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Exhibit 10.7  

 
  WARRANT  
    

        THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH
SECURITIES UNDER THE SECURITIES ACT UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.  

  
 

    GMH COMMUNITIES, LP
  GMH COMMUNITIES TRUST
  WARRANT    
    

	

 	
 	

 
	No. 1	 	July 27, 2004,

as amended

        THIS
CERTIFIES THAT, for $1,000,000 received, the receipt and sufficiency of which is hereby acknowledged, Vornado Realty L.P., a Delaware limited partnership ("Vornado"), with its
principal office at 888 Seventh Avenue, New York, New York 10019, and/or its designated affiliates and
permitted transferees and assigns (individually or collectively, the "Holder"), is entitled to purchase from time to time (1) at the LP Exercise Price (as defined below) from GMH Communities,
LP, a Delaware limited partnership, with its principal office at 10 Campus Boulevard, Newtown Square, Pennsylvania 19073 (the "Company"), an LP Fixed Percentage Number (as defined below) of Limited
Partnership Units or (2) at the option of the Holder and at the Trust Exercise Price (as defined below), from GMH Communities Trust, a Maryland real estate investment trust, with its principal
office at 10 Campus Boulevard, Newtown Square, Pennsylvania 19073 (the "Trust"), a Trust Fixed Percentage Number (as defined below) of fully paid and nonassessable Common Shares, or such combination
of the LP Fixed Percentage Number and the Trust Fixed Percentage Number as determined by the Holder, in each case as provided herein, subject to adjustment pursuant to the terms hereof, including but
not limited to, adjustment pursuant to Section 5 hereof, and is entitled to exercise the other appurtenant rights, powers and privileges hereinafter described. 

        1.    DEFINITIONS.    As used herein, the
following terms shall have the following respective meanings: 

        "Additional
Common Equity Securities" has the meaning set forth in Section 5.4(c) hereof. 

        "Affiliate"
shall mean, as to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified
Person. For the 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 "affiliated," "controlling" and "controlled" have meanings correlative to the foregoing. 

        "Applicable
Price" shall mean: 

	(i)
	for
purposes of any issuance of Additional Common Equity Securities under Section 5.4, the greater of (A) the Fair Market Value of a unit or share of
Common Equity Securities being issued (or, if being issued in an underwritten offering, the Market Price on the day that such offering is being priced), and (B) the then effective Exercise
Price; and

	(ii)
	for
purposes of any issuance under Section 5.1(b), the greater of (A) the Market Price on the date of such issuance, and (B) the then effective
Exercise Price; provided, however, that in no event shall the Fair Market Value or the Market Price for purposes of determining the 

 

Applicable
Price be less than $2,871.506 per Common Share or $2,871.506 per Limited Partnership Unit. 

        "Board"
shall mean the Board of Trustees, or its equivalent, of the Trust. 

        "Business
Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or
executive order to close. 

        "Class A
Limited Partnership Interest" shall mean the Class A limited partnership interest in the Company and any successor common interest in the Company held directly or
indirectly by Gary M. Holloway. 

        "Class B
Limited Partnership Interest" shall mean the Class B limited partnership interest in the Company. 

        "Code"
shall mean the Internal Revenue Code of 1986, as amended. 

        "Common
Equity Security" shall mean (1) a Limited Partnership Unit, in the case of an exercise of the Warrant to purchase Limited Partnership Units or (2) a Common Share,
in the case of an exercise of the Warrant to purchase Common Shares. 

        "Common
Shares" shall mean common shares of beneficial interest, par value $0.001 per share, of the Trust, and all other stock of any class or classes (however designated after the date
hereof) of the Trust from time to time outstanding, the holders of which have the right, without limitation as to amount, either to all or to a share of the balance of current dividends or liquidating
distributions after the payment of dividends and distributions on any shares entitled to preference. 

        "Company"
has the meaning set forth in the preamble hereto. 

        "Company
Restricted Period" has the meaning set forth in Section 26 hereof. 

        "Conversion
Right" has the meaning set forth in Section 2.2 hereof. 

        "Convertible
Securities" has the meaning set forth in Section 5.4(b) hereof. 

        "Declaration
of Trust" shall mean the Trust's Declaration of Trust, as may be amended from time to time. 

        "Effective
Price" has the meaning set forth in Section 5.4(c) hereof. 

        "Exchange
Act" shall mean the United States Securities Exchange Act of 1934, as amended. 

        "Excluded
Securities" has the meaning set forth in Section 26(a) hereof. 

        "Excluded
Services" has the meaning set forth in Section 26(d) hereof. 

        "Exercise
Period" shall mean the time period commencing with the date hereof and ending at the earlier of (i) in the event of an Initial Public Offering that results in mandatory
exercise of a portion of this Warrant pursuant to Section 2.1(b) hereof, 5:00 p.m., New York City time, on the date that is eighteen months from the closing of such offering and
(ii) 5:00 p.m., New York City time, on the date that is three (3) years from the date hereof. 

        "Exercise
Price" shall mean (1) the LP Exercise Price, in the case of an exercise of the Warrant to purchase Limited Partnership Units or (2) the Trust Exercise Price, in
the case of an exercise of the Warrant to purchase Common Shares. 

        "Exercise
Shares" shall mean the units or shares, as applicable, of the Common Equity Securities issuable upon exercise of this Warrant, subject to adjustment pursuant to the terms
herein, including, but not limited to, adjustment pursuant to Section 5 hereof, and shall also mean any other shares, 

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securities,
assets or property otherwise issuable or that may be acquired upon exercise of this Warrant. The number of Exercise Shares shall equal (1) the LP Fixed Percentage Number, in the
case of an exercise of the Warrant to purchase Limited Partnership Units or (2) the Trust Fixed Percentage Number, in the case of an exercise of the Warrant to purchase Common Shares, in each
case subject to adjustment pursuant to the terms herein, including, but not limited to, adjustment pursuant to Section 5 hereof. 

        "Fair
Market Value" shall mean: 

	(i)
	with
respect to a Common Equity Security, or any other security of the Trust, the Company or any other issuer:

	(a)
	the
average daily Market Price during the period of the most recent twenty (20) Trading Days, ending on the last Trading Day before the date of determination of
Fair Market Value, if such class of Common Equity Securities or other security is (i) traded on a national securities exchange or admitted to unlisted trading privileges on such an exchange or
(ii) is quoted on the National Market System of the Nasdaq Stock Market (the "National Market System") or the Nasdaq Small Cap Market (the "Small Cap Market"); or

	(b)
	if
such class of Common Equity Securities or other security is not then so listed, admitted to trading or quoted, or if then so listed, admitted to trading or quoted for
less than twenty (20) Trading Days, the Fair Market Value shall be determined in accordance with the Valuation Procedure; or

	(ii)
	with
respect to any assets or property other than cash or Common Equity Securities or other securities, the fair market value as determined in accordance with the
Valuation Procedure. 

        "First
Dilutive Issuance" has the meaning set forth in Section 5.4(d) hereof. 

        "GMH
GP" has the meaning set forth in Section 3.2 hereof. 

        "Holder"
has the meaning set forth in the preamble hereto. 

        "Initial
Public Offering" shall mean an initial public offering by the Trust of its Common Shares as a result of which the Trust obtains an UPREIT Interest. 

        "IPO
Date" shall mean the date on which an Initial Public Offering is consummated. 

        "Issuer"
shall mean (1) the Company, in the case of an exercise of the Warrant to purchase Limited Partnership Units or (2) the Trust, in the case of an exercise of the
Warrant to purchase Common Shares. 

        "Lien"
has the meaning set forth in Section 5.11 hereof. 

        "Limited
Partnership Units" shall mean units representing the Class A Limited Partnership Interest, and all other interests of any class or classes (however designated after the
date hereof) of the Company from time to time outstanding, the holders of which have the right, without limitation as to amount, either to all or to a share of the balance of current distributions or
liquidating distributions after the payment of distributions on any interests in the Company entitled to preference. 

        "LP
Exercise Price" shall mean (i) with respect to each of the first 19,461.216 Limited Partnership Units issuable upon exercise of the Warrant, $2,569.212 per Limited Partnership
Unit and (ii) with respect to each of the next 15,363.715 Limited Partnership Units issuable upon exercise of the Warrant following the issuance of the first 19,461.216 Limited Partnership
Units referred to in clause (i), $3,254.421 per Limited Partnership Unit, in each case subject to adjustment pursuant to the terms herein, including, but not limited to, adjustment pursuant to
Section 5 hereof. The parties hereto acknowledge and agree that the LP Exercise Price set forth herein is based on 66,000 Limited 

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Partnership
Units being the only Limited Partnership Units issued and outstanding as of the date hereof. 

        "LP
Fixed Percentage Number" shall mean, subject to adjustment pursuant to the terms herein, including, but not limited to, adjustment pursuant to Section 5 hereof, the number of
Limited Partnership Units representing a 34.54% economic interest in the Company (after taking into consideration the number of Limited Partnership Units issuable upon exercise of the Warrant), as
determined by the Holder prior to and without regard to the occurrence of an Initial Public Offering; provided that if such an offering does occur, the
percentage interest in the Company to be received upon exercise of the Warrant shall be adjusted as if the Warrant had been exercised in full immediately prior to the consummation of such offering and
shall be subject to adjustment pursuant to the terms herein, including, but not limited to, adjustment pursuant to Section 5 hereof, following such offering. As an illustration, assuming a
total of 1,000,000 Limited Partnership Units outstanding immediately prior to the consummation of an Initial Public Offering, the LP Fixed Percentage Number immediately prior to the consummation of an
Initial Public Offering would equal 1,000,000 × 0.3454 / (1 - 0.3454) = 527,650.474; assuming further that (i) the Trust consummates
an Initial Public Offering where it acquires, with the proceeds from such offering, additional 200,000 Limited Partnership Units and (ii) immediately prior to the exercise of the Warrant, there
are no further transactions in equity securities of the Company or transactions that require adjustment pursuant to Section 5 hereof; then, upon exercise of the Warrant in full for Limited
Partnership Units, the LP Fixed Percentage Number is 527,650.474, and the percentage interest in the Company to be received by the Holder upon exercise of the Warrant in full would be 527,650.474 /
(1,000,000 + 527,650.474 + 200,000) = 30.541%. 

        "Management
Shift" has the meaning set forth in the Partnership Agreement. 

        "Market
Price" shall be, as of any specified date with respect to any share of any class of Common Equity Securities or any other security of the Trust, the Company or any other issuer,
if such class of Common Equity Securities or other security is traded on a national securities exchange or admitted to unlisted trading privileges on such an exchange, or is quoted on the National
Market System or the Small Cap Market, the weighted average sale price of such class of Common Equity Securities or other security on such exchange or on the National Market System or the Small Cap
Market on such date or if no such sale is made on such day, the mean of the closing bid and ask prices for such day on such exchange or on the National Market System or the Small Cap Market;  provided that if such class of Common Equity Securities or other security is not so listed or admitted to unlisted trading privileges or quoted, the
Market Price as of a specified date shall be the mean of the last bid and ask prices reported on such date (x) by the Nasdaq or (y) if reports are unavailable under clause (x)
above by the National Quotation Bureau Incorporated. 

        "National
Market System" has the meaning set forth in the definition of Fair Market Value. 

        "Notice
of Exercise" means the notice attached hereto as Annex A-1 or A-2, as the case may be. 

        "Partnership
Agreement" shall mean the Amended and Restated Limited Partnership Agreement of the Company, dated as of July 20, 2004, as amended, by and among GMH GP, GMH LP LLC, a
Delaware limited liability company, or any successor general partner, Vornado Community GP LLC, a
Delaware limited liability company, and Vornado Community LP LLC, a Delaware limited liability company. 

        "Person"
shall mean any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof, or any entity whatsoever. 

        "Qualifying
Dilutive Issuance" has the meaning set forth in Section 5.4(a) hereof. 

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        "Record
Date" shall mean, with respect to any dividend, other distribution or issuance, the record date for the determination of stockholders entitled to receive such dividend,
distribution or issuance, or if no such record date exists, the date of such dividend, distribution or issuance. 

        "Registration
Rights Agreement" has the meaning set forth in Section 7 hereof. 

        "SEC"
has the meaning set forth in Section 3.1(d) hereof. 

        "Securities
Act" shall mean the United States Securities Act of 1933, as amended. 

        "Significant
Subsidiary" has the meaning set forth in Rule 1-02(w) of Regulation S-X under the Securities Act or any successor rule. 

        "Small
Cap Market" has the meaning set forth in the definition of Fair Market Value. 

        "Subsequent
Dilutive Issuance" has the meaning set forth in Section 5.4(d) hereof. 

        "Trading
Day" shall mean, with respect to any class of Common Equity Securities or any other security of the Trust, the Company or any other issuer, a day (i) on which the
securities exchange or other trading platform applicable for purposes of determining the Market Price of a share or unit of such
class of Common Equity Securities or other security shall be open for business or (ii) for which quotations from such securities exchange or other trading platform of the character specified
for purposes of determining such Market Price shall be reported. 

        "Trust"
has the meaning set forth in the preamble hereto and shall include any entity that becomes general partner of the Company in connection with the establishment of an "UPREIT"
structure. 

        "Trust
Exercise Price" shall mean (i) with respect to each Common Share that constitutes the first 19.302/34.54 of the Trust Fixed Percentage Number (as then in effect) of Common
Shares issuable upon exercise of the Warrant, $2,590,405.139 (i.e., $50,000,000 divided by 19.302 or the cost of each one (1) percent of the
first 19.302% of the Common Shares deliverable hereunder) divided by 1/34.54 of the Trust Fixed Percentage Number (as then in effect) and (ii) with respect to each Common Share that constitutes
the next 15.238/34.54 of the Trust Fixed Percentage Number (as then in effect) of Common Shares issuable upon exercise of the Warrant following the issuance of the first 19.302/34.54 of the Trust
Fixed Percentage Number of Common Shares referred to in clause (i), $3,281,270.508 (i.e., $50,000,000 divided by 15.238 or the cost of each one
(1) percent of the next 15.238% of the Common Shares deliverable hereunder) divided by 1/34.54 of the Trust Fixed Percentage Number (as then in effect), in each case subject to adjustment
pursuant to the terms herein, including, but not limited to, adjustment pursuant to Section 5 hereof. As an illustration, assuming that the Trust Fixed Percentage Number is 527,650.474 as set
forth in the illustration included in the definition of Trust Fixed Percentage Number below, the Trust Exercise Price is $2,590,405.139/(527,650.474/34.54) or $169.568 for each Common Share
constituting the first 19.302/34.54 of the 527,650.474 shares (i.e., the first 294,867.095 shares) acquired. 

        "Trust
Fixed Percentage Number" shall mean, subject to adjustment pursuant to the terms herein, including, but not limited to, adjustment pursuant to Section 5 hereof, the number
of Common Shares representing a 34.54% economic interest in the Company (after taking into consideration the number of Common Shares issuable upon exercise of the Warrant), as determined by the Holder
prior to and without regard to the occurrence of an Initial Public Offering; provided that if such an offering does occur, the percentage interest in
the Company to be received upon exercise of the Warrant shall be adjusted downward as if the Warrant had been exercised in full immediately prior to the consummation of such offering and any
subsequent offering and shall be subject to adjustment pursuant to the terms herein, including, but not limited to, adjustment pursuant to Section 5 hereof, following such offering. As an
illustration, assuming (i) a total of 1,000,000 Common Shares outstanding, immediately prior to the exercise of the Warrant, as a result of an Initial Public Offering by the Trust that did not
require any adjustments pursuant to Section 5 hereof; (ii) that the Trust purchased 1,000,000 Limited 

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Partnership
Units with the proceeds from the issuance of such shares; (iii) that such purchase resulted in the Trust having a 50% UPREIT Interest (with the Company having a total of
1,000,000/0.50 or 2,000,000 aggregate number of Limited Partnership Units outstanding immediately prior to the exercise of the Warrant) and (iv) immediately prior to the exercise of the Warrant
there have been no other transactions in equity securities of the Trust or the Company; then, upon exercise of the Warrant in full for Common Shares, the Trust Fixed Percentage Number is
(1,000,000/0.6546) - 1,000,000 or 527,650.474, assuming further that each Common Share may purchase one Limited Partnership Unit with the proceeds from the Warrant exercise. 

        "Trust
Restricted Period" has the meaning set forth in Section 26 hereof. 

        "UPREIT
Interest" shall mean, subsequent to the establishment of an "UPREIT" structure where the Trust holds, either directly or through one or more intermediaries, the sole general and
certain limited partnership interests in the Company, the percentage economic interest in the Company as represented by the aggregate of such general and limited partnership interests held by the
Trust. 

        "Valuation
Procedure" shall mean a determination made in good faith by (1) the Board that is set forth in resolutions of the Board that are certified by the Secretary of the Trust
or (2) prior to an Initial Public Offering of the Trust, the general partners of the Company that is set forth in resolutions of such general partners that are certified by their respective
Secretary, which certified resolutions (i) set forth the basis of the Board's or general partners' (as the case may be) determination which, in the case of a valuation in excess of
$10 million, shall include the Board's or general partners' (as the case may be) reliance on the valuation of a nationally recognized investment banking or appraisal firm selected by the Holder
and (ii) are delivered to the Holder within ten (10) Business Days following such determination. A Valuation Procedure with respect to the value of any capital stock shall be based on
the price that would be paid for all of the capital stock of the issuer in an arm's-length transaction between a willing buyer and a willing seller (neither acting under compulsion) without any
discount or provision for a minority interest, lack of liquidity or similar discount. 

        "Warrant"
shall mean this warrant to purchase Limited Partnership Units or Common Shares, as the case may be. 

        "Withdrawal
Period" has the meaning set forth in Section 2.3 hereof. 

        2.    EXERCISE OF WARRANT.    

        2.1    EXERCISE.    (a) This Warrant
may be exercised by the Holder in whole or in part at any time during the Exercise Period, by delivery of the following to the Issuer at its address listed on the signature page hereof (or at such
other address as the Issuer may designate by ten (10) days' advance written notice to the Holder): 

	(i)
	an
executed Notice of Exercise;

	(ii)
	the
Exercise Price (A) in cash or by check, or (B) pursuant to Section 2.2 hereof, (C) surrender of the Holder's Class B Limited
Partnership Interest or (D) any combination of (A), (B) or (C) above; and

	(iii)
	this
Warrant. 

        In
the event the Holder determines to pay the Exercise Price with the surrender of a portion of the Holder's Class B Limited Partnership Interest, the portion of Class B
Limited Partnership Interest surrendered shall be valued at $1,000 for each $1,000 cash amount of Class B Limited Partnership Interest invested, reduced by the amount of cash capital returned
on such Class B Limited Partnership Interests. 

        This
Warrant may not be exercised for amounts that would require the payment of less than $10 million of aggregate Exercise Price
(i.e., the aggregate amount derived by multiplying the then 

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applicable
Exercise Price by the number of Exercise Shares deliverable pursuant to such exercise) or, if the Holder owns a Warrant that if exercised in full would require the payment of less than
$10 million of aggregate Exercise Price, for less than the entire Warrant. 

        An
executed Notice of Exercise must be delivered not later than 10 Business Days before the date on which such exercise is to occur, which date will be set forth by the Holder in the
Notice of Exercise; provided, however, that in the event the Trust intends to print and distribute to potential investors in connection with its Initial
Public Offering a preliminary prospectus, the Trust will give the Holder not less than 15 Business Days prior written notice of its intention to file such preliminary prospectus with the SEC together
with a copy of such preliminary prospectus, in which case the Holder will have five (5) Business Days from its receipt of such notice and prospectus to notify the Issuer of its intention to
exercise all or a part of this Warrant in connection with such Initial Public Offering. In the event a Notice of Exercise is not so delivered within such period, the Holder may not deliver a Notice of
Exercise until the earlier of (i) 60 days from the date that written notice of such filing is delivered to the Holder; (ii) the consummation of such Initial Public Offering and
(iii) the date the preliminary prospectus is amended or modified for any reason other than the inclusion of final pricing information that is within the range of prices on the cover of such
preliminary prospectus. Any Notice of Exercise delivered by the Holder in connection with an Initial Public Offering may be withdrawn or amended in the event of an amendment or modification of the
preliminary prospectus delivered to the Holder hereunder for any reason other than the inclusion of final pricing information that is within the range of prices on the cover of such preliminary
prospectus. 

        In
no event shall the maximum amount payable under this Warrant exceed $100 million. 

        (b)   In
the event of an Initial Public Offering, this Warrant shall be automatically exercised at the closing for such offering for the Trust Fixed Percentage Number of
Common Shares or, at the option of the Holder, an LP Fixed Percentage Number of Limited Partnership Units representing, in each case, a 19.302% economic interest in the Company, subject to adjustment
as provided in this Warrant, including Section 5 hereof, if and only if the sale of such number of Common Shares representing such 19.302% interest at the price per share set forth on the cover
page of the final prospectus for the Initial Public Offering would result in an aggregate offering price for such Common Shares of at least $80 million. If the aggregate offering price
utilizing the price to the public set forth on the cover page of the final prospectus for such offering in respect of such number of Common Shares would not result in at least $80 million, then
the Warrant shall not be automatically exercised. 

        Payment
of the Exercise Price in the event of mandatory exercise pursuant to this Section 2.1(b) shall be by surrender of $50 million of Class B Limited Partnership
Interest. Upon the surrender of $50 million of Class B Limited Partnership Interest as payment of the Exercise Price as provided herein, such amount of Class B Limited Partnership
Interest shall be cancelled. 

        (c)   Upon
the exercise of this Warrant, a certificate or certificates for the Exercise Shares so purchased, registered in the name of the Holder or such other Person as may
be designated by the Holder (to the extent such transfer is not restricted and upon payment of any transfer taxes that are required to be paid by the Holder in connection with any such transfer),
shall be issued and delivered to the Holder or such other Person as promptly as practicable (and in any event within five (5) Business Days) after receipt of the Notice of Exercise. If this
Warrant shall not have been exercised in full, a new Warrant exercisable for the number of Exercise Shares remaining shall be executed by the Trust, the Company,
GMH GP and Gary M. Holloway and delivered at the same time as the certificate (or certificates) for the Exercise Shares that are being issued. 

        The
Person in whose name any certificate or certificates for the Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of
such shares on the date on which this Warrant was surrendered and payment of the Exercise Price was made, 

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irrespective
of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Issuer are closed, such
Person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open (whether before or after the end of the
Exercise Period). 

        2.2    NET EXERCISE.    

        (a)   Notwithstanding
any provision herein to the contrary, if the Fair Market Value of one Exercise Share is greater than the Exercise Price (at the date of calculation as
set forth below), then in lieu of exercising this Warrant by payment of cash, check or surrendered Class B Limited Partnership Interest, the Holder may elect (the "Conversion Right") to receive
Exercise Shares equal to the value (as determined below) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the principal office of the Issuer together with the
properly endorsed Notice of Exercise in which event the Issuer shall issue to the Holder a number of Exercise Shares computed using the following formula: 

X =
Y * (A-B)/A 

        Where:

        X =
the number of Exercise Shares to be issued. 

        Y =
the number of Exercise Shares purchasable under this Warrant or, if only a portion of this Warrant is being exercised, the portion of this Warrant being exercised (at the date
of such calculation). 

        A =
the Fair Market Value of one Exercise Share (at the date of such calculation). 

        B =
the Exercise Price (as adjusted pursuant to Section 5 hereof to the date of such calculation). 

        The
Company shall pay all reasonable administrative costs incurred by the Holder in connection with the exercise of the Conversion Right by the Holder pursuant to this
Section 2.2. 

        (b)   Unless
indicated otherwise in writing by the Holder, this Warrant shall automatically be exercised on the last day of the Exercise Period by the Holder hereof pursuant
to Section 2.2(a) hereof for Common Shares if the Fair Market Value of one Exercise Share is greater than the Exercise Price per share on such date. The Issuer shall take all actions and
execute and deliver all documents necessary to effect the foregoing, and the Holder shall be entitled to receive Exercise Shares as if such Holder had exercised this Warrant pursuant to
Section 2.2(a) hereof for the full number of Exercise Shares purchasable under this Warrant on such date. 

        (c)   This
Warrant may not be exercised pursuant to this Section 2.2 for amounts that would result in an aggregate Exercise Price
(i.e., the product of Y and B as denoted in the formula set forth under Section 2.2(a) hereof) of less than $10 million or, if the Holder
owns a Warrant that if exercised in full would result in an aggregate Exercise Price of less than $10 million, for less than the entire Warrant; provided,
however, that the preceding sentence in this Section 2.2(c) shall not apply to an automatic exercise of this Warrant pursuant to Section 2.2(b) hereof. 

        2.3    RESTRICTION ON EXERCISE.    Except as
set forth in the proviso below, in no event may the Warrant be exercised at any time to the extent that the issuance of the Exercise Shares in connection with such exercise would cause the Trust to be
"closely held" within the meaning of Section 856(h) of the Code or any successor provision; provided, however, that to the extent an exercise of
the Warrant is restricted by this Section 2.3 with respect to some or all of the Exercise Shares, the Trust or the Company shall within five (5) Business Days after the Holder delivers a
Notice of Exercise give written notice to the Holder of such restriction, and the Holder shall have five (5) Business Days from the date it receives such notice to withdraw its Notice of
Exercise (the "Withdrawal Period"). If the Holder does not withdraw such notice then the Warrant shall be exercisable and deemed to have 

8

 

been
exercised for Limited Partnership Units but the obligation to deliver such Units may, at the option of either the Trust or the Company, be satisfied by the payment of cash equal to the Fair
Market Value of such unexercised portion of the Warrant not later than three (3) Business Days after the last day of the Withdrawal Period (such value determined at the date of delivery of the
Notice of Exercise). 

        3    COVENANTS AND REPRESENTATIONS OF THE TRUST AND THE COMPANY; SECURITIES
MATTERS.    

        3.1    COVENANTS AS TO EXERCISE SHARES.    

        (a)   Each
of the Trust and the Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of this Warrant will, upon issuance, be duly
authorized, validly issued and outstanding, fully paid and nonassessable in the case of Common Shares, free of preemptive rights and free from all taxes, liens, charges and security interests with
respect to the issuance thereof. If the class of the Common Equity Securities or the class of securities of any other Exercise Shares is then listed or quoted on a national securities exchange, the
National Market System or the Small Cap Market, all such Exercise Shares upon issuance shall also be so listed or quoted. Each of the Trust and the Company further covenants and agrees that it will,
at all times during the Exercise Period, have authorized and reserved solely for purposes of the exercise of this Warrant, free from preemptive rights, a sufficient number of units or shares of its
Common Equity Securities or the class of securities of any other Exercise Shares to provide for the exercise in full of this Warrant (without taking into account any possible exercise pursuant to
Section 2.2 hereof). If at any time during the Exercise Period, the number of authorized but unissued units or shares of Common Equity Securities or the class of securities of any other
Exercise Shares shall not be sufficient to permit exercise in full of this Warrant (without taking into account any possible exercise pursuant to Section 2.2 hereof), the Trust or the Company,
as the case may be, will promptly take such corporate or limited partnership action as shall be necessary to increase its authorized but unissued units or shares of Common Equity Securities or the
class of securities of any other Exercise Shares to such number of shares as shall be sufficient for such purposes. Each of the Trust and the Company covenants and agrees that if any units or shares
of Common Equity Securities or any other class of capital stock to be reserved for the purpose of the issuance of such units or shares upon the exercise of this Warrant require registration with or
approval of any governmental authority under any Federal or state law before such units or shares may be validly issued or delivered upon exercise, then the Trust or the Company, as the case may be,
will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be. 

        (b)   In
the event that at any time, including as a result of any provision of Section 5, the Exercise Shares shall include any shares or other securities other than
units or shares of Common Equity Securities, or any other property or assets, the terms of this Warrant shall be modified or supplemented (in the absence of express written documentation thereof,
shall be deemed to be so modified or supplemented), and each of the Trust and the Company shall take all actions as may be necessary to preserve, in a manner and on terms as nearly equivalent as
practicable to the provisions of this Warrant as they apply to the Common Equity Securities, the rights of the Holder hereunder (including, without limitation, the provisions of Section 5
hereof), including any equitable replacements of the term "Common Equity Securities" with the term "Exercise Shares" and adjustments of any formula included herein. 

        (c)   To
the extent that the Trust and/or the Company are subject to the reporting requirements of the Exchange Act at any time during the Exercise Period, the Trust's and/or
the Company's filings under the Exchange Act will comply, during the Exercise Period, in all material respects as to form with the Exchange Act and the rules and regulations thereunder. If required
pursuant to Regulation D under the Securities Act or any successor regulation thereto, the Trust or 

9

 

the
Company, as the case may be, shall timely file a Form D in respect of the issuance of this Warrant and the issuance of the Exercise Shares. 

        (d)   Until
the later of (i) the date as of which a Holder may sell all of the Exercise Shares without restriction pursuant to Rule 144(k) under the Securities
Act, or any successor rule, and (ii) the last date on which any of the Warrants remain outstanding, to the extent that the Trust and/or the Company are subject to the reporting requirements of
the Exchange Act prior to such date, the Trust and/or the Company shall timely file all reports required to be filed with the Securities and Exchange Commission (the "SEC") pursuant to the Exchange
Act, and the Trust and/or the Company shall not terminate its status as an issuer required to file reports under the Exchange Act other than as a result of a merger or consolidation of the Trust
and/or the Company where the Trust or the Company is not the surviving entity. 

        3.2    NO IMPAIRMENT.    Except and to the
extent as waived or consented to in writing by the Holder, none of the Trust, the Company and GMH Communities GP, LLC, a Delaware limited liability company and a general partner of the Company
(together with its successors, including GMH Communities GP Trust, "GMH GP") will, by amendment of its declaration of trust, limited partnership agreement or limited liability company agreement, as
the case may be, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the Trust, the Company or GMH GP, but will at all times in good faith assist in the carrying out of all the provisions of
this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against impairment consistent with the intent and principles
expressed in Section 5.8 below. The foregoing shall be subject to the right of the Trust, the Company and GMH GP to amend the Declaration of Trust to (i) create a special ownership limit
of 8.5% for the Steven Roth Group (defined to include Steven Roth and each person (other the Trust and any person that is a Vornado Holder (as defined below)) to whom shares actually owned by Steven
Roth would be attributed under the constructive ownership rules of either Section 544 of the Code, as modified by Section 856(h) of the Code, or Section 318(a) of the Code, as
modified by Section 856(d)(5) of the Code) and (ii) exempt the Holder and its subsidiaries (except where the Holder or such a subsidiary is treated as an "individual" for purposes of
Section 542(a)(2) of the Code or any successor provision) from the application of the ownership limits set forth in the Declaration of Trust, except to the extent that (a) their
ownership of Shares, directly, indirectly or under applicable constructive ownership rules, would cause the Trust to be treated as "closely held" within the meaning of Section 856(h) of the
Code, (b) any person (other than the Steven Roth Group, the Holloway Group (defined to include Gary M. Holloway and each person (other than the Trust) to whom shares actually owned by Gary M.
Holloway would be attributed under the constructive ownership rules of either Section 544 of the Code, as modified by Section 856(h) of the Code, or Section 318(a) of the Code, as
modified by Section 856(d)(5) of the Code), or the Vornado Holder (defined to include each of (i) Vornado, (ii) Vornado Realty Trust, a Maryland real estate investment trust,
(iii) any affiliate of Vornado designated pursuant to this Warrant, (iv) any permitted transfer or assignee of Vornado for purposes of this Warrant and (v) any entity in which a
person described in any of clauses (i), (ii), (iii) or (iv) holds a direct or indirect interest; provided, however, that no person shall be treated as a Vornado Holder at any time that
such person is treated as an "individual" for purposes of Section 542(a)(2) of the Code or any successor provision)) holding a direct or indirect interest (including through the application of
applicable constructive ownership rules) in the Holder or such a subsidiary would own directly or indirectly (including through the application of applicable constructive ownership rules) shares in
the Trust in excess of the ownership limitations (not to be less than, with respect to the Common Shares, 7.1% of the outstanding Common Shares (by number or value, whichever is more restrictive) and,
if the Trust has more than one class of shares outstanding, 7.1% of the Trust's outstanding shares, by value) set forth at any time in the Declaration of Trust, (c) a member of the Steven Roth
Group holding a direct or indirect interest (including through the application of 

10

 

applicable
constructive ownership rules) in the Holder or such a subsidiary would own directly or indirectly (including through the application of applicable constructive ownership rules) shares in
the Trust such that the members of the Steven Roth Group, in the aggregate, would own directly or indirectly (including through the application of applicable constructive ownership rules) shares in
the Trust in excess of the ownership limitations (not to be less than, with respect to the Common Shares, 8.5% of the outstanding Common Shares (by number or value, whichever is more restrictive) and,
if the Trust has more than one class of shares outstanding, 8.5% of the Trust's outstanding shares (by value) set forth in the Declaration of Trust at any time for the Steven Roth Group, (d) a
member of the Holloway Group holding a direct or indirect interest (including through the application of applicable constructive ownership rules) in the Holder or such a subsidiary would own directly
or indirectly
(including through the application of applicable constructive ownership rules) shares in the Trust such that the members of the Holloway Group, in the aggregate, would own directly or indirectly
(including through the application of applicable constructive ownership rules) shares in the Trust in excess of the ownership limitations (not to be less than, with respect to the Common Shares, 20%
of the outstanding Common Shares (by number or value, whichever is more restrictive) and, if the Trust has more than one class of shares outstanding, 20% of the Trust's outstanding shares (by value)
set forth at any time in the Declaration of Trust at any time for the Holloway Group (provided, in the case of this clause (d), that the Declaration of Trust at such time provides that in
circumstances where clause (d) applies, Equity Shares not Beneficially or Constructively Owned by Vornado Holders will be transferred to a charitable trust (where such transfers would help to
reduce such excess ownership by members of the Holloway Group) before Equity Shares Beneficially or Constructively Owned by Vornado Holders are so transferred to eliminate such excess ownership by
members of the Holloway Group) and (e) during any period on or after the date of the first closing of an issuance of Common Shares pursuant to an underwritten offering and during which it is
not the case that either (i) each class of the Trust's shares qualifies as a class of "publicly-offered securities" (within the meaning of Section 2510.3-101(b)(2) of the
regulations of the Department of Labor) or (ii) the Trust qualifies for another exception to Section 2510.3-101 of the regulations of the Department of Labor (other than the
exception that provides that the assets of an ERISA Investor (defined to mean (I) an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), whether or not subject to ERISA, or a plan described in Section 4975 of the Code (including, without limitation, foreign plans and governmental plans) (each a
"Plan"), (II) an entity whose underlying assets include the assets of a Plan by reason of the Plan's direct or indirect investment in such entity or (III) an entity that otherwise
constitutes a benefit plan investor within the meaning of Section 2510.3-101 of the regulations of the Department of Labor) will not include any of the underlying assets of an
entity in which it invests if at all times less than 25% of the value of each class of equity interests in the entity is held by ERISA Investors), the direct or indirect ownership of shares in the
Trust (including through the application of applicable constructive ownership rules) by the Holder or such a subsidiary would result in any person owning, directly or indirectly (including through the
application of applicable constructive ownership rules), shares in the Trust such that 25% or more of any class of shares in the Trust would be owned, directly or indirectly (including through the
application of applicable constructive ownership rules), by one or more ERISA Investors (provided, in the case of this clause (e), that the Declaration of Trust at such time provides that in
circumstances where clause (e) applies, Equity Shares not Beneficially Owned by Vornado Holders will be transferred to a charitable trust (where such transfers would help to reduce such excess
ownership by ERISA Investors) before Equity Shares Beneficially Owned by Vornado Holders are so transferred to eliminate such excess ownership by ERISA Investors). For these purposes, "applicable
constructive ownership rules" shall mean the rules set forth in or under Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code, and the rules set forth in or under
Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The Trust and Gary M. Holloway, as the sole shareholder of the Trust, covenant and agree that the Trust's
declaration of trust (i) does not, as of the date hereof, contain any limitation on ownership that would prevent the Holder from exercising this Warrant in full 

11

 

at
any time and holding all or any of the Common Shares or Limited Partnership Units deliverable hereunder, other than those restrictions permitted by the second preceding sentence, and
(ii) will not contain any limitation on ownership that would prevent the Holder from exercising this Warrant in full at any time and holding all or any of the Common Shares or Limited
Partnership Units deliverable hereunder, other than those limitations described in the second preceding sentence; except, in the case of both (i) or (ii), in circumstances where the Holder is
treated as "individual" for purposes of Section 542(a)(2) of the Code (in which circumstances the Holder shall be subject to the same
ownership restrictions that apply under the Declaration of Trust to persons that are (i) members of the Steven Roth Group, if the Holder is a member of the Steven Roth Group,
(ii) members of the Holloway Group, if the Holder is a member of the Holloway Group and (iii) to persons that are not members of the Steven Roth Group or the Holloway Group and who have
not obtained an exemption from the ownership limitations from the Trust's board of trustees, if the Holder is not a member of the Steven Roth Group or the Holloway Group). The parties hereto
acknowledge and agree that the Trust is issuing and the Holder purchasing this Warrant with the expectation that the Trust will become, through a 100% owned subsidiary, the sole general partner of the
Company for purposes of completing an Initial Public Offering and that none of the Trust, the Company, GMH GP or Gary M. Holloway shall take any action to cause or that results in another Person
becoming general partner of the Company, by merger, consolidation or otherwise, without causing such entity to expressly assume all of the covenants, agreements, representations and warranties of the
Trust hereunder. In the event that GMH GP effects an initial public offering as general partner of the Company, then GMH GP shall execute an instrument assuming all of the covenants, agreements,
representations and warranties of the Trust hereunder. 

        3.3    NOTICES OF RECORD DATE.    In the event
(i) the Trust or the Company takes a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other
distribution, (ii) the Trust or the Company authorizes the granting to the holders of Common Equity Securities (or holders of the class of securities of any other Exercise Shares) of rights to
subscribe to or purchase any shares of capital stock of any class or securities convertible into any shares of capital stock or of any other right, (iii) the Trust or the Company authorizes any
reclassification of, or any recapitalization involving, any class of Common Equity Securities or any consolidation or merger to which the Trust or the Company is a party and for which approval of the
stockholders of the Trust or the limited partners of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Trust or the Company, (iv) the Trust or
the Company authorizes or consents to or otherwise commences the voluntary or involuntary dissolution, liquidation or winding up of the Trust or the Company, or (v) the Trust or the Company
authorizes or takes any other action that would trigger an adjustment in the Exercise Price or the number or amount of units or shares of Common Equity Securities or other Exercise Shares subject to
this Warrant (other than a stock split or combination), the Trust or the Company shall mail to the Holder, at least twenty (20) days prior to the earlier of the record date for any such action
or stockholder vote and the date of such action, a notice specifying (a) which action is to be taken and the date on which any such record is to be taken for the purpose of any such action,
(b) the date that any such action is to take place, and (c) the amount and character of any stock, other securities or property and amounts, or rights or options with respect thereto,
proposed to be issued, granted or delivered to each holder of Common Equity Securities (or holders of the class of securities of any other Exercise Shares). 

        3.4    APPROVAL BY SHAREHOLDER AND GENERAL PARTNER AND LIMITED
PARTNERS.    The Trust represents and warrants to the Holder that this Warrant, its terms and its issuance and sale have been approved by a vote the sole shareholder
of the Trust and its Board of Trustees. The Company represents and warrants to the Holder that this Warrant, its terms and its issuance and sale have been approved by a vote of the general and limited
partners of the Company. 

12

 

        4    REPRESENTATIONS AND AGREEMENTS OF
HOLDER.    

        4.1    REPRESENTATIONS OF HOLDER.    The
Holder hereby represents and warrants to the Trust and the Company, as of the date hereof, that: 

        (a)   ACQUISITION
PURSUANT TO EXEMPTION; ACCREDITED INVESTOR; ACQUISITION OF WARRANT FOR PERSONAL ACCOUNT. The Holder is an "accredited investor" within the meaning of
Rule 501 under Regulation D promulgated under the Securities Act. The Holder represents and warrants that it is acquiring this Warrant and, to the extent this Warrant is exercised, the
Exercise Shares solely for its account for investment purposes only and not with a view to or for sale or distribution of said Warrant or Exercise Shares or any part thereof, other than potential
transfers between Affiliates or transfers pursuant to an effective registration statement under, or an exemption from the registration requirements of, the Securities Act. 

        (b)   SECURITIES
ARE NOT REGISTERED. 

	i.
	The
Holder understands that this Warrant and the Exercise Shares have not been registered under the Securities Act, on the basis that no distribution or public offering
is being effected. The Holder realizes that the basis for the exemption set forth above may not be present if, notwithstanding its representations, the Holder has a present intention of acquiring the
securities for a fixed or determinable period in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities. The
Holder has no such present intention, except that, subject to Section 4.2, the Holder may, in the future, transfer between Affiliates or transfer pursuant to an effective registration statement
under, or an exemption from the registration requirements of, the Securities Act.

	ii.
	The
Holder has had full access to all information it considers necessary or appropriate to make an informed investment decision with respect to this Warrant and has been
given the opportunity to ask questions of the Trust and the Company and its representatives concerning this transaction and has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Trust and the Company and can bear the economic risk of its investment in this Warrant. 

        4.2    DISPOSITION OF WARRANT AND EXERCISE
SHARES.    

        (a)   The
Holder agrees not to make any disposition of all or any part of the Exercise Shares in any event unless: 

13

  

        (i)    the
Trust or the Company, as the case may be, shall have received a letter secured by the Holder from the staff of the SEC stating that no action will be recommended to
the SEC with respect to the proposed disposition; 

        (ii)   there
is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said
registration statement; 

        (iii)  the
Holder shall have furnished the Trust or the Company, as the case may be, with an opinion of counsel for the Holder, reasonably satisfactory to the Trust or the
Company, as the case may be, to the effect that such disposition may be made in compliance with Rule 144 under the Securities Act; or 

        (iv)  the
Holder shall have notified the Trust or the Company, as the case may be, of the proposed disposition and shall have furnished it with a statement of the
circumstances surrounding the proposed disposition and, if reasonably requested by the Trust or the Company, as the case may be, the Holder shall have furnished it with an opinion of counsel for the
Holder, reasonably satisfactory to the Trust or the Company, as the case may be, to the effect that such disposition will not require registration of such Exercise Shares under the Securities Act or
any applicable state securities laws. 

        (b)   The
Holder further agrees not to make any disposition of all or any part of this Warrant in any event unless (A) the Holder shall have notified the Trust and the
Company of the proposed disposition not less than five (5) Business Days prior to such proposed disposition and shall have furnished the Trust and the Company with a statement of the
circumstances surrounding the proposed disposition and, if reasonably requested by the Trust and the Company, the Holder shall have furnished the Trust and the Company with an opinion of counsel for
the Holder, reasonably satisfactory to the Trust and the Company, to the effect that such disposition will not require registration of such Warrant under the Securities Act or any applicable state
securities laws, and (B) such transferee has executed and delivered to the Trust and the Company an agreement whereby such transferee agrees to become a party hereto and to be bound by all the
provisions hereof and thereof. 

        (c)   The
Holder is aware that the Exercise Shares may not be sold pursuant to Rule 144 under the Securities Act unless the applicable conditions thereof are met,
including, among other things, the required holding period set forth in Rule 144 under the Securities Act and the number of shares being sold during any three-month period not exceeding
specified limitations. 

        (d)   The
Holder understands and agrees that all certificates evidencing the Exercise Shares may bear the following legend (unless such shares have been disposed of in
accordance with Section 4.2(a)(ii) or (iii) or such legend is no longer required to comply with applicable securities laws): 

"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE SECURITIES ACT UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."

Any
certificate issued at any time in exchange or substitution for any certificate bearing such legend (except a new certificate issued upon completion of a public distribution pursuant to an
effective registration statement under the Securities Act) shall also bear such legend unless such legend is no longer required to comply with applicable securities laws. 

        (e)   Notwithstanding
the foregoing or any provision of the Limited Partnership Agreement, in the event that an Initial Public Offering is not completed within six months from
the date hereof and the Holder exercises this Warrant to acquire Limited Partnership Units, then the Limited Partnership Units 

14

 

so
acquired may be transferred by the Holder subject to compliance only with applicable securities laws. 

5.    ADJUSTMENT OF EXERCISE PRICE, UNITS OR SHARES OF COMMON EQUITY SECURITIES PURCHASABLE AND NUMBER OF WARRANTS.

5.1    ADJUSTMENT OF EXERCISE PRICE. The Exercise Price, as defined in Section 1, shall be subject to adjustment from time to time as
follows: 

        (a)   If
an Issuer after the date hereof shall (i) pay a dividend or make a distribution to all holders of any class of Common Equity Securities with respect to such
holders' Common Equity Securities and in units or shares of Common Equity Securities, (ii) split or otherwise subdivide the outstanding units or shares of Common Equity Securities, or
(iii) combine the outstanding units or shares of Common Equity Securities into a smaller number of units or shares, then in any such case the Exercise Price in effect immediately prior thereto
shall be adjusted to a price obtained by multiplying such Exercise Price by a fraction of which the numerator shall be the number of units or shares of Common Equity Securities outstanding prior to
such action and the denominator shall be the number of units or shares of Common Equity Securities outstanding after giving effect to such action. An adjustment made pursuant to clause (i) of
this subsection (a) shall become effective retroactive to the date immediately after the Record Date for such dividend or distribution, and an adjustment made pursuant to clause (ii) or
(iii) of this subsection (a) shall become effective immediately after the effective date of such subdivision or combination. 

        (b)   If
an Issuer after the date hereof shall issue rights, options or warrants to all holders of any class of Common Equity Securities with respect to such holders' Common
Equity Securities to subscribe for or purchase units or shares of Common Equity Securities or securities convertible into or exchangeable or redeemable for Common Equity Securities at a price per
share less than the Applicable Price per share or unit on the issuance date thereof, the Exercise Price in effect immediately prior thereto shall be adjusted to a price obtained by multiplying such
Exercise Price by a fraction of which (i) the numerator shall be the number of units or shares of Common Equity Securities outstanding on the date of issuance of such rights, options or
warrants plus the number of units or shares of the class of Common Equity Securities subject to such rights, options or warrants which the aggregate consideration for the total number of units or
shares so to be offered would purchase at the Applicable Price of a unit or share of the class of Common Equity Securities subject to such rights, options or warrants, and (ii) the denominator
shall be the number of units or shares of Common Equity Securities outstanding on the date of issuance of such rights, options or warrants plus the number of additional units or shares of Common
Equity Securities to be offered for subscription or purchase; provided, however, that no adjustment
shall be made if an Issuer issues or distributes to the Holder the rights, options or warrants which the Holder would have been entitled to receive had this Warrant been exercised prior to the Record
Date (and, if applicable, had this Warrant been exercisable for the class of Common Equity Securities receiving such issuance or distribution). Any such adjustments shall be made whenever such rights,
options or warrants are issued to all holders of any class of Common Equity Securities with respect to such holders' Common Equity Securities and shall become effective retroactive to the date
immediately after the Record Date for the determination of limited partners or stockholders, as the case may be, entitled to receive such rights, options or warrants unless such rights, options or
warrants are not immediately exercisable, in which case, any such adjustments shall be made at such time such rights, options or warrants become exercisable. Upon expiration of the period during which
any such rights, options or warrants may be exercised, any adjustment previously made pursuant to the foregoing provisions shall be recalculated to take into consideration only those rights, options
or warrants actually exercised during the applicable period for exercise and notice of any such further adjustment to the Exercise Price shall be given to the Holder as herein provided. 

15

 

        (c)   If
an Issuer after the date hereof shall issue or distribute to all holders of any class of Common Equity Securities (or any class of capital stock or common units that
is convertible into or exchangeable or redeemable for Common Equity Securities) with respect to such holders' Common Equity Securities (or such other capital stock or common units) evidences of its
indebtedness, cash, or other assets, shares of capital stock or common units of any class or any other securities (other than the Common Equity Securities) or rights to subscribe therefor (excluding
those referred to in subsection (b) above), in each such case the Exercise Price in effect immediately prior thereto shall be adjusted to a price obtained by multiplying such Exercise Price by
a fraction of which (i) the numerator shall be the difference between (x) the amount, for each class of Common Equity Securities then outstanding, of the Fair Market Value per unit or
share of such class of Common Equity Securities, multiplied by the number of outstanding units or shares of such class of Common Equity Securities, in each case on the Record Date, and (y) the
Fair Market Value of the assets, cash or evidences of indebtedness so distributed, or shares of capital stock or other securities or rights to subscribe therefor so issued, and (ii) the
denominator shall be product of the amount, for each class of Common Equity Securities then outstanding, of the Fair Market Value per unit or share of such class of Common Equity Securities,
multiplied by the number of outstanding units or shares of such class of Common Equity Securities, in each case on the Record Date; provided,  however, that
no adjustment shall be made if the Issuer issues or distributes to the Holder the evidence of indebtedness, cash, other assets, capital
stock or other securities or subscription rights referred to above in this subsection (c) that the Holder would have been entitled to receive had this Warrant been exercised in full prior to
the Record Date (and, if applicable, had this Warrant been exercisable for the class of Common Equity Securities or such other class of capital stock that is convertible into or exchangeable or
redeemable for Common Equity Securities receiving such issuance or distribution). The Issuer shall provide the Holder, upon receipt of a written request therefor, with any indenture or other
instrument defining the rights of the holders of any indebtedness, assets, capital stock or other securities or subscription rights referred to in this Section 5.1(c). Any such adjustment shall
be made whenever any such distribution is made, and shall become effective retroactive to the date immediately after the Record Date. Upon expiration of the period during which any subscription rights
granted pursuant to this subsection (c) may be exercised, any adjustment previously made pursuant to the foregoing provisions shall be recalculated to take into consideration only those
subscription rights actually exercised during the applicable period for exercise and notice of any such further adjustment to the Exercise Price shall be given to the Holder as herein provided. For
the avoidance of doubt, distributions of income or returns on capital with respect to the Class B Limited Partnership Interest shall not result in an adjustment to the Exercise Price pursuant
to this Section 5.1(c). 

        (d)   For
purposes of Sections 5.1(a), 5.1(b) and 5.1(c), any dividend or distribution to which Section 5.1(c) is applicable that also includes units or shares of
Common Equity Securities, a subdivision of Common Equity Securities or a combination of Common Equity Securities to which Section 5.1(a) applies, or rights or warrants to subscribe for or
purchase units or shares of Common Equity Securities to which Section 5.1(b) applies (or any combination thereof), shall be deemed instead to be: 

        (i)    a
dividend or distribution of the evidences of indebtedness, cash, other assets, shares of capital stock, other securities or subscription rights, other than such units
or shares of Common Equity Securities, such subdivision or combination or such rights, options or warrants to which Sections 5.1(a) and 5.1(b) apply, respectively (and any Exercise Price reduction
required by Section 5.1(c) with respect to such dividend or distribution shall then be made), immediately followed by 

        (ii)   a
dividend or distribution of such units or shares of Common Equity Securities, such subdivision or combination or such rights, options or warrants to which Sections
5.1(a) and 5.1(b) 

16

 

apply
(and any further Exercise Price reduction required by Sections 5.1(a) and 5.1(b) with respect to such actions shall then be made). 

        (e)   In
case a tender or exchange offer (other than an odd lot offer) by an Issuer for any Common Equity Securities, or other repurchase of any Common Equity Securities by an
Issuer, is consummated at a price in excess of the Market Price of the Common Equity Securities subject to such tender or exchange offer or repurchase, at the expiration of such tender or exchange
offer or at the time of such repurchase (as the case may be), the Exercise Price in effect immediately prior thereto shall be adjusted to a price obtained by multiplying such Exercise Price by a
fraction of which (i) the numerator shall be such Market Price, less the amount of the excess of the value of the tender or exchange offer price or repurchase price over the Market Price, and
(ii) the denominator shall be the Market Price, such adjustment to become effective immediately prior to the opening of business on the day following such date of expiration or date of
repurchase (as the case may be). 

        (f)    In
the event of an adjustment to the Trust Exercise Price as a result of any adjustment pursuant to this Agreement, the LP Exercise Price shall be adjusted, if an
adjustment is not already required by another provision of this Agreement, in order to maintain the intended relationship between the Limited Partnership Units and the Common Shares and the right of a
holder of one Limited Partnership Unit to receive, upon redemption or exchange of such Unit, one Common Share. 

5.2    ADJUSTMENT OF NUMBER OF EXERCISE SHARES PURCHASABLE UPON EXERCISE OF WARRANTS. Upon each adjustment of the Exercise Price pursuant to
Section 5.1 or 5.4 hereof, the number of Exercise Shares purchasable upon exercise of this Warrant shall be adjusted to the number of Exercise Shares, rounded up or down, as the case may be, to
the nearest full unit or share, obtained by (i) multiplying the number of Exercise Shares purchasable immediately prior to such adjustment by the Exercise Price in effect prior to such
adjustment, and (ii) dividing the product so obtained by the Exercise Price in effect after such adjustment of the Exercise Price. 

5.3    RIGHTS UPON CONSOLIDATION, MERGER, SALE, TRANSFER, RECLASSIFICATION OR RECAPITALIZATION.

        (a)   In
case an Issuer after the date hereof (a) shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation or
limited partnership of such consolidation or merger, (b) shall permit any other Person to consolidate with or merge into such Issuer and such Issuer shall be the continuing or surviving Person
but, in connection with such consolidation or merger, the Common Equity Securities or other securities or property otherwise issuable upon exercise of this Warrant shall be changed into or exchanged
for stock or other securities of any other Person or cash or any other property, (c) shall transfer (by sale, lease or otherwise) all or substantially all of its properties or assets or the
properties or assets of its Significant Subsidiaries to any other Person, or (d) shall effect a capital reorganization or reclassification of the Common Equity Securities or other securities or
property otherwise issuable upon exercise of this Warrant (other than a capital reorganization or reclassification resulting in the issuance of additional units or shares of Common Equity Securities
for which adjustment in the Exercise Price is provided in Section 5.1 or 5.4 unless such adjustment pursuant to Section 5.1 or 5.4 fails to take into account all steps in a
multi-step transaction), then, and in the case of each such transaction, proper provision shall be made so that, upon the basis and the terms and in the manner provided in this Warrant,
the Holder, upon the exercise hereof at any time after the consummation of such transaction (until the end of the Exercise Period), shall be entitled to receive (at the aggregate Exercise Price in
effect at the time of such consummation for all Common Equity Securities or other securities or property otherwise issuable upon such exercise immediately prior to such consummation), in lieu of the
Common Equity Securities or other securities or property otherwise issuable upon such exercise prior to such consummation, the kind and amount of shares, other securities, property, assets or cash
that the Holder would have been entitled to receive upon the consummation of such transaction had the Holder exercised this Warrant 

17

 

immediately
prior to the consummation of such transaction, subject to adjustments (subsequent to such consummation) as nearly equivalent as possible to the adjustments provided for in this
Section 5. In addition, upon the exercise hereof at any time after the consummation of such transaction, the Holder may elect to receive, in lieu of such shares or other securities, property or
assets that the Holder would have been entitled to receive upon the consummation of such transaction, the cash equivalent thereof (with the cash value determined by reference to the Fair Market Value
of such shares or other securities, property or assets that the Holder would have received). If the Holder elects to receive such cash equivalent, the Company or the surviving Person shall bear any
costs and expenses incurred in connection with any sale or disposition of such shares or other securities, property or assets, and shall promptly deliver the cash proceeds to the Holder (in any event
within five (5) Business Days after receipt of such cash proceeds by the Issuer). In no event shall an Issuer undertake any such transaction unless appropriate provision is made by such Issuer
or the surviving Person as part of any such transaction for the obligations provided hereunder. 

        (b)   An
Issuer shall not consummate any transaction that effects or permits any such event or occurrence unless each Person whose shares of stock, securities or assets will
be issued, delivered or paid to the holders of the Common Equity Securities (including such Issuer with respect to clause (ii) below), prior to or simultaneously with the consummation of the
transaction, (i) is, in the case of the Trust, a Maryland corporation or trust, or, in the case of the Company, a limited partnership organized and existing under the laws of the United States
of America or any State or the District of Columbia, and (ii) expressly assumes, or in the case of such Issuer, acknowledges, by a Warrant supplement or other document in a form substantially
similar hereto and to the satisfaction of the Holder, executed and delivered to the Holder, the obligation to deliver to such Holder such shares of stock, securities or assets, including cash, as, in
accordance with the foregoing provisions of this Section 5.3, such Holder is entitled to purchase, and all other obligations and liabilities under this Warrant, including obligations and
liabilities in respect of subsequent adjustments that are required under this Warrant. 

        (c)   The
above provisions of this Section 5.3 shall similarly apply to successive reclassifications and changes of Exercise Shares and to successive consolidations,
mergers, leases, sales or conveyances. 

5.4    SALE OF SHARES BELOW APPLICABLE PRICE.

        (a)   If
at any time or from time to time after the date hereof, an Issuer issues or sells, or is deemed by the express provisions of this Section 5.4 to have issued or
sold, Additional Common Equity Securities (as defined below), other than as provided in Section 5.1, 5.2 or 5.3 above, including as part of an Initial Public Offering, for an Effective Price
(as defined below) less than the Applicable Price (such issue, a "Qualifying Dilutive Issuance"), then and in each such case, the then effective Exercise Price shall be reduced, effective as of the
opening of business on the date of such issue or sale (or if earlier, the date on which a binding agreement providing for such issue or sale was entered into), to a price determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a fraction: 

        (i)    the
numerator of which shall be (A) the number of units or shares of Common Equity Securities outstanding immediately prior to such issue or sale, plus
(B) the number of units or shares of Common Equity Securities being issued or sold or deemed to be issued or sold which the aggregate consideration received by such Issuer for the total number
of Additional Common Equity Securities so issued or deemed to be so issued would purchase at the Applicable Price, and 

        (ii)   the
denominator of which shall be the number of units or shares of Common Equity Securities outstanding immediately prior to such issue or sale plus the total number of
Additional Common Equity Securities so issued or deemed to be so issued. 

Notwithstanding
the foregoing, no adjustment shall be made pursuant to this Section 5.4 for awards of restricted Common Shares from the Trust's Equity Incentive Compensation Plan made 

18

 

to
Trustees of the Trust that are not also employees of the Trust and to employees of the Trust so long as all such awards are approved by the Trust's Board of Trustees or a committee of the Board of
Trustees of the Trust comprised solely of "non-employee" trustees, within the meaning of Rule 16b-3 under the Exchange Act, which committee may include the Compensation
Committee of such Board if such committee is so comprised, and the aggregate number of Common Shares so awarded during the first 18 months following the IPO Date does not exceed 750,000 Common
Shares, subject to adjustment pursuant to Section 5 hereof. 

        (b)   For
the purpose of the adjustment required under this Section 5.4, if an Issuer issues or sells (x) stock or other securities convertible into or
exchangeable or redeemable for units or shares of Common Equity Securities (such convertible, exchangeable or redeemable stock or securities being herein referred to as "Convertible Securities") or
(y) rights, options or warrants for the purchase of units or shares of Common Equity Securities or Convertible Securities and if the Effective Price of such units or shares of Common Equity
Securities is less than the Applicable Price, in each case such Issuer shall be deemed to have issued at the time of the issuance of such rights, options or warrants or Convertible Securities the
maximum number of Additional Common Equity Securities issuable upon exercise, conversion, exchange or redemption thereof and to have received as aggregate consideration for the issuance of such shares
an amount equal to the total amount of the consideration, if any, received by such Issuer for the issuance or sale of such rights, options or warrants or Convertible Securities plus the minimum
amounts of consideration, if any, payable to such Issuer upon the exercise, conversion, exchange or redemption of such rights, options or warrants or Convertible Securities (other than by cancellation
of liabilities or obligations evidenced by such Convertible Securities); provided that: 

        (i)    subject
to paragraph (d) below, if the minimum amounts of such consideration cannot be ascertained, but are a function of anti-dilution or similar
protective clauses, such Issuer shall be deemed to have received the minimum amounts of consideration without reference to such clauses; and 

        (ii)   if
the minimum amount of consideration payable to such Issuer upon the exercise, conversion, exchange or redemption of such rights, options, warrants or Convertible
Securities is reduced over time or on the occurrence or non-occurrence of specified events other than by reason of anti-dilution adjustments, the Effective Price shall be
recalculated using the figure to which such minimum amount of consideration is reduced; provided further, that if the minimum amount of consideration
payable to such Issuer upon the exercise, conversion, exchange or redemption of such rights, options, warrants or Convertible Securities is subsequently increased, the Effective Price shall be again
recalculated using the increased minimum amount of consideration payable to such Issuer but only upon the exercise, conversion, exchange or redemption of such rights, options, warrants or Convertible
Securities. 

No
further adjustment of the Exercise Price, as adjusted upon the issuance of such rights, options, warrants or Convertible Securities, shall be made as a result of the actual issuance of Additional
Common Equity Securities upon the exercise of any such rights, options or warrants or the conversion, exchange or redemption of any such Convertible Securities. If any such rights, options or warrants
or the conversion, exchange or redemption privilege represented by any such Convertible Securities shall expire without having been exercised, the Exercise Price as adjusted upon the issuance of such
rights, options, or warrants or Convertible Securities shall be readjusted to the Exercise Price which would have been in effect had an adjustment been made on the basis of only the Additional Common
Equity Securities, if any, actually issued or sold on the exercise, conversion, exchange or redemption of such rights, options, warrants or Convertible Securities, and on the basis that such
Additional Common Equity Securities, if any, were issued or sold for the consideration actually received by such Issuer upon such exercise, conversion, exchange or redemption (other than by
cancellation of liabilities or obligations evidenced by such Convertible Securities), plus the consideration, if any, actually received by 

19

 

such
Issuer for the issue or sale of all such rights, options, warrants and Convertible Securities, whether or not exercised, provided that such
readjustment shall not apply to prior exercises of this Warrant. 

        (c)   For
the purpose of making any adjustment to the Exercise Price of the Exercise Shares required under this Section 5.4, "Additional Common Equity Securities" shall
mean all units or shares of Common Equity Securities issued by an Issuer or deemed to be issued pursuant to this Section 5.4 (including units or shares of Common Equity Securities subsequently
reacquired or retired by an Issuer). 

The
"Effective Price" of Additional Common Equity Securities shall mean the quotient determined by dividing (x) the aggregate consideration received, or deemed to have been received by an
Issuer for such issue under this Section 5.4, for such Additional Common Equity Securities, by (y) the total number of Additional Common Equity Securities issued or sold, or deemed to
have been issued or sold by the Issuer under this Section 5.4. 

        (d)   In
the event that an Issuer issues or sells, or is deemed to have issued or sold, Additional Common Equity Securities in a Qualifying Dilutive Issuance (the "First
Dilutive Issuance"), then in the event that the Issuer issues or sells, or is deemed to have issued or sold, Additional Shares of Common Equity Securities in a Qualifying Dilutive Issuance other than
the First Dilutive Issuance (a "Subsequent Dilutive Issuance") pursuant to the same instruments as the First Dilutive Issuance, then, and in each such case upon a Subsequent Dilutive Issuance, the
Exercise Price shall be reduced to the Exercise Price that would have been in effect had the First Dilutive Issuance and each Subsequent Dilutive Issuance all occurred on the closing date of the First
Dilutive Issuance. 

5.5    DE MINIMIS ADJUSTMENTS. The adjustments required by this Section 5 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that no adjustment pursuant to Section 5.1, 5.3 or 5.4 hereof shall be required unless such adjustment would require an
increase or decrease of at least $0.01 in the Exercise Price then subject to adjustment; provided,  however, that any adjustments that are not made by
reason of this Section 5.5 shall be carried forward and (i) made as soon as such
adjustment, together with other adjustments required by this Section 5 and not previously made, would result in an increase or decrease of at least $0.01 in the Exercise Price as of the date of
exercise, or (ii) made upon the date of exercise, in whole or in part, of the Warrant. In case an Issuer shall at any time issue Common Equity Securities by way of dividend on any stock or
other securities of an Issuer or split or otherwise subdivide or combine the outstanding units or shares of Common Equity Securities, said amount of $0.01 specified in the preceding sentence (as
theretofore increased or decreased, if said amount shall have been adjusted in accordance with the provisions of this Section 5.5) shall forthwith be proportionately increased in the case of
such a combination or decreased in the case of such a subdivision or stock dividend so as appropriately to reflect the same. All calculations under this Section 5 shall be made to the nearest
hundredth of a cent. 

5.6    CONDITION PRECEDENT TO REDUCTION OF EXERCISE PRICE BELOW PAR VALUE OF SHARES OF COMMON EQUITY SECURITIES OR INCREASE IN PAR VALUE TO ABOVE EXERCISE
PRICE.

To
the extent that any of Common Equity Securities have a par value, 

        (a)   before
taking any action that would require an adjustment reducing the Exercise Price to below the then par value of any of the shares of Common Equity Securities
issuable upon exercise of this Warrant, an Issuer shall take any action that may, in the opinion of its counsel, be necessary in order that such Issuer may validly and legally issue fully paid and
non-assessable shares (in the case of the Trust) of such Common Equity Securities at such adjusted Exercise Price; and 

        (b)   before
taking any action that would increase, or would result in an increase in, the par value, if any, of the Common Equity Securities issuable upon exercise of this
Warrant to an amount that is greater than the then effective Exercise Price, such Issuer shall take such action that is necessary in 

20

 

order
that such Issuer may validly and legally issue fully paid and non-assessable shares (in the case of the Trust) of such Common Equity Securities at such then effective Exercise Price. 

5.7    CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or readjustment of the Exercise Price, an Issuer, at its sole expense, shall
compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to the Holder at the Holder's address, as provided in Section 14 hereof, no later than five (5) Business Days following the effective date of such adjustment or
readjustment. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the
number of Additional Common Equity Securities issued or sold or deemed to have been issued or sold; (ii) the
consideration received or deemed to be received by the Issuer for any Additional Common Equity Securities issued or sold or deemed to have been issued or sold; (iii) the Exercise Price at the
time in effect; and (iv) the type and amount, if any, of other property which would be received upon exercise of this Warrant. 

5.8    OTHER DILUTIVE EVENTS. If any event or occurrence shall occur as to which the provisions of this Section 5 are not strictly
applicable but as to which the failure to make any adjustment to the Exercise Price and/or the number of shares or other assets or property subject to this Warrant would adversely affect the purchase
rights or value represented by this Warrant in accordance with the essential intent and principles of this Warrant, including this Section 5, then, in each such case, each Issuer shall
determine the adjustment, if any, on a basis consistent with the essential intent and principles established in this Warrant, including this Section 5, necessary to preserve, without dilution,
the purchase rights represented by this Warrant. If such determination involves or is based on a determination of the Fair Market Value of any securities or other assets or property, such
determination shall be made in accordance with the Valuation Procedure. 

5.9    GENERAL ADJUSTMENT PROVISIONS.

        (a)   In
any case in which this Section 5 shall require that an adjustment be made retroactive to the date immediately following a Record Date, an Issuer may elect to
defer (but only until five (5) Business Days following the mailing by such Issuer to the Holder of the certificate as required by Section 5.7) issuing to the Holder, in the event of any
exercise of this Warrant after such Record Date, the units or shares of Common Equity Securities issuable upon such exercise in excess of the units or shares of Common Equity Securities issuable upon
such exercise prior to such adjustment, if any. 

        (b)   The
provisions and adjustments provided for in this Section 5 shall apply to successive events or occurrences of the types described in this Section 5. 

        (c)   For
the purpose of making any adjustment required under this Section 5 that requires a determination of the aggregate consideration received by an Issuer for any
sale, issue or distribution of securities, the aggregate consideration received by such Issuer shall equal the sum of: (i) to the extent it consists of cash, the net amount of cash received by
the Issuer after deduction of any underwriting or similar commissions, compensation or concessions paid or allowed by such Issuer in connection with such issue or sale but without deduction of any
expenses payable by such Issuer, and (ii) to the extent it consists of property or assets other than cash, the Fair Market Value of the property or assets. 

5.10    SIGNIFICANT SUBSIDIARIES. If any Significant Subsidiary of an Issuer issues or grants (i) any capital stock or equity ownership
interest; (ii) any rights, options, warrants or convertible securities that are exercisable for or convertible into any capital stock or other equity ownership interest; or (iii) any
stock appreciation rights, phantom stock rights, or any other profit participation rights, or any rights or options to acquire any such rights, in each case of clauses (i), (ii) and
(iii) above, to any Person other than such Issuer or its wholly-owned subsidiaries, such Issuer shall determine an anti-dilution adjustment, if any, on a basis consistent with the
essential intent and principles established herein, 

21

 

including
but not limited to this Section 5, necessary to preserve, without dilution, the purchase rights represented by this Warrant. If such determination involves or is based on a
determination of the Fair Market Value of any securities or other assets or property, such determination shall be made in accordance with the Valuation Procedure. 

5.11    ADJUSTMENT FOR MILITARY PROPERTIES. In the event that a military housing project listed below is not acquired by the Company by the
date set forth below corresponding to such project or, a property or properties, in replacement of such project, are not contributed by such date to the Company by Gary M. Holloway for no additional
interest in the Company or the Trust that is projected to provide cash flow to the Company that will at least equal the cash flow projected to be contributed by such project to the Company, then the
percentage economic interest included in the definition of LP Fixed Percentage Number and Trust Fixed Percentage Number shall be increased, by proportionate increase of the 19.302% and 15.238%
comprising the 34.54% in such definitions (as such may have been adjusted pursuant to this Section 5), by the LP Fixed Percentage set forth below corresponding to the property not acquired, but
the Limited Partnership Units necessary to satisfy such increase upon exercise of this Warrant shall be satisfied entirely by transfer of Limited Partnership Units representing the LP Fixed Percentage
Number indicated below, subject to adjustment as provided in this Warrant, including, but not limited to the other sections of this Section 5, by Gary M. Holloway to the Holder free and clear
of any mortgage, deed of trust, lien (statutory or other), pledge, hypothecation, assignment, preference, priority, security interest, or any other encumbrance or charge (including, without
limitation, any conditional sale or other title retention agreement, any sale-leaseback, any financing lease having substantially the same economic effect as any of the foregoing, the
filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any jurisdiction, domestic or foreign, and mechanics', materialmen's and other similar
liens and encumbrances) (each, a "Lien"). The amount of cash flow projected for a military housing project and replacement property or properties hereunder shall be determined in accordance with the
Valuation Procedure, assuming all projects and properties involve at least $10 million of value. In the event that none of the three military housing projects is acquired and no replacement
properties are contributed, the maximum amount of increase in the percentage economic interest in the Company included in the definition of LP Fixed Percentage Number as a result of such failure shall
be 14.999%. If the projected cash flow from a replacement property or properties replaces some but not all of the projected cash flow from a military project not acquired, then the amount of increase
in the percentage economic interest of the Company included in the definition of LP Fixed Percentage Number shall be proportionately adjusted. In no event shall such increase result in any increase in
the Exercise Price. If this Warrant has been exercised in full prior to the applicable date set forth below, then any such Limited Partnership Units corresponding to a project not acquired shall be
released from the escrow and transferred to the Holder immediately following the applicable date. Prior to the applicable date set forth below, such Limited Partnership Units shall be owned by Gary M.
Holloway free and clear of any Lien and shall be held by the Holder in escrow
during such period. In the event that a project is acquired by the Company or a replacement property is contributed to the Company prior to the applicable date set forth below, then the corresponding
LP Fixed Percentage Number of Limited Partnership Units shall be released to Gary M. Holloway upon completion of such acquisition. 

22

  

	Military Housing Project
 
	 	Date
	 	LP Fixed Percentage Number
	 	LP Fixed

Percentage
	 
	Fort Eustis/Story	 	9 months from date hereof	 	1,440	 	1.440	%
	Fort Bliss/White Sands	 	June 30, 2005	 	1,830	 	1.830	%
	Navy North East	 	9 months from date hereof	 	13,270	 	13.270	%

As
an illustration, if the Navy North East project is not acquired by the Company within nine months from the date hereof and a suitable replacement property is not contributed by such date, then the
LP Fixed Percentage Number will increase from the number of Limited Partnership Units representing 34.54% to the number of Limited Partnership Units representing a 47.810% economic interest in the
Company, with the first 19.302% becoming 19.302/34.54 of 47.810% (i.e., 26.718%) and the 15.238% becoming 15.238/34.54 of 47.810%
(i.e., 21.092%), with appropriate downward adjustments to the LP Exercise Price. Any additional Limited Partnership Units necessary to satisfy the
increase in percentage shall be Limited Partnership Units transferred by Gary M. Holloway and will not be newly issued Units. As a further illustration, if the Navy North East project is not acquired
by the Company within nine months from the date hereof and a suitable replacement property is not contributed by such date and as of such date the Warrant had been exercised to acquire all of the
Limited Partnership Units representing a 19.302% economic interest in the Company, then the LP Fixed Percentage Number shall be increased from the number of Limited Partnership Units representing a
15.238% economic interest in the Company to the number of Limited Partnership Units representing a 28.508% economic interest in the Company with the result that upon exercise of the remaining portion
of the Warrant, Limited
Partnership Units representing a 15.238% economic interest in the Company will be a new issuance of Units by the Company and Limited Partnership Units representing a 13.270% economic interest in the
Company will be Limited Partnership Units transferred to the Holder by Gary M. Holloway. 

6.    FRACTIONAL UNITS OR SHARES. Each Issuer may, but shall not be required to, issue fractions of Exercise Shares upon exercise of the
Warrant or distribute certificates which evidence fractional Exercise Shares. As to any fractional Exercise Share which the Holder would otherwise be entitled to purchase from an Issuer upon such
exercise, such Issuer may purchase from the Holder such unissued fractional unit or share at a price equal to an amount calculated by multiplying such fractional unit or share (calculated to the
nearest 1/100th of a unit or share) by the then Fair Market Value of one Exercise Share determined in accordance with the terms hereof. Payment of such amount shall be made in cash or by check payable
to the order of the Holder at the time of delivery of any certificate or certificates arising upon such exercise. 

7.    REGISTRATION RIGHTS. The Holder shall have the registration rights with respect to the Common Equity Securities and the Warrant as set
forth in that certain Registration Rights Agreement, dated as of July 27, 2004, as amended through the date hereof (the "Registration Rights Agreement") among the Trust, the Company, GMH GP and
the Holder. To the extent that this Warrant becomes exercisable for Exercise Shares other than the Common Equity Securities, each of the Trust and the Company agrees to grant, or cause to be granted,
to the Holder hereof the same registration rights with respect to such Exercise Shares as are currently granted to the Holder in respect of the Common Equity Securities pursuant to the Registration
Rights Agreement. 

8.    NO LIMITED PARTNER OR STOCKHOLDER RIGHTS OR LIABILITIES. This Warrant in and of itself shall not entitle the Holder to any voting rights
or other rights as a stockholder of the Trust or a limited partner of the Company (subject to the provisions of Section 5 above). No provision of this Warrant, in the absence of affirmative
action by the Holder to exercise this Warrant in exchange for units or shares of Common Equity Securities or any other equity securities issuable upon exercise of this Warrant, and no mere enumeration
herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the Exercise Price or as a stockholder of the Trust or a limited partner of the Company, whether
such liability is asserted by the Trust or the Company or by creditors of the Trust or the Company. 

23

 

9.    TRANSFER OF WARRANT. Subject to the restriction on transfers set forth in the legend on the first page of this Warrant and in
Section 4.2 and applicable laws, this Warrant and all rights hereunder, in whole or in part, are transferable, by the Holder in person or by duly authorized attorney, upon delivery of this
Warrant and the form of assignment attached hereto as Annex B-1 or Annex B-2, as applicable, to any transferee designated by Holder. 

10.    PAYMENT OF TAXES ON STOCK CERTIFICATE ISSUES UPON EXERCISE. The initial issuance of certificates of Exercise Shares upon any exercise
of this Warrant shall be made without charge to the exercising Holder for any transfer, stamp or similar tax or for any other governmental charges that may be imposed in respect of the issuance of
such stock certificates, and such stock certificates shall be issued in the respective names of, or in such names as may be directed by, the Holder;  provided, however, that neither the Trust nor the Company, as the case may be, shall be required to pay
any tax or such other charges that may be payable in respect of any transfer involved in the issuance and delivery of any such stock certificate, any new Warrants or other securities in a name other
than that of the Holder upon exercise of this Warrant (other than to an Affiliate), and neither the Trust nor the Company shall be required to issue or deliver such certificates or other securities
unless and until the Person or Persons requesting the issuance thereof shall have paid to the Trust or the Company, as applicable, the amount of such tax or shall have established to the reasonable
satisfaction of the Trust or the Company, as applicable, that such tax has been paid. 

11.    LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. Upon receipt of evidence reasonably satisfactory to the Trust and the Company of the
loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security reasonably satisfactory to the Trust and the
Company or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Trust and the Company shall issue a new Warrant, in lieu of the Warrant so lost, stolen, destroyed
or mutilated, of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Trust and the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone. 

12.    EXCHANGE OF WARRANT; DIVISIBILITY OF WARRANT. Subject to compliance with Section 4.2 hereof, this Warrant is exchangeable,
without charge to any Holder, upon the surrender hereof by the Holder at the office or agency of the Trust or the Company, as the case may be, for one or more new Warrants of the tenor representing in
the aggregate the right to subscribe for and purchase the number of Exercise Shares which may be subscribed for and purchased hereunder, each of such new Warrants to represent the right to subscribe
for and purchase such number of shares as shall be designated by said Holder at the time of such surrender. 

13.    CLOSING OF BOOKS. Neither the Trust nor the Company will at any time close its transfer books against the transfer of any Warrant or of
any Exercise Shares issued or issuable upon the exercise or conversion of any Warrant in any manner which interferes with the timely exercise or conversion of this Warrant. 

14.    NOTICES, ETC. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient or, if not, then on the next Business Day,
(c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) Business Day after deposit with a
nationally recognized overnight courier, specifying next Business Day delivery, with written verification of receipt. All notices and other communications shall be sent to the Trust, the Company or
the Holder, respectively, at the address listed on the signature page hereof or at such other address as the Trust, the Company or the Holder, respectively, may designate by ten (10) days'
advance written notice to the other parties hereto. 

24

 

15.    ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions
contained herein. 

16.    JOINT AND SEVERAL LIABILITIES. The Trust and the Company shall be jointly and severally liable for all of their obligations under this
Warrant and for all of their obligations relating to the Exercise Shares issuable upon the exercise or conversion of this Warrant. 

17.    BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any Person succeeding the Trust, the Company or GMH GP, as the case
may be, by merger, consolidation or acquisition of all or substantially all of the Trust's, the Company's or GMH GP's, as the case may be, assets (to the extent provided in Section 5), and all
of the obligations of the Trust and the Company relating to the Exercise Shares issuable upon the exercise or conversion of this Warrant shall survive the exercise, conversion and termination of this
Warrant and all of the covenants and agreements of the Trust, the Company and GMH GP shall inure to the benefit of the successors and assigns of the Holder. 

18.    SURVIVAL. The representations, warranties, covenants and conditions of the respective parties contained herein or made pursuant to this
Warrant shall survive the execution, delivery and exercise of this Warrant and the delivery of Exercise Shares. 

19.    SEVERABILITY. In case any one or more of the provisions contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good
faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions. 

20.    SECTION HEADINGS; ILLUSTRATIONS. The section headings used herein are for convenience of reference only, are not part of this Warrant
and are not to affect the construction of or be taken into consideration in interpreting this Warrant. The illustrations included herein are intended as examples of the potential outcomes hereunder
and not as a limitation of the intended effect of the provisions hereof. 

21.    NONWAIVER. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a
waiver of such right or otherwise prejudice the Holder's rights, powers or remedies. 

22.    GOVERNING LAW. This Warrant and all rights, obligations and liabilities hereunder shall be governed and construed in accordance with
the law of the State of New York applicable to contracts made and to be performed in the State of New York without regard to principles of conflicts of law. 

23.    VENUE, CONSENT TO JURISDICTION, SERVICE OF PROCESS AND WAIVER OF JURY TRIAL. EACH OF THE TRUST AND THE COMPANY CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT LOCATED IN NEW YORK COUNTY, NEW YORK FOR ANY MATTER OR DISPUTE INVOLVING THIS WARRANT OR OTHERWISE ARISING OUT OF THIS
AGREEMENT, WAIVES ANY REQUIREMENT THAT SERVICE OF PROCESS BE MADE UPON IT IN PERSON, AGREES THAT SERVICE OF PROCESS MAY BE MADE AGAINST IT BY REGISTERED MAIL DIRECTED TO IT AT THE ADDRESS LISTED ON
THE SIGNATURE PAGE HEREOF OR AT SUCH OTHER ADDRESS AS IT MAY DESIGNATE BY TEN (10) DAYS' ADVANCE WRITTEN NOTICE TO THE OTHER PARTIES HERETO, AND AGREES THAT ANY SERVICE SO MADE WILL BE DEEMED
TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH OF THE TRUST AND THE COMPANY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN CONNECTION WITH ANY DISPUTE INVOLVING THIS WARRANT OR OTHERWISE
ARISING OUT OF THIS AGREEMENT AND WAIVES ANY OBJECTION IT 

25

 

MIGHT
HAVE TO VENUE OF ANY ACTION INSTITUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 23. 

24.    AMENDMENTS. Each of the Trust and the Company may from time to time supplement, amend or otherwise modify this Warrant without the
Holder's approval to cure any ambiguity or to correct or supplement any provision contained herein that is inconsistent with any other provision herein or is otherwise defective, or to include any
other provision regarding matters or questions arising hereunder that the Trust and the Company deem necessary or desirable and that in each case do not, in the opinion of the Holder, adversely affect
the rights or interests of the Holder. Except as set forth in the preceding sentence, no amendment, supplement, restatement or termination of any provision of this Warrant is binding unless it is in
writing and signed by authorized representatives of each party hereto at the time of such amendment, supplement, restatement or termination. Any such amendment or
waiver shall be binding upon each future Holder and upon the Trust and the Company. In the event of a waiver or amendment and upon the request of the Trust and the Company, the Holder hereof shall
submit this Warrant to the Trust and the Company so that this Warrant be marked to indicate such amendment or waiver and any Warrant issued thereafter shall bear a similar notation referring to any
such amendment or continuing waiver. Any amendment of this Warrant shall be expressly approved in advance of the effectiveness of such amendment by either the Board of Trustees of the Trust or a
committee of the Board of Trustees of the Trust comprised solely of "non-employee" Trustees of the Trust as such term is defined in Rule 16b-3 under the Exchange Act.,
which committee may include the Compensation Committee of such Board if it is so comprised. 

25.    SPECIFIC PERFORMANCE. Each Holder of this Warrant and Exercise Shares, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. Each of the Trust and the Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law
would be adequate. 

26.    REIT PROTECTION COVENANTS OF THE TRUST AND THE COMPANY.

From
and after November 15, 2004 and until the earlier of (i) the occurrence of a Management Shift and (ii) except with respect to Section 26(d) hereof, the date on which
(A) the Holder has no direct or indirect interest in the Company (other than by or through a taxable REIT subsidiary), (B) the Holder owns no warrant or other right to acquire any
interest in the Company and (C) the Holder's aggregate ownership of interests in the Company and the Trust represents less than 5% of the value of the Company (in all such cases, taking into
account any options or other rights to acquire such interests) (the "Company Restricted Period"), GMH GP shall operate and manage the Company in compliance with all requirements of Part II of
Subchapter M of Chapter 1 of Subtitle A of the Code (or any successor or similar provisions thereto) such that, if at any time after November 15, 2004, the Company were treated as a corporation
for federal income tax purposes and were to elect REIT status under Section 856(c) of the Code, the Company would qualify as a REIT within the meaning of Section 856 of the Code
(determined by (i) assuming that the first taxable year of the Company and its subsidiaries commences on November 15, 2004 and that their final taxable year ends on the date of the
expiration of the Company Restricted Period (unless actions taken by the Company prior to such date would, without regard to actions taken following such date, have prevented the Company from
qualifying as a REIT for the taxable year which includes such date (but assuming that such taxable year begins no earlier than November 15, 2004)), (ii) treating each entity that is
treated as a corporation for federal income tax purposes in which the Company has a direct or indirect interest as a having made a joint TRS election under Section 856(l) of the Code with
respect to the Company to the extent necessary to avoid a REIT qualification issue, so long as the provisions of clause (e) have been complied with and (iii) assuming that the Company
satisfies the requirements of Section 856(a)(5) and Section 856(a)(6) of the Code. From and after the IPO Date and until the earlier of (i) the occurrence of a Management 

26

 

Shift
and (ii) the date on which (A) the Holder has no direct or indirect interest in the Company (other than by or through a taxable REIT subsidiary), (B) the Holder owns no
warrant or other right to acquire any interest in the Company and (C) the Holder's aggregate ownership of interests in the Company and the Trust represents less than 5% by value of the value of
the Company (in all such cases, taking into account any options or other rights to acquire such interests) (the "Trust Restricted Period"), the Trust shall be operated and managed in compliance with
all requirements of Part II of Subchapter M of Chapter 1 of Subtitle A of the Code (or any successor or similar provisions thereto) such that the Trust will qualify as a REIT within the meaning
of Section 856 of the Code; except as may result from any actions taken following the Company Restricted Period. Without limiting the generality of the foregoing two sentences, each of the
Trust and the Company and GMH GP agrees, for the benefit of the Holder, that during the Company Restricted Period (in the case of the Company and GMH GP) and during the Trust Restricted Period (in the
case of the Trust), neither the Trust, the Company nor GMH GP shall act, directly or indirectly, in any manner that would result in violation of any of clauses (a) through (h) below
without the prior written consent of the Holder. Except as specifically provided otherwise in clause (b), for purposes of clauses (a) through (h) below, references to the Company
shall include any corporation, partnership, limited liability company or other entity in which the Company has a direct or indirect interest. 

Except
as may be otherwise agreed to in writing by the Tax Director of Vornado: 

        (a)   Neither
the Trust nor the Company shall own, directly or indirectly, any securities (including, without limitation, stock, partnership or membership interests or
indebtedness of a corporation, partnership or limited liability company) other than Excluded Securities. Excluded Securities shall mean (i) (A) an equity interest in a partnership or limited
liability company that is treated as a partnership or disregarded entity for federal income tax purposes (other than an interest in a partnership or limited liability company listed on such schedules
as may be provided by the Holder to the Trust or the Company from time to time by written notice (provided,  however, that it shall not be a violation of
this clause (a) where the Trust or the Company owns, directly or indirectly, an interest in a
partnership or limited liability company listed on such schedules where such interest was owned, directly or indirectly, by the Trust or the Company (as the case may be) prior to the time at which the
Trust or the Company (as the case may be) received written notice adding such entity to such schedules, so long as the Trust or the Company (as the case may be) disposes of its interest in such entity
within thirty (30) days after receiving such notice), or (B) an interest in an entity that is treated as a corporation for federal income tax purposes and (1) as to which the
Company intends that the Trust will make "taxable REIT subsidiary" election under Section 856(l) of the Code after the IPO Date, so long as the provisions of clause (e) have been
complied with or (2) with respect to which the Trust has made such an election after the IPO Date (and such election is valid), so long as the provisions of clause (e) have been complied
with, (ii) stock in an entity that is a real estate investment trust for federal income tax purposes, (iii) a mortgage loan that is secured by real property with a value, as of the date
of acquisition, in excess of the amount of such loan and (iv) assets constituting real estate assets, cash, cash items or government securities for purposes of Section 856(c)(4)(A) of
the Code. 

        (b)   Neither
the Trust nor the Company shall hold, directly or indirectly (other than solely through an interest in an entity that is treated as a corporation for U.S.
federal income tax purposes), any (i) stock in trade or other property of a kind that would properly be includable in inventory at hand at the close of a taxable year or (ii) property
held primarily for sale to customers in the ordinary course of a trade or business. For purposes of this clause (b), the term "Company" shall not include any entity that is treated as a
corporation for federal income tax purposes. 

        (c)   Neither
the Trust nor the Company shall hold, directly or indirectly, any REMIC residual interests. 

27

 

        (d)   Neither
the Trust nor the Company shall provide services to tenants of the properties in which the Trust or the Company owns a direct or indirect interest other than
(i) services (other than Excluded Services) that are customarily furnished by landlords in the same geographical area to tenants of or with respect to properties of similar type and class in
connection with the rental of space for occupancy only, (ii) through (A) an "independent contractor" (as defined below) or (B) an entity that is treated as a corporation for
federal income tax purposes and (1) as to which the Company intends that the Trust will make a "taxable REIT subsidiary" election under Section 856(l) of the Code after the IPO Date, so
long as the provisions of clause (e) have been complied with or (2) with respect to which the Trust has made such an election after the IPO Date (and such election is valid), so long as
the provisions of clause (e) have been complied with, or (iii) through any entity listed on such schedules as may be provided by the Holder to the Trust or the Company from time to time
by written notice. An entity or individual shall be treated as an independent contractor if it (i) is not owned directly or indirectly by the Trust or the Company and from which neither the
Trust nor the Company derives any income and (ii) is listed on a schedule provided by the Trust or the Company within ten (10) Business Days after the date hereof by written notice (or
from time to time thereafter) to the Tax Director of Vornado (or such other person identified by Vornado), provided that the Tax Director of Vornado (or such other person) does not object to such
person with ten (10) Business Days after receiving such notice. Excluded Services shall mean (i) cleaning services (other than in common areas), (ii) "power space" services,
(iii) conference room services, (iv) catering services, (v) telecommunications services or (vi) any other services provided within a tenant's premises (other than
maintenance services provided for the Trust or the Company's benefit, services such as the provision of lighting, heat, air conditioning, internet hook-ups and similar services (in each
case, to the extent customarily provided to tenants by owners of rental properties of a similar class and located in the same geographic areas)). 

        (e)   For
so long as a member of the Holder holds any direct or indirect interest in the Company, the Company shall not hold an ownership interest in any entity that is a
corporation for U.S. federal income tax purposes without providing the Holder with the opportunity to make a taxable REIT subsidiary election under Section 856(1) with respect to such entity
(and if the Holder so elects, the Company shall cause such entity to join in such election) by providing notice to the Tax Director of Vornado (or such other person identified by Vornado) within 10
business days of acquiring an interest in such entity and allowing the members of the Holder at least 30 business days to choose to make such an election. 

        (f)    No
taxable REIT subsidiary of the Trust or the Company shall operate property as a lodging facility (within the meaning of Section 856(d)(9)(D)(ii) of the
Code) or a health care facility (within the meaning of Section 856(e)(6)(D)(ii)), provided,  however, that if the Internal Revenue Service issues a
private ruling to the Trust concluding that the management of student housing properties that
offer short-term summer leasing arrangements would not constitute the operation of a lodging facility (within the meaning of Section 856(d)(9)(D)(ii) of the Code) and such
ruling is applicable to any partner in the Company that qualifies as a REIT, a taxable REIT subsidiary of the Trust or the Company shall be permitted to operate or manage such properties. Neither the
Trust nor the Company shall (i) rent property for an amount based on income or profits of the tenant except to the extent that gross income (as determined under the provisions of the Internal
Revenue Code relating to the REIT gross income tests) from such rent, together with all other income not qualifying under Section 856(c)(2) of the Code, does not exceed 5% of the gross income
of the Company or the Trust for any taxable year, and (ii) enter into any arrangement whereby the Trust or the Company will derive income from a person listed on such schedules as may be
provided by the Holder to the Trust or the Company from time to time by written notice (provided that it shall not be a violation of this clause (f) where the Trust or the Company (as the case
may be) derives income from a person listed on such schedules as a result of arrangements in place prior to the time at which the Trust or the Company (as the case may be) received written notice
identifying such person on such schedules, so long as the Trust or the Company 

28

 

(as
the case may be) ceases to derive income from such person within thirty (30) days after receiving such notice. 

        (g)   During
the Company Restricted Period, the Company shall, and during the Trust Restricted Period, the Trust shall, deliver to the Holder, at such times as may reasonably
be requested by the Holder (at least on a quarterly basis), a certificate or certificates signed by GMH GP (in the case of the Company) or an appropriate officer of the Trust (in the case of the
Trust) to the effect that the Trust or the Company (as the case may be) has complied with the agreements set forth in this Section 26. In addition, the Trust, GMH GP and the Company shall
cooperate with the Holder, including, without limitation, by providing information and documents within their respective control relating to the income and assets of the Trust and the Company, even if
the Holder at such time no longer holds an interest in the Trust or the Company, in addressing issues raised by any taxing authority in any audit or similar proceeding relating to the Holder that
relates to or arises out of the Holder's investment in the Company. 

        (h)   The
Trust and the Company will, upon the request of the Holder, enter into a Trust Agreement substantially in the form attached as Exhibit A to the Partnership
Agreement, as may be modified by the Holder from time to time to the extent the Holder determines reasonably necessary to comply with any guidance issued by the Internal Revenue Service. 

        (i)    Notwithstanding
the other provisions of this Section 26, neither the GMH GP nor the Company will be responsible for any failure to comply with such provisions
resulting from (A) the deemed treatment of rents as described in Section 856(d)(2)(B) of the Code where such rents would not be treated as rents described in Section 856(d)(2)(B)
of the Code with respect to the Trust or (B) the ownership, either directly or under the attribution rules of Section 856(d)(5) of the Code, by the Holder of a direct or indirect
interest in any entity identified to the Tax Director of Vornado (or such other person identified by Vornado) in a written notice provided by the Company, where such Tax Director (or such other
person) did not reasonably object in writing within ten (10) Business Days of receipt of written notice from the Company to the entering into by the Company or any of its Affiliates of a lease
or similar arrangement with respect to such entity or the use of such entity by the Company or any of its Affiliates as an "independent contractor" (determined as though the Company were a REIT)
within the meaning of Section 856(d)(3) of the Code. 

        (j)    If
either the Trust or the Company during the Trust Restricted Period and the Company Restricted Period, respectively, or GMH GP fails to satisfy its obligations under
this Section 26 and, as a result of such failure, the Holder (1) fails to maintain its qualification as a REIT or (2) otherwise incurs any liability for any tax, penalty or
similar charges), the Trust and the Company shall indemnify the Holder for all losses, damages, liabilities, costs and expenses (including, without limitation, the loss of any deduction or other tax
benefit) attributable to such failure, including without limitation, the loss of REIT status (whether or not such any such losses, damages, liabilities costs or other expenses arise during or after
the Trust Restricted Period or the Company Restricted Period). 

The
provisions of this Section 26 shall not be interpreted to permit the amount of any losses, damages, liabilities, costs and expenses recovered under this Section 26 to be recovered
under the comparable provisions of the Partnership Agreement. 

28.    GENERAL PARTNER APPOINTMENT. If at any time the Class A Limited Partnership Interest has been redeemed and an Initial Public
Offering has not been consummated and the Holder holds Limited Partnership Units acquired pursuant to the exercise of this Warrant or the right to acquire such Limited Partnership Units, then the
Holder will have the right to appoint a general partner of the Company that will share equally in the management decisions of the Company with the existing general partner(s) of the Company and the
general and limited partners of the Company shall prepare and execute an amendment to the Company's limited partnership agreement to effectuate such appointment. 

29

 

29.    APPOINTMENT OF TRUSTEE. At the option of the Holder or, in the event of more than one Holder, at the option of Vornado, in the event
the Holder has exercised this Warrant and holds Common Shares or Limited Partnership Units acquired at an aggregate price of not less than $10 million, then the Holder shall have the right, but
not the obligation, to appoint Michael D. Fascitelli or such other executive officer of Vornado that is reasonably acceptable to the Trust, to the board of trustees of the Trust. In the event the
Holder has exercised this right of appointment, the Trust and
Gary M. Holloway agree to take such actions as are necessary to cause the person so appointed to be elected and re-elected by the shareholders of the Trust, including, but not limited to,
naming such person in any proxy statement and causing such person to be nominated by the nominating committee of the board for election and re-election to the Trust's board of trustees for
so long as (i) such person desires to serve and (ii) the Holder holds Common Shares or Limited Partnership Units acquired at an aggregate price of not less than $10 million. 

30.    OPT-OUTS FROM MARYLAND BUSINESS COMBINATION ACT AND MARYLAND CONTROL SHARE ACQUISITION ACT. The Trust and Gary M. Holloway,
as the sole shareholder of the Trust, covenant and agree that upon the Trust becoming the general partner of the Company, the Trust shall, by adopting a resolution of its board of trustees or by
amending its bylaws, as appropriate, ensure that (1) the acquisition by Vornado, any of its affiliates or any of its transferees and assigns of this Warrant, or Common Shares or Limited
Partnership Units pursuant to the exercise of this Warrant, is exempted from the provisions of Section 3-602 of the Maryland General Corporation Law, as applicable to a Maryland
real estate investment trust, pursuant to Section 3-603(c) of the Maryland General Corporation Law and (2) Title 3, Subtitle 7 of the Maryland General Corporation Law, or any
successor statute, as applicable to a Maryland real estate investment trust, shall not apply to any acquisition of Common Shares or Limited Partnership Units by Vornado, any of its affiliates or any
of its transferees and assigns. 

IN
WITNESS WHEREOF, the parties hereto have caused this Warrant to be executed by their respective duly authorized officers as of October    , 2004. 

	 	 	GMH COMMUNITIES, LP
	

 	
 	

By:	
 	
GMH COMMUNITIES GP, LLC

as sole general partner
	

 	
 	

By:	
 	

	 	 	Name:
	 	 	Title:
	 	 	Address: 10 Campus Boulevard

               Newtown Square, Pennsylvania 19073

Facsimile No.: (610) 355-8001

(With a copy to Joseph M. Macchione, Facsimile No.: (610) 325-2046)

30

  

	 	 	GMH COMMUNITIES TRUST
	

 	
 	

By:	
 	

    

	 	 	Name:
	 	 	Title:
	

 	
 	

Address: 10 Campus Boulevard

               Newtown Square, Pennsylvania 19073

Facsimile No.: (610) 355-8001

(With a copy to Joseph M. Macchione, Facsimile

No.: (610) 325-2046)
	

 	
 	
GMH COMMUNITIES GP TRUST
	

 	
 	

By:	
 	

    

	 	 	Name:
	 	 	Title:
	

 	
 	

Address: 10 Campus Boulevard

               Newtown Square, Pennsylvania 19073

Facsimile No.: (610) 355-8001

(With a copy to Joseph M. Macchione, Facsimile

No.: (610) 325-2046)
	

 	
 	
GMH COMMUNITIES GP, LLC
	

 	
 	

By:	
 	

    

	 	 	Name:
	 	 	Title:
	

 	
 	

Address: 10 Campus Boulevard

               Newtown Square, Pennsylvania 19073

Facsimile No.: (610) 355-8001

(With a copy to Joseph M. Macchione, Facsimile

No.: (610) 325-2046)
	

 	
 	

    
 Gary M. Holloway

Individually and as sole shareholder of GMH Communities Trust and sole member of GMH Communities GP, LLC
	

 	
 	

Address: 10 Campus Boulevard

               Newtown Square, Pennsylvania 19073

Facsimile No.: (610) 355-8001

(With a copy to Joseph M. Macchione, Facsimile

No.: (610) 325-2046)
	 	 	 	 	 

31

 

	

 	
 	
WARRANT HOLDER:
	

 	
 	
VORNADO REALTY L.P.
	

 	
 	

By:	
 	
VORNADO REALTY TRUST

as sole general partner
	

 	
 	

By:	
 	

    

	 	 	Name:
	 	 	Title:
	

 	
 	

Address: 888 Seventh Avenue

               New York, New York 10019

Facsimile No.: (212) 894-7035

ATTN: Dan Guglielmone

32

 
 

Annex A-1  

 
  NOTICE OF EXERCISE    
    

TO: GMH COMMUNITIES, LP  

(1)    The
undersigned hereby elects to purchase on [insert exercise date]                        Class A common units of limited
partnership of GMH Communities, LP
pursuant to the terms of the attached Warrant and tenders herewith or is delivering by wire transfer to account
number                  at                      
  (bank) payment of the exercise price in full;
and 

(2)    Please
issue a certificate or certificates representing said common units of limited partnership in the name of the undersigned or in such other name as is specified below: 

	 	 	    
 (Name)
	

 	
 	

    
 (Address)
	

    
 (Date)	
 	

    
 (Signature)
	

 	
 	

    
 (Print Name)

QuickLinks

WARRANT

GMH COMMUNITIES, LP GMH COMMUNITIES TRUST WARRANT

Annex A-1

NOTICE OF EXERCISE<Page>

                                                                    EXHIBIT 4.6

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT AND LAWS OR, SUBJECT TO SECTION 5.2
HEREOF, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND
ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

                    REPLACEMENT WARRANT TO PURCHASE STOCK

Issuer: Kanbay International, Inc., a Delaware corporation
Number of Shares: 46,567.5
Class of Stock: Common Stock, $.001 par value per share
Exercise Price: $3.3554 per share
Original Issue Date: April 19, 2000
Date of Issuance of Replacement: July 27, 2004
Expiration Date: April 18, 2007

                               RECITALS

  A.  On April 19, 2000, a Warrant to Purchase Preferred Units was issued by
Kanbay, LLC, a Delaware limited liability company, in favor of Silicon Valley
Bank (and subsequently assigned to Silicon Valley Bancshares), for the
purchase of 25,000 Series A Convertible Preferred Units of Kanbay, LLC at the
initial Exercise Price of $6.25 per Preferred Unit (the "Original Warrant")
and pursuant to the Original Warrant, Kanbay, LLC was entitled to convert
from a limited liability company to a Delaware corporation (the "Conversion");

  B.  On August 24, 2000, pursuant to the Conversion and in accordance with
terms of the Original Warrant, Kanbay International, Inc. (the "Company"), a
Delaware corporation and successor to Kanbay, LLC, issued as a replacement
for and in lieu of the Original Warrant, a warrant for the purchase of 25,000
shares of Series A Convertible Preferred Stock of the Company at the initial
Exercise Price of $6.25 per share (the "Conversion Warrant"), such Conversion
Warrant relating back to the Original Issue Date of April 19, 2000;

  C.   In connection with transactions contemplated by that certain
Subscription Agreement by and between the Company and MSIT Holdings, Inc.,
the Company amended its Certificate of Incorporation effective on August 31,
2000, to provide for, among other things, the reclassification of shares of
its Series A Convertible Preferred Stock to shares of Series A-1 Convertible
Preferred Stock (the "New Series A-1 Preferred Stock") and in connection
therewith, the Company issued as a replacement for and in lieu of the
Conversion Warrant, that certain Amended and Restated Warrant for the
purchase of 25,000 shares of its New Series A-1

Preferred Stock (the "Amended and Restated Warrant"), such Amended and
Restated Warrant relating back to the Original Issue Date of April 19, 2000;
and

<Page>

  D.  In connection with the underwritten initial public offering of the
Company's Common Stock (as hereinafter defined), the Company and its
stockholders entered into certain recapitalization transactions, whereby all
of the outstanding preferred stock of the Company was voluntarily converted
into its Class A Common Stock and thereafter all of the outstanding Class A
Common Stock was reclassified and redesignated as a Common Stock, par value
$0.001 per share (the "Common Stock") and in connection therewith, the
Company is issuing as a replacement for and in lieu of the Amended and
Restated Warrant, this Replacement Warrant, such Replacement Warrant relating
back to the Original Issue Date of April 19, 2000.

  FOR THE AGREED UPON VALUE of $1.00, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
this Replacement Warrant ("Warrant") is issued to SILICON VALLEY BANCSHARES
(together with its successors and permitted assigns, "Holder") by the Company.

  Subject to the terms and conditions hereinafter set forth, the Holder is
entitled upon surrender of this Warrant and the duly executed Notice of
Exercise form annexed hereto as APPENDIX 1 ("Notice of Exercise"), at the
principal office of the Company, 6400 Shafer Court, Suite 100, Rosemont, IL
60018, attention: chief financial officer or such other office as the Company
shall notify the Holder of in writing, to purchase from the Company up to
Forty-Six Thousand Five Hundred Sixty-Seven and one-half (46,567.5) fully
paid and non-assessable shares (the "Shares") of the Common Stock at a
purchase price per Share of $3.3554 (the "Exercise Price").  This Warrant may
be exercised in whole or in part at any time and from time to time until 5:00
PM, Eastern time, on the Expiration Date, and shall be void thereafter.
Until such time as this Warrant is exercised in full or expires, the Exercise
Price and the Shares are subject to adjustment from time to time as
hereinafter provided.

ARTICLE 1. EXERCISE.

  1.1  METHOD OF EXERCISE.  Holder may exercise this Warrant by delivering a
duly executed Notice of Exercise to the principal office of the Company.
Unless Holder is exercising the conversion right set forth in Section 1.2,
Holder shall also deliver to the Company a check for the aggregate Exercise
Price for the Shares being purchased.

  1.2  CONVERSION RIGHT.  In lieu of exercising this Warrant as specified in
Section 1.1, Holder may from time to time convert this Warrant, in whole or
in part, into a number of Shares determined as follows:

                           X = Y (A-B)/A

  where:
                           X = the number of Shares to be issued to the Holder.

                           Y = the number of Shares with respect to which this
                           Warrant is being exercised.

<Page>

                           A = the Fair Market Value (as determined pursuant to
                           Section 1.3 below) of one Share.

                           B = the Exercise Price.

  1.3  FAIR MARKET VALUE.

       1.3.1  If shares of Common Stock are traded on a nationally recognized
  securities exchange or over the counter market, the fair market value of one
  Share shall be the closing price of a share of Common Stock reported for the
  business day immediately preceding the date of Holder's Notice of Exercise to
  the Company.

       1.3.2  If shares of Common Stock are not traded on a nationally
  recognized securities exchange or over the counter market, the Board of
  Directors of the Company shall determine the fair market value of a share of
  Common Stock in its reasonable good faith judgment.

  1.4  DELIVERY OF CERTIFICATE AND NEW WARRANT.  Promptly after Holder
exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
right to purchase the Shares not so acquired.

  1.5  REPLACEMENT OF WARRANTS.  On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of
an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company at its expense shall execute and deliver, in lieu of
this Warrant, a new warrant of like tenor.

ARTICLE 2. ADJUSTMENTS TO THE SHARES.

  2.1 STOCK DIVIDENDS, SPLITS, ETC.  If the Company declares or pays a
dividend on the outstanding shares of Common Stock, payable in Common Stock
or other securities, or subdivides the outstanding Common Stock into a
greater amount of Common Stock, then upon exercise of this Warrant, for each
Share acquired, Holder shall receive, without cost to Holder, the total
number and kind of securities to which Holder would have been entitled had
Holder owned the Shares of record as of the date the dividend or subdivision
occurred.

  2.2  RECLASSIFICATION, EXCHANGE OR SUBSTITUTION.  Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon
exercise or conversion of this Warrant, the number and kind of securities and
property that Holder would have received for the Shares if this Warrant had
been exercised immediately before such reclassification, exchange,
substitution, or other event.  The Company or its successor shall promptly
issue to Holder a new Warrant for such new securities or other property.  The
new Warrant shall provide for adjustments which shall be as nearly equivalent
as

<Page>

may be practicable to the adjustments provided for in this Article 2
including, without limitation, adjustments to the Exercise Price and to the
number of securities or property issuable upon exercise of the new Warrant.
The provisions of this Section 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.

  2.3  ADJUSTMENTS FOR COMBINATIONS, ETC.  If the outstanding shares of
Common Stock are combined or consolidated, by reclassification or otherwise,
into a lesser number of shares, the Exercise Price shall be proportionately
increased and the number of Shares shall be proportionately decreased.

  2.4  NO IMPAIRMENT.  The Company shall not, by amendment of its Certificate
of Incorporation or by-laws, or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed under this Warrant by the Company,
but shall at all times in good faith assist in carrying out of all the
provisions of this Article 2 and in taking all such action as may be
necessary or appropriate to protect Holder's rights under this Article
against impairment.

  2.5  FRACTIONAL SHARES.  No fractional Shares shall be issuable upon
exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share.  If a fractional Share
interest arises upon any exercise or conversion of this Warrant, the Company
shall eliminate such fractional Share interest by paying Holder an amount
computed by multiplying such fractional interest by the Fair Market Value
(determined in accordance with Section 1.3 above) of one Share.

  2.6  CERTIFICATE AS TO ADJUSTMENTS.  Upon each adjustment of the Exercise
Price, number of Shares or class of security for which this Warrant is
exercisable, the Company at its expense shall promptly compute such
adjustment, and furnish Holder with a certificate of its chief financial
officer setting forth such adjustment and the facts upon which such
adjustment is based.  The Company shall, upon written request, furnish Holder
a certificate setting forth the Exercise Price,  number of Shares and class
of security for which this Warrant is exercisable in effect upon the date
thereof and the series of adjustments leading to such Exercise Price, number
of Shares and class of security.

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

  3.1  REPRESENTATIONS AND WARRANTIES.  The Company hereby represents and
warrants to the Holder as follows:

       3.1.1  All Shares which may be issued upon the due exercise of this
  Warrant shall, upon issuance, be duly authorized, validly issued, fully paid
  and non-assessable, and free of any liens and encumbrances except for
  restrictions on transfer provided for herein or under applicable federal and
  state securities laws.

       3.1.2  The Company covenants that it shall at all times cause to be
  reserved and kept available out of its authorized and unissued shares such
  number of shares of its Common Stock and other securities as will be
  sufficient to permit the exercise in full of

<page>

  this Warrant and the conversion or exchange of such Common Stock into or for
  such other securities.

       3.1.3  The execution and delivery by the Company of this Warrant and
  the performance of all obligations of the Company hereunder, including the
  issuance to Holder of the Shares upon exercise or conversion hereof, (i) have
  been duly authorized by all necessary corporate action on the part of the
  Company, its Board of Directors and stockholders, (ii) do not conflict with
  or violate the Certificate and/or the Company's by laws, (iii) do not
  contravene any law or governmental rule, regulation or order applicable to
  it, and (iv) do not contravene any provision of, or constitute a default
  under, any material indenture, mortgage, contract or other instrument to
  which it is a party or by which it is bound.  This Warrant constitutes the
  legal, valid and binding agreement of the Company, enforceable in accordance
  with its terms.

  3.2  NOTICE OF CERTAIN EVENTS.  If the Company proposes at any time (a) to
declare any dividend or distribution upon any of its Common Stock, whether in
cash, property, stock, or other securities and whether or not a regular cash
dividend; (b) to offer for subscription pro rata to the holders of Common
Stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of any of its Common
Stock; or (d) to merge or consolidate with or into any other corporation, or
sell, lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up, then, in connection with each such event, the
Company shall give Holder (1) at least 20 days prior written notice of the
date on which a record will be taken for such dividend, distribution, or
subscription rights (and specifying the date on which the holders of
securities of the Company shall be entitled to receive such dividend,
distribution or rights) or for determining rights to vote, if any, in respect
of the matters referred to in (c) and (d) above; and (2) in the case of the
matters referred to in (c) and (d) above at least 20 days prior written
notice of the date when the same will take place (and specifying the date on
which the holders of securities of the Company will be entitled to exchange
their securities of the Company for securities or other property deliverable
upon the occurrence of such event).

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE HOLDER.

  4.1  PURCHASE FOR OWN ACCOUNT.  This Warrant and the Shares to be acquired
upon exercise hereof will be acquired for investment for Holder's account,
not as nominee or agent, and not with a view to sale or distribution in
violation of applicable federal and state securities laws.

  4.2  INVESTMENT EXPERIENCE.  Holder understands that the purchase of this
Warrant and the Shares covered hereby involves substantial risk.  Holder (a)
has experience as an investor in unregistered securities, (b) has sufficient
knowledge and experience in financial and business affairs that it evaluate
the risks and merits of its investment in this Warrant and the Shares, and
(c) can bear the economic risk of such Holder's investment in this Warrant
and the Shares.

  4.3  ACCREDITED INVESTOR.  Holder is an "accredited investor" as such term
is defined in Regulation D under the Securities Act of 1933, as amended.

<Page>

ARTICLE 5. MISCELLANEOUS.

  5.1  LEGENDS.  This Warrant and the Shares shall be imprinted with a legend
in substantially the following form:

       THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
       AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED OR
       OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
       SUCH ACT AND LAWS OR, SUBJECT TO SECTION 5.2 OF THAT CERTAIN REPLACEMENT
       WARRANT TO PURCHASE STOCK ISSUED BY THE CORPORATION TO SILICON VALLEY
       BANCSHARES DATED AS OF APRIL 19, 2000, AN OPINION OF COUNSEL REASONABLY
       SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION
       IS NOT REQUIRED.

  5.2  COMPLIANCE WITH SECURITIES LAWS ON TRANSFER.  This Warrant and the
Shares may not be transferred or assigned in whole or in part without
compliance with applicable federal and state securities laws by the
transferor and the transferee (including, without limitation, the delivery of
investment representation letters and legal opinions reasonably satisfactory
to the Company, as reasonably requested by the Company).  The Company shall
not require Holder to provide an opinion of counsel if the transfer is to an
affiliate of Holder who is an "accredited investor" as such term is defined
in Regulation D under the Securities Act of 1933, as amended.

  5.3  TRANSFER PROCEDURE.  Holder may, subject to Section 5.2 above,
transfer all or part of this Warrant and/or the Shares at any time and from
time to time by giving the Company notice of the portion of the Warrant
and/or Shares being transferred setting forth the name, address and taxpayer
identification number of the transferee and surrendering this Warrant to the
Company for reissuance to the transferee(s) (and Holder if applicable).

  5.4  NOTICES.  All notices and other communications from the Company to the
Holder, or vice versa, shall be deemed delivered and effective when given
personally, or mailed by first class registered or certified mail, postage
prepaid, or sent via reputable overnight courier service, fee prepaid, at
such address as may have been furnished to the Company or the Holder, as the
case may be, in writing by the Company or such holder from time to time, but
in all cases, unless instructed in writing otherwise, the Company shall
deliver a copy of all notices to Holder to Silicon Valley Bank, Treasury
Department, 3003 Tasman Drive, HA-200, Santa Clara, California 95054.

  5.5  WAIVER.  This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.

  5.6  ATTORNEYS FEES.  In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.

<Page>

  5.7 GOVERNING LAW.  This Warrant shall be governed by and construed in
accordance with the laws of the State of Illinois, without giving effect to
its principles regarding conflicts of law.

  5.8  NO RIGHTS AS A SHAREHOLDER.  Except as specifically provided in this
Warrant, Holder shall have no rights as a shareholder of the Company in
respect of the Shares issuable hereunder unless and until Holder exercises
this Warrant as to all or any of such Shares.

             [REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

<Page>

  IN WITNESS WHEREOF, the Company has caused this Replacement Warrant to
Purchase Stock to be duly executed by its duly authorized representative as
of the Original Issue Date.

                                              "COMPANY"
                                              KANBAY INTERNATIONAL, INC.

                                              By: /s/ WILLIAM F. WEISSMAN
                                                  ________________________
                                              Name: William F. Weissman
                                              Title: Vice President and
                                                     Chief Financial Officer

<Page>

                                  APPENDIX 1
                              NOTICE OF EXERCISE

  1.  The undersigned hereby elects to purchase _______shares of
the ____________ stock of __________________ pursuant to Section 1.1 of the
attached Warrant, and tenders herewith payment of the Exercise Price of such
shares in full.

  1.  The undersigned hereby elects to convert the attached Warrant into
Shares in the manner specified in Section 1.2 of the attached Warrant. This
conversion is exercised with respect to ____________ of shares of
the ________________________ Stock of ___________________.

  [Strike paragraph that does not apply.]

  2.  Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:

                                            ___________________________________
                                            (Name)

                                            ___________________________________
                                            ___________________________________
                                            (Address)

  3.  The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view
toward the resale or distribution thereof except in compliance with
applicable securities laws.

                                            ___________________________________
                                            (Signature)

____________________
 (Date)

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