Document:

Exhibit 10.4

 

AMENDED AND RESTATED

ASSET SERVICING AGREEMENT

 

THIS AMENDED AND RESTATED
ASSET SERVICING AGREEMENT (this “Agreement”), dated as of April 19, 2006,
is made by and between GKK Manager LLC, a Delaware limited liability company
(the “Manager”), and SLG Gramercy Services LLC, a Delaware limited liability
company (“Servicer”).

 

WHEREAS, Manager provides
management services to Gramercy Capital Corp., a Maryland corporation (the “Parent”),
and GKK Capital LP, a Delaware limited partnership (the “Operating Partnership”
and collectively with the Parent and subsidiaries and other entities controlled
by either of them, the “Company”), pursuant to that certain Management
Agreement dated as of August 2, 2004, by and among the Parent, the
Operating Partnership and the Manager, as amended and restated as of the date
hereof (the “Management Agreement”);

 

WHEREAS, the Manager
desires to engage Servicer to manage and service certain assets of the Company;

 

WHEREAS, Servicer is
willing to perform the services described herein on the terms and
conditions hereinafter set forth;

 

WHEREAS, the Manager and
Servicer entered into the original asset servicing agreement as of August 2,
2004 (the “Original Asset Servicing Agreement”); and

 

WHEREAS, the Manager and
Servicer desire to amend and restate the Original Asset Servicing Agreement in
its entirety.

 

AGREEMENT

 

NOW THEREFORE, in
consideration of the mutual agreements herein set forth and intending to be
legally bound, the parties hereto agree that the Original Asset Servicing
Agreement shall be amended and restated in its entirety as follows:

 

1.                                       Services.

 

(a)          Servicer
agrees to provide the following asset management services (the “Services”) to
the Manager upon request with respect to the Serviced Assets (as defined in Section 3):

 

(i)                                     issuing
bills and payment notices, and making all reasonable efforts to collect all
payments called for under the terms and provisions of the Serviced Assets, and
shall follow such collection procedures as are in accordance with generally
applicable servicing practices;

 

(ii)                                  establishing,
and maintaining during the term of this Agreement, the Company Account (as
defined in the Management Agreement), and any sub or related accounts in
connection therewith (collectively, the “Accounts”). The Accounts shall relate
solely to the Serviced Assets, and funds in the Accounts shall be held in trust
by the Servicer for the benefit of the Manager and shall not be commingled with
any other moneys. The Servicer shall notify the Manager in writing of the
location and account number of the Accounts and shall thereafter give

 

 

the Manager
written notice of any change of the location or account number of the Accounts
promptly following the date of such change;

 

(iii)                               depositing into the
Accounts all payments on account of principal of the Serviced Assets, including
any principal prepayments thereon and all payments on account of interest or
yield on the Serviced Assets, (including any default interest or late charges),
any exit fees and any other amounts received with respect thereto (including,
without limitation, any amounts received in connection with the liquidation or
other conversion of a Serviced Asset);

 

(iv)                              making
withdrawals from the Accounts of amounts on deposit therein for (without
duplication) the following purposes:

 

(1)                                  to
pay any amount deposited in the Accounts in error to the Person entitled
thereto;

 

(2)                                  to
pay to itself its fees due hereunder and to reimburse itself for any other
amounts owed to it pursuant to the Agreement;

 

(3)                                  after
the withdrawal pursuant to the immediately preceding clause (2), to distribute
to the Manager any amounts remaining in the Accounts; and

 

(4)                                  to
clear and terminate the Accounts upon termination of this Agreement;

 

(v)                                 preparing
and distributing to Manager, on the date on which any distribution is made to
the Manager a report setting forth each Serviced Asset (a) the servicing
fee paid on such date, (b) any other amounts paid to the Servicer on such
date, and (c) any amounts of principal interest, yield, default interest,
late charges, exit fees and any other amounts distributed to Manager on such
day;

 

(vi)                              processing
requests for approvals and consents received by Servicer in connection with the
Serviced Assets for leases and draw requests from escrow accounts and reserve
funds;

 

(vii)                           monitoring compliance with
insurance requirements;

 

(viii)                        monitoring real estate tax and
insurance escrow deposits;

 

(ix)                                reviewing
periodic budgeting and financial reporting under the Serviced Assets; and

 

(x)                                   issuing
customary reporting with respect to each of the Serviced Assets and the
portfolio of all Serviced Assets, and as may be required of the Manager
under the Management Agreement.

 

(b)         In addition
to the Services, the Manager may request Servicer to be appointed as a
special servicer or sub-servicer to a special servicer in respect of any
Serviced Asset. To the extent Servicer accepts such appointment, the Servicer
agrees to provide the following special asset management services (the “Special
Services”) to the Manager:

 

2

 

(i)                                     reviewing
loan files of the Serviced Assets to:  (A) assess
the Company’s rights in and to collateral securing the subject loans, including
bank accounts, letters of credit and funds held in escrow; and (B) identify
guarantees, other credit support and additional sources of equity, if any;

 

(ii)                                  conducting
due diligence with respect to the Serviced Assets with an emphasis on exit
strategies and exploring, developing and implementing strategic opportunities
and plans to restructure debt and equity positions;

 

(iii)                               reviewing current
operating statements of profit and loss and past and current rent rolls to
assess operating and financial performance and the impact of existing and
potential financial and operational issues relating to the collateral for the
Serviced Assets;

 

(iv)                              recommending
short- and long-term strategic alternatives for the management and disposition
of the Serviced Assets based on the relevant market and market trends;

 

(v)                                 overseeing
rehabilitation projects and assessing whether new appraisals or environmental
assessment or physical needs reports are necessary with respect to the
collateral for the Serviced Assets;

 

(vi)                              formulating
appropriate courses of action and conducting negotiations among all concerned
parties regarding the workout of Serviced Assets;

 

(vii)                           structuring workout
proposals and preparing analyses indicating the viability thereof;

 

(viii)                        evaluating liquidity concerns
and capital adequacy and reserve requirements and performing liquidity analyses
of properties and ownership entities with respect to the collateral for the
Serviced Assets;

 

(ix)                                preparing
and delivering such reports relating to the Serviced Assets as Manager shall
reasonably request; and

 

(x)                                   performing
such other services as may be required from time to time for management
and other activities relating to the Serviced Assets as the Manager shall
reasonably request.

 

2.                                       Term.
This Agreement shall remain in full force and effect throughout the term of the
Management Agreement as extended in accordance therewith and terminate
simultaneously with the expiration or earlier termination of the Management
Agreement, except that Servicer may terminate this Agreement at any time
on 60 days notice to Manager.

 

3.                                       Fees.

 

(a)          Servicer
shall receive fees for Services rendered under this Agreement equal to 0.15%
per annum of the Book Value of each Serviced Asset, except that the fees shall
be 0.05% per annum of the Book Value of each Serviced Asset that constitutes a
credit tenant lease asset or non-investment grade bond. “Book Value” means the
book value of a Serviced Asset as reflected in the Company’s most recent
financial statements. “Serviced Assets” means the fixed income investments of
the Company, other than (i) any securities which are rated investment
grade by a nationally recognized

 

3

 

rating
agency, unless the investment grade bonds have a first-loss position; (ii) securities
(whether or not rated) issued by any corporation which are not secured by any
pledge of collateral; or (iii) any securities issued by the U.S.
government or other temporary investments, such as commercial paper or money
market investments, made by the Company, provided, however, that for purposes
of this definition, fixed income investments shall include the Company’s credit
tenant lease assets. The fee shall be calculated and paid monthly on or before
the fifth day following each month end. Manager shall be directly obligated to
pay accrued fees hereunder, whether or not reimbursed by the Company for such
fees as contemplated by the Management Agreement.

 

(b)         To the
extent Servicer accepts appointment as a special servicer or sub-servicer to a
special servicer, Servicer shall receive additional fees in such amounts as are
customary for fees paid to third parties in similar instances, which are
approved by the Independent Directors of the Parent. Such fees shall be agreed
upon by Servicer and such Independent Directors on a case-by-case basis. The
Manager and Servicer shall share equally any fees received by Manager or
Servicer for performance of Special Services (but not any Servicer Termination
Payment (as defined below)).

 

(c)          To the
extent Manager receives any payment from the Company on account of a
termination of the Management Agreement, and such payment is based in part upon
the fees for Services and/or Special Services (the “Services Termination
Payment”), the Servicer shall be entitled to fifty percent of the Services
Termination Payment.

 

4.                                       Confidentiality.

 

(a)          Servicer
shall keep confidential any nonpublic information obtained relating to the
Serviced Assets and its performance of the Services and shall not disclose any
such information (or use the same except in furtherance of its duties under
this Agreement), except as permitted or contemplated by, and subject to the
limitations in, the Management Agreement. The provisions of this Section 4(a) shall
survive the expiration or earlier termination of this Agreement.

 

(b)         Promptly
after the expiration or earlier termination of this Agreement, Servicer shall
return to Manager all confidential and proprietary information provided to or
obtained by Servicer pursuant to or in connection with this Agreement and the
performance of the Services hereunder, including all copies and extracts
thereof in whatever form, in its possession or under its control.

 

5.                                       Notices.
All notices, requests, demands and other communications required or permitted
hereunder shall be in writing and mailed, faxed or delivered by hand or courier
service:

 

	
  (a) 

  	
  If
  to Manager, to:

  
	
   

  
	
   

  	
  GKK Manager LLC

  
	
   

  	
  c/o SL Green
  Realty Corp.

  
	
   

  	
  420 Lexington
  Avenue

  
	
   

  	
  New York, New
  York 10170

  
	
   

  	
  Attention:
  General Counsel

  
	
   

  
	
  (b) 

  	
  If
  to Servicer, to:

  
	
   

  	
   

  
	
   

  	
  SLG Gramercy
  Services LLC

  
	
   

  	
  c/o SL Green
  Realty Corp.

  
	
   

  	
  420 Lexington
  Avenue

  
	
   

  	
  New York, New
  York 10170

  
	
   

  	
  Attention:
  President and General Counsel

  
			

 

4

 

6.                                       Cooperation;
Further Assistance. Each party hereto shall cooperate with and provide
assistance to the other parties consistent with the terms and conditions hereof
to enable (a) the full performance of all obligations hereunder, and (b) the
review and audit of books and records as they relate to the provision of the
Services; such cooperation and assistance to include, without limitation,
providing the other parties and their respective representatives and agents
(including, without limitation, outside auditors) with reasonable access,
during normal business hours and upon reasonable advance notice, to its
employees, representatives and agents and its books, records, offices and
properties relating to the Services.

 

7.                                       Entire
Agreement. Except for the applicable provisions of the Management
Agreement, this Agreement shall constitute the entire agreement among the
parties relating to the subject matter hereof and shall supersede all other
prior or contemporary agreements, understandings, negotiations and discussions
whether oral or written.

 

8.                                       Amendment
and Modification; Assignment. Neither this Agreement nor any of the terms
or provisions hereof may be changed, supplemented, waived or modified
except by a written instrument executed by the parties hereto (or in the case
of a waiver, by the party granting such waiver). Servicer shall have the right
to assign, sub-contract or delegate its rights and obligations hereunder to one
or more entities which (a) meet in all material respects the then
applicable rating criteria issued by Standard & Poor’s for rated
servicers of mortgage-backed securities and (b) are reasonably acceptable
to the Manager.

 

9.                                       Counterparts.
This Agreement may be executed in two or more counterparts, each of which may be
signed by any of the parties hereto, each of which shall be deemed an original
and all of which together shall constitute one and the same instrument.

 

10.                                 Governing
Law. This Agreement and all questions relating to its validity,
interpretation, performance and enforcement shall be governed by, construed,
interpreted and enforced in accordance with the internal laws of the State of
New York, without regard to any conflicts of laws principles thereof.

 

11.                                 Invalid
Provisions. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws, such provision shall be
fully severable, this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of
hereof and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.

 

12.                                 Definitions
and Interpretation.

 

(a)          Defined
Terms. Capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Management Agreement.

 

(b)         Singular
and Plural Forms. The use herein of the singular form shall also
denote the plural form, and the use herein of the plural form shall denote
the singular form, as in each case the context may require.

 

5

 

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

 

	
   

  	
  GKK MANAGER LLC

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SLG GRAMERCY
  SERVICES LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

6Exhibit 10.5

 

 

 

THIRD AMENDED AND
RESTATED

 

AGREEMENT OF
LIMITED PARTNERSHIP

 

OF

 

GKK CAPITAL LP

 

 

 

Dated as of April 19, 2006

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINED TERMS

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  ORGANIZATIONAL
  MATTERS

  	
  11

  
	
  Section 2.01.

  	
  Organization

  	
  11

  
	
  Section 2.02.

  	
  Name

  	
  11

  
	
  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

  	
  13

  
	
  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

  	
  15

  
	
  Section 5.01.

  	
  Requirement and Characterization of
  Distributions

  	
  15

  
	
  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

  	
  22

  
	
  Section 7.04.

  	
  Reimbursement of the General
  Partner

  	
  23

  
	
  Section 7.05.

  	
  Outside Activities of the General
  Partner

  	
  24

  
				

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 7.06.

  	
  Transactions with Affiliates

  	
  25

  
	
  Section 7.07.

  	
  Indemnification

  	
  25

  
	
  Section 7.08.

  	
  Liability of the General Partner

  	
  27

  
	
  Section 7.09.

  	
  Other Matters Concerning the
  General Partner

  	
  28

  
	
  Section 7.10.

  	
  Reliance by Third Parties

  	
  29

  
	
  Section 7.11.

  	
  Restrictions on General Partner’s
  Authority

  	
  29

  
	
  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

  	
  30

  
	
  Section 8.04.

  	
  Return of Capital

  	
  30

  
	
  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

  	
  34

  
	
  Section 9.03.

  	
  Reports

  	
  34

  
	
   

  	
   

  
	
  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

  	
  35

  
	
  Section 10.04.

  	
  Organizational Expenses

  	
  37

  
	
  Section 10.05.

  	
  Withholding

  	
  37

  
	
   

  	
   

  
	
  ARTICLE XI

  	
  TRANSFERS AND
  WITHDRAWALS

  	
  37

  
	
  Section 11.01.

  	
  Transfer

  	
  37

  
	
  Section 11.02.

  	
  Transfers of Partnership Interests
  of General Partner

  	
  38

  
	
  Section 11.03.

  	
  Limited Partners’ Rights to
  Transfer

  	
  38

  
	
  Section 11.04.

  	
  Substituted Limited Partners

  	
  39

  
	
  Section 11.05.

  	
  Assignees

  	
  40

  
						

 

ii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 11.06.

  	
  General Provisions

  	
  40

  
	
   

  	
   

  
	
  ARTICLE XII

  	
  ADMISSION OF
  PARTNERS

  	
  42

  
	
  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

  	
  43

  
	
  Section 13.03.

  	
  Compliance with Timing Requirements
  of Regulations

  	
  44

  
	
  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

  	
  45

  
	
  Section 13.08.

  	
  Reasonable Time for Winding Up

  	
  45

  
	
  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

  	
  47

  
	
   

  	
   

  
	
  ARTICLE XV

  	
  GENERAL
  PROVISIONS

  	
  48

  
	
  Section 15.01.

  	
  Addresses and Notice

  	
  48

  
	
  Section 15.02.

  	
  Titles and Captions

  	
  48

  
	
  Section 15.03.

  	
  Pronouns and Plurals

  	
  48

  
	
  Section 15.04.

  	
  Further Action

  	
  48

  
	
  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

  	
  49

  
	
  Section 15.11.

  	
  Power of Attorney

  	
  49

  
						

 

iii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 15.12.

  	
  Entire Agreement

  	
  50

  
	
  Section 15.13.

  	
  No Rights as Stockholders

  	
  50

  
	
  Section 15.14.

  	
  Limitation to Preserve REIT Status

  	
  51

  
				

 

iv

 

THIRD
AMENDED AND RESTATED

AGREEMENT
OF LIMITED PARTNERSHIP

OF

GKK
CAPITAL LP

 

THIS THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP, dated as of April 19, 2006 is made by
Gramercy Capital Corp., a Maryland corporation, as the General Partner of and a
Limited Partner in the Partnership and each of the other persons listed on the
signature pages hereto, for the purpose of amending and restating the Second
Amended and Restated Agreement of Limited Partnership of the Partnership dated
as of December 14, 2005 by and among the General Partner, SL Green Operating
Partnership, L.P., GKK Manager LLC, and certain other Persons (as defined
below) (the “First Amended and Restated Partnership Agreement”).

 

WHEREAS,
the Partnership desires to modify the distribution and redemption provisions of
the Second Amended and Restated Partnership Agreement applicable to the Class B
Units.

 

WHEREAS, pursuant to Section 14.01.B
the General Partner is hereby amending and restating the Second Amended and
Restated Partnership Agreement to reflect the modification in distribution and
redemption provisions applicable to the Class B Units.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of
the mutual covenants set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby amend and restate the Second Amended and Restated
Partnership Agreement as follows:

 

ARTICLE
I

DEFINED TERMS

 

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

 

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

 

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

 

“Adjusted Capital Account” means the
Capital Account maintained for each Partner as of the end of each Partnership
Year (i) increased by any amounts which such Partner is obligated to restore
pursuant to any provision of this Agreement or is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5) and (ii) decreased by the items described 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)
(d)(6).The foregoing definition of Adjusted Capital Account is intended to
comply with the provisions of Regulations Section 1.704-l(b)(2)(ii)(d) and
shall be interpreted consistently therewith.

 

“Adjusted Capital Account Deficit”
means, with respect to any Partner, the deficit balance, if any, in such
Partner’s Adjusted Capital Account as of the end of the relevant Partnership
Year.

 

 

“Adjusted Property” means any
property the Carrying Value of which has been adjusted pursuant to Exhibit B
hereto.

 

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

 

“Affiliate” means, with respect to
any Person, (i) any Person directly or indirectly controlling, controlled by or
under common control with such Person, (ii) any Person owning or controlling
ten percent (10%) or more of the outstanding voting interests of such 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, general partner or
trustee of such Person or any Person referred to in clauses (i), (ii), and
(iii) above. For purposes of this definition, “control,” when used with respect
to any Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms “controlling” and “controlled”
have meanings correlative to the foregoing.

 

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

 

“Agreement” means this Third Amended
and Restated Agreement of Limited Partnership, as it may be amended, supplemented
or restated from time to time.

 

“Articles of Incorporation” means the
Articles of Incorporation or other organizational document governing the
General Partner, as amended or restated from time to time.

 

“Assignee” means a Person to whom one
or more Partnership Units have been transferred in a manner permitted under
this Agreement, but who has not become a Substituted Limited Partner, 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 Value of such
Contributed Property or Adjusted Property and the adjusted basis thereof for
federal income tax purposes as of such date. A Partner’s share of the
Partnership’s Book-Tax Disparities in all of its Contributed Property and
Adjusted Property will be reflected by the difference between such Partner’s
Capital Account balance as maintained pursuant to Exhibit B hereto and the
hypothetical balance of such Partner’s Capital Account computed as if it had
been maintained, with respect to each such Contributed Property or Adjusted
Property, strictly in accordance with federal income tax accounting principles.

 

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

 

“Capital Account” means the 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 Agreed Value of
Contributed Property which such Partner contributes or is deemed to contribute
to the Partnership pursuant to Section 4.01 or 4.02 hereof.

 

2

 

“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 with respect to
such Contributed Property or Adjusted Property, as the case may be, charged to
the Partners’ Capital Accounts and (ii)with respect to any other Partnership
property, the adjusted basis of such property for federal income tax purposes,
all as of the time of determination. The Carrying Value of any property shall
be adjusted from time to time in accordance with Exhibit B hereto, and to
reflect changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed appropriate
by the General Partner.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Code” means the Internal Revenue
Code of 1986, as amended and in effect from time to time, as interpreted by the
applicable Regulations thereunder. Any reference herein to a specific section
or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.

 

“Consent” means the consent or
approval of a proposed action by a Partner given in accordance with Section
14.02 hereof.

 

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

 

“Conversion Factor” means 1.0; provided
that in the event that the General Partner Entity (i) declares or pays a
dividend on its outstanding Shares in Shares or makes a distribution to all
holders of its outstanding Shares in Shares, (ii) subdivides its outstanding
Shares or (iii) combines its outstanding Shares into a smaller number of
Shares, the Conversion Factor shall be adjusted by multiplying the Conversion
Factor by a fraction, the numerator of which shall be the number of Shares
issued and outstanding on the record date for such dividend, distribution,
subdivision or combination (assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time) and the denominator of
which shall be the actual number of Shares(determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination; and provided, further
that in the event that an entity shall cease to be the General Partner Entity
(the “Predecessor Entity”) and another entity shall become the General Partner
Entity (the “Successor Entity”), the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a 

 

3

 

fraction, the numerator of which is
the Value of one share of the Predecessor Entity, determined as of the time
immediately prior to when the Successor Entity becomes the General Partner
Entity, and the denominator of which is the Value of one Share of the Successor
Entity determined as of that same date. For purposes of the second proviso in
the preceding sentence, in the event that any stockholders of the Predecessor
Entity will receive consideration in connection with the transaction in which
the Successor Entity becomes the General Partner Entity, the numerator in the
fraction described above for determining the adjustment to the Conversion Factor(that
is, the Value of one Share of the Predecessor Entity) shall be the sum of the
greatest amount of cash and the fair market value of any securities and other
consideration that the holder of one Share in the Predecessor Entity could have
received in such transaction (determined without regard to any provisions
governing fractional shares). Any adjustment to the Conversion Factor shall
become effective immediately after the effective date of such event retroactive
to the record date, if any, for the event giving rise thereto; it being
intended that (x) adjustments to the Conversion Factor are to be made in order
to avoid unintended dilution or anti-dilution as a result of transactions in
which Shares are issued, redeemed or exchanged without a corresponding
issuance, redemption or exchange of Partnership Units and (y) if a Specified
Redemption Date shall fall between the record date and the effective date of
any event of the type described above, that the Conversion Factor applicable to
such redemption shall be adjusted to take into account such event.

 

“Debt” means, as to any Person, as of
any date of determination, (i) all indebtedness of such Person for 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 of
reimbursement obligations under letters of credit, surety bonds and other
similar instruments guaranteeing payment or other performance of obligations by
such Person, (iii) all indebtedness for borrowed money or for the deferred
purchase price of property or services secured by any lien on any property
owned by such Person, to the extent attributable to such Person’s interest in
such property, even though such Person has not assumed or become liable for the
payment thereof, and (iv) obligations of such Person incurred in connection
with entering into a lease which, in accordance with generally accepted
accounting principles, should be capitalized.

 

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

 

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

 

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

 

“Equity Award Agreement” means an
equity award agreement entered into between SL Green and/or SL Green Realty
Corp. and a director, officer or employee of the General Partner, the Manager,
SL Green or SL Green Realty Corp. or other Person pursuant to the SL Green
Realty Corp. 2005 Stock Option and Incentive Plan pursuant to which SL Green or
SL Green Realty Corp. transfers Class B Units to such Person subject to
forfeiture to, or repurchase at less than fair market value by, SL Green or any
other Person upon the occurrence of certain events.

 

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

 

4

 

“Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

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

 

“Funds From Operations” means net
income available to holders of Partnership Units (other than Class B Units and
preferred Partnership Units, if any, issued subsequent to the date hereof)
computed in accordance with GAAP, excluding gains (or losses) from sales of
property, plus depreciation and amortization on real estate assets, and after
adjustments for unconsolidated partnerships and joint ventures.

 

“General Partner” means Gramercy
Capital Corp., a Maryland corporation, or its successors as general partner of
the Partnership.

 

“General Partner Entity” means the
General Partner; provided, however, that if (i) the shares of
common stock (or other comparable equity interests) of the General Partner 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 or indirectly,
fifty percent (50%) or more of the shares of common stock (or other comparable
equity interests) of the General Partner are Publicly Traded, the term “General
Partner Entity” shall refer to such entity whose shares of common stock (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” shall mean the General Partner.

 

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

 

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

 

“IRS” means the Internal Revenue
Service, which administers the internal revenue laws of the United States.

 

“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 or
entry by a court of competent jurisdiction adjudicating such Partner
incompetent to manage his or her Person or estate,(ii) as to any corporation
which is a Partner, the filing of a certificate of dissolution, or its
equivalent, for the corporation or the revocation of its charter, (iii) as to
any partnership which is a Partner, the dissolution and commencement of winding
up of the partnership, (iv) as to any estate which is a Partner, the
distribution by the fiduciary of the estate’s entire interest in the
Partnership, (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee) or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this
definition, bankruptcy of a Partner shall be deemed to have occurred when (a)
the Partner commences a voluntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other
similar law now or hereafter in effect, (b) the Partner is adjudged as bankrupt
or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner, (c) the Partner executes and delivers a general
assignment for the benefit of the Partner’s creditors, (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above, (e) the Partner seeks, consents to or
acquiesces in the appointment of a 

 

5

 

trustee, receiver or liquidator for
the Partner or for all or any substantial part of the Partner’s properties, (f)
any proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within one hundred twenty (120) days after the commencement
thereof, (g) the appointment without the Partner’s consent or acquiescence of a
trustee, 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 party to a
proceeding by reason of its status as (A) the General Partner, (B) a Limited
Partner or (C) a director or officer of the Partnership or the General Partner
and (ii) such other Persons (including Affiliates of the General Partner, a
Limited Partner or the Partnership) as the General Partner may designate from
time to time (whether before or after the event giving rise to potential liability),
in its sole and absolute discretion.

 

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

 

“Limited Partner Interest” means a
Partner Interest of a Limited Partner in the Partner representing a fractional
part of the Partner Interests of all Limited Partners and includes any and all
benefits to which the holder of such a Partner Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. A Limited Partner
Interest may be expressed as a number of Partnership Units.

 

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

 

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

 

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

 

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

 

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

 

“Net Income” means, for any taxable
period, the excess, if any, of the Partnership’s items of income and gain for
such taxable period over the Partnership’s items of loss and deduction for such
taxable period. The items included in the calculation of Net Income shall be
determined in accordance with Exhibit B hereto. If an item of income, gain,
loss or deduction that has been included in the initial computation of Net
Income is subjected to the special allocation rules in Exhibit C hereto, Net
Income or the resulting Net Loss, whichever the case may be, shall be
recomputed without regard to such item.

 

“Net Loss” means, for any taxable
period, the excess, if any, of the Partnership’s items of loss and deduction
for such taxable period over the Partnership’s items of income and gain for
such taxable period. The items included in the calculation of Net Loss shall be
determined in accordance with Exhibit B. If an item of income, gain, loss or
deduction that has been included in the initial computation of Net Loss is
subjected to the special allocation rules in Exhibit C hereto, Net Loss or the
resulting Net Income, whichever the case may be, shall be recomputed without
regard to such item.

 

6

 

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

 

“Nonrecourse Built-in Gain” means,
with respect to any Contributed Properties or Adjusted Properties that are
subject to a mortgage or negative pledge securing a Nonrecourse Liability, the
amount of any taxable gain that would be allocated to the Partners pursuant to
Section 2.B of Exhibit C hereto if such properties were disposed of in a
taxable transaction in full satisfaction of such liabilities and for no other
consideration.

 

“Nonrecourse Deductions” has the
meaning set forth in Regulations Section 1.704-2(b)(1), and the amount of
Nonrecourse Deductions for a Partnership Year shall be determined in accordance
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 attached hereto.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Partnership Minimum Gain” has the
meaning set forth in Regulations Section 1.704-2(b)(2), and the amount of
Partnership Minimum Gain, as well as any net increase or decrease in
Partnership Minimum Gain, for a Partnership Year shall be determined in
accordance with the rules of Regulations Section1.704-2(d).

 

“Partnership Record Date” means the
record date established by the General Partner either (i) for distributions
pursuant to Section 5.01 hereof, which record date shall be the same as the
record date established by the General Partner Entity for a distribution to its
stockholders of some or all of its portion of such distribution received by the
General Partner if the shares of common stock (or comparable equity interests)
of the General Partner Entity are Publicly Traded, or (ii) if applicable, for
determining the 

 

7

 

Partners entitled to vote on or
consent to any proposed action for which the consent or approval of the
Partners is sought pursuant to Section14.02 hereof.

 

“Partnership Unit” means a
fractional, undivided share of the Partnership Interests of all Partners issued
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 Units
established after the date hereof. The number of Partnership Units outstanding
and the Percentage Interests represented by such Partnership Units are set
forth in Exhibit A hereto, as such Exhibit may be amended and restated from
time to time. The ownership of Partnership Units may be evidenced by a
certificate in a form approved by the General Partner.

 

“Partnership Year” means the 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 interest in such class,
determined by dividing the Partnership Units of such class owned by such
Partner by the total number of Partnership Units of such class then outstanding
as specified in Exhibit A attached hereto, as such exhibit may be amended and
restated from time to time, multiplied by the aggregate Percentage Interest
allocable to such class of Partnership Interests.

 

“Person” means a natural person,
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 representative
capacity.

 

“Publicly Traded” means listed or
admitted to trading on the New York Stock Exchange, the American Stock Exchange
or another national securities exchange or designated for quotation on the
NASDAQ National Market, or any successor to any of the foregoing.

 

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

 

“Recapture Income” means any gain
recognized by the Partnership (computed without regard to any adjustment
required by Section 743 of the Code) upon the disposition of any property or
asset of the Partnership, which gain is characterized as ordinary income
because it represents the recapture of deductions previously taken with respect
to such property or asset.

 

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

 

“Redemption Amount” means either the
Cash Amount or the Shares Amount, as determined by the General Partner in its
sole and absolute discretion; provided that in the event that the Shares
are not Publicly Traded at the time a Redeeming Partner exercises its
Redemption Right the Redemption Amount shall be paid only in the form of the
Cash Amount unless the Redeeming Partner, in its sole and absolute discretion,
consents to payment of the Redemption Amount in the form of the Shares Amount. A
Redeeming Partner shall have no right, without the General Partner’s consent,
in its sole and absolute discretion, to receive the Redemption Amount in the
form of the Shares Amount.

 

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

 

“Regulations” means the Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).

 

8

 

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

 

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

 

“Residual Gain” or “Residual Loss”
means any item of gain or loss, as the case may be, of the Partnership
recognized for federal income tax purposes resulting from a sale, exchange or
other disposition of Contributed Property or Adjusted Property, to the extent
such item 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 the meaning set
forth in Section 11.06.F hereof.

 

“Securities Act” means the Securities
Act of 1933, as amended.

 

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

 

“Share” means a share of capital
stock (or other comparable equity interest) of the General Partner Entity. Shares
may be issued in one or more classes or series in accordance with the terms of
the Articles of Incorporation (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 one class or series of Shares, the term “Shares”
shall, as the context requires, be deemed to refer to the class or series of
Shares that correspond to the class or series of Partnership Interests for
which the reference to Shares is made. When used with reference to Class A
Units, the term “Shares” refers to shares of common stock (or other comparable
equity interest) of the General Partner Entity.

 

“Shares Amount” means a number of
Shares equal to the product of the number of Partnership Units offered for
redemption by a Redeeming Partner times the Conversion Factor; provided
that, in the event the General Partner Entity issues to all holders of Shares
rights, options, warrants or convertible or exchangeable securities entitling
such holders to subscribe for or purchase Shares or any other securities or
property (collectively, the “rights”), then the Shares Amount for any
Partnership Units outstanding prior to the issuance of such rights shall also
include such rights that a holder of that number of Shares would be entitled to
receive.

 

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

 

“SLG Class B Distribution Percentage”
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 other Persons
after December 14, 2005 and on or before such date (other than Unvested Award
Class B Units) and the number of Vested Award Class B Units plus the number of
Class B Units acquired by SL Green from other Persons after December 14, 2005
and on or before such date (other than Unvested Award Class B Units forfeited
to, or repurchased at less than fair market value by, SL Green pursuant to an
Equity Award Agreement) by (ii) the aggregate number of Class B Units
outstanding as of such date.

 

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

 

9

 

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

 

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

 

“Stock Option Plan” means any stock
incentive plan of the General Partner, the Partnership or any Affiliate of the
Partnership or the General Partner.

 

“Stockholders Equity” means the
aggregate gross proceeds from all sales of Partnership Units (other than Class
B Units and preferred Partnership Units, if any, issued subsequent to the date
hereof).

 

“Subsidiary” means, with respect to
any Person, any corporation, limited liability company, partnership or joint
venture, or other entity of which a majority of (i) the voting power of the
voting equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.

 

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

 

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

 

“Terminating Capital Transaction”
means any sale or other disposition of all or substantially all of the assets
of the Partnership for cash or a related series of transactions that, taken
together, result in the sale or other disposition of all or substantially 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 of determination, the
excess, if any, of (i) the fair market value of such property (as determined
under Exhibit B hereto) as of such date, over (ii) the Carrying Value of such
property (prior to any adjustment to be made pursuant to Exhibit B hereto) as
of such date.

 

“Unrealized Loss” attributable to any
item of Partnership property means, as of any date of determination, 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 such date, over (ii)
the fair market value of such property (as determined under Exhibit B hereto)
as of such date.

 

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

 

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

 

“Value” means, with respect to any
outstanding Shares of the General Partner Entity that are Publicly Traded, the
average of the daily market price for the ten (10) consecutive trading days
immediately preceding the date with respect to which value must be determined
or, if such date is not a Business Day, the immediately preceding Business Day.
The market price for each such trading day shall 

 

10

 

be the closing price, regular way, on
such day, or if no such sale takes place on such day, the average of the
closing bid and asked prices on such day. In the event that the outstanding
Shares of the General Partner Entity are Publicly Traded and the Shares Amount
includes rights that a holder of Shares would be entitled to receive, then the
Value of such rights shall be determined by the General Partner acting in good
faith on the basis of such quotations and other information as it considers, in
its reasonable judgment, appropriate. In the event that the Shares of the
General Partner Entity are not Publicly Traded, the Value of the Shares Amount
per Partnership Unit offered for redemption (which will be the Cash Amount per
Partnership Unit offered for redemption payable pursuant to Sections 8.06 and
8.07 hereof) means the amount that a holder of one Partnership Unit would
receive if each of the assets of the Partnership were to be sold for its fair
market value on the Specified Redemption Date, the Partnership were to pay all
of its outstanding liabilities, and the remaining proceeds were to be distributed
to the Partners in accordance with the terms of this Agreement. Such Value
shall be determined by the General Partner, acting in good faith and based upon
a commercially reasonable estimate of the amount that would be realized by the
Partnership if each asset of the Partnership (and each asset of each
Partnership, limited liability company, joint venture or other entity in which
the Partnership owns a direct or indirect interest) were sold to an unrelated
purchaser in an arms’ length transaction where neither the purchaser nor the
seller were under economic compulsion to enter into the transaction (without
regard to any discount in value as a result of the Partnership’s minority
interest in any property or any illiquidity of the Partnership’s interest in
any property). In connection with determining the value of the Partnership
Interest for purposes of determining the number of additional Partnership Units
issuable upon a Capital Contribution funded by an underwritten public offering
of shares of capital stock (or other comparable equity interest) of the General
Partner, the Value of such shares shall be the public offering price per share
of such class of the capital stock (or other comparable equity interest) sold.

 

“Vested Award Class B Unit” means any
Class B Unit that has been transferred by SL Green or SL Green Realty Corp. to
another Person pursuant to an Equity Award Agreement and is no longer subject
to forfeiture to, or repurchase at less than fair market value by, 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 than fair market value by,
SL Green or another Person pursuant to an Equity Award Agreement).

 

ARTICLE
II

ORGANIZATIONAL MATTERS

 

Section
2.01.          Organization

 

The Partnership is a limited
partnership organized pursuant to the provisions of the Act and upon the terms
and conditions set forth in the Agreement. Except as expressly provided herein
to the contrary, the rights and obligations of the Partners and the
administration and termination of the Partnership shall be governed by the Act.
The Partnership Interest of each Partner shall be personal property for all
purposes.

 

Section
2.02.          Name

 

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

 

11

 

Section
2.03.          Registered Office and Agent; Principal Office

 

The address of the registered office
of the Partnership in the State of Delaware shall be located at 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 the Partnership in the
State of Delaware at such registered office shall be National Registered
Agents, Inc. The principal office of the Partnership shall be 420 Lexington
Avenue, New York, New York, 10170 or such other place as the General Partner
may from time to time designate by notice to the Limited Partners. The
Partnership may maintain offices at such other place or places within or
outside the State of Delaware as the General Partner deems advisable.

 

Section
2.04.          Term

 

The term of the Partnership commenced
on April 21, 2004, the date on which the Certificate was filed in the office of
the Secretary of State of the State of Delaware in accordance with the Act, and
shall continue until December 31, 2103, unless it is dissolved sooner pursuant
to the provisions of Article XIII hereof or as otherwise provided by law.

 

ARTICLE
III

PURPOSE

 

Section
3.01.          Purpose and Business

 

The purpose and nature of the
business to be conducted by the Partnership is (i) to conduct any business that
may be lawfully conducted by a limited partnership organized pursuant to the
Act; provided, however, that such business shall be limited to
and conducted in such a manner as to permit the General Partner Entity at all
times to be classified as a REIT, unless the General Partner ceases to qualify
or is not qualified as a REIT for any reason or reasons not related to the
business conducted by the Partnership; (ii) to enter into any partnership,
joint venture, limited liability company or other similar arrangement to engage
in any of the foregoing or the ownership of interests in any 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, the
Partners acknowledge that the status of the General Partner Entity as a REIT
inures to the benefit of all the Partners and not solely the General Partner or
its Affiliates.

 

Section
3.02.          Powers

 

The Partnership is empowered to do
any and all acts and things necessary, appropriate, proper, advisable,
incidental to or convenient for the furtherance and accomplishment of the
purposes and business described herein and for the protection and benefit of
the Partnership, including, without limitation, full power and authority,
directly or through its ownership interest in other entities, to enter into,
perform and carry out contracts of any kind, borrow money and issue evidences
of indebtedness whether or not secured by mortgage, deed of trust, pledge or
other lien, acquire, own, manage, improve and develop real property, and lease,
sell, transfer and dispose of real property; provided, however,
that the Partnership shall not take, or refrain from taking, any action which,
in the judgment of the General Partner, in its sole and absolute discretion,
(i) could adversely affect the ability of the General Partner Entity to
continue to qualify as a REIT, (ii) could subject the General Partner Entity to
any additional taxes under Section 857 or Section 4981 of the Code or (iii)
could violate any law or regulation of any governmental body or agency having
jurisdiction over the General Partner Entity or its securities, unless such
action (or inaction) shall have been specifically consented to by the General
Partner in writing.

 

12

 

Section
3.03.          Partnership Only for Purposes Specified

 

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

 

ARTICLE
IV

CAPITAL CONTRIBUTIONS AND ISSUANCES

OF PARTNERSHIP INTERESTS

 

Section
4.01.          Capital Contributions of the Partners

 

A.    Capital Contributions. Prior to the date hereof, certain Partners made
Capital Contributions to the Partnership. Exhibit A hereto reflects the Capital
Contributions made by each Partner, the Partnership Units assigned to each
Partner and the Percentage Interest in the Partnership represented by such
Partnership Units. The Capital Accounts of the Partners and the Carrying Values
of the Partnership’s Assets have been and will continue to be determined
pursuant to Section I.D of Exhibit B hereto to reflect the Capital Contributions
made.

 

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

 

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

 

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

 

Section
4.02.          Issuances of Partnership Interests

 

A.    General. The
General Partner is hereby authorized to cause the Partnership from time to time
to issue to Partners (including the General Partner and its Affiliates) or
other Persons (including, without limitation, in connection with the
contribution of property to the Partnership) Partnership Units or other
Partnership Interests in one or more classes, or in one or more series of any
of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties, including
rights, powers and duties senior to Limited Partner Interests, all as shall be
determined, subject to applicable Delaware law, by the General Partner in its
sole and absolute discretion, including, without limitation, (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 share in Partnership distributions
and (iii)the rights of each such class or series of Partnership Interests 

 

13

 

upon dissolution and liquidation of
the Partnership; provided, that no such Partnership Units or other
Partnership Interests shall be issued to the General Partner unless either (a)
the Partnership Interests are issued in connection with the grant, award or
issuance of Shares or other equity interests in the General Partner having
designations, preferences and other rights such that the economic interests
attributable to such Shares or other equity interests are substantially similar
to the designations, preferences and other rights (except voting rights) of the
additional Partnership Interests issued to the General Partner in accordance
with this Section 4.02.A or (b) the Partnership Interests are issued to all
Partners holding Partnership Interests in the same class in proportion to their
respective Percentage Interests in such class. In the event that the
Partnership issues Partnership Interests pursuant to this Section 4.02.A, the
General Partner shall make such revisions to this Agreement (including but not
limited to the revisions described in Section 5.04, Section 6.02 and Section
8.06 hereof) as it deems necessary to reflect the issuance of such additional
Partnership Interests.

 

B.     Percentage Interest Adjustments in the Case of Capital
Contributions for Class A Units. Upon
the acceptance of additional Capital Contributions in exchange for Class A
Units, the Percentage Interest related thereto shall be equal to a fraction,
the numerator of which is equal to the amount of cash, if any, plus the Agreed
Value of Contributed Property, if any, contributed with respect to such
additional Partnership Units and the denominator of which is equal to the sum
of (i) value of the Partnership Interests for all outstanding Class A Units
(computed as of the Business Day immediately preceding the date on which the
additional Capital Contributions are made (an “Adjustment Date”)) plus (ii) the
aggregate amount of additional Capital Contributions contributed to the
Partnership on such Adjustment Date in respect of such additional Class A Units.
The Percentage Interest of each other Partner holding Class A Units not making
a full pro rata Capital Contribution shall be adjusted to a fraction the
numerator of which is equal to the sum of (i) the value of such Limited Partner
(computed as of the Business Day immediately preceding the Adjustment Date)
plus (ii) the amount of additional Capital Contributions (such amount being
equal to the amount of cash, if any, plus the Agreed Value of Contributed
Property, if any, so contributed), if any, made by such Partner to the
Partnership in respect of such Class A Units as of such Adjustment Date and the
denominator of which is equal to the sum of (i) the value of the outstanding
Class A Units (computed as of the Business Day immediately preceding such
Adjustment Date) plus (ii) the aggregate amount of the additional Capital
Contributions contributed to the Partnership on such Adjustment Date in respect
of such additional Class A Units. For purposes of calculating a Partner’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 the cash
contributed by the General Partner plus (a) in the case of cash contributions
funded by an offering of any equity interests in or other securities of the
General Partner, the offering costs attributable to the cash contributed to the
Partnership, and (b) in the case of Class A Units issued pursuant to Section
7.05.E hereof, an amount equal to the difference between the Value of the
Shares sold pursuant to any Stock Option Plan and the net proceeds of such
sale.

 

C.     Classes of Partnership Units. From and after the Effective Date, subject to
Section 4.02.A above, the Partnership shall have two classes of Partnership
Units, entitled “Class A Units” and “Class B Units.” From and after December
14, 2005, the Partnership shall have an additional class of Partnership Units,
entitled “LTIP Units.” Class A Units may be issued to newly admitted Partners
in exchange for the 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 Partner issued
100 Class B Units to the Manager. The Manager immediately assigned 85 of such
Units to SL Green, which assignment was reflected on Exhibit A. There
was no obligation to contribute any capital in connection until issuance of the
Class B Units. The initial Capital Accounts of the Holders of the Class B Units
in respect of such Units was zero. All Class B Units issued under this
Agreement are intended to qualify as “profits interests” under Revenue
Procedure 93-27, 1993-2 C.B. 343 (June 9, 1993) and Revenue 

 

14

 

Procedure 2001-43, 2001-2 C.B. 191
(August 3, 2001), and this Section 4.02.D shall be interpreted and applied
consistently therewith. The General Partner at its discretion may amend this
Section 4.02.D to ensure that any Class B Units granted after the date of this
Agreement will qualify 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 such time).

 

E.     Issuance of LTIP Units. From time to time the General Partner may issue LTIP
Units to Persons providing services to or for the benefit of the Partnership. LTIP
Units shall have the rights, powers, privileges, restrictions, qualifications
and limitations specified in Exhibit E hereto. LTIP Units are intended to
qualify as profits interests in the Partnership and for the avoidance of doubt,
the provisions of Section 4.04 shall not apply to the issuance of LTIP Units.

 

Section
4.03.          No Preemptive Rights

 

Except to the extent expressly
granted by the Partnership pursuant to another agreement, no Person shall 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 any Partner is
admitted to the Partnership and is given a Capital Account in exchange for
services rendered to the Partnership, such transaction shall be treated by the
Partnership and the affected Partner as if the Partnership had compensated such
Partner in cash, and the Partner had contributed such cash to the capital of
the Partnership.

 

Section
4.05.          No Interest on Capital

 

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

 

ARTICLE
V

DISTRIBUTIONS

 

Section
5.01.          Requirement and Characterization of Distributions

 

A.    General. Except
as otherwise provided herein, the General Partner shall make distributions at
such times and in such amounts as it may determine. Such distributions shall be
made to the Partners who are Partners on the Partnership Record Date for such
distribution. Notwithstanding anything to the contrary contained herein, in no
event may a Partner receive a distribution with respect to a Partnership Unit
for a quarter or shorter period if such Partner is entitled to receive a
distribution relating to such period with respect to a Share for which such
Partnership Unit has been redeemed or exchanged. Unless otherwise expressly
provided for herein or in an agreement at the time a new class of Partnership
Interests is created in accordance with Article IV hereof, no Partnership
Interest shall be entitled to a distribution in preference to any other
Partnership Interest. The General Partner shall make such reasonable efforts,
as determined by it in its sole and absolute discretion and consistent with the
qualification of the General Partner Entity as a REIT, to make distributions
(a) to Limited Partners so as to preclude any such distribution or portion
thereof from being treated as part of a sale of property by a Limited Partner
under Section 707 Code or the Regulations thereunder; provided that, the
General Partner and the Partnership 

 

15

 

shall not have liability to a Limited
Partner under any circumstances as a result of any distribution to a Limited
Partner being so treated, and (b) to the General Partner in an amount
sufficient to enable the General Partner Entity to pay stockholder dividends
that will (1) satisfy the requirements for qualification as a REIT under the
Code and the Regulations (the “REIT Requirements”) and (2) avoid any federal
income or excise tax liability for the General Partner Entity.

 

B.     Method.
Distributions shall be made (i) first, to the holders of Class B Units as
provided in Section 5.01.C hereof, and to each other holder of a Partnership
Interest that is entitled to any preference in distribution, in accordance with
the rights of any such class of Partnership Interests, and (ii) thereafter, to
the holders of Class A Units and each other class of Partnership Interests
ranking in parity to the Class A Units (including, without limitation, the LTIP
Units if and to the extent they are then entitled to participate in such
distributions pursuant to Section 2 of Exhibit E hereto), in proportion to the
relative Percentage Interests of each such class of Partnership Interests. All
distributions within a class of Partnership Units shall be pro rata in
proportion to the respective Percentage Interests on the applicable Partnership
Record Date.

 

C.     Distributions When Class B Units Are Outstanding. Holders of Class 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) from debt restructuring or property sales
exceeds (ii) the product of the Partnership’s weighted average Stockholders
Equity multiplied by 2.375% (such percentage to be prorated for any partial
quarter). These distributions shall be paid to Holders of Class B Units within
45 days after the end of each quarter. These distributions shall be
recalculated at the end of each calendar year beginning with 2004, as 25% of
the amount by which (A) annual Funds From Operations plus any gains (or losses)
from debt restructuring and gains (or losses) or property sales for such
calendar year (or part thereof) exceeds (B) the Partnership’s weighted average
Stockholders Equity for such year multiplied by 9.5% (such percentage to be
prorated for any partial year). To the extent quarterly distributions exceed
the annual recalculated amount, the Holders of Class B Units shall refund the
excess to the Partnership, and to the extent the annual recalculated amount
exceeds the quarterly distributions made for such year, such excess shall be
paid by the Partnership to such Holders within 90 days after the end of such
calendar year. Distributions (and any refunds of distributions) 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 in accordance with their Class B
Distribution Percentages, determined as of the date of such distribution (or, in
the case of any refund, as of the date of the distribution(s) with respect to
which such refund is attributable).

 

D.    Class B Units Intended to Qualify as Profits Interests. Distributions made pursuant to this Section 5.01
shall be adjusted as necessary to ensure that the amount apportioned to each
Class B Unit does not exceed the amount attributable to items of Partnership
income or gain realized after the date such Class B Unit was issued by the
Partnership. The intent of this Section 5.01.D is to ensure that any Class B
Units issued after the date of this Agreement qualify 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 Section 5.01 shall be
interpreted and applied consistently therewith. The General Partner at its
discretion may amend this Section 5.01.D to ensure that any Class B Units
granted after the date of this Agreement will qualify 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 such time).

 

16

 

Section
5.02.          Amounts Withheld

 

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

 

Section
5.03.          Distributions Upon Liquidation

 

Proceeds from a Terminating Capital
Transaction shall be distributed to the Partners in accordance with Section
13.02 hereof.

 

Section
5.04.          Revisions to Reflect Issuance of Additional
Partnership Interests

 

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

 

ARTICLE
VI

ALLOCATIONS

 

Section
6.01.          Allocations For Capital Account Purposes

 

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

 

A.    Net Income. After
giving effect to the special allocations set forth in Section 1 of Exhibit C
hereto, Net Income shall be allocated (i) first, to the General Partner to the
extent that Net Losses previously allocated to the General Partner, on a
cumulative basis, pursuant to the last sentence of Section 6.01.B below exceed
Net Income previously allocated to the General Partner, on a cumulative basis,
pursuant to this clause (i) of Section 6.01.A, (ii) second, to Holders of Class
B Units and to the holders of any other Partnership Interests that are entitled
to any preference in distribution in accordance with the rights of any such
class of Partnership Interests until each such Partnership Interest has been
allocated, on a cumulative basis pursuant to this clause (ii), Net Income equal
to the sum of the amount of distributions theretofore received (or to be
received with respect to the fiscal year of the Partnership in which such Net
Income accrues) with respect to such Partnership Interests pursuant to clause
(i) of Section 5.01.B hereof and the amount of any prior allocations of Net Losses
to such class of Partnership Interests pursuant to Section 6.01.B.(i) below
(and, within such class, pro rata in proportion to the respective interests in
such class as of the 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 any preference in the allocation of Net Income, pro rata to each
such class in accordance with the terms of such class (and, within such class,
pro rata in proportion to the respective interests in such class as of the last
day of the period for which such allocation is being made).

 

B.     Net Losses. After
giving effect to the special allocations set forth in Section 1 of Exhibit C
hereto, Net Losses shall be allocated (i) first, to the Holders of Class B
Units and to holders of any other Partnership Interests that are entitled to
any preference in distribution in accordance with the rights of any 

 

17

 

such class of Partnership Interests
to the extent that any prior allocations of Net Income to such class of
Partnership Interests pursuant to Section 6.01.A (1)(ii) above exceed, on a
cumulative basis, distributions theretofore received (or to be received with
respect to the fiscal year of the Partnership in which such Net Income accrues)
with respect to 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 in such class as of the last day of the period for which such
allocation is being made) and (ii) second, with respect to classes of
Partnership Interests that are not entitled to any preference in distribution,
pro rata to each such class in accordance with the terms of such class (and,
within such class, pro rata in proportion to the respective interests in such
class as of the last day of the period for which such allocation is being
made); provided that, Net Losses shall not be allocated to any Limited
Partner pursuant to this Section 6.01.B to the extent that such allocation
would cause such Limited Partner to have an Adjusted Capital Account Deficit
(or increase any existing Adjusted Capital Account Deficit) at the end of such
taxable year (or portion thereof). All Net Losses in excess of the limitations
set forth in this Section 6.01.B shall be allocated to the General Partner.

 

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

 

D.    Special Allocations. With Respect to LTIP Units. After giving effect 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, but subject 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 of LTIP Units until
the Economic Capital Account Balances of such holders, to the extent attributable
to their ownership of LTIP Units, are equal to (i) the Class A Unit Economic
Balance, multiplied by (ii) the number of their LTIP Units; provided that no
such Liquidating Gains will be allocated with respect to any particular LTIP
Unit unless and to the extent that such Liquidating Gains, when aggregated with
other Liquidating Gains realized since the issuance of such LTIP Unit, exceed
Liquidating Losses realized since the issuance of such LTIP Unit. After giving
effect 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, in the
event that, due to distributions with respect to Class A Units in which the
LTIP Units do not participate or otherwise, the Economic Capital Account
Balance of any present or former holder of LTIP Units, to the extent
attributable to the holder’s ownership of LTIP Units, exceeds the target
balance specified above, then Liquidating Losses shall be allocated to such
holder to the extent necessary to reduce or eliminate the disparity. In the
event that Liquidating Gains or Liquidating Losses are allocated under this
Section 6.01.D, Net Income allocable under clause 6.01.A (iii) and any Net
Losses shall be recomputed without regard to the Liquidating Gains or
Liquidating Losses so allocated. For this purpose, “Liquidating Gains” means
any net capital gain realized in connection with the actual or hypothetical
sale of all or substantially all of the assets of the Partnership, including
but not limited to net capital gain realized in connection with an adjustment
to the Carrying Value of Partnership assets under Section 1.D of Exhibit B to
this Agreement. Similarly, “Liquidating Losses” means any net capital loss
realized in connection with any such event. The “Economic Capital Account
Balances” of the holders of LTIP Units will be equal to their Capital Account
balances, plus the amount of their shares of any Partner Minimum Gain or
Partnership Minimum Gain, in either case to the extent attributable to their
ownership of LTIP Units. Similarly, the “Class A Unit Economic Balance” shall
mean (i) the Capital Account balance of the General Partner, plus the amount of
the General Partner’s share of any Partner Minimum Gain or Partnership Minimum
Gain, in either case to the extent attributable to the General Partner’s
ownership of Class A Units and computed on a hypothetical basis after taking
into account all allocations through the date on which any allocation is made
under this Section 6.01.D, divided by (ii) the number of the General 

 

18

 

Partner’s Class A Units. Any such
allocations shall be made among the holders of LTIP Units in proportion to the
amounts required to be allocated to each under this Section 6.01.D. The parties
agree that the intent of this Section 6.01.D is to make the Capital Account
balance associated with each LTIP Unit economically equivalent to the Capital
Account balance associated with the General Partner’s Class A Units (on a
per-unit basis), but only if the Partnership has recognized cumulative net
gains with respect to its assets since the issuance of the relevant LTIP Unit.

 

Section
6.02.          Revisions to Allocations to Reflect Issuance of
Additional Partnership Interests

 

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

 

ARTICLE
VII

MANAGEMENT AND OPERATIONS OF BUSINESS

 

Section
7.01.          Management

 

A.    Powers of General Partner. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership are and shall be exclusively vested in the General Partner, and no
Limited Partner shall have any right to participate in or exercise control or
management power over the business and affairs of the Partnership. The General
Partner may not be removed by the Limited Partners with or without cause; provided,
however, that if the Shares (or comparable equity securities) of the
General Partner Entity are not Publicly Traded, the General Partner maybe
removed with cause with the Consent of the Limited Partners. In addition to the
powers now or hereafter granted a general partner of a limited partnership
under applicable law or which are granted to the General Partner under any
other provision of this Agreement, the General Partner, subject to Sections
7.06 and 7.11 below, shall have full power and authority to do all things
deemed necessary or desirable by it to conduct the business of the Partnership,
to exercise all powers set forth in Section 3.02 hereof and to effectuate the
purposes set forth in Section 3.01 hereof, including, without limitation:

 

(1)  the making
of any expenditures, the lending or borrowing of money or will permit the
General Partner Entity (as long as the General Partner Entity qualifies as a
REIT) to avoid the payment of any federal income tax (including, for this
purpose, any excise tax pursuant to Section 4981 of the Code) and to make
distributions to its stockholders sufficient to permit the General Partner
Entity to maintain REIT status, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of evidences
of indebtedness (including the securing of same by mortgage, deed of trust or
other lien or encumbrance on the Partnership’s assets) and the incurring of any
obligations the General Partner deems necessary for the conduct of the
activities of the Partnership;

 

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

 

19

 

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

 

(4)  the use of
the assets of the Partnership (including, without limitation, cash on hand) for
any purpose consistent with the terms of this Agreement and on any terms it
sees fit, including, without limitation, the financing of the conduct of the
operations of the Partnership or any of the Partnership’s Subsidiaries, the
lending of funds to other Persons (including, without limitation, the
Partnership’s Subsidiaries) and the repayment of obligations of the Partnership
and its Subsidiaries and any other Person in which the Partnership has an
equity investment and the making of capital contributions to its Subsidiaries;

 

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

 

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

 

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

 

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

 

(9)  the
collection and receipt of revenues 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,” “vice president,” “secretary”
and “treasurer”) and agents, outside attorneys, accountants, consultants and
contractors of the Partnership, and the determination of their compensation and
other terms of employment or hiring;

 

(11)         the maintenance of such insurance for the benefit of
the Partnership and the Partners as it deems necessary or appropriate;

 

(12)         the formation of, or acquisition of an interest
(including non-voting interests in entities controlled by Affiliates of the
Partnership or third parties) in, and the contribution of property to, any
further limited or general partnerships, joint ventures, limited liability
companies or other relationships that it deems desirable (including, without
limitation, the acquisition of interests in, and the contributions of funds or
property, or the making of loans, to its Subsidiaries 

 

20

 

and any other Person in which it has an equity
investment from time to time or the incurrence of indebtedness on behalf of
such Persons or the guarantee of obligations of such Persons); provided
that, as long as the General Partner has determined to qualify as a REIT, the
Partnership may not engage in any such formation, acquisition or contribution
that would cause the General Partner to fail to qualify as a REIT);

 

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

 

(14)         the determination of the fair market value of any
Partnership property distributed in kind, using such reasonable method of
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 of attorney, of any
right, including the right to vote, appurtenant to any assets or investment
held by the Partnership;

 

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

 

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

 

(18)         the making, executing and delivering of any and all
deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or other legal instruments or agreements in writing necessary
or appropriate in the judgment of the General Partner for the accomplishment of
any of the powers of the General Partner under this Agreement;

 

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

 

(20)         the amendment and restatement of Exhibit A hereto to
reflect accurately at all times the Capital Contributions and Percentage
Interests of the Partners as the same are adjusted from time to time to the
extent necessary to reflect redemptions, Capital Contributions, the issuance of
Partnership Units, the admission of any Additional Limited Partner or any
Substituted Limited Partner or otherwise, which amendment and restatement,
notwithstanding anything in this Agreement to the contrary, shall not be deemed
an amendment of this Agreement, as long as the matter or event being reflected
in Exhibit A hereto otherwise is authorized by this Agreement.

 

B.     No Approval by Limited Partners. Except as provided in Section 7.11 below, each of
the Limited Partners agrees that the General Partner is authorized to execute,
deliver and perform the above-mentioned 

 

21

 

agreements and transactions on behalf
of the Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement, the Act or any
applicable law, rule or regulation, to the full extent permitted under the Act
or other applicable law. The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any
other Persons under this Agreement or of any duty stated or implied by law or
equity.

 

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 other insurance as the General Partner, in
its sole and absolute discretion, determines to be necessary.

 

D.    Working Capital and Other Reserves. At all times from and after the date hereof, the
General Partner may cause the Partnership to establish and maintain working
capital reserves in such amounts as the General Partner, in its sole and
absolute discretion, deems appropriate and reasonable from time to time,
including upon liquidation of the Partnership pursuant to Section 13.02 hereof.

 

E.     No Obligations to Consider Tax Consequences of Limited
Partners.

 

In exercising its authority under
this Agreement, the General Partner may, but shall be under no obligation to,
take into account the tax consequences to any Partner (including the General
Partner) of any action taken (or not taken) by it. The General Partner and the
Partnership shall not have liability to a Limited Partner for monetary damages
or otherwise for losses sustained, liabilities incurred or benefits not derived
by such Limited Partner in connection with such decisions, provided that the
General Partner has acted in good faith and pursuant to its authority under
this Agreement.

 

Section
7.02.          Certificate of Limited Partnership

 

The General Partner has previously
filed the Certificate with the Secretary of State of Delaware. To the extent
that such action is determined by the General Partner to be reasonable and
necessary or appropriate, the General Partner shall file amendments to and
restatements of the Certificate and do all the things to maintain the
Partnership as a limited partnership (or a partnership in which the limited
partners have limited liability) under the laws of the State of Delaware and
each other state, the District of Columbia or other jurisdiction in which the
Partnership may elect to do business or own property. Subject to the terms of
Section 8.05.A (4) hereof, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware and any
other state, the District of Columbia or other jurisdiction in which the
Partnership may elect to do business or own property.

 

Section
7.03.          Title to Partnership Assets

 

Title to Partnership assets, 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 such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
The General Partner hereby declares and warrants that any Partnership assets
for which legal title is held in the name 

 

22

 

of the General Partner or any nominee
or Affiliate of the General Partner shall be held by the General Partner for
the use and benefit of the Partnership in accordance with the provisions of
this Agreement; provided, however, that the General Partner shall
use its best efforts to cause beneficial and record title to such assets to be
vested in the Partnership as soon as reasonably practicable. All Partnership
assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which legal title to such Partnership
assets is held.

 

Section
7.04.          Reimbursement of the General Partner

 

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

 

B.     Responsibility for Partnership Expenses. The Partnership shall be responsible for and shall
pay all expenses relating to the Partnership’s organization, the ownership of
its assets and its operations. The General Partner shall be reimbursed on a
monthly basis, or such other basis as the General Partner may determine in its
sole and absolute discretion, for all expenses it incurs relating to the
ownership and operation of, or for the benefit of, the Partnership (including,
without limitation, expenses related to the management and administration of
any Subsidiaries of the General Partner or the Partnership or Affiliates of the
Partnership such as auditing expenses and filing fees); provided that,
the amount of any such reimbursement shall be reduced by (i) any interest
earned by the General Partner with respect to bank accounts or other instruments
or accounts held by it as permitted in Section 7.05.A below and (ii) any amount
derived by the General Partner from any investments permitted in Section 7.05.A
below; and, provided  further, that the General Partner shall not
be reimbursed for (i) income tax liabilities or (ii) filing or similar fees in
connection with maintaining the General Partner’s continued corporate existence
that are incurred by the General Partner. The General Partner shall determine
in good faith the amount of expenses incurred by it related to the ownership
and operation of, or for the benefit of, the Partnership. In the event that
certain expenses are incurred for the benefit of the Partnership and other
entities (including the General Partner), such expenses will be allocated to
the Partnership and such other entities in such a manner as the General Partner
in its sole and absolute discretion deems fair and reasonable. Such
reimbursements shall be in addition to any reimbursement to the General Partner
pursuant to Section 10.03.C hereof and as a result of indemnification pursuant
to Section 7.07 below. All payments and reimbursements hereunder shall be
characterized for federal income tax purposes as expenses of the Partnership
incurred on its behalf, and not as expenses of the General Partner.

 

C.     Partnership and Other Interests Issuance and
Repurchase Expenses. The General
Partner shall also be reimbursed for all expenses it incurs relating 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 IV hereof (including, without
limitation, all costs, expenses, damages and other payments resulting from or
arising in connection with litigation related to any of the foregoing), all of
which expenses are considered by the Partners to constitute expenses of, and
for the benefit of, the Partnership.

 

D.    Reimbursement not a Distribution. If and to the extent any reimbursement made pursuant
to this Section 7.04 is determined for federal income tax purposes not to
constitute a payment of expenses of the Partnership, the amount so determined
shall be treated as a distribution to the General Partner and there shall be a
corresponding special allocation of gross income to the General Partner, for
purposes of computing the Partners’ Capital Accounts.

 

23

 

Section
7.05.          Outside Activities of the General Partner

 

A.            General. Notwithstanding anything in this Agreement to the
contrary, it is expressly understood and agreed that the General Partner may,
if it determines such action to be in the best interests of the REIT or the
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 so held) to be
distributed to and held directly by the General Partner (the “Specially
Distributed Assets”). Concurrently with any such distribution, the General
Partner shall (i) amend Section 5.01 of this Agreement so as to provide that,
from and after the date of such distribution, each Partner other than the
General Partner will receive the same distributions that it would have received
had the Specially Distributed Assets been held by the Partnership rather than
directly by the General Partner (and a corresponding adjustment shall be made
to the distributions to be made to the General Partner); and (ii) make such
further amendments to this Agreement (including, without limitation, to the
income and loss allocation provisions of Section 6.01 hereof) as may be
necessary or appropriate to effect the intention of the parties that the
Partners be placed, as nearly as possible, in the same position they would have
been in had such Specially Distributed Assets been held by the Partnership
rather than directly by the General Partner; provided, however,
that the General Partner shall in no event be required to make contributions to
the Partnership to fund distributions to the other Partners.

 

B.     Repurchase of Shares. In the event the General Partner exercises its rights under the Articles
of Incorporation to purchase Shares or otherwise elects to purchase from its
stockholders Shares in connection with a stock repurchase or similar program or
for the purpose of delivering such shares to satisfy an obligation under any
dividend reinvestment or stock purchase program adopted by the General Partner,
any employee stock purchase plan adopted by the General Partner or any similar
obligation or arrangement undertaken by the General Partner in the future, then
the General Partner shall cause the Partnership to purchase from the General
Partner that number of Partnership Units of the appropriate class equal to the
product obtained by multiplying the number of Shares purchased by the General
Partner times a fraction, the numerator of which is one and the denominator of
which is the Conversion Factor, on the same terms and for the same aggregate
price that the General Partner purchased such Shares.

 

C.     Forfeiture of Shares. In the event the Partnership or the General Partner acquires Shares as a
result of the forfeiture of such Shares under a restricted or similar share
plan, then the General Partner shall cause the Partnership to cancel that
number of Partnership Units of the appropriate class equal to the number of
Shares so acquired divided by the Conversion Factor, and, if the Partnership
acquired such Shares, it shall transfer such Shares to the General Partner for
cancellation.

 

D.    Issuances of Shares. After the Effective Date, the General Partner shall not grant, award, or
issue any additional Shares (other than Shares issued pursuant to Section 8.06
hereof or pursuant to a dividend or distribution (including any stock split) of
Shares to all of its stockholders), other equity securities of the General
Partner or New Securities unless (i) the General Partner shall cause, pursuant
to Section 4.02.A hereof, the Partnership to issue to the General Partner
Partnership Interests or rights, options, warrants or securities of the
Partnership having designations, preferences and other rights, all such that
the economic interests are substantially the same as those of such additional
Shares, other equity securities or New Securities, as the case may be, and (ii)
the General Partner transfers to the Partnership, as an additional Capital
Contribution, the proceeds from the grant, award, or issuance of such
additional Shares, other equity securities or New Securities, as the case may
be, or from the exercise of rights contained in such additional Shares, other
equity securities or New Securities, as the case may be. Without limiting the
foregoing, the General Partner is expressly authorized to issue additional
Shares, other equity securities or New Securities, as the case maybe, for less
than fair market value, and the General Partner is expressly authorized,
pursuant to Section 4.02.A hereof, to cause the Partnership to issue to the
General Partner corresponding Partnership Interests, as long as (a) the General
Partner 

 

24

 

concludes in good faith that such
issuance is in the interests of the General Partner and the Partnership (for
example, and not by way of limitation, the issuance of Shares and corresponding
Partnership Units pursuant to a stock purchase plan providing for purchases of
Shares, either by employees or stockholders, at a discount from fair market
value or pursuant to employee stock options that have an exercise price that is
less than the fair market value of the Shares, either at the time of issuance
or at the time of exercise) and (b) the General Partner transfers all proceeds
from any such issuance or exercise to the Partnership as an additional Capital
Contribution.

 

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

 

F.     Funding Debt.
The General Partner may incur a Funding Debt, including, without limitation, a
Funding Debt that is convertible into Shares or otherwise constitutes a class
of New Securities, subject to the condition that the General Partner lends to
the Partnership the net proceeds of such Funding Debt; provided, that
the General Partner shall not be obligated to lend the net proceeds of any
Funding Debt to the Partnership in a manner that would be inconsistent with the
General Partner’s ability to remain qualified as a REIT. If the General Partner
enters into any Funding Debt, the loan to the Partnership shall be on
comparable terms and conditions, including interest rate, repayment schedule
and costs and expenses, as are applicable with respect to or incurred in
connection with such Funding Debt.

 

Section
7.06.          Transactions with Affiliates

 

A.    Transactions with Certain Affiliates. Except (i) as expressly permitted by this Agreement
(other than Section 7.01.A hereof which shall not be considered authority for a
transaction that otherwise would be prohibited by this Section 7.06.A) and (ii)
all transactions with SL Green or its Affiliates contemplated by the General
Partner’s initial public offering, the Partnership shall not, directly or
indirectly, sell, transfer or convey any property to, or purchase any property
from, or borrow funds from, or lend funds to, any Partner or any Affiliate of
the Partnership or the General Partner or the General Partner Entity that is
not also a Subsidiary of the Partnership, except pursuant to transactions that
are on terms that are fair and reasonable and no less favorable to the
Partnership than would be obtained from an unaffiliated third party.

 

B.     Benefit Plans. The General Partner, in its sole and absolute discretion and without the
approval of the Limited Partners, may propose and adopt on behalf of the
Partnership employee benefit plans funded by the Partnership for the benefit of
employees of the General Partner, the Partnership, Subsidiaries of the
Partnership, SL Green, the Manager or any Affiliate of any of them in respect
of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any of the Partnership’s Subsidiaries.

 

C.     Conflict Avoidance. The General Partner is expressly authorized to enter into, in the name
and on behalf of the Partnership, a right of first opportunity arrangement and
other conflict avoidance agreements with various Affiliates of SL Green, the
Manager, the Partnership and General Partner on such terms as the General
Partner, in its sole and absolute discretion, believes are advisable.

 

Section
7.07.          Indemnification

 

A.    General. The
Partnership shall indemnify each Indemnitee from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including,
without limitation, attorneys fees and other legal fees and expenses),
judgments, fines, settlements and other amounts arising from or in 

 

25

 

connection with any and all claims,
demands, actions, suits or proceedings, civil, criminal, administrative or
investigative incurred by the Indemnitee and relating to the Partnership or the
General Partner or the formation or operations of, or the ownership of property
by, either of them as set forth in this Agreement in which any such Indemnitee
may be involved, or is threatened to be involved, as a party or otherwise,
unless it is established by a final determination of a court of competent
jurisdiction that: (i) the act or omission of the Indemnitee was material to
the matter giving rise to the proceeding and either was committed in bad faith
or was the result of active and deliberate dishonesty, (ii) the Indemnitee
actually received an improper personal benefit in money, property or services
or (iii) in the case of any criminal proceeding, the Indemnitee had reasonable
cause to believe that the act or omission was unlawful. Without limitation, the
foregoing indemnity shall extend to any liability of any Indemnitee, pursuant
to a loan guarantee, contractual obligations for any indebtedness or other
obligations or otherwise, for any indebtedness of the Partnership or any
Subsidiary of the Partnership (including, without limitation, any indebtedness
which the Partnership or any Subsidiary of the Partnership has assumed or taken
subject to), and the General Partner is hereby authorized and empowered, on
behalf of the Partnership, to enter into one or more indemnity agreements
consistent with the provisions of this Section 7.07 in favor of any Indemnitee
having or potentially having liability for any such indebtedness. The
termination of any proceeding by judgment, order or settlement does not create
a presumption that the Indemnitee did not meet the requisite standard of
conduct set forth in this Section 7.07.A. The termination of any proceeding 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 rebuttable presumption that
the Indemnitee acted in a manner contrary to that specified in this Section
7.07.A with respect to the subject matter of such proceeding. Any
indemnification pursuant to this Section 7.07 shall be made only out of the
assets of the Partnership, and any insurance proceeds from the liability policy
covering the General Partner and any Indemnitees, and neither the General
Partner nor any Limited Partner shall have any obligation to contribute to the
capital of the Partnership or otherwise provide funds to enable the Partnership
to fund its obligations under this Section 7.07.

 

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

 

C.     No Limitation of Rights. The indemnification provided by this Section 7.07
shall be in addition to any other rights to which an Indemnitee or any other
Person may be entitled under any agreement, pursuant to any vote of the
Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise provided
in a written agreement pursuant to which such Indemnitee is indemnified.

 

D.    Insurance. The
Partnership may purchase and maintain insurance on behalf of the Indemnitees
and such other Persons as the General Partner shall determine against any
liability that may be asserted against or expenses that may be incurred by such
Person in connection with the Partnership’s activities, regardless of whether
the Partnership would have the power to indemnify such Person against such
liability under the provisions of this Agreement.

 

E.     Benefit Plan Fiduciary. For purposes of this Section 7.07, (i) the
Partnership shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves
services 

 

26

 

by, it to the plan or participants or
beneficiaries of the plan, (ii) excise taxes assessed on an Indemnitee with
respect to an employee benefit plan pursuant to applicable law shall constitute
fines within the meaning of this Section 7.07 and (iii) actions taken or
omitted by the Indemnitee with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be i n the
interest of the participants and beneficiaries of the plan shall be deemed to
be for a purpose which is not opposed to the best interests of the Partnership.

 

F.     No Personal Liability for Limited Partners. In no event may an Indemnitee subject any of the
Partners to personal liability by reason of the indemnification provisions set
forth in this Agreement.

 

G.     Interested Transactions. An Indemnitee shall not be denied indemnification in
whole or in part under this Section 7.07 because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.

 

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

 

I.      Indemnification Payments Not Distributions. If and to the extent any payments to the General
Partner pursuant to this Section 7.07 constitute gross income to the General
Partner (as opposed to the repayment of advances made on behalf of the
Partnership), such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners, and shall not be treated as distributions
for purposes of computing the Partners’ Capital Accounts.

 

Section
7.08.          Liability of the General Partner

 

A.    General. Notwithstanding
anything to the contrary set forth in this Agreement, the General Partner and
its directors and officers shall not be liable for monetary damages to the
Partnership, any Partners or any Assignees for losses sustained, liabilities
incurred or benefits not derived as a result of errors in judgment or mistakes
of fact or law or of any act or omission if the General Partner or its
directors and officers acted in good faith.

 

B.     No Obligation to Consider Separate Interests of
Limited Partners or Stockholders. The
Limited Partners expressly acknowledge that the General Partner is acting on
behalf of the Partnership and the General Partner’s stockholders collectively,
that the General Partner is under no obligation to consider the separate
interests of the Limited Partners (including, without limitation, the tax
consequences to Limited Partners or Assignees or to such stockholders) in
deciding whether to cause the Partnership to take (or decline to take) any
actions. In the event of a conflict between the interests of the stockholders
of the 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
in manner not adverse to either the stockholders of the General Partner Entity
or the Limited Partners; provided, however, that for so long as
the General Partner Entity, directly, or the General Partner, owns a
controlling interest in the Partnership, any such conflict that cannot be
resolved in a manner not adverse to either the stockholders of the General
Partner Entity or the Limited Partners shall be resolved in favor of the
stockholders. The General Partner shall not be liable for monetary damages or
otherwise for losses sustained, liabilities incurred or benefits not derived 

 

27

 

by Limited Partners in connection
with such decisions, provided that the General Partner has acted in good
faith.

 

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

 

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

 

E.     Certain Definitions. Whenever in this Agreement the General Partner is permitted or required
to make a decision (i) in its “sole discretion “or “discretion,” or under a
similar grant of authority or latitude, the General Partner shall be entitled
to consider such interests and factors as it desires and may consider its own
interests, and shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Partnership or the Limited Partners,
or (ii) in its “good faith” or under another express standard, the General
Partner shall act under such express standard and shall not be subject to any
other or different standards imposed by this Agreement or by law or any other
agreement contemplated herein.

 

Section
7.09.          Other Matters Concerning the General Partner

 

A.    Reliance on Documents. The General Partner may rely and shall be protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
debenture or other paper or document believed by it in good faith to be genuine
and to have been signed or presented by the proper party or parties.

 

B.     Reliance on Advisors. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants
and advisors selected by it, and any act taken or omitted to be taken in reliance
upon the opinion of such Persons as to matters which the General Partner
reasonably believes to be within such Person’s professional or expert
competence shall be conclusively presumed to have 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 its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or attorneys-in-fact. Each
such attorney shall, to the extent provided by the General Partner in the power
of attorney, have full power and authority to do and perform all and every act
and duty which is permitted or required to be done by the General Partner
hereunder.

 

D.    Actions to Maintain REIT Status or Avoid Taxation of
the General Partner Entity. Notwithstanding
any other provisions of this Agreement or the Act, any action of the General
Partner on behalf of the Partnership or any decision of the General Partner to
refrain from acting on behalf of the Partnership undertaken in the good faith
belief that such action or omission is necessary or advisable in order (i) to
protect the ability of the General Partner Entity to continue to qualify as a
REIT or (ii) to allow the General Partner Entity to avoid incurring any
liability for taxes under Section 857 or 4981 of the 

 

28

 

Code, is expressly authorized under
this Agreement and is deemed approved by all of the Limited Partners.

 

Section
7.10.          Reliance by Third Parties

 

Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority,
without consent or approval of any other Partner or Person, to encumber, sell
or otherwise use in any manner any and all assets of the Partnership, to enter
into any contracts on behalf of the Partnership and to take any and all actions
on behalf of the Partnership, and such Person shall be entitled to deal with
the General Partner as if the General Partner were the Partnership’s sole party
in interest, both legally and beneficially. Each Limited Partner hereby waives
any and all defenses or other remedies which may be available against such Person
to contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the General Partner or its representatives. Each
and every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming
thereunder that (i) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and effect,
(ii) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the
Partnership, and (iii) such certificate, document or instrument was duly
executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.

 

Section
7.11.          Restrictions on General Partner’s Authority

 

A.    Consent Required. The General Partner may not take any action in contravention of an
express prohibition or limitation of this Agreement without the written Consent
of (i) all Partners adversely affected or (ii) such lower percentage of the
Limited Partner Interests as may be specifically provided for under a provision
of this Agreement or the Act.

 

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

 

29

 

Section
7.12.          Loans by Third Parties

 

The Partnership may incur Debt, or
enter into similar credit, guarantee, financing or refinancing arrangements for
any purpose (including, without limitation, in connection with any acquisition
of property or other assets) with any Person that is not the General Partner
upon such terms as the General Partner determines appropriate; provided
that, the Partnership 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
sole discretion.

 

ARTICLE
VIII

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

 

Section
8.01.          Limitation of Liability

 

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

 

Section
8.02.          Management of Business

 

No Limited Partner or Assignee (other
than the General Partner, any of its Affiliates or any officer, director,
employee, partner, agent or trustee of the General Partner, the Partnership or
any of their Affiliates, in their capacity as such) shall take part in the
operation, management or control (within the meaning of the Act) of the Partnership’s
business, transact any business in the Partnership’s name or have the power to
sign documents for or otherwise bind the Partnership. The transaction of any
such business by the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such, shall not
affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.

 

Section
8.03.          Outside Activities of Limited Partners

 

Subject to Section 7.05 hereof, and
subject to any agreements entered into pursuant to Section 7.06.C hereof and to
any other agreements entered into by a Limited Partner or its Affiliates with
the Partnership or a Subsidiary, any Limited Partner (other than the General
Partner) and any officer, director, employee, agent, trustee, Affiliate or
stockholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to
the Partnership, including business interests and activities in direct or
indirect competition with the Partnership. Neither the Partnership nor any
Partners shall have any rights by virtue of this Agreement in any business
ventures of any Limited Partner or Assignee. None of the Limited Partners
(other than the General Partner) nor any other Person shall have any rights by
virtue of this Agreement or the partnership relationship established hereby in
any business ventures of any other Person (other than the General Partner to
the extent expressly provided herein), and such Person shall have no obligation
pursuant to this Agreement to offer any interest in any such business ventures
to the Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.

 

Section
8.04.          Return of Capital

 

Except pursuant to the right of
redemption set forth in Section 8.06 below, no Limited Partner shall be
entitled to the withdrawal or return of its Capital Contribution, except to the
extent of distributions made pursuant to this Agreement or upon termination of
the Partnership as provided herein. 

 

30

 

No Limited Partner or Assignee shall
have priority over any other Limited Partner or Assignee either as to the
return of Capital Contributions (except as permitted by Section 4.02.A hereof) or,
except to the extent provided 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 expressly
provided in this Agreement, as to profits, losses, distributions or credits.

 

Section
8.05.          Rights of Limited Partners Relating to the Partnership

 

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

 

(1)  to obtain a
copy of the most recent annual and quarterly reports filed with the Securities
and Exchange Commission by the General Partner Entity pursuant to the Exchange
Act;

 

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

 

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

 

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

 

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

 

B.     Notice of Conversion Factor. The Partnership shall notify each Limited Partner
upon request of the then current Conversion Factor and any changes that have
been made thereto.

 

C.     Notice of Extraordinary Transaction of the General
Partner Entity. The General Partner
Entity shall not make any extraordinary distributions of cash or property to
its stockholders or effect a merger (including without limitation, a triangular
merger), a sale of all or substantially all of its assets or any other similar
extraordinary transaction without notifying the Limited Partners of its
intention to make such distribution or effect such merger, sale or other
extraordinary transaction at least twenty (20) Business Days prior to the
record date to determine stockholders eligible to receive such distribution or
to vote upon the approval of such merger, sale or other extraordinary
transaction (or, if no such record date is applicable, at least twenty (20)
Business Days before consummation of such merger, sale or other extraordinary
transaction). This provision for such notice shall not be deemed (i) to permit
any transaction that otherwise is prohibited by this Agreement or requires a
Consent of the Partners or (ii) to require a Consent of the Limited Partners to
a transaction that does not otherwise require Consent under this Agreement. Each
Limited Partner agrees, as a condition to the receipt of the notice pursuant
hereto, to keep confidential the information set forth therein until such time
as the General Partner Entity has made public disclosure thereof and to use
such information during such period of confidentiality solely for purposes of
determining 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 with
respect to such exercise so long as such attorney, accountant and/or financial
advisor agrees to receive and hold such information subject to this
confidentiality requirement.

 

31

 

D.    Confidentiality. Notwithstanding any other provision of this Section 8.05, the General
Partner may keep confidential from the Limited Partners, for such period of
time as the General Partner determines in its sole and absolute discretion to
be reasonable, any information that (i) the General Partner reasonably believes
to be in the nature of trade secrets or other information the disclosure of
which the General Partner in good faith believes is not in the best interests
of the Partnership or could damage the Partnership or its business or (ii) the
Partnership is required by law or by agreements with unaffiliated third parties
to keep confidential.

 

Section
8.06.          Class A Redemption Right

 

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

 

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

 

(iii)          The Assignee
of any Limited Partner may exercise the rights of such Limited Partner pursuant
to this Section 8.06 and such Limited Partner shall be deemed to have assigned
such rights to such Assignee and shall be bound by the exercise of such rights
by such Limited Partner’s Assignee. In connection with any exercise of the such
rights by such Assignee on behalf of such Limited Partner, the Cash Amount
shall be paid by the Partnership directly to such Assignee and not to such
Limited Partner.

 

(iv)          Notwithstanding
the foregoing, the Redemption Right shall not be exercisable with respect to
any Class A Unit issued upon conversion of an LTIP Unit until on or after the
date that is two years after the date on which the LTIP Unit was issued,
provided however, that the foregoing restriction shall not apply if the
Redemption Right is exercised by a LTIP Unit holder in connection with a
transaction that falls within the definition of a “change of control” under the
agreement or agreements pursuant to which the LTIP Units were issued to him or
her and provided further that the two (2) year requirement set forth in the
first sentence of Section 8.06.A(i) shall not apply with respect to Class A
Units issued upon conversion of LTIP Units.

 

B.     General Partner Assumption of Right. (i) If a Limited Partner has delivered a Notice of
Redemption, the General Partner may, in its sole and absolute discretion
(subject to any limitations on ownership and transfer of Shares set forth in
the Articles of Incorporation), elect to assume directly and satisfy a
Redemption Right by paying to the Redeeming Partner either the Cash Amount or
the Shares Amount, as the General Partner determines in its sole and absolute
discretion (provided that payment of the Redemption Amount in the form
of Shares shall be in Shares registered under Section 12 of the Exchange Act
and listed for trading on the exchange or national market on which the Shares
are Publicly Traded, and provided, further that, in the event
that the Shares are not Publicly Traded at the time a Redeeming Partner
exercises its Redemption Right, the Redemption Amount shall be paid only in the
form of the Cash Amount unless the Redeeming Partner, in its sole and absolute
discretion, consents to payment of the Redemption Amount in the form of the
Shares Amount), on the Specified Redemption Date, whereupon the General Partner
shall acquire the Class A Units offered for redemption by the 

 

32

 

Redeeming Partner and shall be
treated for all purposes of this Agreement as the owner of such Partnership
Units. Unless the General Partner, in its sole and absolute discretion, shall
exercise its right to assume directly and satisfy the Redemption Right, the
General Partner shall not have any obligation to the Redeeming Partner or to
the Partnership with respect to the Redeeming Partner’s exercise of the
Redemption Right. In the event the General Partner shall exercise its right to
satisfy the Redemption Right in the manner described in the first sentence of
this Section 8.06.B and shall fully perform its obligations in connection
therewith, the Partnership shall have no right or obligation to pay any amount
to the Redeeming Partner with respect to such Redeeming Partner’s exercise of
the Redemption Right, and each of the Redeeming Partner, the Partnership and
the General Partner shall, for federal income tax purposes, treat the
transaction between the General Partner and the Redeeming Partner as a sale of
the Redeeming Partner’s Partnership Units to the General Partner. Nothing
contained in this Section 8.06.B shall imply any right of the General Partner
to require any Limited Partner to exercise the Redemption Right afforded to
such Limited Partner pursuant to Section 8.06.A above.

 

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

 

(iii)          Each Redeeming
Partner agrees to execute such documents as the General Partner may reasonably
require in connection with the issuance of Shares upon exercise of the
Redemption Right.

 

C.     Exceptions to Exercise of Redemption Right. Notwithstanding the provisions of Sections 8.06.A
and 8.06.B above, a Partner shall not be entitled to exercise the Redemption
Right pursuant to Section 8.06.A above if (but only as long as) the delivery of
Shares to such Partner on the Specified Redemption Date (i) would be prohibited
under the Articles of Incorporation or (ii) as long as the Shares are Publicly
Traded, would be prohibited under applicable federal or state securities laws
or regulations (in each case regardless of whether the General Partner would in
fact assume and satisfy the Redemption Right).

 

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

 

E.     Additional Partnership Interests. In the event that the Partnership issues Partnership
Interests to any Additional Limited Partner pursuant to Article IV hereof, the
General Partner shall make such amendments to this Section 8.06 as it
determines are necessary to reflect the issuance of such Partnership Interests
(including setting forth any restrictions on the exercise of the Redemption
Right with respect to such Partnership Interests).

 

33

 

Section
8.07.          Redemption of Class B Units

 

The
Class B Units shall be subject to mandatory redemption if the Management
Agreement is terminated or not renewed. The General Partner shall send notice
of Class B Unit redemption or non-renewal within ten days after the General
Partner sends or receives notice of termination or non-renewal of the
Management Agreement. The redemption date shall be the date on which
termination or non-renewal of the Management Agreement is effective. If the
Management Agreement is terminated pursuant to Section 13(d) of the Management
Agreement or not renewed by the General Partner pursuant to Section 13(b) of
the Management Agreement, the redemption amount, to be paid in cash or by wire
transfer on the redemption date, shall be equal to two times of the higher of
the annual distributions on a Class B Unit relating to either of the two most
recently completed calendar years; provided that if immediately following such
termination or non-renewal the General Partner becomes self-managed in
connection with an internalization of the Manager pursuant to a separate
agreement 13(the “Internalization
Agreement”) between the Manager and
the General Partner and/or a subsidiary of the General Partner, the redemption
amount shall be $100.14 In such
event, the consideration to be paid for such internalization shall be as set
forth in the Internalization Agreement. If the Management Agreement is
terminated by the General Partner pursuant to Section 13(c) of the Management
Agreement or not renewed by the Manager pursuant to Section 13(b) of the
Management Agreement, the aggregate redemption amount shall be $100. Upon any
such redemption, the Class B Units will also be entitled to receive any
distributions payable with respect to periods through the redemption date. If
such distribution amounts cannot be calculated on or by the redemption date,
they shall be calculated and paid as promptly as possible thereafter, but in no
event later than 30 days after the redemption date.

 

ARTICLE
IX

BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

Section
9.01.          Records and Accounting

 

The General Partner shall keep or
cause to be kept at the principal office of the Partnership appropriate books
and records with respect to the Partnership’s business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 9.03 below. Any records maintained by or on behalf of the
Partnership in the regular course of its business may be kept on, or be in the
form of, punch cards, magnetic tape, photographs, micrographics or any other
information storage device, provided that the records so maintained are
convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial and tax
reporting purposes, on an accrual basis in accordance with generally accepted
accounting principles.

 

Section
9.02.          Fiscal Year

 

The fiscal year of the Partnership
shall be the calendar year.

 

Section
9.03.          Reports

 

A.    Annual Reports. As soon as practicable, but in no event later than the date on which the
General Partner Entity mails its annual report to its stockholders, the General
Partner shall cause to be mailed to each Limited Partner an annual report, as
of the close of the most recently ended Partnership Year, containing financial
statements of the Partnership, or of the General Partner Entity if such
statements are prepared solely on a consolidated basis with the Partnership,
for such Partnership Year, 

 

34

 

presented in accordance with
generally accepted accounting principles, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the
General Partner Entity.

 

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

 

ARTICLE
X

TAX MATTERS

 

Section
10.01.        Preparation of Tax Returns

 

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

 

Section
10.02.        Tax Elections

 

A.    Except as otherwise provided herein, the General
Partner shall, in its sole and absolute discretion, determine whether to make
any available election pursuant to the Code. The General Partner shall have the
right to seek to revoke any such election (including, without limitation, an
election under Section 754 of the Code) upon the General Partner’s determination
in its sole and absolute discretion that such revocation is in the best
interests of the Partners.

 

B.     To the extent provided for in Treasury Regulations,
revenue rulings, revenue procedures and/or other IRS guidance issued after the
date hereof, the Partnership is hereby authorized to, and at the direction of
the General Partner shall, elect a safe harbor under which the fair market
value of any Partnership Interests issued after the effective date of such
Treasury Regulations (or other guidance) will be treated as equal to the
liquidation value of such Partnership Interests (i.e., a value equal to the
total amount that would be distributed with respect to such interests if the
Partnership sold all of its assets for their fair market value immediately
after the issuance of such Partnership Interests, satisfied its liabilities
(excluding any non-recourse liabilities to the extent the balance of such
liabilities exceeds the fair market value of the assets that secure them) and
distributed the net proceeds to the Partners under the terms of this Agreement).
In the event that the Partnership makes a safe harbor election as described in
the preceding sentence, each Partner hereby agrees to comply with all safe
harbor requirements with respect to transfers of such Partnership Interests
while the safe harbor election remains effective.

 

Section
10.03.        Tax Matters Partner

 

A.    General. The
General Partner shall be the “tax matters partner” 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 an administrative proceeding
with respect to the Partnership, the tax matters partner shall furnish the IRS
with the name, address, taxpayer identification number and profit interest of
each of the 

 

35

 

Limited Partners and any Assignees; provided,
however, that such information is provided to the Partnership by the
Limited Partners.

 

B.     Powers. The
tax matters partner is authorized, but not required:

 

(1)  to enter
into any settlement with the IRS with respect to any administrative or judicial
proceedings for the adjustment of Partnership items required to be taken into
account by a Partner for income tax purposes (such administrative proceedings
being referred to as a “tax audit” and such judicial proceedings being referred
to as “judicial review”), and in the settlement agreement the tax matters
partner may expressly state that such agreement shall bind all Partners, except
that such settlement agreement shall not bind any Partner (i) who (within the
time prescribed pursuant to the Code and Regulations) files a statement with
the IRS providing that the tax matters partner shall not have the 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)  in the
event that a notice of a final administrative adjustment at the Partnership
level of any item required to be taken into account by a Partner for tax
purposes (a “final adjustment”) is mailed to the tax matters partner, to seek
judicial review of such final adjustment, including the filing of a petition
for readjustment with the Tax Court or the filing of a complaint for refund
with the United States Claims Court or the District Court of the United States
for the district in which the Partnership’s principal place of business is
located;

 

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

 

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

 

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

 

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

 

The taking of any action and the
incurring of any expense by the tax matters partner in connection with any such
proceeding, except to the extent required by law, is a matter in the sole and
absolute discretion of the tax matters partner and the provisions relating to
indemnification of the General Partner set forth in Section 7.07 hereof shall
be fully applicable to the tax matters partner in its capacity as such.

 

C.     Reimbursement. The tax matters partner shall receive no compensation for its services. All
third party costs and expenses incurred by the tax matters partner in
performing its duties as such (including legal and accounting fees and
expenses) shall be borne by the Partnership. Nothing herein shall be construed
to restrict the Partnership from engaging an accounting firm or a law firm to
assist the tax matters partner in discharging its duties hereunder.

 

36

 

Section
10.04.        Organizational Expenses

 

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

 

Section
10.05.        Withholding

 

Each Limited Partner hereby
authorizes the Partnership to withhold from or pay on behalf of or with respect
to such Limited Partner any amount of federal, state, local, or foreign taxes
that the General Partner determines that the Partnership is required to
withhold or pay with respect to any amount distributable or allocable to such
Limited Partner pursuant to this Agreement, including, without limitation, any
taxes required to be withheld or paid by the Partnership pursuant to Section
1441, 1442, 1445, or 1446 of the Code. Any amount paid on behalf of or with
respect to a Limited Partner shall constitute a recourse loan by the
Partnership to such Limited Partner, which loan shall be repaid by such Limited
Partner within fifteen (15) days after notice from the General Partner that
such payment must be made unless (i) the Partnership withholds such payment from
a distribution which would otherwise be made to the Limited Partner or (ii) the
General Partner determines, in its sole and absolute discretion, that such
payment may be satisfied out of the available funds of the Partnership which
would, but for such payment, be distributed to the Limited Partner. Any amounts
withheld pursuant to the foregoing clauses (i) or (ii) shall be treated as
having been distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest
in such Limited Partner’s Partnership Interest to secure such Limited Partner’s
obligation to pay to the Partnership any amounts required to be paid pursuant
to this Section 10.05. In the event that a Limited Partner fails to pay any
amounts owed to the Partnership pursuant to this Section 10.05 when due, the
General Partner may, in its sole and absolute discretion, elect to make the
payment to the Partnership on behalf of such defaulting Limited Partner, and in
such event shall be deemed to have loaned such amount to such defaulting
Limited Partner and shall succeed to all rights and remedies of the Partnership
as against such defaulting Limited Partner (including, without limitation, the
right to receive distributions). Any amounts payable by a Limited Partner
hereunder shall bear interest at the base rate on corporate loans at large
United States money center commercial banks, as published from time to time in
the Wall Street Journal, plus four (4) percentage points (but not higher than
the 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 actions as the Partnership or the General Partner shall request
in order to perfect or enforce the security interest created hereunder.

 

ARTICLE
XI

TRANSFERS AND WITHDRAWALS

 

Section
11.01.        Transfer

 

A.    Definition. The
term “transfer,” when used in this Article XI with respect to a Partnership
Interest or a Partnership Unit, shall be deemed to refer to a transaction by
which the General Partner purports to assign all or any part of its General
Partnership Interest to another Person or by which a Limited Partner purports
to assign all or any part of its Limited Partner Interest to another Person,
and includes a sale, assignment, gift, pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition by law or otherwise. The term “transfer”
when used in this Article XI does not include any redemption or repurchase of
Partnership Units by the Partnership from a Partner (including the General
Partner), acquisition of Partnership Units from a Limited Partner by the
General Partner pursuant to Section 8.06 hereof or otherwise or any conversion
of LTIP Units into Class A Units. No part of the interest of a Limited Partner
shall be subject to the claims of any creditor, any spouse for alimony or 

 

37

 

support, or to legal process, and may
not be voluntarily or involuntarily alienated or encumbered except as may be
specifically 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 set forth in this Article XI. Any
transfer or purported transfer of a Partnership Interest not made in accordance
with this Article XI shall be null and void.

 

Section
11.02.        Transfers of Partnership Interests of General Partner

 

A.    Except for transfers of Partnership Units to the
Partnership as provided in Section 7.05 or Section 8.06 hereof, the General
Partner may not transfer any of its Partnership Interest except (i) in
connection with a transaction described in Section 11.02.B below (ii) to a
wholly-owned Subsidiary or (iii) as otherwise expressly permitted under this
Agreement, nor shall the General Partner withdraw as General Partner except in
connection with a transaction described in Section11.02.B below.

 

B.     The General Partner shall not engage in any merger
(including a triangular merger), consolidation or other combination with or
into another person, sale of all or substantially all of its assets or any
reclassification, recapitalization or change of outstanding Shares (other than
a change in par value, or from par value to no par value, or as a result of a
subdivision or combination as described in the definition of “Conversion Factor”)
(“Termination Transaction”), unless the Termination Transaction has been
approved by the Consent of the Partners holding a majority or more of the then
outstanding Percentage Interests (including the effect of any Partnership Units
held by the General Partner) and in connection with which all Limited Partners
either will receive, or will have the 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 and the greatest amount of cash, securities or
other property paid to a holder of Shares, if any, corresponding to such
Partnership Unit that was issued pursuant to Section 4.02.A hereof in
consideration of one such Share at any time during the period from and after
the date on which the Termination Transaction is consummated; provided
that, if, in connection with the Termination Transaction, a purchase, tender or
exchange offer shall have been made to and accepted by the holders of more than
fifty percent (50%) of the outstanding Shares, each holder of Partnership Units
shall receive, or shall have the right to elect to receive, the greatest amount
of cash, securities, or other property which such holder would have received
had it exercised the Redemption Right and received Shares in exchange for its
Partnership Units immediately prior to the expiration of such purchase, tender
or exchange offer and had thereupon accepted such purchase, tender or exchange
offer.

 

Section
11.03.        Limited Partners’ Rights to Transfer

 

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

 

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

 

38

 

C.     No Transfers Violating Securities Laws. The General Partner may prohibit any transfer
of Partnership Units by a Limited Partner if, in the opinion of legal counsel
to the Partnership, such transfer would require filing of a registration
statement under the Securities Act or would otherwise violate any federal, or
state securities laws or regulations applicable to the Partnership or the
Partnership Unit.

 

D.    No Transfers Affecting Tax Status of Partnership. No transfer of Partnership Units by a Limited Partner
(including a redemption or exchange pursuant to Section 8.06 hereof) may be
made to any Person if (i) in the opinion of legal counsel for the
Partnership, it would result in the Partnership being treated as an association
taxable as a corporation for federal income tax purposes or would result in a
termination of the Partnership for federal income tax purposes (except as a
result of the redemption or exchange for Shares of all Partnership Units held
by all Limited Partners other than the General Partner or the General Partner
Entity or any Subsidiary of either the General Partner or the General Partner
Entity or pursuant to a transaction expressly permitted under Section 7.11.B
or Section 11.02 hereof), (ii) in the opinion of legal counsel for
the Partnership, it would adversely affect the ability of the General Partner
Entity to continue to qualify as a REIT or would subject the General Partner
Entity to any additional taxes under Section 857 or Section 4981 of
the Code or (iii) such transfer is effectuated through an “established
securities market” or a “secondary market (or the substantial equivalent
thereof)” within the meaning of Section 7704 of the Code.

 

E.     No Transfers to Holders of Nonrecourse Liabilities. No pledge or transfer of any Partnership Units may be
made to a lender to the Partnership, or to any Person who is related (within
the meaning of Section 1.752-4(b) of the Regulations) to any lender
to the Partnership, whose loan constitutes a Nonrecourse Liability without the
consent of the General Partner, in its sole and absolute discretion; provided
that, as a condition to such consent the lender will be required to enter into
an arrangement with the Partnership and the General Partner to exchange or
redeem for the Redemption Amount any Partnership Units transferred or in which
a security interest is held simultaneously with the time at which such lender
would be deemed to be a partner in the Partnership for purposes of allocating
liabilities to such lender under Section 752 of the Code.

 

F.     Transfer Register. The General Partner shall keep a register for the Partnership on which
the transfer, pledge or release of Partnership Units shall be shown and
pursuant to which entries shall be made to effect all transfers, pledges or
releases as required by Sections 8-207,8-313(1) and 8-321 of the Uniform Commercial
Code, as amended, in effect in the States of New York and Delaware; provided,
however, that if there is any conflict between such requirements, the
provisions of the Delaware Uniform Commercial Code shall govern. The
General Partner shall (i) place proper entries in such register clearly
showing each transfer and each pledge and grant of security interest and the
transfer and assignment pursuant thereto, such entries to be endorsed by the General
Partner and (ii) maintain the register and make the register available for
inspection by all of the Partners and their pledgees at all times during the
term of this Agreement. Nothing herein shall be deemed a consent to any pledge
or transfer otherwise prohibited under this Agreement.

 

Section 11.04.    Substituted
Limited Partners

 

A.    Consent of General Partner. No Limited Partner shall have the right to
substitute a transferee as a Limited Partner in its place without the consent
of the General Partner to the admission of a transferee of the interest of a
Limited Partner pursuant to this Section 11.04 as a Substituted Limited
Partner, which consent may be given or withheld by the General Partner in
its sole and absolute discretion. The General Partner’s failure or refusal to
permit a transferee of any such interests to become a Substituted Limited
Partner shall not give rise to any cause of action against the Partnership or
any Partner; provided that a transfer which does not require consent of the General
Partner under Section 11.03A shall not require the General Partner’s
consent under this section.

 

39

 

B.     Rights of Substituted Limited Partner. A transferee who has been admitted as a Substituted
Limited Partner in accordance with this Article XI shall have all the
rights and powers and be subject to all the restrictions and liabilities of a
Limited Partner under this Agreement. The admission of any transferee as a
Substituted Limited Partner shall be conditioned upon the transferee executing
and delivering to the Partnership an acceptance of all the terms and conditions
of this Agreement (including, without limitation, the provisions of Section 15.11
hereof and such other documents or instruments as may be required to
effect the admission).

 

C.     Amendment and Restatement of Exhibit A. Upon the admission of a Substituted Limited Partner,
the General Partner shall amend and restate Exhibit A hereto to reflect
the name, address, Capital Account, number of Partnership Units, and Percentage
Interest of such Substituted Limited Partner and to eliminate or adjust, if
necessary, the name, address, Capital Account and Percentage Interest of the
predecessor of such Substituted Limited Partner.

 

Section 11.05.    Assignees

 

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

 

Section 11.06.    General
Provisions

 

A.    Withdrawal of Limited Partner. No Limited Partner may withdraw from the
Partnership other than as a result of a permitted transfer of all of such
Limited Partner’s Partnership Units in accordance with this Article XI or
pursuant to redemption of all of its Partnership Units under Section 8.06
hereof.

 

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

 

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

 

D.    Allocations.
If any Partnership Interest is transferred during any quarterly segment of the
Partnership’s fiscal year in compliance with the provisions of this Article XI
or redeemed or transferred pursuant to Section 8.06 hereof, Net Income,
Net Losses, each item thereof and all other items attributable to such interest
for such fiscal year shall be divided and allocated between the transferor
Partner and the transferee Partner by taking into account their varying
interests during the fiscal year in accordance with Section 706(d) of
the Code, using the interim closing of the books method (unless the General
Partner, in 

 

40

 

its sole
and absolute discretion, elects to adopt a daily, weekly, or a monthly
proration period, in which event Net Income, Net Losses, each item thereof and
all other items attributable to such interest for such fiscal year shall be
prorated based upon the applicable method selected by the General Partner). Solely
for purposes of making such allocations, each of such items for the calendar
month in which the transfer or redemption occurs shall be allocated to the
Person who is a Partner as of midnight on the last day of said month. All
distributions attributable to any Partnership Unit with respect to which the
Partnership Record Date is before the date of such transfer, assignment or
redemption shall be made to the transferor Partner or the Redeeming Partner, as
the case may be, and, in the case of a transfer or assignment other than a
redemption, all distributions thereafter attributable to such Partnership Unit
shall be made to the transferee Partner.

 

E.     Additional Restrictions. In addition to any other restrictions on transfer
herein contained, including without limitation the provisions of this Article XI,
in no event may any transfer or assignment of a Partnership Interest by
any Partner (including pursuant to Section 8.06 hereof) be made without
the express consent of the General Partner, in its sole and 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 applicable
law; (iii) of any component portion of a Partnership Interest, such as the
Capital Account, or rights to distributions, separate and apart from all
other components of a Partnership Interest except as permitted by Section 11.03A;
(iv) if in the opinion of legal counsel to the Partnership such transfer
would cause 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
Partnership Units held by all Limited Partners or pursuant to a transaction
expressly permitted under Section 7.11.B or Section 11.02 hereof); (v) if
in the opinion of counsel to the Partnership, such transfer would cause the
Partnership to cease to be classified as a partnership for federal income tax
purposes (except as a result of the redemption or exchange for Shares of all
Partnership Units held by all Limited Partners or pursuant to a transaction
expressly permitted under Section 7.11.B or Section 11.02 hereof); (vi) if
such transfer would cause the Partnership to become, with respect to any
employee benefit plan subject to Title 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 employee benefit
plan pursuant to Department of Labor Regulations Section 2570.3-101; (ix) if
such transfer requires the registration of such Partnership Interest pursuant
to any applicable federal or state securities laws; (x) if such transfer is
effectuated through an “established securities market” or a “secondary market”
(or the substantial equivalent thereof) within the meaning of Section 7704
of the Code or such transfer causes the Partnership to become a “publicly
traded partnership,” 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 under
the Investment Company Act of 1940, the Investment Advisors Act of 1940 or the Employee
Retirement Income Security Act of 1974, each as amended; (xii) if such transfer
could adversely affect the ability of the General Partner Entity to remain
qualified as a REIT; or (xiii) if in the opinion of legal counsel for the
Partnership, such transfer would adversely affect the ability of the General
Partner Entity to continue to qualify as a REIT or subject the General Partner
Entity to any additional taxes under Section 857 or Section 4981 of
the Code.

 

F.     Avoidance of “Publicly Traded Partnership” Status. The General Partner shall monitor the transfers of
interests in the Partnership to determine (i) if such interests are being
traded on an “established securities market” or a “secondary market (or the
substantial equivalent thereof)” within the meaning of Section 7704 of the
Code and (ii) whether additional transfers of interests would result in
the Partnership being unable to qualify for at least one of the “safe harbors”
set forth in Regulations Section 1.7704-1 (or such other guidance subsequently
published by the IRS setting forth safe harbors under which interests will not
be treated as “readily tradable” on a secondary market (or the substantial 

 

41

 

equivalent
thereof) within the meaning of Section 7704 of the Code (the “Safe Harbors”).
The General Partner shall take all steps reasonably necessary or appropriate to
prevent any trading of interests or any recognition by the Partnership of
transfers made on such markets and, except as otherwise provided herein, to
insure that at least one of the Safe Harbors is met.

 

ARTICLE XII

ADMISSION OF PARTNERS

 

Section 12.01.    Admission
of Successor General Partner

 

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

 

Section 12.02.    Admission
of Additional Limited Partners

 

A.    General. No
Person shall be admitted as an Additional Limited Partner without the consent
of the General Partner, which consent shall be given or withheld in the General
Partner’s sole and absolute discretion. A Person who makes a Capital
Contribution to the Partnership in accordance with this Agreement, including,
without limitation, pursuant to Section 4.01.C hereof, or who exercises an
option to receive Partnership Units shall be admitted to the Partnership as an
Additional Limited Partner only with the consent of the General Partner and
only upon furnishing to the General Partner (i) evidence of acceptance in form satisfactory
to the General Partner of all of the terms and conditions of this Agreement,
including, without limitation, the power of attorney granted in Section 15.11
hereof and (ii) such other documents or instruments as may be
required in the discretion of the General Partner in order to effect such Person’s
admission as an Additional Limited Partner. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.

 

B.     Allocations to Additional Limited Partners. If any Additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items allocable among
Partners and Assignees for such Partnership Year shall be allocated among such
Additional Limited Partner and all other Partners and Assignees by taking into
account their varying interests during the Partnership Year in accordance with Section 706(d) of
the Code, using the interim closing of the books method (unless the General
Partner, in its sole and absolute discretion, elects to adopt a daily, weekly
or monthly proration method, in which event Net Income, Net Losses, and each
item thereof would be prorated based upon the applicable period selected by the
General Partner).Solely for purposes of making such allocations, each of such
items for the calendar month in which an admission of any Additional Limited Partner
occurs shall be allocated among all the Partners and Assignees including such
Additional Limited Partner. All distributions with respect to which the
Partnership Record Date is before the date of such admission shall be made
solely to Partners and Assignees other than the Additional Limited Partner, and
all distributions thereafter shall be made to all the Partners and Assignees
including such Additional Limited Partner.

 

42

 

Section 12.03.    Amendment
of Agreement and Certificate of Limited Partnership

 

For the
admission to the Partnership of any Partner, the General Partner shall take all
steps necessary and 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 required by law, shall prepare and file an amendment to the
Certificate and may for this purpose exercise the power of attorney
granted pursuant to Section 15.11 hereof.

 

ARTICLE XIII

DISSOLUTION AND LIQUIDATION

 

Section 13.01.    Dissolution

 

The
Partnership shall not be dissolved by the admission of Substituted Limited
Partners or Additional Limited Partners or by the admission of a successor
General Partner in accordance with the terms of this Agreement. Upon the
withdrawal of the General Partner, any successor General Partner shall continue
the business of the Partnership. The Partnership shall dissolve, and its
affairs shall be wound up, upon the first to occur of any of the following (“Liquidating
Events”):

 

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

 

(ii)        an event
of withdrawal of the General Partner, as defined in the Act (other than an
event of bankruptcy), unless, within ninety (90) days after the withdrawal a “majority
in interest” (as defined below) of the remaining Partners Consent in writing 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 General Partner, in its sole
and absolute discretion, on or after January 1, 2054;

 

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

 

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

 

As used
herein, a “majority in interest” shall refer to Partners (excluding the General
Partner) who hold more than fifty percent (50%) of the outstanding Percentage
Interests not held by the General Partner.

 

Section 13.02.    Winding
Up

 

A.    General. Upon
the occurrence of a Liquidating Event, the Partnership shall continue solely
for the purposes of winding up its affairs in an orderly manner, liquidating
its assets, and satisfying the claims of its creditors and Partners. No Partner
shall take any action that is in consistent with, or not necessary to or
appropriate for, the winding up of the Partnership’s business and affairs. The
General 

 

43

 

Partner
(or, in the event there is no remaining General Partner, any Person elected by
a majority in interest of the Limited Partners (the “Liquidator”)) shall be
responsible for overseeing the winding up and dissolution of the Partnership
and shall take full account of the Partnership’s liabilities and property and
the Partnership property shall be liquidated as promptly as is consistent with
obtaining the fair value thereof, and the proceeds therefrom (which may, to the
extent determined by the General Partner, include equity or other securities of
the General Partner or any other entity) shall be applied and distributed in
the following order:

 

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

 

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

 

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

 

The General
Partner shall not receive any additional compensation for any services
performed pursuant to this Article XIII.

 

B.     Deferred Liquidation. Notwithstanding the provisions of Section 13.02.A above which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or
all of the Partnership’s assets would be impractical or would cause undue loss
to the Partners, the Liquidator may, in its sole and absolute discretion, defer
for a reasonable time the liquidation of any assets except those necessary to
satisfy liabilities of the Partnership (including to those Partners as
creditors) or distribute to the Partners, in lieu of cash, as tenants in common
and in accordance with the provisions of Section 13.02.A above, undivided
interests in such Partnership assets as the Liquidator deems not suitable for
liquidation. Any such distributions in kind shall be made only if, in the good
faith judgment of the Liquidator, such distributions in kind are in the best
interest of the Partners, and shall be subject to such conditions relating to
the disposition and management of such properties as the Liquidator deems reasonable
and equitable and to any agreements governing the operation of such properties
at such time. The Liquidator shall determine the fair market value of any
property distributed in kind using such reasonable method of valuation as it may adopt.

 

Section 13.03.    Compliance
with Timing Requirements of Regulations

 

Subject
to Section 13.04 below, in the event the Partnership is “liquidated”
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
distributions shall be made pursuant to this Article XIII to the General
Partner and Limited Partners who have positive Capital Accounts in compliance
with Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Partner has a
deficit balance in its Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered a debt owed
to the Partnership or to any other Person for any purpose whatsoever. In the
discretion of the General Partner, a pro rata portion of the distributions that
would otherwise be made to the General Partner and Limited Partners pursuant to
this Article XIII may be:  (A) distributed
to a trust established for the benefit of the General Partner and Limited
Partners for the purposes of liquidating Partnership assets, collecting amounts
owed to the Partnership and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General Partner arising out of or in
connection with the Partnership (in which case the assets of any such trust
shall be distributed to the General Partner and 

 

44

 

Limited
Partners from time to time, in the reasonable discretion of the General
Partner, in the same proportions as the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement); or (B) withheld to provide a
reasonable reserve for Partnership liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld amounts shall be distributed to
the General Partner and Limited Partners as soon as practicable.

 

Section 13.04.    Deemed
Distribution and Recontribution

 

Notwithstanding
any other provision of this Article XIII, in the event the Partnership is
deemed liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but
no Liquidating Event has occurred, the Partnership’s property shall not be
liquidated, the Partnership’s liabilities shall not be paid or discharged and
the Partnership’s affairs shall not be wound up. Instead, for federal income
tax purposes and for purposes of maintaining Capital Accounts pursuant to Exhibit B
hereto, the Partnership shall be deemed to have distributed its assets in kind
to the General Partner and Limited Partners, who shall be deemed to have
assumed and taken such assets subject to all Partnership liabilities, all in
accordance with their respective Capital Accounts. Immediately thereafter, the
General Partner and Limited Partners shall be deemed to have recontributed the
Partnership assets in kind to the Partnership, which shall be deemed to have
assumed and taken such assets subject to all such liabilities.

 

Section 13.05.    Rights
of Limited Partners

 

Except
as otherwise provided in this Agreement, each Limited Partner shall look solely
to the assets of the Partnership for the return of its Capital Contributions
and shall have no right or power to demand or receive property other than cash
from the Partnership. Except as otherwise expressly provided in this Agreement,
no Limited Partner shall have priority over any other Limited Partner as to the
return of its Capital Contributions, distributions, or allocations.

 

Section 13.06.    Notice
of Dissolution

 

In the
event a Liquidating Event occurs or an event occurs that would, but for
provisions of an election or objection by one or more Partners pursuant to Section 13.01
above, result in a dissolution of the Partnership, the General Partner shall,
within thirty (30) days thereafter, provide written notice thereof to each of
the Partners and to all other parties with whom the Partnership regularly
conducts business (as determined in the discretion of the General Partner) and
shall publish notice thereof in a newspaper of general circulation in each
place in which the Partnership regularly conducts business(as determined in the
discretion of the General Partner).

 

Section 13.07.    Cancellation
of Certificate of Limited Partnership

 

Upon the
completion of the liquidation of the Partnership cash and property as provided
in Section 13.02 above, the Partnership shall be terminated and the
Certificate and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware shall be canceled
and such other actions as may be necessary to terminate the Partnership
shall be taken.

 

Section 13.08.    Reasonable
Time for Winding Up

 

A
reasonable time shall be allowed for the orderly winding up of the business and
affairs of the Partnership 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 shall remain in effect among
the Partners during the period of liquidation.

 

45

 

Section 13.09.    Waiver
of Partition

 

Each
Partner hereby waives any right to partition of the Partnership property.

 

Section 13.10.    Liability
of Liquidator

 

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

 

ARTICLE XIV

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

 

Section 14.01.    Amendments

 

A.    General. Amendments
to this Agreement may be proposed by 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.B
below), the General Partner shall submit any proposed amendment to the Limited
Partners. The General Partner shall seek the written vote of the Partners on
the proposed amendment or shall call a meeting to vote thereon and to transact
any other business that it may deem appropriate. For purposes of obtaining
a written vote, the General Partner may require a response within a
reasonable specified time, but not less than fifteen (15) days, and failure to
respond in such time period shall constitute a vote which is consistent with
the General Partner’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 be effective as an amendment hereto if it is
approved by the General Partner and it receives the Consent of Partners holding
a majority of the Percentage Interests of the Limited Partners (including
Limited Partner Interests held by the General Partner).

 

B.     Amendments Not Requiring Limited Partner Approval. Notwithstanding Section 14.01.A or Section 14.01.C
hereof, the General Partner shall have the power, without the Consent of the
Limited Partners, to amend this Agreement as may be required to facilitate
or implement any of the following purposes:

 

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

 

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

 

(3)  to set forth the designations, rights,
powers, duties, and preferences of the holders of any additional Partnership
Interests issued pursuant to Article IV hereof;

 

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

 

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

 

46

 

(6)  to satisfy any requirements, conditions, or
guidelines contained 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 shall notify the Limited Partners when any action under this Section 14.01.B
is taken in the next regular communication to the Limited Partners.

 

C.     Amendments Requiring Limited Partner Approval
(Excluding General Partner). Notwithstanding
Section 14.01.A above, without the Consent of the Limited Partners (not
including Limited Partner Interests held by the General Partner), the General
Partner shall not amend Section 4.02.A, Section 7.01.A (second
sentence only), Section 7.05, Section 7.06, Section 7.08, Section 11.02,
Section 13.01, this Section 14.01.C or Section 14.02.

 

D.    Other Amendments Requiring Certain Limited Partner
Approval. Notwithstanding anything in
this Section 14.01 to the contrary, this Agreement shall not be amended
with respect to any Partner adversely affected without the Consent of such
Partner adversely affected if such amendment would (i) convert a Limited
Partner’s interest in the Partnership into a general partner’s interest, (ii) modify
the limited liability of a Limited Partner, (iii) amend Section 7.11.A,
(iv) amend Article V, Article VI, or Section13.02.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 in Article I that relate
to the Redemption Right (except as permitted in Section 8.06.E), or (vi) amend
this Section 14.01.D. Moreover, this Agreement may be amended by the
General Partner to provide that certain Limited Partners have the obligation,
upon liquidation of their interests in the Partnership (within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g)), to restore to the Partnership
the amounts of their negative Capital Account balances, if any, for the benefit
of creditors of the Partnership or Partners with positive Capital Account
balances or both, together with any necessary corresponding amendments
(including corresponding amendments to Sections 6.01.A, 6.01.B and Exhibit C),
with the consent of only such Limited Partners and of any other Limited
Partners already subject to such a restoration obligation whose restoration
obligation may be affected by such amendment.

 

E.     Amendment and Restatement of Exhibit A Not An
Amendment. Notwithstanding anything
in this Article XIV or elsewhere in this Agreement to the contrary, any
amendment and restatement of Exhibit A hereto by the General Partner to
reflect events or changes otherwise authorized or permitted by this Agreement,
whether pursuant to Section 7.01.A (20) hereof or otherwise, shall not be
deemed an amendment 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
Limited Partners.

 

Section 14.02.    Meetings
of the Partners

 

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

 

47

 

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

 

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

 

D.    Conduct of Meeting. Each meeting of Partners shall be conducted by the General Partner or
such other Person as the General Partner may appoint pursuant to such rules for
the conduct of the meeting as the General Partner or such other Person deems
appropriate.

 

ARTICLE XV

 

GENERAL PROVISIONS

 

Section 15.01.    Addresses
and Notice

 

Any
notice, demand, request or report required or permitted to be given or made to
a Partner or Assignee under this Agreement shall be in writing and shall be
deemed given or made when delivered in person or when sent by first class United
States mail or by other means of written communication to the Partner or
Assignee at the address set forth in Exhibit A hereto or such other
address as the Partners shall notify the General Partner in writing.

 

Section 15.02.    Titles
and Captions

 

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

 

Section 15.03.    Pronouns
and Plurals

 

Whenever
the context may require, any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of
nouns, pronouns and verbs shall include the plural and vice versa.

 

Section 15.04.    Further
Action

 

The
parties shall execute and deliver all documents, provide all information and
take or refrain from taking action as may be necessary or appropriate to
achieve the purposes of this Agreement.

 

48

 

Section 15.05.    Binding
Effect

 

This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their heirs, executors, administrators, successors, legal representatives
and permitted assigns.

 

Section 15.06.    Creditors

 

Other
than as expressly set forth herein with regard to any Indemnitee, none of the
provisions of this Agreement shall be for the benefit of, or shall be
enforceable by, any creditor of the Partnership.

 

Section 15.07.    Waiver

 

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

 

Section 15.08.    Counterparts

 

This
Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all the parties hereto, notwithstanding
that all such parties are not signatories to the original or the same
counterpart. Each party shall become bound by this Agreement immediately upon
affixing its signature hereto (other than the existing Partners who will become
bound by this Agreement upon its execution by the General Partner).

 

Section 15.09.    Applicable
Law

 

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

 

Section 15.10.    Invalidity
of Provisions

 

If any
provision of this Agreement is or becomes invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby.

 

Section 15.11.    Power
of Attorney

 

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

 

(1)           execute,
swear to, acknowledge, deliver, file and record in the appropriate public
offices (a) all certificates, documents and other instruments (including,
without limitation, this Agreement and the Certificate and all amendments or
restatements thereof) that the General Partner or any Liquidator deems
appropriate or necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a partnership in
which the limited partners have limited liability) in the State of Delaware and
in all other jurisdictions in which the Partnership may conduct business
or own property, (b) all instruments that the General Partner or any
Liquidator deems appropriate or necessary to reflect any amendment, change, 

 

49

 

modification or restatement of this
Agreement in accordance with its terms, (c) all conveyances and other
instruments or documents that the General Partner or any Liquidator deems
appropriate or necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement, including, without
limitation, a certificate of cancellation, (d) all instruments relating to
the admission, withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article XI, XII or XIII hereof 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 and
absolute discretion of the General Partner or any Liquidator, to make,
evidence, give, confirm or ratify any vote, consent, approval, agreement or
other action which is made or given by the Partners hereunder or is consistent
with the terms of this Agreement or appropriate or necessary, in the sole
discretion of the General Partner or any Liquidator, to effectuate the terms or
intent of this Agreement.

 

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

 

B.     Irrevocable Nature. The foregoing power of attorney is hereby declared to be irrevocable and
a power coupled with an interest, in recognition of the fact that each of the
Partners will be relying upon the power of the General Partner or any Liquidator
to act as contemplated by this Agreement in any filing or other action by it on
behalf of the Partnership, and it shall survive and not be affected by the
subsequent Incapacity of any Limited Partner or Assignee and the transfer of
all or any portion of such Limited Partner’s or Assignee’s Partnership Units
and shall extend to such Limited Partner’s or Assignee’s heirs, successors,
assigns and personal representatives. Each such Limited Partner or Assignee
hereby agrees to be bound by any representation made by the General Partner or
any Liquidator, acting in good faith pursuant to such power of attorney; and
each such Limited Partner or Assignee hereby waives any and all defenses which may be
available to contest, negate or disaffirm the action of the General Partner or
any Liquidator, taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the General Partner’s or
Liquidator’s request therefor, such further designation, powers of attorney and
other instruments as the General Partner or the Liquidator, as the case may be,
deems necessary to effectuate this Agreement and the purposes of the
Partnership.

 

Section 15.12.    Entire
Agreement

 

This
Agreement contains the entire understanding and agreement among the Partners
with respect to the subject matter hereof and supersedes any prior written oral
understandings or agreements among them with respect thereto.

 

Section 15.13.    No
Rights as Stockholders

 

Nothing
contained in this Agreement shall be construed as conferring upon the holders
of the Partnership Units any rights whatsoever as stockholders of the General
Partner Entity, including, without limitation, any right to receive dividends
or other distributions made to stockholders of the General Partner Entity or to
vote or to consent or receive notice as stockholders in respect to any meeting
of stockholders for the election of directors of the General Partner Entity or
any other matter.

 

50

 

Section 15.14.    Limitation
to Preserve REIT Status

 

To the
extent that any amount paid or credited to the General Partner or its officers,
directors, employees or agents pursuant to Section 7.04 or Section 7.07
hereof would constitute gross income to the General Partner Entity for purposes
of Section 856(c)(2) or 856(c)(3) of the Code (a “General
Partner Payment”) then, notwithstanding any other provision of this Agreement,
the amount of such General Partner Payments for any fiscal year shall not
exceed the 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 including the amount of any General Partner Payments)
for the fiscal year which is described 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 the Code) derived
by the General Partner Entity from sources other than those described in
subsections (A) through (H) of Section 856(c)(2) of the
Code (but not 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 including the amount of any General Partner
Payments) for the fiscal year which is described 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 the Code) derived
by the General Partner Entity from sources other than those described in
subsections (A) through (I) of Section 856(c)(3) of the Code
(but not including the amount of any General Partner Payments);

 

provided, however, that General Partner Payments in
excess of the amounts set forth in subparagraphs (i) and (ii) above may be
made if the General Partner Entity, as a condition precedent, obtains an
opinion of tax counsel that the receipt of such excess amounts would not
adversely affect the General Partner Entity’s ability to qualify as a REIT. To
the extent General Partner Payments may not be made in a year due to the
foregoing limitations, such General Partner Payments shall carry over and be
treated as arising in the following year, provided, however, that
such amounts shall not carry over for more than five years, and if not paid
within such five year period, shall expire; provided, further,
that (i) as General Partner Payments are made, such payments shall be
applied first to carryover amounts outstanding, if any, and (ii) with
respect to carryover amounts for more than one Partnership Year, such payments
shall be applied to the earliest Partnership Year first.

 

51

 

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

  

 

 

CLASS B UNITHOLDER SIGNATURE
PAGE

 

The undersigned holder of Class B Units in GKK Capital
LP hereby consents to and enters into this Third Amended and Restated Agreement
of Limited Partnership of GKK Capital LP.

 

Signature Line for Class B
Unitholder:

 

	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Date: March [  ],
  2006

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