights as a holder of that number of shares of FCEI Class A Stock would have been entitled
to receive.




     (e) “Protection Period” has the meaning given to it in the Tax Protection
Agreement executed and delivered in connection with the Master Contribution Agreement.



     2. Exchange. At any time following the earlier to occur of (a) ___, 2007, (b)
the death of the direct or indirect holder or beneficial owner thereof, (c) the termination of the
Protection Period with respect to the direct or indirect holder or beneficial owner thereof or (d)
the date of the first public announcement of a transaction of the type described in Section 10,



 









 







a holder of Class A Common Units will have the right to exchange all or any portion of such
holder’s Class A Common Units (the “Offered Units”) for the Exchange Consideration, subject
to the limitations contained in Paragraph 4 below. The holder (an “Exercising Holder”) may
exercise the Exchange Right by delivering an Exchange Notice to the Company.



     3. Payment of Exchange Consideration; Assignment of Obligations to FCEI. The Exchange
Consideration will, in the sole discretion of the Company, be paid in the form of (a) cash in the
amount of the Exchange Consideration, payable by delivery of a cashier’s or certified check or by
wire transfer of immediately available funds to the Exercising Holder’s designated account, or (b)
shares of FCEI Class A Stock (valued at the Current Per Share Market Price as of the date on which
the Exchange Notice was delivered to the Company) equal in number to the FCEI Stock Amount or (c)
any combination of cash and FCEI Class A Stock (valued at the Current Per Share Market Price as of
the date on which the Exchange Notice was delivered to the Company) equal in value to the Exchange
Consideration. In addition to the Exchange Consideration, concurrently with the completion of any
exchange pursuant to this Exhibit A, the Company will pay to the Exercising Holder cash in an
amount equal to any Class A Cumulative Distribution Shortfall and payments under Section 5.2(d) of
this Agreement with respect to the Offered Units that are outstanding on the date of the exchange.
The Company may, in its discretion, acquire the Offered Units and pay the Exchange Consideration by
itself or may assign to FCEI its right to acquire the Offered Units and to pay the Exchange
Consideration. FCEI may, in its sole and absolute discretion elect to accept such assignment, in
which event it will pay the Exchange Consideration. Any Offered Units acquired by the Company will
be cancelled and no longer remain outstanding, and the Capital Account attributable to such Offered
Units will be deemed to be discharged and satisfied in full in consideration of the Exchange



 









 







Consideration, unless the Exchange Consideration used to acquire the Offered Units is
contributed to the Company by FCEI; if the Exchange Consideration is contributed to the Company by
FCEI, the Offered Units will be converted into Class B Common Units, issued to FCEI and remain
outstanding, and FCEI will succeed to the Capital Account attributable to such Offered Units.
Similarly, any Offered Units acquired directly by FCEI will be immediately converted into Class B
Common Units and remain outstanding, and FCEI will succeed to the Capital Account attributable to
such Offered Units. For these purposes, the Capital Account attributable to such Offered Units
will be a pro rata portion (based on the ratio of the number of such Offered Units over the total
number of Class A Common Units held by the Exercising Holder immediately prior to the exchange) of
the Capital Accounts attributable to all of the Class A Common Units held by the Exercising Holder
immediately prior to the exchange. Any such acquisition by FCEI of Offered Units will be treated
by the parties as a purchase of partnership interests for federal income tax purposes.



     4. Limitations on Exercise of Exchange Rights. Exchange Rights may be exercised at
any time after the date set forth in Paragraph 2 and from time to time, except that,
without the prior written consent of the Company, (a) only one (1) Exchange Notice may be delivered
to the Company by each holder of Class A Common Units during any calendar quarter (except that the
limitation in this item (a) will not apply to any Exchange Notice delivered as a result of the
occurrence of any of the events set forth in items (b) through (d) of Paragraph 2 or, after the
expiration of the Protection Period (as defined in the Tax Protection Agreement), if any of the
Protected Parties (as defined in the Tax Protection Agreement) recognizes Disposition Gain (as
defined in the Tax Protection Agreement)); and (b) no Exchange Notice may be delivered with respect
to Class A Common Units either (i) having a value of less than $20,000 calculated by



 









 







multiplying the FCEI Stock Amount with respect to such Class A Common Units by the Current Per
Share Market Price or (ii) if a holder does not own Class A Common Units having a value of $20,000
or more, constituting less than all of the Class A Common Units owned by such holder.



     5. Election Notice. Within ten (10) days after receipt by the Company of an Exchange
Notice delivered in accordance with Paragraph 2, the Company will deliver to the Exercising Holder
a notice (an “Election Notice”) setting forth the computation of the Exchange
Consideration, the form of the Exchange Consideration to be paid to such Exercising Holder, and the
date, time and location for completion of the exchange, which date may not be later than (a) ten
(10) days after the delivery of the Election Notice in the case of Offered Units to be exchanged
for FCEI Class A Stock; provided, however, the Exercising Holder will have the
right, in such Exercising Holder’s sole discretion, to request that the delivery of the FCEI Class
A Stock be delayed to the extent necessary to comply with law or any regulatory filings, including,
without limitation, the HSR Act (as defined below) and any filings thereunder and (b) sixty (60)
days after the delivery of the Election Notice in the case of Offered Units to be exchanged for
cash, except that, if the amount of cash is less than Five Million Dollars ($5,000,000),
the date may not be later than thirty (30) days after the date of the delivery of the Election
Notice. If the Company fails to deliver the Election Notice within such ten-day period, the
Company will be deemed to have elected FCEI Class A Stock as the form of the Exchange
Consideration. Notwithstanding the foregoing, the Company will use commercially reasonable efforts
to cause the completion of the exchange to occur as quickly as possible. Once the Company has
delivered an Election Notice with respect to an Exchange Notice, the Exchange Notice may not be
withdrawn or modified by the Exercising Holder without the consent of the



 









 







Company. Similarly, if the Company delivers an Election Notice to an Exercising Holder, the
Company may not modify the Election Notice without the consent of the Exercising Holder.



     6. Closing Deliveries. At the closing of the exchange of Offered Units, payment of
the Exchange Consideration will be accompanied by proper instruments of transfer and assignment and
by the delivery of:




     (a) representations and warranties of the Exercising Holder that (i) it has due
authority to sell all of the right, title and interest in and to such Offered Units to the
Company or FCEI, as the case may be, (ii) the Offered Units are being sold free and clear
of all Liens except, if all or part of the Exchange Consideration is being paid in cash, for
Liens being discharged concurrently with the payment of the cash, and (iii) any FCEI Class A
Stock issued to the Exchanging Holder will not be transferred in violation of the Securities
Act.




     (b) representations and warranties of the Company or FCEI, as the case may be, that (i)
it has due authority for the purchase of such Offered Units and (ii) if shares of FCEI Class
A Stock are delivered in payment of all or any portion of the Exchange Consideration, such
            shares have been duly authorized and are validly issued, fully-paid and non-assessable and
are free and clear of all Liens.




     (c) if shares of FCEI Class A Stock are delivered in payment of all or any portion of
the Exchange Consideration, (i) a stock certificate or certificates evidencing the shares of
FCEI Class A Stock registered in the name of the Exercising Holder or its designee, with an
appropriate legend reflecting that such shares are not registered under the Securities Act
and may not be offered or sold unless registered pursuant to the provisions of the
Securities Act or an exemption therefrom is available.



     7. Offered Units Free and Clear of Liens; Transfer Tax. All Offered Units tendered to
the Company or FCEI upon exercise of Exchange Rights will be delivered to the Company or FCEI free
and clear of all Liens. If any state or local stamp or securities transfer tax is payable as a
result of the transfer of the Exchange Consideration to any Person other than the transferring
holder, the transferring holder will assume and pay such tax. FCEI will be responsible for the
payment of, and for the filing of any returns related to, any real property transfer taxes payable
as a result of the transfer of the Exchange Consideration to any Person (including, without
limitation, the transferring holder.)



 









 





     8. Exchange Rights of Key Management, Charitable Organizations and Institutional
Lenders. Any members of Key Management, Affiliates of a member of Key Management and
charitable organizations that become Assignees of rights with respect to Class A Common Units in
accordance with Section 8.1(c) of the Operating Agreement will, at the time the Company is notified
of the assignment, be deemed to have delivered an Exchange Notice to the Company pursuant to
Paragraph 2, and such Class A Common Units will be exchanged for cash or FCEI Class A Stock in
accordance with this Exhibit A. Any institutional lender or other Entity that customarily
loans money or provides other financial products secured by REIT OP-type units that becomes an
Assignee of rights with respect to Class A Common Units in accordance with Section 8.1(c) of the
Operating Agreement will, at the time the Company is notified that the institutional lender or
other such Entity is foreclosing upon such rights, be deemed to have delivered an Exchange Notice
pursuant to Paragraph 2, and such Class A Common Units will be exchanged for cash or FCEI Class A
Stock in accordance with this Exhibit A.



     9. Rights of Assignee. Subject to the restrictions on transfer set forth in the
Operating Agreement, an Assignee of any holder of Class A Common Units may exercise the Exchange
Rights of such holder of Class A Common Units pursuant to this Exhibit A, and such holder of Class
A Common Units will be deemed to have assigned such Exchange Rights to such Assignee and will be
bound by the exercise thereof by the Assignee. In connection with any exercise of such Exchange
Rights by the Assignee, the Exchange Consideration will be paid by the Company directly to the
Assignee and not to such holder.



     10. Conversion of FCEI Class A Stock. If the Company or FCEI is a party to any
transaction (including, without limitation, a merger or consolidation) as a result of which shares
of FCEI Class A Stock are converted into the right to receive shares of stock, other securities,



 









 







property (including cash) or any combination thereof, the Exchange Consideration will be, in
lieu of each share of FCEI Class A Stock that would otherwise be included in the Exchange
Consideration, the kind and amount of shares of stock, other securities, property or any
combination thereof that was received upon consummation of such transaction in return for one share
of FCEI Class A Stock in such transaction. Notwithstanding the above, if, as part of such
transaction, the form of consideration into which the FCEI Class A Stock is converted (other than
cash) is not covered by the Registration Rights Agreement or a registration rights agreement with
equivalent terms, then notwithstanding the terms of Paragraph 3 of this Exhibit A, the
Exchange Consideration shall be paid in the form of cash.



     11. Hart-Scott-Rodino. Upon exchange of the Class A Common Units, FCEI, the Company,
the FCE Entities and the BCR Entities will make any filings and use commercially reasonable efforts
to obtain any requisite clearances that may be required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR Act”), as provided in the Master Contribution
Agreement. As contemplated by the Master Contribution Agreement, FCEI and the FCE Entities will
bear all costs and expenses, including filing fees, incurred by FCEI, the Company, the FCE Entities
or the BCR Entities in order to comply with the covenants contained in this Section 11.



     12. Headings of Subdivisions. The headings of the various paragraphs of this Exhibit
A are for convenience of reference only and will not affect the interpretation of any of the
provisions hereof.



     13. Severability of Provisions. If any rights, preferences, restrictions, terms or
conditions applicable to the Class A Common Units set forth in the Operating Agreement or in this
Exhibit A are invalid, unlawful or incapable of being enforced by reason of any rule of law



 









 







or public policy, all other rights, preferences, restrictions, terms or conditions applicable
to the Class A Common Units set forth in the Operating Agreement or in this Exhibit A that
can be given effect without the invalid, unlawful or unenforceable provision thereof will,
nevertheless, remain in full force and effect and no other rights, preferences, restrictions, terms
or conditions applicable to the Class A Common Units will be deemed dependent upon any other
provision thereof.



     14. No Preemptive Rights. No holder of Class A Common Units will be entitled to any
preemptive rights to subscribe for or acquire any unissued Units (whether now or hereafter
authorized) or securities of the Company convertible into or carrying a right to subscribe to or
acquire Units of the Company.



     15. Redemption at Option of Holders of Class A Common Units for In-Kind Distribution.




     (i) General.




          (A) At any time or times after the first anniversary of the date hereof, each holder of
Class A Common Units has the right (the “Property Redemption Right”), exercisable
individually or as part of a group of holders of Class A Common Units acting in concert, by
delivery to the Managing Member of a notice (a “Notice of Redemption”), to request
that the Company redeem all or a portion of the Class A Common Units held by such holder of
Class A Common Units (each a “Redeeming Member”) for, subject to the terms hereof,
one or more properties identified by such Redeeming Member and acquired by the Company from
one or more third party sellers (each, an “In-Kind Redemption Property”); provided,
however, that the Property Redemption Right may be exercised only with respect to an amount
of Class A Common Units with an aggregate value of at least $5,000,000 (calculated by
multiplying the FCEI Stock Amount with respect to the Class A Common Units that are the
subject of the Notice of Redemption by the Current Per Share Market Price). The Notice of
Redemption also shall set forth any supplements and/or modifications to the procedures set
forth below in this Paragraph 15 for effectuating the Property Redemption Right that the
Redeeming Member(s) will require. The Company will, promptly following receipt of any
Notice of Redemption pursuant to this Paragraph 15, forward a copy of such notice to all
record holders of Class A Common Units at the last address set forth in the Company’s
registry of Members. The Company may in its sole discretion elect not to proceed with the
in-kind redemption in accordance with the procedure set forth in this Paragraph 15, as
supplemented and modified by the terms of any Notice of Redemption, by giving notice (a
“Response Notice”) to the sender(s) of any Notice of Redemption within fifteen (15)
days after



 









 






receipt of the Notice of Redemption if the Company determines in good faith that the
Company will suffer any adverse effects from proceeding with the in-kind redemption.




          (B) If a Notice of Redemption containing a request for a Property Redemption Right has
been delivered by one or more holders of Class A Common Units and the Company agrees,
subject to the terms hereof, to proceed with the in-kind redemption, the Company will
acquire an In-Kind Redemption Property identified by such Redeeming Member(s), provided the
net fair value (as described below) of such property to the Company does not substantially
exceed the aggregate value of the Class A Common Units that are the subject of the Notice of
Redemption, and the Redeeming Member(s) undertake to pay the Company cash equal to the
amount by which the net fair value of such In-Kind Redemption Property exceeds the aggregate
value of the Class A Common Units that are the subject of the Notice of Redemption. If the
net fair value of an In-Kind Redemption Property exceeds the aggregate value of the Class A
Common Units that are the subject of the Notice of Redemption, such excess will be paid in
cash to the Company by the Redeeming Member(s) at the closing of the redemption. If the
aggregate value of the Class A Common Units that are the subject of the Notice of Redemption
exceeds the net fair value of such In-Kind Redemption Property, then the Redeeming Member(s)
designated by the Class A Member Representative in its sole discretion will retain the
number of Class A Common Units (including if necessary fractional Class A Common Units) with
a value equal to such excess.




          (C) In each case, the Company shall use commercially reasonable efforts to distribute
the In-Kind Redemption Property subject to sufficient “qualified liabilities” as defined in
section 707 of the Code (with all costs of arranging such debt being borne by the Redeeming
Member(s) through an appropriate adjustment to the property valuation) to enable the
Redeeming Member(s) to avoid triggering their negative tax capital accounts as a result of
the redemption. The Company will not be required to incur any expense or liability with
respect to such debt unless and only to the extent that such expense is paid by the
Redeeming Member(s) or taken into account in calculating the net fair value of the In-Kind
Redemption Property. The qualified liabilities will have a minimum remaining term of at
least 18 months and will have commercially reasonable terms, as determined in good faith by
the Managing Member. At the request of the Company, the Redeeming Member(s) shall be
responsible, at their expense, for arranging the indebtedness to be secured by the In-Kind
Redemption Property to be distributed to such Redeeming Member(s) pursuant hereto, in which
event any indebtedness arranged by the Redeeming Member(s) shall be presumed conclusively to
satisfy this Paragraph 15(i)(C). Any such indebtedness shall provide that the debtholder’s
recourse for repayment of such indebtedness shall be limited to the In-Kind Redemption
Property and any guarantees provided by the Redeeming Member(s), it being acknowledged that
the Company shall not have any personal recourse for the repayment of such indebtedness, or
any resulting tax liability arising out of this transaction to the Redeeming Members.




          (D) In all events, neither the Managing Member, the Company nor any of their respective
affiliates shall assume or be required to bear, directly or indirectly, any costs or
expenses or any environmental, tax, legal, economic or reporting risks or



 









 






liabilities arising during or attributable to periods prior to the Company’s
acquisition of the In-Kind Redemption Property. In particular, none of them will make any
representations or warranties regarding the In-Kind Redemption Property so acquired, tax
treatment, or otherwise, other than customary representations and warranties with respect to
the periods during which the Company has owned the In-Kind Redemption Property. The Company
shall assign to the Redeeming Member(s) any and all rights, if any, that it has with respect
to an In-Kind Redemption Property pursuant to the contract for the acquisition of such
In-Kind Redemption Property. Consistent with the foregoing, all legal, survey, title,
environmental, financing and all other costs arising with respect to the acquisition of an
In-Kind Redemption Property or the transfers of an In-Kind Redemption Property to the
Redeeming Member(s) pursuant hereto (including the costs of negotiating any acquisition
agreement for any In-Kind Redemption Property and any debt to be incurred by the Company
with respect thereto) will be paid by the Redeeming Member(s) or included in the calculation
of net fair value of the In-Kind Redemption Property at the time of any distribution to the
Redeeming Member(s).




          (E) If in any Response Notice the Company disagrees with any or all of the supplements
or modifications to the procedures described in this Paragraph 15 for effectuating the
Property Redemption Right set forth in any Notice of Redemption but otherwise the Company is
willing to proceed with the in-kind redemption, the Redeeming Member(s) who delivered the
Notice of Redemption shall not be required to proceed with the in-kind redemption but may,
within five (5) days after delivery of the Response Notice, withdraw such Notice of
Redemption.




          (F) If within three months after acceptance of a Notice of Redemption sent by one or
more Members the Company has not acquired an In-Kind Redemption Property identified by such
Redeeming Member(s) for any reason (other than a default by the Company of its obligations
under this Paragraph 15), the Company may, at its option, treat such Notice of Redemption as
being void and of no further force or effect.




     (ii) In-Kind Redemption Property




          (A) The selection of an In-Kind Redemption Property shall be subject to the consent of
the Managing Member, such consent not to be unreasonably withheld or delayed. For purposes
of clarification, a refusal to consent shall be deemed to be reasonable if (i) the Redeeming
Member(s) either do(es) not perform Phase I environmental testing or it or they perform
Phase I environmental testing and such Phase I does not indicate that “no material adverse
environmental condition” exists or other language having substantially the same meaning,
(ii) the Managing Member determines in its reasonable judgment that such In-Kind Redemption
Property is reasonably likely to produce negative cash flow in the period prior to the date
the Put (hereinafter defined) would be exercisable or (iii) in the case that any Redeeming
Member(s) or an Affiliate of any Redeeming Member(s) is in employee of FCEI, or any
subsidiary or Affiliate of FCEI, the Audit Committee of FCEI determines in good faith that
the ownership of the In-Kind Redemption Property by such Redeeming Member(s) or Affiliate of
any such Redeeming Member(s) would constitute a violation of any of FCEI’s then current



 









 






corporate policies or procedures or any non-competition provision in such Redeeming
Member(s)’s or Redeeming Member(s) Affiliate’s employment agreement (if any). Further, if
the Managing Member determines in good faith that the projected cash on cash return of any
proposed In-Kind Redemption Property in the period prior to the date the Put would be
exercisable is less than fifteen percent (15%) on an annual basis, the amount of such
projected deficiency may in the Managing Member’s sole discretion be added to the
calculation of net fair value of such In-Kind Redemption Property. Prior to making a
proposal for the Company to acquire an In-Kind Redemption Property, the Redeeming Members
shall fully negotiate a transaction (including price) with a prospective seller of such
In-Kind Redemption Property and with all lenders, if any, and then the Company shall use
commercially reasonable efforts to consummate such transaction in accordance with its terms,
subject to the Company’s consent right and the other provisions set forth in this Paragraph
15.




          (B) The Company will have a put option (the “Put”), exercisable no earlier than
ninety (90) days and no later than one hundred ten (110) days after the Company acquires an
In-Kind Redemption Property, to put such In-Kind Redemption Property to the Redeeming
Members in exchange for all of their Class A Common Units (subject to the provisions of the
last two sentences of the first paragraph of Paragraph 15(i)(B) of this Exhibit A).
The “net fair value” of the In-Kind Redemption Property shall be the price the Company pays
for such In-Kind Redemption Property, plus costs described in Paragraphs 15(i)(D) and
15(ii)(E) of this Exhibit A not paid by the Member(s) less the proceeds of any debt
incurred to acquire such In-Kind Redemption Property and assumed, directly or indirectly, by
such Redeeming Member(s) in such redemption. If any Redeeming Members do not honor their
Put obligations, the Company may either (1) cancel the Class A Common Units included in the
Redemption Notice (including without limitation any right to receive any future
distributions, except for the right to receive payment of any unpaid amounts due with
respect to such Class A Common Units pursuant to Section 5.2 of the Operating Agreement and
Paragraph 3 of this Exhibit A), so that the Redeeming Member(s) will no longer be
Members in respect of such Class A Common Units and any such Class A Common Units will no
longer be deemed to be outstanding, or (2) pursue any remedies at law or in equity for
breach, including the right to seek specific performance.




          (C) The Redeeming Member(s) will have a call option (the “Call”), exercisable
no earlier than one hundred eighty (180) days and no later than two hundred (200) days after
the Company acquires the In-Kind Redemption Property, to cause the Company to redeem all of
their Class A Common Units in exchange for the In-Kind Redemption Property (subject to the
provisions of the last two sentences of Paragraph 15(i)(B) of this Exhibit A). If
the Company does not honor its Call obligations, the Redeeming Member(s) may pursue any
remedies at law or in equity for breach, including the right to seek specific performance.




          (D) During the time that the Company owns the In-Kind Redemption Property, the Company
will operate the In-Kind Redemption Property in a commercially reasonable manner consistent
with the operation by FCEI of properties it owns in the



 









 






same geographic region, and it will bear all operating expenses and risk of loss
(subject to the terms below) with respect to the In-Kind Redemption Property, and receive
all revenues from operations. In the event of a casualty loss during the Company’s
ownership of an In-Kind Redemption Property, the Company will assign to the Redeeming
Member(s) its rights to the proceeds from insurance recoverable in connection with such loss
at the closing of the redemption. The Company shall not be permitted to exercise the Put if
both (i) a material casualty (a casualty resulting in a loss of more than twenty percent
(20%) of the value of the In-Kind Redemption Property) has occurred prior to the closing of
the redemption and (ii) the Company has not maintained stand-alone casualty insurance on the
In-Kind Redemption Property (including, without limitation, customary earthquake, flood and
terrorism insurance) with coverage limits comparable to those maintained for properties
owned by FCEI (provided such insurance is commercially reasonable and was available at the
time of the acquisition of the In-Kind Redemption Property by the Company). The cost for
any such casualty insurance for the period during which the In-Kind Redemption Property is
owned by the Company shall be borne by the Company.




          (E) The Company may acquire any In-Kind Redemption Property through a newly-formed
special purpose limited liability company (and shall so acquire such In-Kind Redemption
Property in that manner at the request of the Redeeming Member(s)) and then distribute the
interests in such limited liability company to the Redeeming Member(s) at the closing of the
redemption in lieu of transferring title to the In-Kind Redemption Property. Any transfer
tax due with respect to distribution of such interests in such limited liability company
either will be paid by the Redeeming Member(s) or will be included in the calculation of the
net fair value of the In-Kind Redemption Property.



          (iii) Tax Reporting. The Company will report the distribution of any In-Kind Redemption
Property as a distribution of property to the Redeeming Member(s). In the event that the Managing
Member concludes in good faith, after consultation with its tax advisors, that the Company may not
report the distribution of the In-Kind Redemption Property as a non-taxable distribution of
property, the Managing Member and its tax advisors will consult in good faith with the affected
Redeeming Member(s) and their designated tax advisor to determine whether modifications to the
Property Redemption Right would permit reporting a distribution of In-Kind Redemption Property as a
non-taxable distribution of property; provided, however, that the Managing Member and the Company
shall not be required to bear any incremental expense or risk as a result of such modifications
unless reimbursed therefor by the Redeeming Member(s).



          (iv) No Further Rights. To the fullest extent permitted by applicable law, on the applicable
date of redemption, (1) the Member(s) redeemed pursuant to this section, (A) shall have no further
rights in respect of such Class A Common Units (including without limitation any right to receive
any distributions paid after the applicable date of redemption), other than the right to receive
the In-Kind Redemption Property and except for the right to receive payment of any unpaid amounts
due to such Member(s) pursuant to Section 5.2 of the Operating Agreement and Paragraph 3 of this
Exhibit A, and (B) shall no longer be Members in respect of such



 









 







redeemed Class A Common Units and (2) any redeemed Class A Common Units shall no longer be deemed
to be outstanding.




 









 







EXHIBIT
B TO THE MASTER III OPERATING AGREEMENT



THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED PROMISSORY NOTE (THIS “NOTE”) IS SUBORDINATE TO THE
INDEBTEDNESS OF THE MAKER (OR ANY SUCCESSOR THERETO) INCURRED UNDER OR RELATING TO (A) THAT CERTAIN
CREDIT AGREEMENT BY AND AMONG FOREST CITY RENTAL PROPERTIES CORPORATION, AS BORROWER, VARIOUS
LENDING INSTITUTIONS, AS BANKS, KEYBANK NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT FOR THE
BANKS, AND NATIONAL CITY BANK, AS SYNDICATION AGENT FOR THE BANKS, DATED AS OF MARCH 24, 2004,
INCLUDING AS SUCH CREDIT AGREEMENT MAY FROM TIME TO TIME BE AMENDED, RESTATED OR OTHERWISE MODIFIED
(THE “CREDIT AGREEMENT”) AND (B) ANY OTHER AGREEMENT OR AGREEMENTS THAT REFINANCE OR REPLACE THE
CREDIT AGREEMENT IN WHOLE OR IN PART AT ANY TIME, INCLUDING IN EACH CASE AS SUCH AGREEMENT(S) MAY
FROM TIME TO TIME BE AMENDED, RESTATED OR OTHERWISE MODIFIED TO THE EXTENT SUCH AGREEMENT OR
AGREEMENTS REQUIRE SUCH SUBORDINATION. THE INDEBTEDNESS TO WHICH THIS NOTE IS SUBORDINATED
PURSUANT TO THE PRECEDING SENTENCE INCLUDES INDEBTEDNESS ARISING FROM GUARANTEES OF INDEBTEDNESS
DESCRIBED IN CLAUSE (A) OR (B) OF THE PRECEDING SENTENCE.




SUBORDINATED PROMISSORY NOTE




[Date]

Cleveland, Ohio




     FOR VALUE RECEIVED, the undersigned (“Maker”) hereby promises to pay to the order of FOREST
CITY MASTER ASSOCIATES III, LLC (herein referred to, together with its successors or any subsequent
holder hereof as the “Holder”) the principal sum set forth on Attachment A hereto, together with
simple interest on the unpaid balance thereof from time to time outstanding at a rate of
                     percent (___%) [lowest applicable federal rate as of the date of the note] per annum,
principal and interest being payable when and as herein provided.



     The principal of this Note and all accrued interest thereon shall be due and payable in whole
or in part, on demand, as follows:



     (a) in the event of issuance of a notice by Holder to Maker specifying an amount of principal
required to be repaid and the date such payment shall be due, which date shall not be earlier than
five (5) days after the date of the notice and will not be later than ten (10) days after the date
of the notice, and stating any of the following:



          (1) that a Class A Distribution Shortfall (as defined in that certain Amended and Restated
Limited Liability Company Operating Agreement by and among the members of Holder dated                     ,
2006, as the same may be amended from time to time, (the “Agreement”)) has occurred; and/or




          (2) that Holder has received an Exchange Notice (as defined in the Agreement) and either (x)
the Holder has elected to pay the Exchange Consideration (as



1









 





defined in the Agreement) in cash rather than assign the obligation to pay the Exchange Consideration to FCEI and does not have
enough cash to pay the Exchange Consideration in full or (y) the Holder has elected to assign the
obligation to pay the Exchange Consideration to FCEI, but FCEI declines to assume the obligation
and the Holder does not have enough cash to pay the Exchange Consideration in full; and/or




          (3) that Holder is being dissolved and its assets are being liquidated.




     Holder may issue one or more notices under any or all of subparagraphs (a)(1), (a)(2) and/or
(a)(3) above from time to time and the amount of the principal required to be paid by the issuance
of any such notice may be all or any portion of the then outstanding principal balance of this
Note, as determined by Holder and set forth in such notice. Any notice given pursuant to this
subparagraph (a) shall be deemed delivered on the day transmitted by electronic means, facsimile or
physical delivery to Maker or the business day after the dispatch of such notice by national
overnight courier service properly addressed to Maker at the address set forth below.



     (b) The entire principal hereof shall become due and payable in full, without notice or
demand, in the event that (1) Maker fails to pay any principal of or interest on this Note when due
and such failure continues for ten (10) days, (2) Maker becomes a debtor in any voluntary or
involuntary case or proceeding under title 11, United States Code (Bankruptcy) as in effect from
time to time, (3) a receiver, trustee, liquidator or similar official is appointed for all or any
material portion of the assets of Maker, (4) any material assets of Maker is seized or subject to
foreclosure or other process or procedure for the enforcement of rights of any creditor(s), and/or
(5) Maker ceases to conduct any substantial portion of its business operations for a period of more
than ten (10) days, For purposes of this paragraph, “material assets” means assets that generate
net operating income equal to 20% or more of the total net operating income of Maker.



     (c) Unless the same shall have become due and payable earlier pursuant to the provisions of
subparagraphs (a) and/or (b) above, the principal hereof shall be due and payable in full on the
date that is thirty (30) years after the date appearing at the beginning of this Note.



     Interest shall begin to accrue on each borrowing represented by this Note on the first day of
the calendar month following the month in which the borrowing is made. Accrued interest shall be
due and payable on each date any or all of the principal hereof becomes due and payable pursuant to
any of the foregoing provisions relating thereto. Interest shall be computed on the basis of a
year of 360 days for the actual number of days elapsed.



2









 





     Payments hereunder shall be made to Holder c/o                     . Maker shall be notified by
Holder in writing of any change in the address or location of payments.



     Maker will have the right to prepay, in whole or in part, the outstanding principal amount of
this Note, together with accrued interest, without penalty or premium.



     Holder acknowledges and agrees, by acceptance of this Note, that payment of principal and
interest under this Note is subordinate to the indebtedness described in the legend at the
beginning of this Note pursuant to and in accordance with the terms and conditions of that certain
Subordination Agreement among                                          dated as of                                         .



     If any principal of or interest on this Note is not paid when due, the entire unpaid principal
balance hereof shall bear interest from the date the unpaid amount was due until all principal and
interest due have been paid in full at a rate                      basis points above the interest rate
otherwise in effect hereunder, computed and payable in the same manner as provided with respect to
interest in the first paragraph hereof.



     Failure of Holder to enforce or exercise any provision, right or remedy in respect hereof
shall not constitute a waiver of the right to enforce or exercise the same.



     If any principal of or interest on this Note is not paid when due, Maker agrees to pay all
reasonable costs of collection, including, but not limited to, reasonable attorneys’ fees and
reasonable expenses incurred in connection with the enforcement of any guaranty hereof incurred by
the Holder on account of such collection, and expenses incurred by the Holder in connection with
any insolvency, bankruptcy, reorganization, arrangement, or similar proceedings involving the
Maker, or involving any endorser or guarantor hereof, which in any way affect the exercise by the
Holder of his rights and remedies under this Note.



     Maker and any endorser, surety, or guarantor, hereby severally waive presentment, notice of
dishonor, protest, notice of protest, and diligence in collection or bringing suit on this Note
against any party liable hereon in whole or in part, and agree that Holder may, without notice to
or the consent of any such parties, extend the time for payment, accept partial payment, take
security therefor, or exchange or release any collateral without discharging or releasing Maker or
any other such party.



     If any of the terms or provisions of this Note shall be deemed unenforceable, the
enforceability of the remaining terms and provisions shall not be affected. This Note shall be
governed and construed in accordance with the laws of the State of New York.



3









 





     IN WITNESS WHEREOF, Maker has executed and delivered this Subordinated Promissory Note as of
the date first set forth above.



	 	 	 	 	 	 	 	 	 	 	 
	Address of Maker:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Maker	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	 	 	Title:
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	email:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Facsimile:
	 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 






4









 






EXHIBIT C TO THE MASTER III OPERATING AGREEMENT




ASSIGNMENT AND ASSUMPTION OF UNITS




     THIS ASSIGNMENT AND ASSUMPTION OF UNITS (this “Assignment”), dated as of                     ,
                    , is made by and between                                          (the “Assignor”) and
                                         (the “Assignee”).



     WHEREAS, the Assignor is the owner of                      Class ___Common Units (the “Transferred
Units”) of Forest City Master Associates III, LLC, a New York limited liability company (the
“Company”).



     WHEREAS, the Assignor desires to Transfer the Transferred Units to the Assignee and the
Assignee desires to assume and accept the Transferred Units and all of the obligations related
thereto accruing from and after the date hereof, pursuant to the terms hereof and pursuant to
Section 8.1(b) of that certain Amended and Restated Limited Liability Company Operating Agreement
of the Company (as the same may have been amended from time to time, the “Agreement”).



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Assignor and the Assignee hereby agree as follows:



ARTICLE I




Assignment and Assumption




     Section 1.1 Defined Terms. All terms used but not otherwise defined in this
Assignment will have the meanings given to such terms in the Agreement.



     Section 1.2 Assignment and Assumption. The Assignor hereby Transfers to the Assignee
all of the Assignor’s right, title and interest in and to the Transferred Units in accordance with
Section 8.1(b) of the Agreement, and the Assignee hereby agrees to assume and accept the
Transferred Units and all of the obligations related thereto accruing from and after the date
hereof, and accepts and adopts the provisions of the Agreement applicable to a Member of the
Company.



     Section 1.3 Admission. Each of parties acknowledges and agrees that,
contemporaneously with the assignment described in Section 1.2 hereof, the Assignee shall be
admitted as a Substituted Member.



     Section 1.4 Continuation of Company. The parties agree that the Transfer of the
Transferred Units will not dissolve the Company and that the business of the Company will continue.



-1-









 





ARTICLE II




Miscellaneous




     Section 2.1 GOVERNING LAW. AS PERMITTED BY SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK, THE PARTIES HERETO AGREE THAT THIS ASSIGNMENT WILL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.



     Section 2.2 Jurisdiction. Each of the parties submits to the jurisdiction of any New
York State Court or Federal Court of the United States of America sitting in the borough of
Manhattan, and any appellate court from any such court, in any suit, action or proceeding arising
out of or relating to this Assignment, or for recognition or enforcement of any judgment. All
claims in respect of any such suit, action or proceeding may be brought, heard and determined in
such New York State Court or, to the extent permitted by law, in such Federal Court. Final
judgment in any such suit, action or proceeding will be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. Each of the parties
waives, to the fullest extent it may legally and effectively do so, any objection that it may now
or hereafter have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Assignment in any New York State Court or Federal Court sitting in the borough of
Manhattan. Each of the parties waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or proceeding in any such court.
Nothing contained in this Section 2.2 will be construed as preventing either of the parties from
(i) objecting to the jurisdiction of any New York State Court on the ground that the matter
involved exceeds the statutory jurisdiction of such court or (ii) from seeking to remove any suit,
action or proceeding from a New York State Court to a Federal Court sitting in the borough of
Manhattan, or vice versa.



     Section 2.3 Counterparts. This Assignment may be executed in two or more
counterparts, each of which will be deemed to be an original, but all of which will constitute one
and the same instrument. The submission of a signature page transmitted by facsimile, by e-mail
(as a .pdf file or otherwise) or similar electronic transmission facility will be considered as an
“original” signature page for purposes of this Assignment.



[signature page follows]




-2-









 








     IN WITNESS WHEREOF, this Assignment has been duly executed by the parties hereto as of the day
and year first written above.



	 	 	 	 	 	 	 	 	 	 	 
	[ASSIGNOR]	 	 	 	[ASSIGNEE]	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 
	 	 
	 	 

	 	 
	Name:	 	 	 	 	 	Name:
	 

	 	 
	Title:

	 	 	 	 	 	Title:
	 	 	 	 






-3-









 






EXHIBIT D TO THE MASTER III OPERATING AGREEMENT




EXHIBIT D




EXAMPLE SHOWING CALCULATION

OF CLASS A DISTRIBUTION PREFERENCE




Assumptions:




	 	 	 	 	 	 	 
	Quarterly Dividend

	 	=	 	$.07 per share
	Conversion Factor

	 	=
	 	1.0	 	 
	Number of Class A Common Units

	 	=
	 	4,300,000	 	 






Class A Distribution Preference =




	 	 	 	 	 
	($.07 x 1.0)

	 +	$2,500,000	 	 
	 

	 	 	 
	 

	 	(4 x 4,300,000 Units)	 






	 	 	 	 	 	 	 
	$.07 + $.14535=	 	$.21535 = Class A Distribution Preference (per Unit)
	 

	 	x 4,300,000 Units	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	$926,000	 	Quarterly Distribution	 	 
	 

	 	 	 	 	 	 






Calculation Check:




	 	 	 	 	 	 	 
	Quarterly Distribution

	 	$	926,000	 	 	 
	
	 	x	 4	 	 	 
	 

	 	 	 	 	 
	Annual Distribution

	 	$

($	3,704,000

2,500,000	

)	 	 
	 

	 	 	 	 	 
	 

	 	$	1,204,000	 	 	 
	Annual Dividend

	 	 ̧ $.28
	($.07 x 4)	 	 
	 

	 	 	 	 	 
	Total # of Units

	 	 	4,300,000	 	 	 





NOTE: the above amounts will be adjusted for any of the following.





	 	1.	 	Any increase or decrease in the FCE dividend rate.
	 
	 	2.	 	Termination of the 5-year period for the $2,500,000 fixed annual preference.
	 
	 	3.	 	Decrease in the number of units outstanding during any fiscal quarter and thereafter
resulting from conversion of units
	 
	 	4.	 	Increase in units issued for development projects applicable only to the FCE dividend
rate.
	 
	 	5.	 	The Conversion Factor may change pursuant to the definition of Conversion Factor.




 









 











EXHIBIT B-1




INTEREST CONTRIBUTION AGREEMENT




With Respect To




[Insert name of entity in which Interests are being contributed] (the “Company”)




     THIS INTEREST CONTRIBUTION AGREEMENT (this “Agreement”), dated as of                     , 2006, is
made by and between [                    ], a [                    ] (the “Contributor”), and Forest City Master
Associates III, LLC, a New York limited liability company/                                         (the
“Contributee”).



     WHEREAS, Forest City Enterprises, Inc., an Ohio corporation, [the Contributee/Forest City
Master Associates III, LLC], the FCE Entities, the BCR Entities and the BCR Individuals are parties
to that certain Master Contribution and Sale Agreement, dated as of                     , 2006 (as amended,
the “Master Contribution Agreement”), pursuant to which the BCR Entities have agreed to contribute
and to cause the BCR Individuals to contribute the BCR Contributed Interests and the FCE Entities
have agreed to contribute the FCE Contributed Interests, each in the manner set forth in the Master
Contribution Agreement and to the entities designated in the Master Contribution Agreement.



     WHEREAS, the Contributor desires to contribute, transfer and assign to the Contributee, and
the Contributee desires to accept from the Contributor, the interests in the Company identified on
Schedule 1 (collectively, the “Contributed Interests”) in exchange for the consideration
set forth on Schedule 1, all upon the terms and conditions set forth in this Agreement and
in the Master Contribution Agreement.



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Contributee and the Contributor hereby agree as follows:



ARTICLE I




Contribution




     Section 1.1 Defined Terms. All terms used but not otherwise defined in this Agreement
will have the meanings given to such terms in the Master Contribution Agreement.



     Section 1.2 Contribution. In consideration of the mutual covenants and agreements set
forth in this Agreement and in the Master Contribution Agreement, the Contributor agrees to
contribute, transfer and assign to the Contributee, and the Contributee agrees to accept from the
Contributor, the Contributed Interests, subject to and in accordance with the terms, conditions,
provisions and covenants set forth in the Master Contribution Agreement.



-1-









 





     Section 1.3 Condition of Contributed Interests. The Contributee accepts each
Contributed Interest from the Contributor without any representation or warranty except as
expressly set forth in the Master Contribution Agreement.



     Section 1.4 Withdrawal. Upon the execution and delivery of this Agreement, the
Contributor will withdraw from the Company, unless the Contributed Interests comprise less than all
of the Interests of the Contributor in the Company, in which case the Contributor will remain a
partner, shareholder or member of the Company, as the case may be, with respect to any Interests in
the Company not contributed to the Contributee pursuant to this Agreement.



     Section 1.5 Continuation of Company. The parties agree that the contribution of the
Contributed Interests and the withdrawal of the Contributor from the Company will not dissolve the
Company, and that the business of the Company will continue.



ARTICLE II




Consideration




     Section 2.1 Consideration. As consideration for the Contributed Interests, the
Contributee will issue to the Contributor the consideration set forth on Schedule 1 in
accordance with the terms of the Master Contribution Agreement.



ARTICLE III




Miscellaneous




     Section 3.1 Notices. All notices, demands, consents, requests or other communications
provided for or permitted to be given hereunder by a party to this Agreement will be given in the
manner provided in the Master Contribution Agreement.



     Section 3.2 Assignment. Neither of the parties to this Agreement will have the right
to assign, transfer, convey or otherwise sell (or enter into any agreement to do the same),
directly or indirectly, any interest it may have in or under this Agreement without first having
obtained the written consent of the other party, which consent may be withheld in such party’s sole
and absolute discretion.



     Section 3.3 Waiver. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing signed by the party
against whom the enforcement of the change, waiver, discharge or termination is sought or, in the
case of a default, by the non-defaulting party or parties.



     Section 3.4 GOVERNING LAW. AS PERMITTED BY SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK, THE PARTIES HERETO AGREE THAT THIS AGREEMENT WILL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.



-2-









 





     Section 3.5 Jurisdiction. Each of the parties submits to the jurisdiction of any New
York State Court or Federal Court of the United States of America sitting in the borough of
Manhattan, and any appellate court from any such court, in any suit, action or proceeding arising
out of or relating to this Agreement, or for recognition or enforcement of any judgment. All
claims in respect of any such suit, action or proceeding may be brought, heard and determined in
such New York State Court or, to the extent permitted by law, in such Federal Court. Final
judgment in any such suit, action or proceeding will be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. Each of the parties
waives, to the fullest extent it may legally and effectively do so, any objection that it may now
or hereafter have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement in any New York State Court or Federal Court sitting in the borough of
Manhattan. Each of the parties waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or proceeding in any such court.
Nothing contained in this Section 3.5 will be construed as preventing either of the parties from
(i) objecting to the jurisdiction of any New York State Court on the ground that the matter
involved exceeds the statutory jurisdiction of such court or (ii) from seeking to remove any suit,
action or proceeding from a New York State Court to a Federal Court sitting in the borough of
Manhattan, or vice versa.



     Section 3.6 Captions. The captions and section headings included in this Agreement
are for convenience only, do not constitute part of this Agreement and will not be considered or
referred to in interpreting the provisions of this Agreement.



     Section 3.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which will be deemed to be an original, but all of which will constitute one and the same
instrument. The submission of a signature page transmitted by facsimile, by e-mail (as a .pdf file
or otherwise) or similar electronic transmission facility will be considered as an “original”
signature page for purposes of this Agreement.



     Section 3.8 Severability. If any provision hereof is held invalid or not enforceable
to its fullest extent, such provision will be enforced to the extent permitted by law, and the
validity of the remaining provisions hereof will not be affected thereby.



     Section 3.9 Prior Negotiations; Construction. No negotiations concerning or
modifications made to prior drafts of this Agreement will be construed in any manner to limit,
reduce or impair the rights, remedies, duties and obligations of the parties under this Agreement
or to restrict or expand the meaning of any of the provisions of this Agreement or to construe any
of the provisions of this Agreement in any party’s favor. The parties acknowledge that each party
and its counsel have reviewed and revised this Agreement and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party will not be
employed in the interpretation of this Agreement or any amendment, schedule or exhibit hereto.



[signature page follows]




-3-









 





     IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the
day and year first written above.



	 	 	 	 	 	 	 	 	 	 	 
	[CONTRIBUTEE]	 	 	 	[Contributor]	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 
	 	 
	 	 
	 	 
	Name:

	 	 

	 	 
	 	Name:
	 	 

	 	 
	Title:

	 	 	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Acknowledged and agreed to by:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[Company]	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	Name:

	 	 

	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 







 









 






EXHIBIT B-2




INTEREST TRANSFER AGREEMENT




With Respect To




[Insert name of entity in which Interests are being transferred] (the “Company”)




     THIS INTEREST TRANSFER AGREEMENT (this “Agreement”), dated as of                     , 2006, is made
by and between [                    ], a [                    ] (the “Transferor”), and [                    ], a
[                    ] (the “Transferee”).



     WHEREAS, Forest City Enterprises, Inc., an Ohio corporation, [the Transferee/Forest City
Master Associates III, LLC], the FCE Entities, the BCR Individuals and the BCR Entities are parties
to that certain Master Contribution and Sale Agreement, dated as of                     , 2006 (as the same
may have been amended from time to time, the “Master Contribution Agreement”), pursuant to which,
among other things, the BCR Individuals and the BCR Entities have agreed to sell, transfer and
assign the BCR Sold Interests to the entities designated in the Master Contribution Agreement in
the manner set forth in the Master Contribution Agreement.



     WHEREAS, the Transferor desires to sell, transfer and assign to the Transferee, and the
Transferee desires to accept from the Transferor, the interests in the Company identified on
Schedule 1 (collectively, the “Transferred Interests”) [in exchange for the consideration
set forth on Schedule 1] 1, all upon the terms and conditions set forth
in this Agreement and in the Master Contribution Agreement.



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Transferee and the Transferor hereby agree as follows:



ARTICLE I




Transfer




     Section 1.1 Defined Terms. All terms used but not otherwise defined in this Agreement
will have the meanings given to such terms in the Master Contribution Agreement.



     Section 1.2 Transfer. In consideration of the mutual covenants and agreements set
forth in this Agreement and in the Master Contribution Agreement, the Transferor agrees to sell,
transfer and assign to the Transferee, and the Transferee agrees to accept from the Transferor, the
Transferred Interests, subject to and in accordance with the terms, conditions, provisions and
covenants set forth in the Master Contribution Agreement.



     Section 1.3 Condition of Transferred Interests. The Transferee accepts each
Transferred Interest from the Transferor without any representation or warranty except as expressly
set forth in the Master Contribution Agreement.





 




			
	1	 	Bracketed text to be deleted with respect to any
transfers for nominal consideration only.




-1-









 










     Section 1.4 Withdrawal. Upon the execution and delivery of this Agreement, the
Transferor will withdraw from the Company, unless the Transferred Interests comprise less than all
of the Interests of the Transferor in the Company, in which case the Transferor will remain a
partner, shareholder or member of the Company, as the case may be, with respect to any Interests in
the Company not transferred to the Transferee pursuant to this Agreement.



     Section 1.5 Continuation of Company. The parties agree that the transfer of the
Transferred Interests and the withdrawal of the Transferor from the Company will not dissolve the
Company, and that the business of the Company will continue.



ARTICLE II




[Consideration




     Section 2.1 Consideration. As consideration for the Transferred Interests, the
Transferee will issue to the Transferor the consideration set forth on Schedule 1 in
accordance with the terms of the Master Contribution Agreement.]2



ARTICLE III




Miscellaneous




     Section 3.1 Notices. All notices, demands, consents, requests or other communications
provided for or permitted to be given hereunder by a party to this Agreement will be given in the
manner provided in the Master Contribution Agreement.



     Section 3.2 Assignment. Neither of the parties to this Agreement will have the right
to assign, transfer, convey or otherwise sell (or enter into any agreement to do the same),
directly or indirectly, any interest it may have in or under this Agreement without first having
obtained the written consent of the other party, which consent may be withheld in such party’s sole
and absolute discretion.



     Section 3.3 Waiver. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing signed by the party
against whom the enforcement of the change, waiver, discharge or termination is sought or, in the
case of a default, by the non-defaulting party or parties.



     SECTION 3.4 GOVERNING LAW. AS PERMITTED BY SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK, THE PARTIES HERETO AGREE THAT THIS AGREEMENT WILL IN ALL RESPECTS BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.




     Section 3.5 Jurisdiction. Each of the parties submits to the jurisdiction of any
New York State Court or Federal Court of the United States of America sitting in the borough of






 




			
	2	 	Bracketed text to be replaced with “INTENTIONALLY OMITTED” with respect to any transfers for
nominal consideration only.




-2-









 









Manhattan, and any appellate court from any such court, in any suit, action or proceeding arising
out of or relating to this Agreement, or for recognition or enforcement of any judgment. All
claims in respect of any such suit, action or proceeding may be brought, heard and determined in
such New York State Court or, to the extent permitted by law, in such Federal Court. Final
judgment in any such suit, action or proceeding will be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. Each of the parties
waives, to the fullest extent it may legally and effectively do so, any objection that it may now
or hereafter have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement in any New York State Court or Federal Court sitting in the borough of
Manhattan. Each of the parties waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or proceeding in any such court.
Nothing contained in this Section 3.5 will be construed as preventing either of the parties from
(i) objecting to the jurisdiction of any New York State Court on the ground that the matter
involved exceeds the statutory jurisdiction of such court or (ii) from seeking to remove any suit,
action or proceeding from a New York State Court to a Federal Court sitting in the borough of
Manhattan, or vice versa.




     Section 3.6 Captions. The captions and section headings included in this Agreement
are for convenience only, do not constitute part of this Agreement and will not be considered or
referred to in interpreting the provisions of this Agreement.



     Section 3.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which will be deemed to be an original, but all of which will constitute one and the same
instrument. The submission of a signature page transmitted by facsimile, by e-mail (as a .pdf file
or otherwise) or similar electronic transmission facility will be considered as an “original”
signature page for purposes of this Agreement.



     Section 3.8 Severability. If any provision hereof is held invalid or not enforceable
to its fullest extent, such provision will be enforced to the extent permitted by law, and the
validity of the remaining provisions hereof will not be affected thereby.



     Section 3.9 Prior Negotiations; Construction. No negotiations concerning or
modifications made to prior drafts of this Agreement will be construed in any manner to limit,
reduce or impair the rights, remedies, duties and obligations of the parties under this Agreement
or to restrict or expand the meaning of any of the provisions of this Agreement or to construe any
of the provisions of this Agreement in any party’s favor. The parties acknowledge that each party
and its counsel have reviewed and revised this Agreement and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party will not be
employed in the interpretation of this Agreement or any amendment, schedule or exhibit hereto.



[signature page follows]




-3-









 





     IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day
and year first written above.



	 	 	 	 	 	 	 	 	 	 	 
	[Transferee]	 	 	 	[Transferor]	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 
	 	 
	 	 
	 	 
	Name:

	 	 

	 	 
	 	Name:
	 	 

	 	 
	Title:

	 	 	 	 	 	Title:
	 		 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Acknowledged and agreed to by:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[Company]	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	Name:

	 	 

	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 







 









 










EXHIBIT C-1




REGISTRATION RIGHTS AGREEMENT




     THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of
                    , 2006, by and among Forest City Enterprises, Inc., an Ohio corporation (the
“Company”), and the holders of BCR Units listed from time to time on Schedule A hereto
(collectively, and as further described in the recitals below, the “Holders”).



     WHEREAS, in connection with the consummation of the transactions contemplated by the Master
Contribution Agreement, certain of the BCR Entities and BCR Individuals have received BCR Units in
Master III; and



     WHEREAS, in connection therewith, the Company has agreed to grant to those BCR Entities and
BCR Individuals and each permitted transferee of BCR Units under the Master III Operating Agreement
(including members of Key Management and Affiliates of members of Key Management to the extent that
may be required in connection with an Exchange Notice delivered pursuant to Paragraph 8 of Exhibit
A to the Master III Operating Agreement (as such terms are defined in the Master III Operating
Agreement)) (each a “Holder”) the registration rights set forth below.



     NOW, THEREFORE, the parties hereto, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, hereby agree as follows:



ARTICLE I




DEFINITIONS



  1.1. Definitions. In addition to the words and terms defined elsewhere in this
Agreement, each capitalized word or term used as a defined term but not otherwise defined in this
Agreement shall have the meaning assigned to it in the Master Contribution Agreement (defined
below), unless the context or use clearly indicates another meaning or intent. In addition, the
following terms and phrases shall, for purposes of this Agreement, have the meanings set forth
below:




     “Agreement” has the meaning set forth in the recitals.



     “BCR” means Bruce C. Ratner, an individual.



     “Business Day” means any day on which the New York Stock Exchange (or any successor exchange)
is open for trading.



     “Common Stock” means the Class A Common Stock ($.33 1/3 par value) of the Company.



     “Company” has the meaning set forth in the recitals.



 









 





     “Company Offering” has the meaning set forth in Section 4.1(b).



     “Company Sale Period” has the meaning set forth in Section 4.1(b).



     “Conversion Shares” means (i) all or any portion of the shares of Common Stock received by the
Holders, or issuable to the Holders, upon exercise of their rights to exchange or convert all or a
portion of their BCR Units for shares of Common Stock pursuant to the Master III Operating
Agreement and (ii) any shares of Common Stock issued as a dividend or other distribution with
respect to, in exchange for or in replacement of the BCR Units or Common Stock referred to in
clause (i) above.



     “Eligible Securities” means all or any portion of the Conversion Shares; provided, that, as to
any proposed offer or sale of Eligible Securities, such securities shall cease to be Eligible
Securities with respect to such proposed offer or sale when (i) a registration statement with
respect to the sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration statement, (ii)
such securities are permitted to be sold pursuant to Rule 144(k) (or any successor provision to
such Rule) under the Securities Act to be confirmed in a written opinion of counsel to the Company
addressed to the Holders, or (iii) such securities shall have been otherwise transferred pursuant
to an applicable exemption under the Securities Act, new certificates for such securities not
bearing a legend restricting further transfer shall have been delivered by the Company and such
securities shall be freely transferable to the public without registration under the Securities
Act.



     “End of Suspension Notice” has the meaning set forth in Section 6.3(b).



     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC thereunder, all as the same shall be in effect at the relevant time.



     “Holder” shall have the meaning set forth in the recitals.



     “Initial Shelf Effectiveness Period” has the meaning set forth in Section 3.1(b).



     “Master III” means Forest City Master Associates III, LLC, a New York limited liability
company.



     “Master III Operating Agreement” means the Amended and Restated Limited Liability Company
Operating Agreement of Forest City Master Associates III, LLC, dated                     , 2006, as the same
may be amended from time to time.



     “Master Contribution Agreement” means the Master Contribution and Sale Agreement, dated as of
                    , 2006, among the Company, certain entities affiliated with the Company, Master III
and certain entities and individuals affiliated with BCR, as the same may have been amended,
supplemented or modified.



     “Other Holder” has the meaning set forth in Section 4.2.



     “Other Securities” has the meaning set forth in Section 5.1.



- 2 -









 





     “Person” means an individual, a partnership (general or limited), corporation, limited
liability company, joint venture, business trust, cooperative, association or other form of
business organization, whether or not regarded as a legal entity under applicable law, a trust
(inter vivos or testamentary), an estate of a deceased, insane or incompetent person, a
quasi-governmental entity, a government or any agency, authority, political subdivision or other
instrumentality thereof, or any other entity.



     “Post-Effective Suspension Event” has the meaning set forth in Section 6.3(a).



     “Pre-Effective Suspension Event” has the meaning set forth in Section 4.1(c).



     “Registration Expenses” means all expenses incident to the Company’s performance of or
compliance with the registration requirements set forth herein including, without limitation, the
following: (i) the fees, disbursements and expenses of the Company’s attorneys, accountants and
experts in connection with the registration of Eligible Securities under the Securities Act; (ii)
all expenses in connection with the preparation, printing and filing of the registration statement,
any preliminary or final prospectus, any other offering document and any amendments and supplements
thereto and the mailing and delivering of copies thereof to the underwriters and dealers; (iii) the
cost of printing or producing any agreement(s) among underwriters, underwriting agreement(s) and
blue sky or legal investment memoranda, any selling agreements and any other documents in
connection with the offering, sale or delivery of Eligible Securities; (iv) all expenses in
connection with the qualification of Eligible Securities for offering and sale under the securities
or “blue sky” laws of any state, including the fees and disbursements of counsel for the
underwriters in connection with such qualification; (v) the filing fees incident to securing any
required review by NASD, Inc. of the terms of the sale of Eligible Securities; (vi) fees and
expenses incurred in connection with the listing of Eligible Securities on each securities exchange
on which securities of the same class are then listed, and (vii) all SEC and blue sky registration
fees attributable to Eligible Securities; except that, Registration Expenses with respect to any
registration pursuant hereto shall not include (x) transfer taxes applicable to Eligible
Securities, (y) underwriting discounts and selling commissions attributable to the sale of any
Eligible Securities, and (z) fees and expenses, if any, of any counsel retained by any Holder or
any underwriter, other than the reasonable fees and expenses of any counsel retained by BCR in an
amount not to exceed $15,000 annually (collectively, clauses (x), (y) and (z) are referred to as
the “Selling Expenses”).



     “SEC” means the Securities and Exchange Commission.



     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
of the SEC thereunder, all as the same shall be in effect at the relevant time.



     “Selling Holders” means the Holder or Holders who request registration pursuant to Section
3.1, 4.1, 4.2 or 5.1.



     “Shelf Registration Statement” means a “shelf” registration statement of the Company prepared
pursuant to the provisions of this Agreement which provides for the offering and sale of Eligible
Securities on an appropriate form under Rule 415 under the Securities Act, or any successor or
similar rule that may be adopted by the SEC, and all amendments and supplements



- 3 -









 







to such registration statement, including post-effective amendments and prospectus
supplements, in each case including the prospectus contained therein, as supplemented, all exhibits
thereto and all material incorporated by reference therein.



     “Suspension Notice” has the meaning set forth in Section 6.3(b).



ARTICLE II




EFFECTIVENESS OF REGISTRATION RIGHTS



  2.1. Participation in Registration Process by Holders of BCR Units in Master III.
Subject to the Holder’s compliance with the provisions of Articles III, IV or V below, as
applicable, a Holder will be permitted to exercise the registration rights described in this
Agreement in respect of the Eligible Securities prior to the receipt by such Holder of said
Eligible Securities so long as prior to or concurrently with the exercise or participation in a
registration process the Holder has, to the extent contractually required to do so, delivered to
Master III an exchange or conversion request that complies with the terms of the interests being
exchanged or converted including, without limitation, any “lock-up” or other restrictions on the
sale or conversion of BCR Units contained in the Master III Operating Agreement; except that, (a)
the Company’s obligations to comply with such request for registration shall be suspended, for a
period not to exceed ten (10) days after receipt of an Exchange Notice (as defined in the Master
III Operating Agreement) by the Company, until Master III delivers an Election Notice (as defined
in the Master III Operating Agreement) to the Holder, and (b) the Company will be obligated to
satisfy a registration request only with respect to the portion of such exchange or conversion
request that is to be satisfied by the issuance of Common Stock to the Holder.




ARTICLE III




INITIAL REGISTRATION RIGHTS



   3.1. Shelf Registration. Following the Principal Closing Date and prior to the [DATE
THAT IS THE LOCK-UP EXPIRATION], the Company shall:





     (a) File with the SEC, and thereafter shall use commercially reasonable efforts to
cause to be declared effective as promptly as practicable but in no event later than the
[DATE THAT IS THE LOCK-UP EXPIRATION], a Shelf Registration Statement relating to the offer
and sale of the Eligible Securities by the Holders in accordance with the methods of
distribution elected by the Holders participating in, and as set forth in, such Shelf
Registration Statement.




     (b) Use commercially reasonable efforts to keep the Shelf Registration Statement
continuously effective in order to permit the prospectus, as amended or supplemented,
forming part thereof to be usable by Holders for a period of three years after the [DATE
THAT IS THE LOCK-UP EXPIRATION], provided such period shall automatically be extended to the
extent required to permit brokers and dealers to comply with Rule 174 under the Securities
Act or as otherwise provided herein, or for such shorter period that will terminate when all
Eligible Securities covered by the Shelf



- 4 -









 







Registration Statement have been sold pursuant to the Shelf Registration Statement or
cease to be outstanding or otherwise to be Eligible Securities (the “Initial Shelf
Effectiveness Period”).




     (c) The Company shall promptly supplement and amend the Shelf Registration Statement if
required by the rules, regulations or instructions applicable to the registration form used
for such Shelf Registration Statement, if required by the Securities Act, or, in the
reasonable discretion of the Company, if reasonably requested by the Holders of a majority
of the Eligible Securities covered by such Shelf Registration Statement or by any
underwriter of such Eligible Securities.




     (d) From and after the date the Shelf Registration Statement is declared effective, the
Company shall, as promptly as practicable after the request of a Holder, and in any event
upon ten (10) Business Days after such date:




          (i) if required by applicable law, file with the SEC a post-effective amendment to the
Shelf Registration Statement or prepare and, if required by applicable law, file a
supplement to the related prospectus or a supplement or amendment to any document
incorporated therein by reference or file any other required document so that the Holder so
requesting is named as a selling securityholder in the Shelf Registration Statement and the
related prospectus in such a manner as to permit such Holder to deliver such prospectus to
purchasers of the Eligible Securities in accordance with applicable law and, if the Company
shall file a post-effective amendment to the Shelf Registration Statement, use its
commercially reasonable efforts to cause such post-effective amendment to be declared
effective under the Securities Act as promptly as is practicable;




          (ii) provide such Holder copies of any documents filed pursuant to Section 3.1(d)(i);
and




          (iii) notify such Holder as promptly as practicable after the effectiveness under the
Securities Act of any post-effective amendment filed pursuant to Section 3.1(d)(i).



ARTICLE IV




DEMAND REGISTRATION RIGHTS




       4.1. Notice and Registration. If the Shelf Registration Statement contemplated by
Article III hereof is no longer effective, and upon written notice from a Holder or Holders owning
Eligible Securities requesting that the Company effect the registration under the Securities Act of
all or part of the Eligible Securities held by such Holders, which notice shall specify the
intended method or methods of disposition of such Eligible Securities, the Company will use
commercially reasonable efforts to effect (as promptly as is practicable under the circumstances)
the registration under the Securities Act of such Eligible Securities for disposition in accordance
with the intended method or methods of disposition stated in such request (which request may be
satisfied by means of a Shelf Registration Statement); and the Company agrees that it will use



- 5 -









 




such a Shelf Registration Statement if the Company is then eligible to do so and a Shelf
Registration Statement is requested by the Holder(s) in its written notice requesting registration,
provided that:





     (a) If the Company shall have previously effected a registration with respect to a
Holder’s Eligible Securities pursuant to this Article IV, the Company shall not be required
to effect a registration for such Holder’s Eligible Securities pursuant to this Article IV
until a period of twelve (12) months shall have elapsed from the effective date of the most
recent such previous registration.




     (b) If, upon receipt of a registration request pursuant to this Article IV, the Company
is advised in writing (with a copy to the Selling Holders) by a nationally recognized
independent investment banking firm selected by the Company to act as lead underwriter in
connection with a public offering of securities by the Company that, in such firm’s opinion,
a registration at the time and on the terms requested would materially adversely affect such
public offering of securities by the Company (other than an offering in connection with
employee benefit and similar plans) (a “Company Offering”) that had been contemplated by the
Company prior to the notice by the Holders who initially requested registration, the Company
shall not be required to effect a registration pursuant to this Article IV until the
earliest of (i) three (3) months after the completion of such Company Offering, (ii)
promptly after abandonment of such Company Offering, or (iii) three (3) months after the
date of written notice from the Holders who initially requested registration (such period a
“Company Sale Period”); except that, the Company may not exercise its rights to delay any
registration under this Section 4.1(b) (x) more than once in any twelve (12) month period or
(y) within four (4) months of the end of any delay effected pursuant to Section 4.1(c); and
provided further that in no event shall Pre-Effective Suspension Events and Company Sale
Periods be permitted to take effect for more than an aggregate of ninety (90) days in any
twelve (12) month period.




     (c) If, while a registration request is pending pursuant to this Article IV, the Chief
Executive Officer and the General Counsel of the Company, with the advice of counsel,
determine in good faith, that (A) the filing of a registration statement or the declaration
of effectiveness is reasonably likely to adversely affect a material financing, acquisition,
disposition, merger or other comparable transaction involving the Company or (B) disclosure
is reasonably likely to have a material adverse effect on the Company and, in each of (A)
and (B), after the advice of counsel, the filing of a registration statement or the
declaration of effectiveness would require the disclosure of material non-public information
not otherwise required to be disclosed under applicable law (such circumstances being
hereinafter referred to as a “Pre-Effective Suspension Event”), the Company shall deliver a
certificate to such effect signed by its Chairman, Chief Executive Officer, President or any
Vice President to the Selling Holders, and the Company shall not be required to effect a
registration pursuant to this Article IV until the earlier of (i) the date upon which such
material information is disclosed to the public or ceases to be material or (ii) ninety (90)
days after the Company makes such determination; except that, in no event shall
Pre-Effective Suspension Events be permitted to take effect (x) more than twice in any
twelve (12) month period or (y) within four (4) months following the end of any
Pre-Effective Suspension Event with respect to



- 6 -









 







the same or substantially the same facts or circumstances; and provided further that in
no event shall Pre-Effective Suspension Events and Company Sale Periods be permitted to
exist for more than an aggregate of ninety (90) days in any twelve (12) month period.




     (d) (1) The Company shall not be required to effect more than one registration in any
twelve (12) month period, provided that, at the time of the request for registration under
this Section 4.1, at the time of the filing of the registration statement with the SEC and
throughout the period in which the registration statement is to remain effective, the
Company is eligible to register the Eligible Securities on Form S-3 under the Securities Act
or any successor form.




     (2) Subject to Section 4.1(d)(3) below, if at any such time the Company is not
eligible to register the Eligible Securities on Form S-3 under the Securities Act or any
successor form, the Company shall not be required to file a registration statement for the
Holders pursuant to this Section 4.1 after the Company has effected three (3) such
registrations on a form other than Form S-3 under the Securities Act or any successor form
pursuant to this Section 4.1 and such registrations have been declared or ordered effective.




     (3) Following the fifteenth anniversary of the effectiveness of the Shelf Registration
Statement contemplated by Article III hereof, the Company shall not be required to file a
registration statement for the Holders pursuant to this Section 4.1 after the Company has
effected four (4) such registrations under the Securities Act following that fifteenth
anniversary pursuant to this Section 4.1 and such registrations have been declared or
ordered effective, except that, notwithstanding the limitation contained in this paragraph,
the Holders may require the Company to file one (1) additional registration statement
pursuant to this Section 4.1 within one year of the death of BCR. For the avoidance of
doubt, for purposes of determining whether the Company has effected four (4) registrations
pursuant to this Section 4.1(d)(3), any registrations effected pursuant to Section 4.1(d)(2)
or Section 4.4 shall not be counted.




     (4) No registration of Eligible Securities under this Article IV shall relieve the
Company of its obligation (if any) to effect registrations of Eligible Securities pursuant
to Article V.




     (e) If the Eligible Securities of a Holder are registered for resale pursuant to an
effective Shelf Registration Statement filed by the Company in compliance with this
Agreement, then, for so long as that Shelf Registration Statement is effective and available
for use by that Holder in compliance with applicable securities and other laws and without
the need for any further action by the Company, and the Company is otherwise complying with
any requirements of this Agreement relating to the Shelf Registration Statement, the Company
will be deemed to have satisfied its obligations pursuant to this Article IV with respect to
that Holder and the Eligible Securities so registered. For the avoidance of doubt, at any
time in its sole discretion the Company may elect to include the Eligible Securities of any
Holder, or any portion thereof, in any Shelf Registration Statement being filed by the
Company.



- 7 -









 




  4.2. Other Holder Shares. Upon receipt of the written notice from Holders requesting
registration under Section 4.1, the Company shall promptly, and in any event within ten (10)
Business Days, give written notice to each of the other Holders (the “Other Holders”). Within ten
(10) Business Days after receipt of such notice by any Other Holder, such Other Holder may request
in writing that its Eligible Securities be included in such registration and, subject to Section
4.1 hereof, the Company shall include in such registration the Eligible Securities of any such
Other Holder requested to be so included. Each such request by such Other Holder shall specify the
number of shares of Eligible Securities proposed to be sold and the intended method of distribution
thereof.



  4.3. Limitation on Registration Rights. Each registration of Eligible Securities
requested by a Holder pursuant to Section 4.1 shall be with respect to a number of shares of Common
Stock having an aggregate offering price (determined in the manner required by Form S-3 or any
successor form) of not less than $10,000,000 or all of the Eligible Securities subject to this
Agreement.



  4.4. Automatic Exercise of Demand Registration Rights. Upon the third anniversary of
the effectiveness of the Shelf Registration Statement contemplated by Article III hereof, and
thereafter upon each subsequent third anniversary of the effectiveness of any Shelf Registration
Statement filed pursuant to this Section 4.4 until the fifteenth anniversary of the effectiveness
of the Shelf Registration Statement contemplated by Article III hereof, if the Company is eligible
to register the Eligible Securities on Form S-3 or any successor form, then the Holders of Eligible
Securities will be deemed to have requested that the Company effect the registration under the
Securities Act of all of the Eligible Securities pursuant to Section 4.1 of this Agreement on a
Shelf Registration Statement filed pursuant to Rule 415(a)(6) or
other applicable

rule(s) under the
Securities Act. Unless otherwise notified by a Holder or Holders in writing of a change in the
method or methods of disposition from that provided for in the currently effective Shelf
Registration Statement, the Company will prepare and file the Shelf Registration Statement using
the method or methods of disposition provided for in such currently effective Shelf Registration
Statement.




ARTICLE V




PIGGY-BACK REGISTRATION



   5.1. Notice and Registration. If the Company proposes to register any shares of
Common Stock or other securities issued by it having terms substantially similar to Eligible
Securities (“Other Securities”) for public sale under the Securities Act (whether proposed to be
offered for sale by the Company or by any other Person) on a form and in a manner which would
permit registration of Eligible Securities for sale to the public under the Securities Act, it will
give prompt written notice to the Holders of its intention to do so, which notice the Holders shall
keep confidential, and upon the written request of a Holder delivered to the Company within fifteen
(15) Business Days after the giving of any such notice (which request shall specify the number of
Eligible Securities intended to be disposed of by such Holder and the intended method of
disposition thereof), the Company will use commercially reasonable efforts to effect, in connection
with the registration of the Other Securities, the registration under the Securities Act of all
Eligible Securities which the Company has been so requested to register by the Selling




- 8 -









 







Holders, to the extent required to permit the disposition (in accordance with the intended
method or methods thereof as aforesaid) of Eligible Securities so to be registered, except that:





     (a) if, at any time after giving such written notice of its intention to register any
Other Securities and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason not to
register the Other Securities, the Company may, at its election, give written notice of such
determination to the Holders and thereupon the Company shall be relieved of its obligation
to register such Eligible Securities in connection with the registration of such Other
Securities (but not from its obligation to pay Registration Expenses to the extent incurred
in connection therewith as provided in Section 6.5), without prejudice, however, to the
rights (if any) of the Holders immediately to request that such registration be effected as
a registration under Article IV;




     (b) the Company will not be required to effect any registration pursuant to this
Article V if the Company shall have been advised in writing (with a copy to the Selling
Holders) by a nationally recognized independent investment banking firm selected by the
Company to act as lead underwriter in connection with the public offering of securities by
the Company that, in such firm’s opinion, such registration at that time would materially
affect the Company’s own scheduled offering, except that, if an offering of some but not all
of the shares requested to be registered by the Holders and other holders of the Company’s
securities with piggyback rights would not materially affect the Company’s offering, the
offering will include all securities offered by the Company and such number of securities
with piggyback rights as is determined by such lead underwriter is the maximum number that
can be included without materially affecting the Company’s offering, and the aggregate
number of shares requested to be included in such offering by the Selling Holders and each
other group of securityholders with piggyback rights shall be reduced pro rata based on the
relative number of shares being proposed for inclusion by each; if the aggregate number of
Eligible Securities to be included in such offering is reduced in accordance with the
foregoing, the total number of shares requested to be including in such offering by each
Selling Holder shall be reduced pro rata according to the total number of Eligible
Securities requested by each Selling Holder to be registered under the Securities Act in
connection with the registration of the Other Securities; and




     (c) the Company shall not be required to effect any registration of Eligible Securities
under this Article V incidental to the registration of any of its securities (i) on Form S-8
or any successor form to such Form or in connection with any employee or director welfare,
benefit or compensation plan, (ii) on Form S-4 or any successor form to such Form or in
connection with an exchange offer, (iii) in connection with a rights offering exclusively to
existing holders of shares of the Company’s Class A or Class B common stock, (iv) in
connection with an offering solely to employees of the Company or its affiliates, or (v)
relating to a transaction pursuant to Rule 145 under the Securities Act.


No registration of Eligible Securities effected under this Article V shall relieve the Company of
its obligation (if any) to effect registrations of Eligible Securities pursuant to Article IV.




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ARTICLE VI




REGISTRATION PROCEDURES AND EXPENSES



  6.1. Registration and Qualification. If and whenever the Company is required to
effect the registration of any Eligible Securities under the Securities Act as provided in Articles
III, IV or V, the Company will:





     (a) prepare, file and use commercially reasonable efforts to cause to become effective
a registration statement under the Securities Act regarding the Eligible Securities to be
offered;




     (b) prepare and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith and take such other actions as may
be necessary to keep such registration statement effective and to comply with the provisions
of the Securities Act with respect to the disposition of all Eligible Securities registered
on such registration statement (1) in the case of a Shelf Registration Statement filed
pursuant to Article III, until the end of the Initial Shelf Effectiveness Period, and (2) in
the case of a registration statement filed pursuant to Article IV or Article V, until the
earlier of (A) such time as all of such Eligible Securities have been disposed of in
accordance with the intended methods of disposition by the Selling Holders set forth in such
registration statement or (B) (i) the expiration of twelve months after such registration
statement becomes effective, or (ii) with respect to a Shelf Registration Statement, such
longer time as all of such Eligible Securities have been disposed of in accordance with the
intended methods of disposition by the Selling Holders set forth in such Shelf Registration
Statement up to a maximum of three years from the date the Shelf Registration Statement is
declared effective by the SEC; provided that, such longer period will only be available (A)
to the extent that Rule 415, or any successor rule under the Securities Act, permits an
offering on a continuous or delayed basis and (B) if applicable rules under the Securities
Act governing the obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (y) includes any prospectus required by Section 10(a) of the
Securities Act or (z) reflects facts or events representing a material or fundamental change
in the information set forth in the registration statement, (i) the incorporation by
reference in the Shelf Registration Statement of the information required to be included in
(y) and (z) above from periodic reports filed pursuant to Section 12 or 15(d) of the
Exchange Act, or (ii) the use of a prospectus supplement, filed pursuant to Rule 424 under
the Securities Act, containing the information required to be included in (y) and (z) above;




     (c) furnish to the Selling Holders and to any underwriter of such Eligible Securities
such number of conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits), such number of copies of the
prospectus included in such registration statement (including each preliminary prospectus
and any supplemental prospectus), in conformity with the requirements of the Securities Act,
such documents incorporated by reference in such registration statement or prospectus, and
such other documents as the Selling Holders or such underwriter may reasonably request;



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     (d) use commercially reasonable efforts to register or qualify all Eligible Securities
covered by such registration statement under such other securities or blue sky laws of such
jurisdictions as the Selling Holders or any underwriter of such Eligible Securities shall
reasonably request, and do any and all other acts and things which may be reasonably
requested by the Selling Holders or any underwriter to consummate the disposition in such
jurisdictions of the Eligible Securities covered by such registration statement, except the
Company shall not for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified, or to subject itself
to taxation in any jurisdiction where it is not then subject to taxation, or to consent to
general service of process in any jurisdiction where it is not then subject to service of
process;




     (e) use commercially reasonable efforts to list the Eligible Securities on each
national securities exchange on which the Common Stock is then listed, if the listing of
such securities is then permitted under the rules of such exchange;




     (f) use commercially reasonable efforts to ensure that (i) any registration statement
and any amendment thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and regulations
thereunder, (ii) any registration statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading, and (iii) any prospectus forming part of any registration statement, and any
supplement to such prospectus (as amended or supplemented from time to time), does not
include an untrue statement of a material fact or omit to state a material fact necessary in
order to make the statements, in the light of the circumstances under which they were made,
not misleading;




     (g) immediately notify the Selling Holders at any time when a prospectus relating to a
registration statement filed pursuant to this Agreement is required to be delivered under
the Securities Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they were
made, not misleading, and, at the request of the Selling Holders, prepare and furnish to the
Selling Holders as many copies of a supplement to or an amendment of such prospectus as the
Selling Holders reasonably request so that, as thereafter delivered to the purchasers of
such Eligible Securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made,
not misleading; and




     (h) immediately notify the Selling Holders of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of a registration
statement filed pursuant to this Agreement or the initiation of any proceedings for that
purpose and take every reasonable effort to obtain the withdrawal of any such stop order.



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The Company may require the Selling Holders to furnish the Company such information
regarding the Selling Holders and the proposed method of distribution of their respective
Eligible Securities as the Company may from time to time reasonably request in writing and
as shall be required by law or by the SEC in connection with any registration, and each
Selling Holder shall promptly notify the Company of the distribution of such securities.
Each Holder agrees that it will respond in writing within ten (10) Business Days to any
request by the Company to provide or verify any information regarding that Holder or the
Holder’s Eligible Securities that is required to be included in a registration statement
relating to the Holder’s Eligible Securities pursuant to the rules and regulations of the
SEC.


   6.2. Underwriting.





     (a) If requested by the underwriters for any underwritten offering of Eligible
Securities pursuant to a registration requested hereunder, the Company will (i) enter into
and perform its obligations under an underwriting agreement with such underwriters for such
offering, such agreement to contain such representations and warranties by the Company and
such other terms and provisions as are customarily contained in underwriting agreements with
respect to secondary distributions, including, without limitation, indemnities and
contribution to the effect and to the extent provided in Article VIII hereof; and (ii) (x)
furnish to the underwriters an opinion of counsel for the Company, addressed to them, and
(y) use its reasonable efforts to furnish to the underwriters, a “comfort letter” signed by
the independent registered public accountants who have certified the Company’s financial
statements included in such registration statement, addressed to them, each such document
described in clause (x) and (y) covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case of such
accountants’ letter, with respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer’s counsel and in accountants’
letters delivered to underwriters in underwritten public offerings of securities. The
holders of Eligible Securities on whose behalf Eligible Securities are to be distributed by
such underwriters shall, if requested by such underwriters, be parties to any such
underwriting agreement; provided, however, that in the case of an
underwritten offering pursuant to Article V hereof, such underwriting agreement shall not
provide for indemnification or contribution obligations on the part of such holders
materially greater than the obligations of such holders under this Agreement.
Notwithstanding the foregoing, any Selling Holder may elect, in writing, prior to the
effective date of the registration statement filed in connection with such registration, not
to register such Eligible Securities in connection with such registration.




     (b) In the event that any registration pursuant to Article V hereof shall involve, in
whole or in part, an underwritten offering, the Company may require Eligible Securities
requested to be registered pursuant to Article V to be included in such underwriting on the
same terms and conditions as shall be applicable to the Other Securities being sold through
underwriters under such registration. In such case, the holders of Eligible Securities on
whose behalf Eligible Securities are to be distributed by such underwriters shall be parties
to any such underwriting agreement. Such agreement shall contain such representations and
warranties by the Selling Holders and such other



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terms and provisions as are customarily contained in underwriting agreements with
respect to secondary distributions; provided, however, such underwriting
agreement shall not provide for indemnification or contribution obligations on the part of
such Selling Holders materially greater than the obligations of such Selling Holders under
this Agreement.




     (c) In the event that any registration pursuant to Article IV hereof shall involve, in
whole or in part, an underwritten offering, the Selling Holders shall have the right to
select the underwriters for such underwritten offering, which underwriters shall be subject
to approval by the Company, which approval shall not be unreasonably withheld or delayed.


  6.3. Blackout Periods.




          (a) At any time when a registration statement filed pursuant to Articles III, IV or V relating
to Eligible Securities is effective, subject to the provisions of this Section 6.3 and a good faith
determination by the Chief Executive Officer and the General Counsel of the Company, with the
advice of counsel, that it is in the best interests of the Company to suspend the use of a
registration statement following the effectiveness of a registration statement, the Company, by
written notice to the Holders, may direct the Holders to suspend sales of the Eligible Securities
pursuant to a registration statement for such times as the Company reasonably may determine is
necessary and advisable (but in no event for more than the earlier of (i) the date upon which any
material non-public information that is a basis for such determination is disclosed to the public
or ceases to be material or (ii) ninety (90) days after the Company makes such determination) if
any of the following events shall occur: (I) the Chief Executive Officer and the General Counsel
of the Company, with the advice of counsel, in good faith determine that (A) the continued use of a
registration statement is reasonably likely to adversely affect a material financing, acquisition,
disposition, merger or other comparable transaction involving the Company or (B) disclosure of
material non-public information is reasonably likely to have a material adverse effect on the
Company and, in each of (A) and (B), the continued use of a registration statement would require
the disclosure of material non-public information not otherwise required to be disclosed under
applicable law; or (II) the Chief Executive Officer and the General Counsel of the Company, with
the advice of counsel, shall have determined in good faith that it is required by law, rule or
regulation to supplement the registration statement or file a post-effective amendment to the
registration statement in order to incorporate information into the registration statement for the
purpose of (A) including in the registration statement any prospectus required under Section
10(a)(3) of the Securities Act; (B) reflecting in the prospectus included in the registration
statement any facts or events arising after the effective date of the registration statement (or of
the most recent post-effective amendment thereto) that, individually or in the aggregate,
represents a fundamental change in the information set forth therein; or (C) including in the
prospectus included in the registration statement any material information with respect to the plan
of distribution not disclosed in the registration statement or any material change to such
information (the circumstances set forth in clauses I and II above are referred to as a
“Post-Effective Suspension Event”). Upon the occurrence of any such Post-Effective Suspension
Event, the Company shall use its commercially reasonable efforts to promptly amend or supplement
the registration statement on a post-effective basis or to take such action as is necessary to
permit resumed use of the registration statement as promptly as possible.




- 13 -









 








          (b) In the case of a Post-Effective Suspension Event, the Company shall give written notice (a
“Suspension Notice”) to the Selling Holders to suspend sales of the Eligible Securities and such
notice shall certify by the Company’s Chairman, Chief Executive Officer, President or any Vice
President to the Selling Holders, that such suspension was approved by the Chief Executive Officer
and the General Counsel of the Company, with the advice of counsel, shall continue only for so long
as the Post-Effective Suspension Event or its effect is continuing, and the Company is taking all
reasonable steps to terminate suspension of the use of the registration statement as promptly as
possible. The Selling Holders shall not effect any sales of the Eligible Securities pursuant to
such registration statement at any time after receiving a Suspension Notice from the Company and
prior to receipt of an End of Suspension Notice (as defined below). The Selling Holders may
recommence effecting sales of the Eligible Securities pursuant to the registration statement
following further notice to such effect (an “End of Suspension Notice”) from the Company, which End
of Suspension Notice shall be given by the Company to the Selling Holders in the manner described
above promptly following the conclusion of any Post-Effective Suspension Event and its effect.




          (c) If there is a Post-Effective Suspension Event, the time period set forth in Section 6.1(b)
shall be extended for a number of days equal to the number of days from the date of the suspension
of sales by the Selling Holders until the date when such sales may be resumed hereunder.



  6.4. Qualification for Rule 144 Sales. With a view to making available to the
Holders the benefits of Rule 144 for so long as any Eligible Securities remain outstanding, the
Company shall use commercially reasonable efforts to: (1) keep adequate current public information
available (as required by Rule 144); (2) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act; (3) furnish to
each Holder promptly upon request, (A) a written statement by the Company, if true, that it has
complied with the applicable reporting requirements of Rule 144, the Securities Act and the
Exchange Act and (B) such other information as may be reasonably requested to permit the Holders to
sell such Eligible Securities pursuant to Rule 144 (without regard to Rule 144(k)) without
registration. In connection with any sale, transfer or other disposition by any Holder of any
Eligible Securities pursuant to Rule 144 under the Securities Act, the Company shall cooperate with
the Holder to facilitate the timely preparation and delivery of certificates representing Eligible
Securities to be sold and not bearing any Securities Act legend, and enable certificates for such
Eligible Securities to be for such number of shares and registered in such names as the Holder may
reasonably request at least five (5) Business Days prior to any sale of Eligible Securities
hereunder.



  6.5. Expenses. The Company shall pay all Registration Expenses in connection with
the registration pursuant to Articles III, IV or V. Each Holder shall pay any Selling Expenses.



  6.6. Compliance with Company Policies and Procedures. Each Holder who is or becomes
an officer, director or affiliate, or otherwise is or becomes subject to the Company’s policies and
procedures concerning trading in Company securities, acknowledges and agrees that all sales of
Eligible Securities shall be made in compliance with the Company’s policies and procedures
concerning trading in Company securities, as in effect from time to time.




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ARTICLE VII




PREPARATION; REASONABLE INVESTIGATION




     In connection with the preparation and filing of each registration statement registering
Eligible Securities under the Securities Act, the Company will give the Selling Holders and the
underwriters, if any, and their respective counsel and accountants, drafts of such registration
statement for their review and comment prior to filing and such reasonable and customary access to
its books and records and such opportunities to discuss the business of the Company with its
officers and the independent registered public accountants who have certified its financial
statements as shall be reasonably necessary to conduct an investigation within the meaning of the
Securities Act, subject in all cases to mutually acceptable confidentiality arrangements.



ARTICLE VIII




INDEMNIFICATION AND CONTRIBUTION



   8.1. Indemnification and Contribution.





     (a) The Company shall indemnify and hold harmless each Person that exercises
registration rights hereunder and, to the extent applicable, its directors and officers, its
partners, its trustees and each Person who controls any of such Persons, each Person who
participates as an underwriter in the offering or sale of such securities, and each Person,
if any, who controls such underwriter within the meaning of the Securities Act against any
losses, claims, damages, liabilities and expenses, joint or several, to which such Person
may be subject under the Securities Act or otherwise insofar as such losses, claims,
damages, liabilities or expenses (or actions or proceedings in respect thereof) arise out of
or are based upon (i) any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Eligible Securities were registered
under the Securities Act, any preliminary prospectus or final prospectus included therein,
any issuer free-writing prospectus, or any amendment or supplement thereto, or any document
incorporated by reference therein, or (ii) any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the statements therein
not misleading, and the Company will promptly reimburse each such Person for any legal or
any other expenses reasonably incurred by such Person in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding, provided, that, the
Company shall not be liable to any Person in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense arises out
of or is based upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus, issuer
free-writing prospectus or final prospectus, or any amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such Selling Holders
or such underwriter expressly for use in the registration statement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on behalf of



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Holders or any such Person and shall survive the transfer of such securities by the Selling
Holders.




     (b) Each Selling Holder shall, severally and not jointly, indemnify and hold harmless
(in the same manner and to the same extent as set forth in Section 8.1(a)) the Company, each
director of the Company, each officer of the Company who shall sign such registration
statement, each Person who participates as an underwriter in the offering or sale of such
securities, each Person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act, with respect to any statement in or omission from such
registration statement, any preliminary prospectus or final prospectus included therein, any
issuer free-writing prospectus, or any amendment or supplement thereto, but only to the
extent that such statement or omission was made in reliance upon and in conformity with
written information furnished by such Selling Holder to the Company expressly for use in the
registration statement. Notwithstanding the provisions of this Section 8.1(b), a Holder
shall not be required to indemnify the Company, its directors, officers, underwriters or
control persons with respect to any amount in excess of the amount of the total proceeds to
such Holder from sales of the Eligible Securities under such registration statement, and no
Holder shall be liable under this Section 8.1(b) for any statements or omissions of any
other Holder. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director, officer or
controlling Person and shall survive the transfer of the registered securities by such
Selling Holder and the expiration of this Agreement.




     (c) An indemnified party hereunder shall give reasonably prompt notice to the
indemnifying party of any action or proceeding commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify the indemnifying party (i) shall
not relieve such indemnifying party from any liability which it may have under the indemnity
agreement provided in Sections 8.1(a) or (b) above, unless and to the extent it did not
otherwise learn of such action and the lack of notice by the indemnified party results in
the forfeiture by the indemnifying party of substantial rights and defenses, and (ii) shall
not, in any event, relieve the indemnifying party from any obligations to the indemnified
party other than the indemnification obligation provided under Sections 8.1(a) or (b) above.
If the indemnifying party so elects within a reasonable time after receipt of such notice,
the indemnifying party may assume the defense of such action or proceeding at such
indemnifying party’s own expense with counsel chosen by the indemnifying party and approved
by the indemnified party, which approval shall not be unreasonably withheld; except that,
the indemnifying party will not settle any such action or proceeding or consent to the entry
of a judgment in any such action or proceeding without the written consent of the
indemnified party unless (i) as a condition to such settlement, the indemnifying party
secures the unconditional release of the indemnified party and (ii) the settlement does not
include any statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of the indemnified party; and provided, further, that if the indemnified party
reasonably determines that a conflict of interest exists where it is advisable for the
indemnified party to be represented by separate counsel or that, upon advice of counsel,
there may be legal defenses available to it which are different from or in addition to those
available to the indemnifying party,



- 16 -









 







then the indemnifying party shall not be entitled to
assume such defense and the indemnified party shall be entitled to separate counsel at the
indemnifying party’s expense. If the indemnifying party is not entitled to assume the
defense of such action or
proceeding as a result of the second proviso to the preceding sentence, the
indemnifying party’s counsel shall be entitled to conduct the indemnifying party’s defense
and counsel for the indemnified party shall be entitled to conduct the defense of the
indemnified party, it being understood that both such counsel will cooperate with each other
to conduct the defense of such action or proceeding as efficiently as possible. If the
indemnifying party is not so entitled to assume the defense of such action or does not
assume such defense, after having received the notice referred to in the first sentence of
this paragraph, the indemnifying party will pay the reasonable fees and expenses of counsel
for the indemnified party. In such event, however, the indemnifying party will not be
liable for any settlement effected without the written consent of the indemnifying party.
If an indemnifying party is entitled to assume, and assumes, the defense of such action or
proceeding in accordance with this paragraph, the indemnifying party shall not be liable for
any fees and expenses of counsel for the indemnified party incurred thereafter in connection
with such action or proceeding.




     (d) In order to provide for just and equitable contribution in circumstances in which
the indemnity agreement provided for in Sections 8.1(a) and (b) above is for any reason held
to be unenforceable by the indemnified party or otherwise unavailable although applicable in
accordance with its terms, the Company and the relevant Holder shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by
such indemnity agreement incurred by the Company and the Holder, (i) in such proportion as
is appropriate to reflect the relative fault of the Company on the one hand and the Holder
on the other, in connection with the statements, omissions or violations which resulted in
such losses, claims, damages, liabilities or expenses, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative fault of but also the relative benefits to the Company on the
one hand and the Holder on the other, in connection with the statements, omissions or
violations which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative benefits to the indemnifying
party and indemnified party shall be determined by reference to, among other things, the
total proceeds received by the indemnifying party and indemnified party in connection with
the offering to which such losses, claims, damages, liabilities or expenses relate. The
relative fault of the indemnifying party and indemnified party shall be determined by
reference to, among other things, whether the action in question, including any untrue or
alleged untrue statement of a material fact, omission or alleged omission to state a
material fact or other violation of law, has been made by, or relates to information
supplied by, the indemnifying party or the indemnified party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such action.




     The parties hereto agree that it would not be just or equitable if contribution
pursuant to this Section 8.1(d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. Notwithstanding the provisions of this




- 17 -









 






Section 8.1(d), a Holder shall not be required to contribute any amount in excess of
the amount of the total proceeds received by such Holder from sales of the Eligible
Securities of such Holder under such registration statement.





     Notwithstanding the foregoing, no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 8.1(d), each Person, if any, who controls a Holder within the meaning of Section 15
of the Securities Act shall have the same rights to contribution as the Holder, and each
director of the Company, each officer of the Company who signed such registration statement
and each Person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as the Company.




     (e) Indemnification and contribution similar to that specified in the preceding
subsections of this Article VIII (with appropriate modifications) shall be given by the
Company and the Selling Holders with respect to any required registration or other
qualification of such Eligible Securities under any federal or state law or regulation of a
governmental authority other than the Securities Act.



ARTICLE IX




MISCELLANEOUS




     9.1. Benefits of Registration Rights. Subject to the limitations of Sections 4.1 and
5.1, any Holder may severally or jointly exercise the registration rights hereunder in such manner
and in such proportion as they shall agree among themselves.



     9.2. Integration; Amendment. This Agreement, the Master Contribution Agreement and
the Master III Operating Agreement constitute the entire agreement among the parties hereto with
respect to the matters set forth herein and supersede and render of no force and effect all prior
oral or written agreements, commitments and understandings among the parties with respect to the
matters set forth herein, other than any agreement as may exist solely among the Holders. Except
as otherwise expressly provided in this Agreement, no amendment, modification or discharge of this
Agreement shall be valid or binding unless set forth in writing and duly executed by the Company
and either (i) BCR, or (ii) in the event BCR owns, directly or indirectly, less than 5% of the
Eligible Securities subject to this Agreement, the Holders of a majority of the then outstanding
Eligible Securities subject to this Agreement. Any amendment effected in accordance with clauses
(i) or (ii) of the immediately preceding sentence shall be binding upon each Holder of Eligible
Securities then outstanding (whether or not such Holder consented to any such amendment).
Notwithstanding the foregoing, Schedule A may be amended at any time by the execution and delivery
of an addendum to this Agreement, in substantially the form attached hereto as Exhibit 1,
acknowledging that a permitted transfer of BCR Units has occurred under the Master III Operating
Agreement, setting forth the name and notice address of such permitted transferee and
acknowledging, as contemplated by Section 9.4, that such permitted transferee agrees to be bound by
the terms of this Agreement, and the consent of no other Holder will be required for such an
amendment.



- 18 -









 





     9.3. Waivers. No waiver by a party hereto shall be effective unless made in a
written instrument duly executed by (a) the Company and either (i) BCR or (ii) in the event BCR
owns, directly or indirectly, less than 5% of the Eligible Securities subject to this Agreement,
the Holders of a majority of the then outstanding Eligible Securities subject to this Agreement or
(b) the party against whom such waiver is sought to be enforced, and only to the extent set forth
in such instrument. Neither the waiver by any of the parties hereto of a breach or a default under
any of the provisions of this Agreement, nor the failure of any of the parties, on one or more
occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege
hereunder shall thereafter be construed as a waiver of any subsequent breach or default of a
similar nature, or as a waiver of any such provisions, rights or privileges hereunder. Any waiver
effected in accordance with Section 9.3(a) shall be binding upon each Holder of Eligible Securities
then outstanding (whether or not such Holder consented to any such waiver).



     9.4. Burden and Benefit. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors, personal and legal
representatives and successors. If a Holder disposes of BCR Units, such BCR Units shall remain
subject to this Agreement and, as a condition of the validity of such disposition, the transferee
shall be required to execute and deliver an addendum to this Agreement, in substantially the form
attached hereto as Exhibit 1, unless such transferee is already a Holder. Thereafter, such
transferee shall be deemed to be a Holder for purposes of this Agreement.



     9.5. Notices. All notices called for under this Agreement shall be in writing and
shall be deemed given upon receipt if delivered personally or by facsimile transmission and
followed promptly by mail, or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the parties at the addresses set forth opposite their names in Schedule A
hereto, or to any other address or addressee as any party entitled to receive notice under this
Agreement shall designate, from time to time, to others in the manner provided in this Section 9.5
for the service of notices; except that, notices of a change of address shall be effective only
upon receipt thereof. Any notice delivered to the party hereto to whom it is addressed shall be
deemed to have been given and received on the day it was received; except that, if such day is not
a Business Day then the notice shall be deemed to have been given and received on the Business Day
next following such day and if any party rejects delivery of any notice attempted to be given
hereunder, delivery shall be deemed given on the date of such rejection. Any notice sent by
facsimile transmission shall be deemed to have been given and received on the Business Day next
following the transmission.



     9.6. Specific Performance. The parties hereto acknowledge that the obligations
undertaken by them hereunder are unique and that there would be no adequate remedy at law if any
party fails to perform any of its obligations hereunder, and accordingly agree that each party, in
addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to
(i) compel specific performance of the obligations, covenants and agreements of any other party
under this Agreement in accordance with the terms and conditions of this Agreement and (ii) obtain
preliminary injunctive relief to secure specific performance and to prevent a breach or
contemplated breach of this Agreement in any court of the United States or any State thereof having
jurisdiction.



- 19 -









 





     9.7. Governing Law. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of the State of New York, but not including the choice of law rules
thereof.



     9.8. Headings. Section and subsection headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for
any purpose, and shall not in any way define or affect the meaning, construction or scope of any of
the provisions hereof.



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



     9.10. Execution in Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required. It shall not be necessary that the signature
of or on behalf of each party appears on each counterpart, but it shall be sufficient that the
signature of or on behalf of each party appears on one or more of the counterparts. All
counterparts shall collectively constitute a single agreement. It shall not be necessary in any
proof of this Agreement to produce or account for more than a number of counterparts containing the
respective signatures of or on behalf of all of the parties.



     9.11. Severability. If fulfillment of any provision of this Agreement, at the time
such fulfillment shall be due, shall transcend the limit of validity prescribed by law, then the
obligation to be fulfilled shall be reduced to the limit of such validity; and if any clause or
provision contained in this Agreement operates or would operate to invalidate this Agreement, in
whole or in part, then such clause or provision only shall be held ineffective, as though not
herein contained, and the remainder of this Agreement shall remain operative and in full force and
effect.



- 20 -









 





     IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed
on its behalf as of the date first hereinabove set forth.



	 	 	 	 	 	 	 
	 	 	FOREST CITY ENTERPRISES, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 





Signatures of Holders on Next Page





- 21 -









 








[Signature Page of Holders]





 









 








Exhibit 1




Form of Addendum to Registration Rights Agreement




ADDENDUM TO REGISTRATION RIGHTS AGREEMENT




     THIS ADDENDUM TO REGISTRATION RIGHTS AGREEMENT (this “Addendum”) is made and entered into by
___ (the “Additional Holder”) as of ___, 200___.



     WHEREAS, Forest City Enterprises, Inc. (“FCEI”) and the parties listed on Schedule A of that
certain Registration Rights Agreement, dated as of ___,
200___ (the “Agreement”), as amended
from time to time, entered into the Agreement for the purpose of conferring on holders of the BCR
Units certain rights to have shares received in connection with the exchange of such BCR Units
registered under the Securities Act of 1933, as amended; and



     WHEREAS, a permitted transfer of BCR Units to the Additional Holder has occurred under the
Master III Operating Agreement and the Additional Holder desires to execute this Addendum so that
the Additional Holder may have all of the rights and obligations of a Holder under the Agreement.



     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
hereinafter set forth, the Additional Holder hereby agrees as follows:



     1. Definitions. Each capitalized word or term used as a defined term but not
otherwise defined in this Addendum shall have the meaning assigned to it in the Agreement.



     2. Additional Party to the Agreement. Pursuant to Sections 9.2 and 9.4 of the
Agreement, the Additional Holder is, and the Additional Holder hereby agrees to be, a party to the
Agreement as a Holder.



     IN WITNESS WHEREOF, the Additional Holder has caused this Addendum to be duly executed as of
the date first written above.



	 	 	 	 	 	 	 
	ADDITIONAL HOLDER:	 	 	 
	 
	 
	 	 	 	 	 	 
	 	 	 
	Name:
	 	 	 	 	 	 
	 	 	 	 
	Notice Address:	 	 
	 

	 	 

	 	 






 









 







EXHIBIT C-2




Form of Addendum to Registration Rights Agreement




ADDENDUM TO REGISTRATION RIGHTS AGREEMENT




     THIS ADDENDUM TO REGISTRATION RIGHTS AGREEMENT (this “Addendum”) is made and entered into by
___ (the “Additional Holder”) as of ___, 200___.



     WHEREAS, Forest City Enterprises, Inc. (“FCEI”) and the parties listed on Schedule A of that
certain Registration Rights Agreement, dated as of ___,
200___ (the “Agreement”), as amended
from time to time, entered into the Agreement for the purpose of conferring on holders of the BCR
Units certain rights to have shares received in connection with the exchange of such BCR Units
registered under the Securities Act of 1933, as amended; and



     WHEREAS, a permitted transfer of BCR Units to the Additional Holder has occurred under the
Master III Operating Agreement and the Additional Holder desires to execute this Addendum so that
the Additional Holder may have all of the rights and obligations of a Holder under the Agreement.



     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
hereinafter set forth, the Additional Holder hereby agrees as follows:



     1. Definitions. Each capitalized word or term used as a defined term but not
otherwise defined in this Addendum shall have the meaning assigned to it in the Agreement.



     2. Additional Party to the Agreement. Pursuant to Sections 9.2 and 9.4 of the
Agreement, the Additional Holder is, and the Additional Holder hereby agrees to be, a party to the
Agreement as a Holder.



     IN WITNESS WHEREOF, the Additional Holder has caused this Addendum to be duly executed as of
the date first written above.




	 	 	 	 	 	 	 
	ADDITIONAL HOLDER:	 	 
	 
	 
	 	 	 	 	 	 
	 	 	 
	Name:
	 	 	 	 	 	 
	 	 	 	 
	Notice Address:	 	 	 	 
	 

	 	 	 	 

	 	 















 








EXHIBIT D-1




TAX PROTECTION AGREEMENT




     THIS
TAX PROTECTION AGREEMENT (this “Agreement”) is made as of the ___ day of ___, 2006,
by and between, FOREST CITY MASTER ASSOCIATES III, LLC, a New York limited liability company (the
“Company”), Forest City Enterprises, Inc. (“FCEI”), certain entities associated with FCEI (“FCEI
Entities”), Forest City Rental Properties Corporation (“Rental Properties”) and BRUCE C. RATNER,
an individual residing at c/o Forest City Ratner Companies, 1 MetroTech Center North, Brooklyn, New
York 11201 (“BCR”).



W
I T N E S S E
T H :




     WHEREAS, FCEI, the FCEI Entities and certain entities affiliated with BCR are parties to a
Master Contribution and Sale Agreement of even date herewith (the “Master Contribution Agreement”).



     WHEREAS, as a condition to entering into the Master Contribution Agreement and proceeding with
the transactions contemplated by the Master Contribution Agreement, FCEI, the FCEI Entities, Rental
Properties and BCR have agreed to enter into this Agreement with the Company.



     NOW, THEREFORE, in consideration of the representations, warranties and covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:



     Section 1. Definitions. For purposes of this Agreement, each capitalized term that is
used herein and is not otherwise defined will have the meaning given to it in the Amended and
Restated Limited Liability Company Operating Agreement (the “Operating Agreement”) of the Company
by and among certain entities affiliated with FCEI, BCR and certain entities and individuals
affiliated with BCR of even date herewith. In addition, each of the following terms will have the
meaning set forth below:



     (a) “Affected Interests” is defined in Section 6(c).



     (b) “BCR” is defined in the preamble.



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



     (d) “Company Representative” means the person designated in writing by the Managing Member to
represent the Company.



     (e) “Contributed Assets” means (i) the BCR Contributed Interests (as defined in the Master
Contribution Agreement) contributed to the Company pursuant to the Master Contribution Agreement
and the related Properties, (ii) any assets (such as the Properties) directly or indirectly, in
whole or in part, owned by an entity that is a Contributed Asset, and (iii)
any assets received as “substituted basis property” (as such term is used in Section
7701(a)(42) of the Code) with respect to a Contributed Asset.



 









 





     (f) “Cumulative Liability Adjustment” shall be determined as follows. If Class A Initial
Common Units are exchanged or redeemed for the Exchange Consideration or are sold in a taxable
transaction, or if there is a Disposition of a Contributed Asset, the number of such Units so
exchanged, redeemed or sold, or the number of Units issued for the Contributed Asset in the case of
a Disposition of a Contributed Asset, will be multiplied by the dollar amount specified on
Schedule 1(m) for such Units. The Cumulative Liability Adjustment is the sum of this product for
each exchange, redemption, sale or Disposition.



     (g) “Disposition” means any sale, transfer or other act or transaction by the Company
(including a deemed distribution under Section 752 of the Code resulting in recognition of gain
under Section 731 of the Code), or by any entity in which the Company holds a direct or indirect
interest, involving a Contributed Asset (other than a transaction by a Protected Party).



     (h) “Disposition Gain” means, for each Contributed Asset, any income or gain that is
recognized by a Property Owner or the Company for federal income tax purposes as a result of a
Disposition of the Contributed Asset and is allocated to a Protected Party provided that the amount
of such gain can never exceed the amount of the Section 704(c) Gain attributable to the Contributed
Asset as of the date of contribution to the Company.



     (i) “FCEI” is defined in the recitals.



     (j) “Guaranty Opportunity” is defined in Section 4(a).



     (k) “Indemnifiable Disposition” means any Disposition during the Protection Period that
results in a Protected Party being allocated Disposition Gain other than Disposition Gain arising
from (i) a Disposition of any of the Development Properties, (ii) a Disposition of Columbia Park
and Quartermaster Plaza (Phase IV only) if the Disposition of such properties occurs prior to 18
months after the Principal Closing Date, (iii) a Disposition of Woodbridge Crossing if the
Disposition occurs prior to January 31, 2007, (iv) a Disposition of 80 Dekalb, and (v) a
transaction that results from a casualty to or condemnation of a Contributed Asset in which (x) the
lender with respect to indebtedness secured by that Contributed Asset does not allow the proceeds
from the casualty or condemnation to be used for repair of or improvements to the Contributed Asset
or acquisition of a replacement asset and (y) the Company uses commercially reasonable efforts to
qualify for nonrecognition of gain for federal income tax purposes with respect to the casualty or
condemnation.



     (l) “Master Contribution Agreement” is defined in the first whereas clause.



     (m) “Protected Party” means Bruce Ratner, Ellen Ratner, Michael Ratner, their spouses, lineal
descendants, and any trust for their benefit, that directly or indirectly beneficially own any
Class A Initial Common Units. Schedule 1(m) sets forth the number of Class A Initial Common Units
to be beneficially owned by them, as of the Principal Closing Date. Schedule 1(m) is subject to
revision from time to time to reflect the issuance or transfer of Units to BCR or to an Affiliate
or member or the Immediate Family of BCR following the Principal
Closing Date. Notwithstanding the foregoing, a Protected Party shall not include any transferee of an
interest in the Company that is described in Section 8.1(a)(iv), (v), and (vi) of the Operating
Agreement.



     (n) “Protected Party Representative” means the Class A Member Representative.



2









 





     (o) “Protection Period” is defined in Section 3.



     (p) “Section 704(c) Gain” means the amount of gain allocated to a Protected Party under
Section 704(c) of the Code from a Disposition of a Contributed Asset, or that would be allocated to
such party under Section 704(c) of the Code from a Disposition of a Contributed Asset if Section
704(c) of the Code applied to the difference between the fair market value of the Contributed Asset
and its adjusted tax basis on the Principal Closing date or, if later, the date the Contributed
Asset is contributed to the Company.



     (q) “Substantial Authority” has the meaning provided in Section 6662 of the Code and the
Treasury Regulations promulgated thereunder.



     (r) “Transfer,” “Transferred Interest,” and “Transferring Party,” are defined in Section 6(d).



     (s) “Treasury Regulation” means a final or temporary regulation promulgated under the Code by
the U.S. Department of Treasury.



     Section 2.
Section 704(c) Method. With respect to the Contributed Assets, the Company
will use, and will cause any entity (classified as a partnership for Federal income tax purposes)
in which the Company holds a direct or indirect interest to use, the “traditional method with
curative allocations” with the curative allocation limited to the gain on a Disposition of a
Contributed Asset to the extent permitted under Treasury Regulation Section 1.704-3(c). The
Company will cause any entity that is treated as a partnership for federal income tax purposes to
which any of the Contributed Assets are transferred in a transaction that is wholly or partially
nontaxable (i) to use such “traditional method with curative allocations” with the curative
allocation limited to the gain on a Disposition of a Contributed Asset to the extent permitted
under Treasury Regulation Section 1.704-3(c), and (ii) to agree, for the benefit of the Protected
Parties, to be bound by the provisions of this Section 2 as though such entity were the Company.
The parties agree that (i) Section 704(c) of the Code and the principles thereunder will apply to
any Disposition of Contributed Assets, (ii) Section 704(c) of the Code and the principles
thereunder will not apply to allocations from the Company of items of depreciation from property
that has an adjusted tax basis equal to its basis under Section 704(b) of the Code, and (iii) the
BCR Interests will not be treated as property subject to the allowance for depreciation or
amortization under either Section 704(b) or (c) of the Code. To the extent (x) any of the above
methods is determined by a court to be a method that is not permitted under Section 704(c) of the
Code or the Treasury Regulations promulgated thereunder, or (y) there is a settlement of an
examination of the Company’s federal income tax return to the effect that any of the above methods
are not permitted under Section 704(c) of the Code or the Treasury Regulations promulgated
thereunder, the Managing Member shall adopt a substitute method that varies from the original
method to the least extent permitted under the Code and Treasury Regulations which
is as neutral to FCEI as possible, and the method so determined shall be used and shall be
deemed to be a method specified in this Section 2. If the Managing Member in consultation with its
tax advisor does not believe that the method selected by the Protected Party is supported by
Substantial Authority, the Protected Party Representative will select an alternative method,
subject again to the Managing Members’ consent.




3









 








     Section 3.
Protection Period. The “Protection Period” with respect to each Protected
Party is the period of time beginning on the Principal Closing Date and ending on the earliest of
(i) the twelfth anniversary of the Principal Closing Date, (ii) the date on which the last of the
Class A Initial Common Units directly or indirectly beneficially owned by such Protected Party is
exchanged or redeemed for the Exchange Consideration, (iii) the death of the Protected Party, as
and to the extent provided in Section 6(c), and (iv) with respect to any transfer of a direct or
indirect interest in the Company a taxable transfer to the extent provided in Section 6(d).



     Section 4. Debt Protection 




     (a) Subject to the provisions of this Section 4, during the Protection Period, the Company may
sell, assign, transfer, refinance (with recourse or nonrecourse indebtedness) mortgage, pledge or
otherwise deal with any of the Contributed Assets provided, however, that the Company and/or FCEI
will (i) maintain, and cause each of the entities classified as a partnership for Federal income
tax purposes in which the Company holds a direct or indirect interest to maintain, an amount of
indebtedness, in the aggregate, at least equal to $500 million reduced by the Cumulative Liability
Adjustment, (ii) if the Company chooses to refinance (or cause or permit to be refinanced) existing
indebtedness, use commercially reasonable efforts to cause such refinancing indebtedness to be
“qualified nonrecourse financing” within the meaning of Section 465(b)(6)(B) of the Code; (iii)
use commercially reasonable efforts to replace such indebtedness with other indebtedness, rather
than retire existing indebtedness with equity or FCEI loans, unless in its reasonable business
judgment it is in the best interests of FCEI to do so; and (iv) provide each of the Protected
Parties that holds a direct or indirect interest in the Company with an opportunity to undertake
obligations in a form reasonably acceptable to, and in no way detrimental to, the Company, the
intent of which is to allocate indebtedness to such parties for purposes of Section 752 of the Code
and the Treasury Regulations promulgated thereunder (a “Guaranty Opportunity”). If any Protected
Party intends to undertake a Guaranty Opportunity, it shall provide a written notification to the
Company Representative of such intention. In addition to the foregoing, if in its reasonable
business judgment, FCEI or the Company determines that it is in the best interests of FCEI or the
Company to retire (or cause to be retired) existing debt with equity contributions, then FCEI will
use commercially reasonable efforts to cooperate with the Protected Party Representative in
structuring the debt retirement to minimize adverse income tax consequences to a Protected Party
through (A) a merger of certain BCR Entities, (B) allowing Protected Parties or affiliates thereof
to participate in the equity contribution (e.g., by BCR making a loan to the Company), or
(C) any other reasonable request by the Protected Party Representative which would involve no cost
to FCEI.



     (b) At least thirty (30) days (or such shorter period if commercially reasonable) prior to the
occurrence of any of the following events, the Company Representative shall provide written notice
to the Protected Party Representative of any:




     (i) Reductions in the outstanding principal balance of any indebtedness of the Property
Owners that differ materially from amortization schedules related to such indebtedness;




     (ii) Refinancings of any indebtedness of the Property Owners; and



4









 






     (iii) Sales or exchanges of any property that serves as security for any indebtedness
of the Property Owners.



     (c) The Company has agreed to provide the Protected Party Representative with a list of
information (set forth on the Section 4(c) Information List attached hereto) that the Company will
provide when reasonably requested to do so by the Protected Party Representative, and at or prior
to the Principal Closing Date, the Company will provide a schedule of the indebtedness that the
Company expects to report for federal income tax return purposes as being the amount of total
indebtedness allocable to the Company as of the Principal Closing Date and the reductions
attributable to expected amortization of such indebtedness. In no event is the Company
responsible for providing the fair market value of any property, although the Protected Party
Representative may request third party appraisals (if any) the Company has already obtained when
such information is related to a Guaranty Opportunity a Protected Party may undertake. If the
Protected Party Representative proposes a guarantee of indebtedness for which FCEI or any of its
affiliates bears the “risk of loss” (as such term is used for purposes of the Treasury Regulations
promulgated under Section 752 of the Code), the Company will promptly advise the Protected Party
Representative. Once a guaranty has been executed by the Protected Party, the Company will
undertake commercially reasonable efforts so that neither FCEI nor any of its affiliates bears the
“risk of loss” (as such term is used for purposes of the Treasury Regulations promulgated under
Section 752 of the Code) with respect to the portion of the indebtedness that is guaranteed by the
Protected Party or, in the case of indemnification or other contractual arrangement, that is
subject to indemnification or other contractual arrangement. For purposes of the preceding two
sentences, the Company will be entitled to assume that the Protected Party or entity providing the
guaranty or indemnity or entering into the contractual arrangements and the affiliates of such
Protected Party or entity have not entered into any arrangement that would reduce or eliminate the
“risk of loss” (as determined under Treasury Regulations Section 1.752-2) that such entity would
have absent such arrangement.



     (d) Except as provided in the third and fourth sentences of the preceding Section 4(c), the
Protected Party will bear the risk that a guaranty, indemnification or other action taken pursuant
to a Guaranty Opportunity is not effective to cause an allocation for federal income tax purposes
of indebtedness of the Property Owners to such Protected Party in the desired amount. Neither FCEI
nor any of its affiliates will be required to take a position on any federal, state, or local tax
return that is not supportable, as determined by FCEI in its reasonable discretion, by at least
Substantial Authority; provided, however, that FCEI shall take the position in question if the
Protected Party provides FCEI with a well-reasoned opinion of counsel or an accounting firm that
the position is supportable by Substantial Authority. Notwithstanding the preceding proviso, if
FCEI or an accounting firm or counsel advising FCEI disagrees with the opinion referred to in the
preceding sentence, the parties shall mutually agree on the selection of an independent law firm or
accounting firm, which shall be requested to resolve as expeditiously
as reasonably possible the question of whether the position in question is supportable by
Substantial Authority. With respect to the Guaranty Opportunity, the Protected Party will bear any
costs or expenses associated with the contest or litigation of any position taken with regard to
any allocation of partnership liabilities under Code Section 752 of the Code and the Treasury
Regulations promulgated thereunder, including any costs associated with counsel or an accounting
firm providing FCEI the well-reasoned opinion described above.



5









 





     Section 5. Preservation of Tax Status. During the Protection Period, the Company will
not take any action that would cause the Company to be treated as a corporation for federal income
tax purposes.



     Section 6. Indemnification




     (a) Subject to the other provisions of this Section 6, the Company will indemnify each of the
Protected Parties as follows:




     (i) If the Company or an entity in which the Company owns a direct or indirect interest
fails to use the allocation method specified in Section 2, the Company will pay to the
Protected Party an amount equal to the aggregate federal, state and local income taxes paid,
or to be paid, by the Protected Party as a result of, or in connection with, the failure to
use such allocation method (taking into consideration all taxes imposed in respect of items
allocated to the Protected Party as a result of allocations not permitted by Section 2) plus
an amount equal to the aggregate federal, state and local income taxes payable by the
Protected Party as a result of the receipt of the payments required by this Section 6(a)(i)
(including for this purpose all taxes on payments hereunder intended to compensate or
indemnify the recipient for tax liability).




     (ii) If an Indemnifiable Disposition occurs during the Protection Period, the Company
will pay to the Protected Party an amount equal to the aggregate federal, state and local
income taxes paid, or to be paid, by the Protected Party as a result of, or in connection
with, such transaction or event plus an amount equal to the aggregate federal, state and
local income taxes payable by the Protected Party as a result of the receipt of the payments
required by this Section 6(a)(ii) (including for this purpose all taxes on payments
hereunder intended to compensate or indemnify the recipient for tax liability).




     (iii) If the Company or other entity fails to comply with Section 4 or 5, the Company
will pay to each of the Protected Parties an amount equal to the aggregate federal, state
and local taxes paid, or to be paid, by such Protected Party as a result of such
non-compliance plus an amount equal to the aggregate federal, state and local income taxes
payable by the Protected Party as a result of the receipt of the payments required by this
Section 6(a)(iii) (including for this purpose all taxes on payments hereunder intended to
compensate or indemnify the recipient for tax liability).




     (iv) For purposes of determining taxes paid, payable or to be paid for purposes of this
section 6(a), (v) all income arising from the transaction or event shall be treated as
subject to federal, state and local income tax payable by individuals residing in New York
City, determined using the maximum federal, New York State and New York
City rates on ordinary income and capital gain (taking into account recapture), as
applicable, then in effect, (or in the case of individuals residing outside of New York
City, using the appropriate state and local rates, taking into account taxes imposed by New
York City and New York State (or other jurisdictions where the property in question is
located) on income derived from such jurisdiction, to the extent appropriate), (w) indemnity
payments will be assumed to be taxable as guaranteed payments treated as ordinary income,
(x) the deduction for such guaranteed payments will be allocated 100% to the FCEI Entities
who contributed (or who are related to the party who funded) the capital or



6









 







otherwise funded
the amounts to make such payments (to the extent of such contribution), (y) any amounts
payable pursuant to the indemnity provided for in this Section will be determined assuming
that the transaction or event giving rise to the indemnification obligation was the only
transaction or event reported on the Protected Party’s tax return (and, for clarity, without
giving effect to any loss carry forwards or other deductions available to the Protected
Party) and (z) any amounts payable with respect to state and local income taxes shall be
assumed to be deductible for federal income tax purposes.




     (v) Notwithstanding the foregoing, the amount that the Company is required to pay under
this Section 6 will be reduced by the amount of any prior distributions made to the
Protected Party under Sections 5.2(b)(vi) and (vii) of the Operating Agreement (but only to
the extent not previously taken into account under this clause (v)).




     (vi) For purposes of this Section 6, no amount of taxes paid, payable, or to be paid by
a Protected Party from an event, sale, refinancing, transaction, or otherwise shall be taken
into account more than once.



     (b) Notwithstanding the foregoing, the Company will not be required to indemnify during the
Protection Period any Protected Party pursuant to Section 6 as a result of any Indemnifiable
Disposition if, based on the terms of the organizational documents for the relevant Property Owner
in force on the date of this Agreement or, if giving more control to the Company, the
organizational documents in force at the time of the Indemnifiable Disposition, the action is one
that cannot reasonably be prevented directly or indirectly by the Company or an Affiliate (or by
any successor to the Company’s interest in the Property Owner); provided that, the Company (and any
such successor) uses commercially reasonable efforts to prevent the occurrence of such transaction
or event through the exercise of its rights under the organizational documents for such Property
Owner. For this purpose, the failure by the Company to exercise any buy-sell right, right of first
refusal or right of first offer will not be treated as a failure to use commercially reasonable
efforts to prevent the occurrence of the relevant transaction or event.



     (c) If a Protected Party dies, then any subsequent owner (including his or her estate and any
grantor trust the assets of which are deemed to be included in his estate) of the direct or
indirect interests in the Company owned (or treated as owned for federal income tax purposes) by
the deceased Protected Party (the “Affected Interests”) and by each BCR Entity through which the
deceased Protected Party owned (or was treated as owning for federal income tax purposes) an
indirect interest in the Company at death will not, with respect to the Affected Interests, be
eligible to receive an indemnity payment under Section 6(a) or to recover damages
for a breach of Section 2, 4 or 5 to the extent the subsequent owner’s basis in the Affected
Interests is increased to fair market value under Section 1014(a) of the Code (or successor
provision of the Code or Internal Revenue law) and the Company has an election under Section 754 in
effect for its federal income tax year of the death.
To the extent such subsequent owner’s basis
in the Affected Interests is increased to fair market value under Section 1014(a) of the Code (or
successor provision of the Code or Internal Revenue law) and the Company does not have an election
under Section 754 of the Code in effect for its federal income tax year of the death, then the
subsequent owner, with respect to the Affected Interests, will be eligible to receive an indemnity
payment under Section 6(a) or to recover damages for a breach of Section 2, 4, or 5 with respect to
events occurring no later than six months after the date of such death.



7









 




For purposes of this
Section 6, the Company shall be treated as having an election under Section 754 of the Code in
effect only to the extent a valid election under such Code section is in effect for any federal tax
partnership in which the Company owns a direct or indirect equity interest (subject to the
conditions of Section 6(j)) so that there is an adjustment to federal income tax basis at the
ultimate property level.




     (d) To the extent that a Protected Party (the “Transferring Party”) transfers (the “Transfer”)
a direct or indirect interest in the Company (the “Transferred Interest”) in a transaction that is
fully taxable for federal income tax purposes, then any subsequent owner of the Transferred
Interests and each BCR Entity through which the Transferring Party owned (or was treated as owning
for federal income tax purposes) the Transferred Interest will not, with respect to the Transferred
Interests, be eligible with respect to events occurring subsequent to the Transfer to receive an
indemnity payment under Section 6(a) or to recover damages for a breach of Section 2, 4 or 5.



     (e) As soon as practicable (but in no event more than sixty (60) days after the end of the
Company’s federal income tax year), the Company will provide the Protected Party Representative
with a written computation of the amount of Disposition Gain or other income for which an indemnity
is due. As soon as practicable after receipt of such written computation, the Protected Party will
prepare and deliver to the Company Representative a written statement of the computation of the
amount of any indemnity payment to which the Protected Party is entitled under Section 6(a),
together with all information necessary for the Company to confirm the accuracy of the computation
(the statement and information are collectively referred to as the “Computation Statement”). The
Company will have thirty (30) days from the date of the receipt of the Computation Statement to
review it (“Review Period”).




     (i) If, after its review of the Computation Statement, the Company believes that the
amount of the indemnification to which the Protected Party is entitled under Section 6(a) is
less than the amount shown on the Computation Statement, then the Company may deliver to the
Protected Party Representative prior to the expiration of the Review Period a notice of
disagreement setting forth the Company’s computation of the amount of the indemnification to
which the Protected Party is entitled. If the Company does not deliver a written notice of
disagreement within the Review Period, the Protected Party’s determination of the amount of
the indemnification payable under Section 6(a) as shown on the Computation Statement will be
final and binding on the parties.




     (ii) If the Company delivers a written notice of disagreement with the Computation
Statement within the Review Period, the Protected Party and the Company will attempt in good
faith to resolve such disagreement within sixty (60) days from the date on which the Company
delivers the notice of disagreement. If the Company and the Protected Party cannot reach
agreement within the sixty (60) day period (or such longer period as they may agree), either
party may refer the dispute to an independent accounting firm of national reputation that is
acceptable to the Company and the Protected Party (the “Independent Accounting Firm”) for
binding resolution. The Independent Accounting Firm may conduct such proceedings as it, in
its discretion, deems advisable to assist it in resolving the dispute. Any computation by
the Independent Accounting Firm must be made on a basis consistent with the provisions of
this Agreement. The Independent Accounting Firm will render its decision in writing



8









 







within
sixty (60) days following its selection. The decision by the Independent Accounting Firm
will be conclusive and binding on the parties. The Protected Party and the Company will
each pay one-half of the fees and reimbursable expenses of the Independent Accounting Firm.
Each of the parties will bear its own legal, accounting and other fees and expense of
participating in such dispute resolution procedure. Unless otherwise agreed by the Company
and the Protected Party, non-computational issues, such as legal questions regarding the
interpretation of provisions of this agreement, will not be submitted to the Independent
Accounting Firm for resolution but will be resolved in accordance with Section 13 of this
Agreement.



     (f) The FCEI Entities will contribute to the Company funds sufficient to pay the required
indemnity, and the Company will pay the Protected Party the amount of indemnification to which it
is entitled at least five (5) business days prior to the date on which the Protected Party is
required to pay the taxes (including estimated taxes) for which the indemnification is being paid;
provided, however, that the Company is not required to make such payment before the expiration of
the Review Period. If there is a dispute with respect to the amount of the indemnity, the Company
shall pay the indemnity to the extent not in dispute in accordance with the preceding rules and
shall pay the remaining amount due (if any) within five (5) business days after resolution of the
dispute. In the event the FCEI Entities fail to pay the required indemnity amount, Rental
Properties, by its execution hereof, agrees to guaranty the performance of the FCEI Entities as
described in this Section 6(f).



     (g) The indemnification provided in Section 6(a) will be the Protected Parties’ exclusive
remedy with respect to an Indemnifiable Disposition or for a breach by the Company of its
obligations under Section 2, 4 or 5.



     (h) Notwithstanding anything to the contrary herein, and to avoid uncertainty as to the
applicability of any indemnification obligation hereunder, the indemnification obligations provided
in this Agreement shall not apply to any of the following:




     (i) The contributions by affiliates of BCR and by BCR of the BCR Contributed Interests
to the Company as described in the Master Contribution Agreement;




     (ii) Allocations of Net Income to the Class A Distribution Preference; and




     (iii) Transfers of interests by any Protected Party; and




     (iv) Exercise of Exchange Rights as provided for in the Operating Agreement and any
exhibits or addendums thereto; and




     (v) Redemption at Option of Holders of Class A Common Units for In-Kind Distribution;
and




     (vi) Allocations of Net Income pursuant to Article 5.1(a)(vi) of the Operating
Agreement.



     (i) To the extent any of the methods under Section 704(c) of the Code described in Section 2
above are disallowed by the Internal Revenue Service and as a result of a disposition of a
Contributed Asset after the Protection Period expires the FCEI Entities are allocated income or



9









 







gain under Section 704(c) of the Code in excess of the amount that would have been allocated to the
FCEI Entities had the methods described in Section 2 above been permitted, then BCR agrees to file
claims for refund for any overpayment of federal, state and city income tax attributable to the
disallowance by the Internal Revenue Service of the Section 704(c) method used for each of the BCR
tax years affected. Upon receipt of such refunds, BCR will contribute to the Company an amount
equal to such refunds or the amount that would have been refunded to BCR unreduced by any offsets
for other items, and the Company will distribute such amount to the FCEI Entities. The distribution
to the FCEI Entities will be treated as a guaranteed payment to the FCEI Entities, and the
deduction corresponding to such guaranteed payment will be allocated exclusively to BCR, so that
there will be no net credit to the Capital Account of BCR in connection with such contribution.



     (j) With respect to any federal income tax year of the Company (other than the Company’s
federal income tax year including the Principal Closing Date), the Company will, at the request of
the Protected Party Representative, make or cause to be made an election under Section 754 of the
Code for the Company and any federal tax partnership in which the Company holds a direct or
indirect interest, if (i) such election does not adversely affect the Company and (ii) the Company
has the ability to make such election or cause such election to be made.



     Section 7. Participation in Contest. In connection with any dispute potentially
affecting the tax liability of a Protected Party, including a dispute relating to the Section
704(c) method described in Section 2 hereof or the allocation of indebtedness under Section 752, at
the election of and expense of the Protected Party Representative, counsel or accountant elected by
the Protected Party Representative shall have the right to be present at and participate in any
litigation with or administrative hearing before the Internal Revenue Service, and the Company will
not settle any such dispute without first consulting with the Protected Party Representative and
giving full, fair and deliberate consideration to its recommendations and suggestions. As the
Company makes its decision with respect to any litigation or administrative hearing with the IRS,
the Company will consider the intentions of the parties as reflected in this agreement and
the relative economic impact of the proposed settlement on FCEI and the Protected Parties such
that the method selected is as neutral to FCEI as possible.



     Section 8.
Third Party Beneficiaries. Each of the Protected Parties is an intended
third-party beneficiary of, and may enforce, the provisions of this Agreement.



     Section 9.
Notices. All notices, demands, consents, requests or other communications
provided for or permitted to be given hereunder by a party to this Agreement will be given in the
manner provided in the Master Contribution Agreement.



     Section 10.
Assignment. None of the parties to this Agreement will have the right to
assign, transfer, convey or otherwise sell (or enter into any agreement to do the same), directly
or indirectly, any interest or benefit it may have in or under this Agreement without first having
obtained the written consent of the other party (the Protected Party Representative, in the case of
any Protected Party), which consent may be withheld in such party’s sole and absolute discretion;
provided, however, that consent shall not be required in the case of an assignment permitted under
the Operating Agreement.



10









 





     Section 11. Waiver. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing signed by the party
against whom the enforcement of the change, waiver, discharge or termination is sought or, in the
case of a default, by the non-defaulting party or parties.



     Section 12. GOVERNING LAW. AS PERMITTED BY SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK, THE PARTIES HERETO AGREE THAT THIS AGREEMENT WILL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.



     Section 13. Jurisdiction. Each of the parties submits to the jurisdiction of any New
York State Court or Federal Court of the United States of America sitting in the borough of
Manhattan, and any appellate court from any such court, in any suit, action or proceeding arising
out of or relating to this Agreement (other than computational issues submitted to the Independent
Accounting Firm under Section 6(e)), or for recognition or enforcement of any judgment. All claims
in respect of any such suit, action or proceeding may be brought, heard and determined in such New
York State Court or, to the extent permitted by law, in such Federal Court. Final judgment in any
such suit, action or proceeding will be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Each of the parties waives, to the
fullest extent it may legally and effectively do so, any objection that it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or relating to this
Agreement in any New York State Court or Federal Court sitting in the borough of Manhattan. Each
of the parties waives, to the fullest extent permitted by law, the defense of an inconvenient forum
to the maintenance of such suit, action or proceeding in any such court. Nothing contained in this
Section 13 will be construed as preventing either of the parties from (i) objecting to the
jurisdiction of any New York State Court on the ground that the matter involved exceeds the
statutory jurisdiction of such court or (ii) from seeking to remove
any suit, action or proceeding from a New York State Court to a Federal Court sitting in the
borough of Manhattan, or vice versa.



     Section 14. Captions. The captions and section headings included in this Agreement
are for convenience only, do not constitute part of this Agreement and will not be considered or
referred to in interpreting the provisions of this Agreement.



     Section 15. Counterparts. This Agreement may be executed in two or more counterparts,
each of which will be deemed to be an original, but all of which will constitute one and the same
instrument. The submission of a signature page transmitted by facsimile, pdf file or similar
electronic transmission facility will be considered as an “original” signature page for purposes of
this Agreement.



     Section 16. Severability. If any provision hereof is held invalid or not enforceable
to its fullest extent, such provision will be enforced to the extent permitted by law, and the
validity of the remaining provisions hereof will not be affected thereby.



     Section 17. Prior Negotiations; Construction. No negotiations concerning or
modifications made to prior drafts of this Agreement will be construed in any manner to limit,
reduce or impair the rights, remedies, duties and obligations of the parties under this Agreement



11









 







or to restrict or expand the meaning of any of the provisions of this Agreement or to construe any
of the provisions of this Agreement in any party’s favor. The parties acknowledge that each party
and its counsel have reviewed and revised this Agreement and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party will not be
employed in the interpretation of this Agreement or any amendment, schedule or exhibit hereto.



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



	 	 	 	 	 	 	 
	 	 	FOREST CITY MASTER ASSOCIATES III, LLC
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 
	 

	 	 	 	 

     Bruce C. Ratner
	 	 






12









 






     Section 4(c) Information list




     For any real property and related indebtedness in which the Company owns a direct or indirect
interest:




	1.	 	Rent roll and stacking plan;
	 
	2.	 	Selected lease abstracts;
	 
	3.	 	Copy of any third party appraisals dated within 3 years;
	 
	4.	 	Operating agreement;
	 
	5.	 	Account receivable aging;
	 
	6.	 	Schedule of tenant leases in default;
	 
	7.	 	Information concerning any material litigation affecting the property or its owner;
	 
	8.	 	Financial statements for the most recent three fiscal years:
	 
	9.	 	Mortgage and mezzanine loan documents; and
	 
	10.	 	Any other information reasonably requested and related to the property and its owner.




13









 











EXHIBIT D-2




Exhibit
D-2

Form of Addendum to Tax Protection Agreement




ADDENDUM TO TAX PROTECTION AGREEMENT




     THIS ADDENDUM TO TAX PROTECTION AGREEMENT (this “Addendum”) is made and entered into by
___ (the “Additional Protected Party”) as of ___, 200___.



     WHEREAS, Forest City Master Associates III, LLC, a New York limited liability company (“Master
III”), Forest City Enterprises, Inc. (“FCEI”), certain other entities associated with FCEI, Forest
City Rental Properties Corporation and Bruce C. Ratner entered into that certain Tax Protection
Agreement, dated as of ___, 200___ (the “Agreement”), as amended from time to time, for the
benefit of each Person receiving or entitled to receive any BCR Units; and



     WHEREAS, a transfer of BCR Units that does not terminate the obligations of FCEI, Master III
and certain other entities affiliated with FCEI under the Agreement with respect to the Additional
Protected Party has occurred and the Additional Protected Party desires to execute this Addendum so
that the Additional Protected Party may have all of the rights and obligations of a Protected Party
under the Agreement.



     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
hereinafter set forth, the Additional Protected Party hereby agrees as follows:



     1. Definitions. Each capitalized word or term used as a defined term but not
otherwise defined in this Addendum shall have the meaning assigned to it in the Agreement.



     2. Additional Protected Party to the Agreement. Pursuant to the Agreement, the
Additional Protected Party is, and the Additional Protected Party hereby agrees to be, a party to
the Agreement as a Protected Party.



     IN WITNESS WHEREOF, the Additional Protected Party has caused this Addendum to be duly
executed as of the date first written above.



	 	 	 	 	 	 	 	 	 
	ADDITIONAL PROTECTED PARTY:
	 
	 
	 	 	 	 	 	 	 	 
	 	 	 
	Name: 
	 	 	 	 	 	 	 	 
	 

	 

	 
	Notice Address:	 	 	 	 	 	 
	 	 






 









 








EXHIBIT E




VOTING AGREEMENT




     THIS VOTING AGREEMENT
(this “Agreement”) is made as of the ___ day of ___, 2006 by and
among FOREST CITY ENTERPRISES, INC., an Ohio corporation (“FCEI”), each of the parties listed on
Schedule A hereto (each a “Forest City Principal”, and, collectively, the “Forest City Principals”)
and Bruce C. Ratner, an individual (“BCR”).



W
I T N E S S E
T H:





     WHEREAS, FCEI, BCR and certain other parties thereto have entered into that certain Master
Contribution and Sale Agreement, dated as of ___, 2006, as the same may have been amended
from time to time (the “Master Contribution Agreement”).



     WHEREAS, simultaneously herewith, the Principal Closing under the Master Contribution
Agreement is occurring.



     WHEREAS, the Forest City Principals own certain shares of FCEI Class B Common Stock, as
described in FCEI’s most recent proxy statement filed with the Securities and Exchange Commission.
The currently owned and hereafter acquired shares of FCEI Class B Common Stock of the Forest City
Principals are referred to herein as the “Forest City Principal Shares”.



     WHEREAS, FCEI, the Forest City Principals and BCR desire to execute and deliver this Agreement
for the purpose of regulating certain aspects of the relationship between the parties commencing as
of the Principal Closing.



     NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements
contained herein and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:



     Section 1.
Definitions. Capitalized terms used but not defined in this Agreement
have the meanings given to them in the Master Contribution Agreement. For purposes of this
Agreement, the following terms shall have the meanings given to them in this Section 1:



          (a) “Affiliate” means, as to any Person, any other Person that controls, is controlled by, or
is under common control with, such Person; as used in this definition, “control” shall mean (a) the
ownership of more than ten percent (10%) of the voting securities or other voting interest of any
Person (including attribution from related parties), or (b) the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities, by contract or otherwise.




          (b) “Immediate Family of BCR” means the “Immediate Family” (as defined in the Master III
Operating Agreement) of BCR together with any estate planning vehicles of BCR and the Immediate
Family of BCR.




1









 








          (c) “Person” means any individual, corporation, partnership, association, trust, limited
liability company or other entity or organization.




          (d) “Ratner Family” means the “Immediate Family” (as defined in the Master III Operating
Agreement) of the Forest City Principals together with any estate planning vehicles of the Forest
City Principals and the Immediate Family of the Forest City Principals.




     Section 2.
Voting of Forest City Principal Shares.



          (a) Subject to Section 2(c) below, the board of directors of FCEI (the “Board of Directors”)
will, no later than February 1, 2007, (i) if necessary, create a vacancy in the Board of Directors
by increasing the number of directors and (ii) appoint BCR as a director of FCEI to fill the
vacancy. Thereafter, subject to Section 2(b) and Section 2(c) below, (i) the Board of Directors
will (A) nominate and recommend BCR to the shareholders of FCEI for election to the Board of
Directors at the first meeting of the shareholders of FCEI following the date of BCR’s appointment
to the Board of Directors and for re-election to the Board of Directors at each subsequent meeting
of the shareholders of FCEI held to consider a vote on BCR’s seat on the Board of Directors and (B)
not take any action intended to interfere with the election or re-election of BCR to the Board of
Directors, and (ii) the Forest City Principals agree to vote their respective Forest City Principal
Shares in favor of BCR for election to the Board of Directors at the first meeting of the
shareholders of FCEI following the date of BCR’s appointment to the Board of Directors and for
re-election to the Board of Directors at each subsequent meeting of the shareholders of FCEI held
to consider a vote on BCR’s seat on the Board of Directors.




          (b) Notwithstanding any other provision in this Section 2, in the event (i) of BCR’s death or
a physical or mental incapacity that prevents BCR from performing all duties required of a director
of FCEI, or (ii) that (A) in the case that BCR is an employee of the New York Strategic Business
Unit, the aggregate number of all BCR Units and FCEI Stock issued upon conversion of any BCR Units
owned directly and/or beneficially by BCR, any Affiliate of BCR or any member of the Immediate
Family of BCR, taken together as a group, is at any time less than 1,500,000 or (B) in the case
that BCR is no longer an employee of the New York Strategic Business Unit, the aggregate number of
all BCR Units and FCEI Stock issued upon conversion of any BCR Units owned directly and/or
beneficially by BCR, any Affiliate of BCR or any member of the Immediate Family of BCR, taken
together as a group, is at any time less than 2,500,000, or (iii) that BCR materially breaches
either the non-competition covenant contained in BCR’s then current employment agreement with FCEI
or any written policy generally applicable to all members of the Board of Directors and BCR does
not cure such breach within thirty (30) days of receipt of notice of such breach from FCEI, all
obligations of FCEI, the Board of Directors and the Forest City Principals pursuant to this
Agreement will automatically terminate and, in the case of clause (iii) of this sentence, BCR will
immediately tender his resignation as a director of FCEI to the Board of Directors; provided,
however, in the event BCR, in good faith, disputes FCEI’s claim that BCR is in material breach, as
described in clause (iii) of this sentence, BCR shall not be obligated to tender his resignation
and this Agreement shall not automatically terminate until there has been a determination by the
Audit Committee of the Board of Directors that BCR was in material breach.




2









 








          (c) Notwithstanding anything to the contrary in this Agreement, the obligations of the Forest
City Principals pursuant to this Agreement will apply only to their capacities as shareholders of
FCEI. Nothing in this Agreement will prohibit, or be deemed to limit in any manner, any Forest
City Principal who is serving as an officer or director, solely in his or her capacity as such
officer or director, from (i) taking any action or making any statement at any meeting of the Board
of Directors or any committee thereof, (ii) making any statement to any officer, director or agent
of FCEI, or (iii) otherwise taking any action solely in his or her capacity as an officer or
director of FCEI. In no event will any of the Forest City Principals or any member of the Board of
Directors be required to take, or be required to refrain from taking, any action that they believe
in good faith, after consulting with legal counsel, would constitute a breach of any fiduciary duty
owed as a result of serving as an officer or director of FCEI.




          (d) In the event that any Forest City Principal transfers (including by operation of law or
through succession, but excluding a proxy given to a representative appointed or designated by FCEI
in connection with a particular FCEI shareholder meeting) beneficial ownership of any Forest City
Principal Shares to any member of the Ratner Family, the Forest City Principal (or, in the case of
death, such deceased Forest City Principal’s legal representatives), concurrently with such
transfer, will cause the transferee to execute and deliver a counterpart of this Agreement to BCR
pursuant to which the transferee agrees to be bound by the provisions of this Agreement as if it
were a Forest City Principal. No transfer of beneficial ownership of any Forest City Principal
Shares from any Forest City Principal to any member of the Ratner Family will be effective unless
the transferee executes a counterpart of this Agreement and agrees to be bound by each of the terms
of this Agreement.




     Section 3.
Representations and Warranties of BCR. BCR hereby represents and warrants
to FCEI and the Forest City Principals as follows:



          (a) Authority. BCR has full legal power, authority and right to execute and deliver,
and to perform its obligations under, this Agreement. This Agreement (i) has been duly executed by
BCR and (ii) constitutes a valid and binding agreement of BCR enforceable against him in accordance
with its terms, subject to (A) bankruptcy, insolvency, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors’ rights generally and (B) general principles
of equity, regardless of whether considered in a proceeding at law or in equity.




          (b) No Conflicts. Neither the execution and delivery of this Agreement by BCR nor the
performance by BCR of his obligations hereunder will violate or result in any breach or violation
of or be in conflict with or constitute a default under any term of any agreement, judgment,
injunction, order, decree, law or regulation to which BCR is subject or by which BCR is bound.




     Section 4.
Representations and Warranties FCEI. FCEI hereby represents and warrants
to BCR as follows:



          (a) Authority. FCEI has full legal power, authority and right to execute and deliver,
and to perform its obligations under, this Agreement. This Agreement (i) has been duly executed by
FCEI and (ii) constitutes a valid and binding agreement of FCEI enforceable against




3









 







it in accordance with its terms, subject to (A) bankruptcy, insolvency, moratorium and other
similar laws now or hereafter in effect relating to or affecting creditors’ rights generally and
(B) general principles of equity, regardless of whether considered in a proceeding at law or in
equity.




          (b)
No Conflicts. Neither the execution and delivery of this Agreement by FCEI nor
the performance by FCEI of its obligations hereunder will violate or result in any breach or
violation of or be in conflict with or constitute a default under any term of (i) the
organizational documents of FCEI or (ii) any agreement, judgment, injunction, order, decree, law or
regulation to which FCEI is subject or by which FCEI is bound.




     Section 5.
Representations and Warranties of the Forest City Principals. Each Forest
City Principal hereby represents and warrants to BCR as follows:



          (a) Title. As of the date hereof, each of the Forest City Principals owns
beneficially and of record its respective Forest City Principal Shares. Each of the Forest City
Principals has the sole right, or the shared right with other Forest City Principals, to vote their
respective Forest City Principal Shares, and there are no restrictions on rights of disposition or
other liens, claims, options, charges or other encumbrances pertaining to the Forest City Principal
Shares that would restrict or prevent any of the Forest City Principals from performing their
respective obligations pursuant to this Agreement.




          (b) Authority. Each of the Forest City Principals has full legal power, authority and
right to execute and deliver, and to perform its obligations under, this Agreement. This Agreement
(i) has been duly executed by such Forest City Principal and (ii) constitutes a valid and binding
agreement of such Forest City Principal enforceable against such Forest City Principal in
accordance with its terms, subject to (A) bankruptcy, insolvency, moratorium and other similar laws
now or hereafter in effect relating to or affecting creditors’ rights generally and (B) general
principles of equity, regardless of whether considered in a proceeding at law or in equity.




          (c) No Conflicts. Neither the execution and delivery of this Agreement by the Forest
City Principals nor the performance by the Forest City Principals of their respective obligations
hereunder will violate or result in any breach or violation of or be in conflict with or constitute
a default under any term of any agreement, judgment, injunction, order, decree, law or regulation
to which such Forest City Principal is subject or by which such Forest City Principal is bound.




          (d) Right to Vote. None of the Forest City Principals has granted any person any
proxy (revocable or irrevocable) or power of attorney with respect to any of their respective
Forest City Principal Shares or deposited any of their respective Forest City Principal Shares in a
voting trust or entered into any arrangement or agreement limiting or affecting such Forest City
Principal’s legal power, authority or right to vote their respective Forest City Principal Shares
as required by this Agreement. The Forest City Principals will not commit any act that could
impose additional restrictions on, or otherwise affect, such Forest City Principal’s legal power,
authority and right to vote their respective Forest City Principal Shares as required by this
Agreement. The Forest City Principals will not (w) enter into any voting agreement with respect




4









 







to any of their respective Forest City Principal Shares, (x) grant any Person (other than a
representative appointed or designated by FCEI in connection with a particular shareholder meeting)
any proxy (revocable or irrevocable) or power of attorney with respect to any of their respective
Forest City Principal Shares, (y) deposit any of their respective Forest City Principal Shares in a
voting trust or (z) otherwise enter into any agreement or arrangement restricting or affecting such
Forest City Principal’s legal power, authority or right to vote as required by this Agreement
without, in each case, (A) causing such Person to agree to be bound by the provisions of this
Agreement that impose limitations and/or voting obligations on the Forest City Principals or (B)
the prior written consent of BCR.




     Section 6. Severalty of Obligations. The obligations under this Agreement of each
Forest City Principal are the separate and several obligations of such Forest City Principal, and
are not joint obligations with respect to any other Person. No failure by any Forest City
Principal to perform its obligations under this Agreement will relieve any other Person of any of
its obligations hereunder, and no Forest City Principal will be responsible or liable for the
obligations of, or any action taken or omitted by, any other Forest City Principal hereunder.



     Section 7. Specific Enforcement. The parties agree that, in the event that any of
the terms or the provisions of this Agreement are not performed or complied with in accordance with
their specific terms or are otherwise breached, immediate irreparable injury would be caused for
which there is no adequate remedy at law. Accordingly, it is agreed that in the event of a failure
by a party to perform its obligations hereunder, the other parties will be entitled to specific
performance through injunctive relief to prevent breaches of the terms of this Agreement and
specifically to enforce the terms of this Agreement in any action instituted in accordance with
Section 9(e) below, in addition to any other remedy to which such other parties may be entitled, at
law or in equity.



     Section 8. Termination. This Agreement will automatically terminate following a
merger, consolidation or other transaction involving FCEI if, immediately after the consummation of
such merger, consolidation or other transaction, the persons who held the voting equity securities
of FCEI immediately prior to the consummation of such merger, consolidation or other transaction no
longer hold a majority of the voting equity securities of the surviving or resulting entity.



     Section 9. Miscellaneous.




          (a) Notices. All notices, demands, consents, requests or other communications
provided for or permitted to be given hereunder by a party to this Agreement will be given in the
manner provided in the Master Contribution Agreement.




          (b) Assignment. The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns; provided that none
of the parties to this Agreement will have the right to assign, transfer, convey or otherwise sell
(or enter into any agreement to do the same), directly or indirectly, any interest it may have in
or under this Agreement without first having obtained the written consent of the other parties,
which consent may be withheld in such other party’s sole and absolute discretion.




5









 








          (c) Waiver. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by the party against
whom the enforcement of the change, waiver, discharge or termination is sought or, in the case of a
default, by the non-defaulting party or parties.




          (d) GOVERNING LAW. THE PARTIES HERETO AGREE THAT THIS AGREEMENT WILL IN ALL RESPECTS
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO.




          (e) Jurisdiction. Each of the parties submits to the jurisdiction of any Ohio State
Court or Federal Court of the United States of America sitting in the City of Cleveland, Ohio, and
any appellate court from any such court, in any suit, action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment. All claims in
respect of any such suit, action or proceeding may be brought, heard and determined in such Ohio
State Court or, to the extent permitted by law, in such Federal Court. Final judgment in any such
suit, action or proceeding will be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. Each of the parties waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in
any Ohio State Court or Federal Court sitting in the City of Cleveland, Ohio. Each of the parties
waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court. Nothing contained in this
Section 9(e) will be construed as preventing either of the parties from (i) objecting to the
jurisdiction of any Ohio State Court on the ground that the matter involved exceeds the statutory
jurisdiction of such court or (ii) from seeking to remove any suit, action or proceeding from an
Ohio State Court to a Federal Court sitting in the City of Cleveland, Ohio, or vice versa.




          (f) Captions. The captions and section headings included in this Agreement are for
convenience only, do not constitute part of this Agreement and will not be considered or referred
to in interpreting the provisions of this Agreement.




          (g) Counterparts. This Agreement may be executed in two or more counterparts, each of
which will be deemed to be an original, but all of which will constitute one and the same
instrument. The submission of a signature page transmitted by facsimile, by e-mail (as a pdf file
or otherwise) or similar electronic transmission facility will be considered as an “original”
signature page for purposes of this Agreement.




          (h) Severability. If any provision hereof is held invalid or not enforceable to its
fullest extent, such provision will be enforced to the extent permitted by law, and the validity of
the remaining provisions hereof will not be affected thereby.




          (i) Prior Negotiations; Construction. No negotiations concerning or modifications
made to prior drafts of this Agreement will be construed in any manner to limit, reduce or impair
the rights, remedies, duties and obligations of the parties under this Agreement or to restrict or
expand the meaning of any of the provisions of this Agreement or to construe any of the provisions
of this Agreement in any party’s favor. The parties acknowledge that each party and its counsel
have reviewed and revised this Agreement and that the normal rule of




6









 







construction to the effect that any ambiguities are to be resolved against the drafting party
will not be employed in the interpretation of this Agreement or any amendment, schedule or exhibit
hereto.




          (j) Changes in Capitalization. Without duplication of any other provision of this
Agreement and subject to Section 8 hereof, if any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, acquisition of property or stock,
reorganization, liquidation or other similar change or transaction of or by FCEI occurs as a result
of which shares of any class of any corporation are issued in respect of outstanding securities of
FCEI, all references to FCEI’s securities hereunder will be deemed to be references to the
securities received by holders of FCEI’s securities in exchange for or in respect of their FCEI
securities pursuant to such transaction.




          (k) No Beneficial Interest in Stock. The parties hereto have acted independently with
respect to the negotiation, execution and delivery of this Agreement and all other agreements
between them and have not entered into, and do not intend to enter into, any arrangements that
would result in the formation of a “group” within the meaning of Section 13(d)(3) or in the
creation of any beneficial ownership interest by a party in the shares of FCEI capital stock held
by another party hereto for purposes of Rule 13d-3 under the Exchange Act.




          (l) Further Assurances. The parties hereto will each execute and deliver, or cause to
be executed and delivered, all further documents and instruments reasonably requested by another
party and use their reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable under applicable laws and
regulations, to consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, providing any information reasonably requested in order to permit a
party hereto to make timely filings under the Securities Act and the Exchange Act.




     IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.



[signature blocks to be added]





7









 








EXHIBIT F




EXHIBIT F 

to

MASTER CONTRIBUTION AND SALE AGREEMENT




ESTOPPEL STANDARDS




1. Anchor Tenants





That the Lease is in full force and effect.




That to Tenant’s knowledge, the Lease is valid and enforceable according to its terms.




That to Tenant’s knowledge, Landlord is not in default under the Lease and no condition
exists that, with the giving of notice or passage of time, would constitute a default by
Landlord under the Lease.




That to Tenant’s knowledge, there are no set-offs, counterclaims or defenses to the
performance or observance of the covenants or agreements to be performed by Tenant under the
Lease.




The dates on which the lease term began and, excluding unexercised renewals, will expire.
Whether there are options to renew the Lease and, if so, how many and the duration of each
such option.




The amount of the base or minimum monthly rent currently payable by Tenant, and the date
through which such rent has been paid.




That Tenant is in occupancy of the Premises.



2. Ground Leases





That the Ground Lease is in full force and effect.




That to Lessor’s knowledge, the Ground Lease is valid and enforceable according to its
terms.




That to Lessor’s knowledge, all rents, fees, sums, charges, cost, expenses and other amounts
due and payable or currently accrued under the Ground Lease have been paid and Lessee is not
otherwise in default under the Ground Lease.



Exhibit F-Page 1









 






That to Lessor’s knowledge, there are no set-offs, counterclaims or defenses to the
performance or observance of the covenants or agreements to be performed by Lessor under the
Ground Lease.



3. REAs





That, to the knowledge of the undersigned, the REA is in full force and effect, all fees,
sums, charges, costs, expenses and other amounts due and payable by the undersigned have
been paid, and the undersigned is not otherwise in default.



4. UDAG Loans





The outstanding principal amount of the UDAG Loan.




That, to the Lender’s knowledge, Borrower is not in default under the UDAG Loan and
no condition exists that, with the giving of notice or passage of time, would
constitute a default under the UDAG Loan.



Exhibit F-Page 2









 





EXHIBIT G-1




EXHIBIT G-1 TO MASTER CONTRIBUTION AND SALE AGREEMENT1




AMENDED AND RESTATED OPERATING AGREEMENT




     This
Amended and Restated Operating Agreement is made and entered into as of the ___ day of
[___], 2006 (the “Effective Date”), by and among Forest City Master Associates III,
LLC, a New York limited liability company (“Master III”), and [___], a [___]
(the “FCE Entity”).



RECITALS:




     WHEREAS, [___,] LLC, a [insert jurisdiction of organization] limited liability company
(the “Company”), was formed pursuant to the Articles of Organization dated as of [___
___], 200[_] (as the same may have been amended, the “Certificate”) and filed with the
[insert jurisdiction of organization] Secretary of State on [___], 200[_] for the purposes of
acquiring, and owning, a direct or indirect interest in, and developing, financing, managing,
operating, improving, leasing and disposing of, the Property and the buildings and improvements now
or hereafter located thereon and an Operating Agreement, dated as of [___], 200[_] (as the
same may have been amended, the “Initial Agreement”), for the Company was adopted;



     WHEREAS, Forest City Enterprises, Inc., an Ohio corporation (“FCEI”), certain entities
affiliated with FCEI (including the FCE Entity), Master III, certain entities affiliated with
Master III and certain entities and individuals affiliated with Bruce C. Ratner (the “BCR
Parties”) are parties to a Master Contribution and Sale Agreement, dated as of [___], 2006
(as the same may have been amended or otherwise modified from time to time in accordance with the
terms thereof, the “Master Contribution Agreement”);



     WHEREAS, pursuant to the Master Contribution Agreement, certain of the BCR Parties and the FCE
Entity have, among other things, contributed all or a portion of their respective interests in the
Company to Master III in exchange for Class A Common Units (in the case of the BCR Parties) and
Class B Common Units (in the case of the FCE Entity) of Master III;



     WHEREAS, Master III and the FCE Entity desire to amend and restate the Initial Agreement in
its entirety on the terms and conditions set forth in this Agreement to reflect the admission of
Master III as a Member.



     NOW, THEREFORE, in consideration of the foregoing and of the mutual consideration and
agreement herein contained, the Members agree that the Initial Agreement shall be amended and
restated to read in its entirety as follows:



ARTICLE I

ORGANIZATION AND TERM




     1.1. Formation. The Company was formed under and pursuant to the provisions of the Act by
filing the Certificate on or prior to the date hereof. The rights and liabilities of the Members
will be as provided under the Act, the Certificate and this Agreement. The fact that the
Certificate is on file in the office of the Secretary of State, State of New York, will constitute
notice that the Company is a limited liability company.





 




			
	1	 	To be modified as appropriate at closing for
individual entity types and structures on an entity-by-entity basis.




1









 










          In order to maintain the Company as a limited liability company under the laws of the State of
New York, the Company will from time to time take appropriate action, including the publication of
its formation, and the preparation and filing of such amendments to the Certificate and such other
fictitious name certificates, documents, instruments and publications as may be required by law,
including, without limitation, action to reflect:




          1.1.1. a change in the Company name;




          1.1.2. a correction of false or erroneous statements in the Certificate or the desire of the
Members to make a change in any statement therein in order that it will accurately represent the
agreement among the Members; or




          1.1.3. a change in the time for dissolution of the Company as stated in the Certificate and in
this Agreement.




     1.2. Name. The business and affairs of the Company will be conducted solely under the name of
“___”. The Company will execute and file all assumed or fictitious name
certificates required to be filed in the applicable public records of ___County, New York,
with the Secretary of State of the State of New York, or in any other county in which the Company
is doing business.



     1.3. Term. The term of the Company commenced on the date of filing the Certificate in
accordance with the Act and shall continue in perpetuity until dissolved, wound up and terminated
in accordance with Article X.



     1.4. Registered Agent and Office. The Company’s registered agent and office in New York will
be CT Corporation Systems, whose business address is 3 Winners Circle, Albany, New York 12205. At
any time, the Company may designate another registered agent and/or office.



     1.5. Principal Place of Business. The principal place of business of the Company will be c/o
[___], 50 Public Square, Terminal Tower, Suite 1360, Cleveland, Ohio 44113. The following
items will at all times be maintained at the Company’s principal office:



          1.5.1. a current list of the full name and last known business, residence or mailing address
of each Member and Manager, both past and present;




          1.5.2. a copy of the Certificate, together with executed copies of any powers of attorney
pursuant to which any amendment has been executed;




          1.5.3. copies of the Company’s federal, state and local income tax returns and reports, if
any, for the three most recent Fiscal Years;




          1.5.4. copies of this Agreement with all amendments and copies of any writings permitted or
required under the Act regarding the obligation of a Member to perform any enforceable promise to
contribute cash or property or to perform services as consideration for such Member’s Capital
Contribution;




          1.5.5. minutes of every meeting of the Members; and




          1.5.6. any written consents obtained from Members pursuant to the Act regarding action taken
by Members without a meeting.




2









 







Such records are subject to inspection and copying at the reasonable request and at the expense of
any Member during ordinary business hours.




     1.6. Other Instruments. Each Member hereby agrees to execute and deliver to the Company
within five (5) days after receipt of a written request therefor, such other and further documents
and instruments, statements of interest and holdings, designations, powers of attorney and other
instruments and to take such other action as any Member reasonably deems necessary, useful or
appropriate to comply with any laws, rules or regulations as may be necessary to enable the Company
to fulfill its responsibilities under this Agreement and the Act.



ARTICLE II

PURPOSES AND POWERS OF THE COMPANY




     2.1. Purposes. The overall business, purpose and scope of the Company is to directly or
indirectly acquire, own, develop, construct, finance, mortgage, maintain, operate, manage, lease,
market and sell ___ (the “Project”), including all amenities therein. The overall
business, purpose and scope as described above will be the only business or purpose of the Company.



     2.2. Authority of Company. In furtherance of its purpose, but consistent with and subject to
the provisions of this Agreement and all applicable laws, the Company is empowered and authorized
to do any and all acts and things incidental to, or necessary, appropriate, proper, advisable, or
convenient for, the furtherance and accomplishment of the purposes described in Section 2.1 and for
the protection and benefit of the Company, including, without limitation:



          2.2.1. acquiring fee and leasehold estates in real and personal property and the rights
therein or appurtenant thereto, necessary, appropriate or incidental to the development,
construction, ownership, management and maintenance of the Project;




          2.2.2. entering into, performing and carrying out contracts and agreements of any kind, and
entering into any kind of activity, in connection with, or incidental to, the accomplishment of the
purposes of the Company;




          2.2.3. securing approvals, permits and consents necessary, appropriate or incidental to the
accomplishment of the purposes of the Company;




          2.2.4. developing and constructing improvements to the Property and dedicating or otherwise
conveying portions of the Company Assets as may further the purposes of the Company;




          2.2.5. borrowing money, and issuing evidences of indebtedness in furtherance of the Company
business and securing any Company indebtedness by mortgage, pledge, security interest or other
lien, and otherwise financing or refinancing (defined for purposes of this Agreement to include
recast, modified, extended or increased) the Project;




          2.2.6. leasing, mortgaging, selling or otherwise disposing of all or any part of the Project
and/or the Property for cash, stock, other securities or other property, or any combination
thereof;




          2.2.7. entering into partnerships, ventures and other business arrangements, and contributing
all or any portion of the Company Assets as consideration for same;




3









 








          2.2.8. to sue and be sued, complain and defend, and participate in administrative or other
proceedings, in its name;




          2.2.9. to appoint agents of the Company, and define their duties and fix their compensation,
if any;




          2.2.10. to make and alter operating agreements, not inconsistent with the Certificate, this
Agreement or the laws of the State of New York, for the administration and regulation of its
affairs;




          2.2.11. to indemnify a Member or Managers or former Member or Managers, and to make any other
indemnification that is authorized by the Certificate or by this Agreement in accordance with the
Act;




          2.2.12. at the end of the term hereof as provided in Section 1.3, to cease its activities and
surrender its Certificate;




          2.2.13. to have and exercise all powers necessary or convenient to effect any or all of the
purposes for which the Company is organized;




          2.2.14. to become a member of a general partnership, limited partnership, joint venture or
similar association or any other limited liability company;




          2.2.15. to file condominium and homeowner association offering statements, prospectuses or
other required documents with the appropriate governmental authorities, and thereafter to sell one
or more condominium units in the Project in accordance therewith; and




          2.2.16. doing and performing all other acts and things which may be necessary, appropriate or
incidental to the carrying out of the business and purposes of the Company.




     2.3. Certain Transactions. The Company is expressly permitted in the normal course of its
business to enter into transactions with any or all Members or with any Affiliate of any or all
Members.



     2.4 Certain Restrictions. Notwithstanding anything herein to the contrary, the Company shall
neither (i) refrain from distributing any Cash Available for Distribution, Net Refinancing Proceeds
or Net Sales Proceeds if such failure to distribute will result in either a Class A Cumulative
Distribution Shortfall under the Master III Operating Agreement (as defined in the Master III
Operating Agreement) or an inability of Master III to perform its obligations under the Exchange
Rights (as defined in the Master III Operating Agreement) under the Master III Operating Agreement
nor (ii) take any action (including refraining from distributing any Cash Available for
Distribution, Net Refinancing Proceeds or Net Sales Proceeds) or enter into any contract that would
materially interfere with Master III’s legal right to make allocations and distributions to the
holders of its Class A Common Units or perform its obligations under the Exchange Rights under the
Master III Operating Agreement or would otherwise alter such obligations.



ARTICLE III

CAPITAL CONTRIBUTIONS




     3.1. Initial Capital Contributions. The Capital Accounts for each of the Members as of
the date of this Agreement are set forth on Exhibit A (the “Initial Capital
Contributions”). The Members will have no further liability or responsibility to the Company or any creditor
except to the extent specifically set forth herein.




4









 







     3.2. Member Loans. The Members shall have the right, but not the obligation, to make loans to
the Company (“Member Loans”), as reasonably determined by the Manager in excess of the
Initial Capital Contributions and Additional Capital Contributions. Member Loans shall be repaid
with interest thereon at 12% per annum, compounded annually from the date advanced until the date
repaid. Any Member Loans made by Master III shall conform with the terms of Section 6.3 of the
Master III Operating Agreement.



     3.3. Additional Capital Requirements. The FCE Entity may contribute to the Company all such
amounts in excess of its Initial Capital Contribution as may be required to complete the
construction, marketing, sale or rental or operations, as applicable, of the Project in accordance
with the Project Budget or the Company’s operating budget in such amounts as may be determined by
the FCE Entity (collectively, the “Additional Capital Contributions”). The FCE Entity
shall not be obligated to make any Additional Capital Contributions. No Member shall be permitted
or required to make any Additional Capital Contributions except as provided in this Section 3.3.
The FCE Entity will be entitled to a preference from cash distributions of a Priority Return and a
return of capital with respect to each Additional Capital Contribution.



     3.4. Withdrawals and Interest. Except as otherwise provided herein, no Member will have the
right to withdraw its Initial Capital Contribution or to receive any return, preferred return or
interest on any portion of his/its Capital Contributions, including, without limitation, its
Initial Capital Contribution or Additional Capital Contributions.



ARTICLE IV

DISTRIBUTIONS




     4.1. Timing of Distributions. Except as otherwise provided in Article X, the Company will
distribute any Cash Available for Distribution as promptly as possible, as reasonably determined by
the Manager. The Manager will use its best efforts to make sufficient distributions to the Members
to pay, when due, taxes attributable to any income or gain has been allocated to the Members.



     4.2 Distributions of Cash Available for Distribution, Net Refinancing Proceeds and Net Sales
Proceeds. Cash Available for Distribution, Net Refinancing Proceeds and Net Sales Proceeds will be
distributed in the following order and priority:




4.2.1 First, to the FCE Entity in an amount equal to its accrued and unpaid Priority
Return.




4.2.2 Second, to the FCE Entity in an amount equal to its Unreturned Capital.




4.2.3 Third, to the Members in an amount equal to their respective accrued and
unpaid Preferred Returns.




4.2.4 Fourth, to the Members in an amount equal to their respective Preferred Equity.




4.2.5 Last, to the Members in accordance with their respective Company Percentages.



     Notwithstanding the above, to the extent that the amount being distributed in the aggregate to
Master III from all Property Owners and Service Companies (as such terms are defined in the Master
III Operating Agreement) is not sufficient to pay currently the Class A Distribution Preference
under the Master III Operating Agreement (as such term is defined in the Master III Operating
Agreement) and to pay in full any then outstanding Class A Cumulative Distribution Shortfall under
the Master III Operating



5









 







Agreement, all Cash Available for Distribution, Net Refinancing Proceeds and Net Sales Proceeds
shall be distributed to the Members in accordance with their respective Company Percentages prior
to the repayment of any Member Loans (including the payment of any interest thereon) made after the
date hereof, accrued and unpaid Priority Return, Unreturned Capital, accrued and unpaid Preferred
Returns and Preferred Equity, until such time as Master III receives distributions from the
Property Owners and Service Companies in an aggregate amount sufficient to pay currently the Class
A Distribution Preference under the Master III Operating Agreement and pay in full any then
outstanding Class A Cumulative Distribution Shortfall under the Master III Operating Agreement.



     4.3. Fiscal Year. The fiscal year of the Company for both financial reporting and federal
income tax purposes will be the Fiscal Year.



ARTICLE
V

ALLOCATIONS




     5.1 Allocations of Income (Including Income from Sale of Property). Income from operations or
sale of the Property for each fiscal year or portion thereof shall be allocated among the Members
as follows:




5.1.1 First, to the Members, to the extent of and in proportion to, the cumulative
amount of net losses allocated to the Members under Section 5.2.4, in excess of any
amounts previously allocated under this clause;




5.1.2 Second, to the Members, to the extent of and in proportion to, the cumulative
amount of net losses allocated to the Members under Section 5.2.3, in excess of any
amounts previously allocated under this clause;




5.1.3 Third, to the FCE Entity, to the extent of the cumulative amount of net losses
allocated to the FCE Entity under Section 5.2.2, in excess of any amounts previously
allocated under this clause;




5.1.4 Fourth, to the FCE Entity, to the extent of the cumulative amount of net
losses allocated to the FCE Entity under Section 5.2.1, in excess of any amounts
previously allocated under this clause;




5.1.5 Fifth, to the FCE Entity, to the extent any Priority Return has been
distributed under Section 4.2.1 for this and all prior periods, in excess of any
amounts previously allocated under this clause;




5.1.6 Sixth, to the Members, to the extent of the cumulative amount of any Preferred Return
distributed for this and all prior periods in excess of any amounts previously allocated under this
clause; and




5.1.7 Last, to the Members in accordance with their respective Company Percentages.



     5.2 Allocation of Net Loss. Losses for each fiscal year shall be allocated among the Members
as follows:




5.2.1 First, to the FCE Entity to the extent of the Priority Return allocated to the
FCE Entity under Section 5.1.5 to the extent not previously distributed;



6









 






5.2.2 Second, to the FCE Entity an amount of loss equal to the FCE Entity’s
Unreturned Capital;




5.2.3 Third, to the Members, to the extent of any Preferred Return allocated to the
Members under Section 5.1.6 to the extent not previously distributed;




5.2.4 Fourth, to the Members, to the extent of their respective positive Capital
Account balances; and




5.2.5 Last, to the Members in accordance with their respective Company Percentages.



     5.3 Miscellaneous Tax Matters. All tax and accounting determinations shall be made reasonably
and in good faith by the Manager for the benefit of all Members. The Manager may make or decline
to make, or may revoke or seek to revoke, any election which the Company may make under the tax
laws, including the election provided by section 754 of the Code.



     5.4. Tax Matters Partner. The FCE Entity is designated a tax matters partner (the
“TMP”) as defined in Section 6231(a)(7) of the Code, and the Members will take such actions
as may be necessary, appropriate, or convenient to effect the designation of the FCE Entity as TMP.
The TMP and the other Members will use their best efforts to comply with the responsibilities
outlined in this Section 5.4 and in Sections 6222 through 6232 of the Code (including any Treasury
Regulations promulgated thereunder).



ARTICLE VI

RIGHTS AND POWERS OF MEMBERS




     6.1. Powers of Members. No act will be taken, sum expended, decision made or obligation
incurred by the Company or the Manager or any Member with respect to any matter within the scope of
the major decisions enumerated below, unless such matter has been approved by all of the Members,
such approval not to be unreasonably withheld or delayed, either separately or as a part of the
Project Budget, to-wit:



          6.1.1. the amendment of the Certificate or this Agreement;




          6.1.2. the approval or disapproval of the issuance of additional Interests for sale to then
existing Members or new subscribers and the admission of a transferee of all or a portion of a
Member’s Interest;




          6.1.3. the dissolution of the Company (except as provided in Article X);




          6.1.4. acquisition of any real property other than the Property;




          6.1.5. the formation of a partnership or other venture between the Company and a third party;




          6.1.6. any decision to pay the Manager, any Member or any Affiliate a salary or other
compensation not otherwise provided for herein and the amount of such salary or other compensation
and other benefits; and




          6.1.7. amendment of this Section 6.1.




7









 








     The Manager acknowledges, covenants and agrees that in making decisions affecting the
Property, the Manager will act reasonably, recognizing its fiduciary responsibility to all Members.
To the extent feasible and financially reasonable, the Manager will not make decisions which favor
one Member over the others.



     6.2. Transactions Between a Member or Manager and the Company. Except as otherwise provided
by applicable law, any Member or Manager may, but will not be obligated to, lend money to the
Company, act as surety for the Company and transact other business with the Company and has the
same rights and obligations when transacting business with the Company as a person or entity who is
not a Member or a Manager.



     6.3. Member Activities. Any of the Members, their Affiliates and any shareholder, officer,
director, partner, employee or other Person holding a legal or beneficial interest in an entity
which is a Member or an Affiliate thereof, may engage in or possess an interest in other business
ventures of every nature and description, independently or with others, including but not limited
to the ownership, development, construction, operation and management of residential and commercial
property similar to the Project, whether or not in competition with the Project; and neither the
Company nor the other Members will have any right, by virtue of this Agreement, to enter into or
participate in such independent ventures or to share the income or profits derived therefrom or any
other rights therein; and, each of the Members hereby waives whatever statutory or other rights to
the contrary which he/she may now or hereafter possess.



     6.4. Affiliates. The fact that a Member, an Affiliate, or a shareholder or partner of a
Member or Affiliate is directly or indirectly interested in, owned, employed or connected with any
Person employed by the Company or the Members, to render or perform a service for the Company or
from which the Company or the Members may buy merchandise, material, services or other property,
will not prohibit the Company or the Members from employing such Person or from purchasing
merchandise, material, services or other property therefrom or from otherwise dealing with the
Person under reasonable terms and conditions such as would be reflected in an arms-length
transaction, provided, all such dealings are communicated to the Members in writing prior to
implementation.



ARTICLE VII

MANAGER




     7.1. Manager.



          7.1.1. The management of the Company’s business will be vested exclusively in the Manager.
The Manager will have the sole authority to sign agreements, checks and other instruments on behalf
of the Company, subject only to the provisions of Section 6.1.




          7.1.2. Upon the resignation or removal of the FCE Entity as Manager, the FCE Entity will
designate the replacement Manager.




          7.1.3. The Manager may engage in other business activities as permitted by Section 6.3 and
will be obliged to devote only as much of its time to the Company’s business as reasonably required
in light of the Company’s business and objectives. The Manager will perform its duties as Managers
in good faith, in a manner it reasonably believes to be in the best interests of the Company, and
with such care as an ordinarily prudent person in a like position would use under similar
circumstances. A person who so performs his duties will not have any liability by reason of being
or having been a Manager of the Company.




8









 








     7.2. Powers of the Manager. Subject to the limitations set forth elsewhere in this Agreement,
the Manager will have the right and authority to take all actions which it deems necessary, useful
or appropriate for the day-to-day management and conduct of the Company’s business. The Manager
may exercise all powers of the Company and do all such lawful acts and things as are not by
statute, the Act, the Certificate or this Agreement, directed or required to be exercised or done
by the Member subject to the provisions of Section 6.1. All instruments, contracts, agreements and
documents providing for the acquisition, mortgage or disposition of the Company Assets will be
valid and binding on the Company if approved by the Manager and by the Members pursuant to Section
6.1, to the extent such approval is required thereunder.



     7.3. Salaries and Fees. The Company shall not pay to any Manager, Member, or any of their
Affiliates a fee or salary as compensation for their services rendered to the Company. Such fees
and salaries will be treated as expenses of the Company and will not be deemed to constitute
distributions to the recipient of any profit, loss or capital of the Company.



     7.4. Duties of the Manager. The Manager will have the following primary duties and
responsibilities, with such limitations on their powers as set forth below and elsewhere in this
Agreement:



          7.4.1. The preparation of Project Budget, and expending the capital and revenues of the
Company in accordance with approved Project Budget;




          7.4.2. Negotiating and arranging for all financings, and preparing all projections, financial
reports and other information or material to be furnished to the lenders;




          7.4.3. Supervising construction, alterations and improvements with respect to the Project;
retaining, terminating and/or hiring the services of engineers, surveyors, appraisers, accountants,
attorneys, mortgage brokers, corporate fiduciaries, escrow agents, depositories, custodians, agents
for collection, insurers, insurance agents, and such other technical or administrative advisors as
reasonably deemed necessary by the Manager to further the purposes of the Company; retaining agents
and employees for the Company, including property managers and leasing agents, and to delegate any
of their powers (but not their obligations) to such agents or employees and direct such agents or
employees with respect to the implementation of the Manager’s decisions and the conduct of
day-to-day operations of the Company;




          7.4.4. The negotiation, administration, review and coordination of contracts on behalf of the
Company for the construction and development of the Project and sales of units in the Project, and
the administration and coordination of on-site and offsite improvements, warranty claims and
corrective work;




          7.4.5. Entering into and executing (i) agreements and any and all documents and instruments
customarily employed in the real estate industry in connection with the development, construction
and operation of the Project; and (ii) all other instruments deemed to be necessary or appropriate
to the proper operation of the Project or to perform effectively and properly their duties or
exercise their powers hereunder;




          7.4.6. Placing or investing Company Assets in bank savings and checking accounts, savings and
loan associations, commercial paper, government securities, certificates of deposit, bankers’
acceptances and other short-term interest-bearing obligations; provided, however, that the Manager
will use reasonable efforts to cause uninvested cash reserves of the Company to be placed in
interest-bearing accounts or instruments. To the extent funds of the Company are sufficient
therefor, the Manager may

9









 








maintain reserves for operating or other expenses to the extent contemplated in the Project
Budget, subject to any limitations on the establishment of reserves set forth elsewhere in this
Agreement;




          7.4.7. The performance of other customary development functions, including seeking to obtain
all local, state and federal permits, approvals and land use consents and acting as a liaison with
all governmental authorities having jurisdiction over the development of the Project, and
processing all governmental permits and approvals; and authorizing such research reports, economic
and statistical data, evaluations, analysis, opinions and recommendations as may be necessary to
further the purposes of the Company;




          7.4.8. Procuring and maintaining insurance policies with such coverage and in such amounts as
required by this Agreement or by the terms of any loan to the Company;




          7.4.9. File protests regarding property tax assessments and commence, defend, and settle
litigation arising from such protests;




          7.4.10. Prepare and deliver to each of the Members periodic reports not less than quarterly of
the state of the business and the affairs of the Company as well as quarterly financial statements,
and maintain, or cause to be maintained, the books and records;




          7.4.11. As soon as reasonably practical after the end of each Fiscal Year, cause the
Accountants to conduct any audit which may be required herein, and prepare and deliver to each
Member a report setting forth in sufficient detail all such information and data with respect to
business transactions affected by or involving the Company during such Fiscal Year as will enable
the Company and Members to prepare their federal, state and local income tax returns in accordance
with the laws, rules and regulations then prevailing. The Manager will also cause such Accountants
to prepare federal, state or local tax returns required of the Company and file the same. The
Manager will also furnish to each Member copies of the Company’s audit report, tax return and such
other reports on the Company’s operations and conditions as may be reasonably requested by any
Member;




          7.4.12. Collecting all revenues payable to the Company and depositing all sums collected in
the Company’s account or accounts in a bank or financial institution selected by the Manager; and




          7.4.13. Making, or causing to be made, distributions of Cash Available for Distribution, Net
Refinancing Proceeds or Net Sales Proceeds pursuant to Article IV.




     7.5 Expenses of Company. Expenses to carry out the purposes and business of the Company will
constitute Company expenditures and, whenever possible and consistent with the Project Budget or
operating budgets, will be paid by the Company from its accounts.



ARTICLE VIII

MEMBERS’ AND MANAGER’S LIABILITY AND INDEMNITY




     8.1. Members.



          8.1.1. In the absence of the written agreement of any Member to the contrary, no Member will
be liable under a judgment, decree or order of a court, or in any other manner, for the debts,
liabilities or obligations of the Company. A Member will have no liability to any other Member
and/or the Company when acting pursuant to its authority granted pursuant to the Articles and/or
this Agreement except to the extent such Member’s acts or omissions constituted willful misconduct
or gross negligence

10









 








of such Member. Additionally, a Member will be liable to the Company for any difference
between its Capital Contribution actually paid in and the amount promised by any Member as stated
in this Agreement or any writing signed by the Member.




          8.1.2. If a Member has received a distribution in violation of this Agreement or the Act, it
shall be liable to the Company to return such distribution.




     8.2. Manager. The Manager does not in any way guarantee the return of any Member’s Capital
Contribution or a profit for the Members from the Company’s business. The Manager will incur no
liability to the Company or to any of the Members as a result of engaging in any other business or
venture regardless of whether such other business or venture competes with the Company or whether
the Manager is active in the management or business of such other business or venture. Neither the
Company nor any of the Members will have any rights by virtue of the Articles, this Agreement or
any applicable law in or to the other business ventures of the Manager or to the income, gains,
losses, deductions and credits derived therefrom by the Manager.



     8.3. Company’s Indemnification of Members, Manager, Employees or Agents. The Company agrees to
indemnify its Members, Manager, employees and agents to the fullest extent permitted by law and as
specifically permitted in the Act.



     8.4. Force Majeure. Notwithstanding anything in this Agreement to the contrary, a Member or a
Manager will not be liable (except for such Member’s obligation to contribute or return its Capital
Contributions under the Act or this Agreement) for any loss or damage to the Company Assets or
operations caused by its failure to carry out any of the provisions of the Articles and/or this
Agreement as a result of foreseeable or unforeseeable acts of God or incidents resulting from
outside forces, beyond the control of such Member or Manager, such as strikes, labor troubles,
riots, fires, weather, floods, acts of a public enemy, insurrections, breakdown or failure of
machinery, acts, omissions or delays of governmental authorities and governmental laws, rules,
regulations or orders.



     8.5. Remedies. The remedies of the Members hereunder are cumulative and will not exclude any
other remedies to which a Member may be lawfully entitled. The Members acknowledge that all legal
remedies for any breach of this Agreement may be inadequate, and therefore they consent to any
appropriate equitable remedy; provided, that any failure of a Member to abide by the terms of this
Agreement, including without limitation any vote or consent that should bind a Member, or any other
failure to adhere to the terms of this Agreement which cost the Company or the other Member legal
and court costs to enforce same will render the breaching Member liable to the Company and the
other Member for any such fees and costs.



     8.6. Waiver. The failure of any Member to insist upon strict performance of a covenant or
condition hereunder will not be a waiver of its right to demand strict compliance therewith in the
future.



ARTICLE IX

ADDITIONAL MEMBERS AND INTERESTS




     9.1. Additional Interests. By approval of or on behalf of the Members possessing one hundred
percent (100%) of the Interests, the Company may issue Additional Interests by sale or other
issuance to existing Members or other persons or entities (individually, an “Additional
Member”, and collectively, the “Additional Members”). Any such sale or other issuance
of Company Interests will be made in accordance with the Certificate and this Agreement. As a
condition to such issuance, the Additional Members acquiring such Interests will execute (a) an
instrument by which the Additional Members acknowledge the terms and conditions of and covenants
and agrees to be bound by the



11









 







Certificate and this Agreement and (b) all other documents and instruments the Company may
require. The Additional Members will become Members as regards such Interests upon the date the
last of such agreements or instruments are executed. The legal fees and costs associated with the
preparation and filing of an amendment to the Certificate to effectuate such admission, if
necessary, and all other documents necessary to continue the Company’s right to do business in the
jurisdictions in which it is then doing business, will be borne by the Company.



     9.2. Allocations. The Additional Members will not be entitled to any retroactive allocation
of profits or losses (or other items of Company income, gain, loss, deduction or credit); provided
that the Additional Members will be entitled to their respective shares of profits or losses (or
other items of Company income, gain, loss, deduction or credit) arising under contracts entered
into before the effective date of the issuance of any Additional Interest to the extent that such
profits or losses (or other items of Company income, gain, loss, deduction or credit) arise after
such effective date. The Company’s books may be closed at the time Additional Interests are issued
(as though the Company’s Fiscal Year had ended) or the Company may credit to such Additional
Interests pro rata allocations of profits or losses (or other items of Company income, gain, loss,
deduction or credit) for that portion of the Company’s Fiscal Year after the effective date of the
issuance of the Additional Interests.



ARTICLE X

TERMINATION AND DISSOLUTION




     10.1. Events Requiring Termination and Dissolution. The Company will be dissolved and
terminated upon the happening of any of the following events:



          10.1.1 The insolvency or bankruptcy of the Company;




          10.1.2 At the election of the FCE Entity, an Act of Insolvency by, or the dissolution of,
Master III;




          10.1.3 At the election of Master III, an Act of Insolvency by, or the dissolution of, the FCE
Entity;




          10.1.4. The sale of all of the real estate Company Assets (provided, however, that if all or a
portion of the consideration received by the Company in connection with such sale is evidenced by a
promissory note or notes, the Company shall not be dissolved by reason of such sale so long as the
Company is the holder of such promissory note or notes);




          10.1.5. The unanimous agreement in writing of the Members to dissolve the Company; or




          10.1.6. Any other event required by law to cause a dissolution of the Company.




     Without limitation on the other provisions hereof, except as provided in subsection 10.1.2 or
10.1.3, the death, retirement, resignation, expulsion or dissolution of any Member, the occurrence
of an Act of Insolvency with respect to any Member, the assignment of all or any part of a Member’s
Interest in the Company, the occurrence of any event that terminates the continued membership of a
Member under the Act or the admission of a new Member shall not dissolve the Company and the
business of the Company shall continue.



12









 





     10.2. Management During Liquidation. In the event of the dissolution of the Company, the
rights and obligations of the Members with respect to management of the Company will be continued
by the Manager during the period of winding up. The Company Assets will be liquidated as promptly
as is consistent with obtaining the fair market value of the Assets, and the liquidation will be
conducted in compliance with law and sound business practice. The Manager may maintain reasonable
reserves (as and to the extent required by applicable law) to provide for the payment of contingent
claims and liabilities. The Manager will be entitled to reimbursement for out-of-pocket expenses
incurred in connection with the winding-up and liquidation of the Company. Such reimbursement will
be paid as an expense of the Company after all debts to all third parties have been repaid but
before any repayment of loans or advances by the Members.



     10.3. Members’ Right to Bid for Assets. Upon the dissolution and liquidation of the Company,
any Member may make a bid or tender on any of the Company Assets. Those Company Assets as are bid
upon by a Member will not be sold to a third party unless the bid made by such third party is upon
more favorable terms and conditions than the highest and best bid of a Member.



     10.4. Distribution of Liquidation Proceeds. Liquidation proceeds, to the extent sufficient
therefor, will be applied and distributed in the following order of priority:



          10.4.1. First, payment of creditors of the Company (other than Members) in the order of
priority as provided by law.




          10.4.2. Second, establishment by the Manager of reasonable reserves to provide for contingent
liabilities, if any, as and to the extent required by law.




          10.4.3. Third, payment of debts of the Company to the Members, if any, in the order and
priority provided by law.




          10.4.4. Fourth, to the FCE Entity to the extent of the Priority Return accrued during the
Fiscal Year and prior Fiscal Years.




          10.4.5. Fifth, to the Members to the extent of their respective Preferred Returns accrued
during the Fiscal Year and prior Fiscal Years.




          10.4.6. Last, pro rata, to the Members in accordance with their respective Capital Account.




ARTICLE XI

AMENDMENTS




     11.1. Proposal of Amendments. Amendments to the Articles and this Agreement may be proposed
in writing by any Member or Members or by the Manager. If required by the Manager, any such
proposed amendment must be accompanied by an opinion of counsel as to the legality and effect on
the Members. Copies of any amendments made pursuant to this Article XI must be sent to the
Members.



     11.2. Amendments by Members. A proposed amendment will be voted upon at either an annual
meeting or a special meeting of the Members duly called for the purpose of voting on the amendment.
Such votes will be made as provided in Article VI. Upon the Members’ approval of any amendment,
all Members will be deemed to have consented to and will be bound by the terms and provisions
thereof.



13









 





     11.3. Amendments by Manager. Notwithstanding any provision of this Agreement, amendments to
this Agreement which, in the opinion of counsel to the Company, are necessary to maintain the
status of the Company as a tax partnership under federal or state law or for other tax purposes may
be made by the Manager without the necessity of a vote of the Members.



ARTICLE XII

MISCELLANEOUS




     12.1. Notice. All notices, requests, consents and other communications required or permitted
under this Agreement must be in writing and must either be (as elected by the Person giving such
notice) hand delivered by messenger, sent by confirmed facsimile transmission, or sent via
recognized overnight courier, such as DHL or Federal Express. In either case, the party sending
the communication shall endeavor to send a courtesy copy via fax. Until further notice, such
communications shall be addressed to:



	 	 	 	 	 
	 

	 	If to The FCE Entity:
	 	[                    ]
	 

	 	 	 	50 Public Square
	 

	 	 	 	Terminal Tower, Suite 1100
	 

	 	 	 	Cleveland, Ohio 44113
	 

	 	 	 	ATTN: James A. Ratner
	 
	 	 	 	 
	 

	 	With a copy to:
	 	50 Public Square
	 

	 	 	 	Terminal Tower, Suite 1100
	 

	 	 	 	Cleveland, Ohio 44113
	 

	 	 	 	Attn: General Counsel
	 
	 	 	 	 
	 

	 	If to Master III:
	 	[                    ]
	 

	 	 	 	50 Public Square
	 

	 	 	 	Terminal Tower, Suite 1100
	 

	 	 	 	Cleveland, Ohio 44113
	 

	 	 	 	ATTN: James A. Ratner
	 
	 	 	 	 
	 

	 	With a copy to:
	 	50 Public Square
	 

	 	 	 	Terminal Tower, Suite 1100
	 

	 	 	 	Cleveland, Ohio 44113
	 

	 	 	 	Attn: General Counsel






          Each such notice will be deemed given (a) on the date delivered, (b) on the date of facsimile
confirmation (if the notice is given by facsimile) or (c) on the date upon which a delivery receipt
is signed or delivery is refused, or the notice is designated by the carrier as not deliverable, as
the case may be, if sent by overnight courier service such as DHL or Federal Express.




     12.2. Partition. The Members agree that the Company Assets are not and will not be suitable
for partition. Accordingly, each of the Members hereby irrevocably waives any and all rights that
it may have to maintain any action for partition of any of the Company Assets.



     12.3. Governing Law. This Agreement has been executed and delivered within the [insert
jurisdiction of organization], is a contract made under the laws of the [insert jurisdiction of
organization], and will be governed by and interpreted in accordance with the laws of the [insert
jurisdiction of organization], without regard to conflict of law principles thereunder.



14









 





     12.4. Successors. Except as otherwise specifically provided herein, this Agreement will be
binding upon and inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.



     12.5. Pronouns. Wherever from the context it appears appropriate, each term stated in either
the singular or the plural will include the singular and the plural, and pronouns stated in either
the masculine, the feminine or the neuter gender will include the masculine, feminine and neuter.



     12.6. Captions. Captions contained in this Agreement are inserted only as a matter of
convenience and in no way define, limit or extend the scope or intent of this Agreement or any
provision hereof.



     12.7. Severability. If any provision of this Agreement, or the application of such provision
to any Person or circumstance, is held invalid, the remainder of the Agreement, or the application
of such provision to Persons or circumstances other than those to which it is held invalid, will
not be affected hereby.



     12.8. Counterparts. This Agreement may be executed in several counterparts, each of which
will be deemed an original but all of which will constitute one and the same instrument. In
addition, this Agreement may contain more than one counterpart of the signature page, and this
Agreement may be executed by the affixing of the signatures of each of the Members to one of such
counterpart signature pages, all of which will have the same force and effect as though all of the
signatories had signed a single signature page.



     12.9. Entire Agreement; Amendment. This Agreement embodies and constitutes the entire
understandings of the parties with respect to the transactions contemplated herein, and all prior
or contemporaneous agreements, understandings, representations and statements, oral or written, are
merged into this Agreement unless specifically agreed to by the Members. Except as set forth in
Article XI, neither this Agreement nor any provisions hereof may be waived, modified, amended,
discharged or terminated except by an instrument in writing executed by all of the parties hereto.



     12.10. Attorneys’ Fees. If any Member or Manager commences an action against the other
Members and/or Manager to interpret or enforce any of the terms of this Agreement or as the result
of a breach by the other Member(s) or Manager(s) of any terms hereof, the losing Member(s) or
Manager(s) will pay to the prevailing Member(s) or Manager(s) reasonable attorneys’ fees, costs and
expenses incurred in connection with the prosecution or defense of such action (including at the
appellate level).



     12.11. Further Assurances. Each Member agrees to execute and deliver any and all such other
and additional instruments and documents and do any and all such other acts and things as may be
necessary or expedient to more fully effectuate this Agreement and to carry on the business
contemplated hereunder.



     12.12. Equitable Remedies. Each of the parties hereto acknowledges and agrees that, in the
event of a breach or threatened breach of this Agreement by any Member or the failure of a Member
to perform in accordance with the specific terms hereof, the other parties hereto will be
irreparably damaged and that monetary damages would not provide an adequate remedy. Accordingly,
it is agreed that, in addition to any and all other rights which may be available, at law or in
equity, the non-breaching parties will be entitled to injunctive relief and/or specifically to
enforce the terms and provisions hereof.



15









 





     12.13. Indemnities. No Manager or Member will be liable for errors in judgment, whether or
not disclosed, unless due to gross negligence, willful neglect or intentional misconduct. From and
after the Effective Date, the Company will and does hereby indemnify and hold harmless the Managers
and Members from and against any and all claims, actions, suits, liabilities, judgments,
obligations, losses, penalties, demands, expenses and damages (and all expenses associated
therewith, including court costs and attorney’s fees at all negotiations, trial and appellate
levels) incurred by the Managers or Members in respect of any act or omission to act by such
Managers or Members, whether or not such act or omission to act was negligent, including without
limitation any such act or omission by them when acting in the good faith belief that they were
acting or refraining from acting within the scope of their authority under this Agreement on behalf
of the Company or in furtherance of their interests, provided that the foregoing will not entitle
the Managers or the Members to indemnification for gross negligence, willful neglect or intentional
misconduct.



     12.14. Contribution. In the event that one Member is held severally liable for the debts of
the Company, and such liability did not arise out of such Member’s grossly negligent or willful
act, such Member will be entitled to contribution from the other Member, to the extent of the other
Member’s Company Percentage multiplied by the amount of the applicable liability.



     12.15. No Third Party Rights. The provisions of this Agreement are for the exclusive benefit
of the Company and the Members and no other party (including without limitation any creditor of the
Company or any Member) will have any right or claim against the Company or any Member by reason of
those provisions or be entitled to enforce any of those provisions against the Company or any
Member.



     12.16. Reliance on Experts. For purposes of this Agreement, whenever one of the Members
reasonably requires or retains the use of an expert in order to discharge a duty hereunder, such
Member’s sole responsibility in connection with such duties will be the reasonable reliance upon
the advice of the experts, and no Member will be liable on account of any duty or obligation
imposed hereunder in the event of a reliance upon professional advice.



     12.17. Submission to Jurisdiction. Each of the Members irrevocably and unconditionally (a)
agrees that any suit, action or other legal proceeding arising out of or relating to this Agreement
will be brought in the courts of record of the [insert appropriate venue] or the courts of the
United States in the district in which such court is located; (b) consents to the jurisdiction of
each such court in any such suit, action or proceeding; (c) waives any objection which he/she may
have to the laying of venue of any such suit, action or proceeding in any of such courts; (d)
consents to service of any court paper by mail, as provided in Section 12.1 hereof, or in such
other manner as may be provided under applicable laws or court rules in [insert jurisdiction or
organization].



     12.18. Remedies Cumulative. The rights and remedies given in this Agreement to a
non-defaulting Member or the Company are deemed cumulative, and the exercise of one of such
remedies will not operate to bar the exercise of any other rights and remedies reserved to a
non-defaulting Member under the provisions of this Agreement or given to a non-defaulting Member by
law.



     12.19. No Waiver. One or more waivers of a breach of any provision of this Agreement by any
Member will not be construed as a waiver of a subsequent breach of the same or any other provision,
nor will any delay or omission by a non-defaulting Member to seek a remedy for any breach of any
provision of this Agreement by a Member be construed as a waiver by the non-defaulting Member of
the right to exercise its/his/her remedies and rights with respect to such breach or any subsequent
breach, whether similar or not.



16









 





     12.20. Confidentiality. Except as required in the normal conduct of a Member’s business or as
required by law, no Member, without the written approval of all Members, whether during continuance
of the Company or after its termination, will divulge to any Person not a Member other than
its/his/her attorneys, accountants, employees and professional advisers, any information concerning
the business of the Company or the content of this Agreement or any other contract or agreement
entered into by the Company. A Member may, however, disclose to third parties the existence of the
Company and the names of the Members. Notwithstanding anything in this Agreement, including the
foregoing provisions of this Section 12.20, to the contrary, in accordance with Section
1.6011-4(b)(3)(iii) of the Treasury Regulations, the Company and each Member (and each employee,
representative, or other agent of the Company or any Member) may disclose to any and all Persons,
without limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to the Company or such Member relating to such tax treatment and tax
structure; provided, however, that, as permitted by Section 1.6011-4(b)(3)(ii) of the Treasury
Regulations, such disclosure shall not be permitted to the extent, but only to the extent,
reasonably necessary to comply with the securities laws of any applicable jurisdiction.



     12.21. Construction. This Agreement will be interpreted without regard to any presumption or
rule requiring construction against the party causing this Agreement to be drafted.



     12.22. Time Devoted to Venture. No Member will be required to devote its/his/her entire time
or attention to the business of the Company, or more time or attention than reasonably required to
carry out its/his/her obligations under this Agreement.



     [Placeholder for any SPE provisions and other requirements of any lender]




     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed effective as
of the date first set forth above.



	 	 	 	 	 
	 	[                    ]

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 
	 	Forest City Master Associates III, LLC

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 




17









 





SCHEDULE I




DEFINITIONS




     As used in this Agreement, the following capitalized terms have the meanings stated below and
include the plural as well as the singular number.



     1. “Accountants” means the independent certified public accountants selected by Manager.



     2. “Act” means the [insert jurisdiction of organization]] Limited Liability Company Act, and
all amendments thereto from time to time.



     3. “Act of Insolvency” will be deemed to have occurred if (a) a Member files in any court, in
accordance with any statute of the United States or of any state, a petition in bankruptcy or
insolvency, or files for the appointment of a receiver or trustee of all or a portion of the
Member’s property, or makes an assignment for the benefit of creditors or admits in writing
its/his/her inability to pay its/his/her debts generally as they become due; or (b) there is filed
against a Member in any court in accordance with any statute of the United States or of any state,
a petition in bankruptcy or insolvency, or for reorganization, or for appointment of a receiver or
a trustee of all or a portion of the Member’s property, and any order or decree is not vacated, or
such appointment is not revoked or terminated and such receiver or trustee discharged, within
ninety (90) days after entry or appointment, as the case may be.



     4. “Additional Capital Contributions” shall have the meaning given to such term in subsection
3.3.



     5. “Additional Member” shall have the meaning given to such term in Section 9.1.



     6. “Additional Interests” means Interests in the Company issued by the Company subsequent to
the date of this Agreement.



     7. “Affiliate” means, with respect to any Person, (i) any Person directly or indirectly
controlling, controlled by or under common control with such Person, or (ii) any Person owning or
controlling twenty-five percent (25%) or more of the outstanding voting securities of such Person.



     8. “Agreement” means this Amended and Restated Operating Agreement as originally executed and
as subsequently amended or supplemented in accordance with the terms herein.



     9. “Allocation Regulations” means Section 1.704-1 and 1.704-2 of the Treasury Regulations as
such regulations may be amended and in effect from time to time (whether in temporary or final
form) and any corresponding provisions of succeeding Treasury Regulations.



     10. “Capital Account” means, with respect to any Member, the Capital Account maintained for
such Person



     11. “Capital Contribution” means the amount of cash and the Gross Assets Value of property
other than cash contributed to the Company by a Member. Such term includes a Member’s Initial
Capital Contribution and Additional Capital Contributions.



18









 





     12. “Cash Available for Distribution” means for any Fiscal Year or other period the gross cash
revenues and receipts of the Company for such Fiscal Year or other period and any cash previously
set aside by the Company as reserves that in the reasonable determination of the Manager is no
longer required to be reserved by the Company, less the portion thereof used during such Fiscal
Year or other period to pay operating expenses, debt service or capital expenditures, or to
establish reserves required by third party lenders or, provided the reserve does not result in any
Class A Cumulative Distribution Shortfall (as defined in the Master III Operating Agreement), other
reasonable and customary reserves as may be reasonably determined by the Manager. “Cash Available
for Distribution” will not be reduced by depreciation, amortization or similar non-cash allowances.
For purposes of the last paragraph of Section 4.2 of this Agreement only, “Cash Available for
Distribution” will not be net of repayment of Member Loans or any interest thereon.



     13. “Code” means the Internal Revenue Code of 1986, as it may be amended, or any subsequent
federal law concerning income tax that is enacted in substitution for, or that corresponds with,
such Code.



     14. “Company” means the limited liability company created pursuant to this Agreement in
accordance with the Act.



     15. “Company Assets” means any and all property contributed to or acquired by the Company in
accordance with this Agreement, including but not limited to the Property and the Project and both
tangible and intangible property.



     16. “Company Percentage” means [51]% for the FCE Entity and [49]% for Master III, subject to
adjustment as set forth in the Agreement.



     17. “Depreciation” means, for each Fiscal Year or other period, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with respect to an Assets for
such Fiscal Year or other period, except that if the Gross Assets Value of an Assets differs from
its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year or other
period, Depreciation will be an amount which bears the same ratio to such beginning Gross Assets
Value as the federal income tax depreciation, amortization, or other cost recovery deduction for
such Fiscal Year or other period bears to such beginning adjusted tax basis; provided, however, if
the federal income tax depreciation, amortization, or other cost recovery deduction for such Fiscal
Year is zero, Depreciation will be determined with reference to such beginning Gross Assets Value
using any reasonable method selected by the Manager.



     18. “Fiscal Year” means the fiscal and taxable year of the Company, which unless otherwise
required by the Code will be the 12-month period (or portion thereof) ending on each January 31.



     19. “Gross Assets Value” means, with respect to any Assets, the Assets’s adjusted basis for
federal income tax purposes, except as follows:



          19.1. The initial Gross Assets Value of any Assets contributed by a Member to the Company will
be the gross fair market value of such Assets, as determined by the contributing Member and the
Manager;




          19.2. The Gross Assets Values of all Company Assets will be adjusted to equal their respective
gross fair market values, as determined by the Members, as of the following times: (i) the
acquisition of an additional interest in the Company by any new or existing Member in exchange for
more

19









 








than a “de minimis” Capital Contribution; (ii) the distribution by the Company to a Member of
more than a “de minimis” amount of Company Assets other than money as consideration for an interest
in the Company; and (iii) the liquidation of the Company within the meaning of the Allocation
Regulations; provided, however, that adjustments pursuant to clauses (i) and (ii) above will be
made only if the Manager reasonably determines that such adjustments are necessary and appropriate
to reflect the relative economic interests of the Members in the Company; and




          19.3. If the Gross Assets Value of an Asset has been determined or adjusted pursuant to the
above, such Gross Assets Value will thereafter be adjusted by the Depreciation taken into account
with respect to such Assets for purposes of computing profits and losses.




     20. “Interest” shall mean a Member’s ownership interest in the Company, including its right to
receive its share of Cash Available for Distribution and to vote on those matters herein described
where a vote of Members is required or permitted.



     21. “Manager” initially means the [FCE Entity, or another Person selected by the FCE Entity to
succeed the FCE Entity as a Manager]. [assuming Company is not required to be Member managed]



     22. “Master III Operating Agreement” means that certain Amended and Restated Limited Liability
Company Operating Agreement by and among the members of Master III dated                     , 2006, as the
same may be amended from time to time.



     23. “Member” means each of the parties who has executed this Agreement and each of the parties
who may hereafter become Additional or Substitute Members as provided in the Articles and in this
Agreement.



     24. “Net Refinancing Proceeds” means the amount by which any cash proceeds received by the
Company from any permanent loan exceeds (i) the amount required to be paid by the Company in
reduction or satisfaction of prior loans or liens upon the Property, (ii) any closing costs
incurred or required to be paid by the Company in connection with such permanent loan, (iii) the
amount of any such proceeds applied to fund any reserves required by third party lenders or,
provided the reserve does not result in any Class A Cumulative Distribution Shortfall (as defined
in the Master III Operating Agreement), other reasonable and customary reserves as may be
reasonably determined by the Manager, (iv) the amount of any such proceeds applied, to the extent
authorized by the Manager and/or a lender, to fund any capital improvements of the Property.



     25. “Net Sales Proceeds” means the amount by which the gross cash proceeds from the sale of
the Property exceed (i) the amount required to be paid by the Company in reduction or satisfaction
of prior loans or liens upon the Property, (ii) closing costs payable to third parties in
connection with such sale and (iii) any reserves required by third party lenders or, provided the
reserve does not result in any Class A Cumulative Distribution Shortfall (as defined in the Master
III Operating Agreement), other reasonable and customary reserves as may be reasonably determined
by the Manager.



     26. “Person” means a natural person, corporation, trust, partnership, joint venture,
association or other business or other legal entity.



     27. “Preferred Equity” means the amount with respect to each Member set forth on Exhibit B
[amounts to be generated from Schedule P-6C to the Master Contribution Agreement].



20









 





     28. “Preferred Return” means [12]% per annum, compounded annually, on the Preferred Equity of
the FCE Entity or Master III, as applicable, commencing on the date of the contribution of such
equity.



     29. “Priority Return” means a rate of return of twelve percent (12%) per annum, compounded
annually, on the Unreturned Capital of the FCE Entity commencing on the date of the contribution of
such capital.



     30. “Project Budget” means the line item budget for the acquisition of the Property, the
construction of the Project and the leasing or sale of residential or retail units therein.



     31. “Property” means the land and all easements, covenants, permits, licenses, approvals and
other rights appurtenant thereto, located in                     .



     32. “Treasury Regulations” means the Income Tax Regulations promulgated under the Code, as
such regulations may be amended from time to time (including corresponding provisions of succeeding
regulations).



     33. “Unreturned Capital” means an amount equal to the Additional Capital Contributions of the
FCE Entity that have not been returned.



21









 





EXHIBIT G-2




EXHIBIT G-2 

TO

MASTER CONTRIBUTION AND SALE AGREEMENT




FORM AMENDED OPERATING AGREEMENT RELATING TO

DEVELOPMENT PROPERTIES




AMENDED AND RESTATED OPERATING AGREEMENT




     THIS AMENDED AND RESTATED OPERATING AGREEMENT OF [                    ] LLC (as the same may be
amended or otherwise modified from time to time in accordance with the terms hereof, this
“Agreement”) is made as of [                    ], 2006 by and between [RRG                     ,
LLC], a New York limited liability company having an office at 1 MetroTech Center North, Brooklyn,
New York 11201 (together with its permitted successors and assigns, “Ratner”), and [Forest
City                     , Inc.], a New York corporation having an office at 1100 Terminal Tower,
Cleveland, Ohio 44113 (together with its permitted successors and assigns, “Forest City”).



RECITALS:




     WHEREAS, the Members (as such term is hereinafter defined) formed [                    ,] LLC,
a New York limited liability company (the “Company”), pursuant Articles of Organization
dated as of [                     ___], 200[_] and filed with the New York Secretary of State on
[_________ ___], 200[_] and an Operating Agreement dated as of [                                ___], 200[_] (the
“Initial Agreement”) for the purposes of acquiring, and owning, a direct or indirect
interest in, and developing, financing, managing, operating, improving, leasing and disposing of,
certain real property described on Exhibit A hereto and located in                     ,                     ,
and the buildings and improvements now or hereafter located thereon (the
“Property”)1;



     WHEREAS, Ratner, Forest City and certain of their respective affiliates are parties to a
Master Contribution and Sale Agreement, dated as of [                     ___], 2006 (as the same may be
amended or otherwise modified from time to time in accordance with the terms thereof, the
“Master Contribution Agreement”);





 




			
	1	 	The term “Property” will need to
be modified where, as in the case of East River Plaza and Mill Basin, the
Company owns an interest in the property owner, rather than the property
itself. Other changes to this Agreement may also be required.




 









 










     WHEREAS, under the Master Contribution Agreement, Ratner and Forest City have agreed to, among
other things and assuming satisfaction of certain conditions, (i) contribute all or a portion of
their respective interests in the Company to Forest City Master Associates III, LLC, a New York
limited liability company (“Master III”), upon or following the Stabilization Date (as
hereinafter defined) in exchange for Class A Additional Common Units (in the case of Ratner) and
Class B Common Units (in the case of Forest City) as described in Section 2.3(g)(i) of the Master
Contribution Agreement (in which case this Agreement shall be amended and restated in the form
attached as Exhibit G-1 to the Master Contribution Agreement on the related Stabilization Closing
Date (as defined in the Master Contribution Agreement)) or (ii) continue with the ownership of the
Property as Members under this Agreement as described in Section 2.3(g)(iv) of the Master
Contribution Agreement (the “Continuation Option”);



     WHEREAS, the Members wish to amend and restate the Initial Agreement in its entirety on the
terms and conditions set forth in this Agreement.



     NOW, THEREFORE, in consideration of the foregoing and of the mutual consideration and
agreement herein contained, the Members agree that the Initial Agreement shall be amended and
restated to read in its entirety as follows:



ARTICLE I




DEFINITIONS




     “Act of Insolvency” means that a Member:



          (i) shall file a voluntary petition in bankruptcy or is adjudicated as bankrupt or insolvent;
or




          (ii) has a receiver appointed for all or substantially all of its business or assets on the
ground of insolvency; or




          (iii) has a trustee appointed for it after a petition has been filed for reorganization under
the bankruptcy laws of the United States, or any law of the United States now in existence or
hereafter enacted having the same general purpose; or




          (iv) makes a general assignment for the benefit of its creditors;



and such act or event, if not voluntary, is not cured or otherwise caused to be set aside within
thirty (30) days from the occurrence thereof.




     “Actual Completion Cost” means the total cost to the Company of acquiring the Property
and completing the development of the Property in accordance with the Development Plan, including
all hard and soft costs thereof included in the Budget.



     “Adjusted Development Cost” means the Actual Completion Cost excluding the Ratner
Development Fee, the Forest City Disposition Fee, the Site Management Fee and the Leasing Incentive
Fee.



2









 





     “Affiliate” of, or a person or entity “affiliated” with, a specified person or entity,
means a person, entity or trust that directly or indirectly, through one or more intermediaries,
Controls, is Controlled by, or is under common Control with, the person or entity specified, or is
a member of the family of such person.



     “Agreement” shall have the meaning set forth in the introductory paragraph to this
Agreement.



     “Appraisers’ Notice” shall have the meaning set forth in Section 11.01(a).



     “Assign” means to sell, transfer, assign, pledge or otherwise dispose of an interest
in the Company, or to seek a court order for the liquidation or dissolution of the Company, whether
voluntarily or by operation of law. “Assignor,” “Assignee” and
“Assignment” have meanings corresponding to the foregoing.



     “Book Value” means, with respect to any asset of the Company, the asset’s adjusted
basis as of the relevant date for federal income tax purposes, except as follows:



     (i) the initial Book Value of any asset contributed by a Member to the Company shall be the
fair market value of such asset as of the date of contribution, which shall be equal to the amount
credited to such Member’s Capital Account for such contribution;



     (ii) the Book Values of all Company assets (including intangible assets such as goodwill)
shall be adjusted to equal their respective fair market values as of the following times:




     (A) the acquisition of an additional interest in the Company by any new or existing
Member in exchange for more than a de minimis capital contribution;




     (B) the distribution by the Company to a Member of more than a de
minimis amount of money or Company property as consideration for an interest in the
Company; and




     (C) the liquidation of the Company within the meaning of Treasury Regulation section
1.704-1(b)(2)(ii)(g); and



     (iii) if the Book Value of an asset has been determined or adjusted pursuant to this
paragraph, such Book Value shall thereafter be used to compute the Depreciation with respect to
such asset for purposes of computing Net Income and Net Loss and other items allocated pursuant to
Section 4.02.


The foregoing definition of Book Value is intended to comply with the provisions of Treasury
Regulation section 1.704-1(b)(2)(iv) and shall be interpreted and applied consistently therewith.




     “Budget” shall have the meaning set forth in Section 6.02.



     “Business Day” means any day, other than (i) a Saturday or Sunday, or (ii) a day on
which banks in New York are required or authorized by law or executive order to close.



3









 





     “Capital Account” shall have the meaning set forth in Section 4.01.



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



     (i) such Capital Account shall be deemed to be increased by any amounts which such Member is
obligated to restore to the Company (pursuant to this Agreement or otherwise) or is deemed to be
obligated to restore pursuant to the penultimate sentence of Treasury Regulation section 1.704-2(g)
(relating to allocations attributable to nonrecourse debt); and



     (ii) such Capital Account shall be deemed to be decreased by the items described in Treasury
Regulation sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).



     “Capital Contribution” means, with respect to each Member, the amount of cash and fair
market value (valued at contribution) of property which the Member has actually contributed to the
Company as of the date in question (reduced by any liabilities to which contributed property is
subject or which the Company assumes in connection with such contribution). If an interest in the
Company is Assigned pursuant to Article VIII, the Capital Contribution of the Assignee shall
include any Capital Contribution previously made by the Assignor.



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



     “Company” shall have the meaning set forth in the Recitals to this Agreement.



     “Company Minimum Gain” means the aggregate amount of gain (of whatever character),
determined for each nonrecourse liability of the Company, that would be realized by the Company if
it disposed of the property subject to such liability in a taxable transaction in full satisfaction
thereof, determined in accordance with Treasury Regulation section 1.704-2(d).



     “Company Nonrecourse Deductions” means the excess, if any, of the net increase, if
any, in the amount of Company Minimum Gain during a fiscal year over the aggregate amount of any
distributions during that fiscal year of proceeds of a nonrecourse liability as defined in Treasury
Regulation section 1.704-2(c).



     “Completion Date” means the date on which development of the Property has been
substantially completed, as evidenced by (i) issuance of a temporary certificate of occupancy for
base building of the improvements to be constructed pursuant to the Development Plan, and (ii)
completion of all construction work substantially in compliance with the Development Plan (other
than punch list items).



     “Construction Loan Closing Date” means the date on which the Company first closes on
construction financing pursuant to the Development Plan.



     “Continuation Option” shall have the meaning set forth in the Recitals to this
Agreement.



4









 





     “Continuation Option Stabilized Value” shall mean an amount equal to the Stabilized
Value of the Property under, and as determined in accordance with, the Master Contribution
Agreement.



     “Control” (including the terms “Controlling,” “Controlled by” and “under common
Control with”) means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity, whether through the ownership of
securities, by contract or otherwise.



     “Depreciation” means for each fiscal year or part thereof, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable for federal income tax
purposes with respect to an asset for such fiscal year or other period, except that if the Book
Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning
of such fiscal year, Depreciation shall be an amount which bears the same ratio to such Book Value
as the federal income tax depreciation, amortization or other cost recovery deduction for such
fiscal year bears to such adjusted tax basis.



     “Development Plan” means the plan for the development of the Property attached hereto
as Exhibit B, as the same may thereafter be modified by the Management Committee in its
discretion.



     “Excess” shall have the meaning set forth in Section 4.03(b).



     “FCE” means Forest City Enterprises, Inc., an Ohio corporation.



     “Forest City” shall have the meaning set forth in the introductory paragraph to this
Agreement.



     “Forest City Borrowing Rate” means a rate per annum equal to the weighted average cost
of borrowing of Forest City or its Affiliates for the applicable funds plus three percent (3%) or,
if such funds are not borrowed, the prime rate announced from time to time by Key Bank, N.A. (or
its successors) at its offices in the City of Cleveland for 90-day unsecured commercial loans.



     “Forest City Disposition Fee” shall have the meaning set forth in Section 4.04(d).



     “Full Price” shall have the meaning set forth in Section 8.03(c).



     “Initiating Member” shall have the meaning set forth in Section 11.01(a).



     “IRS” means the Internal Revenue Service.



     “Leasing Incentive Fee” shall have the meaning set forth in Section 4.04(a).



     “LLC Law” means the New York Limited Liability Company Act, as amended from time to
time, and any successor to such statute.



     “Management Committee” shall have the meaning set forth in Section 5.01(a).



5









 





     “Managing Member” means Ratner and any successor designated pursuant to the terms of
this Agreement.



     “Member Nonrecourse Debt” has the meaning set forth in Treasury Regulation section
1.704-2(b)(4).



     “Member Nonrecourse Debt Minimum Gain” means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse
Debt were treated as a nonrecourse liability, determined in accordance with Treasury Regulation
section 1.704-2(i).



     “Member Nonrecourse Deductions” means the excess, if any, of the net increase, if any,
in the amount of Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt
during a fiscal year over the aggregate amount of any distributions during that fiscal year to the
Member that bears the economic risk of loss for such Member Nonrecourse Debt to the extent such
distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an
increase in Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt,
determined in accordance with Treasury Regulation section 1.704-2(i).



     “Members” means Ratner and Forest City, together with any of their respective
permitted successors and assigns. Reference to a “Member” means any one of the Members.



     “Membership Value” means the amount a Member would receive in respect of its interest
in the Company if the Property had been sold and the Company had received proceeds from such sale
in an amount equal to the Property Value, and such proceeds and all cash and other assets of the
Company were distributed and applied in accordance with Section 9.02.



     “Net Cash Flow” means, for any given period, all receipts from the conduct of the
business of the Company for such period, from whatever source derived, and any releases of funds
held in reserve, but specifically excluding any Net Sale Proceeds, Net Refinancing Proceeds and any
proceeds from loans, which are available for distribution by the Company following (i) the payment
of all operating, debt service and capital expenses of the Company for such period with respect to
which no reserves have been established (including, without limitation, any principal and interest
due during any such period with respect to any debt of the Company), and (ii) the establishment or
replenishment, as deemed reasonably necessary by the Management Committee, of reserves for taxes,
debt service, maintenance, repairs and other expenses and other working capital requirements of the
Company or for contingent and unforeseen liabilities of the Company.



     “Net Income” and “Net Loss” means for each fiscal year or part thereof, the
Company’s taxable income or loss for such year determined in accordance with Code section 703(a)
(for this purpose, all items of income, gain, loss or deduction required to be stated separately
pursuant to Code section 703(a)(1) shall be included in taxable income or loss) with the following
adjustments:



     (i) any income of the Company that is exempt from federal income tax shall be added to such
taxable income or loss;



6









 





     (ii) any expenditures of the Company described in Code section 705(a)(2)(B) or treated as such
pursuant to Treasury Regulation section 1.704-1(b)(2)(iv)(i) (to the extent such expenditures are
not taken into account in computing the Members’ shares of Company Nonrecourse Deductions or Member
Nonrecourse Deductions) shall be subtracted from such taxable income or loss;



     (iii) Depreciation for such fiscal year shall be taken into account in lieu of the
depreciation, amortization and other cost recovery deductions taken into account in computing such
taxable income or loss;



     (iv) gain or loss resulting from any disposition of Company property with respect to which
gain or loss is recognized for federal income tax purposes shall be computed with reference to the
Book Value of the property disposed of, rather than the adjusted tax basis of such property;



     (v) such taxable income or loss shall not be deemed to include any income, gain, loss,
deduction or other item thereof allocated pursuant to Section 4.02(d) (relating to allocations
caused by the occurrence of deficit Capital Account balances or the presence of nonrecourse debt);



     (vi) if any property is distributed in kind to any Member, the difference between its fair
market value and its Book Value at the time of distribution shall be treated as Net Income or Net
Loss, as the case may be, recognized by the Company as if from a sale of such property; and



     (vii) if Company assets are adjusted pursuant to clause (ii) of the definition of Book Value,
the difference between their fair market value and their Book Value at the time shall be treated as
Net Income or Net Loss, as the case may be, recognized by the Company as if from a sale of such
assets.



     “Net Refinancing Proceeds” means the amount by which any cash proceeds received by the
Company from any permanent loan exceeds (i) the amount required to be paid by the Company in
reduction or satisfaction of prior loans or liens upon the Property, (ii) any closing costs
incurred or required to be paid by the Company in connection with such permanent loan, (iii) the
amount of any such proceeds applied to fund any reserves as the Management Committee deems
appropriate or are required by a lender, (iv) the amount of any such proceeds applied, to the
extent authorized by the Management Committee and/or a lender, to fund any capital improvements of
the Property and (v) the amount of any Ratner Development Fee paid to Ratner.



     “Net Sales Proceeds” means the amount by which the gross cash proceeds from the sale
of the Property exceed (i) the amount required to be paid by the Company in reduction or
satisfaction of prior loans or liens upon the Property, (ii) closing costs payable to third parties
in connection with such sale and (iii) the amount of the Forest City Disposition Fee required to be
paid to Forest City.



     “Non-Selling Member” shall have the meaning set forth in Section 5.05(a).



     “Notice” shall have the meaning set forth in Section 12.02.



7









 





     “Offeree” shall have the meaning set forth in Section 8.03(b).



     “Offeror” shall have the meaning set forth in Section 8.03(b).



     “Option Notice” shall have the meaning set forth in Section 8.03(b).



     “Option Price” shall have the meaning set forth in Section 8.03(b).



     “Partial Price” shall have the meaning set forth in Section 8.03(c).



     “Percentage Interests” shall have the meaning set forth in Section 3.03.



     “Pre-Stabilization Priority Return” means the Priority Return of Forest City accrued
and unpaid as of the Stabilization Date.



     “Priority Return” means [INSERT BRACKETED PROVISIONS ONLY IF AGREEMENT IS BEING
ENTERED INTO PRIOR TO THE CONSTRUCTION LOAN CLOSING DATE: (i) prior to the Construction Loan
Closing Date, ten percent (10%) per annum on the Unreturned Capital of Forest City in excess of
$5,000,000 but less than $15,000,000, but not on any other portion of Forest City’s Unreturned
Capital, commencing on the first anniversary of the Capital Contribution first increasing such
portion of Forest City’s Unreturned Capital to an amount in excess of $5,000,000, (ii) ten percent
(10%) per annum on the Unreturned Capital of Ratner, and (iii) from and after the Construction Loan
Closing Date,] ten percent (10%) per annum on all Unreturned Capital (excluding any portion thereof
attributable to Section 3.01(c) Contributions) of a Member outstanding from time to time. The
Priority Return shall include any return earned prior to the date hereof by agreement of the
parties with regard to development costs paid on behalf of the Company during development of the
Property but prior to the date hereof. Upon the Stabilization Date, the Pre-Stabilization Priority
Return shall be deemed to be a Capital Contribution of Forest City, shall become part of the
Unreturned Capital of Forest City and shall no longer be treated as Priority Return of Forest City.
To the extent that the Priority Return is not paid in full for any fiscal year, the unpaid amount
will accrue, will be compounded annually as of the first day of each fiscal year, and will be paid
in later fiscal years in accordance with Section 4.03.



     “Projection” shall have the meaning set forth in Section 6.02.



     “Property” shall have the meaning set forth in Recitals hereof.



     “Property Value” shall have the meaning set forth in Section 11.01(a).



     “Purchase Offer” shall have the meaning set forth in Section 8.03(c).



     “Put Notice” shall have the meaning set forth in Section 8.04.



     “Put Right” shall have the meaning set forth in Section 8.04.



8









 





     “Ratner” shall have the meaning set forth in the introductory paragraph to this
Agreement.



     “Ratner Development Fee” shall have the meaning set forth in Section 4.04(c).



     “Ratner Family Member” shall have the meaning set forth in Section 8.01(b).



     “Requested Amount” shall have the meaning set forth in Section 3.04(a).



     “Sale Notice” shall have the meaning set forth in Section 8.03(c).



     “Section 3.01(c) Contribution” shall have the meaning set forth in Section 3.01(c).



     “Section 3.01(c) Return” means the Forest City Borrowing Rate on the portion of the
Unreturned Capital of a Member attributable to Section 3.01(c) Contributions. The Section 3.01(c)
Return will be payable out of Net Cash Flow, Net Refinancing Proceeds and Net Sales Proceeds in
accordance with Section 4.03. To the extent that the Section 3.01(c) Return is not paid in full
for any fiscal year, the unpaid amount will accrue, will be compounded annually as of the first day
of each fiscal year, and will be paid in later fiscal years in accordance with Section 4.03.



     “Section 8.02 Member” shall have the meaning set forth in Section 8.02(a).



     “Selling Member” shall have the meaning set forth in Section 5.05(a).



     “Site Management Fee” shall have the meaning set forth in Section 4.04(b).



     “Stabilization Date” means the later of (i) the first day of the February immediately
following the earlier of (A) the first calendar quarter in which at least ninety percent (90%) of
the leaseable area of the Property is rented and occupied and (B) the third (3rd) anniversary of
the “grand opening” of the Property [FOR EAST RIVER PLAZA ONLY: , (ii) the date on which each of
the consents set forth on Schedule 1.2B of the Master Contribution Agreement with respect to the
Property (to the extent such consents are still required under the applicable agreement with such
parties) have been obtained by Ratner] and (ii[i]) the date on which the conditions precedent to
Forest City’s (as such term is defined in the Master Contribution Agreement) obligation to
consummate the transactions related to the Property set forth in Sections 6.1(e) and 6.1(f) of the
Master Contribution Agreement, and the conditions precedent to the BCR Entities’ and BCR
Individuals’ (as such terms are defined in the Master Contribution Agreement) obligations to
consummate the transactions related to the Property set forth in Sections 6.2(f) and 6.2(g) of the
Master Contribution Agreement, have been satisfied.



     “Tag-Along” shall have the meaning set forth in Section 8.03(c).



     “Tax Liabilities” shall have the meaning set forth in Section 4.03(b)(ix).



     “Tax Matters Partner” shall have the meaning set forth in Section 7.03.



9









 





     “Unreturned Capital” means, for any Member as of any date, the excess, if any, of (i)
the sum of (A) any Capital Contributions made by such Member pursuant to Section 3.01(a), (B) with
respect to Forest City, the Pre-Stabilization Priority Return; (C) such Member’s Section 3.01(c)
Contributions, (D) any Capital Contributions made by such Member pursuant to Section 3.04; (E) with
respect to Forest City, the net loss incurred by Forest City with respect to the Property prior to
this date hereof in the amount of $___ [INSERT ANY NET LOSS DEDUCTED FROM FOREST CITY’S CAPITAL
CONTRIBUTION PURSUANT TO SECTION 5.3(A) OF THE FCRC AGREEMENT OR $0 IF NONE]; and (F) the amount of
any liabilities of the Company which, in connection with distributions of property by the Company,
are assumed by such Member or are secured by any Company property distributed to such Member, over
(ii) the cumulative amount of money and the fair market value of any Property (other than money)
distributed to such Member under Section 4.03(a)(ii) and (iii), Section 4.03(b)(ii) or (iv),
Section 4.03(c)(ii), (iv) or (vi) or Section 4.03(d)(i) or (iii), as of such date.



ARTICLE II




GENERAL PROVISIONS




     2.01 Formation of Company; Qualification. The Members have formed, and wish to
continue, the Company under the LLC Law. To the extent not already taken, the Managing Member
shall take such action as may be necessary or appropriate in order to form, license, register or
qualify the Company under the laws of any jurisdiction in which the Company is doing business or
owns or uses property or in which such formation, licensing, registration or qualification is
necessary in order to protect the limited liability of the Members or to continue in effect such
formation, licensing, registration or qualification. If required by law, the Managing Member shall
file or cause to be filed for recordation in the office of the appropriate authorities of the State
of New York, and in the proper office or offices in each other jurisdiction in which the Company is
formed, licensed, registered or qualified, such documents (including, without limitation, articles
of organization) as are required by the applicable statutes, rules or regulations of any such
jurisdiction or as are necessary to reflect the identity of the Members and the amounts of their
respective Capital Contributions.



     2.02 Name. The name of the Company is [                    ] LLC, or such other
name as the Management Committee may from time to time determine.



     2.03 Business. The business of the Company shall be (a) to acquire, own, develop,
finance, manage, operate, improve, lease, exchange and dispose of the Property and (b) to carry on
any other activity which, in the opinion of the Management Committee, may be necessary or
appropriate in connection with or incidental to the foregoing.2



     2.04 Office. The principal office of the Company shall be at One MetroTech Center
North, Brooklyn, New York, or such other location in the City of New York as the Managing Member
may select from time to time.





 




			
	2	 	Modify as necessary if Company owns an
interest in the property owner, rather than the property itself.




10









 










     2.05 Term. The term of the Company commenced on the date of the Initial Agreement and
shall continue until dissolved and terminated in the manner provided in Article IX.



     2.06 Ownership of Company Property. All property acquired by the Company, real,
personal or mixed, tangible or intangible, shall be owned by the Company as an entity, and no
Member, individually, shall have any ownership interest therein. Each Member hereby expressly
waives the right to require partition of any Company property or any part thereof.



ARTICLE III




CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS




     3.01 Capital Contributions.



               (a) Forest City. Forest City has paid development costs relating to the Property on
behalf of the Company prior to the date hereof, which expenditures will be deemed to constitute
Capital Contributions to the Company as of the date hereof. Beginning on the date hereof and
ending on the day immediately preceding the Stabilization Date, Forest City will make Capital
Contributions to the Company from time to time in such amounts as are necessary, as determined by
the Management Committee, to execute the Development Plan and to permit the Company to proceed with
the development of the Property in accordance with the Development Plan. The Management Committee
will determine, in its sole discretion, the extent to which the Company utilizes debt or equity
capital to finance the purchase and development of the Property.



               (b) Ratner. Ratner shall not be required to make any Capital Contributions to the
Company.



               (c) Future Funding Requirement. At any time and from time to time on and following
the Stabilization Date, to the extent that the Management Committee determines that the Company
requires funds, such funds shall be contributed to the Company by Forest City within twenty (20)
Business Days after notice from the Managing Member. Any Capital Contribution made by Forest City
under this Section 3.01(c) shall be referred to herein as a “Section 3.01(c) Contribution”.
Forest City will be entitled to a Section 3.01(c) Return and a return of capital with respect to
each Section 3.01(c) Contribution as set forth in the definition of Section 3.01(c) Return and in
Section 4.03.



     3.02 Return of Capital Contributions. No Member will have the right to return of its
Capital Contribution except in accordance with Article IV or Article IX. Except for the Priority
Return and the Section 3.01(c) Return as expressly provided herein, no Member shall have the right
to receive interest on its Capital Contribution.



     3.03 Percentage Interests. The Members shall have the following Percentage
Interests:3





 




			
	3	 	Conform to actual percentage interests for
the given Development Property Owner.




11









 










	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Ratner:	 	 	[30]	%	 	 	 	 
	 
	 	Forest City:	 	 	[70]	%	 	 	 	 






     3.04 Failure to Fund.



               (a) The amounts to be contributed by Forest City pursuant to Section 3.01 shall be such
Member’s “Requested Amounts.”



               (b) If Forest City fails to contribute to the Company its Requested Amount, and such failure
shall continue for five (5) days after notice to Forest City specifying such failure, Ratner at its
option may contribute the Requested Amount of Forest City. In such event, Ratner will be entitled
to a Priority Return and a return of capital with respect to such Requested Amount as set forth in
the definition of Priority Return and in Section 4.03.



               (c) The provisions of Section 3.04(b) shall be applicable each time that Forest City shall
fail to contribute all or any portion of a Requested Amount.



     3.05 Additional Contributions. No Member shall be permitted or required to make any
additional Capital Contributions to the Company except as provided in Section 3.01 and Section
3.04.



ARTICLE IV




CAPITAL ACCOUNTS; ALLOCATIONS; DISTRIBUTIONS AND FEES




     4.01 Capital Accounts. The Company shall maintain a separate capital account
(“Capital Account”) for each Member in accordance with federal income tax accounting
principles and Treasury Regulation section 1.704-1(b), which account shall, as of any given date,
reflect such Member’s Capital Contributions, (i) increased to reflect its allocable share of
Company Net Income and gain (or item thereof) and (ii) decreased to reflect its allocable share of
Company Net Loss and deduction (or item thereof), for each fiscal year or fraction thereof, and the
amount of cash or the Book Value of property distributed by the Company to such Member.


The following additional rules shall apply in maintaining Capital Accounts:




               (a) For purposes of this definition, amounts described in section 709 of the Code (other than
amounts with respect to which an election is in effect under section 709(b) of the Code) shall be
treated as described in section 705(a)(2)(B) of the Code.



               (b) In the case of a contribution to the Company of a promissory note (other than a note that
is readily tradeable on an established securities market), the Capital Account of the Member
contributing such note shall not be increased until (a) the Company makes a taxable disposition of
such note, or (b) principal payments are made on such note.



               (c) If the Book Values of Company assets are adjusted, as provided in the definition of Book
Value, the Capital Accounts of all Members shall be adjusted simultaneously to reflect the
aggregate net adjustment as if the Company recognized gain or loss



12









 







equal to the amount of such aggregate net adjustment and such gain or loss were allocated to
the Members in the manner required by Section 4.02.



               (d) If, in any taxable year, the Company has in effect an election under section 754 of the
Code, Capital Accounts shall be adjusted in accordance with Treasury Regulation section
1.704-1(b)(2)(iv)(m).



               (e) The foregoing provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Treasury Regulation section 1.704-1(b),
and shall be interpreted and applied in a manner consistent with such Regulations. To the extent
such provisions are inconsistent with such regulations or are incomplete with respect thereto, the
Capital Accounts of the Members shall be maintained in accordance with such Regulations.



               (f) Except as may otherwise be provided in this Agreement, whenever it is necessary to
determine the Capital Account of a Member, the Capital Account of such Member shall be determined
after giving effect to all allocations and distributions for transactions effected prior to the
time as of which such determination is to be made. Any Member who shall acquire an interest in the
Company or whose interest shall be increased by means of a transfer to him of all or part of
another Member’s interest in the Company, shall have a Capital Account which reflects such
transfer. Any Member which transfers a part of its interest in the Company shall have a Capital
Account which reflects such transfer.



     4.02 Allocation of Net Income and Net Loss for Book Purposes.



               (a) Net Income from Operations. Net Income from operations of the Property for each
fiscal year or portion thereof shall be allocated among the Members as follows:




          (i) First, to Forest City, to the extent of and in proportion to, the
cumulative amount of Net Losses allocated to Forest City under Section 4.02(c)(vi),
in excess of any amounts previously allocated under this clause;




          (ii) Second, to the Members, to the extent of and in proportion to, the
cumulative amount of Net Losses allocated to the Members under Section 4.02(c)(v),
in excess of any amounts previously allocated under this clause;




          (iii) Third, to Ratner, to the extent of the cumulative amount of Net Losses
allocated to Ratner under Section 4.02(c)(iv), in excess of any amounts previously
allocated under this clause;




          (iv) Fourth, to Forest City, to the extent of the cumulative amount of Net
Losses allocated to Forest City under Section 4.02(c)(iii), in excess of any amounts
previously allocated under this clause;




          (v) Fifth, to Forest City, to the extent of the cumulative amount of Net Losses
allocated to Forest City under Section 4.02(c)(ii), in excess of any amounts
previously allocated under this clause;



13









 






          (vi) Sixth, to the Members, to the extent of and in proportion to, the
cumulative amount of Net Losses allocated to the Members under Section 4.02(c)(i),
in excess of any amounts previously allocated under this clause;




          (vii) Seventh, to Ratner, to the extent of its Priority Return accrued for this
and all prior periods, in excess of any amounts previously allocated under this
clause;




          (viii) Eighth, to Forest City, to the extent of its Section 3.01(c) Return
accrued for this and all prior periods, in excess of any amounts previously
allocated under this clause;




          (ix) Ninth, to Forest City, to the extent of its Priority Return accrued for
this and all prior periods, in excess of any amounts previously allocated under this
clause; and




          (x) Last, to the Members, in proportion to their Percentage Interests.



               (b) Net Income from Sale of the Property. Net Income from sale of the Property shall
be allocated among the Members as follows:




          (i) First, to Forest City, to the extent of any losses set forth in clause (E)
of the definition of “Unreturned Capital,” in excess of amounts previously allocated
under this clause;




          (ii) Second, to Forest City, to the extent of its Pre-Stabilization Priority
Return;




          (iii) Third, to Forest City, to the extent of and in proportion to, the
cumulative amount of Net Losses allocated to Forest City under Section 4.02(c)(vi),
in excess of any amounts previously allocated under this clause and Section
4.02(a)(i);




          (iv) Fourth, to the Members, to the extent of and in proportion to, the
cumulative amount of Net Losses allocated to the Members under Section 4.02(c)(v),
in excess of any amounts previously allocated under this clause and Section
4.02(a)(ii);




          (v) Fifth, to Ratner, to the extent of the cumulative amount of Net Losses
allocated to Ratner under Section 4.02(c)(iv), in excess of any amounts previously
allocated under this clause and Section 4.02(a)(iii);




          (vi) Sixth, to Forest City, to the extent of the cumulative amount of Net
Losses allocated to Forest City under Section 4.02(c)(iii), in excess of any amounts
previously allocated under this clause and Section 4.02(a)(iv);



14









 






          (vii) Seventh, to Forest City, to the extent of the cumulative amount of Net
Losses allocated to the Forest City under Section 4.02(c)(ii), in excess of any
amounts previously allocated under this clause and Section 4.02(a)(v);




          (viii) Eighth, to Forest City, to the extent of the cumulative amount of Net
Losses allocated to Forest City under Section 4.02(c)(i), in excess of any amounts
previously allocated under this clause and Section 4.02(a)(vi);




          (ix) Ninth, to Ratner, to the extent of its Priority Return accrued for this
and all prior periods, in excess of any amounts previously allocated under this
clause and Section 4.02(a)(vii) hereof;




          (x) Tenth, to Forest City, to the extent of its Section 3.01(c) Return accrued
for this and all prior periods, in excess of any amounts previously allocated under
this clause and Section 4.02(a)(viii);




          (xi) Eleventh, to Forest City, to the extent of its Priority Return accrued for
this and all prior periods, in excess of any amounts previously allocated under this
clause and Section 4.02(a)(ix); and




          (xii) Last, to the Members, in proportion to their Percentage Interests.



               (c) Net Loss. Net Loss for each fiscal year shall be allocated among the Members as
follows:




          (i) First, to the Members, to the extent of and in proportion to, the
cumulative amount of Net Income allocated to Members under Section 4.02(a)(x), in
excess of any amounts previously allocated under this clause;




          (ii) Second, to Forest City, to the extent of the cumulative amount of Net
Income allocated to Forest City under Section 4.02(a)(ix), reduced by all current
and prior distributions to it under Section 4.03(b)(v), in excess of any amounts
previously allocated under this clause;




          (iii) Third, to Forest City, to the extent of the cumulative amount of Net
Income allocated to Forest City under Section 4.02(a)(viii), reduced by all current
and prior distributions to it under Section 4.03(b)(iii), in excess of any amounts
previously allocated under this clause;




          (iv) Fourth, to Ratner, to the extent of the cumulative amount of Net Income
allocated to Ratner under Section 4.02(a)(vii), reduced by all current and prior
distributions to it under Section 4.03(a)(i) and 4.03(b)(i), in excess of any
amounts previously allocated under this clause;




          (v) Fifth, to the Members, to the extent of and in proportion to, the positive
balances in their Capital Accounts; and



          (vi) Last, to Forest City.



15









 






               (d) Regulatory Allocations. Notwithstanding the general allocation rules set forth
above, the following special allocation rules shall apply under the circumstances described
therein.




          (i) Limitation on Loss Allocations. The Net Losses allocated to any
Member pursuant to Section 4.02(c) with respect to any fiscal year shall not exceed
the maximum amount of Net Losses that can be so allocated without causing such
Member to have a Capital Account Deficit at the end of such fiscal year. All Net
Losses in excess of the limitation set forth in this Section 4.02(d)(i) shall be
allocated to Members which are not subject to the foregoing limitation.




          (ii) Qualified Income Offset. If in any fiscal year a Member
unexpectedly receives an adjustment, allocation or distribution described in
Treasury Regulation section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), and such
adjustment, allocation or distribution causes or increases a Capital Account Deficit
for such Member, then, before any other allocations are made under this Agreement or
otherwise, such Member shall be allocated items of income and gain (consisting of a
pro rata portion of each item of Company income, including gross income and gain) in
an amount and manner sufficient to eliminate such Capital Account Deficit as quickly
as possible.




          (iii) Company Minimum Gain Chargeback. If there is a net decrease in
Company Minimum Gain during any Company fiscal year, each Member shall be allocated
items of income and gain for such fiscal year (and, if necessary, for subsequent
fiscal years) in proportion to and to the extent of, an amount equal to such
Member’s share of the net decrease in Company Minimum Gain, in accordance with
Treasury Regulation section 1.704-2(f) and (g).




          (iv) Member Nonrecourse Debt Minimum Gain Chargeback. If there is a
net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt during any Company fiscal year, each Member who has a share of the
Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt,
determined in accordance with Treasury Regulation section 1.704-2(i), shall be
specially allocated items of Company income and gain for such fiscal year (and, if
necessary, subsequent fiscal years) in an amount equal to such Member’s share of the
net decrease in Member Nonrecourse Debt Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Treasury Regulation section
1.704-2(i).




          (v) Company Nonrecourse Deductions. Company Nonrecourse Deductions for
any Company fiscal year shall be specially allocated among the Members in proportion
to their Percentage Interests.




          (vi) Member Nonrecourse Deductions. Any Member Nonrecourse Deduction
for any Company fiscal year shall be specially allocated



16









 







to the Member who bears the economic risk of loss with respect to the Member
Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in
accordance with Treasury Regulation section 1.704-2(i).



               (e) Tax Allocations.




          (i) Generally. Except as set forth in Section 4.02(e)(ii), allocations
for tax purposes of items of income, gain, loss, deduction and credit shall be made
in the same manner as allocations for book purposes.




          (ii) Special Rules. In accordance with Code section 704(c) and the
Treasury Regulations thereunder, income, gain, loss and deduction with respect to
any property contributed (or distributed with respect to property so contributed) to
the capital of the Company shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of such
property to the Company for federal income tax purposes and its initial Book Value.


In the event the Book Value of Company Property is adjusted pursuant to Section 4.01(c) hereof,
subsequent allocations of income, gain, loss, and deduction with respect to the Property shall take
account of any variation between the adjusted basis of such asset for federal income tax purposes
and the Book Value in the same manner as under Code section 704(c) and the Regulations thereunder.



The Managing Member shall make such allocations in accordance with Treasury Regulation section
1.704-3 using the method selected by the Managing Member.





          (iii) Allocations pursuant to this Section 4.02(e) are solely for purposes of
federal, state, and local taxes and shall not affect, or in any way be taken into
account in computing, any Member’s Capital Account or share of profits, losses,
other items, or distributions pursuant to any other provision of this Agreement.



     4.03 Distributions. The Managing Member shall make distributions to the Members as
follows:



               (a) Net Cash Flow Prior to the Stabilization Date. Prior to the Stabilization Date,
the Company shall distribute to the Members all Net Cash Flow of the Company, said distributions to
be made from time to time as determined by the Management Committee, but not less often than
annually, in the following order of priority:




          (i) First, to Ratner in an amount equal to its accrued and unpaid Priority
Return.




          (ii) Second, to Ratner in an amount equal to its Unreturned Capital.




          (iii) Thereafter, to Forest City.



17









 





               (b) Net Cash Flow From and After the Stabilization Date. From and after the
Stabilization Date, the Company shall distribute to the Members all Net Cash Flow of the Company,
said distributions to be made from time to time as determined by the Management Committee, but not
less often than annually, in the following order of priority:




          (i) First, to Ratner in an amount equal to its accrued and unpaid Priority
Return.




          (ii) Second, to Ratner in an amount equal to its Unreturned Capital.




          (iii) Third, to Forest City in an amount equal to its accrued and unpaid
Section 3.01(c) Return.




          (iv) Fourth, to Forest City in an amount equal to the portion of its Unreturned
Capital attributable to Section 3.01(c) Contributions.




          (v) Fifth, to Forest City in an amount equal to its accrued and unpaid Priority
Return.




          (vi) Thereafter, in accordance with the Percentage Interests.




          (vii) Notwithstanding Section 4.03(b)(vi), in the event that the federal, state
and local income taxes imposed on a Member relating to its share of the Company’s
taxable income (the “Tax Liabilities”) for any fiscal year (calculated on
the assumption that the taxable income from the Company is its only taxable income,
taking into account the federal deduction for state and local income taxes, and
assuming an aggregate state and local tax rate applicable to such Member of 40%)
exceeds the amount of Net Cash Flow distributed to such Member for such fiscal year
(including for this purpose Net Cash Flow distributed to such Member during the
first 90 days of the succeeding fiscal year; the “Excess”), Net Cash Flow
will first be distributed to such Member, prior to any distribution under Section
4.03(b)(vi), in an amount equal to such Excess. If any amount of Net Cash Flow is
distributed to a Member under this Section 4.03(b)(vii) for any fiscal year, such
amount will be deducted from the first distributions which would otherwise be made
to such Member in later fiscal years when Net Cash Flow or Net Refinancing Proceeds
and Net Sales Proceeds otherwise distributable to such Member exceed the Tax
Liabilities for such fiscal year, and instead be distributed in a manner which
reverses all distributions under this Section 4.03(b)(vii).



          (c) Net Refinancing Proceeds. The Company shall distribute to the Members Net
Refinancing Proceeds, said distributions to be made at the times determined by the Management
Committee, in the following order of priority:




          (i) First, to Ratner in an amount equal to its accrued and unpaid Priority
Return.



18









 






          (ii) Second, to Ratner in an amount equal to its Unreturned Capital.




          (iii) Third, to Forest City in an amount equal to its accrued and unpaid
Section 3.01(c) Return.




          (iv) Fourth, to Forest City in an amount equal to the portion of its Unreturned
Capital attributable to Section 3.01(c) Contributions.




          (v) Fifth, to Forest City in an amount equal to its accrued and unpaid Priority
Return.




          (vi) Sixth, to Forest City in an amount equal to its Unreturned Capital.




          (vii) Seventh, if Forest City has elected (or is deemed to have elected) the
Continuation Option, to Ratner until it has received on a cumulative basis an amount
equal to the amount that Ratner would have received under Section 4.03(d) assuming
(A) a sale of the Property on the Stabilization Date for a cash purchase price equal
to the Continuation Option Stabilized Value and closing costs equal to [___] percent
([___]%)4 of such assumed price and (B) that Sections 4.03(c)(vii),
4.03(c)(viii), 4.03(d)(vi) and 4.03(d)(vii) were not included in this Agreement.




          (viii) Eighth, if Forest City has elected (or is deemed to have elected) the
Continuation Option, to Forest City until it has received on a cumulative basis an
amount equal to the amount that Forest City would have received under Section
4.03(d) assuming (A) a sale of the Property on the Stabilization Date for a cash
purchase price equal to the Continuation Option Stabilized Value and closing costs
equal to [___] percent ([___]%) of such assumed price and (B) that Sections
4.03(c)(vii), 4.03(c)(viii), 4.03(d)(vi) and 4.03(d)(vii) were not included in this
Agreement.




          (ix) Thereafter, in accordance with the Percentage Interests.



               (d) Net Sales Proceeds. The Company shall distribute to the Members Net Sales
Proceeds, said distributions to be made at the times determined by the Management Committee, in the
following order of priority:




          (i) First, to Ratner in an amount equal to its Unreturned Capital.




          (ii) Second, to Ratner in an amount equal to its accrued and unpaid Priority
Return.





 




			
	4	 	For Development Properties in NYC: 3.025%.
For Development Properties in Yonkers: 1.9%.




19









 











          (iii) Third, to Forest City in an amount equal to its Unreturned Capital.




          (iv) Fourth, to Forest City in an amount equal to its accrued and unpaid
Section 3.01(c) Return.




          (v) Fifth, to Forest City in an amount equal to its accrued and unpaid Priority
Return.




          (vi) Sixth, if Forest City has elected (or is deemed to have elected) the
Continuation Option, to Ratner until it has received on a cumulative basis an amount
equal to the amount that Ratner would have received under Section 4.03(d) assuming
(A) a sale of the Property on the Stabilization Date for a cash purchase price equal
to the Continuation Option Stabilized Value and closing costs equal to [___] percent
([___]%) of such assumed price and (B) that Sections 4.03(c)(vii), 4.03(c)(viii),
4.03(d)(vi) and 4.03(d)(vii) were not included in this Agreement.




          (vii) Seventh, if Forest City has elected (or is deemed to have elected) the
Continuation Option, to Forest City until it has received on a cumulative basis an
amount equal to the amount that Forest City would have received under Section
4.03(d) assuming (A) a sale of the Property on the Stabilization Date for a cash
purchase price equal to the Continuation Option Stabilized Value and closing costs
equal to [___] percent ([___]%) of such assumed price and (B) that Sections
4.03(c)(vii), 4.03(c)(viii), 4.03(d)(vi) and 4.03(d)(vii) were not included in this
Agreement.




          (viii) Thereafter, in accordance with the Percentage Interests.



     4.04 Fees. The Managing Member shall arrange for payment by the Company of the
following fees:



               (a) Leasing Incentive Fee. On or before the Completion Date, Ascot Brokerage, an
Affiliate of Forest City, will be entitled to a fee of [___] percent ([___]%)5 of the
Adjusted Development Cost for services rendered and to be rendered in connection with the leasing
of the Property (the “Leasing Incentive Fee”), which fee shall be payable prior to any
distribution to the Members pursuant to Section 4.03.



               (b) Site Management Fee. On or before the Completion Date, Forest City Ratner
Companies, an Affiliate of Forest City, will be entitled to a fee of [___] percent
([___]%)5 of the Adjusted Development Cost for site management services (the “Site
Management Services”), which fee shall be payable prior to any distribution to the Members
pursuant to Section 4.03.





 




			
	5	 	Insert percentage applicable to the given
Development Property. To be comparable to like fee in prior projects.






20










 







               (c) Ratner Development Fee. On or before the Completion Date, Ratner will be entitled
to a fee from the Company in an amount equal to one and one-half percent (1.5%) of the Adjusted
Development Cost (the “Ratner Development Fee”), which fee shall be payable prior to any
distribution to the Members pursuant to Section 4.03. [MODIFY FOR NY TIMES, WHERE RATNER WILL HAVE
RECEIVED A PRIOR PAYMENT OF THIS FEE AT CLOSING UNDER MASTER CONTRIBUTION AGREEMENT].



               (d) Forest City Disposition Fees. On the sale of the Property, Forest City will be
entitled to a fee from the Company in an amount equal to one and one-half percent (1.5%) of the
Adjusted Development Cost (the “Forest City Disposition Fee”), which fee shall be payable
prior to any distribution to the Members pursuant to Section 4.03.



     4.05 Allocation of Nonrecourse Liabilities. Pursuant to Treasury Regulation section
1.752-3(a), Company nonrecourse liabilities shall be allocated in the following order:



               (a) First, to each Member to the extent of its respective share of Company Minimum Gain.



               (b) Then, to each Member in the amount of any taxable gain that would be allocated to that
Member under Code section 704(c) or in connection with a revaluation of Company property pursuant
to Treasury Regulation section 1.704-1(b)(2)(iv)(f) or (r), if the Company disposed of (in a
taxable transaction) all Company property subject to one or more nonrecourse liabilities of the
Company in full satisfaction of such liabilities and for no other consideration.



               (c) Then, the excess nonrecourse liabilities will be allocated to the Members in accordance
with their Percentage Interests.


ARTICLE V



MANAGEMENT AND CONTROL




     5.01 Management Committee.



               (a) The overall management and control of the business and affairs of the Company shall be
vested in a management committee (the “Management Committee”). All decisions with respect
to the management and control of the Company that are “approved by the Management Committee” shall
be binding on the Company and the Members. Approval or consent of the Management Committee shall
require the approval or consent of all of the members of the Management Committee.



               (b) The Management Committee shall be comprised of three (3) members, two (2) designated by
Forest City (subject to the further provisions of this Section 5.01(b)) and the other designated by
Ratner. Forest City hereby designates James A. Ratner and Charles A. Ratner, and Ratner hereby
designates Bruce C. Ratner, as their respective initial representatives on the Management
Committee. If either Member shall elect to change its designated representative or
representatives, it shall do so only with the approval of the other Member. Upon the death or
incapacity of James A. Ratner or Charles A. Ratner (or a successor



21









 




of either of them), the remaining representative of Forest City shall be entitled to exercise
the consent and approval rights of both representatives of Forest City until such time as Forest
City shall designate a successor representative which is approved by Ratner, which approval shall
not be unreasonably withheld if such designee is a spouse, child, sibling, niece, nephew or heir of
James A. Ratner or Charles A. Ratner if such designee is a spouse, child, sibling, niece, nephew or
heir who is actively involved in the business conducted by the Company or who has experience in
real estate development activities similar to those conducted by the Company. Upon the death or
incapacity of Bruce C. Ratner, Forest City shall have the sole representative or representatives on
the Management Committee until a replacement is designated by Ratner and approved by Forest City,
which approval shall not be unreasonably withheld if such designee is a Ratner Family Member who is
actively involved in the business conducted by the Company or who has experience in real estate
development activities similar to those conducted by the Company.




               (c) Each Member agrees that its representative shall consult in good faith with the
representative or representatives of the other Member. In the event of any need for approval or
other action by the Management Committee, each Member shall use its best efforts to cause its
representative or representatives to respond within five (5) days after the date such
representative or representatives is or are notified of the need for such approval or other action.



               (d) The Management Committee shall hold meetings regularly and in any event not less often
than quarterly. The Managing Member shall keep the Management Committee and the other Member
informed as to all material developments and transactions involving the Company and the Property.
Either Member shall have the right to call a special meeting of the Management Committee in
Cleveland, Ohio or New York City, New York upon the giving to the other Member of at least five (5)
Business Days’ prior written notice thereof, specifying the time, place and date of such meeting.
Meetings of the Management Committee may be held in person or by telephone.



               (e) In addition to any other matters set forth in this Agreement which expressly require
approval of the Management Committee, and except as may otherwise be expressly provided for herein,
no act shall be taken, sum expended, decision made or obligation incurred by the Company with
respect to a matter within the scope of any of the following decisions unless and until the same
has been approved by the Management Committee:




               (i) the acquisition of any land or other real property or interest therein;




               (ii) subject to Section 5.05 and Section 5.06, the sale or other transfer, or
mortgaging or the placing or suffering of any other encumbrance on any of the Company’s
assets or any part thereof, including the terms and conditions of any such sale, transfer or
mortgaging (it being understood that the Members shall not incur any recourse obligations in
connection with any such sale, transfer, mortgaging or other encumbrance);




               (iii) the approval of a Budget and any Projection which includes a change in the
aggregate amount of a Budget;



22









 






               (iv) the making of any expenditure or incurring any obligation which, when added to any
other expenditures for the Fiscal Year of the Company, exceeds by more than 10% in the
aggregate the applicable Budget or Projection therefor;




               (v) the making of a Request for a Capital Contribution pursuant to Section 3.01(c);




               (vi) subject to Section 5.06, the financing, refinancing or repayment (other than
pursuant to the terms of any applicable loan documents) of any indebtedness of the Company,
including the terms and conditions of any such financing or refinancing (it being understood
that no Member shall be obligated to incur any recourse obligation in connection with such
financing or refinancing, except that Forest City shall cause its Affiliate, FCE, to provide
its standard form of completion guarantee to the lender on the Construction Loan Closing
Date);




               (vii) the taking of any act in contravention of this Agreement;




               (viii) the confession of a judgment in a material amount against the Company;




               (ix) the conversion of property of the Company to the use of a Member, or assignment to
a Member of any rights in specific property of the Company; and




               (x) the execution or delivery of any general assignment for the benefit of the
creditors of the Company.



               (f) Unless otherwise provided in this Agreement, a member of the Management Committee having
the right to consent to or approve of any matter shall be reasonable in granting or withholding
such consent or approval. If a member of the Management Committee withholds his or her consent or
approval to any proposal, such member shall provide the other members with a reasonably detailed
explanation in writing of the basis for such refusal. If a member shall fail to respond to a
request for consent or approval within a twenty (20) day period and such failure shall continue for
a period of ten (10) days after the requesting member shall have given a second notice stating that
failure to respond within said ten (10) day period shall be deemed to constitute consent or
approval, such failure to respond shall be deemed to constitute consent or approval effective on
the expiration of such second ten (10) day period.



     5.02 Managing Member.



               (a) The Managing Member shall supervise, on behalf of the Management Committee and pursuant to
the Development Plan, the day to day activities of the Company, and the Managing Member shall be
responsible for the implementation of the decisions of the Management Committee and affairs of the
Company. The Managing Member shall at all times conform in all material respects to the Budgets
approved by the Management Committee and the policies and programs established by the Management
Committee, and the scope of the Managing Member’s authority shall be limited by said policies and
programs. The Managing Member shall keep the Management Committee informed as to all matters of
concern



23









 




to the Company as to which it has actual knowledge. The Management Committee shall respond to
all reasonable requests made by the Managing Member for funds necessary for the operation of the
Company, which response shall be made promptly given the nature and extent of such request.




               (b) Pursuant to the provisions of this Section 5.02 and subject to the provision of Section
5.01(e), the Managing Member shall have full power and authority to take any and all actions on
behalf of the Company. The Managing Member shall take all actions which may be necessary or
appropriate for the development, maintenance, preservation and operation of the Property and other
assets of the Company in accordance with the provisions of this Agreement and applicable laws and
regulations. The Managing Member shall be under a duty to use due care and reasonable diligence in
the management of the Company’s business and shall conduct the affairs of the Company in good faith
and in accordance with the terms of this Agreement and in a manner consistent with the purposes set
forth in Section 2.03.



     5.03 Rights of Members. Except as specifically set forth herein, no Member shall (i)
be permitted to take part in the management, control or conduct of the business or affairs of the
Company; (ii) have the right to vote on any matters; or (iii) have the authority or power in its
capacity as a Member to act as agent for or on behalf of the Company or the other Member, to do any
act which would be binding on the Company or the other Member, or to incur any expenditures or
indebtedness on behalf of or with respect to the Company or the other Member.



     5.04 Intentionally Omitted.



     5.05 Sale or Conveyance of Property. (a) If, at any time after either (x) the fifth
(5th) anniversary of the Stabilization Date or (y) a default by FCE or any of its
Affiliates under Sections 2.3 or 4.9 of the Master Contribution Agreement which continues
unremedied for more than thirty (30) days after written notice thereof from Ratner to Forest City
or any other circumstance that would give rise to a right on the part of Ratner (and/or its
Affiliates) to terminate the Master Contribution Agreement with respect to the Property in
accordance with Section 9.5(b) thereof, a Member desires to sell the Property pursuant to a bona
fide third party offer to purchase, and the other Member does not wish to do so, then the Member
desiring to sell (the “Selling Member”) may, by notice to the other Member (the
“Non-Selling Member”) accompanied by a copy of the third party offer containing the
material and relevant terms of the offer, require the Non-Selling Member to proceed with the sale
on the terms proposed by the third party unless within sixty (60) days after receipt of the notice,
the Non-Selling Member elects to purchase the Property on the same terms (or to the extent that
some or all of the terms cannot be duplicated because of their unique nature, for example, an
exchange for a specific property, then on terms substantially similar to and at least equal in
value to the terms that cannot be duplicated) as are contained in the third party offer. The
exercise of the Non-Selling Member’s election shall be accompanied by a deposit of five (5%)
percent of the purchase price, but not more than the deposit required under the third party offer,
and the closing must occur within twelve (12) months following the exercise of the election. If
the election is made but the Non-Selling Member fails to close as herein provided, the Selling
Member may retain the deposit as sole and liquidated damages and the Non-Selling Member shall have
no further right to acquire the Property.



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               (b) After the fifth anniversary of the Stabilization Date, if a Selling Member desires to
market and offer to sell the Property without having a bona fide offer from a third party and the
other Member does not wish to do so, the Selling Member may thereafter notify the Non-Selling
Member of the gross price based upon which the Selling Member is willing to sell the Property and
the other relevant terms. In such event, the Non-Selling Member, within six (6) months after
receipt of such notice, may elect to purchase the Property or may obtain a bona fide offer from a
third party to purchase the Property which shall be more favorable to the Company than the terms
specified by the Selling Member and invoke the provisions of Section 5.05(a). If the Non-Selling
Member does not do so, the Selling Member will, for a period of six (6) months after the expiration
of the Non-Selling Member’s right of election, be authorized to enter into an agreement for the
sale of the Property for a gross purchase price of not less than ninety five (95%) percent of the
price specified in the notice previously given by the Selling Member to the Non-Selling Member, and
otherwise on terms consistent with the relevant terms proposed to the Non-Selling Member. If the
Selling Member does not enter into such an agreement for sale within the six (6) month period, or
having entered into such an agreement, the closing thereunder does not occur and the six (6) month
period has expired, the Selling Member must again comply with the terms of this Section 5.05(b).
If the Non-Selling Member does elect to purchase the Property for the specified price, then the
same terms as govern the deposit, closing date, liquidated damages and waiver contained in Section
5.05(a) above shall apply to the purchase by the Non-Selling Member under this Section 5.05(b).



     5.06 Financing. At any time during which the indebtedness of the Company must be
refinanced and the Management Committee is in disagreement with respect thereto, either Member may
provide the other Member a notice setting forth the terms on which it believes the Company should
enter into an agreement to refinance the indebtedness of the Company. Said notice will contain all
relevant and material terms and will comply with any limitations or requirements in this Agreement
(such as the requirement that any loan be non-recourse). In the event said other Member provides,
within sixty (60) days after receipt of the notice of proposed loan terms, reasonable evidence of
the availability of a loan on more favorable terms than those proposed, the Company will diligently
pursue a refinancing on the terms and with the lender identified by said other Member. If said
other Member is unable to provide such evidence of availability, the Company shall pursue the
refinancing on the terms outlined in the initial proposal and may conclude same without the consent
or approval of said other Member. If the closing of the refinancing does not occur within six (6)
months after the notice of proposed terms was first provided, the applicable Member must again
comply with the provisions of this Section 5.06.



     5.07 Removal of Managing Member. If the Managing Member shall commit a material
breach of its obligations hereunder or be negligent in the performance of its responsibilities or
otherwise breach or default in any of its material obligations hereunder, the other Member shall
give the Managing Member notice of such breach, negligence or default and the Managing Member shall
cure such breach or default within ten (10) Business Days thereafter; provided, however, that if
such cure cannot reasonably be accomplished within such ten (10) Business Day period, the Managing
Member shall commence and diligently prosecute such cure to completion within a reasonable period
of time under the circumstances. If the Managing Member fails to so cure such breach, negligence
or default within such applicable period of time, the other Member shall have the right upon notice
to the Managing Member to



25









 




remove the Managing Member, in which event the other Member shall become the Managing Member
hereunder. If the Managing Member becomes the subject of an Act of Insolvency, the other Member
shall become the Managing Member on five (5) Business Days’ prior notice. Disputes as to whether
or not a Managing Member shall be removed shall be subject to arbitration and, during the pendency
of any such arbitration, the role of the Managing Member shall be vested in the Management
Committee.




     5.08 Liability of a Member for Good Faith Acts. No Member, including without
limitation the Managing Member, shall be liable, responsible or accountable in damages or otherwise
to any Member for any act or omission performed or omitted by it in good faith on behalf of the
Company and in a manner reasonably believed by such Member to be within the scope of authority
granted to it by this Agreement and in the best interest of the Company and the Members, unless
such act or omission shall constitute negligence, willful misconduct or a breach of fiduciary duty
to the Members.



     5.09 Indemnification of Members.



               (a) In any threatened, pending or completed action, suit or proceeding to which any Member (or
its directors, officers, employees, agents or constituent partners, shareholders or members) ,
including without limitation the Managing Member, becomes a party, or is threatened to be made a
party, by reason of the position of such Member (or its directors, officers, employees, agents or
constituent partners, shareholders or members) , involving an alleged cause of action for damages
arising from activities performed within the scope of such Member’s authority under this Agreement,
the Company shall, to the extent of its assets, indemnify such Member against expenses, including
attorneys’ fees, judgments and amounts paid in settlement actually and reasonably incurred by it in
connection with such action, suit or proceeding, if the Member acted in good faith and in a manner
reasonably believed by it to be in or not opposed to the best interests of the Company, and
provided that such Member’s conduct does not constitute negligence, willful misconduct or a breach
of its fiduciary obligations to the Members. The termination of any action, suit or proceeding by
judgment, order or settlement shall not, of itself, create a presumption that the Member did not
act in good faith and in a manner reasonably believed by it to be in or not opposed to the best
interests of the Company.



               (b) In no event shall a Member (or its directors, officers, employees, agents, or constituent
partners, shareholders or members) be liable for any loss or damage to the Company or its property
caused by strikes, labor troubles, riots, fires, acts of a public enemy, insurrections, acts of
God, breakdown or failure of plant or machinery, failure to carry out the provisions hereof due to
the provisions of law, rules or regulations promulgated by any government agency, or any demand or
requisition of any government, or from any other cause beyond the control of the Member.



     5.10 Activities of Members.



               (a) The Managing Member shall not be required to devote its full time and effort to the
affairs of the Company, but shall devote such time and effort as may reasonably be required to
adequately promote the Company’s interests.



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               (b) Members (other than Members who are employees of FCE), or an Affiliate of FCE or a
director of FCE during the term of such employment or directorship), and any assignees, officers,
directors, members, employees, agents, trustees, affiliates or stockholders of such Member are
permitted to engage in other business ventures and investments and are not required to present
corporate opportunities to the Company, FCE or their Affiliates, even if such opportunities
directly or indirectly compete with FCE, the Company or their Affiliates. Neither FCE, the
Company, the other Members nor their Affiliates will have any rights in or to such opportunities,
and such opportunities are hereby renounced. Members who are employees of FCE or of an Affiliate
of FCE during the term of such employment will be subject to the restrictions on participating in
business ventures and investments, and to the requirements for presenting corporate opportunities,
that are set forth in FCE’s Code of Legal and Ethical Conduct, as amended from time to time. Any
Member who is a director of FCE during the term of such directorship will also be subject to the
restrictions on participating in business ventures and investments, and to the requirements for
presenting corporate opportunities, that are set forth in FCE’s Corporate Governance Guidelines, as
amended from time to time. Such Members acknowledge that the Code of Legal and Ethical Conduct and
the Corporate Governance Guidelines may also restrict conduct by their Affiliates.



     5.11 Unauthorized Acts. No Member shall take any action on behalf of or in the name
of the Company, or enter into any commitment or obligation binding upon the Company, except as
expressly provided in this Agreement. Each Member shall indemnify and hold harmless the other
Member and its Affiliates, directors, officers and employees against any loss, liability, damage or
expense arising out of any breach of this Section 5.11 by such Member or its Affiliates, directors,
officers, agents or employees.


ARTICLE VI



BOOKS AND RECORDS; ACCOUNTS; BUDGETS




     6.01 Books and Records. (a) The Managing Member shall maintain full and accurate
books and records at the principal place of business of the Company, in accordance with the
accounting policies and procedures of Forest City and its Affiliates.



               (b) Each Member and its duly authorized representatives, including, but not limited to,
auditors and any supervisory or regulatory authority having jurisdiction (through its or their
representatives), shall have the right to inspect and examine the books, records, files, securities
and other documents of the Company during regular business hours upon reasonable prior notice.
Such supervisory and regulatory authorities shall also have the right, in connection with an
examination of the Company, to interview the employees of the Company in regard to activities of
the Company, and to interview any other person having custody or control of documents of the
Company with respect to such documents. Any expense for any inspection, examination or interview
shall be borne by the Member causing such inspection or review to be conducted.



     6.02 Budgets. Promptly after the execution of this Agreement and not less often than
once each fiscal year thereafter, the Managing Member shall prepare and submit to the Management
Committee for its consideration a budget (the “Budget”) for the Company setting



27









 




forth the estimated receipts and expenditures (working capital, operating and other) of the
Company for the period covered by the Budget. The Management Committee shall review and adjust the
Budget as it determines to be appropriate. When a Budget is approved by the Management Committee,
the Managing Member shall implement such Budget and shall be authorized, without the need for
further approval by the Management Committee, to make the expenditures and incur the obligations
provided for in such Budget. If at any time the Managing Member shall determine, in its reasonable
business judgment, that funds in excess of the Budget are required, or that the Budget requires
other modifications, then the Managing Member shall prepare and submit to the Management Committee
a modification to the applicable Budget, to be reviewed and adjusted in the same manner as a
Budget. Similarly, if at any time the Managing Partner shall determine, in its reasonable business
judgment, that a prior modification requires further modification, then the Managing Partner shall
prepare and submit to the Management Committee a further modification, to be reviewed and adjusted
in the same manner as a Budget. All approved modifications to a Budget and to any prior Budget
modification shall be referred to herein as a “Projection”. When approved by the
Management Committee, the Managing Member shall implement such Projection and shall be authorized,
without the need for further approval by the Management Committee, to make the expenditures and
incur the obligations provided for in such Projection.




     6.03 Trial Balance. The Managing Member shall prepare, in form satisfactory to the
Members, a trial balance for the Company for each month in accordance with the accounting policies
and procedures of Forest City and its Affiliates.



     6.04 Company’s Auditors; Audit. The independent auditors of the Company shall be
selected by Forest City. After the Completion Date, the Managing Member shall cause the
independent auditors to (i) audit the records and accounts of the Company, (ii) render their
opinion on the statement of financial condition of the Company as of the end of each fiscal year
and of the results of its operations and changes in its financial condition for each fiscal year,
and (iii) if requested by the Members, render their opinion as to the accuracy of the Net Cash Flow
computations made by the accountants for the Company and whether the distributions thereof are in
accordance with this Agreement. The Managing Member shall, to the extent feasible, cause such
audit to be furnished to the Members as promptly as practicable but in any event not later than
ninety (90) days after the close of each fiscal year after the Completion Date. The fees and
expenses of the independent auditors and accountants shall be an expense charged to the Company.



     6.05 Decisions with Respect to Accounting Principles. All decisions as to accounting
principles and elections, whether for book or tax purposes, will be made by the Members.



     6.06 Bank Accounts. The funds of the Company shall be maintained in such banks as the
Managing Member may from time to time specify. All depository banks shall be approved by the
Management Committee. Such account or accounts shall be listed in the name of the Company and
shall be subject to withdrawal only upon the signature or signatures of persons designated by the
Managing Member. No funds of the Company shall be commingled with any other funds. Reasonable
efforts shall be made by the Managing Member to keep excess funds of the Company at hand from time
to time invested in savings accounts, certificates of deposit, governmental obligations or other
high grade interest-bearing securities.



28









 





     6.07 Fiscal Year. The fiscal year of the Company shall be February 1 through January
31 of each year or such other period as may be selected by Tax Matters Partner in accordance with
the Code.


ARTICLE VII



INCOME TAX RETURNS; TAX ELECTIONS




     7.01 Tax Returns. Federal, state and local income tax returns of the Company shall be
prepared or caused to be prepared by Forest City. Copies of all tax returns of the Company shall
be furnished to the Members at least thirty (30) days prior to statutory date for filing by the
Member having the earlier filing date (as extended by any extension thereof previously obtained).



     7.02 Notice of Tax Examinations. Any Member receiving advice that the Internal
Revenue Service intends to examine any income tax return of the Company shall promptly notify the
other Member.



     7.03 Tax Matters Partner. Forest City shall be the “Tax Matters Partner” as defined
in Section 6231 of the Code; provided, however, that all tax elections required or permitted to be
made by the Company under the Code or any state or local tax laws and the determination of how to
proceed with respect to matters under audit shall be made by mutual agreement of the Members.


ARTICLE VIII



TRANSFER OF INTERESTS IN THE COMPANY




     8.01 Withdrawal; Assignment; Affiliate Transfers.



               (a) Except as otherwise provided in this Agreement, no Member may withdraw from the Company,
petition a court for the dissolution, termination or liquidation of the Company or otherwise Assign
any portion of its interest in the Company without the approval of the other Member, which approval
may be granted or denied in its sole discretion. Any attempted withdrawal or Assignment not
permitted hereunder shall be void. For purposes of this Section 8.01, an Assignment shall include
the transfer or other disposition of stock, partnership, membership or other interests in a Member,
directly or indirectly, other than transfers of publicly traded securities.



               (b) Notwithstanding the provisions of Section 8.01(a) to the contrary:




               (i) Ratner may Assign its entire interest in the Company, and the partners, members,
shareholders and other entities holding direct or indirect interests in Ratner may Assign
all or a portion of their interests in Ratner, to Master III ,or as otherwise contemplated
by the Master Contribution Agreement;




               (ii) Ratner may Assign its entire interest in the Company, and the partners, members,
shareholders and other entities holding direct or indirect interests in



29









 




Ratner may Assign all or a portion of their interests in Ratner, (A) to any entity
Controlled by or under the Control of Bruce C. Ratner, (B) to the children, spouse,
siblings, nieces, nephews or heirs of Bruce C. Ratner or to trustees for the benefit of such
children, spouse, siblings, nieces, nephews or heirs of Bruce C. Ratner, (C) to any person
that is, at the time of the Assignment, an “Immediate Family Member” of Bruce C. Ratner
under the operating agreement of Master III as in effect from time to time (each, a
“Ratner Family Member”) or any entity owned by or under the Control of the foregoing
and (D) to any individual, entity, trust, association, organization or other person that is
a permitted transferee of Class A Common Units under the operating agreement or other
organizational documents of Master III from time to time; provided, however,
that upon an Assignment by Ratner of its entire interest in the Company permitted by this
Section 8.01(b), the transferor shall remain liable for the obligations of such transferor
set forth in this Agreement and, subject to Section 5.01(b), Bruce C. Ratner shall remain as
the transferor’s representative on the Management Committee. Interests in Ratner may also
be transferred to other nominees designated by Bruce C. Ratner provided that (i) such
nominees acquire their interests on terms identical to or at least not less favorable to
such nominees than the terms under which Ratner and/or Bruce C. Ratner acquired such
interests, (ii) Bruce C. Ratner shall remain the sole representative of Ratner on the
Management Committee and in the event of his death or incapacity, unless a replacement is
proposed by Ratner and approved by Forest City, the Management Committee shall consist
solely of the representatives of Forest City, and (iii) Forest City shall consent to such
transfer, which consent shall not be unreasonably withheld, provided, however, that if
Forest City shall conclude that it cannot establish a satisfactory business relationship
with such transferee, it shall not be unreasonable for Forest City to withhold its consent.




               (c) Notwithstanding the provisions of Section 8.01(a) to the contrary, (i) Forest City may
Assign all or any portion of its interest in the Company to Master III, and (ii) Forest City may
Assign all or any portion of its interest in the Company, and partners, members, shareholders and
other entities holding direct or indirect interests in Forest City may Assign all or any portion of
their interests in Forest City, (A) to any person or entity which directly or indirectly, through
one or more intermediaries, Controls, is Controlled by or is under common Control with FCE and (B)
to any individual, entity, trust, association, organization or other person that is a permitted
transferee of Class B Common Units under the operating agreement or other organizational documents
of Master III from time to time; provided, however, that upon any Assignment by
Forest City of its entire interest in the Company as permitted by this Section 8.01(c), the
transferor shall remain liable for the obligations of such transferor and, subject to Section
5.01(b), James A. Ratner and Charles A. Ratner (or their permitted successors) shall remain as the
transferor’s representatives on the Management Committee.



               (d) No Assignment of the whole or any part of an interest in the Company shall be effective
unless and until all of the following conditions are satisfied:




               (i) a duly executed and acknowledged instrument of assignment which is
satisfactory in form and substance to the Managing Member is filed with the Company
setting forth the intention (if it be the intention) of the Assignor that the
Assignee become a substituted or additional Member;



30









 






               (ii) the Assignor and Assignee execute and acknowledge such other instrument or
instruments as the Managing Member may deem reasonably necessary or desirable to
effectuate such admission, including the written assumption, acceptance and adoption
by the Assignee of all of the terms and conditions of this Agreement as the same may
have been theretofore amended;




               (iii) the Assignee pays to the Company the reasonable expenses of the Company
incurred in connection with such assignment and substitution; and




               (iv) the Assignor pays to the Company any and all sums owed by it to the
Company.



     8.02 Default.



               (a) If any Member (a “Section 8.02 Member”) shall (1) default in its obligations under
Section 3.01, (2) commit an Act of Insolvency or (3) violate the restrictions set forth under
Section 8.01, the other Member shall have the option (if it shall so elect by notice to the Section
8.02 Member) to acquire the Section 8.02 Member’s interest in the Company by paying to the Section
8.02 Member such Member’s Membership Value.



               (b) Within ten (10) days following the date of the exercise of the option set forth in Section
8.02(a), the Member obligated to purchase shall, by notice to the Section 8.02 Member, fix a
closing date which shall be not later than thirty (30) days following the date of the exercise of
the option and a place of closing in the City and State of New York, and the closing shall take
place on said date at such place in accordance with Section 8.05.



     8.03 Right of First Offer.



               (a) If either Member desires to Assign all of its interest in the Company, it may do so, but
only after the fifth (5th) anniversary of the Stabilization Date and if it is not in
default under this Agreement, and if it first offers to Assign such interest to the other Member in
accordance with this Section 8.03. If Forest City desires to Assign all or any portion of its
interest in the Company, in addition to first offering such interest to Ratner as provided in
Section 8.03(b), the sale shall be subject to the Tag-Along provisions contained in Section
8.03(c).



               (b) If a Member wishes to Assign all of its interest in the Company as provided in Section
8.03(a) above, such Member (the “Offeror”) must first give notice (the “Option
Notice”) to the other Member (the “Offeree”) that it intends to Assign all of its
interest in the Company at a purchase price set forth in the Option Notice (the “Option
Price”) and upon such other terms and conditions as are set forth in the Option Notice. The
Offeree shall have an option, for a period of sixty (60) days from and after the date of the Option
Notice, to:




               (i) elect in writing to purchase the Offeror’s interest in the Company, upon
the same terms and conditions as are contained in the Option Notice (or to the
extent that some or all of the terms cannot be duplicated because of their unique
nature, for example, an exchange for a specific property, then on



31









 







terms substantially similar to and at least equal in value to the terms that
cannot be duplicated), except that the Offeree shall remit upon the acceptance
thereof a certified or bank check payable to the order of the Offeror in an amount
equal to five (5%) percent of the Option Price as a deposit on the Option Price; or




               (ii) elect in writing not to purchase the Offeror’s interest in the Company, in
which event the Offeror may Assign its interest in the Company for a purchase price
and upon such terms and conditions which are no less favorable to the Offeror than
those set forth in the Option Notice within six (6) months after the Offeree shall
so elect in writing or the expiration of the sixty (60) day period, whichever is
earlier. If the Offeror shall not so Assign its interest within such time period,
any subsequent proposed Assignment of the Offeror’s interest in the Company shall
again be subject to the provisions of this Section 8.03(b).


If the Offeree does not respond in writing to an Option Notice prior to the expiration of the sixty
(60) day option period, the Offeree shall be deemed to have elected not to purchase the Offeror’s
interest in the Company.




               (c) If Forest City desires to make an Assignment as to which the provisions of Section 8.03(a)
apply, then after compliance with the provisions of Section 8.03, and if Forest City is continuing
to pursue such Assignment, Forest City shall give notice (the “Sale Notice”) to Ratner that
it continues to desire to Assign its interest in the Company, accompanied by a bona fide
third-party offer (the “Purchase Offer”) to purchase, in the alternative, (x) all of the
interests of the Members in the Company at a specified purchase price (the “Full Price”)
and upon such other terms and conditions set forth in the Purchase Offer, or (y) to purchase just
the interest of Forest City in the Company at a purchase price (the “Partial Price”) and
upon such other terms and conditions set forth in the Purchase Offer. Ratner shall have the right
to (i) join with Forest City in the Assignment of all of the interests in the Company for the Full
Price (the “Tag-Along”), (ii) acquire (or cause the acquisition of) Forest City’s interest
for the Partial Price (or to the extent that some or all of the terms cannot be duplicated because
of their unique nature, for example, an exchange for a specific property, then on terms
substantially similar to and at least equal in value to the terms that cannot be duplicated), or
(iii) remain in the Company with no change in its interest. If within sixty (60) days after
receiving the Sale Notice, Ratner fails to give notice to Forest City of its election under clause
(i) , (ii) or (iii) , then Ratner shall be deemed to have elected under clause (iii). If Ratner
elects (or is deemed to have elected) under clause (iii), Forest City may, within ninety (90) days
after the expiration of said sixty (60) day period or date on which Ratner so elects whichever is
earlier, proceed to Assign its interest in the Company to a third party in accordance with the
terms of the Purchase Offer; provided, however, that if such Assignment is not
closed within said ninety (90) day period, any subsequent proposed Assignment of Forest City’s
interest in the Company shall again be subject to this Section 8.03(c) and, if the six (6) month
period in Section 8.03(b) shall also have expired, to Section 8.03(b). If Ratner elects under
clause (ii) above, the closing shall occur on a date selected by Ratner in the election notice to
Forest City, which date must be within twelve (12) months after the date on which Ratner so elects,
and at a location in the City and State of New York selected by Ratner in said election notice.
The closing shall take place on said date and at such location in accordance with Section 8.05.



32









 





               (d) Upon the Assignment of the Offeror’s interest in the Company pursuant to this Section
8.03, all existing agreements between the Company and any person, firm or corporation with whom the
Offeror or a shareholder, director or member thereof is directly or indirectly interested or
connected shall, at the option of the Company, be terminated forthwith.



               (e) The provisions of this Section 8.03 shall not apply to any transfer permitted under
Section 8.01(b) and Section 8.01(c).



     8.04 Put. Ratner may offer to Forest City the interest of Ratner in the Company (the
“Put Right”) at any time after (i) the fifth (5th) anniversary of the
Stabilization Date or (ii) the transfer of Control of FCE or Forest City after the date hereof or
(iii) a default by FCE or any of its Affiliates under Sections 2.3 or 4.9 of the Master
Contribution Agreement which continues unremedied for more than thirty (30) days after written
notice thereof from Ratner to Forest City or any other circumstance that would give rise to a right
on the part of Ratner (and/or its Affiliates) to terminate the Master Contribution Agreement with
respect to the Property in accordance with Section 9.5(b) thereof, in any case by notice given to
Forest City (the “Put Notice”). The purchase price to be paid to Ratner for its interest
in the Company shall be the Membership Value of Ratner or, if Ratner exercises the Put Right while
Forest City has pending an Option Notice, or a Sale Notice, the purchase price shall be one hundred
ten percent (110%) of the Membership Value of Ratner. Within thirty (30) days following receipt by
Forest City of the Put Notice, Forest City shall, by notice to Ratner, (a) fix a closing date not
later than one hundred twenty (120) days after the exercise of the Put Right by Ratner and fix a
location for closing in the City and State of New York, said closing to take place on said date and
at such location in accordance with Section 8.05, or (b) advise Ratner that it does not wish to
acquire the interest of Ratner in the Company. If Forest City fails to provide such notice within
said thirty (30) day period, Forest City shall be deemed to have advised Ratner pursuant to clause
(b). If Forest City notifies or is deemed to have notified Ratner pursuant to clause (b) that it
does not wish to acquire the interest of Ratner in the Company, Ratner may market and sell the
Property within twelve (12) months thereafter without the consent of Forest City or the Management
Committee and is hereby irrevocably authorized to do so on behalf of the Company for the Property
Value. If Ratner shall give to Forest City the Put Notice, the same shall render any notices under
Section 5.05, Section 5.06 and Section 8.03 inapplicable unless Forest City shall have notified or
is deemed to have notified Ratner pursuant to clause (b) above and Ratner does not sell the
Property within twelve (12) months thereafter. In all events, it is understood that Ratner may
withdraw a Put Notice at any time prior to the transfer of the interest of Ratner in the Company.



     8.05 Closing.



               (a) If an interest in the Company is to be Assigned pursuant to Section 8.02, 8.03(c) or 8.04,
then at the closing, the Assignor shall execute and deliver to the purchasing Member assignments of
interest, deeds, bills of sale, instruments of conveyance, and other instruments as the purchasing
Member may reasonably require, to give it good and clear record title to all of the Assignor’s
right, title and interest in and to the Company and the Property, subject to liabilities and
obligations as provided in Section 8.05(b) of this Agreement, and the Assignor hereby irrevocably
constitutes and appoints the purchasing Member its attorney-in-fact to execute, acknowledge and
deliver such instruments as may be necessary or appropriate to



33









 




carry out and enforce the provisions of this Section 8.05. The purchase price shall be
delivered to the Assignor in cash in immediately available funds at the closing or within five (5)
days after determination of the price to be paid, whichever is later.




               (b) The sale by the Assignor of its interest in the Company pursuant to this Section 8.05
shall be subject to all liabilities and obligations of the Company, matured or unmatured, absolute
or contingent, other than loans made to the Company by the Assignor, and upon the consummation of
such sale, the purchasing Member shall execute and deliver to the Assignor, in form satisfactory to
the Assignor, an instrument assuming the aforesaid liabilities and obligations of the Company,
together with a covenant to hold the Assignor harmless from and against such liabilities and
obligations.



     8.06 No Action Permitted Which Constitutes Default of Company Obligation.
Notwithstanding anything in this Article VIII to the contrary, no Member shall be permitted to take
action otherwise permitted hereunder if such action would constitute a default under any obligation
of the Company.


ARTICLE IX



DISSOLUTION AND LIQUIDATION




     9.01 Events of Dissolution.



     The Company shall be dissolved by any of the following events, whichever shall first occur:



               (a) the sale, disposition or liquidation of substantially all of the property owned by the
Company;



               (b) the determination of the Members to do so; or



               (c) as otherwise provided by the LLC Law.



     9.02 Liquidation upon Dissolution. Upon dissolution of the Company, the Management
Committee, on behalf of all Members, as liquidating trustee, shall dissolve the Company, sell or
distribute all Company properties within a reasonable time, pay or arrange for the payment of all
Company debts and expenses and distribute the balance of the Company assets to the Members,
following the application of Section 4.03(d) as applicable, in proportion to their respective
positive Capital Account balances, as determined following all Capital Account adjustments for the
taxable year of the liquidation. Any distributions of Company property in kind shall be made in an
equitable manner, taking into account tax and related considerations. Dissolution of the Company
shall be effective on the day on which the event occurs giving rise to the dissolution, but the
Company shall not terminate until the Company’s Articles of Organization shall have been cancelled
and the assets of the Company shall have been distributed as provided herein. Notwithstanding the
dissolution of the Company prior to the termination of the Company, as aforesaid, the business of
the Company and the affairs of the Members, as such, shall continue to be governed by this
Agreement.



34









 





     9.03 Limited Deficit Capital Account Restoration. Upon the liquidation of the Company
pursuant to Section 9.02, no Member shall be obligated to restore or otherwise make a contribution
to the Company on account of a deficit balance in such Member’s Capital Account.


ARTICLE X



REPRESENTATIONS AND WARRANTIES




     10.01 Representations and Warranties of Forest City. Forest City hereby represents
and warrants to Ratner and the Company that Forest City is a duly formed
                                        , validly existing and in good standing under the laws of the State of
                    ; that it is not subject to any proceeding for the reorganization, dissolution or
liquidation thereof; that it has all requisite authorizations to enter into this Agreement and to
consummate the transactions contemplated hereby; and that the parties executing this Agreement on
behalf of Forest City are duly authorized to so do.



     10.02 Representations and Warranties of Ratner. Ratner hereby represents and warrants
to Forest City and the Company that Ratner is a duly formed                                         , validly existing
and in good standing under the laws of the State of                     ; that it is not subject to any
proceeding for the reorganization, dissolution or liquidation thereof; that it has all requisite
authorizations to enter into this Agreement and to consummate the transactions contemplated hereby;
and that the parties executing this Agreement on behalf of Ratner are duly authorized to so do.


ARTICLE XI



VALUATION




     11.01 Valuation. (a) If the Membership Value of an interest in the Company needs to
be determined for purposes of Section 8.02 or Section 8.04, then the Member initiating the need for
such determination (the “Initiating Member”) shall within thirty (30) days thereafter
appoint an appraiser in order to obtain an appraisal of the fair market value of the Property, as
of the date in question (the “Property Value”). Within twenty (20) days after the
Initiating Member has appointed an appraiser, the other Member shall, by notice to the Initiating
Member, appoint a second appraiser. If the second appraiser shall not have been appointed within
such twenty (20) day period, the first appraiser shall proceed to make his appraisal, in which
event his appraisal alone shall determine the Property Value. If the second appraiser is timely
appointed, each appraiser shall, with all possible speed, proceed to make an independent appraisal
of the Property. Within 60 days after the appointment of the second appraiser, the two appraisers
thus appointed shall attempt to agree on the Property Value, in which event such value shall be the
Property Value for purposes hereof; if the two appraisers are within five (5%) percent of each
other’s fair market value determination, the Property Value shall be the average of the two values;
provided, however, that if the two appraisers fail to agree on the Property Value within five (5%)
percent of each other within such sixty (60) day period, then within fifteen (15) days of the
expiration of such sixty (60) day period, they shall jointly appoint a third appraiser, who shall



35









 




make an independent appraisal of the Property. If the two appraisers shall fail to appoint or
agree upon the third appraiser within such fifteen (15) day period, the third appraiser shall be
selected by the Supreme Court or other appropriate court of the State in which the Property is
located. In the event of appointment of a third appraiser, the Property Value shall be the fair
market value as determined by the third appraiser. All appraisers shall be disinterested persons
of recognized competence who are MAI appraisers with at least five (5) years’ experience in
appraising commercial real properties. All appraisals shall be in writing. Each appraiser shall
appraise the fair market value of the Property in its condition as of the date in question, at its
highest and best use on the basis of all relevant factors affecting market value in accordance with
generally accepted appraisal techniques. Promptly after the completion of the independent
appraisal(s), the appraiser(s), acting jointly, shall send a copy of each appraiser’s appraisal and
a statement of the Property Value as determined by such appraisals (“Appraisers’ Notice”)
to each Member and to the Company’s accountants. The Members shall each pay the fees and expenses
of the appraiser selected by or on their behalf, and any fees and expenses of the third appraiser
and any general expenses incurred by the appraisers in connection with the appraisal shall be
divided equally between the Members.




               (b) Within twenty (20) days after the date of the Appraisers’ Notice of the Property Value,
the Company’s accountants shall send a notice to each Member containing the Membership Value of the
Initiating Member.


ARTICLE XII



MISCELLANEOUS




     12.01 Execution in Counterparts. This Agreement may be executed in counterparts, each
of which thus executed shall be deemed an original, but all of which, taken together, shall
constitute one and the same document, binding upon the parties hereto, their heirs, executors,
administrators, successors and permitted assigns.



     12.02 Notices. Any notice, request, demand, election, consent or other communication
(each a “Notice”) which may or must be given hereunder to any party shall be given by hand
delivery, by Federal Express or other recognized overnight courier, or by certified or registered
mail, return receipt requested, postage prepaid, and shall be deemed to have been duly given or
received: (i) if delivered by hand, on the Business Day when received by the party to whom such
Notice is to be given; (ii) if sent by overnight courier, the Business Day on which delivery is
first attempted by such courier and (iii) if by certified or registered mail, return receipt
requested, postage prepaid, three (3) Business Days after mailing, at the addresses set forth
below. Any party may change its address for receiving Notice by giving written Notice of such
change to the other Member pursuant to this Section 12.02.



     If the Member to receive the Notice is Ratner, addressed to Ratner at:



[RRG                                         ], LLC

c/o Forest City Ratner Companies

One MetroTech Center North

Brooklyn, New York 11201




36









 





Attention: Ms. Joanne Minieri




with a copy to:




[RRG                                         ], LLC

c/o Forest City Ratner Companies

One MetroTech Center North

Brooklyn, New York 11201

Attention: David Berliner, Esq.




     If the Member to receive the Notice is Forest City, addressed to Forest City at:



Forest City Enterprises, Inc.

1100 Terminal Tower

Cleveland, Ohio 44113

Attention: Mr. James A. Ratner




with a copy to:




Forest City Enterprises, Inc.

1100 Terminal Tower

Cleveland, Ohio 44113

Attention: Geralyn Presti, Esq.




     12.03 Confidentiality. Any information delivered or disclosed to a Member which is
not otherwise public, known to such Member and independently developed or received by such Member,
shall be held as proprietary and confidential information of the Company and shall not be disclosed
to any third party except with the prior written consent of the other Member. Each Member will, in
good faith, attempt to restrict any such confidential information only to those parties who have a
need to know, in order for such Member to perform its duties hereunder. Parties who need to know
may include any consultant which may be retained by such Member in performing its duties hereunder.
In addition, information covered hereby may be disclosed to any governmental or regulatory agency
to which the information must be disclosed by law and may also be introduced or pled in litigation
or similar proceedings. Any disclosures of information covered hereby deemed by a Member to be
required by law shall, unless otherwise required by law, be preceded by Notice in writing to the
other Member at least ten (10) days prior to such disclosure.



     12.04 Amendments. This Agreement may not be amended or otherwise changed except by a
writing signed by all of the Members. Notwithstanding the foregoing, the Members acknowledge that
this Agreement shall be amended and restated in the form attached as Exhibit G-1 to the Master
Contribution Agreement in the event that Forest City elects the option described in Section
2.3(g)(i) of the Master Contribution Agreement with respect to the Property in accordance with the
terms of the Master Contribution Agreement, such amendment and restatement to occur on the related
Stabilization Closing Date.



     12.05 Additional Documents. Each Member agrees to execute, with acknowledgment or
affidavit, if required by the Managing Member, any and all documents which may be



37









 




necessary or expedient in connection with the formation of the Company and the achievement of
its purposes.




     12.06 Validity. In the event that any provision of this Agreement shall be held to be
invalid, such invalidity shall not affect in any respect whatsoever the validity of the remainder
of this Agreement.



     12.07 Waiver. The waiver by any Member of the breach of any term, covenant, agreement
or condition herein contained shall not be deemed a waiver of any subsequent breach of the same or
any other term, covenant, agreement or condition herein, nor shall any custom, practice or course
of dealings arising among the Members in the administration hereof be construed as a waiver or
diminution of the right of any party hereto to insist upon the strict performance by any other
party of the terms, covenants, agreements and conditions herein contained.



     12.08 No Third Party Beneficiary. Nothing contained in this Agreement shall be deemed
to create any third party beneficiary status or grant any rights to any capital contributions to
any party which is not a Member.



     12.09 Publicity. All publicity, signs, press releases, brochures or other information
or materials disseminated or made available to the public by the Company shall refer to the
development of the Property as a company of the Members and their respective affiliates.



     12.10 Governing Law. This Agreement shall be construed according to and governed by
the laws of the State of New York.



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



	 	 	 
	 

	 	[Ratner], a                                                             
	 
	 	 
	 

	 	By:
	 
	 	 
	 

	 	[Forest City], a                     
	 
	 	 
	 

	 	By:






38









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I DEFINITIONS	 	 	2	 
	ARTICLE II GENERAL PROVISIONS	 	 	10	 
	 
	 	2.01	 	Formation of Company; Qualification	 	 	10	 
	 
	 	2.02	 	Name	 	 	10	 
	 
	 	2.03	 	Business	 	 	10	 
	 
	 	2.04	 	Office	 	 	10	 
	 
	 	2.05	 	Term	 	 	10	 
	 
	 	2.06	 	Ownership of Company Property	 	 	10	 
	ARTICLE III CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS	 	 	11	 
	 
	 	3.01	 	Capital Contributions	 	 	11	 
	 
	 	3.02	 	Return of Capital Contributions	 	 	11	 
	 
	 	3.03	 	Percentage Interests	 	 	11	 
	 
	 	3.04	 	Failure to Fund	 	 	11	 
	 
	 	3.05	 	Additional Contributions	 	 	12	 
	ARTICLE IV CAPITAL ACCOUNTS; ALLOCATIONS; DISTRIBUTIONS AND FEES	 	 	12	 
	 
	 	4.01	 	Capital Accounts	 	 	12	 
	 
	 	4.02	 	Allocation of Net Income and Net Loss for Book Purposes	 	 	13	 
	 
	 	4.03	 	Distributions	 	 	17	 
	 
	 	4.04	 	Fees	 	 	20	 
	 
	 	4.05	 	Allocation of Nonrecourse Liabilities	 	 	21	 
	ARTICLE V MANAGEMENT AND CONTROL	 	 	21	 
	 
	 	5.01	 	Management Committee	 	 	21	 
	 
	 	5.02	 	Managing Member	 	 	23	 
	 
	 	5.03	 	Rights of Members	 	 	24	 
	 
	 	5.04	 	Member Decisions	 	 	24	 
	 
	 	5.05	 	Sale or Conveyance of Property	 	 	24	 
	 
	 	5.06	 	Financing	 	 	25	 
	 
	 	5.07	 	Removal of Managing Member	 	 	25	 
	 
	 	5.08	 	Liability of a Member for Good Faith Acts	 	 	26	 






-i-









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	5.09	 	Indemnification of Members	 	 	26	 
	 
	 	5.10	 	Activities of Members	 	 	26	 
	 
	 	5.11	 	Unauthorized Acts	 	 	27	 
	ARTICLE VI BOOKS AND RECORDS; ACCOUNTS; BUDGETS	 	 	27	 
	 
	 	6.01	 	Books and Records	 	 	27	 
	 
	 	6.02	 	Budgets	 	 	27	 
	 
	 	6.03	 	Trial Balance	 	 	28	 
	 
	 	6.04	 	Company’s Auditors; Audit	 	 	28	 
	 
	 	6.05	 	Decisions with Respect to Accounting Principles	 	 	28	 
	 
	 	6.06	 	Bank Accounts	 	 	28	 
	 
	 	6.07	 	Fiscal Year	 	 	28	 
	ARTICLE VII INCOME TAX RETURNS; TAX ELECTIONS	 	 	29	 
	 
	 	7.01	 	Tax Returns	 	 	29	 
	 
	 	7.02	 	Notice of Tax Examinations	 	 	29	 
	 
	 	7.03	 	Tax Matters Partner	 	 	29	 
	ARTICLE VIII TRANSFER OF INTERESTS IN THE COMPANY	 	 	29	 
	 
	 	8.01	 	Withdrawal; Assignment; Affiliate Transfers	 	 	29	 
	 
	 	8.02	 	Default	 	 	31	 
	 
	 	8.03	 	Right of First Offer	 	 	31	 
	 
	 	8.04	 	Put	 	 	33	 
	 
	 	8.05	 	Closing	 	 	33	 
	 
	 	8.06	 	No Action Permitted Which Constitutes Default of Company Obligation	 	 	34	 
	ARTICLE IX DISSOLUTION AND LIQUIDATION	 	 	34	 
	 
	 	9.01	 	Events of Dissolution	 	 	34	 
	 
	 	9.02	 	Liquidation upon Dissolution	 	 	34	 
	 
	 	9.03	 	Limited Deficit Capital Account Restoration	 	 	34	 
	ARTICLE X REPRESENTATIONS AND WARRANTIES	 	 	35	 
	 
	 	10.01	 	Representations and Warranties of Forest City	 	 	35	 
	 
	 	10.02	 	Representations and Warranties of Ratner	 	 	35	 






-ii-









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE XI VALUATION	 	 	35	 
	 
	 	11.01	 	Valuation	 	 	35	 
	ARTICLE XII MISCELLANEOUS	 	 	36	 
	 
	 	12.01	 	Execution in Counterparts	 	 	36	 
	 
	 	12.02	 	Notices	 	 	36	 
	 
	 	12.03	 	Confidentiality	 	 	37	 
	 
	 	12.04	 	Amendments	 	 	37	 
	 
	 	12.05	 	Additional Documents	 	 	37	 
	 
	 	12.06	 	Validity	 	 	38	 
	 
	 	12.07	 	Waiver	 	 	38	 
	 
	 	12.08	 	No Third Party Beneficiary	 	 	38	 
	 
	 	12.09	 	Publicity	 	 	38	 
	 
	 	12.10	 	Governing Law	 	 	38	 







-iii-









 








EXHIBIT H




EXHIBIT H




                    , 200___




The BCR Entities and the BCR Individuals

set forth on Exhibit A attached hereto

c/o BR Retail Member, LLC

c/o Forest City Ratner Companies

1 Metrotech Center North — 11th Floor

Brooklyn, NY 11201




Ladies and Gentlemen:




     I am acting as counsel for Forest City Enterprises, Inc., an Ohio corporation (“FCEI”), in
connection with the transactions contemplated by that certain Master Contribution and Sale
Agreement, dated ___, 2006, by and among FCEI, the FCE Entities, Master III, the Master III
Entities, the BCR Entities and the BCR Individuals (as the same may have been amended from time to
time, the “Master Contribution Agreement”). Defined terms used but not otherwise defined in this
opinion letter will have the meaning given to such terms in the Master Contribution Agreement.



     The consideration to be delivered by Forest City Master III and the Master III Entities
pursuant to the Master Contribution Agreement includes a combination of cash and Class A Common
Units. Following a one-year lock-up period subject to certain exceptions, the Class A Common Units
may be redeemed in kind or exchanged for cash or for shares of FCEI’s Class A Common Stock. FCEI
is required to reserve and register with the Securities and Exchange Commission the FCEI Class A
Common Stock that may be issued upon the exchange of the Class A Common Units.



     I am of the opinion that FCEI’s Class A Common Stock reserved for issuance upon the exchange
of the Class A Common Units in connection with this transaction:




	 	i.	 	is duly authorized, fully paid and non-assessable;
	 
	 	ii.	 	is free of preemptive and similar rights and liens; and
	 
	 	iii.	 	when issued, will not require registration under Section 5
of the Securities Act of 1933, as amended.





     In rendering this opinion, I have examined the Articles of Incorporation and the Code of
Regulations of FCEI, and my examination of matters of law has been limited to, and I express no



 









 







opinion as to the laws of any jurisdiction other than, the laws of the State of Ohio, the Ohio
General Corporation Law and the federal laws of the United States.



     This opinion letter is furnished solely for your benefit and for the benefit of your counsel
insofar as it relates to matters of the jurisdictions indicated above in connection with the
transaction contemplated by the parties under the Master Contribution Agreement, and may not be
circulated to, relied upon, described or quoted from any other person without my prior written
consent.



     I disavow any obligation to update this opinion letter or advise you of any changes in my
opinion letter in the event of changes in applicable laws or facts or if additional or newly
discovered information is brought to may attention. This opinion letter is provided to you as a
legal opinion only and not as a guarantee or warranty of the matters discussed herein or in the
documents referred to herein.



	 	 	 	 	 
	 	Very truly yours,





Geralyn M. Presti

General Counsel

 	 
	 	 	 
	 	 	 
	 	 	 
	 



GMP/mrh




Enclosure




 









 





EXHIBIT A




BCR Entities and BCR Individuals




Brooklyn One Trust

Brooklyn Two Trust

Brooklyn Three Trust

RRG New B.U.G., LLC

RRG New S.I.A.C., LLC

RRG Flatbush Associates, L.P.

RRG Myrtle, LLC

RRG Fulton Associates, L.P.

RRG Tech Place Associates, L.P.

RRG Harlem Office, LLC

RRG Hanson Office, LLC

BR Master Limited Partnership

RRG Queens Place, LLC

RRG Retail Properties, LLC

RRG Hanson, LLC

RRG Gowanus Canal, Inc.

FC Quartermaster Retail II, L.P.

RRG Quartermaster II, LLC

FC Quartermaster Retail III, L.P.

RRG Quartermaster III, LLC

FC Quartermaster Retail, L.P.

FC Quartermaster Retail IV, L.P.

RRG New Residential Properties, LLC

The Ellen Ratner 2000 Trust

FC Forest Avenue Retail, LLC

RRG Court Street Retail, LLC

RRG Steinway Street Retail, LLC

RRG Bloomfield, LLC

BR Basketball, LLC

BR Land, LLC

BR First New York, L.P.

Ratner Realty Group, Inc.

BR 42 Hotel, LLC

BR 8 South, LLC

RRG East River, LLC

RRG Yonkers, LLC

RRG 330 Jay Office, LLC

RRG Mill Basin, LLC

RRG Tilden Associates, L.P.

RRG Tilden, Inc.

BR Retail Member, LLC

Bruce C. Ratner

Michael D. Ratner

Ellen Ratner





 










 





SCHEDULE P-1A




FCE Entities




Forest City B.U.G. Building, Inc., a New York corporation




Forest City S.I.A.C. Building, Inc., a New York corporation




Forest City Flatbush Inc., a New York corporation




F.C. Member, Inc., a New York corporation




Forest City Fulton Street Building, Inc., a New York corporation




Forest City Tech Place Inc., a New York corporation




Forest City Pierrepont, Inc., a New York corporation




Forest City Commercial Holdings, Inc., a New York corporation




Forest City Bluffside Corporation, an Ohio corporation




Cleveland/NY Residential, LLC, a New York limited liability company




Forest City Equity Services, Inc., an Ohio corporation




First New York Management Company, Inc., a New York corporation




Forest City NY, Inc., a New York corporation




Forest City N.Y. Group, Inc., a New York corporation




FC 8 South, Inc., a New York corporation




 









 





SCHEDULE P-1B




Master III Entities




FC New Flatbush, LLC, a New York limited liability company




FC New Tech, LLC, a New York limited liability company




FC New KERA, LLC, a New York limited liability company




Master III FC/ BCR Holdings, Inc., a New York Corporation




 









 





SCHEDULE P-2A




BCR Entities




Brooklyn One Trust, a New York trust




Brooklyn Two Trust, a New York trust




Brooklyn Three Trust, a New York trust




RRG New B.U.G., LLC, a New York limited liability company




RRG New S.I.A.C., LLC, a New York limited liability company




RRG Flatbush Associates, L.P., a New York limited partnership




RRG Myrtle, LLC, a New York limited liability company




RRG Fulton Associates, L.P., a Delaware limited partnership




RRG Tech Place Associates, L.P., a New York limited partnership




RRG Harlem Office, LLC, a New York limited liability company




RRG Hanson Office, LLC, a New York limited liability company




BR Master Limited Partnership, a New York limited partnership




RRG Queens Place, LLC, a New York limited liability company




RRG Retail Properties, LLC, a New York limited liability company




RRG Hanson, LLC, a New York limited liability company




RRG Gowanus Canal, Inc., a New York corporation




FC Quartermaster Retail II, L.P., a New York limited partnership




RRG Quartermaster II, LLC, a Pennsylvania limited liability company




FC Quartermaster Retail III, L.P., a New York limited partnership




RRG Quartermaster III, LLC, a Pennsylvania limited liability company




FC Quartermaster Retail, L.P., a New York limited partnership




FC Quartermaster Retail IV, L.P., a Pennsylvania limited liability company




RRG New Residential Properties, LLC, a New York limited liability company




 









 





The Ellen Ratner 2000 Trust, a New York trust




FC Forest Avenue Retail, LLC, a New York limited liability company




RRG Court Street Retail, LLC, a New York limited liability company




RRG Steinway Street Retail, LLC, a New York limited liability company




RRG Bloomfield, LLC, a New York limited liability company




BR Basketball, LLC, a New York limited liability company




BR Land, LLC, a New York limited liability company




BR First New York, L.P., a New York limited partnership




Ratner Realty Group, Inc., a New York corporation




BR 42 Hotel, LLC, a New York limited liability company




BR 8 South, LLC, a New York limited liability company




RRG East River, LLC, a New York limited liability company




RRG Yonkers, LLC, a New York limited liability company




RRG 330 Jay Office, LLC, a New York limited liability company




RRG Mill Basin, LLC, a New York limited liability company




RRG Tilden Associates, L.P., a New York limited partnership




RRG Tilden, Inc., a New York corporation




BR Retail Member, LLC, a New York limited liability company (the “BCR Representative”)




-4-









 





SCHEDULE P-2B




BCR Individuals




Bruce C. Ratner




Michael D. Ratner




Ellen Ratner





-5-











 





SCHEDULE P-3A 

to

MASTER CONTRIBUTION AND SALE AGREEMENT




PROPERTIES




Operating Properties





	1.	 	Atlantic Center

199 Fort Greene Place

625 Atlantic Avenue

Brooklyn, New York
	 
	2.	 	Maspeth Center

7417 Grand Avenue

Maspeth, New York
	 
	3.	 	Shops at Bruckner Boulevard

845 White Plains Road

(1906 Story Avenue)

Bronx, New York
	 
	4.	 	Shops at Northern Boulevard

48-18 Northern Blvd.

Long Island City, New York
	 
	5.	 	Shops at Gun Hill Road

1806 Gun Hill Road

1820 Gun Hill Road

Bronx, New York
	 
	6.	 	[Omitted]
	 
	7.	 	Shops at Richmond Avenue

2505-2535 Richmond Avenue

Staten Island, New York
	 
	8.	 	Atlantic Center Site V

590 Atlantic Avenue

(617 Pacific Street)

Brooklyn, New York
	 
	9.	 	[Omitted]
	 
	10.	 	Castle Center

1716, 1720, 1724 Eastchester Road

Bronx, New York
	 
	11.	 	Two Metrotech Center

Brooklyn, New York




Schedule P-3A, Page 1









 











Operating Properties





	12.	 	One Metrotech Center

Brooklyn, New York
	 
	13.	 	Ten Metrotech Center

625 Fulton Street

Brooklyn, New York
	 
	14.	 	One Pierrepont Plaza

Brooklyn, New York
	 
	15.	 	Queenswood Apartments

Corona, New York
	 
	16.	 	Eleven Metrotech Center

Brooklyn, New York
	 
	17.	 	Nine Metrotech Center

Brooklyn, New York
	 
	18.	 	Steinway Street Theaters

35-50 37th Street

Astoria, New York
	 
	19.	 	Atlantic Terminal (Retail)

139 Flatbush Avenue

Brooklyn, New York
	 
	20.	 	Forest Avenue Cinemas

2474 Forest Avenue

Staten Island, New York
	 
	21.	 	Court Street

94-110 Court Street

Brooklyn, New York
	 
	22.	 	Columbia Park

3131 Kennedy Blvd.

North Bergen, New Jersey
	 
	23.	 	42nd Street Retail

West 42nd Street

New York, New York
	 
	24.	 	Queens Place

88-01 Queens Blvd.

Rego Park, New York
	 
	25.	 	Woodbridge Crossing

451-479 Green Street

Woodbridge, New Jersey
	 
	26.	 	Worth Street

111 Worth Street

New York, New York





Schedule P-3A, Page 2









 








Operating Properties





	27.	 	Harlem Center (Retail)

105 & 125 W. 125th Street

New York, New York
	 
	28.	 	Brooklyn Commons

124-136 Second Avenue

Brooklyn, New York
	 
	29.	 	Fifteen Metrotech Center

Brooklyn, New York
	 
	30.	 	Quartermaster Plaza I, II, III and IV

Philadelphia, Pennsylvania
	 
	31.	 	Harlem Center (Office)

105 West 125th Street

New York, New York
	 
	32.	 	Atlantic Terminal (Office)

139 Flatbush Avenue,

Brooklyn, New York
	 
	33.	 	[Omitted]
	 
	34.	 	[Omitted]
	 
	35.	 	MetroTech Commons Area

Brooklyn, New York
	 
	36.	 	Atlantic Center — Vacant Lot

147 Felix Street

Brooklyn, New York





Development Properties





	37.	 	Beekman Street Residential Tower

52 Beekman Street

New York, New York
	 
	38.	 	12 MetroTech

330 Jay Street

Brooklyn, New York
	 
	39.	 	New York Times Building

620 Eighth Avenue

New York, New York
	 
	40.	 	Ridge Hill

Yonkers, New York




Schedule P-3A, Page 3









 





Development Properties




	41.	 	East River Plaza

New York, New York
	 
	42.	 	Mill Basin

Flatbush Avenue and Shore Parkway

Brooklyn, New York
	 
	43.	 	80 DeKalb Avenue

Brooklyn New York






Schedule P-3A, Page 4











 





SCHEDULE P-3B 

to

MASTER CONTRIBUTION AND SALE AGREEMENT1




OPERATING PROPERTY OWNERS AND ORGANIZATIONAL CHARTS




	 	 	 	 	 
	 	 	Operating	 	 
	 	 	Properties	 	Operating Property Owners
	 
	 	 	 	 
	1.

	 	Atlantic Center

199 Fort Greene Place

625 Atlantic Avenue

Brooklyn, New York
	 	Atlantic Center Fort Greene Associates, L.P.
	 
	 	 	 	 
	2.

	 	Maspeth Center

7417 Grand Avenue

Maspeth, New York
	 	FC Grand Avenue Associates, L.P.
	 
	 	 	 	 
	3.

	 	Shops at Bruckner Boulevard

845 White Plains Road

(1906 Story Avenue)

Bronx, New York
	 	FC Bruckner Associates, L.P.
	 
	 	 	 	 
	4.

	 	Shops at Northern Boulevard

48-18 Northern Blvd.

Long Island City, New York
	 	FC Northern Associates, L.P.
	 
	 	 	 	 
	5.

	 	Shops at Gun Hill Road

1806 Gun Hill Road

1820 Gun Hill Road

Bronx, New York
	 	FC Ely Associates, L.P. (1820 Gun Hill Road) 

FC Waring Associates, L.P. (1806 Gun Hill Road)
	 
	 	 	 	 
	6.

	 	[Omitted]	 	 
	 
	 	 	 	 
	7.

	 	Shops at Richmond Avenue

2505-2535 Richmond Avenue

Staten Island, New York
	 	FC Richmond Associates, L.P.
	 
	 	 	 	 
	8.

	 	Atlantic Center Site V

590 Atlantic Avenue

(617 Pacific Street)

Brooklyn, New York
	 	FC Pacific Associates, LLC








 




			
	1	 	See also the attached organizational charts.





Schedule P-3B, Page 1









 





	 	 	 	 	 
	 	 	Operating	 	 
	 	 	Properties	 	Operating Property Owners
	 
	 	 	 	 
	9.

	 	[Omitted]	 	 
	 
	 	 	 	 
	10.

	 	Castle Center

1716, 1720, 1724
 Eastchester
Road

Bronx, New York
	 	FC Castle Center Associates II, LLC
	 
	 	 	 	 
	11.

	 	Two Metrotech Center

Brooklyn, New York
	 	Forest City Bridge Street Associates, L.P.
	 
	 	 	 	 
	12.

	 	One Metrotech Center

Brooklyn, New York
	 	Forest City Jay Street Associates, L.P.
	 
	 	 	 	 
	13.

	 	Ten Metrotech Center

625 Fulton Street

Brooklyn, New York
	 	625 Fulton Associates, LLC
	 
	 	 	 	 
	14.

	 	One Pierrepont Plaza

Brooklyn, New York
	 	Forest City Pierrepont Associates
	 
	 	 	 	 
	15.

	 	Queenswood Apartments

Corona, New York
	 	Queenswood Associates, L.P.

(Note that this entity includes interests owned by third parties.
Queenswood Management Associates is the BCR/FCEI entity).
	 
	 	 	 	 
	16.

	 	Eleven Metrotech Center

Brooklyn, New York
	 	Forest City Tech Place Associates, L.P.
	 
	 	 	 	 
	17.

	 	Nine Metrotech Center

Brooklyn, New York
	 	FC Flatbush Associates, L.P.
	 
	 	 	 	 
	18.

	 	Steinway Street Theaters

35-50 37th Street

Astoria, New York
	 	FC Steinway Street Associates II, LLC
	 
	 	 	 	 
	19.

	 	Atlantic Terminal (Retail)

139 Flatbush Avenue

Brooklyn, New York
	 	FC Hanson Associates, LLC
	 
	 	 	 	 
	20.

	 	Forest Avenue Cinemas

2474 Forest Avenue

Staten Island, New York
	 	FC Forest Avenue Associates, LLC






Schedule P-3B, Page 2









 






	 	 	 	 	 
	 	 	Operating	 	 
	 	 	Properties	 	Operating Property Owners
	 
	 	 	 	 
	21.

	 	Court Street

94-110 Court Street

Brooklyn, New York
	 	FC Court Street Associates, LLC
	 
	 	 	 	 
	22.

	 	Columbia Park

3131 Kennedy Blvd. 

North Bergen, New Jersey
	 	FC/Treeco Columbia Park LLC


(Note that this entity includes interests owned by third parties.
FC Columbia Park Associates, LLC is the BCR/FCEI entity).
	 
	 	 	 	 
	23.

	 	42nd Street Retail

West 42nd Street

New York, New York
	 	FC 42nd Street Associates, L.P.
	 
	 	 	 	 
	24.

	 	Queens Place

88-01 Queens Blvd. 

Rego Park, New York
	 	FC Queens Place Associates, LLC


(Note that this entity is wholly owned by Bluffside Development
Company, which is the BCR/FCEI entity).
	 
	 	 	 	 
	25.

	 	Woodbridge Crossing

451-479 Green Street

Woodbridge, New Jersey
	 	FC Woodbridge Crossing, LLC


[FCR Woodbridge Urban Renewal Corporation, which is a wholly owned
subsidiary of FC Woodbridge Crossing, LLC]
	 
	 	 	 	 
	26.

	 	Worth Street

111 Worth Street

New York, New York
	 	FC Foley Square Associates, LLC


(Note that this entity includes interests owned by third parties.
FC/RRG Foley Square Associates, LLC is the BCR/FCEI entity).
	 
	 	 	 	 
	27.

	 	Harlem Center (Retail)

105 & 125 W. 125th
Street 

New York, New York
	 	Harlem Center LLC
(Note that this entity includes interests owned by third parties.
FC Harlem Center, LLC is the BCR/FCEI entity).
	 
	 	 	 	 
	28.

	 	Brooklyn Commons

124-136 Second Avenue

Brooklyn, New York
	 	FC Gowanus Associates, LLC
	 
	 	 	 	 
	29.

	 	Fifteen Metrotech Center

Brooklyn, New York
	 	Forest City Myrtle Associates, LLC
	 
	 	 	 	 
	30.

	 	Quartermaster Plaza I, II, III
and IV

Philadelphia, Pennsylvania
	 	FC Quartermaster Associates, L.P.


FC Quartermaster Associates II, L.P. 


FC Quartermaster Associates III, L.P.


FC Quartermaster Associates IV, L.P.






Schedule P-3B, Page 3









 






	 	 	 	 	 
	 	 	Operating	 	 
	 	 	Properties	 	Operating Property Owners
	 
	 	 	 	 
	31.

	 	Harlem Center (Office)

105 West 125th Street

New York, New York
	 	Harlem Center Office, LLC


(Note that this entity includes interests owned by third parties.
FC Harlem Center Office, LLC is the BCR/FCEI entity.)
	 
	 	 	 	 
	32.

	 	Atlantic Terminal (Office)

139 Flatbush Avenue,

Brooklyn, New York
	 	FC Hanson Office Associates, LLC
	 
	 	 	 	 
	33.

	 	[Omitted]	 	 
	 
	 	 	 	 
	34.

	 	[Omitted]	 	 
	 
	 	 	 	 
	35.

	 	MetroTech Commons Area

Brooklyn, New York
	 	Commons Associates (which is a partnership of the 1 and 2 MTC owners)
	 
	 	 	 	 
	36.

	 	Atlantic Center — Vacant Lot
	 	FC Felix Associates, L.P.







Schedule P-3B, Page 4











 









	

Atlantic Center Fort Greene
Associates, L.P.

Chart A-13

fcAtlanticCenterFortGreeneAssocOC.ppt

9/28/04

Effective Ownership:

BCR                     0.5970%

BR I Trust   8.1675%

BR II Trust          4.9005%

BR III Trust       16.3350%

Special allocation:  75% FC; 25% BCR








 








	

FC Grand Avenue Associates, L.P.

Chart A-14

FCGrandAvenueAssocOC.p
pt

9/28/04

Effective Ownership:

BCR   0.5970%

BR I Trust   8.1675%

BR II Trust   4.9005%

BR III Trust       16.3350%








 








	

FC Bruckner Associates, L.P.

Chart A-17

fcBrucknerAssocOC.ppt

8/4/98

Effective Ownership:

BCR                    0.5970%

BR I Trust          8.1675%

BR II Trust        4.9005%

BR III Trust     16.3350%








 








	

FC Northern Associates, L.P.

Chart A-19

fcNorthernAssoc.ppt

8/4/98

Effective Ownership:

BCR                    0.5970%

BR I Trust           8.1675%

BR II Trust          4.9005%

BR III Trust       16.3350%








 








	

FC Ely Associates, L.P.

Chart A-21

fcElyAssocOC.ppt

8/4/98

Effective Ownership:

BCR   0.5970%

BR I Trust   8.1675%

BR II Trust          4.9005%

BR III Trust       16.3350%








 








	

FC Waring Associates, L.P.

Chart A-22

fcWaringAssociatesOC.pp
t

8/29/2009

Effective Ownership:

BCR                     0.5970%

BR I Trust            8.1675%

BR II Trust   4.9005%

BR III Trust       16.3350%








 








	

FC Richmond Associates, L.P.

Chart A-29

fcRichmondAssocOC.ppt

7/31/98

Effective Ownership:

BCR   0.5970%

BR I Trust   8.1675%

BR II Trust   4.9005%

BR III Trust       16.3350%








 








	

FC Pacific Associates, LLC

Chart A-31

fcPacificAssocOC.ppt

2/3/99

Effective Ownership:

BCR   0.5970%

BR I Trust   8.1675%

BR II Trust   4.9005%

BR III Trust  16.3350%










 








	

FC Castle Center Associates II, LLC


Effective Ownership:

BCR   0.5970%

BR I Trust   8.1675%

BR II Trust   4.9005%

BR III Trust       16.3350%

Chart A-49-2

fcCastlecenterOCII.ppt









 








	

Forest City Bridge Street Associates, L.P.

Effective Ownership:

BCR   8.4023%

MDR   1.1498%

BR 1 Trust           6.0865%

BR II Trust   0.3815%

Chart A-1

FCBridgeStreetAssocOC.ppt

9/24/2004








 








	

Forest City Jay Street Associates,
L.P.


Chart A-2

fcJayStreetAssocOC-2005.ppt

4/21/05








 








	

625 Fulton Associates

(a NY General Partnership)

99.5% Non-Managing Member of Owner

100% Owner of Managing Member


RRG  625 Fulton Associates, Inc.

(a NY Corp)

(0.5% Managing Member)

625 FULTON ASSOCIATES, LLC

625 Fulton Associates, LLC

(a NY LLC)

(Owner)

Forest City Fulton
Street Building, Inc.

80.0% GP

Forest City Rental
Properties Corporation

100%

RRG Fulton

Associates, L.P.

20.0% GP

Forest City
Enterprises,
Inc.

100%

BCR

1.0% LP

Brooklyn Two
Trust

20.0% LP

Brooklyn Three
Trust

78.0% LP

RRG Fulton
Corp.

1.0% GP

Bruce Ratner

100%

Chart A-5

fc625FultonAssocOC.ppt

1/26/05








 








	

Forest City Pierrepont Associates

Chart A-6

fcPierrepontAssocOC.ppt

9/28/04

Effective Ownership:

BCR                      6.6915%

44.11% LP

44.11% LP

6.37% LP

2.57% LP

1.47% LP

..37% LP


BCR

Jerome Kessler

Bailkin Trust

Paul Travis

David Kessler

C. Balinong








 








	

03/02/04

Chart A-7  QueenswoodAssocOC.ppt

Queenswood Associates, L.P.

Queenswood Associates, L.P.

NOTE:  Limited partner, Queenswood Properties, Inc., receives a 5% preferred return on their equity investment after which, cashflow is distributed 5% to the limited partner and 95%
to the general partner, Queenswood Management Associates.

Forest City Equity Services, Inc. will provide a limited guaranty to Freddie Mac. Forest City Rental Properties Corporation will provide a limited guaranty to HDC/HAC.  Freddie Mac
and HDC/HAC require separate entities providing their respective guaranty and Forest City Residential Group, Inc. does not routinely produce financial reports.








 








	

Forest City Tech Place Associates,
L.P.

Chart A-9

fcTechPlaceAssocOC.ppt

9/28/04

Effective Ownership:

BCR                   0.2000%

BR I Trust        11.4660%

BR II Trust         2.6000%

BR III Trust        5.7340%








 








	

FC Flatbush Associates, L.P.

Effective Ownership:

BCR                             0.2000%

BR I Trust                    2.9000%

BR II Trust                   2.9000%


Chart A-25

fcFlatbushAssocOC.ppt

10/08/04









 








	

10/11/04

fcSteinwayAssoc8-02

FC Steinway Street Associates II, LLC

Chart A-32-A









 








	

FC Hanson Associates, LLC

Chart A-35

fcHansonAssocOC.ppt

3/12/2001








 








	

FC Forest Avenue Associates, LLC

Chart A-36

fcForestAvenueAssocOC.ppt

7/15/2005








 








	

5/30/2003

fcCourtStreetAssocOC2

FC Court Street Associates, LLC

Chart A-37A








 








	

FC/Treeco Columbia Park LLC

Chart A-41

fcFCTreecoColumbiaParkOC.ppt

7/31/98








 








	

FC 42nd Street Associates, L.P.

Chart A-15

FC42ndStreetAssocOC.ppt

9/28/04

Effective Ownership:

BCR   0.5970%

BR I Trust   8.1675%

BR II Trust          4.9005%

BR III Trust       16.3350%








 








	

FC QUEENS PLACE ASSOCIATES, LLC

a New York limited liability company

Bluffside Development Company

a California general partnership

100%

Forest City Bluffside
Corporation

an Ohio corporation

56%

Forest City Equity

Services, Inc.

an Ohio corporation

14%

RRG Queens Place, LLC

a New York limited
liability company

30%

Forest City Rental
Properties

an Ohio corporation

100%

Forest City Rental
Properties

an Ohio corporation

100%

Bruce C. Ratner

100%

H:\docs\legal\corpforms\FC Queens Place Power Point chart created 3232000

Chart A-51

FC QueensPlace

Forest City Enterprises,
Inc.

100%

Forest City
Enterprises, Inc.

100%








 








	

8/23/2003

Woodbridge-Chart A-55 (revised 2003)

FCR WOODBRIDGE URBAN

RENEWAL CORPORATION

(a New Jersey corporation)








 








	

5/26/2005

fcfoleyOC

FC FOLEY SQUARE
ASSOCIATES, LLC

Chart A-57(A)








 








	

5/26/2005

fcfoleyOC

FC FOLEY SQUARE
ASSOCIATES, LLC

Chart A-57








 








	

7/12/2001

fcharlemOC

HARLEM CENTER LLC

Chart A-63








 








	

FC GOWANUS

ASSOCIATES, L.P.

FCGowanusAssoc ChartA-64

2/19/2002








 








	
8/27/2003

forest city myrtle associates OC-66

 (9-02)

FOREST CITY MYRTLE

ASSOCIATES, LLC









 








	

6/15/2006

FCQuartermasterOC-2005.pp

FC QUARTERMASTER
ASSOCIATES, L.P.

Chart A-67










 








	

5/27/2005

FCQuartermasterOC-II.pp

FC QUARTERMASTER ASSOCIATES
II, L.P.

Chart A-67









 








	

9/9/2003

FCQuartermasterOC-III.pp

FC QUARTERMASTER ASSOCIATES
III, L.P.

Chart A-67










 








	

9/12/2005

FCQuartermasterOC-version 02.pp

FC QUARTERMASTER ASSOCIATES
IV, L.P.

Chart A-67










 








	

HARLEM CENTER OFFICE LLC

a New York limited liability company

(Borrower)

FC Harlem Office, Inc.

0.5%

(Managing Member)

RRG Harlem Office, LLC

30%

Bruce C. Ratner

15.%

Bruce C. Ratner

Family Trusts

85%

Forest City Commercial Holdings, Inc.

70.0%

Forest City Rental Properties,

Corp.

100%

Forest City Enterprises, Inc.

100%

HARLEM CENTER OFFICE LLC

6/10/2004                                                          HARLEM CENTER-OFFICEOC2                                      Chart A-68

FC Harlem Center Office, LLC

74.5% of Borrower

100% of Managing Member

ADC Harlem Center Development,

LLC

25%








 








	

10/11/04

fcHansonOfficeAssocOC

FC HANSON OFFICE
ASSOCIATES, LLC

Chart A-69









 








	

Common Associates


Common Associates (a New York general partnership)


Forest City Jay Street Associates, L.P.
54.0%


Forest City Bridge Associates, L.P.
46.0%


FC B.U.G., LLC
82.5% (general partner)


RRG B.U.G.
Limited Partnership 2.5% (limited partner)


Mattone Group Jay Street/BUG, LLC
15.0% (limited partner)


Forest City S.I.A.C. Building, Inc. 65.0% GP
(general partner)


RRG S.I.A.C.
Associates L.P.
17.5% (general partner)


RRG S.I.A.C. Limited Partnership 2.5% (limited partner)


Mattone Group Bridge Street/SIA
C, LLC 15.0% (limited partner)


Forest City B.U.G. Building, Inc.
78.7879%





RRG B.U.G. Associates L.P. 21.2121%


Jerome Kessler 99.0% (limited partner)


RRG B.U.G., Inc. 1.0% (general partner)


Forest City


Rental


Properties
Corporation


100%


Bruce Ratner 46.87% (limited partner)


Michael Ratner 6.57% (limited partner)


Paul Travis 8.6% (limited partner)


RRG S.I.A.C., Inc.
1.0% (general partner)


Trusts for the benefit of Bruce C. Ratner family members 39.96% (limited partner)


Jerome Kessler 99.0% (limited partner)


RRG S.I.A.C., Inc.
1.0% (general partner)


Forest City Rental Properties Corporation 100%


Bruce C. Ratner 46.87% (limited partner)


Michael D. Ratner 6.57% (limited partner)




Paul Travis 8.6% (limited partner)


RRG


B.U.G.,


Inc.


1.0%
(general
partner)


Trusts for the benefit of Bruce C. Ratner family members 36.96% (limited partner)


Forest City Enterprises, Inc.
100%


Bruce C. Ratner 100%


Bruce C. Ratner 100%


Forest City Enterprises, Inc.
100%


Bruce C. Ratner 100%


Chart C-1
FCCOMMONASSOCOCV2.ppt 4/22/05













 








	

FC Felix Associates, L.P.

Chart A-46

FCFelixAssocOC.ppt

8/4/98

Effective Ownership:

BCR   0.5970%

BR I Trust   8.1675%

BR II Trust   4.9005%

BR III Trust       16.3350%








 





SCHEDULE P-3C 

to

MASTER CONTRIBUTION AND SALE AGREEMENT1




DEVELOPMENT PROPERTY OWNERS AND ORGANIZATIONAL CHARTS




	 	 	 	 	 
	 	 	Development Properties	 	Development Property Owners
	 
	 	 	 	 
	1.

	 	Beekman Street Residential

Tower

52 Beekman Street

New York, New York
	 	FC Tilden A, LLC


FC Tilden B, LLC


(Note that an additional
tenancy-in-common interest in the
property is owned by FC Beekman
Associates, LLC, but that interest
is not included in the transaction,
nor is FC Beekman Associates, LLC a
Property Owner under the Agreement).
	 
	 	 	 	 
	2.

	 	12 MetroTech

330 Jay Street

Brooklyn, New York
	 	330 Jay Office Associates, LLC
	 
	 	 	 	 
	3.

	 	New York Times Building

620 Eighth Avenue

New York, New York
	 	The New York Times Building, LLC


(Note that this entity is a joint
venture with ING and The New York
Times. FC 41st Street
Associates, LLC is the BCR/FCEI
entity. In addition, it is expected
that FC Eighth Ave., LLC will
acquire the acquire a portion of the
interests of The New York Times
Building, LLC in a Section 1031 tax
deferred exchange with FC 42 Hotel,
LLC and that after such exchange the
Development Property Owner will be
FC Eighth Ave., LLC.)
	 
	 	 	 	 
	4.

	 	Ridge Hill

Yonkers, New York
	 	FC Yonkers Associates, LLC
	 
	 	 	 	 
	5.

	 	East River Plaza

New York, New York
	 	Tiago Holdings, LLC


(Note that this entity includes
interests owned by third parties.
FC East River Associates, LLC is the
BCR/FCEI entity.).
	 
	 	 	 	 
	6.

	 	Mill Basin

Flatbush Avenue and Shore
Parkway, 

Brooklyn, New York
	 	Mill Basin Associates, LLC


(Note that this entity includes
interests owned by third parties.
FC Mill Basin Associates, LLC is the
BCR/FCEI entity.)
	 
	 	 	 	 
	7.

	 	80 DeKalb Avenue

Brooklyn New York
	 	625 Fulton Associates, LLC








 




			
	1	 	See also the attached organizational charts.






Schedule P-3C, Page 1












 








	

Beekman - Ownership Structure

Beekman 1031.ppt



Beekman Land




FC Tilden A, LLC

9.7%


FC Beekman

Associates, LLC

58.0%



Forest City Tilden

Associates, LLC




Forest City Tilden,
Inc.

..8%




FC Tilden B, LLC

32.3%




Forest City Tilden

Associates, LLC




CUIP Beekman, LLC

85%




RRG Tilden

Associates, L.P.

..2%



FC Beekman

Holdings, LLC

15%



Forest City Master

Associates

99.0%

Forest City Rental

Properties

Corporation

100%

RRG Tilden, Inc.

1% GP


Bruce C.
Ratner

99% LP


Forest City

Enterprises, Inc.

Bruce C.
Ratner

100%



Forest City Tilden, Inc.

..8%




RRG Tilden

Associates, L.P.

..2%



Forest City Master

Associates

99.0%

Forest City Rental

Properties

Corporation

100%

RRG Tilden, Inc.

1% GP

Bruce C.
Ratner

99% LP

Forest City

Enterprises, Inc.

Bruce C.
Ratner

100%

Cleveland/NY

Residential, LLC

1%

member

Forest City

Residential

Group, Inc.

100%

Forest City Rental
Properties
Corporation

100%

Forest City

Enterprises, Inc.


RRG Beekman, LLC

30%

Managing member

7/6/2005

Tenants in Common

In Fee Ownership of Land








 








	

330 Jay Office Associates, LLC


330 Jay Office Associates, LLC

a NY LLC

Bruce C. Ratner

100%

RRG 330 Jay Office, LLC

Member

19%

Forest City Commercial

Holdings, Inc.

Member

80%

Bruce C. Ratner

Managing
Member

83.5%

Michael D.
Ratner

Member

16.5%

Forest City Rental
Properties

100%

CORPFORMS

330 JAY PROPOSED STRUCTURE 2

RRG Jay Office, Inc.

Managing Member

1%

Forest City Enterprises, Inc.

100%








 








	

New York Times Building.OC

THE NEW YORK TIMES

BUILDING, LLC








 








	

                           New York Times Project

Before Completion of Construction/Condominiumization

42nd Street Development Project,

Inc.

Ground Lessor

The New York Times Building,
LLC

Ground Tenant

FC LION LLC

42.0517%

NYT Real Estate Company, LLC

57.9483%

Ground Lease

Two FC/ING Severance Subleases

(Retail and Office)

NYT Severance Sublease

Notes:

1.  Single Ground Lease during Construction:

     Will be Required by Ground Lessor and Construction Lenders

2.  FC and NYT Subleases Executed and Effective but no building obligations.

INGREDUS SITE

8 South LLC

60%

FC 41ST Street
Associates, LLC

40%

FC 8 South, Inc.

70%

RRG 8 South, Inc.

30%

The New York Times Company

Legal/NYTimes/FC NYT Project Chart 1.ppt

#1








 








	

FC LION, LLC.OC

FC LION, LLC








 








	

FC YONKERS ASSOCIATES,
LLC

5/7/2004

fcYonkersAsocOC

Chart A-70








 








	

9/26/2005



 TIAGO HOLDING, LLC


Chart A-77

Tiago Holdings.ppt









 








	

MILL BASIN ASSOCIATES, LLC

MILL BASIN ASSOCIATES, LLC

(a New York limited liability company)

MB MEMBERS LLC

25%

member

FC MILL BASIN ASSOCIATES, LLC

A New York limited liability company

75%

Managing member

F.C. MEMBER

70%

member

RRG MILL BASIN, LLC

30%

managing member

Forest City Rental Properties

Corporation

100%

Forest City Enterprises, Inc.

100%

Brooklyn One Trust

22.8%

Brooklyn Two Trust

16.5%

Bruce C. Ratner

15%

Brooklyn Three Trust

45.7%

7/26/2004

Mill Basin Associates, LLC.ppt








 








	

625 Fulton Associates

(a NY General Partnership)

99.5% Non-Managing Member of Owner

100% Owner of Managing Member


RRG  625 Fulton Associates, Inc.

(a NY Corp)

(0.5% Managing Member)

625 FULTON ASSOCIATES, LLC

625 Fulton Associates, LLC

(a NY LLC)

(Owner)

Forest City Fulton
Street Building, Inc.

80.0% GP

Forest City Rental
Properties Corporation

100%

RRG Fulton

Associates, L.P.

20.0% GP

Forest City
Enterprises,
Inc.

100%

BCR

1.0% LP

Brooklyn Two
Trust

20.0% LP

Brooklyn Three
Trust

78.0% LP

RRG Fulton
Corp.

1.0% GP

Bruce Ratner

100%

Chart A-5

fc625FultonAssocOC.ppt

1/26/05








 





SCHEDULE P-3D 

to

MASTER CONTRIBUTION AND SALE AGREEMENT




ORGANIZATIONAL CHARTS FOR NETS, ATLANTIC YARDS, BLOOMFIELD AND

METROTECH ASSOCIATES




[see attached charts]




Schedule P-3D, Page 1




 








 








	
1/25/2006

Atlantic Yards-Brooklyn Arena

Atlantic Yards Development

Company, LLC

Brooklyn Arena, LLC

FCR Land,

 LLC

FCR Sports,

 LLC

Arena

 Nominee

Sub C, LLC

Block 1127

Lot 22

Various Investors

in Brooklyn Sports, LLC

Brooklyn Arena and Atlantic Yards

Various Investors

in Brooklyn Sports LLC

Arena

Nominee

Sub E, LLC

Arena

Nominee

Sub B, LLC

Arena

Nominee

Sub F, LLC

Block 1127

Lot 54

Block 1127

Lots 55 & 56



Block 1118

Lot 1

Block 1127

Lot 21

Block 1127

Lot 27

Atlantic

Arts

Development

Company, LLC

Brooklyn

Arena

Sub A, LLC

Block 1127

Lot 29

Block 1129

Lot 1, 3

& 81

Atlantic

Yards

Nominee

Sub A, LLC

AY 644

Pacific

II, LLC

AY 814

Pacific,

LLC


Seagoing

Development

Company,

LLC

Block 1127

Lot 35

Nets Sports and Entertainment, LLC

Brooklyn Basketball,

 LLC

New Jersey

Basketball, LLC

Nets

Franchise

626 Pacific

465 Dean

461 Dean

463 Dean

181 Flatbush

624 Pacific

636 Pacific

640 Pacific

585 Dean

551 Carlton

549 Carlton


810 Pacific

540

Vanderbilt

185, 189 &

193 Flatbush






489 Dean

24 6th

Ave

814 Pacific

AY 485

 Dean, LLC

Atlantic

Yards

Development

Sub C, LLC

Block 1127

Lot 11



Block 1127

Lot 43


191

Flatbush


483-485

Dean


AY 489

Dean, LLC

Block 1127

Lot 30

644 -646

Pacific

Block 1129

Lots 43 & 49

Block 1127

Lots 10,

12 & 13








 








	

1/25/2006

Atlantic Yards-Brooklyn Arena

Beneficiary

 Trusts1

FCR Sports & FCR Land Organizational Flow Chart

FCR Sports, LLC

30%

Bruce Ratner is the managing member of BR Basketball, LLC and BR Land, LLC; The Beneficiary Trusts are the for the benefit of family members of Bruce Ratner

BR Basketball, LLC

(Managing Member)

85%

Forest City Sports, LLC

70%

FC Basketball, Inc.

100%

FC Rental

Properties Corporation

Bruce

 Ratner1

15%

Forest City

Enterprises, Inc.

100%

100%

Beneficiary

 Trusts1

FCR Land, LLC

30%

BR Land, LLC

(Managing Member)

85%

F.C. Member, Inc.

70%

Bruce

 Ratner1

15%

Forest City

Properties Corporation

100%








 








	

6/8/2006

fcBloomfield              Chart A-117

FC BLOOMFIELD ASSOCIATES, LLC








 








	

Forest City Metrotech Associates

Effective Ownership:

BCR      20.0005%

Chart B-6

fcFCMetrotechAssocOC.ppt

8/3/98








 








SCHEDULE P-3E 

to

MASTER CONTRIBUTION AND SALE AGREEMENT1




SERVICE COMPANIES AND ORGANIZATIONAL CHARTS




First New York Partners




FCRC Security Co. L.P.




FCRC Services Company, L.P.






 




			
	1	 	See also the attached organizational charts.





Schedule P-3E, Page 1





 











 








	

First New York Partners

Chart B-3

fcFirstNewYorkPartnersOC.ppt

6/03/04








 








	

FCRC Security Co. L.P.

Effective Ownership:

BCR

Chart B-5

fcFCRCSecurityServicesOC.ppt

2/5/05








 








	

FCRC Services Company, L.P.

Chart B-4

fcFCRCServicesCompanyOC.ppt

2/5/05

Effective Ownership:

BCR








 





SCHEDULE P-4




Preliminary Transactions




One MetroTech





	 	•	 	Each of Bruce C. Ratner, Michael D. Ratner, Brooklyn One Trust and Brooklyn Two Trust
will contribute their respective interests in RRG B.U.G. Associates L.P. (collectively,
90.4%) to a newly formed entity RRG New B.U.G., LLC.





Two MetroTech





	 	•	 	Each of Bruce C. Ratner, Michael D. Ratner, Brooklyn One Trust and Brooklyn Two Trust
will contribute their respective interests in RRG S.I.A.C. Associates L.P. (collectively,
90.4%) to a newly formed entity RRG New S.I.A.C., LLC in exchange for interests therein.
	 
	 	•	 	Forest City S.I.A.C. Building, Inc. will contribute a 14% interest in Forest City
Bridge Street Associates, L.P. to RRG S.I.A.C. Associates L.P. for a 44.44% interest
therein. As a result of this contribution, the RRG S.I.A.C. Associates L.P.’s ownership
of Forest City Bridge Street Associates, L.P. will increase from 17.5% to 31.5%.
	 
	 	•	 	The partnership agreement of RRG S.I.A.C. Associates L.P. will be amended to adjust the
percentage interests of its partners to reflect the foregoing but in a manner such that
each partner thereof will continue to have the same effective interest and rights in
Forest City Bridge Street Associates, L.P. even though RRG S.I.A.C. Associates, L.P.’s
interest in the property shall have been increased from 17.5% to 31.5%. The revised
interests of each of the partners of RRG S.I.A.C. Associates L.P. will be as follows: RRG
New S.I.A.C., LLC will have a 50.223% interest therein, Forest City S.I.A.C. Building,
Inc. will have a 44.44% interest therein, RRG S.I.A.C., Inc. will have a 0.56% interest
therein and Paul Travis will have a 4.777% interest therein. Notwithstanding the above,
the amendment to the partnership agreement of RRG S.I.A.C. Associates L.P. will expressly
provide that the above adjustments shall not result in any adverse impact to Travis (e.g.,
Travis’s voting rights and distribution preferences will remain as if the above described
contribution had not occurred and he will continue to be entitled to 8.6% of the votes in
RRG S.I.A.C. Associates L.P.).





Worth Street





	 	•	 	Each of Bruce C. Ratner, Brooklyn One Trust, Brooklyn Two Trust and Brooklyn Three
Trust will contribute their respective interests in RRG Residential Properties, LLC. to a
newly formed entity RRG New Residential Properties, LLC in exchange for interests therein.




-1-









 






	 	•	 	Cleveland/NY Residential, LLC will contribute a 68% interest in FC/RRG Foley Square
Associates, LLC to RRG Residential Properties, LLC in exchange for a 69.39% interest
therein.





Harlem Center Retail





	 	•	 	An entity wholly-owned and controlled by Bruce C. Ratner will be issued a de minimus
interest in FC Harlem Center, LLC (reducing the percentage interests of each of the
existing members pro rata), but which interest will only have de minimus economic rights.
Such entity also will become the replacement managing member of FC Harlem Center, LLC.





Harlem Center Office





	 	•	 	An entity wholly-owned and controlled by Bruce C. Ratner will be issued a de minimus
interest in FC Harlem Center Office, LLC (reducing the percentage interests of each of the
existing members pro rata), but which interest will only have de minimus economic rights.
Such entity also will become the replacement managing member of FC Harlem Center Office,
LLC.





Beekman





	 	•	 	Forest City Master Associates will distribute its 99% interest in Forest City Tilden
Associates, LLC, 29.8% to BR Master Limited Partnership and 69.2% to Forest City
Commercial Holdings, Inc.
	 
	 	•	 	BR Master Limited Partnership will contribute the 29.8% interest in Forest City Tilden
Associates, LLC to RRG Tilden Associates, L.P. in exchange for an interest therein. RRG
Tilden Associates, L.P. will then own a 30% interest in Forest City Tilden Associates,
LLC. RRG Tilden Associates, L.P. will then convert into an LLC.
	 
	 	•	 	RRG Tilden, Inc. will assign its interest in RRG Tilden Associates, L.P. (now a limited
liability company) to Bruce C. Ratner in liquidation and dissolve. As a result, Bruce C.
Ratner will own a .67% interest in RRG Tilden Associates, L.P. and BR Master Limited
Partnership a 99.33% interest.
	 
	 	•	 	BR Master Limited Partnership will distribute its 99.33% interest in RRG Tilden
Associates, L.P. to its partners, pro rata.





First New York Partners/FCRC Security Co. L.P./FCRC Services Company, L.P.





	 	•	 	Each of these entity will be converted into a limited liability company.






-2-












 






DRAFT




Master Contribution and Sale Agreement

Schedule P5-A




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	COLUMN (I)	 	COLUMN (III)	 	COLUMN (IV)	 	COLUMN (II)
	 	 	 	 	 	 	 	 	 	 	Interests Sold
	Chart	 	Operating Property	 	Ratner Transferor	 	Interest Transferred	 	Transferee Entity	 	Cash
Consideration	 	Percentage
Interst
	A-117
	 	Bloomfield	 	RRG Bloomfield, LLC	 	FC Bloomfield Associates, LLC	 	Master III FC/ BCR Holdings, Inc.	 	 	***	 	 	 	30.00	%
	B-6
	 	MetroTech Associates	 	Bruce Ratner	 	RRG Metrotoch Corp.	 	Master III FC/ BCR Holdings, Inc.	 	 	***	 	 	 	100.00	%
	A-72
	 	Atlantic Yards/Nets	 	BR Basketball, LLC	 	FCR Sports, LLC	 	Master III FC/ BCR Holdings, Inc.	 	 	***	 	 	 	30.00	%
	 
	 	 	 	BR Land, LLC	 	FCR Land, LLC	 	Master III FC/ BCR Holdings, Inc.	 	 	***	 	 	 	30.00	%





***   Text
Omitted and Filed Separately 

Confidential Treatment Requested





 









 







DRAFT




Master Contribution and Sale Agreement

Schedule P5-B




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	COLUMN (I)	 	COLUMN (III)	 	 	 	COLUMN (II)
	 	 	 	 	 	 	 	 	 	 	Interests Contributed	 	Interests Sold
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Number of	 	Percentage	 	Cash	 	Percentage
	Chart	 	Operating Property	 	Ratner Transferor	 	Interest Transferred	 	Transferee Entity	 	Value	 	Class A Units	 	Interst	 	Consideration	 	Interst
	B-3
	 	First New York Partners	 	BR First New York, LP	 	First New York Partners	 	F.C. Master 3 LLC	 	 	—	 	 	 	—	 	 	 	 	 	 	 	***	 	 	 	50.00	%
	B-5
	 	FCRC Security Company	 	Ratner Realty Group, Inc.	 	FCRC Security Co., LP	 	F.C. Master 3 LLC	 	 	—	 	 	 	—	 	 	 	 	 	 	 	***	 	 	 	50.00	%
	B-4
	 	FCRC Service Company	 	Bruce Ratner	 	FCRC Services Company, LP	 	F.C. Master 3 LLC	 	 	—	 	 	 	—	 	 	 	 	 	 	 	***	 	 	 	32.50	%
	 
	 	 	 	Michael Ratner	 	 	 	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	***	 	 	 	17.50	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	***	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	In consideration for Forest City contributing the cash consideration above to F.C. Master 3 LLC, Forest
City will receive *** units, using a unit price of ***.
	 
	 	 	 	 	 	 	 	 	 	 	***  Text
Omitted and Filed Separately  

Confidential Treatment Requested








 









 







DRAFT




Schedule P5-B




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	COLUMN I	 	COLUMN III	 	 	 	COLUMN II	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Common Capital Contributed	 	Equity Loan	 	Preferred Capital Contributed	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Percentage	 	 	 	 	 	 	 	 	 	 	 	 	 	Total Initial	 	Class B	 	Percentage
	Operating Property	 	FCE Transferor	 	Interest Transferred	 	Recepient Entity	 	Value	 	Interst	 	Value	 	Value	 	% of Total	 	Capital Account	 	Units	 	Interst
	First New York Partners
	 	First New York Management Company, Inc.	 	First New York Partners	 	F.C. Master 3 LLC	 	 	***	 	 	 	50.00	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	***	 	 	 	***	 	 	 	50.00	%
	FCRC Security Company
	 	Forest City NY, Inc.	 	FCRC Security Co., LP	 	F.C. Master 3 LLC	 	 	***	 	 	 	50.00	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	***	 	 	 	***	 	 	 	50.00	%
	FCRC Service Company
	 	Forest City SIAC Building, Inc.	 	FCRC Services Company, LP	 	F.C. Master 3 LLC	 	 	***	 	 	 	50.00	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	***	 	 	 	***	 	 	 	50.00	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	***	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	***	 	 	 	***	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Using a unit price of $	 	 	***	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





***   Text
Omitted and Filed Separately 

Confidential Treatment Requested




 











 






DRAFT




Master Contribution and Sale Agreement

Schedule P6-A




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	COLUMN (I)	 	COLUMN (III)	 	COLUMN (IV)	 	COLUMN (II)
	 	 	 	 	 	 	 	 	 	 	Interests Contributed
	 	 	 	 	 	 	 	 	 	 	 	 	Number of	 	Percentage
	Chart	 	Operating Property	 	Ratner Transferor	 	Interest Transferred	 	Transferee Entity	 	Value	 	Class A Units	 	Interst
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A-2

	 	One Metrotech Center
	 	RRG New BUG LLC
	 	RRG B.U.G. Associates LP
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	90.40	%
	A-1

	 	Two Metrotech Center
	 	RRG New SIAC LLC
	 	RRG S.I.A.C. Associates, LP
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	50.22	%
	A-25

	 	Nine Metrotech Center
	 	RRG Flatbush Associates, LP
	 	FC Flatbush Associates, LP
	 	New Flatbush LLC
	 	***
	 	***
	 	 	20.00	%
	A-66

	 	15 Metrotech Center (9 South)
	 	RRG Myrtle, LLC
	 	Forest City Myrtle Associates, LLC
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	20.00	%
	A-5

	 	Ten Metrotech Center
	 	RRG Fulton Associates, LP
	 	625 Fulton Associates
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	20.00	%
	A-9

	 	Eleven Metrotech Center
	 	RRG Tech Place Associates, LP
	 	Forest City Tech Place Associates, LP
	 	New Tech LLC
	 	***
	 	***
	 	 	20.00	%
	A-6

	 	One Pierrepont Plaza
	 	Bruce Ratner
	 	KERA Limited Partnership
	 	New KERA LLC
	 	***
	 	***
	 	 	44.11	%
	A-68

	 	Harlem Center Office
	 	RRG Harlem Office, LLC
	 	FC Harlem Center Offfice, LLC
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-42

	 	42nd Street Retail
	 	BR Master Limited Partnership
	 	FCR 42nd Street Partners
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-51

	 	Queens Place
	 	RRG Queens Place, LLC
	 	Bluffside Development Company
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-63

	 	Harlem Center Retail
	 	RRG Retail Properties, LLC
	 	FC Harlem Center, LLC
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-55

	 	Woodbridge Crossing
	 	RRG Retail Properties, LLC
	 	FC Woodbridge Crossing, LLC
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	29.50	%
	A-35

	 	Atlantic Terminal (Retail)
	 	RRG Hanson, LLC
	 	FC Hanson Associates, LLC
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-64

	 	Brooklyn Commons
	 	RRG Gowanus Canal, Inc.
	 	FC Gowanus Associates, LLC
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-67

	 	Quartermaster II
	 	FC Quartermaster Retail II, LP
	 	FC Quartermaster Assoc II, LP
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	29.70	%
	A-67

	 	Quartermaster I
	 	FC Quartermaster Retail, LP
	 	FC Quartermaster Associates, LP
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	29.70	%
	A-67

	 	Quartermaster IV
	 	FC Quartermaster Retail IV, LP
	 	FC Quartermaster Associates IV, LP
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	29.70	%
	A-57

	 	Worth Street
	 	RRG New Residential Properties, LLC
	 	RRG Residential Properties, LLC
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.61	%
	A-36

	 	Forest Avenue Cinemas
	 	FC Forest Avenue Retail, LLC
	 	FC Forest Avenue Associates, LLC
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	29.70	%
	A-37

	 	The Heights
	 	RRG Court Street Retail, LLC
	 	FC Court Street Associates, LLC
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	29.70	%
	A-41

	 	Columbia Park
	 	BR Master LP
	 	FC Columbia Park Member, LLC
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-17

	 	Bruckner Blvd.
	 	BR Master LP
	 	Forest City Master Associates
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-13

	 	Atlantic Center
	 	BR Master LP
	 	Forest City Master Associates
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	25.00	%
	A-22

	 	Gun Hill Road (Waring)
	 	BR Master LP
	 	Forest City Master Associates
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-21

	 	Gun Hill Road (Ely)
	 	BR Master LP
	 	Forest City Master Associates
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-14

	 	Maspeth Center
	 	BR Master LP
	 	Forest City Master Associates
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-19

	 	Northern Blvd
	 	BR Master LP
	 	Forest City Master Associates
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-46

	 	Atlantic Center — Vacant Lot
	 	BR Master LP
	 	Master Associates II
	 	F.C. Master 3 LLC
	 	 	 	***
	 	 	30.00	%
	A-31

	 	Atlantic Center Site V
	 	BR Master LP
	 	Master Associates II
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-29

	 	Richmond Avenue
	 	BR Master LP
	 	Master Associates II
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	A-49

	 	Castle Center
	 	BR Master LP
	 	Master Associates II
	 	F.C. Master 3 LLC
	 	***
	 	***
	 	 	30.00	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	***
	 	***	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Using a unit price of $                    ***



***   Text
Omitted and Filed Separately 

Confidential Treatment Requested




 









 







DRAFT




Master Contribution and Sale Agreement

Schedule P6-B




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	COLUMN (I)	 	COLUMN (III)	 	COLUMN (IV)	 	COLUMN (II)
	 	 	 	 	 	 	 	 	 	 	Interests Sold
	 	 	 	 	 	 	 	 	 	 	Cash	 	Percentage
	Chart	 	Operating Property	 	Ratner Transferor	 	Interest Transferred	 	Transferee Entity	 	Consideration	 	Interst
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A-2

	 	One Metrotech Center
	 	Bruce Ratner
	 	RRG B.U.G., Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-1

	 	Two Metrotech Center
	 	Bruce Ratner
	 	RRG SIAC, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-6

	 	One Pierrepont Plaza
	 	Bruce Ratner
	 	Ratner-Kessler Realty, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	50.00	%
	A-69

	 	Atlantic Terminal (Office)
	 	RRG Hanson Office, LLC
	 	FC Hanson Office Associates, LLC
	 	F.C. Master 3 LLC
	 	***
	 	 	30.00	%
	A-42

	 	42nd Street Retail
	 	Bruce Ratner
	 	RRG 42nd Street, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-55

	 	Woodbridge Crossing
	 	Bruce Ratner
	 	RRG Woodbridge, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-67

	 	Quartermaster II
	 	RRG Quartermaster II, LLC
	 	FC Quartermaster Assoc II, LP
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-67

	 	Quartermaster III
	 	FC Quartermaster Retail III, LP
	 	FC Quartermaster Assoc III, LP
	 	F.C. Master 3 LLC
	 	***
	 	 	29.70	%
	 

	 	 	 	RRG Quartermaster III, LLC
	 	FC Quartermaster Assoc III, LP
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-67

	 	Quartermaster I
	 	Bruce Ratner
	 	RRG Quartermaster, LLC
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-67

	 	Quartermaster IV
	 	Bruce Ratner
	 	RRG Quartermaster IV, LLC
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-7

	 	Queenswood
	 	The Ellen Ratner 2000 Trust
	 	BR Queenswood Associates, LP
	 	F.C. Master 3 LLC
	 	***
	 	 	65.00	%
	 

	 	 	 	Brooklyn II Trust
	 	BR Queenswood Associates, LP
	 	F.C. Master 3 LLC
	 	***
	 	 	10.00	%
	 

	 	 	 	Bruce Ratner
	 	BR Queenswood Management, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	1.00	%
	A-36

	 	Forest Avenue Cinemas
	 	Bruce Ratner
	 	RRG Forest Avenue, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-37

	 	The Heights
	 	Bruce Ratner
	 	RRG Court Street, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-32

	 	Steinway St. Theaters
	 	RRG Steinway Street Retail, LLC
	 	FC Steinway Street Assoc II, LLC
	 	F.C. Master 3 LLC
	 	***
	 	 	29.70	%
	 

	 	 	 	Bruce Ratner
	 	RRG Steinway, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-41

	 	Columbia Park
	 	Bruce Ratner
	 	RRG Master II, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-17

	 	Bruckner Blvd.
	 	Bruce Ratner
	 	BR Bruckner Corp.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-13

	 	Atlantic Center
	 	Bruce Ratner
	 	RRG Fort Greene, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-22

	 	Gun Hill Road (Waring)
	 	Bruce Ratner
	 	BR Waring Street, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-21

	 	Gun Hill Road (Ely)
	 	Bruce Ratner
	 	BR Ely, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-14

	 	Maspeth Center
	 	Bruce Ratner
	 	RRG Grand Avenue, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-19

	 	Northern Blvd
	 	Bruce Ratner
	 	BR Northern Corp.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-46

	 	Atlantic Center — Vacant Lot
	 	Bruce Ratner
	 	RRG Felix, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-31

	 	Atlantic Center Site V
	 	Bruce Ratner
	 	RRG Pacific, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-29

	 	Richmond Avenue
	 	Bruce Ratner
	 	RRG Richmond, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	A-49

	 	Castle Center
	 	Bruce Ratner
	 	RRG Castle Center, Inc.
	 	Master III FC/ BCR Holdings, Inc.
	 	***
	 	 	100.00	%
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	***	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 






In consideration for Forest City contributing the cash consideration above to F.C. Master 3 LLC, where applicable, Forest City will receive *** units, using a unit price of ***.



***   Text
Omitted and Filed Separately 

Confidential Treatment Requested




 











 






DRAFT



Master Contribution and Sale Agreement

Schedule P6-C




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	COLUMN (I)	 	COLUMN (III)	 	COLUMN (IV)	 	 	 	 	 	 	 	 	 	COLUMN (II)	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Preferred Capital	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Common Capital Contributed	 	Equity Loan	 	Contributed	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total Initial	 	Number of Class B	 	 
	Chart	 	Operating Property	 	FCE Transferor	 	Interest Transferred	 	Recepient Entity	 	Value	 	Percentage Interst	 	Value	 	Value	 	% of Total	 	Capital Account	 	Units	 	Percentage Interst
	A-2	 	One Metrotech Center	 	Forest City BUG Building, Inc.
	 	FC BUG, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	16.97	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	16.97	%
	A-1	 	Two Metrotech Center	 	Forest City SIAC Building, Inc.
	 	RRG S.I.A.C. Associates, LP	 	F.C. Master 3 LLC	 	 	***		 	 	44.44	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	44.44	%
	A-25	 	Nine Metrotech Center	 	Forest City Flatbush, Inc.
	 	FC Flatbush Associates, LP	 	New Flatbush LLC	 	 	***		 	 	14.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	14.00	%
	A-66	 	15 Metrotech Center (9 South)	 	FC Member, Inc.
	 	Forest City Myrtle Associate, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	24.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	24.00	%
	A-5	 	Ten Metrotech Center	 	Forest City Fulton Street Buillding, Inc.
	 	625 Fulton Associates	 	F.C. Master 3 LLC	 	 	***		 	 	29.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	29.00	%
	A-9	 	Eleven Metrotech Center	 	Forest City Tech Place, Inc.
	 	Forest City Tech Place Associates, LP	 	New Tech LLC	 	 	***		 	 	14.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	14.00	%
	A-6	 	One Pierrepont Plaza	 	Forest City Pierrepont, Inc.
	 	Forest City Pierrepont Associate	 	New KERA LLC	 	 	***		 	 	34.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	34.00	%
	A-68	 	Harlem Center Office	 	Forest City Commercial Holdings, Inc.
	 	FC Harlem Center Office, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	2.00	%	 	 	***		 	 	***		 	 	24.00	%	 	 	***		 	 	***		 	 	2.00	%
	A-69	 	Atlantic Terminal (Office)	 	FC Member, Inc.
	 	FC Hanson Office Associates, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	49.00	%	 	 	***		 	 	***		 	 	19.00	%
	A-42	 	42nd Street Retail	 	Forest City Commercial Holdings, Inc.
	 	FCR 42nd Street Partners	 	F.C. Master 3 LLC	 	 	***		 	 	19.19	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	19.19	%
	A-51	 	Queens Place	 	Forest City Bluffside Corporation
	 	Bluffside Development Company	 	F.C. Master 3 LLC	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	19.00	%
	A-63	 	Harlem Center Retail	 	Forest City Commercial Holdings, Inc.
	 	FC Harlem Center, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	2.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	2.00	%
	A-55	 	Woodbridge Crossing	 	FC Member, Inc.
	 	FC Woodbridge Crossing, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	49.00	%	 	 	***		 	 	***		 	 	19.00	%
	A-35	 	Atlantic Terminal (Retail)	 	FC Member, Inc.
	 	FC Hanson Associates, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	49.00	%	 	 	***		 	 	***		 	 	19.00	%
	A-64	 	Brooklyn Commons	 	FC Member, Inc.
	 	FC Gowanus Associates, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	19.00	%
	A-67	 	Quartermaster II	 	Forest City Commercial Holdings, Inc.
	 	FC Quartermaster Associates II, LP	 	F.C. Master 3 LLC	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	19.00	%
	A-67	 	Quartermaster III	 	Forest City Commercial Holdings, Inc.
	 	FC Quartermaster Associates III, LP	 	F.C. Master 3 LLC	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	19.00	%
	A-67	 	Quartermaster I	 	Forest City Commercial Holdings, Inc.
	 	FC Quartermaster Associates, LP	 	F.C. Master 3 LLC	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	49.00	%	 	 	***		 	 	***		 	 	19.00	%
	A-67	 	Quartermaster IV	 	Forest City Commercial Holdings, Inc.
	 	FC Quartermaster Associates IV, LP	 	F.C. Master 3 LLC	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	 	 
	A-57	 	Worth Street	 	Cleveland/NY Residential, LLC
	 	RRG Residential Properties, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	69.39	%	 	 	***		 	 	***		 	 	97.32	%	 	 	***		 	 	***		 	 	69.39	%
	A-7	 	Queenswood	 	Forest City Equity Services, Inc.
	 	Queenswood Management Associates	 	F.C. Master 3 LLC]	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	19.00	%
	A-36	 	Forest Avenue Cinemas	 	Forest City Commercial Holdings, Inc.
	 	FC Forest Avenue Associates, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	19.00	%
	A-37	 	The Heights	 	Forest City Commercial Holdings, Inc.
	 	FC Court Street Associates, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	19.00	%
	A-32	 	Steinway St. Theaters	 	Forest City Commercial Holdings, Inc.
	 	FC Steinway Street Associates II, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	19.00	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	19.00	%
	A-41	 	Columbia Park	 	Forest City Commercial Holdings, Inc.
	 	FC Columbia Park Member, LLC	 	F.C. Master 3 LLC	 	 	***		 	 	2.02	%	 	 	***		 	 	***		 	 	 	 	 	 	***		 	 	***		 	 	2.02	%
	A-17	 	Bruckner Blvd.	 	Forest City Commercial Holdings, Inc.
	 	Forest City Master Associates	 	F.C. Master 3 LLC	 	 	***		 	 	19.19	%	 	 	***		 	 	 	 	 	 	 	 	 	 	***		 	 	***		 	 	19.19	%
	A-13	 	Atlantic Center	 	Forest City Commercial Holdings, Inc.
	 	Forest City Master Associates	 	F.C. Master 3 LLC	 	 	***		 	 	24.24	%	 	 	***		 	 	 	 	 	 	 	 	 	 	***		 	 	***		 	 	24.24	%
	A-22	 	Gun Hill Road (Waring)	 	Forest City Commercial Holdings, Inc.
	 	Forest City Master Associates	 	F.C. Master 3 LLC	 	 	***		 	 	19.19	%	 	 	***		 	 	 	 	 	 	 	 	 	 	***		 	 	***		 	 	19.19	%
	A-21	 	Gun Hill Road (Ely)	 	Forest City Commercial Holdings, Inc.
	 	Forest City Master Associates	 	F.C. Master 3 LLC	 	 	***		 	 	19.19	%	 	 	***		 	 	 	 	 	 	 	 	 	 	***		 	 	***		 	 	19.19	%
	A-14	 	Maspeth Center	 	Forest City Commercial Holdings, Inc.
	 	Forest City Master Associates	 	F.C. Master 3 LLC	 	 	***		 	 	19.19	%	 	 	***		 	 	 	 	 	 	 	 	 	 	***		 	 	***		 	 	19.19	%
	A-19	 	Northern Blvd	 	Forest City Commercial Holdings, Inc.
	 	Forest City Master Associates	 	F.C. Master 3 LLC	 	 	***		 	 	19.19	%	 	 	***		 	 	 	 	 	 	 	 	 	 	***		 	 	***		 	 	19.19	%
	A-46	 	Atlantic Center - Vacant Lot	 	Forest City Commercial Holdings, Inc.
	 	Master Associates II	 	F.C. Master 3 LLC	 	 	***		 	 	 	 	 	 	***		 	 	 	 	 	 	 	 	 	 	***		 	 	***		 	 	19.19	%
	A-31	 	Atlantic Center Site V	 	Forest City Commercial Holdings, Inc.
	 	Master Associates II	 	F.C. Master 3 LLC	 	 	***		 	 	19.19	%	 	 	***		 	 	 	 	 	 	 	 	 	 	***		 	 	***		 	 	19.19	%
	A-29	 	Richmond Avenue	 	Forest City Commercial Holdings, Inc.
	 	Master Associates II	 	F.C. Master 3 LLC	 	 	***		 	 	19.19	%	 	 	***		 	 	 	 	 	 	 	 	 	 	***		 	 	***		 	 	19.19	%
	A-49	 	Castle Center	 	Forest City Commercial Holdings, Inc.
	 	Master Associates II	 	F.C. Master 3 LLC	 	 	***		 	 	19.19	%	 	 	***		 	 	 	 	 	 	 	 	 	 	***		 	 	***		 	 	19.19	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	***		 	 	 	 	 	 	***		 	 	 	 	 	 	 	 	 	 	***		 	 	***		 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Using a unit price of $	 	 	***		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





***   Text
Omitted and Filed Separately 

Confidential Treatment Requested















 





DRAFT



Master Contribution and Sale Agreement

Schedule P7-A




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	COLUMN (I)	 	COLUMN (III)	 	COLUMN (IV)	 	COLUMN (II)
	 	 	 	 	 	 	 	 	 	 	Interests Contributed
	Chart	 	Development Property	 	Ratner Transferor	 	Interest Transferred	 	Transferee Entity	 	Percentage Interest
	A-74	 	Beekman Residential Tower	 	RRG Tilden Associates L.P.	 	Forest City Tilden Associates, LLC	 	F.C. Master 3 LLC	 	 	30.00	%
	 	 	 	 	RRG Tilden Associates L.P.	 	Forest City Tilden Associates, LLC	 	F.C. Master 3 LLC	 	 	100.00	%
	A-65	 	New York Times Building (1)	 	BR 42 Hotel, LLC	 	FC 42 Hotel Member, LLC
	 	F.C. Master 3 LLC	 	 	30.00	%
	 	 	 	 	BR 8 South, LLC	 	FC NY Times Associates LLC
	 	F.C. Master 3 LLC	 	 	100.00	%
	A-77	 	East River Plaza	 	RRG East River, LLC	 	FC East River Associates LLC
	 	F.C. Master 3 LLC	 	 	30.00	%
	A-70	 	Ridge Hill Village Center	 	RRG Yonkers, LLC	 	FC Yonkers Associates, LLC
	 	F.C. Master 3 LLC	 	 	30.00	%
	A-40	 	330 Jay Street Office	 	RRG 330 Jay Office, LLC	 	330 Jay Office Associates, LLC
	 	F.C. Master 3 LLC	 	 	19.00	%
	A-79	 	Mill Basin Center	 	RRG Mill Basin LLC	 	FC Mill Basin Associates, LLC
	 	F.C. Master 3 LLC	 	 	30.00	%






Notes:






 




			
	(1)	 	Assuming 1031 is consumated. If not, the transferor and
Interest Transferred will change.














 






DRAFT



Master Contribution and Sale Agreement

Schedule P7-B




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	COLUMN (I)	 	COLUMN (III)	 	COLUMN (IV)	 	COLUMN (II)
	 	 	 	 	 	 	 	 	 	 	Common Capital	 	Preferred Capital
	 	 	 	 	 	 	 	 	 	 	Contributed	 	Contributed
	Chart	 	Development Property	 	FCE Transferor	 	Interest Transferred	 	Recepient Entity	 	Percentage Interest	 	% of Total
	A-74	 	Beekman Residential Tower	 	Forest City Commercial Holdings, Inc.	 	Forest City Tilden Associates, LLC
	 	F.C. Master 3 LLC	 	 	19.19	%	 	 	49.00	%
	A-65	 	New York Times Building (1)	 	Forest City N.Y. Group, Inc.	 	FC 42 Hotel Member, LLC
	 	F.C. Master 3 LLC	 	 	19.02	%	 	 	49.00	%
	A-77	 	East River Plaza	 	F.C. Member, Inc.	 	FC East River Associates, LLC
	 	F.C. Master 3 LLC	 	 	70.00	%	 	 	100.00	%
	A-70	 	Ridge Hill Village Center	 	F.C. Member, Inc.	 	FC Yonkers Associates, LLC
	 	F.C. Master 3 LLC	 	 	19.00	%	 	 	49.00	%
	A-40	 	330 Jay Street Office	 	Forest City Commerial Holdings, Inc.	 	330 Jay Office Associates, LLC
	 	F.C. Master 3 LLC	 	 	29.00	%	 	 	49.00	%
	A-79	 	Mill Basin Center	 	F.C. Member Inc.	 	FC Mill Basin Associates, LLC
	 	F.C. Master 3 LLC	 	 	2.00	%	 	 	49.00	%






Notes:






 




			
	(1)	 	Assuming 1031 is consumated. If not, the transferor and Interest Transferred will change.


















 





DRAFT



Master Contribution and Sale Agreement

Schedule P7-C




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	COLUMN (I)	 	(COLUMN (III)	 	COLUMN (IV)	 	COLUMN (II)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Interests Sold
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Percentage
	Chart	 	Development Property	 	Ratner Transferor	 	Interest Transferred	 	Transferee Entity	 	Interest
	 	A-40	 	 	330 Jay Street Office
	 	Bruce Ratner	 	RRG Jay Office, Inc.	 	Master III FC/ BCR Holdings, Inc.	 	 	100.00	%



















 





SCHEDULE 1.2A




Ground Lease Consents



One Pierrepont Plaza



New York City Industrial Development Agency



42nd Street Retail




New York State Urban Development Corporation doing business as Empire State Development Corporation



The New 42nd Street Retail, Inc.





 









 








SCHEDULE 1.2B




Development Property Consents



East River Plaza



DWD Associates, LLC



Banc of America CDE I, LLC




 









 








SCHEDULE 1.3(b)




Certain Lender and Third Party Consents



Woodbridge Crossing



GMAC Commercial Mortgage Corporation



Quartermaster Plaza (Phase I & Phase IV)



Deutsche Banc Mortgage Capital, L.L.C.



Brooklyn Commons



Wells Fargo Bank Northwest, NA as Trustee, Legg Mason Mortgage Capital Corporation Lease-Backed
Pass-Through Trust, Series 2003-CTL-14



Queenswood Apartments



Queenswood Properties, Inc. (subsidiary of Willis North America, Inc.)



Forest City will use commercially reasonable efforts to obtain each of the consents set forth in
this Schedule 1.3(b). For purposes of this Schedule 1.3(b), “commercially reasonable efforts” will
not require Forest City to incur more than $150,000.00 in costs and expenses (including attorneys’
fees, processing fees or any other cost or expense) in connection with obtaining any such consents.
If any party identified on this Schedule 1.3(b) is unwilling to give its consent to the
transactions contemplated by this Agreement, or if the cost and expense to Forest City in
connection with obtaining such consent exceeds $150,000.00, then Forest City and the BCR Entities
agree as follows:





     With respect to the Operating Property referred to as Woodbridge Crossing, (A) BCR
will, either directly or indirectly through an entity or entities wholly-owned and
controlled by him, continue to “control” First New York Partners, subject to the right of
Forest City, in its sole discretion, to terminate the rights of BCR or any such entity or
entities to “control” First New York Partners and (B) BCR will not transfer his Interests
in RRG Woodbridge, Inc. to Forest City and BCR will continue to wholly-own and “control”
RRG Woodbridge, Inc., subject to the right of Forest City, in its sole discretion, to
terminate the right of BCR or any such entity to “control” RRG Woodbridge, Inc. or force
BCR to sell to an affiliate of FCEI his Interests in RRG Woodbridge, Inc.;




     With respect to the Operating Property referred to as Quartermaster Plaza (Phase I),
RRG Quartermaster, LLC will continue to be a 30% shareholder of RRG Quartermaster, Inc.,
which is the 1.0% general partner of FC Quartermaster Associates, L.P., and BCR will,
either directly or indirectly through an entity or entities wholly-owned and controlled by
him, continue to wholly-own and “control” RRG Quartermaster, LLC, subject to the right of
Forest City, in its sole discretion, to terminate the rights of BCR or any such entity or



 









 







entities to “control” RRG Quartermaster, LLC. or force BCR to sell to an affiliate of
FCEI his Interest in RRG Quartermaster, LLC;




     With respect to the Operating Property referred to as Brooklyn Commons, the BCR
Transferred Interests related to such Operating Property will be contributed to Master III
pursuant to the terms of this Agreement but the FCE Contributed Interests related to such
Operating Property will not be contributed to Master III; and


     With respect to the Operating Property referred to as Queenswood Apartments, the BCR Transferred
Interests related to such Operating Property will be transferred pursuant to the terms of this
Agreement but the FCE Contributed Interests related to such Operating Property will not be
contributed to Master III.





 












 





SCHEDULE 2.3(c)

to

MASTER CONTRIBUTION AND SALE AGREEMENT




DETERMINATION OF VALUE




	 	 	 	 	 
	Line	 	Caption	 	Comments
	1

	 	NOI 200[_] Actual
	 	In the case of the
Operating Properties,
actual Net Operating
Income (NOI) for the
fiscal year 2005 (Feb. 1,
2005 — Jan. 31, 2006),
as reflected in the
general ledger, was
utilized. For the
Development Properties,
there will likely not be
a full fiscal year of NOI
as of the Stabilization
Date. Thus, an
appropriate adjustment
and/or annualization of
income may be required,
and particular attention
is required for the
adjustments set forth
below for NOI
Normalization (line 2),
Lease Annualization (line
5) and Lease
Stabilization (line 6).
	 
	 	 	 	 
	 

	 	Adjusted for:	 	 
	 
	 	 	 	 
	2

	 	(+) NOI Normalization
	 	In cases where there were
non-recurring expenses
during the fiscal year
for which NOI 200[_]
Actual (line 1) was
determined, (e.g., for
grand openings,
marketing), these
non-recurring expenses
were ignored and an
appropriate adjustment
made to NOI 200[_]
Actual.
	 
	 	 	 	 
	3

	 	(+) Ground Rent (Adjustment)
	 	In the case where PV of
Ground Lease (line 15)
below takes into account
the present value of all
ground lease rent
payments to be made by
the Development Property
Owner, there is the
possibility for a
duplicative deduction
since NOI 200[_] Actual
(line 1) may already
incorporate a deduction
for ground lease payments
made for which NOI 200[_]
Actual (line 1) was
determined. In order to
avoid such duplication,
ground lease rent
payments during the
fiscal year for which NOI
200[_] Actual (line 1)
was determined are to be
ignored and an
appropriate adjustment
made to NOI 200[_]
Actual.
	 
	 	 	 	 
	4

	 	(+) Straight Line Rent
	 	The calculation of NOI
200[_] Actual (line 1) is
based on rental revenues
that have been
“straight-lined”. The
effects of this
straight-lining are to be
avoided, so that rents
received are those
actually paid for the
fiscal period in
question, by an
appropriate adjustment to
NOI 200[_] Actual (line
1).
	 
	 	 	 	 
	5

	 	(+) Lease Annualization
	 	If a space tenant paid
rent for only part of the
fiscal year for which NOI
200[_] Actual (line 1)
was determined, then an
adjustment is to be made
by assuming that such
rent was paid for the
entire fiscal year in
question.
	 
	 	 	 	 
	6

	 	(+) Lease Stabilization
	 	If the Development
Property is less than 95%
occupied, then unoccupied
space (up to 95%
occupancy) is assumed to
be rented at market rents
and appropriate
adjustments made to NOI
200[_] Actual.
	 
	 	 	 	 
	7

	 	(=) Adj. Ann./Stab. NOI	 	 
	 
	 	 	 	 
	9

	 	(+) Non-Esc Exp Adjustment
	 	If there were
non-property level
expenses incurred by the
Development Property
Owner due to
circumstances that are
either unique to that
owner (e.g., that it must
comply with requirements
applicable to public
companies) and/or would
not be incurred by a
third-party owner, then
these expenses are






Schedule 2.3(c)— Page 1




 









 








	 	 	 	 	 
	Line	 	Caption	 	Comments
	 

	 	 	 	ignored and an
appropriate adjustment
made to NOI 200[_]
Actual. However,
consistent with the
methodology used in
deriving the Adj.
Ann./Stab. Esc Adj. NOI
(line 10) (for purposes
of applying a cap rate)
it is appropriate to add
back certain agreed upon
recurring expenses that
FC will have in operating
the development property
in question on an
on-going basis in future
years. For illustrative
purposes only, see
Exhibit F in the NAV
model used to value the
operating properties.
	 
	 	 	 	 
	10

	 	(=) Adj. Ann./Stab. Esc Adj. NOI	 	 
	 
	 	 	 	 
	11

	 	(÷) Cap Rate
	 	The relevant
capitalization rate for
the market and product
type in question is to be
utilized.
	 
	 	 	 	 
	12

	 	(=) Capitalized NOI	 	 
	 
	 	 	 	 
	13

	 	(+) Other Value Adjustments
	 	An appropriate adjustment
is to be made to
Capitalized NOI (line 12)
to take into account any
value that is not
captured in the
calculation of
Capitalized NOI (e.g.,
for undeveloped (or
underdeveloped) and thus
non-income (or lower
income) producing parcels
within a project).
	 
	 	 	 	 
	14

	 	(=) Gross Value	 	 
	 
	 	 	 	 
	15

	 	(-) PV of Ground Lease
	 	The present value,
determined using a
discount rate of 8%, of
all future ground lease
liabilities.
	 
	 	 	 	 
	16

	 	(-) Participation Adjustment
	 	If a third-party such as
a ground lessor has a
right to a payment in
connection with and
triggered by a sale of
the Development Property
in question, then the
amount of that payment
(determined in accordance
with the underlying
agreement) is to be
deducted from Gross Value
(line 14).
	 
	 	 	 	 
	17

	 	(=) Net Gross Value	 	 
	 
	 	 	 	 
	19

	 	(-) Debt
	 	Subtracted from the Net
Gross Value is the total
amount of indebtedness
encumbering the
Development Property as
of the end of the fiscal
period in question.
	 
	 	 	 	 
	20

	 	(+) Debt Adjustment
	 	In cases where there are
reserves for the
repayment of debt or
other offsets to
indebtedness, the amounts
in question are added
back to Net Gross Value
(line 17).
	 
	 	 	 	 
	21

	 	(=) Net Asset Value	 	 
	 
	 	 	 	 
	23

	 	(-) Promote Repayment
	 	A deduction is to be made
for the return of and on
Forest City’s capital.
	 
	 	 	 	 
	24

	 	(=) Value after Promote Pmt	 	 
	 
	 	 	 	 
	25

	 	Value @ BCR Ownership
	 	BCR’s percentage
ownership of the
Development Property
Owner is applied to Value
after Promote Pmt (line
24).
	 
	 	 	 	 
	26

	 	(-) Equity Loan Balance
	 	Equity loan balance plus
unpaid accrued preferred
return outstanding as of
the end of the fiscal
period in question.
	 
	 	 	 	 
	27

	 	(+) Value Deficit
	 	An adjustment for any
situation where the
deduction for Equity Loan
Balance (line 26) results
in a Value @ BCR
Ownership (line 25) of
less than zero. This is
intended to bring Value @
BCR Ownership (line 25)
up to zero, so that there
would be no negative
value to BCR.
	 
	 	 	 	 
	28

	 	(=) BCR Value After Repayment	 	 






Schedule 2.3(c)— Page 2





 












 





SCHEDULE 3.1 (A) 

to

MASTER CONTRIBUTION AND SALE AGREEMENT




EXISTING TITLE POLICIES




	 	 	 	 	 
	PROPERTY	 	ENTITY NAME	 	TITLE COMPANY/NO.
	 
	 	 	 	 
	Brooklyn
	 	 	 	 
	 
	 	 	 	 
	One Pierrepont Plaza 

135/151 Pierrepont

(aka 300 Cadman Plaza West) 

Brooklyn, New York

	 	Forest City Pierrepont Associates
	 	Commonwealth Land

NY930813K
	 
	 	 	 	 
	Ten Metrotech Center 

625 Fulton Street

	 	625 Fulton Associates, LLC
	 	New York Land/ G322130141
	 
	 	 	 	 
	Brooklyn, New York
	 	 	 	 
	 
	 	 	 	 
	One Metrotech Center 

Brooklyn, New York

	 	Forest City Jay Street Associates, L.P.
	 	Commonwealth/ G321952516
	 
	 	 	 	 
	Two Metrotech Center 

Brooklyn, New York

	 	Forest City Bridge Street Associates, L.P.
	 	First American/B1012404
	 
	 	 	 	 
	Nine Metrotech Center 

Brooklyn, New York

	 	FC Flatbush Associates, L.P.
	 	Commonwealth Land/

207-112383
	 
	 	 	 	 
	11 Metrotech Center 

Brooklyn, New York

	 	Forest City Tech Place Associates, L.P.
	 	Commonwealth Land/NY960455
	 
	 	 	 	 
	15 Metrotech Center 

Brooklyn, New York

	 	Forest City Myrtle Associates, LLC
	 	Commonwealth Land Policy

A60-0149510
	 
	 	 	 	 
	330 Jay Street-Office 

12 Metrotech Center 

Brooklyn, New York

	 	330 Jay Office Associates, LLC
	 	Land America Commonwealth/Policy

H65-0289345
	 
	 	 	 	 
	Atlantic Center 

199 Fort Greene Place 

Brooklyn, New York

	 	Atlantic Center Fort
Greene Associates, L.P.
	 	New York Land/Policy

207-112314






-1-









 






	 	 	 	 	 
	PROPERTY	 	ENTITY NAME	 	TITLE COMPANY/NUMBER
	 
	 	 	 	 
	617 Pacific Street 

140 Flatbush Avenue 

Brooklyn, New York

	 	FC Pacific Associates, LLC
	 	First American/F89-224160
	 
	 	 	 	 
	94-110 Court Street 

Brooklyn, New York

	 	FC Court Street Associates, LLC
	 	First American /Policy B406561
	 
	 	 	 	 
	Atlantic Terminal-Office 

139 Flatbush Avenue 

Brooklyn, New York

	 	FC Hanson Office Associates, LLC
	 	Commonwealth Land/

G32-2130118
	 
	 	 	 	 
	Atlantic Terminal-Retail 

139 Flatbush Avenue 

Brooklyn, New York

	 	FC Hanson Associates, LLC
	 	Commonwealth Land/Policy

A60-0149496
	 
	 	 	 	 
	Brooklyn Commons 

1 11th Street 

118 2nd Avenue 

34 9th Street 

12th Street 

71 12th Street 

Brooklyn, New York

	 	FC Gowanus Associates, LLC
	 	Fidelity Title/5412-1122998
	 
	 	 	 	 
	147 Felix Place 

Brooklyn, New York

	 	FC Felix Associates, L.P.
	 	New York Land/92NYK4913
(Certificate of Title/report only)
	 
	 	 	 	 
	Metrotech Common Area

	 	Commons Associates	 	 
	 
	 	 	 	 
	Bronx
	 	 	 	 
	 
	 	 	 	 
	1800 Gun Hill Road 

Bronx, New York

	 	FC Ely Associates, L.P.
	 	First American/B1011800
	 
	 	 	 	 
	1806 Gun Hill Road 

Bronx, New York

	 	FC Waring Associates, L.P.
	 	First American/B1011798
	 
	 	 	 	 
	1910 Story Avenue 

Bronx, New York

	 	FC Bruckner Associates, L.P.
	 	First American/B1011797
	 
	 	 	 	 
	1716, 1720 & 1724

Eastchester Road

	 	FC Castle Center Associates II, LLC
	 	Commonwealth Land/ G32-0112562






Bronx, New York



-2-









 






	 	 	 	 	 
	PROPERTY	 	ENTITY NAME	 	TITLE COMPANY/NUMBER
	 
	 	 	 	 
	Queens
	 	 	 	 
	 
	 	 	 	 
	48-18 Northern Blvd. 

Long Island City, NY

	 	FC Northern Associates, L.P.
	 	New York Land/95NYQ6265A
	 
	 	 	 	 
	74-17 Grand Avenue 

Maspeth, NY

	 	FC Grand Avenue Associates, L.P.
	 	First American/Y1007564
	 
	 	 	 	 
	35-50 38th Street 

Long Island City, New York

	 	FC Steinway Street Associates, LLC
	 	Commonwealth Land/

02NYQ8888
	 
	 	 	 	 
	88-01 Queens Blvd.


Rego Park, New York

	 	FC Queens Place Associates, LLC
	 	Fidelity National/5312-784605
	 
	 	 	 	 
	New York
	 	 	 	 
	 
	 	 	 	 
	226-252 West 42nd Street 

New York, New York

	 	FC 42nd Street Associates, L.P.
	 	New York Land/97NYM6978
	 
	 	 	 	 
	95-117 Worth Street 

New York, New York

	 	FC Foley Square Associates, LLC
	 	Fidelity/26-041-92104256
	 
	 	 	 	 
	105 West 125th Street 

125 W. 125th Street 

New York, New York

	 	Harlem Center LLC
	 	CommonwealthLand/

Policy
A60-701112
	 
	 	 	 	 
	105 West 125th Street 

125 West 125th Street 

New York, New York

	 	Harlem Center Office, LLC
	 	Fidelity/26-031-92-79351
	 
	 	 	 	 
	New York Times Building 

New York, New York

	 	FC Lion LLC
	 	New York Land/Policy B66-0127088
	 
	 	 	 	 
	Beekman
	 	FC Beekman Associates, LLC
	 	New York Land/
	 

	 	FC Tilden A, LLC

FC Tilden B, LLC
	 	Policy B66-0127088






-3-









 






	 	 	 	 	 
	PROPERTY	 	ENTITY NAME	 	TITLE COMPANY/NUMBER
	 
	 	 	 	 
	Washburn Wire

(East River)

	 	Tiago Holdings, LLC
	 	Lawyers Title/G37282NY
	 
	 	 	 	 
	Staten Island
	 	 	 	 
	 
	 	 	 	 
	2505 Richmond Ave. 

Staten Island, New York

	 	FC Richmond Associates, L.P.
	 	New York Land/F89-224078
	 
	 	 	 	 
	2474 Forest Avenue 

Staten Island, New York

	 	FC Forest Avenue Associates, LLC
	 	Fidelity/Policy 5412-1122975
	 
	 	 	 	 
	Yonkers

(Ridge Hill) 

339 Tuckahoe Road 

Yonkers, NY 

New Jersey

	 	FC Yonkers Associates, LLC	 	 
	 
	 	 	 	 
	3131 Kennedy Blvd. 

Bergen, New Jersey

	 	FC/Treeco Columbia Park, LLC
	 	Commonwealth/Policy North Policy 207-832792
	 
	 	 	 	 
	493 Green Street

Woodbridge, NJ

	 	FC Woodbridge Crossing, LLC
	 	Commonwealth/Policy F37-0050841
	 
	 	 	 	 
	Pennsylvania
	 	 	 	 
	 
	 	 	 	 
	Philadelphia

	 	FC Quartermaster Associates, L.P.
	 	Fidelity/26-031-92-44811
	 
	 	 	 	 
	Philadelphia

	 	FC Quartermaster Associates II, L.P.
	 	Fidelity/26-031-92-44811

Loan Policy 26-041-92-269709
	 
	 	 	 	 
	Philadelphia

	 	FC Quartermaster Associates III, L.P.
	 	Fidelity/26-031-92-44811

Loan Policy 26-041-92-269710
	 
	 	 	 	 
	Philadelphia

	 	FC Quartermaster Associates IV, L.P.
	 	Fidelity/







-4-












 





SCHEDULE 3.1 (B) 

to

MASTER CONTRIBUTION AND SALE AGREEMENT




NEW TITLE COMMITMENTS




	 	 	 	 	 
	PROPERTY	 	ENTITY NAME	 	TITLE COMPANY/NO.
	 
	 	 	 	 
	Brooklyn
	 	 	 	 
	 
	 	 	 	 
	One Pierrepont Plaza

135/151 Pierrepont

(aka 300 Camden Plaza West)

Brooklyn, New York

	 	Forest City Pierrepont Associates
	 	New York Land/06SS10855
	 
	 	 	 	 
	Ten Metrotech Center

625 Fulton Street

Brooklyn, New York

	 	625 Fulton Associates, LLC
	 	New York Land/06SS10833
	 
	 	 	 	 
	One Metrotech Center

Brooklyn, New York

	 	Forest City Jay Street Associates, L.P.
	 	New York Land/06SS10831
	 
	 	 	 	 
	Two Metrotech Center

Brooklyn, New York

	 	Forest City Bridge Street Associates, L.P.
	 	New York Land/06SS10938
	 
	 	 	 	 
	Nine Metrotech Center

Brooklyn, New York

	 	FC Flatbush Associates, L.P.
	 	New York Land/06SS10937
	 
	 	 	 	 
	11 Metrotech Center

Brooklyn, New York

	 	Forest City Tech Place Associates, L.P.
	 	New York Land/06SS10951
	 
	 	 	 	 
	15 Metrotech Center

Brooklyn, New York

	 	Forest City Myrtle Associates, LLC
	 	New York Land/06SS10832
	 
	 	 	 	 
	12 Metrotech Center

330 Jay Street-Office

Brooklyn, New York

	 	330 Jay Office Associates, LLC
	 	New York Land/06SS10834
	 
	 	 	 	 
	Atlantic Center

199 Fort Greene Place

Brooklyn, New York

	 	Atlantic Center Fort

Greene Associates, L.P.
	 	New York Land/06SS10838






-1-









 






	 	 	 	 	 
	PROPERTY	 	ENTITY NAME	 	TITLE COMPANY/NUMBER
	 
	 	 	 	 
	617 Pacific Street

140 Flatbush Avenue

Brooklyn, New York

	 	FC Pacific Associates, LLC
	 	New York Land/06SS10854
	 
	 	 	 	 
	94-110 Court Street

Brooklyn, New York

	 	FC Court Street Associates, LLC
	 	New York Land/06SS10853
	 
	 	 	 	 
	Atlantic Terminal-Office

139 Flatbush Avenue

Brooklyn, New York

	 	FC Hanson Office Associates, LLC
	 	New York Land/06SS10934
	 
	 	 	 	 
	Atlantic Terminal-Retail

139 Flatbush Avenue

Brooklyn, New York

	 	FC Hanson Associates, LLC
	 	New York Land/06SS10830
	 
	 	 	 	 
	Brooklyn Commons

1 11th Street

118 2nd Avenue

34 9th Street

12th Street

73 12th Street

Brooklyn, New York

	 	FC Gowanus Associates, LLC
	 	New York Land/06SS10835
	 
	 	 	 	 
	147 Felix Place

Brooklyn, New York

	 	FC Felix Associates, L.P.
	 	New York Land/06SS10864
	 
	 	 	 	 
	Metrotech Common Area

	 	Commons Associates
	 	New York Land/06SS10963
	 
	 	 	 	 
	Bronx
	 	 	 	 
	 
	 	 	 	 
	1800 Gun Hill Road

Bronx, New York

	 	FC Ely Associates, L.P.
	 	New York Land/
06SS10857A
	 
	 	 	 	 
	1806 Gun Hill Road

Bronx, New York

	 	FC Waring Associates, L.P.
	 	New York Land/
06SS10857B
	 
	 	 	 	 
	1910 Story Avenue

Bronx, New York

	 	FC Bruckner Associates, L.P.
	 	New York Land/06SS10856






-2-









 






	 	 	 	 	 
	PROPERTY	 	ENTITY NAME	 	TITLE COMPANY/NUMBER
	 
	 	 	 	 
	1716, 1720 & 1724

Eastchester Road

Bronx, New York

	 	FC Castle Center Associates II, LLC
	 	New York Land/06SS10849
	 
	 	 	 	 
	Queens
	 	 	 	 
	 
	 	 	 	 
	48-18 Northern Blvd.

Long Island City, NY

	 	FC Northern Associates, L.P.
	 	New York Land/06SS10850
	 
	 	 	 	 
	74-17 Grand Avenue

Maspeth, NY

	 	FC Grand Avenue Associates, L.P.
	 	New York Land/06SS10858
	 
	 	 	 	 
	35-50 38th Street

Long Island City, New York

	 	FC Steinway Street Associates II, LLC
	 	New York Land/06SS10871
	 
	 	 	 	 
	88-01 Queens Blvd.

Rego Park, New York

	 	FC Queens Place Associates, LLC
	 	TitleServ/06-7406-15432Q
	 
	 	 	 	 
	New York
	 	 	 	 
	 
	 	 	 	 
	226-252 West 42nd Street 

New York, New York

	 	FC 42nd Street Associates, L.P.
	 	New York Land/06SS10836
	 
	 	 	 	 
	95-117 Worth Street

	 	FC Foley Square Associates, LLC
	 	Fidelity/06-7406-15450SS- 
NYM
	 
	 	 	 	 
	New York, New York
	 	 	 	 
	 
	 	 	 	 
	105 West 125th Street 

125 West 125th Street 

New York, New York

	 	Harlem Center LLC
	 	Fidelity/06-7406-15449-SS-

NYM
	 
	 	 	 	 
	105 West 125th Street 

125 West 125th Street 

New York, New York

	 	Harlem Center Office LLC
	 	Fidelity/06-7406-15452-SS-

NYM
	 
	 	 	 	 
	New York Times Building

New York, New York

	 	FC Lion LLC
	 	Fidelity/06/7406-

15446.SSNYM






-3-









 






	 	 	 	 	 
	PROPERTY	 	ENTITY NAME	 	TITLE COMPANY/NUMBER
	 
	 	 	 	 
	Beekman

	 	FC Beekman Associates, LLC

FC Tilden A, LLC

FC Tilden B, LLC
	 	New York Land/06SS10839
	 
	 	 	 	 
	Washburn Wire

(East River)

	 	Tiago Holdings, LLC
	 	New York Land/06SS10840
	 
	 	 	 	 
	Staten Island
	 	 	 	 
	 
	 	 	 	 
	2505 Richmond Ave.

Staten Island, New York

	 	FC Richmond Associates, L.P.
	 	New York Land/06SS10848
	 
	 	 	 	 
	2474 Forest Avenue

Staten Island, New York

	 	FC Forest Avenue Associates, LLC
	 	New York Land/06SS10837
	 
	 	 	 	 
	Yonkers
	 	 	 	 
	 
	 	 	 	 
	Yonkers Development

(Ridge Hill)

339 Tuckahoe Road

Yonkers, NY

	 	FC Yonkers Associates, LLC
	 	Fidelity 06-7406-

15688.SS-W
	 
	 	 	 	 
	New Jersey
	 	 	 	 
	 
	 	 	 	 
	3131 Kennedy Blvd.

North Bergen, New Jersey

	 	FC/Treeco Columbia Park, LLC
	 	Land Title/99-LT-0250
	 
	 	 	 	 
	493 Green Street

Woodbridge, NJ

	 	FC Woodbridge Crossing, LLC
	 	LandTitle/03-LT-0310
	 
	 	 	 	 
	Pennsylvania
	 	 	 	 
	 
	 	 	 	 
	Philadelphia

	 	FC Quartermaster Associates, L.P.
	 	Fidelity/06-7406-15654-SS-

PA-1

Commitment No. 8106- 
0185
	 
	 	 	 	 
	Philadelphia

	 	FC Quartermaster Associates II, L.P.
	 	Fidelity/06-7406-15654-SS- 
PA-2

Commitment No. 8106- 
0185A
	 
	 	 	 	 
	Philadelphia

	 	FC Quartermaster Associates III, L.P.
	 	Fidelity/06-7406-15654-SS- 
PA-3






-4-









 






	 	 	 	 	 
	PROPERTY	 	ENTITY NAME	 	TITLE COMPANY/NUMBER
	 
	 	 	 	 
	 

	 	 	 	Commitment No. 8106- 
0185B
	 
	 	 	 	 
	Philadelphia

	 	FC Quartermaster Associates IV, L.P.
	 	Fidelity/06-7406-15654-SS- 
PA-4

Commitment No. 8106- 
0185C







-5-












 





SCHEDULE 4.13-1

to

MASTER CONTRIBUTION AND SALE AGREEMENT




ANCHOR TENANT ESTOPPEL CERTIFICATES




	 	 	 
	Properties	 	Anchors
	Atlantic Center

	 	Stern’s — Misc., Inc. (Federated)
	199 Fort Greene Place 

625 Atlantic Avenue
	 	 
	Brooklyn, New York
	 	 
	 
	 	 
	Shops at Gun Hill Road

	 	Home Depot U.S.A., Inc.
	1806 Gun Hill Road
	 	 
	Bronx, New York
	 	 
	 
	 	 
	Two Metrotech Center

	 	Securities Industry Automation Corporation
	Brooklyn, New York
	 	 
	 
	 	 
	One Metrotech Center

	 	The Brooklyn Union Gas Company (KeySpan)
	Brooklyn, New York

	 	The Bear Stearns Companies, Inc.
	 
	 	 
	Ten Metrotech Center

	 	United States of America (IRS)
	Brooklyn, New York
	 	 
	 
	 	 
	One Pierrepont Plaza

	 	Morgan Stanley & Co. Incorporated
	Brooklyn, New York
	 	 
	 
	 	 
	Eleven Metrotech Center
Brooklyn, New York

	 	The City of New York, Department of Citywide Administrative Services (Department of Information Technology and Telecommunications)
	 
	 	 
	Nine Metrotech Center

	 	The City of New York, Department of Citywide Administrative Services (Fire Department)
	Brooklyn, New York
	 	 
	 
	 	 
	Atlantic Terminal (Retail)

	 	Target Corporation
	139 Flatbush Avenue
	 	 
	Brooklyn, New York
	 	 
	 
	 	 
	Fifteen Metrotech Center

	 	WellChoice, Inc.
	Brooklyn, New York

	 	The City of New York, Department of Citywide
Administrative Services (Human Resources
Administration)
	 
	 	 
	Quartermaster Plaza II and
III

	 	Home Depot U.S.A., Inc. (II)
	Philadelphia, Pennsylvania

	 	BJ’s Wholesale Club, Inc. (III)
	 
	 	 
	Woodbridge Crossing

	 	Sears, Roebuck & Co. (Great Indoors)
	451-479 Green Street
	 	 
	Woodbridge, New Jersey
	 	 






Schedule 4.13-1 — Page 1









 






	 	 	 
	Properties	 	Anchors
	Atlantic Terminal (Office)

	 	The Bank of New York
	139 Flatbush Avenue,
	 	 
	Brooklyn, New York
	 	 






Schedule 4.13-1 — Page 2









 






SCHEDULE 4.13-2

to

MASTER CONTRIBUTION AND SALE AGREEMENT




GROUND LESSOR ESTOPPEL CERTIFICATES




	 	 	 
	Properties	 	Ground Lessors
	Atlantic Center

	 	The City of New York
	199 Fort Greene Place 

625 Atlantic Avenue
	 	 
	Brooklyn, New York
	 	 
	 
	 	 
	Shops at Bruckner Boulevard

	 	Bruckner Plaza Associates, L.P.
	845 White Plains Road
	 	 
	Bronx, New York
	 	 
	 
	 	 
	Shops at Northern Boulevard

	 	48-18 Properties, L.L.C.
	48-18 Northern Blvd.
	 	 
	Long Island City, New York
	 	 
	 
	 	 
	Castle Center

	 	Waters Place Associates, L.P.
	1716, 1720, 1724

Eastchester Road
	 	 
	Bronx, New York
	 	 
	 
	 	 
	Two Metrotech Center

	 	The City of New York
	Brooklyn, New York
	 	 
	 
	 	 
	One Metrotech Center

	 	The City of New York
	Brooklyn, New York
	 	 
	 
	 	 
	One Pierrepont Plaza

	 	The City of New York
	Brooklyn, New York
	 	 






Schedule 4.13-2 — Page 1









 






	 	 	 
	Properties	 	Ground Lessors
	Eleven Metrotech Center

	 	The City of New York
	Brooklyn, New York
	 	 
	 
	 	 
	Nine Metrotech Center

	 	The City of New York
	Brooklyn, New York
	 	 
	 
	 	 
	Atlantic Terminal (Retail)

	 	Metropolitan Transit Authority and Long Island Railroad Company
	139 Flatbush Avenue
	 	 
	Brooklyn, New York
	 	 
	 
	 	 
	Forest Avenue Cinemas

	 	Morrow Street Associates, LLC
	2474 Forest Avenue
	 	 
	Staten Island, New York
	 	 
	 
	 	 
	Court Street

	 	94-110 Court Street LLC
	94-110 Court Street
	 	 
	Brooklyn, New York
	 	 
	 
	 	 
	42nd
Street Retail

	 	42nd St. Development Project, Inc.
	West 42nd Street

	 	The New 42nd Street, Inc.
	New York, New York
	 	 
	 
	 	 
	Woodbridge Crossing

	 	Dowel-Woodbridge, LLC
	451-479 Green Street

	 	Township of Woodbridge
	Woodbridge, New Jersey

	 	Public Service Electric and Gas Company
	 
	 	 
	Harlem Center (Retail)
105 & 125 W.
125th Street
New York, New York

	 	The New York State Urban Development Corporation (d/b/a Empire State Development Corporation)
	 
	 	 
	Fifteen Metrotech Center

	 	The City of New York






Schedule 4.13-2 — Page 2









 






	 	 	 
	Properties	 	Ground Lessors
	Brooklyn, New York
	 	 
	 
	 	 
	Quartermaster Plaza I, II,
III and IV

	 	Philadelphia Authority for Industrial Development
	Philadelphia, Pennsylvania
	 	 
	 
	 	 
	Harlem Center (Office)
105 West 125th
Street
New York, New York

	 	The New York State Urban Development Corporation (d/b/a Empire State Development Corporation)
	
	 	 
	
	 	 
	 
	 	 
	Atlantic Terminal (Office)

	 	Metropolitan Transit Authority and Long Island Railroad Company
	139 Flatbush Avenue,
	 	 
	Brooklyn, New York
	 	 
	 
	 	 
	MetroTech Commons

	 	The City of New York







Schedule 4.13-2 — Page 3











 





SCHEDULE 4.13-3

to

MASTER CONTRIBUTION AND SALE AGREEMENT




REA ESTOPPEL CERTIFICATES




	 	 	 	 	 
	Properties	 	REA	 	Parties
	 
	 	 	 	 
	Quartermaster Plaza
I, II and III

Philadelphia,
Pennsylvania

	 	Amended and
Restated
Restriction and
Common Area
Maintenance
Agreement and Grant
of Easements dated
                    , 2005
	 	FC Quartermaster Associates, L.P., FC 

Quartermaster II Associates, L.P., FC 

Quartermaster III Associates, L.P., FC 

Quartermaster IV Associates, L.P., Home 

Depot U.S.A., Inc., and BJ’s Wholesale
Club, Inc.
	 
	 	 	 	 
	42nd
Street Retail

West 

42nd
Street 

New York, New York

	 	Declaration of
Easement and
Operating
Agreement, dated as
of November 5, 1998
	 	The City of New York 

42nd St. Development Project, Inc. 

Sunstone 42nd Street, LLC 

FC 42nd Street Associates, L.P.






Schedule 4.13-3 — Page 1

















 





SCHEDULE 4.17




Amended Operating Agreements or Partnership Agreements



Agreements of the following entities are to be amended and restated on the form attached to
this Agreement as Exhibit G-1



Forest City Master Associates, a New York general partnership



Master Associates II, a New York general partnership



FC B.U.G., LLC, a Delaware limited liability company



625 Fulton Associates, a New York general partnership



Queenswood Management Associates, a New York general partnership



FC Steinway Street Associates II, LLC, a New York limited liability company



FC Hanson Associates, LLC, a New York limited liability company



FC Forest Avenue Associates, LLC, a New York limited liability company



FC Court Street Associates, LLC, a New York limited liability company



FCR 42nd Street Partners, a New York general partnership



Bluffside Development Company, a California general partnership



FC Woodbridge Crossing, LLC, a New Jersey limited liability company



FC/RRG Foley Square Associates, LLC, a New York limited liability company



FC Harlem Center, LLC, a New York limited liability company



FC Gowanus Associates, LLC, a New York limited liability company



FC Quartermaster Associates, L.P., a New York limited partnership



FC Quartermaster Associates IV, L.P., a New York limited partnership



FC Harlem Center Office, LLC, a New York limited liability company



FC Hanson Office Associates, LLC, a New York limited liability company



Agreements of the following entities are to be amended and restated on the form attached to
this Agreement as Exhibit G-2



330 Jay Office Associates, LLC, a New York limited liability company




-1-









 







Forest City Tilden Associates, LLC, a New York limited liability company



FC 42 Hotel Member LLC, a New York limited liability company [assumes closing of ING sale and 1031
exchange]



FC NY Times Associates, LLC, a New York limited liability company [assumes closing of ING sale and
1031 exchange]



FC 41st Street Associates, LLC, a New York limited liability company [if closing of ING
sale and 1031 exchange does not occur]



FC Yonkers Associates, LLC, a New York limited liability company



FC East River Associates, LLC, a New York limited liability company



FC Mill Basin Associates, LLC, a New York limited liability company





-2-












 






Master Contribution and Sale Agreement

Schedule 4.18A




Holdback Schedule




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Interest	 	 	 	Effective	 	 	 	 	 	Interest	 	Effective Held
	Operating Property	 	Outside Partner	 	Outside Partner Entity/Owner	 	Owned	 	Entity Owned	 	Interest	 	FCE Transferor	 	Held Back Interest (3)	 	Transferred	 	Back Interest
	One Metrotech Center
	 	Kessler	 	Kessler (2)	 	99.0000%	 	RRG B.U.G. Limited Partnership	 	2.4750%	 	Forest City B.U.G. Building Inc.	 	FC B.U.G., LLC	 	3.0000%	 	2.4750%
	 
	 	Mattone	 	Mattone Group Jay Street/BUG LLC	 	15.0000%	 	Forest City Jay Street Associates, L.P.	 	15.0000%	 	Forest City B.U.G. Building Inc.	 	FC B.U.G., LLC	 	18.1818%	 	15.0000%
	 
	 	Travis	 	Paul Travis	 	8.6000%	 	RRG B.U.G. Associates, L.P.	 	1.5050%	 	Forest City B.U.G. Building Inc.	 	FC B.U.G., LLC	 	1.8242%	 	1.5050%
	Two Metrotech Center
	 	Kessler	 	Kessler (2)	 	99.0000%	 	RRG S.I.A.C. Limited Partnership	 	2.4750%	 	Forest City S.I.A.C. Building Inc.	 	Forest City Bridge Street Associates, L.P.	 	2.4750%	 	2.4750%
	 
	 	Mattone	 	Mattone Group Bridge Street/SIAC LLC	 	15.0000%	 	Forest City Bridge Street Associates, L.P.	 	15.0000%	 	Forest City S.I.A.C. Building Inc.	 	Forest City Bridge Street Associates, L.P.	 	15.0000%	 	15.0000%
	 
	 	Travis	 	Paul Travis (1)	 	4.7778%	 	RRG S.I.A.C. Associates, L.P.	 	1.5050%	 	Forest City S.I.A.C. Building Inc.	 	Forest City Bridge Street Associates, L.P.	 	1.5050%	 	1.5050%
	Nine Metrotech Center
	 	Mattone	 	Mattone Group Flatbush LLC	 	15.0000%	 	FC Flatbush Associates, L.P.	 	15.000%	 	Forest City Flatbush Inc.	 	FC Flatbush Associates L.P.	 	15.0000%	 	15.0000%
	15 Metrotech Center (9 South)
	 	Mattone	 	Mattone Group Myrtle, LLC	 	5.0000%	 	Forest City Myrtle Associates, LLC	 	5.000%	 	F.C. Member, Inc.	 	Forest City Myrtle Associates, LLC	 	5.0000%	 	5.0000%
	Eleven Metrotech Center
	 	Mattone	 	Mattone Group Tech Place LLC	 	15.0000%	 	Forest City Tech Place Associates, L.P.	 	15.000%	 	Forest City Tech Place Inc.	 	Forest City Tech Place Associates, L.P.	 	15.0000%	 	15.0000%
	One Pierrepont Plaza
	 	Kessler	 	Kessler (2)	 	44.1100%	 	KERA Limited Partnership	 	6.6165%	 	Forest City Pierrepont, Inc.	 	Forest City Pierrepont Associates	 	6.6165%	 	6.6165%
	 
	 	Kessler	 	Kessler (2)	 	50.0000%	 	Ratner-Kessler Realty Inc.	 	0.0750%	 	Forest City Pierrepont, Inc.	 	Forest City Pierrepont Associates	 	0.0750%	 	0.0750%
	 
	 	Bailkin	 	Jordana Bailkin	 	6.3700%	 	KERA Limited Partnership	 	0.9555%	 	Forest City Pierrepont, Inc.	 	Forest City Pierrepont Associates	 	0.9555%	 	0.9555%
	 
	 	Travis	 	Paul Travis	 	2.5700%	 	KERA Limited Partnership	 	0.3855%	 	Forest City Pierrepont, Inc.	 	Forest City Pierrepont Associates	 	0.3855%	 	0.3855%
	 
	 	David Kessler	 	David Kessler	 	1.4700%	 	KERA Limited Partnership	 	0.2205%	 	Forest City Pierrepont, Inc.	 	Forest City Pierrepont Associates	 	0.2205%	 	0.2205%
	 
	 	Balinong	 	Conchita Balinong	 	0.3700%	 	KERA Limited Partnership	 	0.0555%	 	Forest City Pierrepont, Inc.	 	Forest City Pierrepont Associates	 	0.0555%	 	0.0555%
	Harlem Center Office
	 	ADC	 	ADC Harlem Center Development LLC	 	25.0000%	 	Harlem Center Office LLC	 	25.0000%	 	Forest City Commercial Holdings Inc.	 	FC Harlem Center Office, LLC	 	33.3333%	 	25.0000%
	Harlem Center
	 	ADC	 	ADC Harlem Center Development LLC	 	25.0000%	 	Harlem Center LLC	 	25.0000%	 	Forest City Commercial Holdings Inc.	 	FC Harlem Center, LLC	 	33.3333%	 	25.0000%
	Columbia Park
	 	Treeco	 	Treeco Columbia Park LLC	 	25.0000%	 	FC/Treeco Columbia Park LLC	 	25.0000%	 	Forest City Commercial Holdings Inc.	 	FC Columbial Park Member, LLC	 	33.6700%	 	25.0000%
	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Development Property
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mill Basin
	 	MB	 	MB Members LLC	 	25.0000%	 	Mill Basin Associates, LLC	 	25.0000%	 	F.C. Member	 	FC Mill Basin Associates, LLC	 	33.3333%	 	25.0000%








 




			
	(2)	 	Estate of Jerome Kessler, or whoever succeded to Jerome Kessler’s interest.
	 
	(3)	 	Unless otherwise indicated, the transferee entity is the same as at the Principal Closing.














 






Master
Contribution and Sale Agreement

Schedule 4.18B




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Interest	 	 	 	 	 	 	 	Interest	 	Effective Held
	Operating Property	 	Outside Partner	 	Outside Partner Entity/Owner	 	Owned	 	Entity Owned	 	FCE Transferor	 	Held Back Interest	 	Transferred	 	Back Interest
	One Metrotech Center
	 	Travis	 	Paul Travis	 	8.6000%	 	RRG B.U.G. Associates, L.P.	 	Forest City B.U.G. Building Inc.	 	FC B.U.G., LLC	 	1.8242%	 	1.5050%
	Two Metrotech Center
	 	Travis	 	Paul Travis	 	4.7778%	 	RRG S.I.A.C. Associates, L.P.	 	Forest City S.I.A.C. Building Inc.	 	Forest City Bridge Street Associates, L.P.	 	1.5050%	 	1.5050%
	One Pierrepont Plaza
	 	Kessler	 	Kessler (1)	 	44.1100%	 	KERA Limited Partnership	 	Forest City Pierrepont, Inc.	 	Forest City Pierrepont Associates	 	6.6165%	 	6.6165%
	 
	 	Kessler	 	Kessler (1)	 	50.0000%	 	Ratner-Kessler Realty Inc.	 	Forest City Pierrepont, Inc.	 	Forest City Pierrepont Associates	 	0.0750%	 	0.0750%
	 
	 	Bailkin	 	Jordana Bailkin	 	6.3700%	 	KERA Limited Partnership	 	Forest City Pierrepont, Inc.	 	Forest City Pierrepont Associates	 	0.9555%	 	0.9555%
	 
	 	Travis	 	Paul Travis	 	2.5700%	 	KERA Limited Partnership	 	Forest City Pierrepont, Inc.	 	Forest City Pierrepont Associates	 	0.3855%	 	0.3855%
	 
	 	David Kessler	 	David Kessler	 	1.4700%	 	KERA Limited Partnership	 	Forest City Pierrepont, Inc.	 	Forest City Pierrepont Associates	 	0.2205%	 	0.2205%
	 
	 	Balinong	 	Conchita Balinong	 	0.3700%	 	KERA Limited Partnership	 	Forest City Pierrepont, Inc.	 	Forest City Pierrepont Associates	 	0.0555%	 	0.0555%
	Queenswood
	 	Kessler	 	Kessler (1)	 	19.0000%	 	BR Queenswood Associates, L.P.	 	N/A	 	N/A	 	N/A	 	N/A
	 
	 	Travis	 	Paul Travis	 	5.0000%	 	BR Queenswood Associates, L.P.	 	N/A	 	N/A	 	N/A	 	N/A








 




			
	(1)	 	Estate of Jerome Kessler, or whoever succeded to Jerome Kessler’s interest.




The aggregate value of the above outside partners’ interests is $14,478,988.00.

















 





SCHEDULE 5.3(j)




Outside Investor Consents




One Pierrepont Plaza




Jerome M. Kessler




 









 





SCHEDULE 5.4(J)




Non-Consolidation Opinions




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Original Loan
	 	 	Property	 	Originator	 	Closing Date	 	Amount
	 
	 	 	 	 	 	 	 	 
	1.   

	 	Atlantic Center

199 Fort Greene Place

625 Atlantic Avenue

Brooklyn, New York
	 	Nomura Asset
Capital Corporation  
	 	March, 1998   
	 	$ 63,149,069   
	 
	 	 	 	 	 	 	 	 
	2.

	 	Maspeth Center

7417 Grand Avenue

Maspeth, New York
	 	Nomura Asset
Capital Corporation
(1998) 


The Capital Company
of
America LLC
(1999 amend) 


LaSalle Bank
National
Association,
Trustee for CDC
Depositor Trust
ST-1 (2001)
	 	1998

1999

2001
	 	$ 24,245,480
	 
	 	 	 	 	 	 	 	 
	3.

	 	Shops at Bruckner Boulevard

845 White Plains Road

Bronx, New York
	 	Nomura Asset

Capital Corporation
	 	March, 1998
	 	$ 14,134,206
	 
	 	 	 	 	 	 	 	 
	4.

	 	Shops at Gun Hill Road

1806 Gun Hill Road

1820 Gun Hill Road

Bronx, New York
	 	Nomura Asset

Capital Corporation
	 	March, 1998
	 	Ely — $3,598,440


Warnig-

$ 11,647,930
	 
	 	 	 	 	 	 	 	 
	5.

	 	Shops at Richmond Avenue

2505-2535 Richmond Avenue

Staten Island, New York
	 	Nomura Asset

Capital Corporation

(1998)


LaSalle Bank

National

Association,

Trustee for CDC

Depositor Trust

ST-1 (2001)
	 	March, 1998
March 7, 2001
	 	$ 20,829,128






 









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Original Loan
	 	 	Property	 	Originator	 	Closing Date	 	Amount
	 
	 	 	 	 	 	 	 	 
	6.

	 	Atlantic Center Site V

590 Atlantic Avenue

Brooklyn, New York
	 	The Capital Company
of America LLC
	 	August 7, 1998
	 	$  4,319,296
	 
	 	 	 	 	 	 	 	 
	7.

	 	Castle Center

1716, 1720, 1724

Eastchester Road

Bronx, New York
	 	Secore Financial

Corporation
	 	April 4, 2001
	 	$ 12,500,000
	 
	 	 	 	 	 	 	 	 
	8.

	 	One Metrotech Center

Brooklyn, New York
	 	Bear Stearns
Commercial
Mortgage, Inc.
	 	May 10, 2005
	 	$180,000,000
	 
	 	 	 	 	 	 	 	 
	9.

	 	Ten Metrotech Center

Brooklyn, New York
	 	Secore Financial

Corporation (for

Societe Generale)
	 	February 25, 2005
	 	$ 73,500,000
	 
	 	 	 	 	 	 	 	 
	10.

	 	One Pierrepont Plaza

Brooklyn, New York
	 	Nomura Asset

Capital Corporation
	 	December 20, 1993
	 	$128,000,000
	 
	 	 	 	 	 	 	 	 
	11.

	 	Steinway Street Theaters

35-50 37th Street

Astoria, New York
	 	UBS Warburg Real
Estate Investments
Inc.
	 	November 18, 2002
	 	$ 18,000,000
	 
	 	 	 	 	 	 	 	 
	12.

	 	Forest Avenue Cinemas

2474 Forest Avenue

Staten Island, New York
	 	Morgan Stanley Dean
Witter Mortgage
Capital, Inc.
	 	June 28, 2002
	 	$  8,150,000
	 
	 	 	 	 	 	 	 	 
	13.

	 	Court Street

94-110 Court Street

Brooklyn, New York
	 	Bear Stearns
Commercial
Mortgage, Inc.
	 	January 18, 2003
	 	$ 21,500,000
	 
	 	 	 	 	 	 	 	 
	14.

	 	Woodbridge Crossing

451-479 Green Street

Woodbridge, New Jersey
	 	GMAC Commercial

Mortgage

Corporation
	 	July 15, 2003
	 	$ 18,600,000
	 
	 	 	 	 	 	 	 	 
	15.

	 	Brooklyn Commons

124-136 Second Avenue

Brooklyn, New York
	 	Legg Mason Real
Estate Services,
Inc. (Wells Fargo
Bank Northwest,
National
Association, as
Trustee, Legg Mason
Mortgage Capital
Corporation
Lease-Backed
Pass-Through Trust,
Series 2003-
CTL-14)
	 	August 26, 2003
	 	$ 28,046,334






 









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Original Loan
	 	 	Property	 	Originator	 	Closing Date	 	Amount
	 
	 	 	 	 	 	 	 	 
	16.

	 	Quartermaster Plaza I

Philadelphia, Pennsylvania
	 	Deutsche Banc
Mortgage Capital,
L.L.C.
	 	September 30, 2005
	 	$43,6000,000







 











 





SCHEDULE 6.1(d)

to

MASTER CONTRIBUTION AND SALE AGREEMENT




1. REQUIRED ESTOPPEL CERTIFICATES




Anchor Tenants



Morgan Stanley & Co. Incorporated (One Pierrepont Plaza)

Securities Industry Automation Corporation (Two Metrotech Center)

The Bank of New York (Atlantic Terminal Office)




2. REQUIRED BCR CONSENTS




Ground Lessors



NYC IDA

New York City Industrial Development Agency (1 Pierrepont Plaza)



ESDC

42nd Street Development Project, Inc. (42nd Street Retail — Key
Management and Ellen Ratner 2000 Trust)

The New 42nd Street Retail, Inc. (42nd Street Retail — Key
Management and Ellen Ratner 2000 Trust)




Outside Investors



Kessler

Estate of Jerome Kessler (1 Pierrepont)




Schedule 6.1(d) — Page 1









 








SCHEDULE 7.1(a)




FCE Entities Organization




	 	 	 	 	 	 	 
	 	 	 	 	 	 	Jurisdiction of
	 	 	Full Legal Name	 	Type of Legal Entity	 	Organization
	 
	 	 	 	 	 	 
	1.

	 	Forest City B.U.G. Building, Inc.
	 	Corporation
	 	New York
	 
	 	 	 	 	 	 
	2.

	 	Forest City S.I.A.C. Building, Inc.
	 	Corporation
	 	New York
	 
	 	 	 	 	 	 
	3.

	 	Forest City Flatbush Inc.
	 	Corporation
	 	New York
	 
	 	 	 	 	 	 
	4.

	 	F.C. Member, Inc.
	 	Corporation
	 	New York
	 
	 	 	 	 	 	 
	5.

	 	Forest City Fulton Street Building, Inc.
	 	Corporation
	 	New York
	 
	 	 	 	 	 	 
	6.

	 	Forest City Tech Place Inc.
	 	Corporation
	 	New York
	 
	 	 	 	 	 	 
	7.

	 	Forest City Pierrepont, Inc.
	 	Corporation
	 	New York
	 
	 	 	 	 	 	 
	8.

	 	Forest City Commercial Holdings, Inc.
	 	Corporation
	 	New York
	 
	 	 	 	 	 	 
	9.

	 	Forest City Bluffside Corporation
	 	Corporation
	 	Ohio
	 
	 	 	 	 	 	 
	10.

	 	Cleveland/NY Residential, LLC
	 	Limited Liability
Company
	 	New York
	 
	 	 	 	 	 	 
	11.

	 	Forest City Equity Services, Inc.
	 	Corporation
	 	Ohio
	 
	 	 	 	 	 	 
	12.

	 	First New York Management Company, Inc.
	 	Corporation
	 	New York
	 
	 	 	 	 	 	 
	13.

	 	Forest City NY, Inc.
	 	Corporation
	 	New York
	 
	 	 	 	 	 	 
	14.

	 	Forest City N.Y. Group, Inc.
	 	Corporation
	 	New York
	 
	 	 	 	 	 	 
	15.

	 	FC South, Inc.
	 	Corporation
	 	New York






 









 






Schedule 7.1 (e) FCEI Stock




As of July 21, 2006




i) Authorized capital stock of FCEI:




	 	 	 	 	 
	Class A
	 	 	271,000,000	 
	Class B
	 	 	56,000,000	 
	Preferred stock
	 	 	10,000,000	 
	 
	 	 	 	 
	Total
	 	 	337,000,000	 






ii) Total number of shares of each class of capital stock outstanding (1):




	 	 	 	 	 
	Class A
	 	 	76,321,341	 
	Class B
	 	 	25,822,860	 
	Preferred Stock
	 	 	—	 
	 
	 	 	 	 
	Total
	 	 	102,144,201	 





iii) Total number of options and warrants to acquire such capital stock and
any commitments to issue or grant any of the foregoing:




	 	 	 	 	 
	Stock Options
	 	 	3,860,792	 
	Phantom Shares (2)
	 	 	9,433	 
	 
	 	 	 	 
	 
	 	 	3,870,225	 
	 
	 	 	 	 








 




			
	(1)	 	Includes unvested restricted stock.
	 
	(2)	 	Respresents phantom shares held in the Nonemployee Director Deferred Compensation Plan
that may be settled in real shares of Class A common stock upon retirement from the Board.




 









 










SCHEDULE 7.1(r)




Individuals Comprising “Knowledge of Forest City”




Thomas G. Smith




Linda Kane




Geralyn M. Presti




Warren Ornstein




Layton McCown



For purposes of Section 7.3, Forest City will identify the individuals with knowledge with respect
to each representation and warranty relating to such Development Property following the
Stabilization Date for such Development Property. If and to the extent that the individuals so
identified by Forest City vary from those identified in Schedule 7.1(r) (other than due to the
discontinuance of the employment of an individual identified on Schedule 7.1(r) by such
individual’s employer as of the date hereof and the identification by Forest City of such
individual’s successor), then the BCR Representative will have the right to review and approve the
individuals identified by Forest City, which approval will not be unreasonably withheld or delayed.





 











 





SCHEDULE 7.2(a)

to

MASTER CONTRIBUTION AND SALE AGREEMENT




BCR Entities Organization




	 	 	 	 	 
	Name of Entity	 	Jurisdiction	 	Entity Type
	 
	 	 	 	 
	Brooklyn One Trust

	 	New York
	 	trust
	 
	 	 	 	 
	Brooklyn Two Trust

	 	New York
	 	trust
	 
	 	 	 	 
	Brooklyn Three Trust

	 	New York
	 	trust
	 
	 	 	 	 
	RRG New B.U.G., LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG New S.I.A.C., LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG Flatbush Associates, L.P.

	 	New York
	 	limited partnership
	 
	 	 	 	 
	RRG Myrtle, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG Fulton Associates, L.P.

	 	Delaware
	 	limited partnership
	 
	 	 	 	 
	RRG Tech Place Associates, L.P.

	 	New York
	 	limited partnership
	 
	 	 	 	 
	RRG Harlem Office, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG Hanson Office, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG Gowanus Canal, Inc.

	 	New York
	 	corporation
	 
	 	 	 	 
	BR Master Limited Partnership

	 	New York
	 	limited partnership
	 
	 	 	 	 
	RRG Queens Place, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG Retail Properties, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG Hanson, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	FC Quartermaster Retail II, L.P.

	 	New York
	 	limited partnership
	 
	 	 	 	 
	RRG Quartermaster II, LLC

	 	Pennsylvania
	 	limited liability company
	 
	 	 	 	 
	FC Quartermaster Retail III, L.P.

	 	New York
	 	limited partnership
	 
	 	 	 	 
	RRG Quartermaster III, LLC

	 	Pennsylvania
	 	limited liability company






Schedule 7.2(a) — Page 1









 






	 	 	 	 	 
	Name of Entity	 	Jurisdiction	 	Entity Type
	 	 	 	 	 
	FC Quartermaster Retail, L.P.

	 	New York
	 	limited partnership
	 
	 	 	 	 
	FC Quartermaster Retail IV, L.P.

	 	New York
	 	limited partnership
	 
	 	 	 	 
	RRG New Residential 

Properties, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	The Ellen Ratner 2000 Trust

	 	New York
	 	trust
	 
	 	 	 	 
	FC Forest Avenue Retail, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG Court Street Retail, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG Steinway Street Retail, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG Bloomfield, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	BR Basketball, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	BR Land, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	BR First New York, L.P.

	 	New York
	 	limited partnership
	 
	 	 	 	 
	Ratner Realty Group, Inc.

	 	New York
	 	corporation
	 
	 	 	 	 
	BR 42 Hotel, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	BR 8 South, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG East River, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG Yonkers, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG 330 Jay Office, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG Mill Basin, LLC

	 	New York
	 	limited liability company
	 
	 	 	 	 
	RRG Tilden Associates, L.P.

	 	New York
	 	limited partnership
	 
	 	 	 	 
	RRG Tilden, Inc.

	 	New York
	 	corporation
	 
	 	 	 	 
	BR Retail Member, LLC

	 	New York
	 	limited liability company







Schedule 7.2(a) — Page 2












 





SCHEDULE 7.2(c)

to

MASTER CONTRIBUTION AND SALE AGREEMENT




CONSENTS




Please note that this Schedule does not list persons to whom notice and/or certain deliveries or
payments may be required to be given or made in connection with the transactions contemplated by
the Agreement.



1. Third-party consents/waivers/confirmations/acknowledgements that will be sought by the BCR
Entities in connection with the transactions contemplated by the Agreement:



     NYC IDA





New York City Industrial Development Agency (1 Pierrepont)



     Morgan Stanley





Morgan Stanley & Co. Incorporated (Transaction Payments for 1 Pierrepont)



     Kessler





Estate of Jerome Kessler (1 Pierrepont)



     NBA





National Basketball Association (Nets)



     NYC





The City of New York (Transaction Payments; and, as described in Schedule 9.2(c),
representations on ownership for Atlantic Center, 2MTC, 1MTC, 11MTC, 9MTC, and 15MTC)



     NYT





The New York Times Company (The New York Times Building)



     ESDC





42nd Street Development Project, Inc. (42nd Street Retail — Key
Management and Ellen Ratner Trust)

The New 42nd Street Retail, Inc. (42nd Street Retail — Key Management
and Ellen Ratner Trust)



     East River Plaza





DWD Associates, LLC (Bloomenfeld)

Banc of America CDE I, LLC



     FCE





Forest City Enterprises, Inc. and affiliates (Key Management)



Schedule 7.2(c) — Page 1




 









 








2. Third-party consents/waivers/confirmations/acknowledgements that Forest City and the BCR
Entities agree are not required in connection with the transactions contemplated by the
Agreement:




All third party lenders, ground lessor, investors and tenants not noted in 1 above, and
specifically including the following:




Paul Travis (1MTC and 2MTC)




Philadelphia Authority for Industrial Development (Quartermaster I-IV)




GMAC Commercial Mortgage Corporation (or its successor as mortgagee) (Woodbridge)




John Hancock Mutual Life Insurance Company (or its successor as mortgagee) (Columbia Park)




Wells Fargo Bank Northwest, NA, as Trustee, Legg Mason Mortgage Capital Corporation
Lease-Backed Pass —Through Trust, Series 2003-CTL-14 (or its successor as mortgagee)
(Brooklyn Commons)




Deutsche Banc Mortgage Capital, L.L.C. (or its successor as mortgagee) (Quartermaster I and
IV)




Nationwide Life Insurance Company (or its successor as mortgagee) (Quartermaster II and III)




ADC Harlem Center Development LLC (Harlem Center Office and Retail)



3. Third-party consents/waivers/confirmations/acknowledgements that have been obtained by the
BCR Entities in connection with the transactions contemplated by the Agreement:



     Mattone





Mattone Group Jay Street / BUG, LLC (1MTC)

Mattone Group Bridge Street / SIAC, LLC (2MTC)

Mattone Group Flatbush LLC (9MTC)

Mattone Group Tech Place LLC (11MTC)

Mattone Group Myrtle, LLC (15MTC)



4. Third-party consents/waivers/confirmations/acknowledgements that have been obtained by
Forest City in connection with the transactions contemplated by the Agreement:




Teachers Insurance and Annuity Association (Northern Blvd., 2MTC, 9MTC, Atlantic Terminal
Retail, Queens Place, Harlem Retail and 42nd Street Retail)



Schedule 7.2(c) — Page 2





 









 








SCHEDULE 7.2(f)

to

MASTER CONTRIBUTION AND SALE AGREEMENT




Material Non-Compliance with Laws




None



Schedule 7.2(f) — Page 1




 









 








SCHEDULE 7.2(g)

to

MASTER CONTRIBUTION AND SALE AGREEMENT




PENDING TAX CLAIMS AND AUDITS




Tax Returns & Payments




***



***



The Property Owner for Atlantic Terminal Retail has not been billed for, and thus is unable to pay,
real estate taxes.



The Property Owner for Atlantic Center Site V is delinquent in the payment of approximately $2,000
in business improvement district assessments.



The Property Owner for Woodbridge is delinquent in the payment of approximately $60,000 in payments
in lieu of real estate taxes.



Pending Tax Audits




NYS Department of Taxation and Finance is conducting audits with respect to Sales and Compensating
Use Taxes against the Property Owners for Pierrepont and Atlantic Terminal Retail.



***   Text
Omitted and Filed Separately 

Confidential Treatment Requested





Schedule 7.2(g) — Page 1




 












 





SCHEDULE 7.2(j)

to

MASTER CONTRIBUTION AND SALE AGREEMENT




LIST OF GROUND LEASES AND ANCHOR LEASES AND DEFAULTS UNDER GROUND 

LEASES AND ANCHOR TENANT LEASES




1. GROUND LEASES




	 	 	 	 	 
	Properties	 	Ground Lessors	 	Lease Dates
	 
	 	 	 	 
	Atlantic Center

199 Fort Greene 

Place

625 Atlantic Avenue

Brooklyn, New York

	 	The City of New York
	 	August 4, 1995
	 
	 	 	 	 
	Shops at Bruckner 

Boulevard

845 White Plains 

Road

Bronx, New York

	 	Bruckner Plaza Associates, L.P.
	 	September 29, 1995
	 
	 	 	 	 
	Shops at Northern
Boulevard

48-18 Northern Blvd.

Long Island City,

New York

	 	48-18 Properties, L.L.C.
	 	October 1, 1996
	 
	 	 	 	 
	Castle Center

1716, 1720, 1724

Eastchester Road

Bronx, New York

	 	Waters Place Associates, L.P.
	 	May 17, 1999
	 
	 	 	 	 
	Two Metrotech Center

Brooklyn, New York

	 	The City of New York
	 	March 10, 1988

March 31, 1989 — Confirmation and
Correction

April 30, 1991 — 2nd Amend.

December 31, 2001 — 3rd Amend.

April 3, 1991 letter
	 
	 	 	 	 






Schedule 7.2(j) — Page 1









 






	 	 	 	 	 
	Properties	 	Ground Lessors	 	Lease Dates
	

	 	
	 	
	One Metrotech Center

 Brooklyn, New York

	 	The City of New York	 	August 30, 1988 

October 30, 1989 — Confirmation and
Correction

November 1, 1991 — Amend.

December 31, 2001 — 3rd Amend.
	 
	 	 	 	 
	One Pierrepont Plaza

Brooklyn, New York

	 	The City of New York
	 	May 13, 1986

May 13, 1986 — Assignment

December 20, 1993 — Amend.
	 
	 	 	 	 
	Eleven Metrotech 

Center

Brooklyn, New York

	 	The City of New York
	 	November 17, 1993

December 31, 2001 — Amend.
	 
	 	 	 	 
	Nine Metrotech 

Center

Brooklyn, New York

	 	The City of New York
	 	August 30, 1996

December 31, 2001 — Amend.
	 
	 	 	 	 
	Atlantic Terminal

(Retail)

139 Flatbush Avenue

Brooklyn, New York

	 	Metropolitan Transit Authority and
Long Island Railroad Company
	 	October 31, 2002
	 
	 	 	 	 
	Forest Avenue 

Cinemas

2474 Forest Avenue

Staten Island, New 

York

	 	Morrow Street Associates, LLC
	 	December 31, 1998
	 
	 	 	 	 
	Court Street

94-110 Court Street

Brooklyn, New York

	 	94-110 Court Street LLC
	 	January 28, 1999

January 28, 1999 — Agreement

January 28, 1999 — Commencement Date

Agreement

January 28, 1999 — Amend.
	 
	 	 	 	 
	42nd
Street Retail

West 

42nd
Street

New York, New York

	 	42nd St. Development Project, Inc.

The New 42nd Street, Inc.
	 	42DP:

December 13, 1996

August 6, 1997 — 1st Amend.

February 6, 1998 — 2nd Amend.

November 5, 1998 — 3rd Amend.

October 6, 2000 — 4th Amend.

October 14, 2005 — 5th Amend.

and Side Letter







Schedule 7.2(j) — Page 2









 






	 	 	 	 	 
	Properties	 	Ground Lessors	 	Lease Dates
	 

	 	 	 	New 42:

December 13, 1996

February 6, 1998 — 1st Amend.

November 5, 1998 — 2nd Amend.

October 6, 2000 — 3rd Amend.

October 14, 2005 — 4th Amend.
and Side Letter
	 
	 	 	 	 
	Woodbridge Crossing

451-479 Green Street

Woodbridge, New 

Jersey

	 	Dowel-Woodbridge, LLC



Township of Woodbridge

Public Service Electric and Gas Company
	 	Dowel:

January 25, 2001

Township:

December 21, 2000



PSE&G:

January 5, 2001

January 25, 2001 — Assignment
	 
	 	 	 	 
	Harlem Center
(Retail)

105 & 125 W.

125th
Street

New York, New York

	 	The New York State Urban Development

Corporation (d/b/a Empire State

Development Corporation)
	 	December 13, 2002 (Retail Sublease)
	 
	 	 	 	 
	Fifteen Metrotech 

Center

Brooklyn, New York

	 	The City of New York
	 	December 31, 2001

May 14, 2002 —Amend.
	 
	 	 	 	 
	Quartermaster Plaza
I, II, III and IV

Philadelphia,

Pennsylvania

	 	Philadelphia Authority for Industrial

Development	 	 
	 
	 	 	 	 
	Harlem Center

(Office)

105 West
125th

Street

New York, New York

	 	The New York State Urban Development

Corporation (d/b/a Empire State

Development
 Corporation)
	 	December 13, 2002 (Office Sublease)
	 
	Atlantic Terminal

(Office)

139 Flatbush
Avenue,
Brooklyn,

	 	Metropolitan Transit Authority and

Long Island Railroad Company
	 	October 31, 2002






Schedule 7.2(j) — Page 3









 






	 	 	 	 	 
	Properties	 	Ground Lessors	 	Lease Dates
	New York
	 	 	 	 
	 
	 	 	 	 
	MetroTech Commons

	 	The City of New York
	 	August 30, 1998


October 26, 1989 — Amend.






2. ANCHOR TENANT LEASES




	 	 	 	 	 
	Properties	 	Anchor Tenants	 	Lease Dates
	Atlantic Center

199 Fort Greene 

Place

625 Atlantic Avenue

Brooklyn, New York

	 	Stern’s — Misc., Inc. (Federated)
	 	March 1, 1995

March 1, 1996 — 1st Amend

March 1, 1996 — 2nd Amend

April 17, 1996 — letter

May 4, 1999 — assignment

May 4, 1999 — 3rd Amend

June 16, 2003 — 4th Amend

June 1, 2004 — 5th Amend

	 
	 	 	 	 
	Shops at Gun Hill 

Road

1806 Gun Hill Road

Bronx, New York

	 	Home Depot U.S.A., Inc.
	 	June 27, 1995

January  , 1996 — 1st Amend

June 10, 1996 — assignment
	 
	 	 	 	 
	Two Metrotech Center

Brooklyn, New York

	 	Securities Industry Automation Corporation
	 	March 10, 1988

November 13, 1989 — letter

February 4, 1997

May 1, 1999

May 26, 2000

August 1, 2002

June 1, 2003
	 
	 	 	 	 
	One Metrotech Center

Brooklyn, New York

	 	The Brooklyn Union Gas Company

(KeySpan)

	 	September 15, 1988

March 8, 1991 — 1st Amend.

March 24, 2005 — 2nd Amend.
	 

	 	The Bear Stearns Companies, Inc.
	 	November 1, 1991

November 1, 1991 — letter agreement

September 30, 1999 — letter agreement

December 20, 1999 — 1st Amend

July 30, 2001 — letter agreement

April 23, 2003 — 2nd Amend.
	 
	Ten Metrotech Center

Brooklyn, New York

	 	United States of America (IRS)
	 	August 21, 1990

Letter dated 4-15-92 regarding: (a)
substantial
completion date for (i)
basement storage space,
expansion space
under SLA No. 3 and parking
garage
(4-1-92); and (ii) training space under

SLA No. 2 (4-16-92); and (b) expiration of
rent
abatement for expansion space under
SLA No.







Schedule 7.2(j) — Page 4









 






	 	 	 	 	 
	Properties	 	Anchor Tenants	 	Lease Dates
	 

	 	 	 	3 (9-30-92).


Supplemental Agreement No. 1, dated
9-19-90,
effective 9-12-90.


Supplemental Agreement No. 2, executed by

GSA on 6-26-91 and by LL on 6-6-91,
effective
4-1-91.


Supplemental Agreement No. 3, executed by

GSA on 6-26-91 and by LL on 7-18-91,

effective 7-1-91.


Supplemental Agreement No. 4, dated
10-30-
91, effective 8-1-91.


Supplemental Agreement No. 5, dated
12-12-
91, effective 8-14-91.


Supplemental Agreement No. 6, dated
2-5-92,
effective 11-15-91.


Supplemental Agreement No. 7, dated
3-23-92,
effective 2-1-92.


Supplemental Agreement No. 8, dated
3-23-92,
effective 2-12-92.


Supplemental Agreement No. 9, undated,

effective 4-1-92.


Supplemental Agreement No. 10, undated,

effective 5-29-92.


Supplemental Agreement No. 11, dated
1-25-93,
 effective 11-3-92.


Supplemental Agreement No. 12, dated
4-7-93,
 effective 4-1-92.


Supplemental Agreement No. 13, dated
5-27-93,
effective 2-15-93.


Supplemental Agreement No. 14, dated
5-27-93,
 effective 4-16-93.


Supplemental Agreement No. 15, dated and

effective 9-6-96


Supplemental Agreement No. 16, dated
2-4-97.


Supplemental Agreement No. 17, dated and

effective 8-8-97.


Supplemental Agreement No. 18 dated and






Schedule 7.2(j) — Page 5









 






	 	 	 	 	 
	Properties	 	Anchor Tenants	 	Lease Dates
	 

	 	 	 	effective 6-19-99.


Supplemental Agreement No. 19, undated,

effective 10-19-98.




Supplemental Agreement No. 20, undated,

effective 10-19-98.


Supplemental Agreement No. 21, dated
3-9-99
and effective 2-3-99.


Supplemental Agreement No. 22, dated and
effective 10-12-99.


Supplemental Agreement No. 23, dated
6-27-00
and effective 6-12-00.


Supplemental Agreement No. 24 dated
6-20-00 
and effective 6-15-00.


Supplemental Agreement No. 25, dated
8-23-
00, effective 8-17-00.


Supplemental Agreement No. 26, undated,

effective 9-28-01.


Supplemental Agreement No. 27.


Supplemental Agreement No. 28, dated
10-2-
02.


Supplemental Agreement No. 29 dated
12-18-
02.


Supplemental Agreement No. 30, dated
4-2-03.


Supplemental Agreement No. 31, dated
4-17-
03.


Supplemental Agreement No. 32, dated
1-7-04,
 effective 5-28-03.


Supplemental Agreement No. 33, dated
9-2-04.


Supplemental Agreement No. 34, dated
10-20-04, effective 6-1-04.


Supplemental Agreement No. 35, dated and

effective 11-1-04.


	 
	 	 	 	 
	One Pierrepont Plaza


	 	Morgan Stanley & Co. Incorporated
	 	May 13, 1986

June 13, 1986 — letter

October 16, 1987 — letter







Schedule 7.2(j) — Page 6









 






	 	 	 	 	 
	Properties	 	Anchor Tenants	 	Lease Dates
	Brooklyn, New York

	 	 	 	
October 16, 1987 — 2nd Amend

December 7, 1987 — letter

July 20, 1988 — 3rd Amend

January 26, 1988 — letter

May 3, 1988 — letter

October 20, 1988 — letter

November 29, 1988 — letter 


January 11, 1989 — 4th Amend

January 5, 1990 — letter

January 12, 1990 — 5th Amend.

March 29, 1991 — 6th Amend.

September 15, 1992 — 7th Amend

November 30, 1992 — letter

December 4, 1992 — letter

December 15, 1992 — 8th Amend

September 23, 1993 — letter

December 20, 1993 — 9th Amend

May 2, 1994 — 10th Amend

April 30, 1997 — letter

September 28, 1998 — 11th Amend

March 28, 2000 — 12th Amend

July 11, 2003 — license

July 22, 2003 — license

July 22, 2003 — overlandlord consent
	 
	 	 	 	 
	Eleven Metrotech 

Center

Brooklyn, New York

	 	The City of New York, Department of

Citywide Administrative Services

(Department of Information Technology and

Telecommunications)
	 	May 12, 1993

May 14, 1993 — 1st Amend.

October 5, 1993 — 2nd Amend.

April 3, 1995 — 3rd Amend.

April 5, 1999 — 4th Amend.

April 30, 1999 — 5th Amend.

March 27, 2000 — 6th Amend.

September 29, 2000 — 7th Amend.

December 31, 2001 — 8th Amend.

October 15, 2004 — 9th Amend.
	 
	 	 	 	 
	Nine Metrotech 

Center

Brooklyn, New York

	 	The City of New York, Department of

Citywide Administrative Services (Fire

Department)
	 	July 24, 1996
	 
	 	 	 	 
	Atlantic Terminal

(Retail)

139 Flatbush Avenue 

Brooklyn, New York

	 	Target Corporation
	 	August 15, 2001

August 15, 2001 — Development Agreement

October 9, 2001 — amend

January 3, 2002 — amend

January 31, 2002 — amend to Development

Agreement

January 31, 2002 — set aside
	 
	 	 	 	 
	Fifteen Metrotech 

Center

	 	WellChoice, Inc.
	 	January 17, 2002

April 23, 2002 — 1st Amend.

December 19, 2002 — 2nd Amend.








Schedule 7.2(j) — Page 7









 






	 	 	 	 	 
	Properties	 	Anchor Tenants	 	Lease Dates
	Brooklyn, New York

	 	 	 	
July 1, 2003 — 3rd Amend.
	 
	 	 	 	 
	 

	 	The City of New York, Department of

Citywide Administrative Services (Human

Resources Administration)
	 	December 27, 2001

July 17, 2003 — letter

December 15, 2003 — letter

March 19, 2004 — letter

May 6, 2004 — 1st Amend

October 15, 2004 — 2nd Amend

July 11, 2005 — 3rd Amend
	 
	 	 	 	 
	Quartermaster Plaza
II and III

Philadelphia,

Pennsylvania

	 	Home Depot U.S.A., Inc. (II)




BJ’s Wholesale Club, Inc. (III)

	 	August 29, 2003




June 30, 2003

August 29, 2003 — 1st Amend

September 29, 2004 — letter

	 
	 	 	 	 
	Atlantic Terminal

(Office)

139 Flatbush Avenue, 

Brooklyn, New York

	 	The Bank of New York
	 	August 7, 2002

August 7, 2002 — letters (2)

February 28, 2006 (letter)
	 
	 	 	 	 
	Woodbridge Crossing

451-479 Green Street 

Woodbridge, New 

Jersey

	 	Sears, Roebuck & Co. (Great Indoors)
	 	June 4, 2001


June 4, 2001 — Development Agreement 


June 7, 2001 — Construction Deposit Escrow
and Disbursing Agreement 


August 16, 2001 — Supplemental Agreement 


November 13, 2001 — letter 


July 2, 2002 — letter






3. MATERIAL DEFAULTS UNDER GROUND LEASES AND ANCHOR TENANT LEASES




None





Schedule 7.2(j)  — Page 8











 





Schedule
7.2(k)





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	LEASING COMMISSION	 	TI ALLOWANCE
	 	 	PROPERTY	 	TENANT	 	DUE DATE	 	DUE NOW	 	DUE DATE	 	DUE IN FUTURE	 	TENANT	 	DUE NOW	 	DUE DATE	 	DUE IN FUTURE
	 	 	 
	***	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	***	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	***	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	***	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	***
	 	5-Jul-06
	 	***
	 	30-Jun-06
	 	***
	 	***
	 	***
	 	1-Feb-07
	 	***
	 
	 	***
	 	***
	 	 	 	 	 	1-Feb-07
	 	***
	 	***	 	 	 	 	 	 
	 
	 	***
	 	***
	 	 	 	 	 	30-Dec-11
	 	***
	 	***	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	***	 	 	 	 	 	 	 	 
	 
	 	***
	 	***
	 	18-Aug-06
	 	***
	 	15-Jan-07
	 	***
	 	***
	 	none
	 	 	 	none
	 
	 	***
	 	***
	 	 	 	 	 	14-Jul-07
	 	***
	 	***
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	***	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	***
	 	1-Jun-06
	 	***
	 	1-Oct-06
	 	***
	 	***
	 	***
	 	 	 	***
	 
	 	***
	 	***
	 	23-Jun-06
	 	***
	 	20-Dec-06
	 	***
	 	***
	 	***	 	 	 	 
	 
	 	***
	 	***
	 	 	 	 	 	18-Jun-07
	 	***
	 	***
	 	***	 	 	 	 
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	***
	 	***
	 	 	 	***
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	***
	 	none
	 	 	 	***
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	 	 	none




***  Text
Omitted and Filed Separately 

Confidential Treatment Requested




 









 







	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	LEASING COMMISSION	 	TI ALLOWANCE
	 	 	PROPERTY	 	TENANT	 	DUE DATE	 	DUE NOW	 	DUE DATE	 	DUE IN FUTURE	 	TENANT	 	DUE NOW	 	DUE IN FUTURE
	 	 	 
	***	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	none
	***	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	none
	***	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	none
	***	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	***
	 	none
	 	 	 	 	 	 	 	 	 	 	 	none	 	 
	 
	 	***
	 	***
	 	20-Apr-06
	 	***
	 	16-Apr-06
	 	***
	 	 	 	none	 	 
	 
	 	 	 	***
	 	22-Apr-06
	 	***
	 	22-Jul-06
	 	***	 	 	 	 	 	 
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	none
	 
	 	***
	 	none
	 	 	 	none
	 	 	 	none
	 	none
	 	none
	 	none
	??
	 	***
	 	***
	 	31-Aug-06
	 	***
	 	31-Oct-06
	 	***
	 	***
	 	none
	 	none
	 
	 	 	 	***
	 	 	 	 	 	29-Apr-07
	 	***
	 	***
	 	none
	 	none





***   Text
Omitted and Filed Separately 

Confidential Treatment Requested





 











 





SCHEDULE 7.2(l)

to

MASTER CONTRIBUTION AND SALE AGREEMENT




DEFAULTS UNDER OPERATING CONTRACTS



None.




Schedule 7.2(l) — Page 1




 









 








SCHEDULE 7.2(m)

to

MASTER CONTRIBUTION AND SALE AGREEMENT




DEFAULTS UNDER CONTINUING LOANS




***


***



***   Text
Omitted and Filed Separately 

Confidential Treatment Requested





Schedule 7.2(m) — Page 1




 









 








SCHEDULE 7.2(n)

to

MASTER CONTRIBUTION AND SALE AGREEMENT




ENVIRONMENTAL REPORTS




	 	 	 	 	 	 	 
	 	 	Operating Properties	 	Entity/Ownership Name	 	Type of Reports
	 
	 	 	 	 	 	 
	1.

	 	Atlantic Center

199 Fort Greene Place

625 Atlantic Avenue

Brooklyn, New York
	 	Atlantic Center Fort Greene Associates, LP
	 	N/A
	 
	 	 	 	 	 	 
	2.

	 	Maspeth Center

7417 Grand Avenue

Maspeth, New York
	 	FC Grand Avenue
Associates, L.P.
	 	N/A
	 
	 	 	 	 	 	 
	3.

	 	Shops at Bruckner Boulevard

845 White Plains Road

Bronx, New York
	 	FC Bruckner Associates, L.P.
	 	N/A
	 
	 	 	 	 	 	 
	4.

	 	Shops at Northern Boulevard

48-18 Northern Blvd. 

Long Island City, New York
	 	FC Northern Associates, L.P.
	 	N/A
	 
	 	 	 	 	 	 
	5.

	 	Shops at Gun Hill Road

1806 Gun Hill Road

1820 Gun Hill Road

Bronx, New York
	 	FC Waring Associates, L.P. 


FC Ely Associates, L.P.
	 	N/A
	 
	 	 	 	 	 	 
	6.

	 	Shops at Richmond Avenue

2505-2535 Richmond Avenue

Staten Island, New York
	 	FC Richmond Associates, L.P.
	 	N/A
	 
	 	 	 	 	 	 
	7.

	 	Atlantic Center Site V

(Pacific Avenue)

590 Atlantic Avenue

Brooklyn, New York
	 	FC Pacific Associates, LLC
	 	N/A





Schedule 7.2(n) — Page 1




 









 






	 	 	 	 	 	 	 
	 	 	Operating Properties	 	Entity/Ownership Name	 	Type of Reports
	 
	 	 	 	 	 	 
	8.

	 	Castle Center

1716, 1720, 1724 
Eastchester
Road

Bronx, New York
	 	FC Castle Center Associates II, LLC
	 	Property Condition Report
Dated 2/1/01 prepared by
IVI Architects,
Engineers & Construction
Consultants
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Phase I dated 2/01,
prepared by AKRF, Inc.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Remediation Progress
Report dated 8/01
prepared by Lawler,
Matusky & Skelly
Engineers, LLP
	 
	 	 	 	 	 	 
	9.

	 	Two Metrotech Center

Brooklyn, New York
	 	Forest City Bridge Street Associates, L.P.
	 	N/A
	 
	 	 	 	 	 	 
	10.

	 	One Metrotech Center

Brooklyn, New York
	 	Forest City Jay Street Associates, L.P.
	 	Property Condition
Report dated 3/05
prepared by EBI
Consulting
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Phase I dated 3/05
prepared by EBI
Consulting
	 
	 	 	 	 	 	 
	11.

	 	Ten Metrotech Center

625 Fulton Street

Brooklyn, New York
	 	625 Fulton Associates, LLC
	 	Phase 1 Report dated
5/03 prepared by Emteque
Corporation
	 
	 	 	 	 	 	 
	12.

	 	One Pierrepont Plaza

Brooklyn, New York
	 	Forest City Pierrepont Associates
	 	Forest City Ratner
internal memo dated
6/2/06 from John Davie
re: status of fuel tank
rupture.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Forest City Ratner
internal memo dated
6/6/05 regarding
analysis of Morgan
Stanley lease.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Letter dated 5/11/06
from Roux Associates
Inc. re: Remediation
System Summary and
Estimated Timeframe for
Remediation;





 Schedule 7.2(n) — Page 2




 









 








	 	 	 	 	 	 	 
	 	 	Operating Properties	 	Entity/Ownership Name	 	Type of Reports
	 

	 	 	 	 	 	300 Cadman
Plaza West Site; Spill
No. 0501830, dated
5/11/06
	 
	 	 	 	 	 	 
	13.

	 	Queenswood Apartments

Corona, New York
	 	Queenswood Associates, L.P.
	 	N/A
	 
	 	 	 	 	 	 
	14.

	 	Eleven Metrotech Center

Brooklyn, New York
	 	Forest City Tech Place
Associates, L.P.
	 	N/A
	 
	 	 	 	 	 	 
	15.

	 	Nine Metrotech Center

Brooklyn, New York
	 	FC Flatbush Associates, L.P.
	 	N/A
	 
	 	 	 	 	 	 
	16.

	 	Steinway Street Theaters

(a.k.a. Kaufman)

35-50 37th Street 

Astoria, New York
	 	FC Steinway Street Associates, LLC
	 	N/A
	 
	 	 	 	 	 	 
	17.

	 	Atlantic Terminal (Retail)

139 Flatbush Avenue

Brooklyn, New York
	 	FC Hanson Associates, LLC
	 	Phase I dated 4/01 by
AKRF, Inc.

(see also: Atlantic
Terminal Office)
	 
	 	 	 	 	 	 
	18.

	 	Forest Avenue Cinemas

2474 Forest Avenue

Staten Island, New York
	 	FC Forest Avenue
Associates, LLC	 	 
	 
	 	 	 	 	 	 
	19.

	 	Court Street

94-110 Court Street

Brooklyn, New York
	 	FC Court Street
Associates, LLC
	 	Phase I dated 11/02
prepared by IVI
Environmental

Property condition report
Dated 12/26/02 prepared
by IVI Environmental
	 
	 	 	 	 	 	 
	20.

	 	Columbia Park

3131 Kennedy Blvd. 

North Bergen, New Jersey
	 	FC/Treeco Columbia Park, LLC
	 	N/A





Schedule 7.2(n) — Page 3





 









 







	 	 	 	 	 	 	 
	 	 	Operating Properties	 	Entity/Ownership Name	 	Type of Reports
	 
	 	 	 	 	 	 
	21.

	 	42nd Street Retail

West 42nd Street

New York, New York
	 	FC 42nd Street Associates, L.P.
	 	Environmental Review
Technical Assessment —
Proposed Program
Modifications dated
8/01, consultant
unknown.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Memorandum — Summary of
General site conditions
at 42nd
Street Development site
— Lot 1 by Empire State
Development — cover
letter dated 9/7/01
forwarding copy of
Memorandum and
supporting documents to
Kelly, Drye & Warren,
LLP, outside counsel.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Lead Paint Survey dated
10/15/02 prepared by
Warren & Panzer
Engineers, P.C.
	 
	 	 	 	 	 	 
	22.

	 	Queens Place

88-01 Queens Blvd. 

Rego Park, New York
	 	FC Queens Place
Associates, LLC
	 	N/A
	 
	 	 	 	 	 	 
	23.

	 	Woodbridge Crossing

451-479 Green Street

Woodbridge, New Jersey
	 	FC Woodbridge Crossing, LLC
	 	N/A
	 
	 	 	 	 	 	 
	24.

	 	Worth Street

111 Worth Street

New York, New York
	 	FC Foley Square Associates, LLC
	 	N/A
	 
	 	 	 	 	 	 
	25.

	 	Harlem Center (Retail)

105 & 125 W. 125th Street 

New York, New York
	 	Harlem Center, LLC
	 	N/A
	 
	 	 	 	 	 	 
	26.

	 	Brooklyn Commons

124-136 Second Avenue

Brooklyn, New York
	 	FC Gowanus Associates, LLC
	 	Voluntary Cleanup
Program (Remedial Work
Plan) with approval
letter dated 3/01






Schedule 7.2(n) — Page 4




 









 







	 	 	 	 	 	 	 
	 	 	Operating Properties	 	Entity/Ownership Name	 	Type of Reports
	 

	 	 	 	 	 	Phases I-III 3rd Party
Review dated 7/01
prepared by IVI
Environmental
	 
	 	 	 	 	 	 
	27.

	 	Fifteen Metrotech Center

Brooklyn, New York
	 	Forest City Myrtle Associates, L.P.
	 	Phase I dated 11/01
prepared by AKRF, Inc.
	 
	 	 	 	 	 	 
	28.

	 	Quartermaster Plaza I, II, III
and IV

Philadelphia, 

Pennsylvania
	 	FC Quartermaster Associates, L.P.


 FC Quartermaster Associates, II, L.P. 


FC Quartermaster Associates III, L.P.


FC Quartermaster Associates IV, L.P.
	 	Environmental summary
dated 4/03 prepared by
Pennoni Associates
	 
	 	 	 	 	 	 
	29.

	 	Harlem Center (Office)

105 West 125th Street

New York, New York
	 	Harlem Center Office, LLC
	 	Phase I dated 12/04
prepared by Property
Solutions Inc.
	 
	 	 	 	 	 	 
	30.

	 	Atlantic Terminal (Office)

139 Flatbush Avenue,

Brooklyn, New York
	 	FC Hanson Office Associates, LLC
	 	Updated Phase I dated
12/01 prepared by AKRF,
Inc.

Phase I dated 6/01
(update to 5/00 report)
prepared by AKRF, Inc.
	 
	 	 	 	 	 	 
	31.

	 	New York Times Building

New York, New York
	 	FC Lion, LLC
	 	N/A
	 
	 	 	 	 	 	 
	32.

	 	Metrotech Commons Area

Brooklyn, New York
	 	Commons Associates
	 	N/A
	 
	 	 	 	 	 	 
	33.

	 	Atlantic Center — Vacant Lot

147 St. Felix Place 

Brooklyn, New York
	 	FC Felix Associates, L.P.
	 	N/A





Schedule 7.2(n) — Page 5





 











 





SCHEDULE 7.2(o)




Financial Information Letter




See attached




 









 










June 5, 2006




Mr. Thomas G. Smith

Executive Vice President,

   Chief Financial Officer & Secretary

Forest City Enterprises, Inc.

Terminal Tower Suite 1100

50 Public Square

Cleveland, Ohio 44113





	Re:  	 	Quarter Ended April 30, 2006





Dear Mr. Smith:



I am providing this letter in connection with the preparation of Forest City Enterprises, Inc.’s
(the Company) Form 10-Q for the period indicated above in relation to the New York strategic
business unit, including Forest City Ratner Companies, First New York Partners, New Jersey Nets,
and all subsidiaries and affiliates (collectively, “the SBU”). I confirm that I am responsible for
the fair presentation in the consolidated PlanMaster reports except for the shell companies for the
period referred to above of the SBU’s balance sheet and pre-tax earnings amount on the income
statement in conformity with generally accepted accounting principles.



Certain representations in this letter are described as being limited to those matters that are
material. Items are considered material, regardless of size, if they involve an omission or
misstatement of accounting information that, in the light of surrounding circumstances, makes it
probable that the judgment of a reasonable person relying on the information would have been
changed or influenced by the omission or misstatement.



I confirm, to the best of my knowledge and belief, as of the date of this letter, the following
representations:





	1)	 	I have provided to you all:






	 	a)	 	Financial records and related data.
	 
	 	b)	 	Communications from regulatory agencies concerning noncompliance with or
deficiencies in financial reporting practices.
	 
	 	c)	 	Material transactions, agreements or accounts that have not been properly
recorded in the accounting records underlying the PlanMaster reports.






	2)	 	Omitted intentionally.






1 Metro Tech Center North, Brooklyn, NY 11201 (718) 923-8400 Fax: (718) 923-8700



 









 






	3)	 	There are no significant deficiencies (other than previously communicated to the Risk
Management Department), including material weaknesses, in the design or operation of internal
controls which could adversely affect the SBU’s ability to record, process, summarize and
report financial data. As of the balance sheet date, an evaluation of the effectiveness of
the SBU’s disclosure controls and procedures was carried out. Our assessment of disclosure
items was based on the Corporate Form 10-Q checklist. Based on that evaluation, we believe
our SBU’s disclosure controls and procedures, in all material respects, are effective. There
have been no changes in our SBU’s internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, the SBU’s internal control
over financial reporting.
	 
	4)	 	We have disclosed to you all deficiencies in the design or operation of internal control over
financial reporting (whether or not remediated) identified as part of management’s assessment
of the effectiveness of internal control over financial reporting as of April 30, 2006.
	 
	5)	 	We acknowledge our responsibility for the design and implementation of programs and controls
to prevent and detect fraud.
	 
	 	 	I am not aware of any:






	 	a)	 	Fraud or suspected fraud involving management or employees who have significant
roles in the SBU’s internal controls. (I understand the term “fraud” to mean those
matters described in Statement on Auditing Standards No. 99, Consideration of Fraud in
a Financial Statement Audit).
	 
	 	b)	 	Fraud involving others that could have a material effect on the consolidated
PlanMaster reports of the SBU.
	 
	 	c)	 	Violations or possible violations of laws or regulations whose effect should be
considered for disclosure in the consolidated PlanMaster reports or as a basis for
recording a loss contingency.
	 
	 	d)	 	Allegations of fraud or suspected fraud affecting the SBU or the Company in
communications from employees, former employees, analysts, regulators, short sellers,
or others.






	6)	 	I am not aware of any plans or intentions that may materially affect the carrying value or
classification of assets or liabilities.




 









 












	7)	 	All related-party transactions, including sales, purchases, loans, transfers, leasing
arrangements, guarantees and amounts receivable from or payable to related parties have been
disclosed to you in accordance with Statement of Financial Accounting Standards (SFAS) No. 57.
I understand the term “related-party” to include those entities described in Statement on
Auditing Standards No. 45, footnote 1.
	 
	8)	 	We have disclosed all material guarantees (except in accordance with mortgage debt
arrangements and other financing agreements which are governed by FC Finance), whether written
or oral, under which the SBU is contingently liable. All guarantees have been evaluated in
accordance with valuation provisions of Financial Interpretation (FIN) No. 45, Guarantor’s
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and rescission
of FASB Interpretation No. 34. Additionally, we have discussed the relevant disclosure
provisions of FIN No. 45 with the External Reporting Group.
	 
	9)	 	There are no significant estimates and material concentrations known to management that are
required to be disclosed in accordance with AICPA’s Statement of Position 94-6, Disclosure of
Certain Significant Risks and Uncertainties. (Significant estimates are estimates at the
balance sheet date that could change materially within the next year. Concentrations refer to
volumes of business, revenues, available sources of supply, or markets or geographic areas for
which events could occur that would significantly disrupt normal finances within the next
year.)
	 
	10)	 	The SBU has satisfactory title to all owned assets and there are no liens or encumbrances on
such assets nor has any asset been pledged as collateral, except as disclosed to you.
	 
	11)	 	The SBU has complied with all aspects of contractual agreements that would have a material
effect on the PlanMaster reports of the SBU in the event of noncompliance.
	 
	12)	 	Receivables recorded in the PlanMaster reports represent bona fide claims against debtors for
sales or other charges arising on or before the balance sheet date and are not subject to
discount except for normal cash discounts. All receivables have been appropriately reduced to
their estimated net realizable value.
	 
	13)	 	Inventories of land are recorded in the PlanMaster reports at lower of cost or market, if
applicable.




 









 












	14)	 	All liabilities of which I am aware are included in the consolidated PlanMaster reports as of
the balance sheet date(s). Other than disclosed there are no unrecorded liabilities or gain
or loss contingencies that are required to be accrued or disclosed by SFAS No. 5, Accounting
for Contingencies. There are no unasserted claims or assessments that our legal counsel has
advised are probable of assertion and required to be disclosed in accordance with SFAS No. 5.
	 
	15)	 	The SBU has appropriately reconciled its books and records (e.g., general ledger accounts)
underlying the PlanMaster reports to their related supporting information (e.g., sub ledger or
third-party data). All related reconciling items considered to be material were identified
and included on the reconciliations and were appropriately adjusted in the PlanMaster reports.
There were no material unreconciled differences or material general ledger suspense account
items that should have been adjusted or reclassified to another account balance. There were
no material general ledger suspense account items written off to a balance sheet account,
which should have been written off to an income statement account and vice versa. Based on
the Company’s policy, all intracompany and intercompany accounts have been eliminated or
appropriately measured and considered for disclosure in the consolidated PlanMaster reports.
	 
	16)	 	All material costs that have been deferred to future periods meet the definition of an asset
as defined in the Statement of Financial Accounting Concepts No. 6, Elements of Financial
Statements, and are realizable.
	 
	17)	 	All cash and bank accounts and all other properties and assets of the SBU of which I am aware
are included in the PlanMaster reports.
	 
	18)	 	I have disclosed to you all arrangements with financial institutions involving compensating
balances or other arrangements involving restrictions on cash balances, lines of credit or
similar arrangements.
	 
	19)	 	The SBU has adopted and applied the relevant provisions of FIN No. 46(R) (revised December
2003) (FIN 46(R)) Consolidation of Variable Interest Entities and the related FASB Staff
Positions (FSPs) for all variable interest entities (VIEs) created after January 31, 2003 and
special-purpose entities (SPEs) created prior to February 1, 2003. In this process the SBU
has properly:






	 	a.	 	Identified variable interest(s) currently held in entities and
determined whether the entity is a variable interest entity including
reconsideration as described in paragraph 7.
	 
	 	b.	 	Consolidated VIEs for which the SBU is the primary beneficiary
including reconsideration events as described in paragraph 15.
	 
	 	c.	 	Complied with the disclosure requirements in paragraph 24 of FIN No. 46
or FIN No. 46(R) regarding VIEs that are not consolidated by the SBU, but in which
the SBU holds a significant variable interest.






	20)	 	Tax-exempt bonds issued have retained their tax-exempt status.




 









 












	21)	 	I have reviewed long-lived assets to be held and used or to be disposed of by sale and
certain identifiable intangibles, if any, including equity method investments, for impairment
in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, whenever events or changes in circumstances have indicated that the carrying amount of
assets might not be recoverable, and have appropriately recorded the adjustment. We have also
reviewed our equity method investments, including our interest in Nets Sports and
Entertainment, LLC., and believe that the carrying values of such investments are not in
excess of their fair value at April 30, 2006.
	 
	22)	 	I have reviewed the criteria for revenue recognition included in Staff Accounting Bulletin
(SAB) No. 104, namely, collectibility, delivery, evidence of arrangement and fixed price and
are recognizing revenue in accordance with SAB No. 104.
	 
	23)	 	There are no anticipated losses on contracts that are determinable, including contracts on
which work has not started as of the date of this letter.
	 
	24)	 	Changes in lease provisions, including renewals or extension of the terms of a lease have
been evaluated by the Company based on SFAS No. 13, Accounting for Leases, paragraph 9, in
order to determine whether the change gives rise to a new lease with a classification
different from the previous classification.
	 
	25)	 	I am not aware of any subsidiary, partnership, affiliate and/or any other legal entity that
has not been included in the PlanMaster reports that would have a material impact on the
financial position, results of operations or cash flows of the SBU.
	 
	26)	 	With regard to real estate investments included in the PlanMaster reports and managed by
third parties, I am not aware of any material differences in the application of accounting
policies by said third parties with the policies employed by the Company, other than that they
do not straight-line rents which I deem an immaterial difference. Otherwise, I am not aware
of any misapplication of generally accepted accounting principles related to these entities.
	 
	27)	 	The SBU is in compliance with all debt covenants which could have a material impact on the
PlanMaster reports of the SBU. The SBU’s long-term debt does not contain any subjective
acceleration clauses, except in the event of default as defined by the agreements.
	 
	28)	 	I believe that all of our partners or members with deficit capital accounts that have a debit
minority interest balance net of write offs reported on the consolidated PlanMaster reports of
the SBU as of balance sheet date, are recoverable pursuant to the provisions set forth in the
respective partnership agreement.




 









 












	29)	 	All advances on behalf of affiliates are considered realizable in all material respects based
on current undiscounted cash flow projections assuming a long-term hold of the underlying
properties and the SBU’s priority claim on such cash flows as documented in the respective
operating and/or partnership agreements.
	 
	30)	 	The SBU has no current intention to sell or refinance Forest City Bridge Street Associates.
As such, no accrual has been made in the financial statements for the quarter ended April 30,
2006 or for the year ended January 31, 2006
	 
	31)	 	We believe that the probability weighted present value of estimated future cash flows related
to the indemnification by the Company of the National Basketball Association (“NBA”) is at or
near zero. Accordingly, no liability has been established as of April 30, 2006. Further, the
SBU has appropriately accounted for and disclosed the impact of this guarantee pursuant to FIN
45. We have fully disclosed to you all such guarantees.
	 
	32)	 	For purposes of its evaluation (including all reconsideration events that occurred during the
quarter ended April 30, 2006) of Nets Sports and Entertainment, LLC (formerly Brooklyn Sports,
LLC), the SBU has concluded that the entity is a variable interest entity and that its
investment should not be consolidated based on consideration of all facts and circumstances as
required by FIN No. 46(R) paragraph 17 as FCR Sports, LLC is not the most closely associated
investor. Accordingly, the Company’s investment in Nets Sports and Entertainment, LLC will be
presented as an equity method investment as of April 30, 2006. We believe the Company has
also complied with the disclosures requirements of FIN No. 46(R).
	 
	33)	 	If applicable, our SBU has evaluated all transfers of financial assets to determine that
control over the transferred assets has been surrendered and that all of the conditions
pursuant to paragraph 9 of SFAS No. 140 have been met. We do not have any transactions that
fall under the guidance of SFAS No. 140.
	 
	34)	 	Our SBU has appropriately accounted for and disclosed the impact of all off-balance sheet
commitments, borrowings and other obligations pursuant to the appropriate authoritative
literature, including but not limited to FAS No. 140, Accounting for Transfers of Servicing of
Financial Assets and Extinguishments of Liabilities. We have fully disclosed to you all such
off-balance sheet commitments, borrowings and obligations.
	 
	35)	 	If applicable, our SBU has evaluated all transactions involving qualified special purpose
entities to determine that all of the conditions pursuant to paragraph 35 of SFAS No. 140 have
been met. We do not have any transactions that fall under the guidance of SFAS No. 140.




 









 












	36)	 	Principal and interest payment on our note receivable is current and we believe that the
borrower will continue to meet their contractual obligation. Accordingly, we do not believe
the note receivable to be impaired. If necessary, the SBU would review notes receivable for
impairment, apply a systematic methodology for measuring and documenting loan losses and make
appropriate allowances thereon if necessary, in accordance with SFAS No. 114, Accounting by
Creditors for Impairment of a Loan and SFAS No. 118, Accounting by Creditors for Impairment of
a Loan — Income Recognition and Disclosures. Our SBU would measure impaired notes based upon
the present value of expected future cash flows discounted at an appropriate interest rate.
The allowance for doubtful accounts related to these notes would encompass probable credit
losses related to specifically-identified loans that have been incurred. The allowance does
not include an amount for loan losses expected to be incurred subsequent to April 30, 2006.
	 
	37)	 	Commitments for future purchases are for quantities not in excess of anticipated requirements
and at prices that will not result in loss. No provision has been made for any material loss
to be sustained in the fulfillment of, or from the inability to fulfill, any sales commitments
as no such losses exist.
	 
	38)	 	We have advised you of all lease termination agreements and have appropriately recorded lease
termination income pursuant to SFAS No. 13.
	 
	39)	 	The information provided to Forest City Enterprises, Inc.’s tax department by the SBU for
purposes of computing the tax provision under generally accepted accounting principles is
complete and accurate.
	 
	40)	 	The cash flow package and Form 10-Q checklist provided to Forest City Enterprises, Inc.’s
Corporate Controller’s Group by the SBU for use in the preparation of the consolidated
financial statements are complete and accurate.
	 
	41)	 	Other than disclosed, no material events have occurred subsequent to the balance sheet date
and through the date of this letter that would require adjustment to or disclosure in the
aforementioned consolidated PlanMaster reports. Additionally, any material subsequent event
from the date of this letter until the filing of the Company’s Form 10-Q with the Securities
and Exchange Commission will be communicated to the Corporate External Reporting Group.
	 
	42)	 	No changes in internal control over financial reporting, including any corrective actions
taken by us with regard to significant deficiencies and material weaknesses, have occurred
subsequent to April 30, 2006 and through the date of this letter.




 









 












	43)	 	We acknowledge that we have received and reviewed the new Form 8-K Policies and Procedures as
provided by the Corporate Controller’s Group via an e-mail dated August 19, 2004. We have
disclosed all Form 8-K triggering events related to our SBU from January 31, 2006 through the
date of this letter.
	 
	44)	 	Omitted intentionally.
	 
	45)	 	We have designed the internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of the
PlanMaster reports in accordance with generally accepted accounting principles.
	 
	46)	 	We concur with the identifiable assets (investment) number for the Nets SBU as of April 30,
2006 as it is disclosed in the Segments Disclosure in the Company’s Form 10-Q for the quarter
ended April 30, 2006.
	 
	47)	 	We have reviewed all of our tangible long-lived assets, including related operating/ground
lease agreements that contain provisions that require the leased assets to be returned in the
same condition that existed at lease inception (i.e., the agreement requires the removal of
any leasehold improvements at the end of the lease term) and other agreements for associated
asset retirement obligations (AROs) and have not recognized any related liabilities in
accordance with FASB Statement No. 143, Accounting for Asset Retirement Obligations and FIN 47
Accounting for Conditional Asset Retirement Obligations as such amounts are immaterial based
upon both qualitative and quantitative considerations. Additionally, for those long-lived
assets and or operating/ground lease agreements that have asbestos that has been contained and
encapsulated in accordance with the requisite legal regulations as of April 30, 2006, we have
no present intention of demolishing the asset and/or performing a rehabilitation that would
create a legal obligation to remove the asbestos. We are also unaware of any unremediated
asbestos obligation at April 30, 2006. The methods and assumptions used to measure the fair
value of are AROs, for purposes of assessing materiality, are appropriate and reasonable under
the circumstances and utilize the best available information.
	 
	48)	 	We have completed the process of evaluating the impact that will result from the adoption of
EITF 4-05, Investor’s Accounting for an Investment in a Limited Partnership When the Investor
Is the Sole General Partner and the Limited Partners Have Certain Rights. Such effects are
properly disclosed in the financial statements.




The effects of any uncorrected financial statement misstatements aggregated by you during the
current review engagement and pertaining to the interim periods in the current year, as summarized
in the accompanying schedule, are immaterial, both individually and in the aggregate, to the
consolidated interim financial statements as of April 30, 2006 and for the three months then ended,
taken as a whole.




 









 








	 	 	 	 	 
	Signed:

FOREST CITY RATNER COMPANIES

 	 	 
	/s/ BRUCE C. RATNER
 	 	 
	Bruce C. Ratner, President and Chief Executive Officer 	 	 
	 	 	 
	/s/ JOANNE M. MINIERI
 	 	 
	Joanne M. Minieri, Executive Vice President and Chief Operating Officer 	 	 
	 	 	 
	/s/ DEBORAH J. LEVINSON
 	 	 
	Deborah J. Levinson, Executive Vice President and Chief Financial Officer 	 	 
	 	 	 
	/s/ LAUREN DU
 	 	 
	Lauren Du, Senior Vice President — Controller 	 	 
	 	 	 
	/s/ RAJ PATEL
 	 	 
	Only as to items 3, 4, 5 and 42 	 	 
	Raj Patel, Chief Information Officer 	 	 



	 	 	 	 	 
	FIRST NEW YORK PARTNERS

 	 	 
	/s/ DONNA C. SINGLETON
 	 	 
	Donna C. Singleton, Chief Operating Officer 	 	 
	 	 	 
	/s/ KRISTIN CHUNG
 	 	 
	Kristin Chung, Chief Financial Officer 	 	 
	 	 	 
	/s/ MICHAEL ALBERT
 	 	 
	Michael Albert, Director of Financial Reporting 	 	 
	 	 	 



 









 






	 	 	 	 	 



SCHEDULE 7.2(p)




FCRC Form 10-K Information




See attached





 











 










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SCHEDULE 7.2(t)

to

MASTER CONTRIBUTION AND SALE AGREEMENT




Individuals Comprising “Knowledge of BCR Entities”




	 	 	 
	Section 
Reference	 	Knowledge Party
	7.2(c)

	 	Bruce C. Ratner
	 

	 	David L. Berliner
	 

	 	John W. Davie
	 
	 	 
	7.2(e)

	 	Bruce C. Ratner
	 

	 	Joanne M. Minieri
	 

	 	Deborah J. Levinson
	 

	 	David L. Berliner
	 

	 	Terence M. Whalen
	 

	 	Robert Rediker
	 

	 	Andrew P. Silberfein
	 

	 	James P. Stuckey
	 

	 	Maryanne Gilmartin
	 

	 	Richard Pesin
	 

	 	Robert P. Sanna
	 

	 	Raj Patel
	 

	 	Elena Iracane
	 

	 	Bruce Bender
	 

	 	Linda Chiarelli
	 

	 	Stephen Tuttle
	 
	 	 
	7.2(f)

	 	Bruce C. Ratner
	 

	 	David L. Berliner
	 

	 	Terence M. Whalen
	 

	 	Robert Rediker
	 

	 	Stephen Tuttle
	 

	 	Linda Chiarelli
	 
	 	 
	7.2(g)(iii)

	 	Bruce C. Ratner
	 

	 	Joanne M. Minieri
	 

	 	Deborah J. Levinson
	 

	 	Donna Singleton
	 

	 	Kristin Chung
	 

	 	Lauren Du
	 

	 	John Cheng
	 
	 	 
	7.2(h)

	 	Bruce C. Ratner






Schedule 7.2(t) — Page 1









 






	 	 	 
	Section 
Reference	 	Knowledge Party
	 

	 	David L. Berliner
	 

	 	Terence M. Whalen
	 

	 	Robert Rediker
	 

	 	Stephen Tuttle
	 

	 	Linda Chiarelli
	 
	 	 
	7.2(i)

	 	Bruce C. Ratner
	 

	 	David L. Berliner
	 

	 	Livia Corredor
	 

	 	John W. Davie
	 

	 	Susan Elman
	 

	 	Laurie Golub
	 
	 	 
	7.2(j)

	 	Bruce C. Ratner
	 

	 	David L. Berliner
	 

	 	Terence M. Whalen
	 

	 	Robert Rediker
	 

	 	Stephen Tuttle
	 
	 	 
	7.2(l)

	 	Bruce C. Ratner
	 

	 	David L. Berliner
	 

	 	Terence M. Whalen
	 

	 	Robert Rediker
	 

	 	Raj Patel
	 

	 	Stephen Tuttle
	 
	 	 
	7.2(m)

	 	Bruce C. Ratner
	 

	 	Joanne M. Minieri
	 

	 	Deborah J. Levinson
	 

	 	David L. Berliner
	 

	 	Livia Corredor
	 

	 	John W. Davie
	 

	 	Susan Elman
	 

	 	Laurie Golub
	 

	 	Stephen Tuttle
	 

	 	Andrew P. Silberfein
	 

	 	Donna Singleton
	 

	 	Kristin Chung
	 

	 	Lauren Du
	 
	 	 
	7.2(n)

	 	Bruce C. Ratner
	 

	 	Terence M. Whalen
	 
	 	 
	7.2(o)

	 	Bruce C. Ratner
	 

	 	Joanne M. Minieri
	 

	 	Deborah J. Levinson






Schedule 7.2(t) — Page 2









 






	 	 	 
	Section 
Reference	 	Knowledge Party
	 

	 	Lauren Du
	 

	 	Donna Singleton
	 

	 	Kristin Chung
	 

	 	Michael Albert
	 
	 	 
	7.2(p)

	 	Bruce C. Ratner
	 

	 	Joanne M. Minieri
	 

	 	Deborah J. Levinson
	 

	 	Lauren Du
	 

	 	Donna Singleton
	 

	 	Kristin Chung
	 

	 	Michael Albert
	 
	 	 
	7.4(a)

	 	For purposes of Section 7.4(a), the BCR Representative will identify the
individuals with knowledge with respect to each representation and
warranty relating to such Development Property following the
Stabilization Date for such Development Property. If and to the extent
that the individuals so identified by the BCR Representative vary from
those identified in Schedule 7.2(t) (other than due to the
discontinuance of the employment of an individual identified on Schedule 7.2(t) by such
individual’s employer as of the date hereof and the identification by the
BCR Representative of such individual’s successor), then Forest City will
have the right to review and approve the individuals identified by the
BCR Representative, which approval will not be unreasonably withheld or
delayed.







Schedule 7.2(t) — Page 3









 






SCHEDULE 9.2(c)

to

MASTER CONTRIBUTION AND SALE AGREEMENT




Certain Waivers




Each of the Ground Leases with The City of New York for Atlantic Center, 2MTC, 1MTC, 11MTC, 9MTC,
and 15MTC contains a representation and warranty and covenant from the Property Owner with respect
to the direct and indirect ownership of the Property Owner. Only in the case of 15MTC is such
representation and warranty made as of the date of the relevant Ground Lease. Each Ground Lease
further provides for a default if the Property Owner’s representations and warranties regarding its
direct and indirect ownership become untrue in any material respect. Since indirect ownership will
change at each Closing, there may arguably be a breach of the representations and warranties, and
thus possibly a default under the Ground Leases. One may also argue, however, that each of the
transfers in question is a “permitted transfers”, thus the change in ownership structure is not
material and no default should arise.



Each of the Ground Leases with The City of New York (“NYC”) for Atlantic Center, 2MTC, 1MTC, 11MTC,
9MTC, and 15MTC, and the Anchor lease with Morgan Stanley & Co. Incorporated (“MS”), contains
provisions calling for a “Transaction Payment” in the event of certain transfers of beneficial
ownership of the relevant Property Owner. Confirmation will be sought from both NYC and MS that no
such payments are due in connection with the transactions contemplated to occur at the Principal
Closing and the exercise of the Exchange Rights.




Schedule 9.2(c) — Page 1