**Exhibit10.1**

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SECOND AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

GKK CAPITAL LP

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Dated as of December 14, 2005

 

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**TABLE OF CONTENTS**

 

 
|                                                                                            | **Page** |
|-------------------------------------------------------------------------------------------------|----------|
| ARTICLE I DEFINED TERMS                                                                         | 1        |
| ARTICLE II ORGANIZATIONAL MATTERS                                                               | 11       |
| Section  2.01. Organization                                                                     | 11       |
| Section  2.02. Name                                                                             | 12       |
| Section  2.03. Registered Office and Agent; Principal Office                                    | 12       |
| Section  2.04. Term                                                                             | 12       |
| ARTICLE III PURPOSE                                                                             | 12       |
| Section  3.01. Purpose and Business                                                             | 12       |
| Section  3.02. Powers                                                                           | 12       |
| Section  3.03. Partnership Only for Purposes Specified                                          | 13       |
| ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES OF  PARTNERSHIP INTERESTS                        | 13       |
| Section  4.01. Capital Contributions of the Partners                                            | 13       |
| Section  4.02. Issuances of Partnership Interests                                               | 14       |
| Section  4.03. No Preemptive Rights                                                             | 15       |
| Section  4.04. Other Contribution Provisions                                                    | 15       |
| Section  4.05. No Interest on Capital                                                           | 15       |
| ARTICLE V DISTRIBUTIONS                                                                         | 16       |
| Section  5.01. Requirement and Characterization of Distributions                                | 16       |
| Section  5.02. Amounts Withheld                                                                 | 17       |
| Section  5.03. Distributions Upon Liquidation                                                   | 17       |
| Section  5.04. Revisions to Reflect Issuance of Additional Partnership Interests                | 17       |
| ARTICLE VI ALLOCATIONS                                                                          | 17       |
| Section  6.01. Allocations For Capital Account Purposes                                         | 17       |
| Section  6.02. Revisions to Allocations to Reflect Issuance of Additional Partnership Interests | 19       |
| ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS                                               | 19       |
| Section  7.01. Management                                                                       | 19       |
| Section  7.02. Certificate of Limited Partnership                                               | 22       |
| Section  7.03. Title to Partnership Assets                                                      | 23       |
| Section  7.04. Reimbursement of the General Partner                                             | 23       |
| Section  7.05. Outside Activities of the General Partner                                        | 24       |
| Section  7.06. Transactions with Affiliates                                                     | 26       |

 

 

 

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|                                                                  | **Page** |
|-----------------------------------------------------------------------|----------|
| Section  7.07. Indemnification                                        | 26       |
| Section  7.08. Liability of the General Partner                       | 28       |
| Section  7.09. Other Matters Concerning the General Partner           | 29       |
| Section  7.10. Reliance by Third Parties                              | 29       |
| Section  7.11. Restrictions on General Partner’s Authority       | 30       |
| Section  7.12. Loans by Third Parties                                 | 30       |
| ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED  PARTNERS              | 30       |
| Section 8.01.  Limitation of Liability                                | 30       |
| Section  8.02. Management of Business                                 | 30       |
| Section  8.03. Outside Activities of Limited Partners                 | 31       |
| Section  8.04. Return of Capital                                      | 31       |
| Section  8.05. Rights of Limited Partners Relating to the Partnership | 31       |
| Section  8.06. Class A Redemption Right                               | 32       |
| Section  8.07. Redemption of Class B Units                            | 34       |
| ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS                     | 34       |
| Section  9.01. Records and Accounting                                 | 34       |
| Section  9.02. Fiscal Year                                            | 35       |
| Section  9.03. Reports                                                | 35       |
| ARTICLE X TAX MATTERS                                                 | 35       |
| Section  10.01. Preparation of Tax Returns                            | 35       |
| Section  10.02. Tax Elections                                         | 35       |
| Section  10.03. Tax Matters Partner                                   | 36       |
| Section  10.04. Organizational Expenses                               | 37       |
| Section  10.05. Withholding                                           | 37       |
| ARTICLE XI TRANSFERS AND WITHDRAWALS                                  | 38       |
| Section  11.01. Transfer                                              | 38       |
| Section  11.02. Transfers of Partnership Interests of General Partner | 38       |
| Section  11.03. Limited Partners’ Rights to Transfer             | 39       |
| Section  11.04. Substituted Limited Partners                          | 40       |
| Section  11.05. Assignees                                             | 40       |
| Section  11.06. General Provisions                                    | 41       |
| ARTICLE XII ADMISSION OF PARTNERS                                     | 42       |

 

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|                                                                          | **Page** |
|-------------------------------------------------------------------------------|----------|
| Section  12.01. Admission of Successor General Partner                        | 42       |
| Section  12.02. Admission of Additional Limited Partners                      | 42       |
| Section  12.03. Amendment of Agreement and Certificate of Limited Partnership | 43       |
| ARTICLE XIII DISSOLUTION AND LIQUIDATION                                      | 43       |
| Section  13.01. Dissolution                                                   | 43       |
| Section  13.02. Winding Up                                                    | 44       |
| Section  13.03. Compliance with Timing Requirements of Regulations            | 45       |
| Section  13.04. Deemed Distribution and Recontribution                        | 45       |
| Section  13.05. Rights of Limited Partners                                    | 45       |
| Section  13.06. Notice of Dissolution                                         | 45       |
| Section  13.07. Cancellation of Certificate of Limited Partnership            | 46       |
| Section  13.08. Reasonable Time for Winding Up                                | 46       |
| Section  13.09. Waiver of Partition                                           | 46       |
| Section  13.10. Liability of Liquidator                                       | 46       |
| ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT;  MEETINGS                     | 46       |
| Section  14.01. Amendments                                                    | 46       |
| Section  14.02. Meetings of the Partners                                      | 48       |
| ARTICLE XV GENERAL PROVISIONS                                                 | 48       |
| Section  15.01. Addresses and Notice                                          | 48       |
| Section  15.02. Titles and Captions                                           | 49       |
| Section  15.03. Pronouns and Plurals                                          | 49       |
| Section  15.04. Further Action                                                | 49       |
| Section  15.05. Binding Effect                                                | 49       |
| Section  15.06. Creditors                                                     | 49       |
| Section  15.07. Waiver                                                        | 49       |
| Section  15.08. Counterparts                                                  | 49       |
| Section  15.09. Applicable Law                                                | 49       |
| Section  15.10. Invalidity of Provisions                                      | 50       |
| Section  15.11. Power of Attorney                                             | 50       |
| Section  15.12. Entire Agreement                                              | 51       |
| Section  15.13. No Rights as Stockholders                                     | 51       |
| Section  15.14. Limitation to Preserve REIT Status                            | 51       |

 

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SECONDAMENDED AND RESTATED

AGREEMENTOF LIMITED PARTNERSHIP

OF

GKK CAPITAL LP

THIS SECOND AMENDED ANDRESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of December 14, 2005, ismade by Gramercy Capital Corp., a Maryland corporation, as the General Partnerof and a Limited Partner in the Partnership and each of the other personslisted on the signature pages hereto, for the purpose of amending and restatingthe First Amended and Restated Agreement of Limited Partnership of the Partnershipdated as of August 2, 2004 by and among the General Partner, SL Green OperatingPartnership, L.P., GKK Manager LLC, and certain other Persons (as definedbelow) (the “First Amended and Restated Partnership Agreement”).

WHEREAS,the Partnership desires to modify the distribution provisions of the FirstAmended and Restated Partnership Agreement applicable to the Class B Units toreflect that certain Class B Units are unvested and, as such, are not entitledto distributions.

WHEREAS,the Partnership desires to provide for equity incentives to certain persons whoprovide services for the benefit of the Partnership (“Grantees”) in theform of Partnership Units which shall be designated “LTIP Units.”

WHEREAS,pursuant to Section 4.02.A of this Agreement, the Partnership is issuing LTIPUnits to the Grantees.

WHEREAS, pursuant toSections 4.02.A, 5.04, 6.02, 8.06.E and 14.01.B the General Partner is herebyamending and restating the First Amended and Restated Partnership Agreement tofacilitate the issuance of the LTIP Units.

AGREEMENT

NOW, THEREFORE, inconsideration of the mutual covenants set forth herein, and for other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto hereby amend and restate the First Amended andRestated Partnership Agreement as follows:

 

ARTICLE I

DEFINED TERMS

The following definitionsshall be for all purposes, unless otherwise clearly indicated to the contrary,applied to the terms used in this Agreement.

“Act” means the DelawareRevised Uniform Limited Partnership Act, 6 Del. C. § 17-101, et seq., asit may be amended from time to time, and any successor to such statute.

“Additional LimitedPartner” means a Person admitted to the Partnership as a Limited Partnerpursuant to Section 12.02 hereof and who is shown as such on the books andrecords of the Partnership.

“Adjusted Capital Account”means the Capital Account maintained for each Partner as of the end of eachPartnership Year (i) increased by any amounts which such Partner is obligatedto restore pursuant to any provision of this Agreement or is deemed to beobligated to restore pursuant to the penultimate sentences of RegulationsSections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii) decreased by the itemsdescribed in Regulations Sections1.704-l(b)(2)(ii)(d)(4),1.704-1(b)(2)(ii)(d)(5) and 1.704-l(b)(2)(ii)

 

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(d)(6).Theforegoing definition of Adjusted Capital Account is intended to comply with theprovisions of Regulations Section 1.704-l(b)(2)(ii)(d) and shall be interpretedconsistently therewith.

“Adjusted Capital AccountDeficit” means, with respect to any Partner, the deficit balance, if any, insuch Partner’s Adjusted Capital Account as of the end of the relevantPartnership Year.

“Adjusted Property” meansany property the Carrying Value of which has been adjusted pursuant to ExhibitB hereto.

“Adjustment Date” has themeaning set forth in Section 4.02.B hereof.

“Affiliate” means, withrespect to any Person, (i) any Person directly or indirectly controlling,controlled by or under common control with such Person, (ii) any Person owningor controlling ten percent (10%) or more of the outstanding voting interests ofsuch Person, (iii) any Person of which such Person owns or controls ten percent(10%) or more of the voting interests or (iv) any officer, director, generalpartner or trustee of such Person or any Person referred to in clauses (i),(ii), and (iii) above.  For purposes ofthis definition, “control,” when used with respect to any Person, means thepower to direct the management and policies of such Person, directly orindirectly, whether through the ownership of voting securities, by contract orotherwise, and the terms “controlling” and “controlled” have meaningscorrelative to the foregoing.

“Agreed Value” means (i)in the case of any Contributed Property, the 704(c) Value of such property asof the time of its contribution to the Partnership, reduced by any liabilitieseither assumed by the Partnership upon such contribution or to which suchproperty is subject when contributed; and (ii) in the case of any propertydistributed to a Partner by the Partnership, the Partnership’s Carrying Valueof such property at the time such property is distributed, reduced by anyindebtedness either assumed by such Partner upon such distribution or to whichsuch property is subject at the time of distribution as determined underSection 752 of the Code and the Regulations thereunder.

“Agreement” means thisAgreement of Limited Partnership, as it may be amended, supplemented orrestated from time to time.

“Articles ofIncorporation” means the Articles of Incorporation or other organizationaldocument governing the General Partner, as amended or restated from time totime.

“Assignee” means a Personto whom one or more Partnership Units have been transferred in a mannerpermitted under this Agreement, but who has not become a Substituted LimitedPartner, and who has the rights set forth in Section 11.05 hereof.

“Book-Tax Disparities”means, with respect to any item of Contributed Property or Adjusted Property,as of the date of any determination, the difference between the Carrying Valueof such Contributed Property or Adjusted Property and the adjusted basisthereof for federal income tax purposes as of such date.  A Partner’s share of the Partnership’sBook-Tax Disparities in all of its Contributed Property and Adjusted Propertywill be reflected by the difference between such Partner’s Capital Accountbalance as maintained pursuant to Exhibit B hereto and the hypothetical balanceof such Partner’s Capital Account computed as if it had been maintained, withrespect to each such Contributed Property or Adjusted Property, strictly inaccordance with federal income tax accounting principles.

“Business Day” means anyday except a Saturday, Sunday or other day on which commercial banks in NewYork, New York are authorized or required by law to close.

 

 

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“Capital Account” meansthe Capital Account maintained for a Partner pursuant to Exhibit B hereto.

“Capital Contribution”means, with respect to any Partner, any cash, cash equivalents or the AgreedValue of Contributed Property which such Partner contributes or is deemed tocontribute to the Partnership pursuant to Section 4.01 or 4.02 hereof.

“Carrying Value” means(i) with respect to a Contributed Property or Adjusted Property, the 704(c)Value of such property reduced (but not below zero) by all Depreciation withrespect to such Contributed Property or Adjusted Property, as the case may be,charged to the Partners’ Capital Accounts and (ii)with respect to any otherPartnership property, the adjusted basis of such property for federal incometax purposes, all as of the time of determination.  The Carrying Value of any property shall be adjustedfrom time to time in accordance with Exhibit B hereto, and to reflect changes,additions or other adjustments to the Carrying Value for dispositions andacquisitions of Partnership properties, as deemed appropriate by the GeneralPartner.

“Cash Amount” means anamount of cash equal to the Value on the Valuation Date of the Shares Amount.

“Certificate” means theCertificate of Limited Partnership relating to the Partnership filed in theoffice of the Delaware Secretary of State on April 21, 2004, as amended fromtime to time in accordance with the terms hereof and the Act.

“Class A Unit” meansClass A Units of the Partnership.

“Class A Unit EconomicBalance” has the meaning set forth in Section 6.01.D.

“Class B DistributionPercentage” means, as of a particular date, with respect to SL Green, the SLGClass B Distribution Percentage and, with respect to all other Persons, theStandard Class B Distribution Percentage.

“Class B Unit” means aprofits interest issued pursuant to Section 4.02.D.

“Code” means the InternalRevenue Code of 1986, as amended and in effect from time to time, asinterpreted by the applicable Regulations thereunder.  Any reference herein to a specific section orsections of the Code shall be deemed to include a reference to any correspondingprovision of future law.

“Consent” means theconsent or approval of a proposed action by a Partner given in accordance withSection 14.02 hereof.

“Contributed Property”means each property or other asset contributed to the Partnership, in such formas may be permitted by the Act, but excluding cash contributed or deemedcontributed to the Partnership.  Once theCarrying Value of a Contributed Property is adjusted pursuant to Exhibit Bhereto, such property shall no longer constitute a Contributed Property forpurposes of Exhibit B hereto, but shall be deemed an Adjusted Property for suchpurposes.

“Conversion Factor” means1.0; provided that in the event that the General Partner Entity (i)declares or pays a dividend on its outstanding Shares in Shares or makes adistribution to all holders of its outstanding Shares in Shares, (ii)subdivides its outstanding Shares or (iii) combines its outstanding Shares intoa smaller number of Shares, the Conversion Factor shall be adjusted bymultiplying the Conversion Factor by a fraction, the numerator of which shallbe the number of Shares issued and 

 

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outstanding on therecord date for such dividend, distribution, subdivision or combination(assuming for such purposes that such dividend, distribution, subdivision orcombination has occurred as of such time) and the denominator of which shall bethe actual number of Shares(determined without the above assumption) issued andoutstanding on the record date for such dividend, distribution, subdivision orcombination; and provided, further that in the event that anentity shall cease to be the General Partner Entity (the “Predecessor Entity”)and another entity shall become the General Partner Entity (the “SuccessorEntity”), the Conversion Factor shall be adjusted by multiplying the ConversionFactor by a fraction, the numerator of which is the Value of one share of thePredecessor Entity, determined as of the time immediately prior to when theSuccessor Entity becomes the General Partner Entity, and the denominator ofwhich is the Value of one Share of the Successor Entity determined as of thatsame date.  For purposes of the secondproviso in the preceding sentence, in the event that any stockholders of thePredecessor Entity will receive consideration in connection with thetransaction in which the Successor Entity becomes the General Partner Entity,the numerator in the fraction described above for determining the adjustment tothe Conversion Factor(that is, the Value of one Share of the PredecessorEntity) shall be the sum of the greatest amount of cash and the fair marketvalue of any securities and other consideration that the holder of one Share inthe Predecessor Entity could have received in such transaction (determinedwithout regard to any provisions governing fractional shares). Any adjustmentto the Conversion Factor shall become effective immediately after the effectivedate of such event retroactive to the record date, if any, for the event givingrise thereto; it being intended that (x) adjustments to the Conversion Factorare to be made in order to avoid unintended dilution or anti-dilution as aresult of transactions in which Shares are issued, redeemed or exchangedwithout a corresponding issuance, redemption or exchange of Partnership Unitsand (y) if a Specified Redemption Date shall fall between the record date andthe effective date of any event of the type described above, that theConversion Factor applicable to such redemption shall be adjusted to take intoaccount such event.

“Debt” means, as to anyPerson, as of any date of determination, (i) all indebtedness of such Personfor borrowed money or for the deferred purchase price of property or services,(ii) all amounts owed by such Person to banks or other Persons in respect ofreimbursement obligations under letters of credit, surety bonds and othersimilar instruments guaranteeing payment or other performance of obligations bysuch Person, (iii) all indebtedness for borrowed money or for the deferredpurchase price of property or services secured by any lien on any propertyowned by such Person, to the extent attributable to such Person’s interest insuch property, even though such Person has not assumed or become liable for thepayment thereof, and (iv) obligations of such Person incurred in connectionwith entering into a lease which, in accordance with generally acceptedaccounting principles, should be capitalized.

“Depreciation” means, foreach fiscal year, an amount equal to the federal income tax depreciation,amortization, or other cost recovery deduction allowable with respect to anasset for such year, except that if the Carrying Value of an asset differs fromits adjusted basis for federal income tax purposes at the beginning of such yearor other period, Depreciation shall be an amount which bears the same ratio tosuch beginning Carrying Value as the federal income tax depreciation,amortization, or other cost recovery deduction for such year bears to suchbeginning adjusted tax basis; provided, however, that if thefederal income tax depreciation, amortization, or other cost recovery deductionfor such year is zero, Depreciation shall be determined with reference to suchbeginning Carrying Value using any reasonable method selected by the GeneralPartner.

“Economic Capital AccountBalance” has the meaning set forth in Section 6.01.D.

“Effective Date” meansthe date of the closing of the General Partner’s initial public offering.

 

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“EquityAward Agreement” means an equity award agreement entered into between SL Greenand/or SL Green Realty Corp. and a director, officer or employee of the GeneralPartner, the Manager, SL Green or SL Green Realty Corp. or other Personpursuant to the SL Green Realty Corp. 2005 Stock Option and Incentive Planpursuant to which SL Green or SL Green Realty Corp. transfers Class B Units tosuch Person subject to forfeiture to, or repurchase at less than fair marketvalue by, SL Green or any other Person upon the occurrence of certain events.

“ERISA” means theEmployee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means theSecurities Exchange Act of 1934, as amended.

“Funding Debt” means theincurrence of any Debt by or on behalf of the General Partner for the purposeof providing funds to the Partnership.

“Funds From Operations”means net income computed in accordance with GAAP, excluding gains (or losses)from sales of property, plus depreciation and amortization on real estateassets, and after adjustments for unconsolidated partnerships and jointventures.

“General Partner” meansGramercy Capital Corp., a Maryland corporation, or its successors as generalpartner of the Partnership.

“General Partner Entity”means the General Partner; provided, however, that if (i) theshares of common stock (or other comparable equity interests) of the GeneralPartner are at any time not Publicly Traded and (ii) the shares of common stock(or other comparable equity interests) of an entity that owns, directly orindirectly, fifty percent (50%) or more of the shares of common stock (or othercomparable equity interests) of the General Partner are Publicly Traded, theterm “General Partner Entity” shall refer to such entity whose shares of commonstock (or other comparable equity securities) are Publicly Traded.  If both requirements set forth in clauses (i)and (ii) above are not satisfied, then the term “General Partner Entity” shallmean the General Partner.

“General Partner Payment”has the meaning set forth in Section 15.14 hereof.

“General PartnershipInterest” means a Partnership Interest held by the General Partner that is ageneral partnership interest.  A GeneralPartnership Interest may be expressed as a number of Partnership Units.

“IRS” means the InternalRevenue Service, which administers the internal revenue laws of the UnitedStates.

“Immediate Family” means,with respect to any natural Person, such natural Person’s spouse, parents,descendants, nephews, nieces, brothers, and sisters.

“Incapacity” or “Incapacitated”means, (i) as to any individual Partner, death, total physical disability orentry by a court of competent jurisdiction adjudicating such Partnerincompetent to manage his or her Person or estate,(ii) as to any corporationwhich is a Partner, the filing of a certificate of dissolution, or itsequivalent, for the corporation or the revocation of its charter, (iii) as toany partnership which is a Partner, the dissolution and commencement of windingup of the partnership, (iv) as to any estate which is a Partner, thedistribution by the fiduciary of the estate’s entire interest in thePartnership, (v) as to any trustee of a trust which is a Partner, thetermination of the trust (but not the substitution of a new trustee) or (vi) asto any Partner, the bankruptcy of such Partner. For purposes of this definition, bankruptcy of a Partner shall be deemedto have occurred when (a) the Partner commences a voluntary 

 

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proceeding seekingliquidation, reorganization or other relief under any bankruptcy, insolvency orother similar law now or hereafter in effect, (b) the Partner is adjudged asbankrupt or insolvent, or a final and nonappealable order for relief under anybankruptcy, insolvency or similar law now or hereafter in effect has beenentered against the Partner, (c) the Partner executes and delivers a generalassignment for the benefit of the Partner’s creditors, (d) the Partner files ananswer or other pleading admitting or failing to contest the materialallegations of a petition filed against the Partner in any proceeding of thenature described in clause (b) above, (e) the Partner seeks, consents to oracquiesces in the appointment of a trustee, receiver or liquidator for thePartner or for all or any substantial part of the Partner’s properties, (f) anyproceeding seeking liquidation, reorganization or other relief under anybankruptcy, insolvency or other similar law now or hereafter in effect has notbeen dismissed within one hundred twenty (120) days after the commencementthereof, (g) the appointment without the Partner’s consent or acquiescence of atrustee, receiver or liquidator has not been vacated or stayed within ninety(90) days of such appointment or (h) an appointment referred to in clause (g)is not vacated within ninety (90) days after the expiration of any such stay.

“Indemnitee” means (i)any Person made a party to a proceeding or threatened with being made a partyto a proceeding by reason of its status as (A) the General Partner, (B) aLimited Partner or (C) a director or officer of the Partnership or the GeneralPartner and (ii) such other Persons (including Affiliates of the GeneralPartner, a Limited Partner or the Partnership) as the General Partner maydesignate from time to time (whether before or after the event giving rise topotential liability), in its sole and absolute discretion.

“Limited Partner” meansany Person named as a Limited Partner in Exhibit A attached hereto, as suchExhibit may be amended and restated from time to time, or any SubstitutedLimited Partner or Additional Limited Partner, in such Person’s capacity as aLimited Partner in the Partnership.

“Limited Partner Interest”means a Partner Interest of a Limited Partner in the Partner representing a fractionalpart of the Partner Interests of all Limited Partners and includes any and allbenefits to which the holder of such a Partner Interest may be entitled asprovided in this Agreement, together with all obligations of such Person tocomply with the terms and provisions of this Agreement.  A Limited Partner Interest may be expressedas a number of Partnership Units.

“Liquidating Event” hasthe meaning set forth in Section 13.01 hereof.

“Liquidator” has themeaning set forth in Section 13.02.A hereof.

“LTIP Units” means thePartnership Units designated as such having the rights, powers, privileges,restrictions, qualifications and limitations set forth in Exhibit E hereto.

“Manager” means GKKManager LLC, a Delaware limited liability company.

“Management Agreement”means the agreement entered into by and between Gramercy Capital Corp., aMaryland corporation, GKK Capital LP, a Maryland limited partnership (the “OperatingPartnership”), and GKK Manager LLC, a Delaware limited liability company.

“Net Income” means, forany taxable period, the excess, if any, of the Partnership’s items of incomeand gain for such taxable period over the Partnership’s items of loss anddeduction for such taxable period.  Theitems included in the calculation of Net Income shall be determined inaccordance with Exhibit B hereto.  If anitem of income, gain, loss or deduction that has been included in the initialcomputation of Net Income is subjected to the special allocation rules in ExhibitC hereto, Net Income or the resulting Net Loss, whichever the case may be,shall be recomputed without regard to such item.

 

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“Net Loss” means, for anytaxable period, the excess, if any, of the Partnership’s items of loss anddeduction for such taxable period over the Partnership’s items of income andgain for such taxable period.  The itemsincluded in the calculation of Net Loss shall be determined in accordance withExhibit B.  If an item of income, gain,loss or deduction that has been included in the initial computation of Net Lossis subjected to the special allocation rules in Exhibit C hereto, Net Loss orthe resulting Net Income, whichever the case may be, shall be recomputedwithout regard to such item.

“New Securities” means(i) any rights, options, warrants or convertible or exchangeable securitieshaving the right to subscribe for or purchase shares of capital stock (or othercomparable equity interest) of the General Partner, excluding grants under anyStock Option Plan, or (ii) any Debt issued by the General Partner that providesany of the rights described in clause (i).

“Nonrecourse Built-inGain” means, with respect to any Contributed Properties or Adjusted Propertiesthat are subject to a mortgage or negative pledge securing a NonrecourseLiability, the amount of any taxable gain that would be allocated to thePartners pursuant to Section 2.B of Exhibit C hereto if such properties weredisposed of in a taxable transaction in full satisfaction of such liabilitiesand for no other consideration.

“Nonrecourse Deductions”has the meaning set forth in Regulations Section 1.704-2(b)(1), and the amountof Nonrecourse Deductions for a Partnership Year shall be determined inaccordance with the rules of Regulations Section 1.704-2(c).

“Nonrecourse Liability”has the meaning set forth in Regulations Section1.752-1(a)(2).

“Notice of Redemption”means a Notice of Redemption substantially in the form of Exhibit B attachedhereto.

“Partner” means theGeneral Partner or a Limited Partner, and “Partners” means the General Partnerand the Limited Partners.

“Partner Minimum Gain”means an amount, with respect to each Partner Nonrecourse Debt, equal to thePartnership Minimum Gain that would result if such Partner Nonrecourse Debtwere treated as a Nonrecourse Liability, determined in accordance withRegulations Section 1.704-2(i)(3).

“Partner Nonrecourse Debt”has the meaning set forth in Regulations Section 1.704-2(b)(4).

“Partner NonrecourseDeductions” has the meaning set forth in Regulations Section 1.704-2(i)(2), andthe amount of Partner Nonrecourse Deductions with respect to a PartnerNonrecourse Debt for a Partnership Year shall be determined in accordance withthe rules of Regulations Section1.704-2(i)(2).

“Partnership” means thelimited partnership formed under the Act and continued upon the terms andconditions set forth in this Agreement, and any successor thereto.

“Partnership Interest”means a Limited Partner Interest or the General Partnership Interest andincludes any and all benefits to which the holder of such a PartnershipInterest may be entitled as provided in this Agreement, together with allobligations of such Person to comply with the terms and provisions of thisAgreement.  A Partnership Interest may beexpressed as a number of Partnership Units.

“Partnership Minimum Gain”has the meaning set forth in Regulations Section 1.704-2(b)(2), and the amountof Partnership Minimum Gain, as well as any net increase or decrease inPartnership 

 

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Minimum Gain, fora Partnership Year shall be determined in accordance with the rules ofRegulations Section1.704-2(d).

“Partnership Record Date”means the record date established by the General Partner either (i) fordistributions pursuant to Section 5.01 hereof, which record date shall be thesame as the record date established by the General Partner Entity for adistribution to its stockholders of some or all of its portion of suchdistribution received by the General Partner if the shares of common stock (orcomparable equity interests) of the General Partner Entity are Publicly Traded,or (ii) if applicable, for determining the Partners entitled to vote on orconsent to any proposed action for which the consent or approval of thePartners is sought pursuant to Section14.02 hereof.

“Partnership Unit” meansa fractional, undivided share of the Partnership Interests of all Partnersissued pursuant to Sections 4.01 and 4.02 hereof, and includes Class A Units,Class B Units, LTIP Units and any other classes or series of Partnership Unitsestablished after the date hereof.  Thenumber of Partnership Units outstanding and the Percentage Interestsrepresented by such Partnership Units are set forth in Exhibit A hereto, assuch Exhibit may be amended and restated from time to time.  The ownership of Partnership Units may beevidenced by a certificate in a form approved by the General Partner.

“Partnership Year” meansthe fiscal year of the Partnership, which shall be the calendar year.

“Percentage Interest”means, as to a Partner holding a class of Partnership Interests, its interestin such class, determined by dividing the Partnership Units of such class ownedby such Partner by the total number of Partnership Units of such class thenoutstanding as specified in Exhibit A attached hereto, as such exhibit may beamended and restated from time to time, multiplied by the aggregate PercentageInterest allocable to such class of Partnership Interests.

“Person” means a naturalperson, partnership (whether general or limited), trust, estate, association,corporation, limited liability company, unincorporated organization, custodian,nominee or any other individual or entity in its own or any representativecapacity.

“Publicly Traded” meanslisted or admitted to trading on the New York Stock Exchange, the AmericanStock Exchange or another national securities exchange or designated forquotation on the NASDAQ National Market, or any successor to any of theforegoing.

“Qualified REITSubsidiary” means any Subsidiary of the General Partner that is a “qualifiedREIT subsidiary” within the meaning Section 856(i) of the Code.

“Recapture Income” meansany gain recognized by the Partnership (computed without regard to anyadjustment required by Section 743 of the Code) upon the disposition of anyproperty or asset of the Partnership, which gain is characterized as ordinaryincome because it represents the recapture of deductions previously taken withrespect to such property or asset.

“Redeeming Partner” hasthe meaning set forth in Section 8.06.A hereof.

“Redemption Amount” meanseither the Cash Amount or the Shares Amount, as determined by the GeneralPartner in its sole and absolute discretion; provided that in the eventthat the Shares are not Publicly Traded at the time a Redeeming Partnerexercises its Redemption Right the Redemption Amount shall be paid only in theform of the Cash Amount unless the Redeeming Partner, in its sole and absolutediscretion, consents to payment of the Redemption Amount in the form of the SharesAmount.  A 

 

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Redeeming Partnershall have no right, without the General Partner’s consent, in its sole andabsolute discretion, to receive the Redemption Amount in the form of the SharesAmount.

“Redemption Right” hasthe meaning set forth in Section 8.06.A hereof.

“Regulations” means theIncome Tax Regulations promulgated under the Code, as such regulations may beamended from time to time (including corresponding provisions of succeedingregulations).

“REIT” means a realestate investment trust under Section 856 of the Code.

“REIT Requirements” hasthe meaning set forth in Section 5.01.A hereof.

“Residual Gain” or “ResidualLoss” means any item of gain or loss, as the case may be, of the Partnership recognizedfor federal income tax purposes resulting from a sale, exchange or otherdisposition of Contributed Property or Adjusted Property, to the extent suchitem of gain or loss is not allocated pursuant to Section 2.B.1(a) or 2.B.2(a)of Exhibit C hereto to eliminate Book-Tax Disparities.

“Safe Harbor” has themeaning set forth in Section 11.06.F hereof.

“Securities Act” meansthe Securities Act of 1933, as amended.

“704(c) Value” of anyContributed Property means the fair market value of such property at the timeof contribution as determined by the General Partner using such reasonablemethod of valuation as it may adopt. Subject to Exhibit B hereto, the General Partner shall, in its sole andabsolute discretion, use such method as it deems reasonable and appropriate toallocate the aggregate of the 704(c) Values of Contributed Properties in asingle or integrated transaction among each separate property on a basisproportional to their fair market values.

“Share” means a share ofcapital stock (or other comparable equity interest) of the General PartnerEntity.  Shares may be issued in one ormore classes or series in accordance with the terms of the Articles ofIncorporation (or, if the General Partner is not the General Partner Entity,the organizational documents of the General Partner Entity).  In the event that there is more than oneclass or series of Shares, the term “Shares” shall, as the context requires, bedeemed to refer to the class or series of Shares that correspond to the classor series of Partnership Interests for which the reference to Shares ismade.  When used with reference to ClassA Units, the term “Shares” refers to shares of common stock (or othercomparable equity interest) of the General Partner Entity.

“Shares Amount” means a numberof Shares equal to the product of the number of Partnership Units offered forredemption by a Redeeming Partner times the Conversion Factor; providedthat, in the event the General Partner Entity issues to all holders of Sharesrights, options, warrants or convertible or exchangeable securities entitlingsuch holders to subscribe for or purchase Shares or any other securities orproperty (collectively, the “rights”), then the Shares Amount for anyPartnership Units outstanding prior to the issuance of such rights shall alsoinclude such rights that a holder of that number of Shares would be entitled toreceive.

“SL Green” means SL GreenOperating Partnership, L.P., a Delaware limited partnership.

“SLG Class B DistributionPercentage” means, as of a particular date, the percentage obtained by dividing(i) 81.58 minus the number of Class B Units transferred by SL Green to otherPersons after December 14, 2005 and on or before such date (other than UnvestedAward Class B Units) and the 

 

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number of VestedAward Class B Units plus the number of Class B Units acquired by SL Green fromother Persons after December 14, 2005 and on or before such date (other thanUnvested Award Class B Units forfeited to, or repurchased at less than fairmarket value by, SL Green pursuant to an Equity Award Agreement) by (ii) theaggregate number of Class B Units outstanding as of such date.

“Specially DistributedAssets” has the meaning set forth in Section 7.05.A hereof.

“Specified RedemptionDate” means the tenth Business Day after receipt by the General Partner of aNotice of Redemption; provided that, if the Shares are not PubliclyTraded, the Specified Redemption Date means the thirtieth Business Day afterreceipt by the General Partner of a Notice of Redemption.

“Standard Class BDistribution Percentage” means, with respect to a Person as of a particulardate, the percentage obtained by dividing the number of Class B Units held bysuch Person (other than Unvested Award Class B Units) by the aggregate numberof Class B Units outstanding as of such date.

“Stock Option Plan” meansany stock incentive plan of the General Partner, the Partnership or anyAffiliate of the Partnership or the General Partner.

“Stockholders Equity” meansthe aggregate gross proceeds from all sales of Partnership Units.

“Subsidiary” means, withrespect to any Person, any corporation, limited liability company, partnershipor joint venture, or other entity of which a majority of (i) the voting powerof the voting equity securities or (ii) the outstanding equity interests isowned, directly or indirectly, by such Person.

“Substituted LimitedPartner” means a Person who is admitted as a Limited Partner to the Partnershippursuant to Section 11.04 hereof.

“Successor Entity” hasthe meaning set forth in the definition of “Conversion Factor” herein.

“Terminating CapitalTransaction” means any sale or other disposition of all or substantially all ofthe assets of the Partnership for cash or a related series of transactionsthat, taken together, result in the sale or other disposition of all orsubstantially all of the assets of the Partnership for cash.

“Termination Transaction”has the meaning set forth in Section 11.02.B hereof.

“Unrealized Gain”attributable to any item of Partnership property means, as of any date ofdetermination, the excess, if any, of (i) the fair market value of suchproperty (as determined under Exhibit B hereto) as of such date, over (ii) theCarrying Value of such property (prior to any adjustment to be made pursuant toExhibit B hereto) as of such date.

“Unrealized Loss”attributable to any item of Partnership property means, as of any date ofdetermination, the excess, if any, of (i) the Carrying Value of such property(prior to any adjustment to be made pursuant to Exhibit B hereto) as of suchdate, over (ii) the fair market value of such property (as determined underExhibit B hereto) as of such date.

“UnvestedAward Class B Unit” means any Class B Unit that has been transferred by SL Greenor SL Green Realty Corp. to another Person pursuant to an Equity AwardAgreement and remains subject to forfeiture to, or repurchase at less than fairmarket value by, SL Green or any other Person pursuant to such Equity AwardAgreement.

 

 

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“Valuation Date” meansthe date of receipt by the General Partner of a Notice of Redemption or, ifsuch date is not a Business Day, the first Business Day thereafter.

“Value” means, withrespect to any outstanding Shares of the General Partner Entity that arePublicly Traded, the average of the daily market price for the ten (10)consecutive trading days immediately preceding the date with respect to whichvalue must be determined or, if such date is not a Business Day, theimmediately preceding Business Day.  Themarket price for each such trading day shall be the closing price, regular way,on such day, or if no such sale takes place on such day, the average of theclosing bid and asked prices on such day. In the event that the outstanding Shares of the General Partner Entityare Publicly Traded and the Shares Amount includes rights that a holder ofShares would be entitled to receive, then the Value of such rights shall bedetermined by the General Partner acting in good faith on the basis of suchquotations and other information as it considers, in its reasonable judgment,appropriate.  In the event that theShares of the General Partner Entity are not Publicly Traded, the Value of theShares Amount per Partnership Unit offered for redemption (which will be theCash Amount per Partnership Unit offered for redemption payable pursuant toSections 8.06 and 8.07 hereof) means the amount that a holder of onePartnership Unit would receive if each of the assets of the Partnership were tobe sold for its fair market value on the Specified Redemption Date, thePartnership were to pay all of its outstanding liabilities, and the remainingproceeds were to be distributed to the Partners in accordance with the terms ofthis Agreement.  Such Value shall bedetermined by the General Partner, acting in good faith and based upon acommercially reasonable estimate of the amount that would be realized by thePartnership if each asset of the Partnership (and each asset of each Partnership,limited liability company, joint venture or other entity in which thePartnership owns a direct or indirect interest) were sold to an unrelatedpurchaser in an arms’ length transaction where neither the purchaser nor theseller were under economic compulsion to enter into the transaction (withoutregard to any discount in value as a result of the Partnership’s minorityinterest in any property or any illiquidity of the Partnership’s interest inany property).  In connection withdetermining the value of the Partnership Interest for purposes of determiningthe number of additional Partnership Units issuable upon a Capital Contributionfunded by an underwritten public offering of shares of capital stock (or othercomparable equity interest) of the General Partner, the Value of such sharesshall be the public offering price per share of such class of the capital stock(or other comparable equity interest) sold.

“Vested Award Class BUnit” means any Class B Unit that has been transferred by SL Green or SL GreenRealty Corp. to another Person pursuant to an Equity Award Agreement and is nolonger subject to forfeiture to, or repurchase at less than fair market valueby, SL Green or any other Person pursuant to such Equity Award Agreement(except for a Class B Unit that was forfeited to, or repurchased at less thanfair market value by, SL Green or another Person pursuant to an Equity AwardAgreement).

ARTICLE II

 

ORGANIZATIONAL MATTERS

 

                Section 2.01.          Organization

 

The Partnership isa limited partnership organized pursuant to the provisions of the Act and uponthe terms and conditions set forth in the Agreement.  Except as expressly provided herein to thecontrary, the rights and obligations of the Partners and the administration andtermination of the Partnership shall be governed by the Act.  The Partnership Interest of each Partnershall be personal property for all purposes.

 

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Section 2.02.          Name

The name of thePartnership is GKK Capital LP.  ThePartnership’s business may be conducted under any other name or names deemedadvisable by the General Partner, including the name of the General Partner orany Affiliate thereof.  The words “LimitedPartnership,” “L.P.,” “Ltd.” Or similar words or letters shall be included inthe Partnership’s name where necessary for the purposes of complying with thelaws of any jurisdiction that so requires. The General Partner in its sole and absolute discretion may change thename of the Partnership at any time and from time to time and shall notify theLimited Partners of such change in the next regular communication to theLimited Partners.

Section 2.03.          Registered Office and Agent;Principal Office

The address of theregistered office of the Partnership in the State of Delaware shall be locatedat 9 East Loockerman Street, Suite #1B in the City of Dover, County of Kent,Delaware 19901 and the registered agent for service of process on thePartnership in the State of Delaware at such registered office shall beNational Registered Agents, Inc.  Theprincipal office of the Partnership shall be 420 Lexington Avenue, New York,New York,  10170 or such other place asthe General Partner may from time to time designate by notice to the LimitedPartners.  The Partnership may maintainoffices at such other place or places within or outside the State of Delawareas the General Partner deems advisable.

                Section 2.04.          Term

 

The term of thePartnership commenced on April 21, 2004, the date on which the Certificate wasfiled in the office of the Secretary of State of the State of Delaware inaccordance with the Act, and shall continue until December 31, 2103, unless itis dissolved sooner pursuant to the provisions of Article XIII hereof or asotherwise provided by law.

 

ARTICLE III

 

PURPOSE

                Section 3.01.          Purpose and Business

 

The purpose and nature ofthe business to be conducted by the Partnership is (i) to conduct any businessthat may be lawfully conducted by a limited partnership organized pursuant tothe Act; provided, however, that such business shall be limitedto and conducted in such a manner as to permit the General Partner Entity atall times to be classified as a REIT, unless the General Partner ceases toqualify or is not qualified as a REIT for any reason or reasons not related tothe business conducted by the Partnership; (ii) to enter into anypartnership, joint venture, limited liability company or other similararrangement to engage in any of the foregoing or the ownership of interests inany entity engaged, directly or indirectly, in any of the foregoing; and (iii)to do anything necessary or incidental to the foregoing.  In connection with the foregoing, thePartners acknowledge that the status of the General Partner Entity as a REITinures to the benefit of all the Partners and not solely the General Partner orits Affiliates.

            Section 3.02.          Powers

 

The Partnership isempowered to do any and all acts and things necessary, appropriate, proper,advisable, incidental to or convenient for the furtherance and accomplishmentof the purposes and business described herein and for the protection andbenefit of the Partnership, including, without limitation, full power andauthority, directly or through its ownership interest in other entities, toenter into, perform and carry out contracts of any kind, borrow money and issueevidences of indebtedness 

 

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whether or notsecured by mortgage, deed of trust, pledge or other lien, acquire, own, manage,improve and develop real property, and lease, sell, transfer and dispose ofreal property; provided, however, that the Partnership shall nottake, or refrain from taking, any action which, in the judgment of the GeneralPartner, in its sole and absolute discretion, (i) could adversely affect the abilityof the General Partner Entity to continue to qualify as a REIT, (ii) couldsubject the General Partner Entity to any additional taxes under Section 857 orSection 4981 of the Code or (iii) could violate any law or regulation of anygovernmental body or agency having jurisdiction over the General Partner Entityor its securities, unless such action (or inaction) shall have beenspecifically consented to by the General Partner in writing.

                Section 3.03.          Partnership Only for PurposesSpecified

 

The Partnership shall bea partnership only for the purposes specified in Section 3.01 above, and thisAgreement shall not be deemed to create a partnership among the Partners withrespect to any activities whatsoever other than the activities within thepurposes of the Partnership as specified in Section 3.01 above.

 

ARTICLE IV

CAPITAL CONTRIBUTIONS ANDISSUANCESOF PARTNERSHIP INTERESTS

Section 4.01.          Capital Contributions of thePartners

A.    Capital Contributions.  Prior to the date hereof, certain Partnersmade Capital Contributions to the Partnership. Exhibit A hereto reflects the Capital Contributions made by eachPartner, the Partnership Units assigned to each Partner and the PercentageInterest in the Partnership represented by such Partnership Units.  The Capital Accounts of the Partners and theCarrying Values of the Partnership’s Assets have been and will continue to bedetermined pursuant to Section I.D of Exhibit B hereto to reflect the CapitalContributions made.

B.    General PartnershipInterest.  A number of PartnershipUnits held by the General Partner equal to one percent (1%) of all outstandingPartnership Units shall be deemed to be the General Partnership Interest.  All other Partnership Units held by the GeneralPartner shall be deemed to be Limited Partner Interests and shall be held bythe General Partner in its capacity as a Limited Partner in the Partnership.

C.    Capital Contributions ByMerger.  To the extent thePartnership acquires any property by the merger of any other Person into thePartnership, Persons who receive Partnership Interests in exchange for theirinterests in the Person merging into the Partnership shall become Partners andshall be deemed to have made Capital Contributions as provided in theapplicable merger agreement and as set forth in Exhibit A hereto.

D.    No Obligation to MakeAdditional Capital Contributions. Except as provided in Sections 7.05 and 10.05 hereof, the Partners shallhave no obligation to make any additional Capital Contributions or provide anyadditional funding to the Partnership (whether in the form of loans, repaymentsof loans or otherwise).  No Partner shallhave any obligation to restore any deficit that may exist in its CapitalAccount, either upon a liquidation of the Partnership or otherwise.

 

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Section 4.02.          Issuancesof Partnership Interests

 

A.    General.  The General Partner is hereby authorized tocause the Partnership from time to time to issue to Partners (including theGeneral Partner and its Affiliates) or other Persons (including, withoutlimitation, in connection with the contribution of property to the Partnership)Partnership Units or other Partnership Interests in one or more classes, or inone or more series of any of such classes, with such designations, preferencesand relative, participating, optional or other special rights, powers andduties, including rights, powers and duties senior to Limited PartnerInterests, all as shall be determined, subject to applicable Delaware law, bythe General Partner in its sole and absolute discretion, including, withoutlimitation, (i) the allocations of items of Partnership income, gain, loss,deduction and credit to each such class or series of Partnership Interests,(ii) the right of each such class or series of Partnership Interests to sharein Partnership distributions and (iii)the rights of each such class or seriesof Partnership Interests upon dissolution and liquidation of the Partnership; provided,that no such Partnership Units or other Partnership Interests shall be issuedto the General Partner unless either (a) the Partnership Interests are issuedin connection with the grant, award or issuance of Shares or other equityinterests in the General Partner having designations, preferences and otherrights such that the economic interests attributable to such Shares or otherequity interests are substantially similar to the designations, preferences andother rights (except voting rights) of the additional Partnership Interestsissued to the General Partner in accordance with this Section 4.02.A or (b) thePartnership Interests are issued to all Partners holding Partnership Interestsin the same class in proportion to their respective Percentage Interests insuch class.  In the event that the Partnershipissues Partnership Interests pursuant to this Section 4.02.A, the GeneralPartner shall make such revisions to this Agreement (including but not limitedto the revisions described in Section 5.04, Section 6.02 and Section 8.06hereof) as it deems necessary to reflect the issuance of such additionalPartnership Interests.

B.    Percentage InterestAdjustments in the Case of Capital Contributions for Class A Units.  Upon the acceptance of additional CapitalContributions in exchange for Class A Units, the Percentage Interest relatedthereto shall be equal to a fraction, the numerator of which is equal to theamount of cash, if any, plus the Agreed Value of Contributed Property, if any,contributed with respect to such additional Partnership Units and the denominatorof which is equal to the sum of (i) value of the Partnership Interests for alloutstanding Class A Units (computed as of the Business Day immediatelypreceding the date on which the additional Capital Contributions are made (an “AdjustmentDate”)) plus (ii) the aggregate amount of additional Capital Contributionscontributed to the Partnership on such Adjustment Date in respect of suchadditional Class A Units.  The PercentageInterest of each other Partner holding Class A Units not making a full pro rataCapital Contribution shall be adjusted to a fraction the numerator of which isequal to the sum of (i) the value of such Limited Partner (computed as of theBusiness Day immediately preceding the Adjustment Date) plus (ii) the amount ofadditional Capital Contributions (such amount being equal to the amount ofcash, if any, plus the Agreed Value of Contributed Property, if any, socontributed), if any, made by such Partner to the Partnership in respect ofsuch Class A Units as of such Adjustment Date and the denominator of which isequal to the sum of (i) the value of the outstanding Class A Units (computed asof the Business Day immediately preceding such Adjustment Date) plus (ii) theaggregate amount of the additional Capital Contributions contributed to thePartnership on such Adjustment Date in respect of such additional Class AUnits.  For purposes of calculating aPartner’s Percentage Interest of Class A Units pursuant to this Section 4.02.B,cash Capital Contributions by the General Partner will be deemed to equal thecash contributed by the General Partner plus (a) in the case of cashcontributions funded by an offering of any equity interests in or othersecurities of the General Partner, the offering costs attributable to the cashcontributed to the Partnership, and (b) in the case of Class A Units issuedpursuant to Section 7.05.E hereof, an amount equal to the difference betweenthe Value of the Shares sold pursuant to any Stock Option Plan and the netproceeds of such sale.

 

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C.    Classes of PartnershipUnits.  From and after the EffectiveDate, subject to Section 4.02.A above, the Partnership shall have two classesof Partnership Units, entitled “Class A Units” and “Class B Units.” From andafter December 14, 2005, the Partnership shall have an additional class ofPartnership Units, entitled “LTIP Units.” Class A Units may be issued to newly admitted Partners in exchange forthe contribution by such Partners of cash, real estate partnership interests,stock, notes or other assets or consideration.

D.            Issuance of Class B Units.  On the Effective Date, the General Partnerissued 100 Class B Units to the Manager. The Manager immediately assigned 85 of such Units to SL Green, whichassignment was reflected on Exhibit A. There was no obligation to contribute any capital in connection untilissuance of the Class B Units.  Theinitial Capital Accounts of the Holders of the Class B Units in respect of suchUnits was zero.  All Class B Units issuedunder this Agreement are intended to qualify as “profits interests” underRevenue Procedure 93-27, 1993-2 C.B. 343 (June 9, 1993) and Revenue Procedure2001-43, 2001-2 C.B. 191 (August 3, 2001), and this Section 4.02.D shall beinterpreted and applied consistently therewith. The General Partner at its discretion may amend this Section 4.02.D toensure that any Class B Units granted after the date of this Agreement willqualify as “profits interests” under Revenue Procedure 93-27, 1993-2 C.B. 343(June 9, 1993) and Revenue Procedure 2001-43, 2001-2 C.B. 191 (August 3, 2001)(and any other similar rulings or regulations that may be in effect at suchtime).

E.             Issuance of LTIP Units.  From time to time the General Partner mayissue LTIP Units to Persons providing services to or for the benefit of thePartnership.  LTIP Units shall have therights, powers, privileges, restrictions, qualifications and limitationsspecified in Exhibit E hereto.  LTIPUnits are intended to qualify as profits interests in the Partnership and forthe avoidance of doubt, the provisions of Section 4.04 shall not apply to theissuance of LTIP Units.

 

Section 4.03.          No Preemptive Rights

Except to the extentexpressly granted by the Partnership pursuant to another agreement, no Personshall have any preemptive, preferential or other similar right with respect to(i) additional Capital Contributions or loans to the Partnership or (ii)issuance or sale of any Partnership Units or other Partnership Interests.

Section 4.04.          Other Contribution Provisions

In the event that anyPartner is admitted to the Partnership and is given a Capital Account inexchange for services rendered to the Partnership, such transaction shall betreated by the Partnership and the affected Partner as if the Partnership hadcompensated such Partner in cash, and the Partner had contributed such cash tothe capital of the Partnership.

Section 4.05.          No Interest on Capital

No Partner shall beentitled to interest on its Capital Contributions or its Capital Account.

 

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ARTICLE V

DISTRIBUTIONS

Section 5.01.          Requirement and Characterization ofDistributions

A.    General.  Except as otherwise provided herein, theGeneral Partner shall make distributions at such times and in such amounts asit may determine.  Such distributionsshall be made to the Partners who are Partners on the Partnership Record Datefor such distribution.  Notwithstandinganything to the contrary contained herein, in no event may a Partner receive adistribution with respect to a Partnership Unit for a quarter or shorter periodif such Partner is entitled to receive a distribution relating to such periodwith respect to a Share for which such Partnership Unit has been redeemed orexchanged.  Unless otherwise expresslyprovided for herein or in an agreement at the time a new class of PartnershipInterests is created in accordance with Article IV hereof, no PartnershipInterest shall be entitled to a distribution in preference to any otherPartnership Interest.  The GeneralPartner shall make such reasonable efforts, as determined by it in its sole andabsolute discretion and consistent with the qualification of the GeneralPartner Entity as a REIT, to make distributions (a) to Limited Partners so asto preclude any such distribution or portion thereof from being treated as partof a sale of property by a Limited Partner under Section 707 Code or theRegulations thereunder; provided that, the General Partner and thePartnership shall not have liability to a Limited Partner under anycircumstances as a result of any distribution to a Limited Partner being sotreated, and (b) to the General Partner in an amount sufficient to enable theGeneral Partner Entity to pay stockholder dividends that will (1) satisfy therequirements for qualification as a REIT under the Code and the Regulations(the “REIT Requirements”) and (2) avoid any federal income or excise taxliability for the General Partner Entity.

B.    Method. Distributionsshall be made (i) first, to the holders of Class B Units as provided in Section5.01.C hereof, and to each other holder of a Partnership Interest that isentitled to any preference in distribution, in accordance with the rights ofany such class of Partnership Interests, and (ii) thereafter, to the holders ofClass A Units and each other class of Partnership Interests ranking in parityto the Class A Units (including, without limitation, the LTIP Units if and tothe extent they are then entitled to participate in such distributions pursuantto Section 2 of Exhibit E hereto), in proportion to the relative PercentageInterests of each such class of Partnership Interests.  All distributions within a class ofPartnership Units shall be pro rata in proportion to the respective PercentageInterests on the applicable Partnership Record Date.

C.    Distributions When ClassB Units Are Outstanding.  Holders ofClass B Units shall receive quarterly distributions for each calendar quarter(or portion thereof) in an aggregate amount equal to 25% of the amount, if any,by which (i) the sum of Funds From Operations plus any gains (or losses) fromdebt restructuring or property sales exceeds (ii) the product of thePartnership’s weighted average Stockholders Equity multiplied by 2.375% (suchpercentage to be prorated for any partial quarter).  These distributions shall be paid to Holdersof Class B Units within 45 days after the end of each quarter.  These distributions shall be recalculated atthe end of each calendar year beginning with 2004, as 25% of the amount bywhich (A) annual Funds From Operations plus any gains (or losses) from debtrestructuring and gains (or losses) or property sales for such calendar year(or part thereof) exceeds (B) the Partnership’s weighted average StockholdersEquity for such year multiplied by 9.5% (such percentage to be prorated for anypartial year).  To the extent quarterlydistributions exceed the annual recalculated amount, the Holders of Class BUnits shall refund the excess to the Partnership, and to the extent the annualrecalculated amount exceeds the quarterly distributions made for such year,such excess shall be paid by the Partnership to such Holders within 90 daysafter the end of such calendar year. Distributions (and any refunds ofdistributions) made pursuant to this Section 5.01.C shall be apportioned,subject to Section 5.01.D, among the holders of Class B Units pro rata inaccordance with their Class B Distribution Percentages, 

 

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determined as ofthe date of such distribution (or, in the case of any refund, as of the date ofthe distribution(s) with respect to which such refund is attributable).

 

D.            Class B Units Intended to Qualifyas Profits Interests.  Distributionsmade pursuant to this Section 5.01 shall be adjusted as necessary to ensurethat the amount apportioned to each Class B Unit does not exceed the amountattributable to items of Partnership income or gain realized after the datesuch Class B Unit was issued by the Partnership.  The intent of this Section 5.01.D is toensure that any Class B Units issued after the date of this Agreement qualifyas “profits interests” under Revenue Procedure 93-27, 1993-2 C.B. 343 (June 9,1993) and Revenue Procedure 2001-43, 2001-2 C.B. 191 (August 3, 2001), andSection 5.01 shall be interpreted and applied consistently therewith.  The General Partner at its discretion mayamend this Section 5.01.D to ensure that any Class B Units granted after thedate of this Agreement will qualify as “profits interests” under RevenueProcedure 93-27, 1993-2 C.B. 343 (June 9, 1993) and Revenue Procedure 2001-43,2001-2 C.B. 191 (August 3, 2001) (and any other similar rulings or regulationsthat may be in effect at such time).

Section 5.02.          Amounts Withheld

All amounts withheldpursuant to the Code or any provisions of any state or local tax law andSection 10.05 hereof with respect to any allocation, payment or distribution tothe General Partner, the Limited Partners or Assignees shall be treated asamounts distributed to the General Partner, Limited Partners or Assigneespursuant to Section 5.01 above for all purposes under this Agreement.

Section 5.03.          Distributions Upon Liquidation

Proceeds from aTerminating Capital Transaction shall be distributed to the Partners inaccordance with Section 13.02 hereof.

Section 5.04.          Revisions to Reflect Issuance ofAdditional Partnership Interests

In the event that thePartnership issues additional Partnership Interests to the General Partner orany Additional Limited Partner pursuant to Article IV hereof, the GeneralPartner shall make such revisions to this Article V as it deems necessary toreflect the issuance of such additional Partnership Interests.  Such revisions shall not require the consentor approval of any other Partner.

ARTICLE VI

ALLOCATIONS

Section 6.01.          Allocations For Capital AccountPurposes

For purposes ofmaintaining the Capital Accounts and in determining the rights of the Partnersamong themselves, the Partnership’s items of income, gain, loss and deduction(computed in accordance with Exhibit B hereto) shall be allocated among thePartners in each taxable year (or portion thereof) as provided herein below.

A.    Net Income.  After giving effect to the specialallocations set forth in Section 1 of Exhibit C hereto, Net Income shall beallocated (i) first, to the General Partner to the extent that Net Lossespreviously allocated to the General Partner, on a cumulative basis, pursuant tothe last sentence of  Section 6.01.Bbelow exceed Net Income previously allocated to the General Partner, on a cumulativebasis, pursuant to this clause (i) of Section 6.01.A, (ii) second, to Holdersof Class B Units and to the 

 

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holders of anyother Partnership Interests that are entitled to any preference in distributionin accordance with the rights of any such class of Partnership Interests untileach such Partnership Interest has been allocated, on a cumulative basispursuant to this clause (ii), Net Income equal to the sum of the amount ofdistributions theretofore received (or to be received with respect to thefiscal year of the Partnership in which such Net Income accrues) with respectto such Partnership Interests pursuant to clause (i) of Section 5.01.B hereofand the amount of any prior allocations of Net Losses to such class ofPartnership Interests pursuant to Section 6.01.B.(i) below (and, within suchclass, pro rata in proportion to the respective interests in such class as ofthe last day of the period for which such allocation is being made) and (iii)third, with respect to Partnership Interests that are not entitled to anypreference in the allocation of Net Income, pro rata to each such class inaccordance with the terms of such class (and, within such class, pro rata inproportion to the respective interests in such class as of the last day of theperiod for which such allocation is being made).

B.    Net Losses.  After giving effect to the specialallocations set forth in Section 1 of Exhibit C hereto, Net Losses shall beallocated (i) first, to the Holders of Class B Units and to holders of anyother Partnership Interests that are entitled to any preference in distributionin accordance with the rights of any such class of Partnership Interests to theextent that any prior allocations of Net Income to such class of PartnershipInterests pursuant to Section 6.01.A(1)(ii) above exceed, on a cumulativebasis, distributions theretofore received (or to be received with respect tothe fiscal year of the Partnership in which such Net Income accrues) with respectto such Partnership Interests pursuant to clause (i) of Section 5.01.B hereof(and, within such class, pro rata in proportion to the respective interests insuch class as of the last day of the period for which such allocation is beingmade) and (ii) second, with respect to classes of Partnership Interests thatare not entitled to any preference in distribution, pro rata to each such classin accordance with the terms of such class (and, within such class, pro rata inproportion to the respective interests in such class as of the last day of theperiod for which such allocation is being made); provided that, NetLosses shall not be allocated to any Limited Partner pursuant to this Section6.01.B to the extent that such allocation would cause such Limited Partner tohave an Adjusted Capital Account Deficit (or increase any existing AdjustedCapital Account Deficit) at the end of such taxable year (or portionthereof).  All Net Losses in excess ofthe limitations set forth in this Section 6.01.B shall be allocated to theGeneral Partner.

C.    Recapture Income.  Any gain allocated to the Partners upon thesale or other taxable disposition of any Partnership asset shall, to the extentpossible after taking into account other required allocations of gain pursuantto Exhibit C hereto, be characterized as Recapture Income in the sameproportions and to the same extent as such Partners have been allocated anydeductions directly or indirectly giving rise to the treatment of such gains asRecapture Income.

D.    Special Allocations.With Respect to LTIP Units.  After givingeffect to the special allocations set forth in Section 1 of Exhibit C hereto,and notwithstanding the provisions of Sections 6.01.A and 6.01.B above, butsubject to the prior allocation of income and gain under clauses 6.01.A(i) and(ii) above, any Liquidating Gains shall first be allocated to the holders ofLTIP Units until the Economic Capital Account Balances of such holders, to theextent attributable to their ownership of LTIP Units, are equal to (i) theClass A Unit Economic Balance, multiplied by (ii) the number of their LTIPUnits; provided that no such Liquidating Gains will be allocated with respectto any particular LTIP Unit unless and to the extent that such LiquidatingGains, when aggregated with other Liquidating Gains realized since the issuanceof such LTIP Unit, exceed Liquidating Losses realized since the issuance ofsuch LTIP Unit.  After giving effect tothe special allocations set forth in Section 1 of Exhibit C hereto, andnotwithstanding the provisions of Sections 6.01.A and 6.01.B above, in theevent that, due to distributions with respect to Class A Units in which theLTIP Units do not participate or otherwise, the Economic Capital AccountBalance of any present or former holder of LTIP Units, to the extentattributable to the holder’s ownership of LTIP Units, exceeds the targetbalance specified above, then 

 

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Liquidating Lossesshall be allocated to such holder to the extent necessary to reduce oreliminate the disparity.  In the eventthat Liquidating Gains or Liquidating Losses are allocated under this Section6.01.D, Net Income allocable under clause 6.01.A(iii) and any Net Losses shallbe recomputed without regard to the Liquidating Gains or Liquidating Losses soallocated.  For this purpose, “LiquidatingGains” means any net capital gain realized in connection with the actual orhypothetical sale of all or substantially all of the assets of the Partnership,including but not limited to net capital gain realized in connection with anadjustment to the Carrying Value of Partnership assets under Section 1.D ofExhibit B to this Agreement.  Similarly, “LiquidatingLosses” means any net capital loss realized in connection with any suchevent.  The “Economic Capital AccountBalances” of the holders of LTIP Units will be equal to their Capital Accountbalances, plus the amount of their shares of any Partner Minimum Gain orPartnership Minimum Gain, in either case to the extent attributable to theirownership of LTIP Units.  Similarly, the “ClassA Unit Economic Balance” shall mean (i) the Capital Account balance of theGeneral Partner, plus the amount of the General Partner’s share of any PartnerMinimum Gain or Partnership Minimum Gain, in either case to the extentattributable to the General Partner’s ownership of Class A Units and computedon a hypothetical basis after taking into account all allocations through thedate on which any allocation is made under this Section 6.01.D, divided by (ii)the number of the General Partner’s Class A Units.  Any such allocations shall be made among theholders of LTIP Units in proportion to the amounts required to be allocated toeach under this Section 6.01.D.  Theparties agree that the intent of this Section 6.01.D is to make the CapitalAccount balance associated with each LTIP Unit economically equivalent to theCapital Account balance associated with the General Partner’s Class A Units (ona per-unit basis), but only if the Partnership has recognized cumulative netgains with respect to its assets since the issuance of the relevant LTIP Unit.

 

Section 6.02.          Revisions to Allocations to ReflectIssuance of Additional Partnership Interests

In the event that thePartnership issues additional Partnership Interests to the General Partner orany Additional Limited Partner pursuant to Article IV hereof, the GeneralPartner shall make such revisions to this Article VI and Exhibit A as it deemsnecessary to reflect the terms of the issuance of such additional PartnershipInterests, including making preferential allocations to classes of PartnershipInterests that are entitled thereto. Such revisions shall not require the consent or approval of any otherPartner.

ARTICLE VII

MANAGEMENT AND OPERATIONSOF BUSINESS

Section 7.01.          Management

A.    Powers of General Partner.  Except as otherwise expressly provided inthis Agreement, all management powers over the business and affairs of thePartnership are and shall be exclusively vested in the General Partner, and noLimited Partner shall have any right to participate in or exercise control ormanagement power over the business and affairs of the Partnership.  The General Partner may not be removed by theLimited Partners with or without cause; provided, however, thatif the Shares (or comparable equity securities)of the General Partner Entityare not Publicly Traded, the General Partner maybe removed with cause with theConsent of the Limited Partners.  Inaddition to the powers now or hereafter granted a general partner of a limitedpartnership under applicable law or which are granted to the General Partnerunder any other provision of this Agreement, the General Partner, subject toSections 7.06 and 7.11 below, shall have full power and authority to do allthings deemed necessary or desirable by 

 

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it to conduct thebusiness of the Partnership, to exercise all powers set forth in Section 3.02hereof and to effectuate the purposes set forth in Section 3.01 hereof, including,without limitation:

(1)           the making of any expenditures, thelending or borrowing of money or will permit the General Partner Entity (aslong as the General Partner Entity qualifies as a REIT) to avoid the payment ofany federal income tax (including, for this purpose, any excise tax pursuant toSection 4981 of the Code) and to make distributions to its stockholderssufficient to permit the General Partner Entity to maintain REIT status, theassumption or guarantee of, or other contracting for, indebtedness and otherliabilities, the issuance of evidences of indebtedness (including the securingof same by mortgage, deed of trust or other lien or encumbrance on thePartnership’s assets) and the incurring of any obligations the General Partnerdeems necessary for the conduct of the activities of the Partnership;

(2)           the making of tax, regulatory andother filings, or rendering of periodic or other reports to governmental orother agencies having jurisdiction over the business or assets of the Partnership;

(3)           the acquisition, disposition,mortgage, pledge, encumbrance, hypothecation or exchange of any or all of theassets of the Partnership (including the exercise or grant of any conversion,option, privilege or subscription right or other right available in connectionwith any assets at any time held by the Partnership) or the merger or othercombination of the Partnership with or into another entity, on such terms asthe General Partner deems proper;

(4)           the use of the assets of thePartnership (including, without limitation, cash on hand) for any purposeconsistent with the terms of this Agreement and on any terms it sees fit,including, without limitation, the financing of the conduct of the operationsof the Partnership or any of the Partnership’s Subsidiaries, the lending offunds to other Persons (including, without limitation, the Partnership’sSubsidiaries) and the repayment of obligations of the Partnership and itsSubsidiaries and any other Person in which the Partnership has an equityinvestment and the making of capital contributions to its Subsidiaries;

(5)           the negotiation, execution, deliveryand performance of any contracts, conveyances or other instruments that theGeneral Partner considers useful or necessary to the conduct of the Partnership’soperations or the implementation of the General Partner’s powers under thisAgreement, including contracting with contractors, developers, consultants,accountants, legal counsel, other professional advisors, and other agents andthe payment of their expenses and compensation out of the Partnership’s assets;

 

(6)           the mortgage, pledge, encumbrance orhypothecation of any assets of the Partnership, and the use of the assets ofthe Partnership (including, without limitation, cash on hand) for any purposeconsistent with the terms of this Agreement and on any terms it sees fit,including, without limitation, the financing of the conduct or the operationsof the General Partners or the Partnership, the lending of funds to otherPersons (including, without limitation, any Subsidiaries of the Partnership)and the repayment of obligations of the Partnership, any of its Subsidiariesand any other Person in which it has an equity investment;

(7)           the distribution of Partnership cashor other Partnership assets in accordance with this Agreement;

(8)           the holding, managing, investing andreinvesting of cash and other assets of the Partnership;

 

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(9)           the collection and receipt ofrevenues and income of the Partnership;

(10)         the selection, designation of powers,authority and duties and dismissal of employees of the Partnership (including,without limitation, employees having titles such as “president,” “vicepresident,” “secretary” and “treasurer”) and agents, outside attorneys,accountants, consultants and contractors of the Partnership, and thedetermination of their compensation and other terms of employment or hiring;

(11)         the maintenance of such insurance forthe benefit of the Partnership and the Partners as it deems necessary orappropriate;

(12)         the formation of, or acquisition of aninterest (including non-voting interests in entities controlled by Affiliatesof the Partnership or third parties) in, and the contribution of property to,any further limited or general partnerships, joint ventures, limited liabilitycompanies or other relationships that it deems desirable (including, withoutlimitation, the acquisition of interests in, and the contributions of funds orproperty, or the making of loans, to its Subsidiaries and any other Person inwhich it has an equity investment from time to time or the incurrence ofindebtedness on behalf of such Persons or the guarantee of obligations of suchPersons); provided that, as long as the General Partner has determinedto qualify as a REIT, the Partnership may not engage in any such formation,acquisition or contribution that would cause the General Partner to fail toqualify as a REIT);

(13)         the control of any matters affectingthe rights and obligations of the Partnership, including the settlement,compromise, submission to arbitration or any other form of dispute resolutionor abandonment of any claim, cause of action, liability, debt or damages due orowing to or from the Partnership, the commencement or defense of suits, legalproceedings, administrative proceedings, arbitrations or other forms of disputeresolution, the representation of the Partnership in all suits or legalproceedings, administrative proceedings, arbitrations or other forms of disputeresolution, the incurring of legal expense and the indemnification of anyPerson against liabilities and contingencies to the extent permitted by law;

(14)         the determination of the fair marketvalue of any Partnership property distributed in kind, using such reasonable methodof valuation as the General Partner may adopt;

(15)         the exercise, directly or indirectly,through any attorney-in-fact acting under a general or limited power ofattorney, of any right, including the right to vote, appurtenant to any assetsor investment held by the Partnership;

(16)         the exercise of any of the powers ofthe General Partner enumerated in this Agreement on behalf of or in connectionwith any Subsidiary of the Partnership or any other Person in which thePartnership has a direct or indirect interest, individually or jointly with anysuch Subsidiary or other Person;

(17)         the exercise of any of the powers ofthe General Partner enumerated in this Agreement on behalf of any Person inwhich the Partnership does not have any interest pursuant to contractual orother arrangements with such Person;

(18)         the making, executing and delivering ofany and all deeds, leases, notes, deeds to secure debt, mortgages, deeds oftrust, security agreements, conveyances, contracts, guarantees, warranties,indemnities, waivers, releases or other legal instruments or agreements inwriting 

 

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necessary or appropriate in the judgment of theGeneral Partner for the accomplishment of any of the powers of the General Partnerunder this Agreement;

(19)         the distribution of cash to acquirePartnership Units held by a Limited Partner in connection with a LimitedPartner’s exercise of its Redemption Right under Section 8.06 hereof; and

(20)         the amendment and restatement of ExhibitA hereto to reflect accurately at all times the Capital Contributions andPercentage Interests of the Partners as the same are adjusted from time to timeto the extent necessary to reflect redemptions, Capital Contributions, theissuance of Partnership Units, the admission of any Additional Limited Partneror any Substituted Limited Partner or otherwise, which amendment andrestatement, notwithstanding anything in this Agreement to the contrary, shallnot be deemed an amendment of this Agreement, as long as the matter or eventbeing reflected in Exhibit A hereto otherwise is authorized by this Agreement.

B.    No Approval by LimitedPartners.  Except as provided inSection 7.11 below, each of the Limited Partners agrees that the GeneralPartner is authorized to execute, deliver and perform the above-mentionedagreements and transactions on behalf of the Partnership without any furtheract, approval or vote of the Partners, notwithstanding any other provision ofthis Agreement, the Act or any applicable law, rule or regulation, to the fullextent permitted under the Act or other applicable law.  The execution, delivery or performance by theGeneral Partner or the Partnership of any agreement authorized or permitted underthis Agreement shall not constitute a breach by the General Partner of any dutythat the General Partner may owe the Partnership or the Limited Partners or anyother Persons under this Agreement or of any duty stated or implied by law orequity.

C.    Insurance.  At all times from and after the date hereof,the General Partner may cause the Partnership to obtain and maintain (i)casualty, liability and other insurance on the properties of the Partnership,(ii)liability insurance for the Indemnitees hereunder and (iii) such otherinsurance as the General Partner, in its sole and absolute discretion,determines to be necessary.

D.    Working Capital and OtherReserves.  At all times from andafter the date hereof, the General Partner may cause the Partnership toestablish and maintain working capital reserves in such amounts as the GeneralPartner, in its sole and absolute discretion, deems appropriate and reasonablefrom time to time, including upon liquidation of the Partnership pursuant toSection 13.02 hereof.

E.     No Obligations toConsider Tax Consequences of Limited Partners.

In exercising itsauthority under this Agreement, the General Partner may, but shall be under noobligation to, take into account the tax consequences to any Partner (includingthe General Partner) of any action taken (or not taken) by it.  The General Partner and the Partnership shallnot have liability to a Limited Partner for monetary damages or otherwise forlosses sustained, liabilities incurred or benefits not derived by such LimitedPartner in connection with such decisions, provided that the General Partnerhas acted in good faith and pursuant to its authority under this Agreement.

Section 7.02.          Certificate of Limited Partnership

The General Partner haspreviously filed the Certificate with the Secretary of State of Delaware.  To the extent that such action is determinedby the General Partner to be reasonable and necessary or appropriate, theGeneral Partner shall file amendments to and restatements of the Certificateand do all the things to maintain the Partnership as a limited partnership (ora partnership in which the limited partners have limited liability) under thelaws of the State of Delaware and each other state, the District of 

 

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Columbia or otherjurisdiction in which the Partnership may elect to do business or ownproperty.  Subject to the terms ofSection 8.05.A(4) hereof, the General Partner shall not be required, before orafter filing, to deliver or mail a copy of the Certificate or any amendmentthereto to any Limited Partner.  TheGeneral Partner shall use all reasonable efforts to cause to be filed suchother certificates or documents as may be reasonable and necessary orappropriate for the formation, continuation, qualification and operation of alimited partnership (or a partnership in which the limited partners havelimited liability) in the State of Delaware and any other state, the Districtof Columbia or other jurisdiction in which the Partnership may elect to dobusiness or own property.

Section 7.03.          Title to Partnership Assets

Title to Partnershipassets, whether real, personal or mixed and whether tangible or intangible,shall be deemed to be owned by the Partnership as an entity, and no Partners,individually or collectively, shall have any ownership interest in suchPartnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name ofthe Partnership, the General Partner or one or more nominees, as the GeneralPartner may determine, including Affiliates of the General Partner.  The General Partner hereby declares andwarrants that any Partnership assets for which legal title is held in the nameof the General Partner or any nominee or Affiliate of the General Partner shallbe held by the General Partner for the use and benefit of the Partnership inaccordance with the provisions of this Agreement; provided, however,that the General Partner shall use its best efforts to cause beneficial andrecord title to such assets to be vested in the Partnership as soon asreasonably practicable.  All Partnershipassets shall be recorded as the property of the Partnership in its books andrecords, irrespective of the name in which legal title to such Partnershipassets is held.

Section 7.04.          Reimbursement of the GeneralPartner

A.    No Compensation.  Except as provided in this Section 7.04 andelsewhere in this Agreement (including the provisions of Articles V and VIhereof regarding distributions, payments and allocations to which it may beentitled), the General Partner shall not be compensated for its services asgeneral partner of the Partnership.

B.    Responsibility forPartnership Expenses.  ThePartnership shall be responsible for and shall pay all expenses relating to thePartnership’s organization, the ownership of its assets and itsoperations.  The General Partner shall bereimbursed on a monthly basis, or such other basis as the General Partner maydetermine in its sole and absolute discretion, for all expenses it incursrelating to the ownership and operation of, or for the benefit of, thePartnership (including, without limitation, expenses related to the managementand administration of any Subsidiaries of the General Partner or thePartnership or Affiliates of the Partnership such as auditing expenses andfiling fees); provided that, the amount of any such reimbursement shallbe reduced by (i) any interest earned by the General Partner with respect tobank accounts or other instruments or accounts held by it as permitted inSection 7.05.A below and (ii) any amount derived by the General Partner fromany investments permitted in Section 7.05.A below; and, providedfurther,that the General Partner shall not be reimbursed for (i) income tax liabilitiesor (ii) filing or similar fees in connection with maintaining the GeneralPartner’s continued corporate existence that are incurred by the GeneralPartner.  The General Partner shalldetermine in good faith the amount of expenses incurred by it related to theownership and operation of, or for the benefit of, the Partnership.  In the event that certain expenses areincurred for the benefit of the Partnership and other entities (including theGeneral Partner), such expenses will be allocated to the Partnership and suchother entities in such a manner as the General Partner in its sole and absolutediscretion deems fair and reasonable. Such reimbursements shall be in addition to any reimbursement to theGeneral Partner pursuant to Section 10.03.C hereof and as a result of indemnificationpursuant to Section 7.07 below.  Allpayments and 

 

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reimbursementshereunder shall be characterized for federal income tax purposes as expenses ofthe Partnership incurred on its behalf, and not as expenses of the GeneralPartner.

C.    Partnership and OtherInterests Issuance and Repurchase Expenses. The General Partner shall also be reimbursed for all expenses it incursrelating to any issuance or repurchase of additional Partnership Interests,Shares, Debt of the Partnership or the General Partner or rights, options,warrants or convertible or exchangeable securities pursuant to Article IVhereof (including, without limitation, all costs, expenses, damages and otherpayments resulting from or arising in connection with litigation related to anyof the foregoing), all of which expenses are considered by the Partners toconstitute expenses of, and for the benefit of, the Partnership.

D.    Reimbursement not aDistribution.  If and to the extentany reimbursement made pursuant to this Section 7.04 is determined for federalincome tax purposes not to constitute a payment of expenses of the Partnership,the amount so determined shall be treated as a distribution to the GeneralPartner and there shall be a corresponding special allocation of gross incometo the General Partner, for purposes of computing the Partners’ CapitalAccounts.

Section 7.05.          Outside Activities of the GeneralPartner

A.    General.  Notwithstanding anything in this Agreement tothe contrary, it is expressly understood and agreed that the General Partnermay, if it determines such action to be in the best interests of the REIT orthe Partnership, elect to cause some or all of the assets of the Partnership(including cash expected to be utilized to purchase assets that will be soheld) to be distributed to and held directly by the General Partner (the “SpeciallyDistributed Assets”).  Concurrently withany such distribution, the General Partner shall (i) amend Section 5.01 of thisAgreement so as to provide that, from and after the date of such distribution,each Partner other than the General Partner will receive the same distributionsthat it would have received had the Specially Distributed Assets been held bythe Partnership rather than directly by the General Partner (and a correspondingadjustment shall be made to the distributions to be made to the GeneralPartner); and (ii) make such further amendments to this Agreement (including,without limitation, to the income and loss allocation provisions of Section6.01 hereof) as may be necessary or appropriate to effect the intention of theparties that the Partners be placed, as nearly as possible, in the sameposition they would have been in had such Specially Distributed Assets beenheld by the Partnership rather than directly by the General Partner; provided,however, that the General Partner shall in no event be required to makecontributions to the Partnership to fund distributions to the other Partners.

B.    Repurchase of Shares.  In the event the General Partner exercisesits rights under the Articles of Incorporation to purchase Shares or otherwiseelects to purchase from its stockholders Shares in connection with a stockrepurchase or similar program or for the purpose of delivering such shares tosatisfy an obligation under any dividend reinvestment or stock purchase programadopted by the General Partner, any employee stock purchase plan adopted by theGeneral Partner or any similar obligation or arrangement undertaken by theGeneral Partner in the future, then the General Partner shall cause thePartnership to purchase from the General Partner that number of PartnershipUnits of the appropriate class equal to the product obtained by multiplying thenumber of Shares purchased by the General Partner times a fraction, the numeratorof which is one and the denominator of which is the Conversion Factor, on thesame terms and for the same aggregate price that the General Partner purchasedsuch Shares.

C.    Forfeiture of Shares.  In the event the Partnership or the GeneralPartner acquires Shares as a result of the forfeiture of such Shares under arestricted or similar share plan, then the General Partner shall cause thePartnership to cancel that number of Partnership Units of the appropriate classequal to the 

 

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number of Sharesso acquired divided by the Conversion Factor, and, if the Partnership acquiredsuch Shares, it shall transfer such Shares to the General Partner forcancellation.

D.    Issuances of Shares.  After the Effective Date, the General Partnershall not grant, award, or issue any additional Shares (other than Sharesissued pursuant to Section 8.06 hereof or pursuant to a dividend ordistribution (including any stock split) of Shares to all of itsstockholders),other equity securities of the General Partner or New Securitiesunless (i) the General Partner shall cause, pursuant to Section 4.02.A hereof,the Partnership to issue to the General Partner Partnership Interests orrights, options, warrants or securities of the Partnership having designations,preferences and other rights, all such that the economic interests aresubstantially the same as those of such additional Shares, other equitysecurities or New Securities, as the case may be, and (ii) the General Partner transfersto the Partnership, as an additional Capital Contribution, the proceeds fromthe grant, award, or issuance of such additional Shares, other equitysecurities or New Securities, as the case may be, or from the exercise ofrights contained in such additional Shares, other equity securities or NewSecurities, as the case may be.  Withoutlimiting the foregoing, the General Partner is expressly authorized to issueadditional Shares, other equity securities or New Securities, as the casemaybe, for less than fair market value, and the General Partner is expresslyauthorized, pursuant to Section 4.02.A hereof, to cause the Partnership toissue to the General Partner corresponding Partnership Interests, as long as(a) the General Partner concludes in good faith that such issuance is in theinterests of the General Partner and the Partnership (for example, and not byway of limitation, the issuance of Shares and corresponding Partnership Unitspursuant to a stock purchase plan providing for purchases of Shares, either byemployees or stockholders, at a discount from fair market value or pursuant toemployee stock options that have an exercise price that is less than the fairmarket value of the Shares, either at the time of issuance or at the time ofexercise) and (b) the General Partner transfers all proceeds from any suchissuance or exercise to the Partnership as an additional Capital Contribution.

E.     Stock Option Plan.  If at any time or from time to time, theGeneral Partner sells Shares pursuant to any Stock Option Plan, the GeneralPartner shall transfer the net proceeds of the sale of such Shares to thePartnership as an additional Capital Contribution in exchange for an amount ofadditional Partnership Units equal to the number of Shares so sold divided bythe Conversion Factor.

F.   FundingDebt.  The General Partner may incur a Funding Debt,including, without limitation, a Funding Debt that is convertible into Sharesor otherwise constitutes a class of New Securities, subject to the conditionthat the General Partner lends to the Partnership the net proceeds of suchFunding Debt; provided, that the General Partner shall not be obligatedto lend the net proceeds of any Funding Debt to the Partnership in a mannerthat would be inconsistent with the General Partner’s ability to remainqualified as a REIT.  If the GeneralPartner enters into any Funding Debt, the loan to the Partnership shall be oncomparable terms and conditions, including interest rate, repayment scheduleand costs and expenses, as are applicable with respect to or incurred inconnection with such Funding Debt.

 

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                                                Section 7.06.                             Transactions with Affiliates

 

A.           Transactions withCertain Affiliates.  Except (i) asexpressly permitted by this Agreement (other than Section 7.01.A hereof whichshall not be considered authority for a transaction that otherwise would be prohibitedby this Section 7.06.A) and (ii) all transactions with SL Green or itsAffiliates contemplated by the General Partner’s initial public offering, thePartnership shall not, directly or indirectly, sell, transfer or convey anyproperty to, or purchase any property from, or borrow funds from, or lend fundsto, any Partner or any Affiliate of the Partnership or the General Partner orthe General Partner Entity that is not also a Subsidiary of the Partnership,except pursuant to transactions that are on terms that are fair and reasonableand no less favorable to the Partnership than would be obtained from anunaffiliated third party.

B.             Benefit Plans.  The General Partner, in its sole and absolutediscretion and without the approval of the Limited Partners, may propose andadopt on behalf of the Partnership employee benefit plans funded by thePartnership for the benefit of employees of the General Partner, thePartnership, Subsidiaries of the Partnership, SL Green, the Manager or anyAffiliate of any of them in respect of services performed, directly orindirectly, for the benefit of the Partnership, the General Partner, or any ofthe Partnership’s Subsidiaries.

C.             Conflict Avoidance.  The General Partner is expressly authorizedto enter into, in the name and on behalf of the Partnership, a right of firstopportunity arrangement and other conflict avoidance agreements with variousAffiliates of SL Green, the Manager,  thePartnership and General Partner on such terms as the General Partner, in itssole and absolute discretion, believes are advisable.

                                                Section 7.07.                             Indemnification

 

A.           General.  The Partnership shall indemnify eachIndemnitee from and against any and all losses, claims, damages, liabilities,joint or several, expenses (including, without limitation, attorneys fees andother legal fees and expenses), judgments, fines, settlements and other amountsarising from or in connection with any and all claims, demands, actions, suitsor proceedings, civil, criminal, administrative or investigative incurred bythe Indemnitee and relating to the Partnership or the General Partner or theformation or operations of, or the ownership of property by, either of them asset forth in this Agreement in which any such Indemnitee may be involved, or isthreatened to be involved, as a party or otherwise, unless it is established bya final determination of a court of competent jurisdiction that: (i) the act oromission of the Indemnitee was material to the matter giving rise to theproceeding and either was committed in bad faith or was the result of activeand deliberate dishonesty, (ii) the Indemnitee actually received an improperpersonal benefit in money, property or services or (iii) in the case of anycriminal proceeding, the Indemnitee had reasonable cause to believe that theact or omission was unlawful.  Withoutlimitation, the foregoing indemnity shall extend to any liability of anyIndemnitee, pursuant to a loan guarantee, contractual obligations for anyindebtedness or other obligations or otherwise, for any indebtedness of thePartnership or any Subsidiary of the Partnership (including, withoutlimitation, any indebtedness which the Partnership or any Subsidiary of thePartnership has assumed or taken subject to), and the General Partner is herebyauthorized and empowered, on behalf of the Partnership, to enter into one ormore indemnity agreements consistent with the provisions of this Section 7.07in favor of any Indemnitee having or potentially having liability for any suchindebtedness.  The termination of anyproceeding by judgment, order or settlement does not create a presumption thatthe Indemnitee did not meet the requisite standard of conduct set forth in thisSection 7.07.A.  The termination of anyproceeding by conviction or upon a plea of nolo contendere or its equivalent,or an entry of an order of probation prior to judgment, creates a rebuttablepresumption that the Indemnitee acted in a manner contrary to that specified inthis Section 7.07.A with respect to the subject matter of such proceeding.  Any indemnification pursuant to this Section7.07 shall be made only out of the assets of the Partnership, and

 

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any insurance proceedsfrom the liability policy covering the General Partner and any Indemnitees, andneither the General Partner nor any Limited Partner shall have any obligationto contribute to the capital of the Partnership or otherwise provide funds toenable the Partnership to fund its obligations under this Section 7.07.

 

B.             Advancement ofExpenses.  Reasonable expenses expectedto be incurred by an Indemnitee shall be paid or reimbursed by the Partnershipin advance of the final disposition of any and all claims, demands, actions,suits or proceedings, civil, criminal, administrative or investigative made orthreatened against an Indemnitee upon receipt by the Partnership of (i) awritten affirmation by the Indemnitee of the Indemnitee’s good faith beliefthat the standard of conduct necessary for indemnification by the Partnershipas authorized in this Section 7.07.B has been met and (ii) a writtenundertaking by or on behalf of the Indemnitee to repay the amount if it shallultimately be determined that the standard of conduct has not been met.

C.             No Limitation ofRights.  The indemnification providedby this Section 7.07 shall be in addition to any other rights to which anIndemnitee or any other Person may be entitled under any agreement, pursuant toany vote of the Partners, as a matter of law or otherwise, and shall continueas to an Indemnitee who has ceased to serve in such capacity unless otherwiseprovided in a written agreement pursuant to which such Indemnitee isindemnified.

D.            Insurance.  The Partnership may purchase and maintaininsurance on behalf of the Indemnitees and such other Persons as the GeneralPartner shall determine against any liability that may be asserted against orexpenses that may be incurred by such Person in connection with the Partnership’sactivities, regardless of whether the Partnership would have the power toindemnify such Person against such liability under the provisions of thisAgreement.

E.              Benefit PlanFiduciary.  For purposes of thisSection 7.07, (i) the Partnership shall be deemed to have requested anIndemnitee to serve as fiduciary of an employee benefit plan whenever theperformance by it of its duties to the Partnership also imposes duties on, orotherwise involves services by, it to the plan or participants or beneficiariesof the plan, (ii) excise taxes assessed on an Indemnitee with respect to anemployee benefit plan pursuant to applicable law shall constitute fines withinthe meaning of this Section 7.07 and (iii) actions taken or omitted by theIndemnitee with respect to an employee benefit plan in the performance of itsduties for a purpose reasonably believed by it to be i n the interest of theparticipants and beneficiaries of the plan shall be deemed to be for a purposewhich is not opposed to the best interests of the Partnership.

F.              No PersonalLiability for Limited Partners.  Inno event may an Indemnitee subject any of the Partners to personal liability byreason of the indemnification provisions set forth in this Agreement.

G.             InterestedTransactions.  An Indemnitee shallnot be denied indemnification in whole or in part under this Section 7.07because the Indemnitee had an interest in the transaction with respect to whichthe indemnification applies if the transaction was otherwise permitted by theterms of this Agreement.

H.            Benefit.  The provisions of this Section 7.07 are forthe benefit of the Indemnitees, their heirs, successors, assigns andadministrators and shall not be deemed to create any rights for the benefit ofany other Persons.  Any amendment,modification or repeal of this Section 7.07, or any provision hereof, shall beprospective only and shall not in any way affect the limitation on thePartnership’s liability to any Indemnitee under this Section 7.07 as in effectimmediately prior to such amendment, modification or repeal with respect toclaims arising from or related to matters occurring, in whole or in part, priorto such amendment, modification or repeal, regardless of when such claims mayarise or be asserted.

 

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I.                 IndemnificationPayments Not Distributions.  If andto the extent any payments to the General Partner pursuant to this Section 7.07constitute gross income to the General Partner (as opposed to the repayment ofadvances made on behalf of the Partnership), such amounts shall constituteguaranteed payments within the meaning of Section 707(c) of the Code, shall betreated consistently therewith by the Partnership and all Partners, and shallnot be treated as distributions for purposes of computing the Partners’ CapitalAccounts.

                                                Section 7.08.                             Liability of the General Partner

 

A.           General.  Notwithstanding anything to the contrary setforth in this Agreement, the General Partner and its directors and officersshall not be liable for monetary damages to the Partnership, any Partners orany Assignees for losses sustained, liabilities incurred or benefits notderived as a result of errors in judgment or mistakes of fact or law or of anyact or omission if the General Partner or its directors and officers acted ingood faith.

B.             No Obligation toConsider Separate Interests of Limited Partners or Stockholders.  The Limited Partners expressly acknowledgethat the General Partner is acting on behalf of the Partnership and the GeneralPartner’s stockholders collectively, that the General Partner is under noobligation to consider the separate interests of the Limited Partners(including, without limitation, the tax consequences to Limited Partners orAssignees or to such stockholders) in deciding whether to cause the Partnershipto take (or decline to take) any actions. In the event of a conflict between the interests of the stockholders ofthe General Partner Entity on one hand and the Limited Partners on the other,the General Partner shall endeavor in good faith to resolve the conflict inmanner not adverse to either the stockholders of the General Partner Entity orthe Limited Partners; provided, however, that for so long as theGeneral Partner Entity, directly, or the General Partner, owns a controllinginterest in the Partnership, any such conflict that cannot be resolved in amanner not adverse to either the stockholders of the General Partner Entity orthe Limited Partners shall be resolved in favor of the stockholders.  The General Partner shall not be liable formonetary damages or otherwise for losses sustained, liabilities incurred orbenefits not derived by Limited Partners in connection with such decisions, providedthat the General Partner has acted in good faith.

C.             Actions of Agents.  Subject to its obligations and duties asGeneral Partner set forth in Section 7.01.A above, the General Partner mayexercise any of the powers granted to it by this Agreement and perform any ofthe duties imposed upon it hereunder either directly or by or through itsemployees or agents.  The General Partnershall not be responsible for any misconduct or negligence on the part of anysuch employee or agent appointed by the General Partner in good faith.

D.            Effect of Amendment.  Any amendment, modification or repeal of thisSection 7.08 or any provision hereof shall be prospective only and shall not inany way affect the limitations on the General Partner’s liability to thePartnership and the Limited Partners under this Section 7.08 as in effectimmediately prior to such amendment, modification or repeal with respect toclaims arising from or relating to matters occurring, in whole or in part,prior to such amendment, modification or repeal, regardless of when such claimsmay arise or be asserted.

E.              CertainDefinitions.  Whenever in thisAgreement the General Partner is permitted or required to make a decision (i)in its “sole discretion “or “discretion,” or under a similar grant of authorityor latitude, the General Partner shall be entitled to consider such interestsand factors as it desires and may consider its own interests, and shall have noduty or obligation to give any consideration to any interest of or factorsaffecting the Partnership or the Limited Partners, or (ii) in its “good faith”or under another express standard, the General Partner shall act under suchexpress standard and shall not be subject to any

 

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otheror different standards imposed by this Agreement or by law or any otheragreement contemplated herein.

 

                                                Section 7.09.                             Other Matters Concerning the GeneralPartner

 

A.           Reliance onDocuments.  The General Partner mayrely and shall be protected in acting or refraining from acting upon anyresolution, certificate, statement, instrument, opinion, report, notice,request, consent, order, bond, debenture or other paper or document believed byit in good faith to be genuine and to have been signed or presented by theproper party or parties.

B.             Reliance onAdvisors.  The General Partner mayconsult with legal counsel, accountants, appraisers, management consultants,investment bankers and other consultants and advisors selected by it, and anyact taken or omitted to be taken in reliance upon the opinion of such Personsas to matters which the General Partner reasonably believes to be within suchPerson’s professional or expert competence shall be conclusively presumed tohave been done or omitted in good faith and in accordance with such opinion.

C.             Action Through Agents. The General Partner shall have the right, in respect of any of itspowers or obligations hereunder, to act through any of its duly authorizedofficers and a duly appointed attorney or attorneys-in-fact.  Each such attorney shall, to the extentprovided by the General Partner in the power of attorney, have full power andauthority to do and perform all and every act and duty which is permitted orrequired to be done by the General Partner hereunder.

D.            Actions to MaintainREIT Status or Avoid Taxation of the General Partner Entity.  Notwithstanding any other provisions of thisAgreement or the Act, any action of the General Partner on behalf of thePartnership or any decision of the General Partner to refrain from acting on behalfof the Partnership undertaken in the good faith belief that such action oromission is necessary or advisable in order (i) to protect the ability of theGeneral Partner Entity to continue to qualify as a REIT or (ii) to allow theGeneral Partner Entity to avoid incurring any liability for taxes under Section857 or 4981 of the Code, is expressly authorized under this Agreement and isdeemed approved by all of the Limited Partners.

                                                Section 7.10.                             Reliance by Third Parties

 

Notwithstanding anythingto the contrary in this Agreement, any Person dealing with the Partnershipshall be entitled to assume that the General Partner has full power andauthority, without consent or approval of any other Partner or Person, toencumber, sell or otherwise use in any manner any and all assets of thePartnership, to enter into any contracts on behalf of the Partnership and totake any and all actions on behalf of the Partnership, and such Person shall beentitled to deal with the General Partner as if the General Partner were thePartnership’s sole party in interest, both legally and beneficially.  Each Limited Partner hereby waives any andall defenses or other remedies which may be available against such Person tocontest, negate or disaffirm any action of the General Partner in connectionwith any such dealing.  In no event shallany Person dealing with the General Partner or its representatives be obligatedto ascertain that the terms of this Agreement have been complied with or toinquire into the necessity or expedience of any act or action of the GeneralPartner or its representatives.  Each andevery certificate, document or other instrument executed on behalf of thePartnership by the General Partner or its representatives shall be conclusiveevidence in favor of any and every Person relying thereon or claimingthereunder that (i) at the time of the execution and delivery of suchcertificate, document or instrument, this Agreement was in full force andeffect, (ii) the Person executing and delivering such certificate, document orinstrument was duly authorized and empowered to do so for and on behalf of thePartnership, and (iii) such certificate, document or instrument was dulyexecuted and

 

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deliveredin accordance with the terms and provisions of this Agreement and is bindingupon the Partnership.

 

                                                Section 7.11.                             Restrictions on General Partner’sAuthority

 

A.           Consent Required.  The General Partner may not take any actionin contravention of an express prohibition or limitation of this Agreementwithout the written Consent of (i) all Partners adversely affected or (ii) suchlower percentage of the Limited Partner Interests as may be specificallyprovided for under a provision of this Agreement or the Act.

B.             Sale of All Assetsof the Partnership.  Except as providedin Article XIII hereof, the General Partner may not, directly or indirectly,cause the Partnership to sell, exchange, transfer or otherwise dispose of allor substantially all of the Partnership’s assets in a single transaction or aseries of related transactions(including by way of merger (including atriangular merger), consolidation or other combination with any other Persons)(i) if such merger, sale or other transaction is in connection with aTermination Transaction permitted under Section 11.02.B hereof, without theConsent of the Partners holding a majority of Percentage Interests (includingthe effect of any Partnership Units held by the General Partner) or (ii)otherwise, without the Consent of the Limited Partners.

                                                Section 7.12.                             Loans by Third Parties

 

The Partnership may incur Debt, or enter into similarcredit, guarantee, financing or refinancing arrangements for any purpose(including, without limitation, in connection with any acquisition of propertyor other assets) with any Person that is not the General Partner upon suchterms as the General Partner determines appropriate; provided that, thePartnership shall not incur any Debt that is recourse to the General Partner,except to the extent otherwise agreed to by the General Partner in its solediscretion.

ARTICLE VIIIRIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

                                                Section 8.01.                             Limitation of Liability

 

The Limited Partnersshall have no liability under this Agreement except as expressly provided inthis Agreement, including Section 10.05 hereof, or under the Act.

                                                Section 8.02.                             Management of Business

                

No Limited Partner orAssignee (other than the General Partner, any of its Affiliates or any officer,director, employee, partner, agent or trustee of the General Partner, thePartnership or any of their Affiliates, in their capacity as such) shall takepart in the operation, management or control (within the meaning of the Act) ofthe Partnership’s business, transact any business in the Partnership’s name orhave the power to sign documents for or otherwise bind the Partnership.  The transaction of any such business by theGeneral Partner, any of its Affiliates or any officer, director, employee,partner, agent or trustee of the General Partner, the Partnership or any oftheir Affiliates, in their capacity as such, shall not affect, impair oreliminate the limitations on the liability of the Limited Partners or Assigneesunder this Agreement.

 

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                                                Section 8.03.                             Outside Activities of Limited Partners

 

Subject to Section 7.05hereof, and subject to any agreements entered into pursuant to Section 7.06.Chereof and to any other agreements entered into by a Limited Partner or itsAffiliates with the Partnership or a Subsidiary, any Limited Partner (otherthan the General Partner) and any officer, director, employee, agent, trustee,Affiliate or stockholder of any Limited Partner shall be entitled to and mayhave business interests and engage in business activities in addition to thoserelating to the Partnership, including business interests and activities indirect or indirect competition with the Partnership.  Neither the Partnership nor any Partnersshall have any rights by virtue of this Agreement in any business ventures ofany Limited Partner or Assignee.  None ofthe Limited Partners (other than the General Partner) nor any other Personshall have any rights by virtue of this Agreement or the partnershiprelationship established hereby in any business ventures of any other Person(other than the General Partner to the extent expressly provided herein), andsuch Person shall have no obligation pursuant to this Agreement to offer anyinterest in any such business ventures to the Partnership, any Limited Partneror any such other Person, even if such opportunity is of a character which, ifpresented to the Partnership, any Limited Partner or such other Person, couldbe taken by such Person.

                                                Section 8.04.                             Return of Capital

 

Except pursuant to theright of redemption set forth in Section 8.06 below, no Limited Partner shallbe entitled to the withdrawal or return of its Capital Contribution, except tothe extent of distributions made pursuant to this Agreement or upon terminationof the Partnership as provided herein. No Limited Partner or Assignee shall have priority over any otherLimited Partner or Assignee either as to the return of Capital Contributions(except as permitted by Section 4.02.A hereof) or, except to the extentprovided by Exhibit C hereto or as permitted by Sections 4.02.A, 5.01.B, 6.01.A(ii) and 6.01.B(i)hereof or otherwise expresslyprovided in this Agreement, as to profits, losses, distributions or credits.

                                                Section 8.05.                             Rights of Limited Partners Relating tothe Partnership

 

A.           General.  In addition to other rights provided by thisAgreement or by the Act, and except as limited by 8.05.D below, each LimitedPartner shall have the right, for a purpose reasonably related to such LimitedPartner’s interest as a limited partner in the Partnership, upon written demandwith a statement of the purpose of such demand and at such Limited Partner’sown expense:

(1)                                  to obtain a copy of the most recent annual and quarterlyreports filed with the Securities and Exchange Commission by the GeneralPartner Entity pursuant to the Exchange Act;

(2)                                  to obtain a copy of the Partnership’s federal, state andlocal income tax returns for each Partnership Year;

(3)                                  to obtain a current list of the name and last knownbusiness, residence or mailing address of each Partner;

(4)                                  toobtain a copy of this Agreement and the Certificate and all amendments thereto,together with executed copies of all powers of attorney pursuant to which thisAgreement, the Certificate and all amendments thereto have been executed; and

(5)                                  to obtain true and full information regarding the amount ofcash and a description and statement of any other property or servicescontributed by each Partner and which each Partner has agreed to contribute inthe future, and the date on which each became a Partner.

 

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B.             Notice ofConversion Factor.  The Partnershipshall notify each Limited Partner upon request of the then current ConversionFactor and any changes that have been made thereto.

C.             Notice ofExtraordinary Transaction of the General Partner Entity.  The General Partner Entity shall not make anyextraordinary distributions of cash or property to its stockholders or effect amerger (including without limitation, a triangular merger), a sale of all orsubstantially all of its assets or any other similar extraordinary transactionwithout notifying the Limited Partners of its intention to make suchdistribution or effect such merger, sale or other extraordinary transaction atleast twenty (20) Business Days prior to the record date to determinestockholders eligible to receive such distribution or to vote upon the approvalof such merger, sale or other extraordinary transaction (or, if no such recorddate is applicable, at least twenty (20) Business Days before consummation ofsuch merger, sale or other extraordinary transaction).  This provision for such notice shall not bedeemed (i) to permit any transaction that otherwise is prohibited by thisAgreement or requires a Consent of the Partners or (ii) to require a Consent ofthe Limited Partners to a transaction that does not otherwise require Consentunder this Agreement.  Each LimitedPartner agrees, as a condition to the receipt of the notice pursuant hereto, tokeep confidential the information set forth therein until such time as theGeneral Partner Entity has made public disclosure thereof and to use suchinformation during such period of confidentiality solely for purposes ofdetermining whether or not to exercise the Redemption Right; provided, however,that a Limited Partner may disclose such information to its attorney,accountant and/or financial advisor for purposes of obtaining advice withrespect to such exercise so long as such attorney, accountant and/or financialadvisor agrees to receive and hold such information subject to thisconfidentiality requirement.

D.            Confidentiality.  Notwithstanding any other provision of this Section8.05, the General Partner may keep confidential from the Limited Partners, forsuch period of time as the General Partner determines in its sole and absolutediscretion to be reasonable, any information that (i) the General Partnerreasonably believes to be in the nature of trade secrets or other informationthe disclosure of which the General Partner in good faith believes is not inthe best interests of the Partnership or could damage the Partnership or itsbusiness or (ii) the Partnership is required by law or by agreements withunaffiliated third parties to keep confidential.

                                                Section 8.06.                             Class ARedemption Right

 

A.           General.  (i) Subject to Section 8.06.C below, on or after the date two (2) yearsafter the issuance of a Class A Unit to a Limited Partner pursuant to ArticleIV hereof, the holder of a Class A Unit (if other than the General Partner orthe General Partner Entity) shall have the right (the “Redemption Right”) torequire the Partnership to redeem such Class A Unit on a Specified RedemptionDate and at a redemption price equal to and in the form of the Cash Amount tobe paid by the Partnership.  Any suchRedemption Right shall be exercised pursuant to a Notice of Redemptiondelivered to the Partnership (with a copy to the General Partner) by theLimited Partner who is exercising the Redemption Right (the “Redeeming Partner”).  A Limited Partner may not exercise theRedemption Right for less than one thousand (1,000) Class AUnits or, if such Redeeming Partner holds less than one thousand (1,000) ClassA Units, for less than all of the Class A Units held by such Redeeming Partner.

(ii)                                  TheRedeeming Partner shall have no right with respect to any Class A Units so redeemed to receive any distributions paid afterthe Specified Redemption Date.

(iii)                               TheAssignee of any Limited Partner may exercise the rights of such Limited Partnerpursuant to this Section 8.06 and such Limited Partner shall be deemed to haveassigned such rights to such Assignee and shall be bound by the exercise ofsuch rights by such Limited Partner’s Assignee. In connection with any exercise of the suchrights by such Assignee on behalf of such Limited Partner, the Cash Amountshall be paid by the Partnership directly to such Assignee and not to suchLimited Partner.

 

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(iv)                              Notwithstandingthe foregoing, the Redemption Right shall not be exercisable with respect toany Class A Unit issued upon conversion of an LTIP Unit until on or after thedate that is two years after the date on which the LTIP Unit was issued, providedhowever, that the foregoing restriction shall not apply if the Redemption Rightis exercised by a LTIP Unit holder in connection with a transaction that fallswithin the definition of a “change of control” under the agreement oragreements pursuant to which the LTIP Units were issued to him or her andprovided further that the two (2) year requirement set forth in the firstsentence of Section 8.06.A(i) shall not apply with respect to Class A Unitsissued upon conversion of LTIP Units.

B.             GeneralPartner Assumption of Right.  (i)If a Limited Partner has delivered a Notice of Redemption, the General Partnermay, in its sole and absolute discretion (subject to any limitations onownership and transfer of Shares set forth in the Articles of Incorporation),elect to assume directly and satisfy a Redemption Right by paying to theRedeeming Partner either the Cash Amount or the Shares Amount, as the GeneralPartner determines in its sole and absolute discretion (provided thatpayment of the Redemption Amount in the form of Shares shall be in Sharesregistered under Section 12 of the Exchange Act and listed for trading on theexchange or national market on which the Shares are Publicly Traded, and provided,further that, in the event that the Shares are not Publicly Traded atthe time a Redeeming Partner exercises its Redemption Right, the RedemptionAmount shall be paid only in the form of the Cash Amount unless the RedeemingPartner, in its sole and absolute discretion, consents to payment of theRedemption Amount in the form of the Shares Amount), on the SpecifiedRedemption Date, whereupon the General Partner shall acquire the Class A Unitsoffered for redemption by the Redeeming Partner and shall be treated for allpurposes of this Agreement as the owner of such Partnership Units.  Unless the General Partner, in its sole andabsolute discretion, shall exercise its right to assume directly and satisfythe Redemption Right, the General Partner shall not have any obligation to theRedeeming Partner or to the Partnership with respect to the Redeeming Partner’sexercise of the Redemption Right.  In theevent the General Partner shall exercise its right to satisfy the RedemptionRight in the manner described in the first sentence of this Section 8.06.B andshall fully perform its obligations in connection therewith, the Partnershipshall have no right or obligation to pay any amount to the Redeeming Partnerwith respect to such Redeeming Partner’s exercise of the Redemption Right, andeach of the Redeeming Partner, the Partnership and the General Partner shall,for federal income tax purposes, treat the transaction between the GeneralPartner and the Redeeming Partner as a sale of the Redeeming Partner’sPartnership Units to the General Partner. Nothing contained in this Section 8.06.B shall imply any right of theGeneral Partner to require any Limited Partner to exercise the Redemption Rightafforded to such Limited Partner pursuant to Section 8.06.A above.

(ii)                                  Inthe event that the General Partner determines to pay the Redeeming Partner theRedemption Amount in the form of Shares, the total number of Shares to be paidto the Redeeming Partner in exchange for the Redeeming Partner’s PartnershipUnits shall be the applicable Shares Amount. In the event this amount is not a whole number of Shares, the RedeemingPartner shall be paid (i) that number of Shares which equals the nearest wholenumber less than such amount plus (ii) an amount of cash which the GeneralPartner determines, in its reasonable discretion, to represent the fair valueof the remaining fractional Share which would otherwise be payable to theRedeeming Partner.

(iii)                               EachRedeeming Partner agrees to execute such documents as the General Partner mayreasonably require in connection with the issuance of Shares upon exercise ofthe Redemption Right.

C.             Exceptions toExercise of Redemption Right. Notwithstanding the provisions of Sections 8.06.A and 8.06.B above, aPartner shall not be entitled to exercise the Redemption Right pursuant toSection 8.06.A above if (but only as long as) the delivery of Shares to suchPartner on the Specified Redemption Date (i) would be prohibited under theArticles of Incorporation or (ii) as long as the Shares are Publicly Traded,would be prohibited under applicable federal or state securities laws orregulations

 

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(ineach case regardless of whether the General Partner would in fact assume andsatisfy the Redemption Right).

 

D.            No Liens onPartnership Units Delivered for Redemption. Each Limited Partner covenants and agrees with the General Partner thatall Partnership Units delivered for redemption (including Partnership Unitsredeemed under Section 8.07) shall be delivered to the Partnership or theGeneral Partner, as the case may be, free and clear of all liens, and,notwithstanding anything contained herein to the contrary, neither the GeneralPartner nor the Partnership shall be under any obligation to acquirePartnership Units which are or may be subject to any liens.  Each Limited Partner further agrees that, inthe event any state or local property transfer tax is payable as a result ofthe transfer of its Partnership Units to the Partnership or the GeneralPartner, such Limited Partner shall assume and pay such transfer tax.

E.              AdditionalPartnership Interests.  In the eventthat the Partnership issues Partnership Interests to any Additional LimitedPartner pursuant to Article IV hereof, the General Partner shall make suchamendments to this Section 8.06 as it determines are necessary to reflect theissuance of such Partnership Interests (including setting forth anyrestrictions on the exercise of the Redemption Right with respect to suchPartnership Interests).

                                                Section 8.07.                             Redemption of Class B Units

 

The Class B Units shallbe subject to mandatory redemption if the Management Agreement isterminated.  The General Partner shallsend notice of Class B Unit redemption within ten days after the GeneralPartner sends or receives notice of termination of the Management Agreement.  The redemption date shall be the date onwhich termination of the Management Agreement is effective.  The redemption amount, to be paid in cash orby wire transfer on the redemption date, shall be equal to two times the annualdistributions on a Class B Unit relating to either the most recently completedcalendar year or, if higher, the prior calendar year; provided that if on theredemption date the General Partner is becoming self-managed, the redemptionamount will be equal to 50% of the redemption amount described above; andprovided, further, that if the Management Agreement is terminated by theGeneral Partner for cause, the aggregate redemption amount shall be $100.   Upon any such redemption, the Class B Unitswill also be entitled to receive any distributions payable with respect toperiods through the redemption date.  If such distribution amounts cannot be calculated on or by theredemption date, they shall be calculated and paid as promptly as possiblethereafter, but in no event later than 30 days after the redemption date.

ARTICLE IXBOOKS, RECORDS, ACCOUNTING AND REPORTS

                                                Section 9.01.                             Records and Accounting

 

The General Partner shallkeep or cause to be kept at the principal office of the Partnership appropriatebooks and records with respect to the Partnership’s business, including,without limitation, all books and records necessary to provide to the LimitedPartners any information, lists and copies of documents required to be providedpursuant to Section 9.03 below.  Anyrecords maintained by or on behalf of the Partnership in the regular course ofits business may be kept on, or be in the form of, punch cards, magnetic tape,photographs, micrographics or any other information storage device, providedthat the records so maintained are convertible into clearly legible writtenform within a reasonable period of time. The books of the Partnership shall be maintained, for financial and taxreporting purposes, on an accrual basis in accordance with generally acceptedaccounting principles.

 

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Section 9.02.                             FiscalYear

The fiscal year of thePartnership shall be the calendar year.

Section 9.03.                             Reports

A.           Annual Reports.  As soon as practicable, but in no event laterthan the date on which the General Partner Entity mails its annual report toits stockholders, the General Partner shall cause to be mailed to each LimitedPartner an annual report, as of the close of the most recently endedPartnership Year, containing financial statements of the Partnership, or of theGeneral Partner Entity if such statements are prepared solely on a consolidatedbasis with the Partnership, for such Partnership Year, presented in accordancewith generally accepted accounting principles, such statements to be audited bya nationally recognized firm of independent public accountants selected by theGeneral Partner Entity.

B.             Quarterly Reports.  If and to the extent that the General PartnerEntity mails quarterly reports to its stockholders, as soon as practicable, butin no event later than the date on which such reports are mailed, the GeneralPartner shall cause to be mailed to each Limited Partner a report containingunaudited financial statements, as of the last day of such calendar quarter, ofthe Partnership, or of the General Partner Entity if such statements areprepared solely on a consolidated basis with the Partnership, and such otherinformation as may be required by applicable law or regulation, or as theGeneral Partner determines to be appropriate.

ARTICLE XTAX MATTERS

                                                Section 10.01.                       Preparation of Tax Returns

 

The General Partner shallarrange for the preparation and timely filing of all returns of Partnershipincome, gains, deductions, losses and other items required of the Partnershipfor federal and state income tax purposes and shall use all reasonable effortsto furnish, within ninety (90) days of the close of each taxable year, the taxinformation reasonably required by Limited Partners for federal and stateincome tax reporting purposes.

                                                Section 10.02.                       Tax Elections

 

A.           Except as otherwiseprovided herein, the General Partner shall, in its sole and absolutediscretion, determine whether to make any available election pursuant to theCode.  The General Partner shall have theright to seek to revoke any such election (including, without limitation, anelection under Section 754 of the Code) upon the General Partner’sdetermination in its sole and absolute discretion that such revocation is inthe best interests of the Partners.

B.             To the extentprovided for in Treasury Regulations, revenue rulings, revenue proceduresand/or other IRS guidance issued after the date hereof, the Partnership ishereby authorized to, and at the direction of the General Partner shall, electa safe harbor under which the fair market value of any Partnership Interestsissued after the effective date of such Treasury Regulations (or otherguidance) will be treated as equal to the liquidation value of such PartnershipInterests  (i.e., a value equal to thetotal amount that would be distributed with respect to such interests if thePartnership sold all of its assets for their fair market value immediatelyafter the issuance of such Partnership Interests, satisfied its liabilities(excluding any non-recourse liabilities to the extent the balance of suchliabilities exceeds the fair market value of the assets that secure them) anddistributed the net proceeds to the Partners under the terms of

 

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thisAgreement). In the event that the Partnership makes a safe harbor election asdescribed in the preceding sentence, each Partner hereby agrees to comply withall safe harbor requirements with respect to transfers of such PartnershipInterests while the safe harbor election remains effective.

 

                                                Section 10.03.                       Tax Matters Partner

 

A.           General.  The General Partner shall be the “tax matterspartner” of the Partnership for federal income tax purposes.  Pursuant to Section 6223(c)(3)of the Code, upon receipt of notice from the IRS of the beginning of anadministrative proceeding with respect to the Partnership, the tax matterspartner shall furnish the IRS with the name, address, taxpayer identificationnumber and profit interest of each of the Limited Partners and any Assignees; provided,however, that such information is provided to the Partnership by theLimited Partners.

B.             Powers.  The tax matters partner is authorized, butnot required:

(1)                                  toenter into any settlement with the IRS with respect to any administrative orjudicial proceedings for the adjustment of Partnership items required to betaken into account by a Partner for income tax purposes (such administrativeproceedings being referred to as a “tax audit” and such judicial proceedingsbeing referred to as “judicial review”), and in the settlement agreement thetax matters partner may expressly state that such agreement shall bind allPartners, except that such settlement agreement shall not bind any Partner (i)who (within the time prescribed pursuant to the Code and Regulations) files astatement with the IRS providing that the tax matters partner shall not havethe authority to enter into a settlement agreement on behalf of such Partner or(ii) who is a “notice partner” (as defined in Section 6231(a)(8) of the Code)or a member of a “notice group” (as defined in Section 6223(b)(2) of the Code);

(2)                                  inthe event that a notice of a final administrative adjustment at the Partnershiplevel of any item required to be taken into account by a Partner for taxpurposes (a “final adjustment”) is mailed to the tax matters partner, to seekjudicial review of such final adjustment, including the filing of a petition forreadjustment with the Tax Court or the filing of a complaint for refund withthe United States Claims Court or the District Court of the United States forthe district in which the Partnership’s principal place of business is located;

(3)                                  to intervene in any action brought by any other Partner forjudicial review of a final adjustment;

(4)                                  to file a request for an administrative adjustment with theIRS at any time and, if any part of such request is not allowed by the IRS, tofile an appropriate pleading (petition or complaint) for judicial review withrespect to such request;

(5)                                  toenter into an agreement with the IRS to extend the period for assessing any taxwhich is attributable to any item required to be taken into account by aPartner for tax purposes, or an item affected by such item; and

(6)                                  to take any other action on behalf of the Partners of thePartnership in connection with any tax audit or judicial review proceeding tothe extent permitted by applicable law or regulations.

The taking of any actionand the incurring of any expense by the tax matters partner in connection withany such proceeding, except to the extent required by law, is a matter in thesole and absolute

 

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discretionof the tax matters partner and the provisions relating to indemnification ofthe General Partner set forth in Section 7.07 hereof shall be fully applicableto the tax matters partner in its capacity as such.

 

C.             Reimbursement.  The tax matters partner shall receive nocompensation for its services.  All thirdparty costs and expenses incurred by the tax matters partner in performing itsduties as such (including legal and accounting fees and expenses) shall beborne by the Partnership.  Nothing hereinshall be construed to restrict the Partnership from engaging an accounting firmor a law firm to assist the tax matters partner in discharging its dutieshereunder.

Section 10.04.                       OrganizationalExpenses

The Partnership shallelect to deduct expenses, if any, incurred by it in organizing the Partnershipratably over a sixty (60) month period as provided in Section 709 of the Code.

Section 10.05.                       Withholding

Each Limited Partnerhereby authorizes the Partnership to withhold from or pay on behalf of or withrespect to such Limited Partner any amount of federal, state, local, or foreigntaxes that the General Partner determines that the Partnership is required towithhold or pay with respect to any amount distributable or allocable to suchLimited Partner pursuant to this Agreement, including, without limitation, anytaxes required to be withheld or paid by the Partnership pursuant to Section1441, 1442, 1445, or 1446 of the Code. Any amount paid on behalf of or with respect to a Limited Partner shallconstitute a recourse loan by the Partnership to such Limited Partner, whichloan shall be repaid by such Limited Partner within fifteen (15) days afternotice from the General Partner that such payment must be made unless (i) thePartnership withholds such payment from a distribution which would otherwise bemade to the Limited Partner or (ii) the General Partner determines, in its soleand absolute discretion, that such payment may be satisfied out of theavailable funds of the Partnership which would, but for such payment, bedistributed to the Limited Partner.  Anyamounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treatedas having been distributed to such Limited Partner.  Each Limited Partner hereby unconditionallyand irrevocably grants to the Partnership a security interest in such LimitedPartner’s Partnership Interest to secure such Limited Partner’s obligation topay to the Partnership any amounts required to be paid pursuant to this Section10.05.  In the event that a LimitedPartner fails to pay any amounts owed to the Partnership pursuant to thisSection 10.05 when due, the General Partner may, in its sole and absolutediscretion, elect to make the payment to the Partnership on behalf of suchdefaulting Limited Partner, and in such event shall be deemed to have loanedsuch amount to such defaulting Limited Partner and shall succeed to all rightsand remedies of the Partnership as against such defaulting Limited Partner(including, without limitation, the right to receive distributions).  Any amounts payable by a Limited Partnerhereunder shall bear interest at the base rate on corporate loans at largeUnited States money center commercial banks, as published from time to time inthe Wall Street Journal, plus four (4) percentage points (but not higher thanthe maximum lawful rate) from the date such amount is due (i.e., fifteen (15)days after demand) until such amount is paid in full.  Each Limited Partner shall take such actionsas the Partnership or the General Partner shall request in order to perfect or enforcethe security interest created hereunder.

 

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ARTICLE XITRANSFERS AND WITHDRAWALS

Section 11.01.                       Transfer

A.           Definition.  The term “transfer,” when used in thisArticle XI with respect to a Partnership Interest or a Partnership Unit, shallbe deemed to refer to a transaction by which the General Partner purports toassign all or any part of its General Partnership Interest to another Person orby which a Limited Partner purports to assign all or any part of its LimitedPartner Interest to another Person, and includes a sale, assignment, gift,pledge, encumbrance, hypothecation, mortgage, exchange or any other dispositionby law or otherwise.  The term “transfer”when used in this Article XI does not include any redemption or repurchase ofPartnership Units by the Partnership from a Partner (including the GeneralPartner), acquisition of Partnership Units from a Limited Partner by theGeneral Partner pursuant to Section 8.06 hereof or otherwise or any conversionof LTIP Units into Class A Units.  Nopart of the interest of a Limited Partner shall be subject to the claims of anycreditor, any spouse for alimony or support, or to legal process, and may notbe voluntarily or involuntarily alienated or encumbered except as may bespecifically provided for in this Agreement.

B.             General.  No Partnership Interest shall be transferred,in whole or in part, except in accordance with the terms and conditions setforth in this Article XI.  Any transferor purported transfer of a Partnership Interest not made in accordance withthis Article XI shall be null and void.

Section 11.02.                       Transfersof Partnership Interests of General Partner

A.           Except for transfers ofPartnership Units to the Partnership as provided in Section 7.05 or Section8.06 hereof, the General Partner may not transfer any of its PartnershipInterest except (i) in connection with a transaction described in Section11.02.B below (ii) to a wholly-owned Subsidiary or (iii) as otherwise expresslypermitted under this Agreement, nor shall the General Partner withdraw asGeneral Partner except in connection with a transaction described inSection11.02.B below.

B.             The General Partnershall not engage in any merger (including a triangular merger), consolidationor other combination with or into another person, sale of all or substantiallyall of its assets or any reclassification, recapitalization or change ofoutstanding Shares (other than a change in par value, or from par value to nopar value, or as a result of a subdivision or combination as described in thedefinition of “Conversion Factor”) (“Termination Transaction”), unless theTermination Transaction has been approved by the Consent of the Partnersholding a majority or more of the then outstanding Percentage Interests(including the effect of any Partnership Units held by the General Partner) andin connection with which all Limited Partners either will receive, or will havethe right to elect to receive, for each Partnership Unit an amount of cash,securities, or other property equal to the product of the Conversion Factor andthe greatest amount of cash, securities or other property paid to a holder ofShares, if any, corresponding to such Partnership Unit that was issued pursuantto Section 4.02.A hereof in consideration of one such Share at any time duringthe period from and after the date on which the Termination Transaction isconsummated; provided that, if, in connection with the TerminationTransaction, a purchase, tender or exchange offer shall have been made to andaccepted by the holders of more than fifty percent (50%) of the outstandingShares, each holder of Partnership Units shall receive, or shall have the rightto elect to receive, the greatest amount of cash, securities, or other propertywhich such holder would have received had it exercised the Redemption Right andreceived Shares in exchange for its Partnership Units immediately prior to theexpiration of such purchase, tender or exchange offer and had thereuponaccepted such purchase, tender or exchange offer.

 

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Section 11.03.                       LimitedPartners’ Rights to Transfer

A.           General.  A Limited Partner may not transfer any ofsuch Limited Partner’s rights as a Limited Partner without the consent of theGeneral Partner, which consent the General Partner may withhold in its solediscretion; provided, however, that no consent shall be requiredfor a transfer or assignment by the Manager or SL Green or its Affiliate of itsClass B Units or the rights to receive distributions pursuant to Class B Unitsto an officer, director or employee of the General Partner, the Manager or SL Green.

B.             IncapacitatedLimited Partners.  If a LimitedPartner is subject to Incapacity, the executor, administrator, trustee,committee, guardian, conservator or receiver of such Limited Partner’s estateshall have all the rights of a Limited Partner, but not more rights than thoseenjoyed by other Limited Partners for the purpose of settling or managing theestate and such power as the Incapacitated Limited Partner possessed totransfer all or any part of its interest in the Partnership.  The Incapacity of a Limited Partner, in andof itself, shall not dissolve or terminate the Partnership.

C.             No TransfersViolating Securities Laws.  TheGeneral Partner may prohibit any transfer of Partnership Units by a LimitedPartner if, in the opinion of legal counsel to the Partnership, such transferwould require filing of a registration statement under the Securities Act orwould otherwise violate any federal, or state securities laws or regulationsapplicable to the Partnership or the Partnership Unit.

D.            No TransfersAffecting Tax Status of Partnership. No transfer of Partnership Units by a Limited Partner (including aredemption or exchange pursuant to Section 8.06 hereof) may be made to anyPerson if (i) in the opinion of legal counsel for the Partnership, it wouldresult in the Partnership being treated as an association taxable as acorporation for federal income tax purposes or would result in a termination ofthe Partnership for federal income tax purposes (except as a result of theredemption or exchange for Shares of all Partnership Units held by all LimitedPartners other than the General Partner or the General Partner Entity or anySubsidiary of either the General Partner or the General Partner Entity orpursuant to a transaction expressly permitted under Section 7.11.B or Section11.02 hereof), (ii) in the opinion of legal counsel for the Partnership, itwould adversely affect the ability of the General Partner Entity to continue toqualify as a REIT or would subject the General Partner Entity to any additionaltaxes under Section 857 or Section 4981 of the Code or (iii) such transfer iseffectuated through an “established securities market” or a “secondary market(or the substantial equivalent thereof)” within the meaning of Section 7704 ofthe Code.

E.              No Transfers toHolders of Nonrecourse Liabilities. No pledge or transfer of any Partnership Units may be made to a lenderto the Partnership, or to any Person who is related (within the meaning ofSection 1.752-4(b) of the Regulations) to any lender to the Partnership, whoseloan constitutes a Nonrecourse Liability without the consent of the GeneralPartner, in its sole and absolute discretion; provided that, as acondition to such consent the lender will be required to enter into anarrangement with the Partnership and the General Partner to exchange or redeemfor the Redemption Amount any Partnership Units transferred or in which asecurity interest is held simultaneously with the time at which such lenderwould be deemed to be a partner in the Partnership for purposes of allocatingliabilities to such lender under Section 752 of the Code.

F.              Transfer Register.  The General Partner shall keep a register forthe Partnership on which the transfer, pledge or release of Partnership Unitsshall be shown and pursuant to which entries shall be made to effect alltransfers, pledges or releases as required by Sections 8-207,8-313(1) and 8-321of the Uniform Commercial Code, as amended, in effect in the States of New Yorkand Delaware; provided, however, that if there is any conflictbetween such requirements, the provisions of the Delaware Uniform CommercialCode shall govern.  The General Partnershall (i) place proper entries in such register clearly

 

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showing each transfer andeach pledge and grant of security interest and the transfer and assignmentpursuant thereto, such entries to be endorsed by the General Partner and (ii)maintain the register and make the register available for inspection by all ofthe Partners and their pledgees at all times during the term of this Agreement.Nothing herein shall be deemed a consent to any pledgeor transfer otherwise prohibited under this Agreement.

 

Section 11.04.                       SubstitutedLimited Partners

A.           Consent of GeneralPartner.  No Limited Partner shallhave the right to substitute a transferee as a Limited Partner in its placewithout the consent of the General Partner to the admission of a transferee ofthe interest of a Limited Partner pursuant to this Section 11.04 as aSubstituted Limited Partner, which consent may be given or withheld by theGeneral Partner in its sole and absolute discretion.  The General Partner’s failure or refusal topermit a transferee of any such interests to become a Substituted LimitedPartner shall not give rise to any cause of action against the Partnership orany Partner; provided that a transfer which does not require consent of theGeneral Partner under Section 11.03A shall not require the General Partner’sconsent under this section.

B.             Rights ofSubstituted Limited Partner.  Atransferee who has been admitted as a Substituted Limited Partner in accordancewith this Article XI shall have all the rights and powers and be subject to allthe restrictions and liabilities of a Limited Partner under thisAgreement.  The admission of anytransferee as a Substituted Limited Partner shall be conditioned upon thetransferee executing and delivering to the Partnership an acceptance of all theterms and conditions of this Agreement (including, without limitation, theprovisions of Section 15.11 hereof and such other documents or instruments asmay be required to effect the admission).

C.             Amendment andRestatement of Exhibit A.  Upon theadmission of a Substituted Limited Partner, the General Partner shall amend andrestate Exhibit A hereto to reflect the name, address, Capital Account, numberof Partnership Units, and Percentage Interest of such Substituted LimitedPartner and to eliminate or adjust, if necessary, the name, address, CapitalAccount and Percentage Interest of the predecessor of such Substituted LimitedPartner.

Section 11.05.                       Assignees

If the General Partner,in its sole and absolute discretion, does not consent to the admission of anypermitted transferee under Section 11.03 above as a Substituted LimitedPartner, as described in Section 11.04 above, such transferee shall beconsidered an Assignee for purposes of this Agreement.  An Assignee shall be entitled to all therights of an assignee of a limited partner interest under the Act, includingthe right to receive distributions from the Partnership and the share of NetIncome, Net Losses, gain, loss and Recapture Income attributable to thePartnership Units assigned to such transferee, and shall have the rightsgranted to the Limited Partners under Section 8.06 hereof but shall not bedeemed to be a holder of Partnership Units for any other purpose under thisAgreement, and shall not be entitled to vote such Partnership Units in anymatter presented to the Limited Partners for a vote (such Partnership Unitsbeing deemed to have been voted on such matter in the same proportion as allother Partnership Units held by Limited Partners are voted).  In the event any such transferee desires tomake a further assignment of any such Partnership Units, such transferee shallbe subject to all the provisions of this Article XI to the same extent and inthe same manner as any Limited Partner desiring to make an assignment ofPartnership Units.

 

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Section 11.06.                       GeneralProvisions

A.           Withdrawal ofLimited Partner.  No Limited Partnermay withdraw from the Partnership other than as a result of a permittedtransfer of all of such Limited Partner’s Partnership Units in accordance withthis Article XI or pursuant to redemption of all of its Partnership Units underSection 8.06 hereof.

B.             Termination ofStatus as Limited Partner.  AnyLimited Partner who shall transfer all of its Partnership Units in a transferpermitted pursuant to this Article XI or pursuant to redemption of all of itsPartnership Units under Section 8.06 hereof shall cease to be a Limited Partner.

C.             Timing ofTransfers.  Transfers pursuant tothis Article XI may only be made on the first day of a fiscal quarter of thePartnership, unless the General Partner otherwise agrees.

D.            Allocations.  If any Partnership Interest is transferredduring any quarterly segment of the Partnership’s fiscal year in compliancewith the provisions of this Article XI or redeemed or transferred pursuant toSection 8.06 hereof, Net Income, Net Losses, each item thereof and all otheritems attributable to such interest for such fiscal year shall be divided andallocated between the transferor Partner and the transferee Partner by takinginto account their varying interests during the fiscal year in accordance withSection 706(d) of the Code, using the interim closing of the books method(unless the General Partner, in its sole and absolute discretion, elects toadopt a daily, weekly, or a monthly proration period, in which event NetIncome, Net Losses, each item thereof and all other items attributable to suchinterest for such fiscal year shall be prorated based upon the applicablemethod selected by the General Partner). Solely for purposes of making such allocations, each of such items forthe calendar month in which the transfer or redemption occurs shall be allocatedto the Person who is a Partner as of midnight on the last day of saidmonth.  All distributions attributable toany Partnership Unit with respect to which the Partnership Record Date isbefore the date of such transfer, assignment or redemption shall be made to thetransferor Partner or the Redeeming Partner, as the case may be, and, in thecase of a transfer or assignment other than a redemption, all distributionsthereafter attributable to such Partnership Unit shall be made to thetransferee Partner.

E.              AdditionalRestrictions.  In addition to anyother restrictions on transfer herein contained, including without limitationthe provisions of this Article XI, in no event may any transfer or assignmentof a Partnership Interest by any Partner (including pursuant to Section 8.06hereof) be made without the express consent of the General Partner, in its soleand absolute discretion, (i) to any person or entity who lacks the legal right,power or capacity to own a Partnership Interest; (ii) in violation of applicablelaw; (iii) of any component portion of a Partnership Interest, such as theCapital Account, or rights to distributions, separate and apart from all othercomponents of a Partnership Interest except as permitted by Section 11.03A;(iv) if in the opinion of legal counsel to the Partnership such transfer wouldcause a termination of the Partnership for federal or state income tax purposes(except as a result of the redemption or exchange for Shares of all PartnershipUnits held by all Limited Partners or pursuant to a transaction expresslypermitted under Section 7.11.B or Section 11.02 hereof); (v) if in the opinionof counsel to the Partnership, such transfer would cause the Partnership tocease to be classified as a partnership for federal income tax purposes (exceptas a result of the redemption or exchange for Shares of all Partnership Unitsheld by all Limited Partners or pursuant to a transaction expressly permittedunder Section 7.11.B or Section 11.02 hereof); (vi) if such transfer would causethe Partnership to become, with respect to any employee benefit plan subject toTitle I 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); (vii)without the consent of the General Partner, to any “benefit plan investor”within the meaning of Department of Labor Regulations Section 2510.3-101(f);(viii) if such transfer would, in the opinion of counsel to the Partnership,cause any portion of the assets of the Partnership to constitute assets of any

 

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employee benefit planpursuant to Department of Labor Regulations Section 2570.3-101; (ix) if suchtransfer requires the registration of such Partnership Interest pursuant to anyapplicable federal or state securities laws; (x) if such transfer iseffectuated through an “established securities market” or a “secondary market”(or the substantial equivalent thereof) within the meaning of Section 7704 ofthe Code or such transfer causes the Partnership to become a “publicly tradedpartnership,” as such term is defined in Section 469(k)(2) or Section 7704(b)of the Code; (xi) if such transfer subjects the Partnership to regulation underthe Investment Company Act of 1940, the Investment Advisors Act of 1940 or theEmployee Retirement Income Security Act of 1974, each as amended; (xii) if suchtransfer could adversely affect the ability of the General Partner Entity toremain qualified as a REIT; or (xiii) if in the opinion of legal counsel forthe Partnership, such transfer would adversely affect the ability of theGeneral Partner Entity to continue to qualify as a REIT or subject the GeneralPartner Entity to any additional taxes under Section 857 or Section 4981 of theCode.

 

F.              Avoidance of “PubliclyTraded Partnership” Status.  TheGeneral Partner shall monitor the transfers of interests in the Partnership todetermine (i) if such interests are being traded on an “established securitiesmarket” or a “secondary market (or the substantial equivalent thereof)” withinthe meaning of Section 7704 of the Code and (ii) whether additional transfersof interests would result in the Partnership being unable to qualify for atleast one of the “safe harbors” set forth in Regulations Section 1.7704-1 (orsuch other guidance subsequently published by the IRS setting forth safeharbors under which interests will not be treated as “readily tradable” on asecondary market (or the substantial equivalent thereof) within the meaning ofSection 7704 of the Code (the “Safe Harbors”). The General Partner shall take all steps reasonably necessary orappropriate to prevent any trading of interests or any recognition by thePartnership of transfers made on such markets and, except as otherwise providedherein, to insure that at least one of the Safe Harbors is met.

ARTICLE XIIADMISSION OF PARTNERS

Section 12.01.                       Admissionof Successor General Partner

A successor to all of theGeneral Partner’s General Partnership Interest pursuant to Section 11.02 hereofwho is proposed to be admitted as a successor General Partner shall be admittedto the Partnership as the General Partner, effective upon such transfer.  Any such transferee shall carry on thebusiness of the Partnership without dissolution.  In each case, the admission shall be subjectto the successor General Partner’s executing and delivering to the Partnershipan acceptance of all of the terms and conditions of this Agreement and suchother documents or instruments as may be required to effect the admission.

Section 12.02.                       Admissionof Additional Limited Partners

A.           General.  No Person shall be admitted as an AdditionalLimited Partner without the consent of the General Partner, which consent shallbe given or withheld in the General Partner’s sole and absolutediscretion.  A Person who makes a CapitalContribution to the Partnership in accordance with this Agreement, including,without limitation, pursuant to Section 4.01.C hereof, or who exercises anoption to receive Partnership Units shall be admitted to the Partnership as anAdditional Limited Partner only with the consent of the General Partner andonly upon furnishing to the General Partner (i) evidence of acceptance in formsatisfactory to the General Partner of all of the terms and conditions of thisAgreement, including, without limitation, the power of attorney granted inSection 15.11 hereof and (ii) such other documents or instruments as may berequired in the discretion of the General Partner in order to effect suchPerson’s admission as an Additional Limited Partner.  The admission of any Person as an AdditionalLimited Partner shall become effective on the date upon which the name of suchPerson is

 

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recordedon the books and records of the Partnership, following the consent of theGeneral Partner to such admission.

 

B.             Allocations toAdditional Limited Partners.  If anyAdditional Limited Partner is admitted to the Partnership on any day other thanthe first day of a Partnership Year, then Net Income, Net Losses, each itemthereof and all other items allocable among Partners and Assignees for suchPartnership Year shall be allocated among such Additional Limited Partner andall other Partners and Assignees by taking into account their varying interestsduring the Partnership Year in accordance with Section 706(d) of the Code, usingthe interim closing of the books method (unless the General Partner, in itssole and absolute discretion, elects to adopt a daily, weekly or monthlyproration method, in which event Net Income, Net Losses, and each item thereofwould be prorated based upon the applicable period selected by the GeneralPartner).Solely for purposes of making such allocations, each of such items forthe calendar month in which an admission of any Additional Limited Partneroccurs shall be allocated among all the Partners and Assignees including suchAdditional Limited Partner.  Alldistributions with respect to which the Partnership Record Date is before thedate of such admission shall be made solely to Partners and Assignees other thanthe Additional Limited Partner, and all distributions thereafter shall be madeto all the Partners and Assignees including such Additional Limited Partner.

Section 12.03.                       Amendmentof Agreement and Certificate of Limited Partnership

For the admission to thePartnership of any Partner, the General Partner shall take all steps necessaryand appropriate under the Act to amend the records of the Partnership(including an amendment and restatement of Exhibit A hereto) and, if necessary,to prepare as soon as practical an amendment of this Agreement and, if requiredby law, shall prepare and file an amendment to the Certificate and may for thispurpose exercise the power of attorney granted pursuant to Section 15.11hereof.

ARTICLE XIIIDISSOLUTION AND LIQUIDATION

Section 13.01.                       Dissolution

The Partnership shall notbe dissolved by the admission of Substituted Limited Partners or AdditionalLimited Partners or by the admission of a successor General Partner inaccordance with the terms of this Agreement. Upon the withdrawal of the General Partner, any successor GeneralPartner shall continue the business of the Partnership.  The Partnership shall dissolve, and itsaffairs shall be wound up, upon the first to occur of any of the following (“LiquidatingEvents”):

(i)                                     the expiration of its term as provided in Section 2.04hereof;

(ii)                                  anevent of withdrawal of the General Partner, as defined in the Act (other thanan event of bankruptcy), unless, within ninety (90) days after the withdrawal a“majority in interest” (as defined below) of the remaining Partners Consent inwriting to continue the business of the Partnership and to the appointment,effective as of the date of withdrawal, of a substitute General Partner;

(iii)                               an election to dissolve the Partnership made by the GeneralPartner, in its sole and absolute discretion, on or after January 1, 2054;

(iv)                              entry of a decree of judicial dissolution of the Partnershippursuant to the provisions of the Act; or

 

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(v)                                 afinal and nonappealable judgment is entered by a court of competentjurisdiction ruling that the General Partner is bankrupt or insolvent, or afinal and nonappealable order for relief is entered by a court with appropriatejurisdiction against the General Partner, in each case under any federal orstate bankruptcy or insolvency laws as now or hereafter in effect, unless priorto or within ninety days after of the entry of such order or judgment a “majorityin interest” (as defined below) of the remaining Partners Consent in writing tocontinue the business of the Partnership and to the appointment, effective asof a date prior to the date of such order or judgment, of a substitute GeneralPartner.

As used herein, a “majorityin interest” shall refer to Partners (excluding the General Partner) who holdmore than fifty percent (50%) of the outstanding Percentage Interests not heldby the General Partner.

Section 13.02.                       WindingUp

A.                                   General.  Upon the occurrence of a Liquidating Event,the Partnership shall continue solely for the purposes of winding up itsaffairs in an orderly manner, liquidating its assets, and satisfying the claimsof its creditors and Partners.  NoPartner shall take any action that is in consistent with, or not necessary toor appropriate for, the winding up of the Partnership’s business andaffairs.  The General Partner (or, in theevent there is no remaining General Partner, any Person elected by a majorityin interest of the Limited Partners (the “Liquidator”)) shall be responsiblefor overseeing the winding up and dissolution of the Partnership and shall takefull account of the Partnership’s liabilities and property and the Partnershipproperty shall be liquidated as promptly as is consistent with obtaining thefair value thereof, and the proceeds therefrom (which may, to the extentdetermined by the General Partner, include equity or other securities of theGeneral Partner or any other entity) shall be applied and distributed in thefollowing order:

(1)                                  First,to the payment and discharge of all of the Partnership’s debts and liabilitiesto creditors other than the Partners;

(2)                                  Second,to the payment and discharge of all of the Partnership’s debts and liabilitiesto the Partners; and

(3)                                  Thebalance, if any, to the Partners in accordance with their Capital Accounts,after giving effect to all contributions, distributions, and allocations forall periods.

The General Partner shallnot receive any additional compensation for any services performed pursuant tothis Article XIII.

B.             DeferredLiquidation.  Notwithstanding theprovisions of Section 13.02.A above which require liquidation of the assets ofthe Partnership, but subject to the order of priorities set forth therein, ifprior to or upon dissolution of the Partnership the Liquidator determines thatan immediate sale of part or all of the Partnership’s assets would beimpractical or would cause undue loss to the Partners, the Liquidator may, inits sole and absolute discretion, defer for a reasonable time the liquidationof any assets except those necessary to satisfy liabilities of the Partnership(including to those Partners as creditors) or distribute to the Partners, inlieu of cash, as tenants in common and in accordance with the provisions ofSection 13.02.A above, undivided interests in such Partnership assets as theLiquidator deems not suitable for liquidation. Any such distributions in kind shall be made only if, in the good faithjudgment of the Liquidator, such distributions in kind are in the best interestof the Partners, and shall be subject to such conditions relating to thedisposition and management of such properties as the Liquidator deemsreasonable and equitable and to any agreements governing the operation of suchproperties at such

 

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time.The Liquidator shall determine the fair market value of any propertydistributed in kind using such reasonable method of valuation as it may adopt.

 

Section 13.03.                       Compliancewith Timing Requirements of Regulations

Subject to Section 13.04below, in the event the Partnership is “liquidated” within the meaning ofRegulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuantto this Article XIII to the General Partner and Limited Partners who havepositive Capital Accounts in compliance with Regulations Section1.704-1(b)(2)(ii)(b)(2).  If any Partnerhas a deficit balance in its Capital Account (after giving effect to allcontributions, distributions and allocations for all taxable years, includingthe year during which such liquidation occurs), such Partner shall have noobligation to make any contribution to the capital of the Partnership withrespect to such deficit, and such deficit shall not be considered a debt owedto the Partnership or to any other Person for any purpose whatsoever.  In the discretion of the General Partner, apro rata portion of the distributions that would otherwise be made to theGeneral Partner and Limited Partners pursuant to this Article XIII may be:  (A) distributed to a trust established forthe benefit of the General Partner and Limited Partners for the purposes ofliquidating Partnership assets, collecting amounts owed to the Partnership andpaying any contingent or unforeseen liabilities or obligations of thePartnership or of the General Partner arising out of or in connection with thePartnership (in which case the assets of any such trust shall be distributed tothe General Partner and Limited Partners from time to time, in the reasonablediscretion of the General Partner, in the same proportions as the amountdistributed to such trust by the Partnership would otherwise have beendistributed to the General Partner and Limited Partners pursuant to thisAgreement); or (B) withheld to provide a reasonable reserve for Partnershipliabilities (contingent or otherwise) and to reflect the unrealized portion ofany installment obligations owed to the Partnership, provided that suchwithheld amounts shall be distributed to the General Partner and LimitedPartners as soon as practicable.

Section 13.04.                       DeemedDistribution and Recontribution

Notwithstanding any otherprovision of this Article XIII, in the event the Partnership is deemedliquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) butno Liquidating Event has occurred, the Partnership’s property shall not beliquidated, the Partnership’s liabilities shall not be paid or discharged andthe Partnership’s affairs shall not be wound up.  Instead, for federal income tax purposes andfor purposes of maintaining Capital Accounts pursuant to Exhibit B hereto, thePartnership shall be deemed to have distributed its assets in kind to theGeneral Partner and Limited Partners, who shall be deemed to have assumed andtaken such assets subject to all Partnership liabilities, all in accordancewith their respective Capital Accounts. Immediately thereafter, the General Partner and Limited Partners shallbe deemed to have recontributed the Partnership assets in kind to thePartnership, which shall be deemed to have assumed and taken such assetssubject to all such liabilities.

Section 13.05.                       Rightsof Limited Partners

Except as otherwiseprovided in this Agreement, each Limited Partner shall look solely to theassets of the Partnership for the return of its Capital Contributions and shallhave no right or power to demand or receive property other than cash from thePartnership.  Except asotherwise expressly provided in this Agreement, no Limited Partner shall havepriority over any other Limited Partner as to the return of its CapitalContributions, distributions, or allocations.

Section 13.06.                       Noticeof Dissolution

In the event aLiquidating Event occurs or an event occurs that would, but for provisions ofan election or objection by one or more Partners pursuant to Section 13.01above, result in a dissolution of

 

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the Partnership, theGeneral Partner shall, within thirty (30) days thereafter, provide written noticethereof to each of the Partners and to all other parties with whom thePartnership regularly conducts business (as determined in the discretion of theGeneral Partner) and shall publish notice thereof in a newspaper of generalcirculation in each place in which the Partnership regularly conducts business(as determined in the discretion of the GeneralPartner).

 

Section 13.07.                       Cancellationof Certificate of Limited Partnership

Upon the completion ofthe liquidation of the Partnership cash and property as provided in Section13.02 above, the Partnership shall be terminated and the Certificate and allqualifications of the Partnership as a foreign limited partnership injurisdictions other than the State of Delaware shall be canceled and such otheractions as may be necessary to terminate the Partnership shall be taken.

Section 13.08.                       ReasonableTime for Winding Up

A reasonable time shallbe allowed for the orderly winding up of the business and affairs of thePartnership and the liquidation of its assets pursuant to Section 13.02 above,in order to minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shallremain in effect among the Partners during the period of liquidation.

Section 13.09.                       Waiverof Partition

Each Partner herebywaives any right to partition of the Partnership property.

Section 13.10.                       Liabilityof Liquidator

The Liquidator shall beindemnified and held harmless by the Partnership in the same manner and to thesame degree as an Indemnitee may be indemnified pursuant to Section 7.11hereof.

ARTICLE XIVAMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

Section 14.01.                       Amendments

A.           General.  Amendments to this Agreement may be proposedby the General Partner or by any Limited Partners holding twenty-five percent(25%) or more of the Partnership Interests. Following such proposal (except an amendment pursuant to Section 14.01.Bbelow), the General Partner shall submit any proposed amendment to the LimitedPartners.  The General Partner shall seekthe written vote of the Partners on the proposed amendment or shall call ameeting to vote thereon and to transact any other business that it may deemappropriate.  For purposes of obtaining awritten vote, the General Partner may require a response within a reasonablespecified time, but not less than fifteen (15) days, and failure to respond insuch time period shall constitute a vote which is consistent with the GeneralPartner’s recommendation with respect to the proposal.  Except as provided in Section 14.01.B,14.01.C or 14.01.D below, a proposed amendment shall be adopted and beeffective as an amendment hereto if it is approved by the General Partner andit receives the Consent of Partners holding a majority of the PercentageInterests of the Limited Partners (including Limited Partner Interests held bythe General Partner).

B.             Amendments NotRequiring Limited Partner Approval. Notwithstanding Section 14.01.A or Section 14.01.C hereof, the GeneralPartner shall have the power, without the Consent of the Limited

 

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Partners, to amend thisAgreement as may be required to facilitate or implement any of the followingpurposes:

 

(1)                                  to add to the obligations of the General Partner orsurrender any right or power granted to the General Partner or any Affiliate ofthe General Partner for the benefit of the Limited Partners;

(2)                                  to reflect the admission, substitution, termination orwithdrawal of any Partner in accordance with this Agreement;

(3)                                  toset forth the designations, rights, powers, duties, and preferences of theholders of any additional Partnership Interests issued pursuant to Article IVhereof;

(4)                                  toreflect a change that does not adversely affect any of the Limited Partners inany material respect, or to cure any ambiguity, correct or supplement anyprovision in this Agreement not inconsistent with law or with other provisions,or make other changes with respect to matters arising under this Agreement thatwill not be inconsistent with law or with the provisions of this Agreement oras may be expressly provided by any other provisions of this Agreement;

(5)                                  to adjust the terms hereof to reflect any SpeciallyDistributed Property, as contemplated in Section 7.05.A hereof; and

(6)                                  to satisfy any requirements, conditions, or guidelinescontained in any order, directive, opinion, ruling or regulation of a federal,state or local agency or contained in federal, state or local law.

The General Partner shallnotify the Limited Partners when any action under this Section 14.01.B is takenin the next regular communication to the Limited Partners.

C.             AmendmentsRequiring Limited Partner Approval (Excluding General Partner).  Notwithstanding Section 14.01.A above,without the Consent of the Limited Partners (not including Limited PartnerInterests held by the General Partner), the General Partner shall not amendSection 4.02.A, Section 7.01.A (second sentence only), Section 7.05, Section7.06, Section 7.08, Section 11.02, Section 13.01, this Section 14.01.C orSection 14.02.

D.            Other AmendmentsRequiring Certain Limited Partner Approval. Notwithstanding anything in this Section 14.01 to the contrary, thisAgreement shall not be amended with respect to any Partner adversely affectedwithout the Consent of such Partner adversely affected if such amendment would(i) convert a Limited Partner’s interest in the Partnership into a generalpartner’s interest, (ii) modify the limited liability of a Limited Partner,(iii) amend Section 7.11.A, (iv) amend Article V, Article VI, orSection13.02.A(3) (except as permitted pursuant to Sections 4.02, 5.01.D, 5.04,6.02 and 14.01(B)(3)), (v) amend Section 8.06 or any defined terms set forth inArticle I that relate to the Redemption Right (except as permitted in Section8.06.E), or (vi) amend this Section 14.01.D. Moreover, this Agreement may be amended by the General Partner toprovide that certain Limited Partners have the obligation, upon liquidation oftheir interests in the Partnership (within the meaning of Regulations Section1.704-1(b)(2)(ii)(g)), to restore to the Partnership the amounts of theirnegative Capital Account balances, if any, for the benefit of creditors of thePartnership or Partners with positive Capital Account balances or both,together with any necessary corresponding amendments (including corresponding amendmentsto Sections 6.01.A, 6.01.B and Exhibit C), with the consent of only suchLimited Partners

 

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andof any other Limited Partners already subject to such a restoration obligationwhose restoration obligation may be affected by such amendment.

 

E.              Amendment andRestatement of Exhibit A Not An Amendment.  Notwithstanding anything in this Article XIVor elsewhere in this Agreement to the contrary, any amendment and restatementof Exhibit A hereto by the General Partner to reflect events or changes otherwiseauthorized or permitted by this Agreement, whether pursuant to Section 7.01.A(20) hereof or otherwise, shall not be deemed anamendment of this Agreement and may be done at any time and from time to time,as necessary by the General Partner without the Consent of the LimitedPartners.

Section 14.02.                       Meetingsof the Partners

A.           General.  Meetings of the Partners may be called by theGeneral Partner and shall be called upon the receipt by the General Partner ofa written request by Limited Partners holding twenty-five percent (25%) or moreof the Partnership Interests.  The noticeof meeting shall state the nature of the business to be transacted.  Notice of any such meeting shall be given toall Partners not less than seven (7) days nor morethan thirty (30) days prior to the date of such meeting.  Partners may vote in person or by proxy atsuch meeting.  Whenever the vote orConsent of Partners is permitted or required under this Agreement, such vote orConsent may be given at a meeting of Partners or may be given in accordancewith the procedure prescribed in Section 14.01.A above.  Except as otherwiseexpressly provided in this Agreement, the Consent of holders of a majority ofthe Percentage Interests held by Limited Partners (including Limited PartnerInterests held by the General Partner) shall control.

B.             Actions Without a Meeting. Any action required or permitted to be taken at a meeting of thePartners may be taken without a meeting if a written consent setting forth theaction so taken is signed by a majority of the Percentage Interests of thePartners (or such other percentage as is expressly required by thisAgreement).  Such consent may be in oneinstrument or in several instruments, and shall have the same force and effectas a vote of a majority of the Percentage Interests of the Partners (or suchother percentage as is expressly required by this Agreement).  Such consent shall be filed with the GeneralPartner.  An action so taken shall bedeemed to have been taken at a meeting held on the effective date so certified.

C.             Proxy.  Each Limited Partner may authorize any Personor Persons to act for him by proxy on all matters in which a Limited Partner isentitled to participate, including waiving notice of any meeting, or voting orparticipating at a meeting.  Every proxymust be signed by the Limited Partner or its attorney-in-fact.  No proxy shall be valid after the expirationof eleven (11) months from the date thereof unless otherwise provided in theproxy.  Every proxy shall be revocable atthe pleasure of the Limited Partner executing it.  Such revocation to beeffective upon the Partnership’s receipt of notice thereof in writing.

D.            Conduct of Meeting.  Each meeting of Partners shall be conductedby the General Partner or such other Person as the General Partner may appointpursuant to such rules for the conduct of the meeting as the General Partner orsuch other Person deems appropriate.

ARTICLE XV

 

GENERAL PROVISIONS

Section 15.01.                       Addressesand Notice

Any notice, demand,request or report required or permitted to be given or made to a Partner orAssignee under this Agreement shall be in writing and shall be deemed given ormade when delivered in

 

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person or when sent byfirst class United States mail or by other means of written communication tothe Partner or Assignee at the address set forth in Exhibit A hereto or suchother address as the Partners shall notify the General Partner in writing.

 

Section 15.02.                       Titlesand Captions

All article or sectiontitles or captions in this Agreement are for convenience only.  They shall not be deemed part of thisAgreement and in no way define, limit, extend or describe the scope or intentof any provisions hereof.  Except as specifically provided otherwise, references to “Articles”and “Sections” are to Articles and Sections of this Agreement.

Section 15.03.                       Pronounsand Plurals

Whenever the context mayrequire, any pronoun used in this Agreement shall include the correspondingmasculine, feminine or neuter forms, and the singular form of nouns, pronounsand verbs shall include the plural and vice versa.

Section 15.04.                       FurtherAction

The parties shall executeand deliver all documents, provide all information and take or refrain fromtaking action as may be necessary or appropriate to achieve the purposes ofthis Agreement.

Section 15.05.                       BindingEffect

This Agreement shall bebinding upon and inure to the benefit of the parties hereto and their heirs,executors, administrators, successors, legal representatives and permittedassigns.

Section 15.06.                       Creditors

Other than as expresslyset forth herein with regard to any Indemnitee, none of the provisions of thisAgreement shall be for the benefit of, or shall be enforceable by, any creditorof the Partnership.

Section 15.07.                       Waiver

No failure by any partyto insist upon the strict performance of any covenant, duty, agreement orcondition of this Agreement or to exercise any right or remedy consequent upona breach thereof shall constitute waiver of any such breach or any othercovenant, duty, agreement or condition.

Section 15.08.                       Counterparts

This Agreement may beexecuted in counterparts, all of which together shall constitute one agreementbinding on all the parties hereto, notwithstanding that all such parties arenot signatories to the original or the same counterpart.  Each party shall become bound by thisAgreement immediately upon affixing its signature hereto (other than theexisting Partners who will become bound by this Agreement upon its execution bythe General Partner).

Section 15.09.                       ApplicableLaw

This Agreement shall beconstrued and enforced in accordance with and governed by the laws of the Stateof Delaware, without regard to the principles of conflicts of law.

 

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Section 15.10.                       Invalidityof Provisions

If any provision of thisAgreement is or becomes invalid, illegal or unenforceable in any respect, thevalidity, legality and enforceability of the remaining provisions containedherein shall not be affected thereby.

Section 15.11.                       Powerof Attorney

A.           General.  Each Limited Partner and each Assignee whoaccepts Partnership Units (or any rights, benefits or privileges associatedtherewith) is deemed to irrevocably constitute and appoint the General Partner,any Liquidator and authorized officers and attorneys-in-fact of each, and eachof those acting singly, in each case with full power of substitution, as itstrue and lawful agent and attorney-in-fact, with full power and authority inits name, place and stead to:

(1)                                  execute,swear to, acknowledge, deliver, file and record in the appropriate publicoffices (a) all certificates, documents and other instruments (including,without limitation, this Agreement and the Certificate and all amendments orrestatements thereof) that the General Partner or any Liquidator deemsappropriate or necessary to form, qualify or continue the existence orqualification of the Partnership as a limited partnership (or a partnership inwhich the limited partners have limited liability) in the State of Delaware andin all other jurisdictions in which the Partnership may conduct business or ownproperty, (b) all instruments that the General Partner or any Liquidator deemsappropriate or necessary to reflect any amendment, change, modification orrestatement of this Agreement in accordance with its terms, (c) allconveyances and other instruments or documents that the General Partner or anyLiquidator deems appropriate or necessary to reflect the dissolution andliquidation of the Partnership pursuant to the terms of this Agreement,including, without limitation, a certificate of cancellation, (d) allinstruments relating to the admission, withdrawal, removal or substitution ofany Partner pursuant to, or other events described in, Article XI, XII or XIIIhereof or the Capital Contribution of any Partner and (e) all certificates,documents and other instruments relating to the determination of the rights,preferences and privileges of Partnership Interests; and

(2)                                  execute,swear to, acknowledge and file all ballots, consents, approvals, waivers,certificates and other instruments appropriate or necessary, in the sole andabsolute discretion of the General Partner or any Liquidator, to make,evidence, give, confirm or ratify any vote, consent, approval, agreement orother action which is made or given by the Partners hereunder or is consistentwith the terms of this Agreement or appropriate or necessary, in the solediscretion of the General Partner or any Liquidator, to effectuate the terms orintent of this Agreement.

Nothing contained in thisSection 15.11 shall be construed as authorizing the General Partner or anyLiquidator to amend this Agreement except in accordance with Article XIV hereofor as may be otherwise expressly provided for in this Agreement.

B.             Irrevocable Nature.  The foregoing power of attorney is herebydeclared to be irrevocable and a power coupled with an interest, in recognitionof the fact that each of the Partners will be relying upon the power of theGeneral Partner or any Liquidator to act as contemplated by this Agreement inany filing or other action by it on behalf of the Partnership, and it shallsurvive and not be affected by the subsequent Incapacity of any Limited Partneror Assignee and the transfer of all or any portion of such Limited Partner’s orAssignee’s Partnership Units and shall extend to such Limited Partner’s orAssignee’s heirs, successors, assigns and personal representatives.  Each such Limited Partner or Assignee herebyagrees to be bound by any representation made by the General Partner or anyLiquidator, acting in good faith pursuant to such power of attorney; and eachsuch Limited Partner or Assignee

 

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herebywaives any and all defenses which may be available to contest, negate ordisaffirm the action of the General Partner or any Liquidator, taken in goodfaith under such power of attorney. Each Limited Partner or Assignee shallexecute and deliver to the General Partner or the Liquidator, within fifteen(15) days after receipt of the General Partner’s or Liquidator’s requesttherefor, such further designation, powers of attorney and other instruments asthe General Partner or the Liquidator, as the case may be, deems necessary toeffectuate this Agreement and the purposes of the Partnership.

 

Section 15.12.                       EntireAgreement

This Agreement containsthe entire understanding and agreement among the Partners with respect to thesubject matter hereof and supersedes any prior written oral understandings oragreements among them with respect thereto.

Section 15.13.                       NoRights as Stockholders

Nothing contained in thisAgreement shall be construed as conferring upon the holders of the PartnershipUnits any rights whatsoever as stockholders of the General Partner Entity,including, without limitation, any right to receive dividends or otherdistributions made to stockholders of the General Partner Entity or to vote orto consent or receive notice as stockholders in respect to any meeting ofstockholders for the election of directors of the General Partner Entity or anyother matter.

Section 15.14.                       Limitationto Preserve REIT Status

To the extent that anyamount paid or credited to the General Partner or its officers, directors,employees or agents pursuant to Section 7.04 or Section 7.07 hereof wouldconstitute gross income to the General Partner Entity for purposes of Section856(c)(2) or 856(c)(3) of the Code (a “General PartnerPayment”) then, notwithstanding any other provision of this Agreement, theamount of such General Partner Payments for any fiscal year shall not exceedthe lesser of:

(i)                                     an amount equal to the excess, if any, of(a) 4.20% of the General Partner Entity’s total gross income (but not includingthe amount of any General Partner Payments) for the fiscal year which isdescribed in subsections (A) though (H) of Section 856(c)(2) of the Code over(b) the amount of gross income (within the meaning of Section 856(c)(2) of theCode) derived by the General Partner Entity from sources other than thosedescribed in subsections (A) through (H) of Section 856(c)(2) of the Code (butnot including the amount of any General Partner Payments); or

(ii)                                  an amount equal to the excess, if any of(a) 25% of the General Partner Entity’s total gross income (but not includingthe amount of any General Partner Payments) for the fiscal year which isdescribed in subsections (A) through (I) of Section 856(c)(3) of the Code over(b) the amount of gross income (within the meaning of Section 856(c)(3) of theCode) derived by the General Partner Entity from sources other than thosedescribed in subsections (A) through (I) of Section 856(c)(3) of the Code (butnot including the amount of any General Partner Payments);

provided, however, that General PartnerPayments in excess of the amounts set forth in subparagraphs (i) and (ii) abovemay be made if the General Partner Entity, as a condition precedent, obtains anopinion of tax counsel that the receipt of such excess amounts would notadversely affect the General Partner Entity’s ability to qualify as a REIT. Tothe extent General Partner Payments may not be made in a year due to the foregoinglimitations, such General Partner Payments shall carry over and be treated asarising in the following year, provided, however, that suchamounts shall not carry over for more than five years, and if not paid withinsuch five year period, shall expire; provided, further, that (i)as General Partner

 

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Payments are made, suchpayments shall be applied first to carryover amounts outstanding, if any, and(ii) with respect to carryover amounts for more than one Partnership Year, suchpayments shall be applied to the earliest Partnership Year first.

 

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| IN  WITNESS WHEREOF, the parties hereto have executed this Agreement as of the  date first

 written above. |
|------------------------------------------------------------------------------------------------------------------|
|                                                                                                             |   |   |
|                                                                                                             | GENERAL PARTNER: |
|                                                                                                             |   |   |
|                                                                                                             | GRAMERCY CAPITAL CORP. |
|                                                                                                             |   |   |
|                                                                                                             | By: |   |
|                                                                                                             |   | Name: Marc Holliday |
|                                                                                                             |   | Title: President and Chief Executive Officer |
|                                                                                                             |   |   |
|                                                                                                             | LIMITED PARTNERS: |
|                                                                                                             |   |
|                                                                                                             | SL GREEN OPERATING  PARTNERSHIP, L.P. |
|                                                                                                             |   |
|                                                                                                             | By: SL Green Realty Corp.,  its general partner |
|                                                                                                             |   |   |
|                                                                                                             | By: |   |
|                                                                                                             |   | Name: Andrew S. Levine |
|                                                                                                             |   | Title: Executive Vice President |
|                                                                                                             |   |   |
|                                                                                                             | GKK MANAGER LLC |
|                                                                                                             |   |   |
|                                                                                                             | By: |   |
|                                                                                                             |   | Name: Andrew S. Levine |
|                                                                                                             |   | Title: Executive Vice President |
|                                                                                                                  |  |  |  |

 

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**CLASS B UNITHOLDER SIGNATURE PAGE**
| The undersigned holder  of Class B Units in GKK Capital LP hereby consents to and enters into this  Second Amended and Restated Agreement of Limited Partnership of GKK Capital  LP. |                    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|
|                                                                                                                                                                                 |                    |
| Signature Line for Class B Unitholder:                                                                                                                                               |                    |
|                                                                                                                                                                                 |                    |   |
|                                                                                                                                                                                 | Name:                   |   |
|                                                                                                                                                                                 | Date: December 14, 2005 |   |

 

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EXHIBITA

PARTNERS AND PARTNERSHIP INTERESTS

[Current version of Exhibit A, which alsoreflects issuance of LTIP Units, to be attached]

 

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EXHIBIT BCAPITAL ACCOUNT MAINTENANCE

1.             Capital Accounts of the Partners

A.            The Partnership shall maintain for each Partner aseparate Capital Account in accordance with the rules of Regulations Section1.704-l(b)(2)(iv).  Such Capital Accountshall be increased by (i) the amount of all Capital Contributions and any otherdeemed contributions made by such Partner to the Partnership pursuant to thisAgreement and (ii) all items of Partnership income and gain (including incomeand gain exempt from tax) computed in accordance with Section 1.B hereof andallocated to such Partner pursuant to Section 6.01 of the Agreement and ExhibitC hereof, and decreased by (x) the amount of cash or Agreed Value of all actualand deemed distributions of cash or property made to such Partner pursuant tothis Agreement and (y) all items of Partnership deduction and loss computed inaccordance with Section 1.B hereof and allocated to such Partner pursuant toSection 6.01 of the Agreement and Exhibit C hereof.

B.            For purposes of computing the amount of any item ofincome, gain, deduction or loss to be reflected in the Partners’ CapitalAccounts, unless otherwise specified in this Agreement, the determination,recognition and classification of any such item shall be the same as itsdetermination, recognition and classification for federal income tax purposesdetermined in accordance with Section 703(a) of the Code (for this purpose allitems of income, gain, loss or deduction required to be stated separatelypursuant to Section 703(a)(1) of the Code shall be included in taxable incomeor loss), with the following adjustments:

(1)           Except as otherwise provided in Regulations Section1.704-l(b)(2)(iv)(m), the computation of all items of income, gain, loss anddeduction shall be made without regard to any election under Section 754 of theCode which may be made by the Partnership, provided that the amounts ofany adjustments to the adjusted bases of the assets of the Partnership madepursuant to Section 734 of the Code as a result of the distribution of propertyby the Partnership to a Partner (to the extent that such adjustments have notpreviously been reflected in the Partners’ Capital Accounts) shall be reflectedin the Capital Accounts of the Partners in the manner and subject to thelimitations prescribed in Regulations Section 1.704-l(b)(2)(iv)(m)(4).

(2)           The computation of all items of income, gain, anddeduction shall be made without regard to the fact that items described inSections 705(a)(1)(B) or 705(a)(2)(B) of the Code are not includable in grossincome or are neither currently deductible nor capitalized for federal incometax purposes.

(3)           Any income, gain or loss attributable to the taxabledisposition of any Partnership property shall be determined as if the adjustedbasis of such property as of such date of disposition were equal in amount tothe Partnership’s Carrying Value with respect to such property as of such date.

(4)           In lieu of the depreciation, amortization, and other costrecovery deductions taken into account in computing such taxable income orloss, there shall be taken into account Depreciation for such fiscal year.

(5)           In the event the Carrying Value of any Partnership Assetis adjusted pursuant to Section 1.D hereof, the amount of any such adjustmentshall be taken into account as gain or loss from the disposition of such asset.

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(6)           Any items specially allocated under Section 2 of Exhibit Chereof shall not be taken into account.

C.            Generally, a transferee (including any Assignee) of aPartnership Unit shall succeed to a pro rata portion of the Capital Account ofthe transferor, including where the transfer causes a termination of thePartnership under Section 708(b)(1)(B) of the Code, in which case the CapitalAccount of the transferee and the Capital Accounts of the other holders ofPartnership Units in the terminated Partnership shall carry over to the newPartnership that is formed, for federal income tax purposes, as a result of thetermination. In such event, the Carrying Values of the Partnership propertiesin the reconstituted Partnership shall remain the same as they were in theterminated Partnership and the Capital Accounts of such reconstitutedPartnership shall be maintained in accordance with the principles of thisExhibit B.

D.            (1)  Consistentwith the provisions of Regulations Section 1.704-1(b)(2)(iv)(f), and asprovided in Section 1.D(2), the Carrying Values of all Partnership assets shallbe adjusted upward or downward to reflect any Unrealized Gain or UnrealizedLoss attributable to such Partnership property, as of the times of theadjustments provided in Section 1.D(2) hereof, as if such Unrealized Gain orUnrealized Loss had been recognized on an actual sale of each such property andallocated pursuant to Section 6.01 of the Agreement.

(2)           Such adjustments shall be made as of the followingtimes:  (a) immediately prior to theacquisition of an additional interest in the Partnership by any new or existingPartner in exchange for more than a de minimis Capital Contribution; (b)immediately prior to the acquisition of a more than de minimis additionalinterest in the Partnership by any new or existing Partner as consideration forthe provision of services to or for the benefit of the Partnership in a partnercapacity or in anticipation of becoming a partner; (c) immediately priorto the distribution by the Partnership to a Partner of more than a de minimisamount of property as consideration for an interest in the Partnership; and (d) immediatelyprior to the liquidation of the Partnership within the meaning of RegulationsSection 1.704-1(b)(2)(ii)(g) (except for a liquidation resulting from thetermination of the Partnership under Section 708(b)(1)(B) of the Code),provided however that adjustments pursuant to clauses (a), (b) and (c)above shall be made only if the General Partner determines that suchadjustments are necessary or appropriate to reflect the relative economicinterests of the Partners in the Partnership.

(3)           In accordance with Regulations Section 1.704-l(b)(2)(iv)(e), the Carrying Value of Partnership assets distributed in kind(other than in connection with the termination of the Partnership under Section708(b)(1)(B) of the Code) shall be adjusted upward or downward to reflect anyUnrealized Gain or Unrealized Loss attributable to such Partnership property,as of the time any such asset is distributed.

(4)           In determining Unrealized Gain or Unrealized Loss forpurposes of this Exhibit B, the aggregate cash amount and fair market value ofall Partnership assets (including cash or cash equivalents) shall be determinedby the General Partner using such reasonable method of valuation as it mayadopt, or in the case of a liquidating distribution pursuant to Article XIII ofthe Agreement, shall be determined and allocated by the Liquidator using suchreasonable methods of valuation as it may adopt. The General Partner, or theLiquidator, as the case may be, shall allocate such aggregate fair market valueamong the assets of the Partnership in such manner as it determines in its soleand absolute discretion to arrive at a fair market value for individualproperties.

E.             The provisions of the Agreement (including this ExhibitB and the other Exhibits to the Agreement) relating to the maintenance ofCapital Accounts are intended to comply with Regulations

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Section1.704-l(b), and shall be interpreted and applied in a manner consistent withsuch Regulations. In the event the General Partner shall determine that it isprudent to modify the manner in which the Capital Accounts, or any debits orcredits thereto (including, without limitation, debits or credits relating toliabilities which are secured by contributed or distributed property or whichare assumed by the Partnership, the General Partner, or the Limited Partners)are computed in order to comply with such Regulations, the General Partner maymake such modification without regard to Article XIV of the Agreement, providedthat it is not likely to have a material effect on the amounts distributable toany Person pursuant to Article XIII of the Agreement upon the dissolution ofthe Partnership. The General Partner also shall (i) make any adjustments thatare necessary or appropriate to maintain equality between the Capital Accountsof the Partners and the amount of Partnership capital reflected on thePartnership’s balance sheet, as computed for book purposes, in accordance withRegulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriatemodifications in the event unanticipated events might otherwise cause thisAgreement not to comply with Regulations Section 1.704-1(b).

2.             No Interest

No interest shall be paidby the Partnership on Capital Contributions or on balances in Partners’ CapitalAccounts.

3.             No Withdrawal

No Partner shall beentitled to withdraw any part of its Capital Contribution or Capital Account orto receive any distribution from the Partnership, except as provided inArticles IV, V, VII and XIII of the Agreement.

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EXHIBIT CSPECIAL ALLOCATION RULES

1.             Special Allocation Rules.

Notwithstanding any otherprovision of the Agreement or this Exhibit C, the following special allocationsshall be made in the following order:

A.            Minimum Gain Chargeback.  Notwithstanding the provisions of Section6.01 of the Agreement or any other provisions of this Exhibit C, if there is anet decrease in Partnership Minimum Gain during any Partnership Year, eachPartner shall be specially allocated items of Partnership income and gain forsuch year (and, if necessary, subsequent years) in an amount equal to suchPartner’s share of the net decrease in Partnership Minimum Gain, as determinedunder Regulations Section 1.704-2(g). Allocations pursuant to the previoussentence shall be made in proportion to the respective amounts required to beallocated to each Partner pursuant thereto. The items to be so allocated shallbe determined in accordance with Regulations Section 1.704-2(f)(6). This Section1.A is intended to comply with the minimum gain chargeback requirements inRegulations Section 1.704-2(f) and, for purposes of this Section 1.A only, eachPartner’s Adjusted Capital Account Deficit shall be determined prior to anyother allocations pursuant to Section 6.01 of this Agreement with respect tosuch Partnership Year and without regard to any decrease in Partner MinimumGain during such Partnership Year.

B.            Partner Minimum Gain Chargeback.  Notwithstanding any other provision ofSection 6.01 of this Agreement or any other provisions of this Exhibit C(except Section 1.A hereof), if there is a net decrease in Partner Minimum Gainattributable to a Partner Nonrecourse Debt during any Partnership Year, eachPartner who has a share of the Partner Minimum Gain attributable to suchPartner Nonrecourse Debt, determined in accordance with RegulationsSection1.704-2(i) (5), shall be specially allocated items of Partnership incomeand gain for such year (and, if necessary, subsequent years) in an amount equalto such Partner’s share of the net decrease in Partner Minimum Gainattributable to such Partner Nonrecourse Debt, determined in accordance withRegulations Section1.704-2(i) (5). Allocations pursuant to the previoussentence shall be made in proportion to the respective amounts required to beallocated to each Partner pursuant thereto. The items to be so allocated shallbe determined in accordance with Regulations Section 1.704-2(i) (4). ThisSection 1.B is intended to comply with the minimum gain chargeback requirementin such Section of the Regulations and shall be interpreted consistentlytherewith. Solely for purposes of this Section 1.B, each Partner’s AdjustedCapital Account Deficit shall be determined prior to any other allocationspursuant to Section 6.01 of the Agreement or this Exhibit with respect to suchPartnership Year, other than allocations pursuant to Section 1.A hereof.

C.            Qualified Income Offset.  In the event any Partner unexpectedlyreceives any adjustments, allocations or distributions described in RegulationsSections 1.704-l(b)(2)(ii)(d)(4), 1.704-l(b)(2)(ii)(d)(5),or1.704-l(b)(2)(ii)(d)(6), and after giving effect to the allocations requiredunder Sections 1.A and 1.B hereof with respect to such Partnership Year, suchPartner has an Adjusted Capital Account Deficit, items of Partnership incomeand gain (consisting of a pro rata portion of each item of Partnership income,including gross income and gain for the Partnership Year) shall be speciallyallocated to such Partner in an amount and manner sufficient to eliminate, tothe extent required by the Regulations, its Adjusted Capital Account Deficitcreated by such adjustments, allocations or distributions as quickly aspossible. This Section 1.C is intended to constitute a “qualified income offset”under Regulations Section 1.704-l(b)(2)(ii)(d) and shall be interpretedconsistently therewith.

D.            Gross Income Allocation.  In the event that any Partner has an AdjustedCapital Account Deficit at the end of any Partnership Year (after taking intoaccount allocations to be made under the preceding paragraphs hereof withrespect to such Partnership Year), each such Partner shall be specially

 

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allocated items ofPartnership income and gain (consisting of a pro rata portion of each item ofPartnership income, including gross income and gain for the Partnership Year)in an amount and manner sufficient to eliminate, to the extent required by theRegulations, its Adjusted Capital Account Deficit.

E.             Nonrecourse Deductions.  Nonrecourse Deductions for any PartnershipYear shall be allocated to the holders of Class A Units in accordance withtheir respective Percentage Interests. If the General Partner determines in itsgood faith discretion that the Partnership’s Nonrecourse Deductions must beallocated in a different ratio to satisfy the safe harbor requirements of theRegulations promulgated under Section 704(b) of the Code, the General Partneris authorized, upon notice to the Limited Partners, to revise the prescribedratio for such Partnership Year to the numerically closest ratio which wouldsatisfy such requirements.

F.             Partner Nonrecourse Deductions.  Any Partner Nonrecourse Deductions for anyPartnership Year shall be specially allocated to the Partner who bears theeconomic risk of loss with respect to the Partner Nonrecourse Debt to whichsuch Partner Nonrecourse Deductions are attributable in accordance withRegulations Sections 1.704-2(b)(4) and 1.704-2(i).

G.            Code Section 754 Adjustments.  To the extent an adjustment to the adjustedtax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of theCode is required, pursuant to Regulations Section1.704-l(b)(2)(iv)(m), to betaken into account in determining Capital Accounts, the amount of suchadjustment to the Capital Accounts shall be treated as an item of gain (if theadjustment increases the basis of the asset) or loss (if the adjustmentdecreases such basis), and such item of gain or loss shall be specially allocatedto the Partners in a manner consistent with the manner in which their CapitalAccounts are required to be adjusted pursuant to such Section of theRegulations.

H.            Forfeiture Allocations.  Upon a forfeiture of any unvested PartnershipInterest by any Partner, gross items of income, gain, loss or deduction shallbe allocated to such Partner if and to the extent required by final TreasuryRegulations promulgated after the Effective Date to ensure that allocationsmade with respect to all unvested Partnership Interests are recognized underCode Section 704(b).

2.             Allocations for Tax Purposes

A.            Except as otherwise provided in this Section 2, forfederal income tax purposes, each item of income, gain, loss and deductionshall be allocated among the Partners in the same manner as its correlativeitem of “book” income, gain, loss or deduction is allocated pursuant to Section6.01 of the Agreement and Section 1 of this Exhibit C.

B.            In an attempt to eliminate Book-Tax Disparitiesattributable to a Contributed Property or Adjusted Property, items of income,gain, loss, and deduction shall be allocated for federal income tax purposesamong the Partners as follows:

(a) (1)      In the case of a Contributed Property,such items attributable thereto shall be allocated among the Partnersconsistent with the principles of Section 704(c) of the Code to take intoaccount the variation between the 704(c) Value of such property and itsadjusted basis at the time of contribution (taking into account Section 2.C ofthis Exhibit C); and

(b)           any item of Residual Gain or Residual Loss attributable toa Contributed Property shall be allocated among the Partners in the same manneras its correlative item of “book” gain or loss is allocated pursuant to Section6.01 of the Agreement and Section 1 of this Exhibit C.

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(c) (2)      In the case of an Adjusted Property, suchitems shall

(i)            first, be allocated among the Partners in a mannerconsistent with the principles of Section 704(c) of the Code to take intoaccount the Unrealized Gain or Unrealized Loss attributable to such propertyand the allocations thereof pursuant to Exhibit B;

(ii)           second, in the event such property was originally aContributed Property, be allocated among the Partners in a manner consistentwith Section 2.B(1) of this Exhibit C; and

(d)           any item of Residual Gain or Residual Loss attributable toan Adjusted Property shall be allocated among the Partners in the same mannerits correlative item of “book” gain or loss is allocated pursuant to Section6.01 of the Agreement and Section 1 of this Exhibit C.

C.            To the extent Regulations promulgated pursuant to Section704(c) of the Code permit a Partnership to utilize alternative methods toeliminate the disparities between the Carrying Value of property and itsadjusted basis, the General Partner shall have the authority to elect themethod to be used by the Partnership and such election shall be binding on allPartners.

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EXHIBIT DNOTICE OF REDEMPTION

The undersigned herebyirrevocably (i) tenders for redemption Partnership Units in GKK Capital LP inaccordance with the terms of the Agreement of Limited Partnership of GKKCapital LP, as amended, and the Redemption Right referred to therein, (ii)surrenders such Partnership Units and all right, title and interest therein and(iii) directs that the Cash Amount or Shares Amount (as determined by theGeneral Partner) deliverable upon exercise of the Redemption Right be deliveredto the address specified below, and if Shares are to be delivered, such Sharesbe registered or placed in the name(s) and at the address(es) specified below.The undersigned hereby represents, warrants, and certifies that the undersigned(a) has marketable and unencumbered title to such Partnership Units, free andclear of the rights of or interests of any other person or entity, (b) has thefull right, power and authority to redeem and surrender such Partnership Unitsas provided herein and (c) has obtained the consent or approval of all personsor entities, if any, having the right to consult or approve such redemption andsurrender.
| Dated: Name of Limited  Partner:                     |
|------------------------------------------------------|
| (Signature  of Limited Partner)                      |
|                                                 |
| (Street  Address)                                    |
|                                                 |
| If Shares are to be issued, issue to:                |
|                                                 |
| Name:                                                |
|                                                 |
| Please insert social security or identifying number: |

 

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EXHIBIT E

 

GKK CAPITAL LP

 

DESIGNATION OF THE RIGHTS,POWERS, PRIVILEGES,

RESTRICTIONS, QUALIFICATIONSAND LIMITATIONS

OF THE LTIP UNITS

 

The following are the termsof the LTIP Units:

1.             Vesting.

A.            Vesting,Generally.  LTIP Units may, in thesole discretion of the General Partner, be issued subject to vesting,forfeiture and additional restrictions on transfer pursuant to the terms of an award,vesting or other similar agreement (a “Vesting Agreement”).  The terms of any Vesting Agreement may bemodified by the General Partner from time to time in its sole discretion,subject to any restrictions on amendment imposed by the relevant VestingAgreement or by the terms of any plan pursuant to which the LTIP Units areissued, if applicable.  LTIP Units thathave vested and are no longer subject to forfeiture under the terms of aVesting Agreement are referred to as “Vested LTIP Units”; all other LTIPUnits are referred to as “Unvested LTIP Units.”  Subject to the terms of any VestingAgreement, a holder of LTIP Units shall be entitled to transfer his or her LTIPUnits to the same extent, and subject to the same restrictions as holders ofClass A Units are entitled to transfer their Class A Units pursuant toArticle XI of the Agreement.

B.            Forfeitureor Transfer of Unvested LTIP Units. Unless otherwise specified in the relevant Vesting Agreement, upon theoccurrence of any event specified in a Vesting Agreement as resulting in eitherthe forfeiture of any LTIP Units, or the right of the Partnership or theGeneral Partner to repurchase LTIP Units at a specified purchase price, thenupon the occurrence of the circumstances resulting in such forfeiture or if thePartnership or the General Partner exercises such right to repurchase, then therelevant LTIP Units shall immediately, and without any further action, betreated as cancelled or transferred to the General Partner, as applicable, andno longer outstanding for any purpose. Unless otherwise specified in the Vesting Agreement, no consideration orother payment shall be due with respect to any LTIP Units that have beenforfeited, other than any distributions declared with a record date prior tothe effective date of the forfeiture.  Inconnection with any forfeiture or repurchase of LTIP Units, the balance of theportion of the Capital Account of the holder that is attributable to all of hisor her LTIP Units shall be reduced by the amount, if any, by which it exceedsthe target balance contemplated by Section 6.01.D of the Agreement**,** calculated with respect to the holder’s remaining LTIPUnits, if any.

C.            Legend.  Any certificate evidencing an LTIP Unit shallbear an appropriate legend indicating that additional terms, conditions andrestrictions on transfer, including without limitation any Vesting Agreement,apply to the LTIP Unit.

2.             Distributions.

A.            LTIPDistribution Amount.  Commencing fromthe Distribution Participation Date (as defined below) established for any LTIPUnits, for any quarterly or other period holders of such LTIP Units shall beentitled to receive, if, when and as authorized by the General Partner out offunds legally available for the payment of distributions, regular cash distributionsin an amount per unit equal to the distribution payable on each Class A Unitfor the corresponding

 

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quarterly or other period (or, if applicable, forthat portion of the quarterly or other period that begins on the DistributionParticipation Date) (the “LTIP Distribution Amount”).  In addition, from and after the DistributionParticipation Date, LTIP Units shall be entitled to receive, if, when and asauthorized by the General Partner out of funds or other property legallyavailable for the payment of distributions, non-liquidating special,extraordinary or other distributions in an amount per unit equal to the amountof any non-liquidating special, extraordinary or other distributions payable onthe Class A Units which may be made from time to time.  LTIP Units shall also be entitled to receive,if, when and as authorized by the General Partner out of funds or otherproperty legally available for the payment of distributions, distributions representingproceeds of a sale or other disposition of all or substantially all of theassets of the Partnership in an amount per unit equal to the amount of any suchdistributions payable on the Class A Units, whether made prior to, on or afterthe Distribution Participation Date, provided that the amount of suchdistributions shall not exceed the positive balances of the Capital Accounts ofthe holders of such LTIP Units to the extent attributable to the ownership ofsuch LTIP Units.  Distributions on the LTIPUnits, if authorized, shall be payable on such dates and in such manner as maybe authorized by the General Partner (any such date, a “Distribution PaymentDate”); provided that the Distribution Payment Date and the record date fordetermining which holders of LTIP Units are entitled to receive a distributionshall be the same as the corresponding dates relating to the correspondingdistribution on the Class A Units.

B.            DistributionParticipation Date.  The “DistributionParticipation Date” for each LTIP Units will be either (i) with respect toLTIP Units granted pursuant to the General Partner’s 2005 Long-TermOutperformance Program (the “2005 Outperformance Program”), theapplicable Valuation Date (as defined in the Vesting Agreement of each Persongranted LTIP Units under the 2005 Outperformance Program) or (ii) with respectto other LTIP Units, such date as may be specified in the Vesting Agreement orother documentation pursuant to which such LTIP Units are issued.

3.             Allocations.

Commencing with the portion of the taxable year ofthe Partnership that begins on the Distribution Participation Date establishedfor any LTIP Units, such LTIP Units shall be allocated Net Income and Net Lossin amounts per LTIP Unit equal to the amounts allocated per Class A Unit.  The allocations provided by the precedingsentence shall be subject to the proviso to the first sentence of Section6.01.B of the Agreement.  The GeneralPartner is authorized in its discretion to delay or accelerate theparticipation of the LTIP Units in allocations of Net Income and Net Loss, orto adjust the allocations made after the Distribution Participation Date, sothat the ratio of (i) the total amount of Net Income or Net Loss allocatedwith respect to each LTIP Unit in the taxable year in which that LTIP Unit’sDistribution Participation Date falls, to (ii) the total amountdistributed to that LTIP Unit with respect to such period, is more nearly equalto such ratio as computed for the Class A Units held by the General Partner.

4.             Adjustments.

The Partnership shallmaintain at all times a one-to-one correspondence between LTIP Units and ClassA Units for conversion, distribution and other purposes, including withoutlimitation complying with the following procedures; provided that the foregoingis not intended to alter the Capital Account Limitation (as defined in Section7.C of this Exhibit E), the special allocations pursuant to Section 6.01.D ofthe Partnership Agreement, differences between non-liquidating distributions tobe made with respect to the LTIP Units and Class A Units prior to theDistribution Participation Date for such LTIP Units, differences betweenliquidating distributions to be made with respect to the LTIP Units and Class AUnits pursuant to Section 13.02 of the

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Partnership Agreement orSection 2.A of this Exhibit E in the event that the Capital Accountsattributable to the LTIP Units are less than those attributable to the Class AUnits due to insufficient special allocations pursuant to Section 6.01.D of thePartnership Agreement or related provisions. If an Adjustment Event (as defined below) occurs, then the GeneralPartner shall make a corresponding adjustment to the LTIP Units to maintainsuch one-for-one correspondence between Class A Units and LTIP Units.  The following shall be “Adjustment Events”:  (A) the Partnership makes a distribution onall outstanding Class A Units in Partnership Units, (B) the Partnershipsubdivides the outstanding Class A Units into a greater number of units orcombines the outstanding Class A Units into a smaller number of units, or(C) the Partnership issues any Partnership Units in exchange for itsoutstanding Class A Units by way of a reclassification or recapitalization ofits Class A Units.  If more than oneAdjustment Event occurs, the adjustment to the LTIP Units need be made onlyonce using a single formula that takes into account each and every AdjustmentEvent as if all Adjustment Events occurred simultaneously.  For the avoidance of doubt, the followingshall not be Adjustment Events: (x) the issuance of Partnership Units in afinancing, reorganization, acquisition or other similar business transaction,(y) the issuance of Partnership Units pursuant to any employee benefit or compensationplan or distribution reinvestment plan, or (z) the issuance of any PartnershipUnits to the General Partner in respect of a capital contribution to thePartnership of proceeds from the sale of securities by the General Partner.  If the Partnership takes an action affectingthe Class A Units other than actions specifically described above as AdjustmentEvents and in the opinion of the General Partner such action would require anadjustment to the LTIP Units to maintain the one-to-one correspondencedescribed above, the General Partner shall have the right to make suchadjustment to the LTIP Units, to the extent permitted by law and by the termsof any plan pursuant to which the LTIP Units have been issued**,** in such manner and at such time as the GeneralPartner, in its sole discretion, may determine to be appropriate under thecircumstances.  If an adjustment is madeto the LTIP Units as herein provided the Partnership shall promptly file in thebooks and records of the Partnership an officer’s certificate setting forthsuch adjustment and a brief statement of the facts requiring such adjustment,which certificate shall be conclusive evidence of the correctness of suchadjustment absent manifest error. Promptly after filing of such certificate, the Partnership shall mail anotice to each holder of LTIP Units setting forth the adjustment to his or herLTIP Units and the effective date of such adjustment.

5.             Ranking.

The LTIP Units shall rank on parity with the Class AUnits in all respects, subject to the proviso in the first sentence of Section4 of this Exhibit E.

6.             No Liquidation Preference.

TheLTIP Units shall have no liquidation preference.

7.             Right to Convert LTIP Units intoClass A Units.

A.            ConversionRight.  A holder of LTIP Units shallhave the right (the “Conversion Right”), at his or her option, at anytime to convert all or a portion of his or her Vested LTIP Units into Class AUnits.  Holders of LTIP Units shall nothave the right to convert Unvested LTIP Units into Class A Units until theybecome Vested LTIP Units; provided, however, that when a holderof LTIP Units is notified of the expected occurrence of an event that willcause his or her Unvested LTIP Units to become Vested LTIP Units, such Personmay give the Partnership a Conversion Notice conditioned upon and effective asof the time of vesting, and such Conversion Notice, unless subsequently revokedby the holder of the LTIP Units, shall be accepted by the Partnership subjectto such condition.  The General Partnershall have the right at

 

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any time to cause a conversion of Vested LTIP Unitsinto Class A Units.  In all cases, theconversion of any LTIP Units into Class A Units shall be subject to theconditions and procedures set forth in this Section 7.

B.            Numberof Units Convertible. A holder of Vested LTIP Units may convert such VestedLTIP Units into an equal number of fully paid and non-assessable Class A Units,giving effect to all adjustments (if any) made pursuant to Section 4.  Notwithstanding the foregoing, in no eventmay a holder of Vested LTIP Units convert a number of Vested LTIP Units thatexceeds (x) the Economic Capital Account Balance of such holder, to the extentattributable to its ownership of LTIP Units, divided by (y) the Class A UnitEconomic Balance, in each case as determined as of the effective date ofconversion (the “Capital Account Limitation”).

C.            Notice.  In order to exercise his or her ConversionRight, a holder of LTIP Units shall deliver a notice (a “Conversion Notice”)in the form attached as Attachment A to this Exhibit E to the Partnershipnot less than 10 nor more than 60 days prior to a date (the “Conversion Date”)specified in such Conversion Notice. Each holder of LTIP Units covenants and agrees with the Partnership thatall Vested LTIP Units to be converted pursuant to this Section 7 shall be freeand clear of all liens.  Notwithstandinganything herein to the contrary, a holder of LTIP Units may deliver aRedemption Notice pursuant to Section 8.06 of the Agreement relating to thoseClass A Units that will be issued to such holder upon conversion of such LTIPUnits into Class A Units in advance of the Conversion Date; provided, however,that the redemption of such Class A Units by the Partnership shall in no eventtake place until the Conversion Date. For clarity, it is noted that the objective of this paragraph is to puta holder of LTIP Units in a position where, if he or she so wishes, the Class AUnits into which his or her Vested LTIP Units will be converted can be redeemedby the Partnership simultaneously with such conversion, with the furtherconsequence that, if the General Partner elects to assume the Partnership’sredemption obligation with respect to such Class A Units under Section 8.06 ofthe Agreement by delivering to such holder Shares rather than cash, then suchholder can have such Shares issued to him or her simultaneously with theconversion of his or her Vested LTIP Units into Class A Units.  The General Partner shall cooperate with aholder of LTIP Units to coordinate the timing of the different events describedin the foregoing sentence.

D.            ForcedConversion.  The Partnership, at anytime at the election of the General Partner, may cause any number of VestedLTIP Units held by a holder of LTIP Units to be converted (a “ForcedConversion”) into an equal number of Class A Units, giving effect to alladjustments (if any) made pursuant to Section 4; provided, that thePartnership may not cause a Forced Conversion of any LTIP Units that would notat the time be eligible for conversion at the option of the holder of such LTIPUnits pursuant to Section 7.B above.  Inorder to exercise its right to cause a Forced Conversion, the Partnership shalldeliver a notice (a “Forced Conversion Notice”) in the form attached asAttachment B to this Exhibit E to the applicable holder not less than 10nor more than 60 days prior to the Conversion Date specified in such ForcedConversion Notice.  A Forced ConversionNotice shall be provided in the manner provided in Section 15.01 of theAgreement.

E.             ConversionProcedures.  A conversion of VestedLTIP Units for which the holder thereof has given a Conversion Notice or thePartnership has given a Forced Conversion Notice shall occur automatically afterthe close of business on the applicable Conversion Date without any action onthe part of such holder of LTIP Units, as of which time such holder of LTIPUnits shall be credited on the books and records of the Partnership with theissuance as of the opening of business on the next day of the number of Class AUnits issuable upon such conversion. After the conversion of LTIP Units as aforesaid, the Partnership shalldeliver to such holder of LTIP Units, upon his or her written request, acertificate of the General Partner certifying the number of

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Class A Units and remaining LTIP Units, if any, heldby such Person immediately after such conversion.

F.             Treatmentof Capital Account.  For purposes ofmaking future allocations under Section 6.01.D of the Agreement and applyingthe Capital Account Limitation, the portion of the Economic Capital Accountbalance of the applicable holder of LTIP Units that is treated as attributableto his or her LTIP Units shall be reduced, as of the date of conversion, by theproduct of the number of LTIP Units converted multiplied by the Class A UnitEconomic Balance.

G.            MandatoryConversion in Connection with a Transaction.  If the Partnership or the General Partnershall be a party to any transaction (including without limitation a merger,consolidation, unit exchange, self tender offer for all or substantially allClass A Units or other business combination or reorganization, or sale of allor substantially all of the Partnership’s assets, but excluding any transactionwhich constitutes an Adjustment Event), in each case as a result of which ClassA Units shall be exchanged for or converted into the right, or the holders ofClass A Units shall otherwise be entitled, to receive cash, securities or otherproperty or any combination thereof (each of the foregoing being referred toherein as a “Transaction”), then the General Partner shall, immediatelyprior to the Transaction, exercise its right to cause a Forced Conversion with respectto the maximum number of LTIP Units then eligible for conversion, taking intoaccount any allocations that occur in connection with the Transaction or thatwould occur in connection with the Transaction if the assets of the Partnershipwere sold at the Transaction price or, if applicable, at a value determined bythe General Partner in good faith using the value attributed to the PartnershipUnits in the context of the Transaction (in which case the Conversion Dateshall be the effective date of the Transaction and the conversion shall occurimmediately prior to the effectiveness of the Transaction).

In anticipation of such Forced Conversion and theconsummation of the Transaction, the Partnership shall use commerciallyreasonable efforts to cause each holder of LTIP Units to be afforded the rightto receive in connection with such Transaction in consideration for the Class AUnits into which his or her LTIP Units will be converted the same kind andamount of cash, securities and other property (or any combination thereof)receivable upon the consummation of such Transaction by a holder of the samenumber of Class A Units, assuming such holder of Class A Units is not a Personwith which the Partnership consolidated or into which the Partnership merged orwhich merged into the Partnership or to which such sale or transfer was made,as the case may be (a “Constituent Person”), or an affiliate of aConstituent Person.  In the event thatholders of Class A Units have the opportunity to elect the form or type ofconsideration to be received upon consummation of the Transaction, prior tosuch Transaction the General Partner shall give prompt written notice to eachholder of LTIP Units of such election, and shall use commercially reasonableefforts to afford such holders the right to elect, by written notice to theGeneral Partner, the form or type of consideration to be received uponconversion of each LTIP Unit held by such holder into Class A Units inconnection with such Transaction.  If aholder of LTIP Units fails to make such an election, such holder (and any ofits transferees) shall receive upon conversion of each LTIP Unit held him orher (or by any of his or her transferees) the same kind and amount ofconsideration that a holder of a Class A Unit would receive if such holder ofClass A Units failed to make such an election.

Subject to the rights of the Partnership and theGeneral Partner under any Vesting Agreement and the terms of any plan underwhich LTIP Units are issued, the Partnership shall use commercially reasonableeffort to cause the terms of any Transaction to be consistent with theprovisions of this Section 7 and to enter into an agreement with the successoror purchasing entity, as the case may be, for the benefit of any holders ofLTIP Units whose LTIP Units will not be converted into Class A Units inconnection with the Transaction that will (i) contain provisions enabling theholders of LTIP Units that remain outstanding after such Transaction to converttheir

 

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LTIP Units into securities as comparable asreasonably possible under the circumstances to the Class A Units and(ii) preserve as far as reasonably possible under the circumstances thedistribution, special allocation, conversion, and other rights set forth in theAgreement for the benefit of the holders of LTIP Units.

8.             Redemption at the Option of thePartnership.

LTIP Units will not be redeemable at the option ofthe Partnership; provided, however, that the foregoing shall not prohibitthe Partnership from repurchasing LTIP Units from the holder thereof if and tothe extent such holder agrees to sell such Units.

9.             Voting Rights.

A.            Votingwith Class A Units.  Holders of LTIPUnits shall have the right to vote on all matters submitted to a vote of theholders of Class A Units; holders of LTIP Units and Class A Units shall votetogether as a single class, together with any other class or series of units oflimited partnership interest in the Partnership upon which like voting rightshave been conferred.  In any matter inwhich the LTIP Units are entitled to vote, including an action by writtenconsent, each LTIP Unit shall be entitled to vote a Percentage Interest equalon a per unit basis to the Percentage Interest of the Class A Units.

B.            SpecialApproval Rights.  In addition to, andnot in limitation of, the provisions of Section 9.A above (and notwithstandinganything appearing to be contrary in the Agreement), the General Partner and/orthe Partnership shall not, without the affirmative consent of the holders ofsixty-six and two-thirds percent (66 2/3%) of the then outstanding LTIP Units,given in person or by proxy, either in writing or at a meeting, take any actionthat would materially and adversely alter, change, modify or amend the rights,powers or privileges of the LTIP Units; but subject in any event to thefollowing provisions: (i) no consent of the holders of LTIP Units will berequired if and to the extent that any such alteration, change, modification oramendment would similarly alter, change, modify or amend the rights, powers orprivileges of the Class A Units; (ii) with respect to the occurrence ofany merger, consolidation or other business combination or reorganization, solong as the LTIP Units either (x) are all converted into Class A Unitsimmediately prior to the effectiveness of the transaction, (y) remainoutstanding with the terms thereof materially unchanged or (z) if thePartnership is not the surviving entity in such transaction, are exchanged fora security of the surviving entity with terms that are materially the same withrespect to rights to allocations, distributions, redemption, conversion andvoting as the LTIP Units and without any income, gain or loss expected to berecognized by the holder upon the exchange for federal income tax purposes (andwith the terms of the Class A Units or such other securities into which theLTIP Units (or the substitute security therefor) are convertible materially thesame with respect to rights to allocations, distributions, redemption,conversion and voting), the occurrence of any such event shall not be deemed tomaterially and adversely alter, change, modify or amend the rights, powers orprivileges of the LTIP Units, provided further, that if some, but not all, ofthe LTIP Units are converted into Class A Units immediately prior to theeffectiveness of the transaction (and neither clause (y) or (z) above isapplicable), then the consent required pursuant to this Section will be theconsent of the holders of sixty-six and two-thirds percent (66 2/3%) ofthe LTIP Units to be outstanding following such conversion; (iii) any creationor issuance of any Class A Units or of any class of series of common orpreferred units of the Partnership (whether ranking junior to, on a parity withor senior to the LTIP Units with respect to payment of distributions,redemption rights and the distribution of assets upon liquidation, dissolutionor winding up), which either (x) does not require the consent of the holders ofClass A Units or (y) does require such consent and is authorized by a vote ofthe holders of Class A Units; and LTIP Units voting together as a single class,together with any

 

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other class or series of units of limitedpartnership interest in the Partnership upon which like voting rights have beenconferred, shall not be deemed to materially and adversely alter, change,modify or amend the rights, powers or privileges of the LTIP Units; and (iv)any waiver by the Partnership of restrictions or limitations applicable to anyoutstanding LTIP Units with respect to any holder or holders thereof shall notbe deemed to materially and adversely alter, change, modify or amend therights, powers or privileges of the LTIP Units with respect to otherholders.  The foregoing voting provisionswill not apply if, as of or prior to the time when the action with respect towhich such vote would otherwise be required will be taken or be effective, alloutstanding LTIP Units shall have been converted and/or redeemed, or provisionis made for such redemption and/or conversion to occur as of or prior to suchtime.

 

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Attachment A to Exhibit E

 

**Notice of Election by Partner to ConvertLTIP Units into Class A Units**

The undersigned holder of LTIP Units herebyirrevocably elects to convert the number of Vested LTIP Units in GKK Capital LP(the “Partnership”) set forth below into Class A Units in accordancewith the terms of the Second Amended and Restated Agreement of LimitedPartnership of the Partnership, as amended. The undersigned hereby represents, warrants, and certifies that theundersigned: (a) has title to such LTIP Units, free and clear of the rights orinterests of any other person or entity other than the Partnership; (b) has thefull right, power, and authority to cause the conversion of such LTIP Units asprovided herein; and (c) has obtained the consent or approval of all persons orentities, if any, having the right to consent or approve such conversion.
|   | Name of Holder:                                                        |                                                       |
|--------|------------------------------------------------------------------------|------------------------------------------------------------|
|   |                                                                   | (Please Print: Exact Name  as Registered with Partnership) |
|   |                                                                   |                                                       |   |   |
|   | Number of LTIP Units to be Converted:                                  |                                                       |   |
|   |                                                                   |                                                       |   |
|   | Conversion Date:                                                       |                                                       |   |
|   |                                                                   |                                                       |   |
|   |                                                                   |                                                       |
|   | (Signature of Holder:  Sign Exact Name as Registered with Partnership) |                                                       |
|   |                                                                   |                                                       |   |   |
|   |                                                                   |                                                       |
|   | (Street Address)                                                       |                                                       |   |   |
|   |                                                                   |                                                       |   |   |
|   |                                                                   |                                                       |   |   |   |
|   | (City)                                                                 |                                                       | (State) |   | (Zip Code) |
|   |                                                                   |                                                       |   |   |
|   | Signature Guaranteed by:                                               |                                                       |
|        |                                                                        |                                                            |  |  |  |  |  |  |  |  |

 

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Attachment B to Exhibit E

 

**Notice of Election by Partnership to Force Conversionof LTIP Units into Class A Units**

GKK Capital LP (the “Partnership”)hereby irrevocably elects to cause the number of LTIP Units held by the holderof LTIP Units set forth below to be converted into Class A Units in accordancewith the terms of the Second Amended and Restated Agreement of LimitedPartnership of the Partnership, as amended.
|   | Name of Holder:                       |                                                       |
|--------|---------------------------------------|------------------------------------------------------------|
|   |                                  | (Please Print: Exact Name  as Registered with Partnership) |
|   |                                  |                                                       |   |   |
|   | Number of LTIP Units to be Converted: |                                                       |   |
|   |                                  |                                                       |   |
|   | Conversion Date:                      |                                                       |   |
|        |                                       |                                                            |  |  |  |

 

 

 

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