Document:

Exhibit 10.1

 

EXECUTION
COPY

 

AMENDMENT NO. 2 TO 

CREDIT AGREEMENT

 

AMENDMENT NO. 2 TO CREDIT AGREEMENT, dated as of April 7,
2009 (this “Amendment”), by and among
GRAMERCY WAREHOUSE FUNDING I LLC, a Delaware limited liability company
(together with its successors and permitted assigns, “GWF-I”),
as a borrower, GKK TRADING WAREHOUSE I LLC, a Delaware limited liability
company (together with its successors and permitted assigns, “GKK Trading” and together with GWF-I, the “Borrowers”), as a borrower, GRAMERCY CAPITAL
CORP., a Maryland corporation (together with its successors and permitted
assigns, “Gramercy Capital”), as a
guarantor, GKK CAPITAL LP, a Delaware limited partnership (together with its
successors and permitted assigns, “GKK Capital”),
as a guarantor, GRAMERCY INVESTMENT TRUST, a Maryland real estate investment
trust (together with its successors and permitted assigns, “Gramercy REIT”), as a guarantor, GKK TRADING
CORP., a Delaware corporation (together with its successors and permitted
assigns, “GTC” and collectively with
Gramercy Capital, GKK Capital and Gramercy REIT, the “Guarantors”),
as a guarantor, the other entities from time to time party to the Credit
Agreement as Borrowers or Guarantors, the several banks and other financial
institutions as are, or may from time to time become parties to the Credit
Agreement (each, together with its successors and assigns, a “Lender” and, collectively, the “Lenders”), as lenders and WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association, as administrative agent
for the Lenders under the Credit Agreement (in such capacity, the “Administrative Agent”), amends that certain
Credit Agreement, dated as of July 22, 2008, as previously amended
pursuant to Amendment No. 1 to Credit Agreement dated as of August 6,
2008 between and among each of the parties to this Amendment (the “Credit Agreement”), by and among the Borrowers,
the Guarantors, the Administrative Agent and the other parties named therein or
referred to thereby.  Capitalized terms
used herein and not otherwise defined shall have the meanings set forth in the
Credit Agreement.

 

RECITALS

 

Borrowers and Guarantors have requested that
Administrative Agent amend the Credit Agreement and the Guarantee Agreement in
the manner set forth in this Amendment.

 

Therefore, in consideration of the premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Borrowers, the Guarantors and the Administrative Agent
hereby agree as follows:

 

SECTION 1.  New
Defined Terms.  The following, new
defined terms are hereby added to Section 1.1 of the Credit Agreement:

 

“100 Church M-1”
shall mean that certain senior mezzanine loan evidenced by the Promissory Note
(Senior Mezzanine), dated as of August 9, 2007, made by 100 Church
Mezzanine LLC, a Delaware limited liability company, in favor of Wachovia Bank,
National 

 

 

Association, a national banking association, in the
original principal amount of $30,000,000.

 

“100 Church M-2”
shall mean shall mean that certain senior mezzanine loan evidenced by the
Promissory Note (Intermediate Mezzanine), dated as of August 9, 2007, made
by 100 Church Member LLC, a Delaware limited liability company, in favor of
Wachovia Bank, National Association, a national banking association, in the
original principal amount of $30,000,000.

 

“2 Herald Mezz”
shall mean GKK 2 Herald Mezz LLC, a Delaware limited liability company.

 

“450 West 33rd”
has the meaning set forth in the Fee and Pricing Letter.

 

“885 Third Mezz”
shall mean GKK 885 Third Mezz LLC, a Delaware limited liability company.

 

“Additional Cash Collateral”
shall mean cash in an amount equal to $13,000,000 delivered by the Borrowers to
the Administrative Agent to be used solely to collateralize the L/C Obligations
arising with respect to the Mortgage Obligation LCs.

 

“CDO LC” shall
mean the Administrative Agent’s Clean, Irrevocable Standby Letter of Credit
Number SM226417W, issued on June 22, 2007 for the benefit of GKK Capital
as applicant and naming GFW-1 and Gramercy Warehouse Funding II as
beneficiaries.

 

“CDO LC Guarantee – 885
Third Mezz” shall mean a guarantee, made solely by 885 Third Mezz,
solely of the L/C Obligations arising with respect to the CDO LC, such
guarantee to be in form acceptable to the Administrative Agent.

 

“CDO LC Guarantee – 2
Herald Mezz” shall mean a guarantee, made solely by 2 Herald Mezz, solely
of the L/C Obligations arising with respect to the CDO LC, such guarantee to be
in form acceptable to the Administrative Agent.

 

“Guarantee Release Event - 2
Herald Mezz” shall mean the first date upon which the sum of (i) the
amount of reduction in the face amount of the CDO LC plus (ii) cash
received by the Administrative Agent to collateralize the L/C Obligations
arising with respect to the CDO LC, shall equal or exceed, in the aggregate,
$20,000,000.

 

2

 

“Guarantee Release Event”
shall mean the first date upon which the sum of (i) the amount of
reduction in the face amount of the CDO LC plus (ii) the proceeds of the
sale of 450 West 33rd received by the Administrative Agent for application in
accordance with this Agreement plus (iii) cash received by the
Administrative Agent to collateralize the L/C Obligations arising with respect
to the CDO LC, shall equal or exceed, in the aggregate, $23,000,000 including,
without limitation, all cash received pursuant to Section 5.30.

 

“JER Longhouse”
has the meaning set forth in the Fee and Pricing Letter.

 

“Mortgage Obligation LCs”
shall mean each of (i) the Administrative Agent’s Clean, Irrevocable
Standby Letter of Credit Number SM226838W, issued on July 7, 2007 for the
benefit of Gramercy Capital as applicant, and naming Goldman Sachs Mortgage
Company as beneficiary, (ii) the Administrative Agent’s Irrevocable Standby
Letter of Credit Number SM226658W, issued on July 6, 2007 for the benefit
of Gramercy Capital as applicant, and naming Goldman Sachs Mortgage Company as
beneficiary, and (iii) the Administrative Agent’s Clean, Irrevocable
Standby Letter of Credit Number SM225127W, issued on April 2, 2007 for the
benefit of Gramercy Capital as applicant, and naming Goldman Sachs Mortgage
Company as beneficiary.

 

“Net Interest Margin”
shall mean, with respect to any period, (i) the aggregate amount of
interest payments made or otherwise received on the Specified Assets (including
default interest payable thereunder) minus (ii) the aggregate amount of
interest payable on the Loans and any amounts (other than breakage costs and
termination payment amounts) payable to an Affiliated Hedge Counterparty under
any Interest Rate Protection Agreement, in each case during such period.

 

“Second Amendment”
shall mean Amendment No. 2 to this Agreement, dated as of April 6,
2009.

 

“Specified Assets”
shall mean JER Longhouse, 1199 F Street, 100 Church M-1, 100 Church M-2, 450
West 33rd and Stuyvesant Interest.

 

“Stuyvesant Interest”
shall mean forty percent (40%) of the one hundred percent (100%) interest in
the Gramercy Participation (as such term is defined in that certain
Participation Agreement dated as of December 20, 2006 (as the same may be
amended, restated, renewed, supplemented or otherwise modified, the “Participation 

 

3

 

Agreement”),
between GFW-1 and SLG Cooper Stuy Funding, LLC, a Delaware limited liability
company, with respect to that certain loan in the original principal amount of
$200,000,000, evidenced by that certain Amended and Restated Promissory Note
dated as of February 16, 2007, made by PCV ST Mezz 11 LP, a Delaware limited
liability partnership and ST Mezz 11 LP, a Delaware limited partnership, as
maker, in favor of GFW-1, as payee.

 

SECTION 2.  Amendments
to Defined Terms.  Each of the
following definitions is hereby amended and restated in its entirety to read as
follows:

 

“Change of Control” shall mean the occurrence
of any of the following events: (a) a majority of the seats (other than
vacant seats) on the board of directors of Parent shall at any time be occupied
by persons who were neither (i) nominated by the board of directors of
Parent, nor (ii) appointed by directors so nominated or (b) Parent
shall cease to own and control, directly or indirectly, 100% of each class of
outstanding Capital Stock of each Borrower or (c) any other event, if such
other event (A) would constitute a Change of Control-Former Definition and
(B) (1)causes a violation of Sections 3.26, 3.27 or 3.28 of the Credit
Agreement or (2) occurs without compliance by the Credit Parties with the
reasonable requests of the Administrative Agent or any Lender as necessary to
permit the Administrative Agent or a Lender to comply with any “know-your-customer”
regulations or similar Requirements of Law. 
As used for purposes of clause (c) of this definition, “Change of
Control-Former Definition” means “Change of Control” as defined in the Credit
Agreement as in effect prior to the Amendment Effective Date.

 

“Maturity Date”
shall mean March 31, 2011.

 

“Revolver Commitment Period”
shall mean the period from and including the Closing Date to and including March 29,
2009.

 

SECTION 3.  Certain
Prepayments; Extension of Maturity Date. 
Sections 2.4 and 2.7(b) of the Credit Agreement are each hereby
deleted in their entirety and the term “[reserved]” is inserted in their place.

 

SECTION 4.  Distributions
from Collection Account.  Section 2.10(a)(ii) is
hereby amended by:

 

(a) deleting the
text of clause FOURTH thereof in its entirety and inserting the term “[reserved.]”
in its place; and

 

(b) inserting a new
clause “SEVENTH PRIME” as set forth immediately below and deleting the term “and”
at the end of the existing clause “SEVENTH”:

 

4

 

SEVENTH PRIME, to the extent of
funds then remaining available therefor after giving effect to the foregoing
clauses, an amount equal to the sum of (i) (100% of the principal payments
made on the Specified Assets, 100% of all other fees and payments of any kind,
excluding default interest and including 60% of the Net Interest Margin for the
period ending on the relevant Payment Date; minus (ii) any such amounts
previously applied pursuant to clause FIFTH above, pari passu
and pro rata (based on the amounts owed to such Persons under this clause) to
the Lenders to prepay principal amounts of Loans under this Agreement allocated
to the Specified Assets ratably (excluding 1199 F Street from such allocation
until the principal amount relating to all other Loans has been paid in full,
and then making such allocation entirely to 1199 F Street), and thereafter make
a corresponding reduction to the related Allocated Term Loan Amounts (and,
solely to the extent of amounts available pursuant to this clause, such
principal amounts shall be deemed to be then due and payable); and

 

SECTION 5.  Financial
Statements.  Section 5.1(a) is
hereby amended to change the phrase “thirty (30) days” to “forty-five (45)
days.”

 

SECTION 6.  Liens.  Section 6.2 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:

 

Section 6.2  Liens.  The Credit Parties shall not sell, pledge,
assign or transfer to any other Person, or grant, create, incur, assume, suffer
or permit to exist any Lien on all or any portion of the Collateral, other than
Permitted Liens, whether now existing or hereafter transferred hereunder, or
any interest therein.  Immediately upon
notice to any Credit Party of a Lien or any circumstance which, if adversely
determined would be reasonably likely to give rise to a Lien (other than in
favor of the Administrative Agent or created by or through the Administrative
Agent), on all or any portion of the Collateral, the Borrowers shall notify the
Administrative Agent and the Borrowers shall further defend the Collateral
against, and will take such other action as is necessary to remove, any Lien or
claim on or to the Collateral (other than any Permitted Liens created under
this Agreement and the Credit Documents), and the Borrowers shall defend the
right, title and interest of the Credit Parties in and to any of the Collateral
against the claims and demands of all Persons whomsoever.  Notwithstanding the foregoing, if a Credit
Party shall grant a Lien on any of the Collateral in violation of this Section,
then it shall be deemed to have simultaneously granted an equal and ratable
Lien on any such Collateral in favor of the Administrative Agent for the
ratable benefit of the Lenders and the Affiliated Hedge Counterparty to the
extent such Lien has not already been granted to the Administrative Agent.

 

SECTION 7.  Financial
Covenants.  Section 5.9 of the
Credit Agreement is hereby deleted in its entirety and the term “[reserved]” is
inserted in its place.  The parties
hereto agree that the foregoing deletion at Section 5.9 shall be effective
as of March 31, 2009.

 

5

 

SECTION 8.  Nature
of Business.  Section 6.3 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:

 

Section 6.3.  Nature of Business.  No Credit Party will, nor will it permit any
Subsidiary to, alter the character of its business in any material respect from
that conducted as of the Closing Date; provided that the business
conducted as of the Closing Date shall be deemed to include management and
investment management of real estate-related assets and properties, servicing
and related activities in connection with real estate-related assets and
properties and investment in real estate-related securities including through
joint ventures.  The Borrowers shall not
engage in any activity other than activities specifically permitted by this Agreement,
including, but not limited to, investment in mortgage loans, mezzanine loans,
participations and other real estate related assets and the purchasing,
financing and holding of commercial mortgage-backed securities, collateralized
debt obligation securities and activities incident thereto.

 

SECTION 9.  Corporate
Changes; Material Contracts.  Section 6.8
of the Credit Agreement is hereby amended and restated in its entirety to read
as follows:

 

Section 6.8  Corporate Changes;
Material Contracts.  No Credit Party
will, nor will it permit any Subsidiaries of Borrowers to, (a) change its
fiscal year, (b) amend, modify or change its Authority Documents in any
respect that is materially adverse to the interests of the Lenders without the
prior written consent of the Administrative Agent; provided that no Credit
Party shall (i) except to the extent permitted under this Agreement, alter
its legal existence, identity or corporate structure or, in one transaction or
a series of transactions, merge into or consolidate with any other entity, or
sell all or substantially all of its assets, (ii) change its state of
incorporation or organization, (iii) change its registered legal name or (iv) change
its organizational identification number, without providing thirty (30) days
prior written notice to the Administrative Agent and without having first taken
all action required by the Administrative Agent for the purpose of perfecting
or protecting the liens and security interests of the Administrative Agent and
the Lenders established hereunder, (c) amend, modify, cancel or terminate
other than on its terms or fail to renew or extend at the Credit Party’s or the
Subsidiary of a Borrower’s option or permit the amendment, modification,
cancellation or termination other than on its terms of any of the Material
Contracts other than the Management Contract in any respect materially adverse
to the interests of the Lenders without first providing at least three (3) Business
Days prior written notice thereof, together with a reasonably detailed written
summary of the substance thereof and a signed and properly completed Compliance
Certificate, (d) change its state of incorporation, organization or
formation without the consent of the Administrative Agent or have more than one
state of incorporation, organization or formation or (e) change its
accounting method (except in accordance with GAAP) in any manner adverse to the
interests of the Lenders without the prior written consent of the Required
Lenders.

 

6

 

SECTION 10.  Limitation
on Restricted Actions.  Section 6.9
of the Credit Agreement is hereby amended and restated in its entirety to read
as follows:

 

Section 6.9  Limitation on Restricted
Actions.  The Borrowers will not, nor
will Borrowers permit any Subsidiaries of Borrowers to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any Lien or
restriction on the ability of a Borrower to (a) other than dividends to
the Guarantors by direct or indirect Subsidiaries of the Guarantors, pay
dividends or make any other distributions to any Credit Party on its Equity
Interest, (b) pay any Indebtedness or other obligation owed to any Credit
Party, (c) other than in connection with Permitted Investments or Permitted
Indebtedness, make loans or advances to any Credit Party, or (d) sell,
lease or transfer any of its Properties to any Credit Party except, in each
case, pursuant to the Credit Documents.

 

SECTION 11.  Certain
Affirmative Covenants.  Each of Section 6.7
and Section 6.12 of the Credit Agreement is hereby deleted in its entirety
and the term “[reserved]” is inserted in its place.

 

SECTION 12.  REIT
Status.  Section 6.10 of the
Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

Section 6.10  Restricted Payments.  No Credit Party shall declare or make any
payment on account of, or set apart assets for, a sinking or other analogous
fund for the purchase, redemption, defeasance, retirement or other acquisition
of any equity or partnership interest of any Credit Party, whether now or
hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
any Credit Party, except, so long as no Default or Event of Default shall have
occurred and be continuing, a Credit Party may make such payments (A) solely
to the extent necessary to preserve the status of the Parent as a REIT, or (B) by
way of redemption or repurchase, in connection with the internalization of
management, of equity interests issued by GKK Capital, so long as the total
amount so paid to SLG or any of its Affiliates in connection with such
internalization does not exceed the $3,000,000, whether in cash or property,
that is permitted to be paid under Section 13 of the Second Amendment, and
so long as such internalization otherwise complies with the requirements of Section 13
of the Second Amendment.

 

SECTION 13.  Consent
to Management Internalization.  Each
of Section 6.22, 6.23, 7.1(d) and 7.1(aa) of the Credit Agreement is
hereby deleted in its entirety and the term “[reserved]” is inserted in its
place, but only if the internalization of management by the Parent is
implemented in a manner that does not (i) have a Material Adverse Effect, (ii) involve
a total payment, distribution or other transfer of cash or property in excess
of $3,000,000 to SLG or any of its Affiliates, whether in cash or property, and
(iii) involve the issuance of debt or equity securities of any kind to SLG
or any of its Affiliates.

 

7

 

SECTION 14.  CDO LC.  The following, new Section 5.29 is
hereby added to the Credit Agreement:

 

Section 5.29  CDO LC.  Each of the Credit Parties shall use its
reasonable best efforts to cause the CDO LC or any portion thereof not to be
drawn; provided that no Credit Party shall be required to violate or cause any
other Person to violate the servicing standards contained in any agreement or
instrument relevant to an underlying asset.

 

SECTION 15.  Cash
Flow From 885 Third Mezz and 2 Herald Mezz. 
The
following, new Section 5.30 is hereby added to the Credit Agreement:

 

Section 5.30  Cash
Flow From 885 Third Mezz and 2 Herald Mezz.

 

(a)  885
Third Mezz.  Until such time as the
Guarantee Release Event shall have occurred, each Credit Party shall take all
steps necessary to cause any and all payments, property or proceeds of any kind
received by 885 Third Mezz, and any and all amounts that would otherwise be
distributed to or by 885 Third Mezz from or to any Person, to be promptly
delivered to the Administrative Agent, which shall hold all such income,
proceeds and amounts as additional cash collateral solely for the L/C
Obligations arising with respect to the CDO LC.

 

(b)  2
Herald Mezz.  Until such time as the
Guarantee Release Event – 2 Herald Mezz shall have occurred, each Credit Party
shall take all steps necessary to cause any and all payments, property or
proceeds of any kind received by 2 Herald Mezz, and any and all amounts that would
otherwise be distributed to or by 2 Herald Mezz from or to any Person, to be
promptly delivered to the Administrative Agent, which shall hold all such
income, proceeds and amounts as additional cash collateral solely for the L/C
Obligations arising with respect to the CDO LC.

 

(c)  Payments.  All payments made under this Section 5.30
shall be deposited into an additional collateral account to be maintained by,
and under the sole dominion and control of, the Administrative Agent and shall
be held by the Administrative Agent as collateral security solely for the L/C
Obligations arising with respect to the CDO LC. 
Under no circumstances shall the Administrative Agent or any Lender have
recourse to such additional collateral for any other Obligation.

 

SECTION 16.  Default
Provisions.

 

(a) Each of Section 7.1(e), Section 7.1(f) and
Section 7.1(s) of the Credit Agreement is hereby deleted and the term
“[reserved.]” is inserted in its place.

 

8

 

(b) Section 7.1(y) is hereby amended
and restated in its entirety to read as follows:

 

(y) Liens.  Any Credit Party shall grant, or suffer to
exist, any Lien on any Mortgage Asset (except any Lien in favor of the
Administrative Agent for the benefit of the Lenders); or the Mortgage Assets
shall not have been pledged to the Administrative Agent for the benefit of the
Lenders, or the Liens contemplated hereby shall cease or fail to be first
priority perfected Liens on any Mortgage Asset in favor of the Administrative
Agent for the benefit of the Lenders (other than by result of any action or
inaction by the Administrative Agent) or shall be Liens in favor of any Person
other than the Administrative Agent for the benefit of the Lenders; or, (A) until
such time as the Guarantee Release Event shall have occurred, any Credit Party
shall create, grant or suffer to exist any Lien on any of the assets of 885
Third Mezz, whether tangible or intangible, or real or personal property and (B) 
until such time as the Guarantee Release Event – 2 Herald Mezz shall have
occurred, any Credit Party shall create, grant or suffer to exist any Lien on
any of the assets of 2 Herald Mezz, whether tangible or intangible, or real or
personal property.

 

(c) Section 7.1(n) is
hereby amended and restated in its entirety to read as follows:

 

(n) Material
Adverse Effect.  Excluding any event
or occurrence arising prior to March 31, 2009, there shall exist any event
or occurrence that has caused a Material Adverse Effect which, if it relates to
any Credit Party other than a Borrower, shall remain uncured for a period of at
least ten (10) Business Days; or

 

SECTION 17.  Limitations
on Certain Remedies.  The following,
new Section 7.3 is hereby added to the Credit Agreement:

 

Section 7.3  With respect to any asserted
violation or breach of any of the representations, warranties, covenants or
default provisions under the Credit Agreement occurring prior to the Amendment
Effective Date with respect to the matters identified on Schedule 2(d) of
the Guarantee Agreement, the Administrative Agent agrees that the sole remedies
for all such asserted violations and breaches are (i) the rights against
the Borrowers in connection with the indemnities set forth in Section 10.5
of the Credit Agreement and (ii) the rights against the Guarantors as set
forth in Section 2(d) of the Guarantee Agreement, as amended.

 

SECTION 18.  The
following, new Section 2.18 is hereby added to the Credit Agreement:

 

Section 2.18  Notwithstanding any other
provision of this Agreement or the other Credit Documents to the contrary:

 

9

 

(a)           CDO LC; Guarantee Release Events.  (i)  The Borrowers shall, subject to
compliance with all applicable Contractual Obligations, use their reasonable
best efforts to reduce the face amount of the CDO LC; provided that no Credit
Party shall be required to violate or cause any other Person to violate the
servicing standards contained in any agreement or instrument relevant to an
underlying asset..

 

(ii)  If the Guarantee Release Event occurs on or
before the date that is 120 days after the effectiveness of the Second
Amendment, the CDO LC Guarantee — 885 Third Mezz shall automatically terminate
and shall thereafter have no force or effect.

 

(iii)  If the Guarantee Release Event — 2 Herald
Mezz occurs, the CDO LC Guarantee — 2 Herald Mezz shall automatically terminate
and shall thereafter have no force or effect.

 

(b)           Certain Sales.

 

(i)            450 West 33rd.  The Borrowers shall, subject to compliance
with all applicable Contractual Obligations, use their reasonable best efforts
to sell (or negotiate a payoff or prepayment in full with the related Obligor)
450 West 33rd on or before the date that is 120 days after the effectiveness of
the Second Amendment.  The Administrative
Agent shall, in connection with any such sale, payoff or prepayment, release
all Liens on such asset so long as (A) either (I) the net sale,
payoff or prepayment proceeds (net only of reasonable and actual third-party
expenses that are approved by the Administrative Agent in its reasonable
discretion) are equal to or greater than the Allocated Term Loan Amount for
such asset, or (II) the Administrative Agent has consented to such sale,
payoff or prepayment and (B) the Administrative Agent receives such net
sale proceeds or other payments.

 

(ii)           100 Church M-1, 100 Church M-2,
JER Longhouse and Stuyvesant Interest. 
The Borrowers shall, subject to compliance with all applicable
Contractual Obligations, use their best efforts to sell (or negotiate a payoff
or prepayment in full with the related Obligor) 100 Church M-1, 100 Church M-2,
JER Longhouse and Stuyvesant Interest. 
If the Borrowers have not sold or received a payoff or prepayment in
full of either 100 Church M-1 and 100 Church M-2 or JER Longhouse on or before September 30,
2009 and the other of such assets on or before March 31, 2010, and/or have
not sold or received a payoff or prepayment in full of the Stuyvesant Interest
and/or 450 West 33rd on or before September 30, 2010, the
Administrative Agent shall have, for each such unsold asset, all of the rights
set forth in Section 2.18(e).  The
Administrative Agent shall, in connection with any such sale, payment or
prepayment, release all Liens on the relevant asset so long as (A) either (I) the
net sale, payoff or prepayment proceeds (net only of reasonable and actual
third-party expenses that are approved by the Administrative Agent in its
reasonable discretion) are equal to or greater than the Allocated Term Loan
Amount for the relevant asset or (II) the Administrative Agent has
consented to such sale, payoff or prepayment and (B) the Administrative
Agent receives such net sale proceeds or other payments.

 

10

 

(iii)          1199 F Street.  The Borrowers may, in their sole discretion,
sell (or negotiate a payoff or prepayment in full with the related Obligor)
1199 F Street so long as  the net
proceeds are equal to or greater than the Allocated Term Loan Amount for such
asset (which shall be deemed for all purposes to be $11,000,000, subject to
adjustment in accordance with this Agreement). 
The Administrative Agent shall, in connection with any such sale, payoff
or prepayment, release all Liens on such asset so long as either (I) the
Administrative Agent receives the Allocated Term Loan Amount for such asset, or
(II) the Administrative Agent has consented to such sale and the
Administrative Agent receives such net proceeds or other payments.

 

(iv)          Application of Proceeds.  Notwithstanding any provision to the contrary
contained in Section 2.10(a)(ii) of the Credit Agreement, amounts
received by the Administrative Agent in connection with sales contemplated by
clauses (i), (ii) and (iii) above shall, up to the Allocated Term
Loan Amount for any asset, be applied by the Administrative Agent to repay
Loans attributable to the relevant asset and to reduce the Allocated Term Loan
Amount for the relevant asset.  If the
amount received by the Administrative Agent is less than the Allocated Term
Loan Amount for the relevant asset, the amount of the shortfall shall be added
to the Allocated Term Loan Amount of the properties referred to in clauses (i) and
(ii) above ratably based on the Allocated Term Loan Amounts of all such
assets.  If the amount received by the
Administrative Agent is greater than the Allocated Term Loan Amount for the
relevant asset, the excess shall be applied in the following order:

 

(A)          to repay Loans attributable to, and
reduce the Allocated Term Loan Amount of, the properties referred to in clauses
(i) and (ii) above ratably in accordance with the Allocated Term Loan
Amount of such properties until all such Loans have been repaid and all such
Allocated Term Loan Amounts have been reduced to zero;

 

(B)           to collateralize the L/C Obligations
ratably in accordance with the outstanding face amount of the Letters of Credit
until all L/C Obligations have been fully collateralized;

 

(C)           to repay Loans attributable to, and
reduce the Allocated Term Loan Amount of, 1199 F Street until all such Loans
have been repaid and all such Allocated Term Loan Amounts have been reduced to
zero

 

(D)          to pay any amounts due and payable,
and satisfy any collateral delivery requirements owing, to any Affiliated Hedge
Counterparty, under any outstanding Interest Rate Protection Agreement;

 

(E)           to fully and completely repay any
other Obligations then due and payable by any Credit Party to the
Administrative Agent or any Lender; and

 

(F)           so long as no Default or Event of
Default has occurred and is continuing, the remainder shall be paid to and may
be retained by the Borrowers.

 

(c)           Limitation on Liability.  (i) Following the sale of any asset in
accordance with this section, none of the Credit Parties shall have liability
for, and no recourse shall 

 

11

 

be had to any Credit Party with respect to, Loans
attributable to such asset, except to the extent of proceeds of sale of other
properties as set forth in clause (b)(iv) above; (ii) in no case
shall the Administrative Agent or the Lenders have recourse to 1199 F Street or
any sale or foreclosure proceeds thereof or to any Credit Party in respect of
1199 F Street except in each case to the extent of the Allocated Term Loan
Amount with respect to 1199 F Street; and (iii) in no event shall the sale
of any asset for the minimum required amounts under this section constitute an
Event of Default so long as the Administrative Agent has approved the related
sale in advance and so long as the proceeds of each such sale (and the related
deficiency) are applied (and re-allocated) in the manner set forth in this
section.

 

(d)           Additional Cash Collateral.  The Additional Cash Collateral shall be
deposited into an additional collateral account to be maintained by, and under
the sole dominion and control of, the Administrative Agent and shall be held by
the Administrative Agent as collateral security solely for the L/C Obligations
arising with respect to the Mortgage Obligation LCs.  The Administrative Agent shall, upon request
of the Borrowers, release from such account amounts to satisfy, on a dollar for
dollar basis, amounts then due and payable pursuant to the agreements for which
the Mortgage Obligation LCs were issued; provided that any such amounts
shall only be released to the relevant obligor (and not to the Borrowers) (i) upon
presentation of reasonable evidence that the relevant amounts are then due and
payable and (ii) if reasonable notice and wiring instructions to the
appropriate third party accounts have been provided to the Administrative
Agent.  Upon the expiration, termination
or cancellation of the Mortgage Obligation LCs, in whole or in part, the
Administrative Agent shall promptly release any then-remaining amount of
Additional Cash Collateral to the Borrowers.

 

(e)           The Administrative Agent shall have
each of the rights set forth below, which the Administrative Agent can either exercise
or refrain from exercising, as determined in its sole and absolute discretion,
if either (i) the Administrative Agent determines, in its reasonable
discretion, that the Borrowers have failed to continuously engage in the
marketing efforts required in subsections (b)(i) or (ii) of this Section 2.18
and has previously provided the Borrowers with at least ten (10) days
prior written notice and opportunity to cure such failure, and the Borrowers
have failed to do so within such 10-day period to the Administrative Agent’s
satisfaction in its reasonable discretion, or (ii) the Borrowers have
failed to sell an asset or assets in accordance with subsections (b)(i) or
(ii) of this Section 2.18 prior to the deadlines specified therein
unless, prior to such deadlines, the Borrowers pay to the Administrative Agent
an amount equal to the Allocated Term Loan Amount for such asset, with each
such payment to be applied by the Administrative Agent in accordance with
clause (iv) above:

 

(i)            the exclusive right to engage in
marketing activities either directly or by hiring and or replacing contractors,
in each case, as are acceptable to the Administrative Agent in its sole and
absolute discretion; it being understood and agreed that if the Administrative
Agent exercises such right, the Credit Parties have no further marketing
obligation;

 

12

 

(ii)           the right to be actively involved in
all future related sales and marketing activities which may be conducted by or
on behalf of the Borrowers; and/or

 

(iii)          the right to require the Borrowers to
accept any subsequently arising purchase offers thereafter received in
connection with the ongoing efforts to sell any or all of the relevant
properties, and to sell all such relevant properties pursuant to the terms of
each such subsequently accepted offer.

 

In connection with the marketing efforts described in Section 2.18,
the Borrowers and the Guarantors shall, on a weekly basis provide the
Administrative Agent with detailed written reports describing all such efforts,
and shall discuss all such efforts and strategies with the Administrative Agent
on a regular basis in an effort to maximize their efficiency.

 

In connection with any conveyance of an asset pursuant
to an offer that the Borrowers have been required by the Administrative Agent
to accept, the Borrowers shall only be required in connection with such a
conveyance to convey such asset on an “AS IS” basis and without representation
or warranty except for a representation or warranty that such asset is,
immediately prior to such conveyance, beneficially owned by the Borrowers and
not encumbered by a Lien created by the Borrowers.

 

SECTION 19.  Amendment
to Fee and Pricing Letter.  (a) 
Notwithstanding any other provision to the contrary, upon the effectiveness of
this Amendment no further amounts shall be payable under paragraph (c) of
the Fee and Pricing Letter.

 

(b)  Paragraph (i) of
the Fee and Pricing Letter is hereby deleted and the term “[reserved]” is
inserted in its place.  The provisions of
paragraph (j) of the Fee and Pricing Letter shall also no longer apply
except for Section 2.7(b)(iv)(A)(b) to the extent such section
permits the Borrower with respect to the Term Loans to obtain a release of an
asset upon payment in full of the Allocated Term Loan Amount for such asset;
provided, however, that any such release shall be made only with the prior
consent of the Administrative Agent, other than with respect to 1199 F Street,
which shall not require such consent.

 

SECTION 20.  Claims
and Defenses.  The Borrowers and the
Guarantors, together with each of their respective successors and assigns,
hereby expressly forever waive, release and discharge any and all claims
(including, without limitation, cross-claims, counterclaims, rights of setoff
and recoupment), causes of actions, demands, suits, costs, expenses and damages
(collectively, the “Claims”) each may have or allege to have (and all
defenses which may arise out of any of the foregoing) of any nature,
description or kind whatsoever, whether known or unknown, whether now or
hereafter arising, and whether arising in law or at equity, against the
Administrative Agent, any Lender and each of their respective affiliates,
equityholders and “controlling persons” (within the meaning of the United
States federal securities laws) and their respective successors and assigns and
each and all of the employees, directors, officers, attorneys, agents and other
representatives of each of the foregoing (collectively, the “Released
Parties”), based in whole or in part on facts, whether or not known, up to
and including the date of this letter. 
The Borrowers and the Guarantors hereby ratify, adopt and confirm the
foregoing general release of all Claims against any Released Party 

 

13

 

which are based in whole
or in part on the facts, whether or not now known or unknown, existing on or
prior to the date of this Letter.  The
Borrowers and the Guarantors confirm that each has consulted with and has been
represented by counsel and expressly disclaims any reliance on any
representations, acts or omissions by any of the Released Parties and hereby
agrees and acknowledges that the validity and effectiveness of the releases set
forth above does not depend in any way on any such representation, acts and/or
omissions or the accuracy, completeness or validity thereof.  The provisions of this paragraph shall
survive the termination of the Credit Agreement and the other Credit Documents
and payment in full of all obligations and all other amounts owing thereunder.

 

SECTION 21.  Withdrawal
of Mandatory Prepayment Notice.  On March 23,
2009, the Administrative Agent sent a Notice of Mandatory Prepayment to the
Borrowers pursuant to Section 2.7(b)(ii) of the Credit Agreement (“Mandatory Prepayment Notice”) to provide the
Borrowers with written notice that, on March 23, 2009, the Administrative
Agent had determined that a Deficit existed in the amount of $26,214,285.87 and
that the Borrowers were required, within one (1) Business Day following
the receipt thereof by the Borrowers of such written notice from the
Administrative Agent, to prepay a portion of the outstanding Term Loans by an
amount equal to at least $26,214,285.87. 
Upon the execution of this Agreement and the satisfaction of each of the
Conditions Precedent set forth in Section 16 above, the Mandatory
Prepayment Notice is hereby withdrawn by the Administrative Agent and shall be
regarded for all purposes by the Administrative Agent and the Credit Parties as
if it had never been issued.

 

SECTION 22.  Conditions
Precedent.  This Amendment and its
provisions shall become effective on the first date on which all of the
following conditions precedent shall have been satisfied (the “Amendment Effective Date”).  On or before the Amendment Effective Date:

 

(a)           the Administrative Agent shall have
received this Amendment, executed and delivered by a duly authorized officer of
each of the Borrowers, the Guarantors and the Administrative Agent;

 

(b)           no Default or Event of Default shall
have occurred and be continuing;

 

(c)           the Borrowers shall provide the
Administrative Agent with written evidence acceptable to the Administrative
Agent, as determined in its sole and absolute discretion, that final, written
comprehensive settlement agreements have been entered into by the guarantors in
connection with their currently existing credit relationships with Key Bank and
JPMorgan;

 

(d)           the Credit Parties shall have
transferred to the Administrative Agent the Additional Cash Collateral;

 

(e)           the Credit Parties shall have caused (i) 885
Third Mezz to enter into the CDO LC Guarantee - 885 Third Mezz, and (ii) and
2 Herald Mezz to enter into the CDO LC Guarantee - 2 Herald Mezz;

 

14

 

(f)            the Borrowers shall have paid to the
Administrative Agent an amount equal to $225,000 in satisfaction of the
expenses due and owing through the date of this Amendment under Section 26
of this Amendment.

 

(g)           the Borrowers shall have paid the
Administrative Agent an amount equal to $100,000, in full satisfaction of all
unpaid commitment and appraisal fees which are due and owing to the
Administrative Agent through the date of this Amendment; and

 

(h)           the Borrowers and the Guarantors
shall have delivered such legal opinions, UCC-3 amendments, officers
certificates and other supporting documents or instruments which the
Administrative Agent may reasonably request.

 

SECTION 23.  Representations
and Warranties.  Each Borrower and
each Guarantor hereby represents and warrants to the Administrative Agent, as
of the date hereof and as of the Amendment Effective Date, that (i) each
of the representations and warranties made by the Borrowers and the Guarantors
in each Credit Document are true and correct in all material respects as if
made on and as of the date of this Amendment; (ii) each Borrower and each
Guarantor has performed in all material respects all agreements and satisfied
all conditions that the Credit Documents provide shall be performed or
satisfied by the Borrowers and Guarantors; and (iii) no Default or Event
of Default has occurred and is continuing.

 

SECTION 24.  Limited
Effect.  Except as expressly amended
and modified by this Amendment, the Credit Agreement and each of the other
Credit Documents shall continue to be, and shall remain, in full force and
effect in accordance with their respective terms; provided, however,
that upon the Amendment Effective Date, each reference therein and herein to
the “Credit Documents” shall be deemed to include, in any event, this Amendment
and each reference to the “Credit Agreement” in any of the Credit Documents
shall be deemed to be a reference to the Credit Agreement as amended hereby.

 

SECTION 25.  Counterparts.  This Amendment may be executed by each of the
parties hereto on any number of separate counterparts, each of which shall be
an original and all of which taken together shall constitute one and the same
instrument.  Delivery of an executed
counterpart of a signature page to this Amendment in Portable Document Format
(PDF) or by facsimile transmission shall be effective as delivery of a manually
executed original counterpart thereof.

 

SECTION 26.  Expenses.  The Borrowers and the Guarantors agree to pay
and reimburse the Lenders and the Administrative Agent for reasonable
out-of-pocket costs and expenses incurred by the Lenders and the Administrative
Agent in connection with the preparation, execution and delivery of this
Amendment, including, without limitation, reasonable fees and disbursements of
Cadwalader, Wickersham & Taft LLP, counsel to the Lenders and the
Administrative Agent.

 

15

 

SECTION 27.  GOVERNING
LAW.  THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.

 

[SIGNATURES FOLLOW]

 

16

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed and delivered as of the day and year first
above written.

 

 

	
  BORROWERS:

  	
  GRAMERCY WAREHOUSE FUNDING I LLC,
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Gramercy Investment Trust, a Maryland real estate investment
  trust, its sole member and manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert R. Foley

  
	
   

  	
   

  	
   

  	
  Name: Robert R. Foley

  
	
   

  	
   

  	
   

  	
  Title: Chief Operating
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  GKK TRADING WAREHOUSE I LLC,
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GKK Trading Corp., its
  sole member and manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert R. Foley

  
	
   

  	
   

  	
   

  	
  Name: Robert R. Foley

  
	
   

  	
   

  	
   

  	
  Title: Chief Operating
  Officer

  
	
   

  	
   

  	
   

  
	
  GUARANTORS:

  	
  GRAMERCY CAPITAL CORP.,
  a Maryland corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert R. Foley

  
	
   

  	
   

  	
  Name: Robert R. Foley

  
	
   

  	
   

  	
  Title: Chief Operating
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  GKK CAPITAL LP,
  a Delaware limited liability partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Gramercy Capital Corp.,
  a Maryland corporation, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert R. Foley

  
	
   

  	
   

  	
   

  	
  Name: Robert R. Foley

  
	
   

  	
   

  	
   

  	
  Title: Chief Operating
  Officer

  

 

 

	
   

  	
  GRAMERCY
  INVESTMENT TRUST, a Maryland real estate investment trust

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert R. Foley

  
	
   

  	
   

  	
  Name: Robert R. Foley

  
	
   

  	
   

  	
  Title: Chief Operating
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  GKK TRADING CORP.,
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert R. Foley

  
	
   

  	
   

  	
  Name: Robert R. Foley

  
	
   

  	
   

  	
  Title: Chief Operating
  Officer

  
	
   

  	
   

  	
   

  
	
  ADMINISTRATIVE
  AGENT:

  	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION, as Administrative Agent on
  behalf of the Lenders

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marianne Hickman

  
	
   

  	
   

  	
  Name: Marianne Hickman

  
	
   

  	
   

  	
  Title: Managing
  Director

  
	
   

  	
   

  	
   

  
	
  100%
  LENDER AND HEDGE COUNTERPARTY:

  	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION, as 100% Lender and Hedge
  Counterparty

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marianne Hickman

  
	
   

  	
   

  	
  Name: Marianne Hickman

  
	
   

  	
   

  	
  Title: Managing
  Director

  

 

2Exhibit 10.2

 

EXECUTION COPY

 

AMENDED AND RESTATED GUARANTEE AGREEMENT

 

THIS AMENDED AND RESTATED GUARANTEE AGREEMENT (as amended, modified, waived,
supplemented, extended, restated or replaced from time to time, this “Guarantee”), is made
as of the 7th day
of April, 2009, by GRAMERCY CAPITAL CORP.,
a Maryland corporation (together with its successors and permitted assigns, “Parent”), as a
guarantor, GKK CAPITAL LP, a Delaware limited
partnership (together with its successors and permitted assigns, “GKK Capital”), as a
guarantor, GRAMERCY INVESTMENT TRUST, a
Maryland real estate investment trust (together with its successors and
permitted assigns, “Gramercy REIT”),
as a guarantor, GKK TRADING CORP., a Delaware
corporation (together with its successors and permitted assigns, “GTC”, and, together
with Parent, GKK Capital, Gramercy REIT and any other Person that becomes a
guarantor under this Guarantee, the “Guarantors”), as a guarantor, for the benefit of
the several banks and other financial institutions as are, or may from time to
time become parties to the Credit Agreement (as defined below) (each, together
with its successors and assigns, a “Lender” and, collectively, the “Lenders”), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association, as administrative agent for the Lenders hereunder (in such
capacity, together with its successors and assigns, the “Administrative Agent”).  Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Credit Agreement (defined
below).

 

RECITALS:

 

WHEREAS, under and subject to the terms of the Credit
Agreement, dated as of July 18, 2008 (as amended, modified, restated,
replaced, waived, substituted, supplemented or extended from time to time, the “Credit Agreement”), by
and among Gramercy Warehouse Funding I LLC, a Delaware limited liability
company (together with its successors and permitted assigns, “GWF-I”), as a
borrower, GKK Trading Warehouse I LLC, a Delaware limited liability company
(together with its successors and permitted assigns, “GKK Trading” and together with GWF-I and any
other Person that becomes a borrower under the Credit Documents, the “Borrowers”), as a
borrower, the Guarantors, the Lenders and the Administrative Agent, the
Borrowers and the Lenders have agreed that the Lenders may make certain loans
to the Borrowers subject to the terms and conditions of the Credit Agreement;

 

WHEREAS, in connection with the execution and delivery
of the Credit Agreement, Guarantors executed and delivered to the Administrative
Agent a Guarantee Agreement dated as of July 22, 2008 (the “Existing
Guarantee”);

 

WHEREAS, Parent is the sole general partner and the 99% owner
of the Class A limited partnership interests of GKK Capital, and the
holder of 100% of the direct or indirect common equity interests in each of GTC
and Gramercy REIT;

 

WHEREAS, as of the date hereof the Credit Parties and the
Administrative Agent are entering into Amendment No. 2 to the Credit
Agreement (“Amendment No. 2”);

 

WHEREAS, the Guarantors will benefit directly or indirectly
from the transactions contemplated under Amendment No. 2;

 

 

WHEREAS, in connection with Amendment No. 2 to the
Credit Agreement the parties desire to amend and restate the Existing Guarantee
as set forth herein;

 

WHEREAS, it was a condition precedent to the effectiveness of
the Credit Agreement that each Guarantor shall have executed and delivered this
Guarantee in connection with each of the representations, warranties,
covenants, indemnities (including but not limited to any indemnification for
environmental conditions) and Obligations of the Borrowers with respect to the
Administrative Agent and the Lenders under each of the Credit Documents
(collectively, the “Guarantee Obligations”); and

 

WHEREAS, the Guarantors and the Administrative Agent have
agreed to amend and restate the Existing Guarantee to, among other things,
reflect the limitations provided for in Section 2 below.

 

NOW, THEREFORE, based upon the foregoing Recitals and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, each Guarantor, intending to be legally bound, hereby agrees as
follows:

 

1.             Amendment and Restatement; Defined Terms.  This Guarantee amends,
restates and replaces the Existing Guarantee in its entirety.  Notwithstanding the foregoing or any other
provision of this Guarantee, if either of the events set forth in Section 2(b)(i) and
(ii) below occur at any time within ninety (90) days of the Amendment
Effective Date, this Guarantee, at the Administrative Agent’s option, shall be
rendered null and void and the Existing Guarantee shall be reinstated in its
original form.  The following terms are
defined for purposes of this Guarantee as follows:

 

(a)           “Consolidated
Subsidiaries” shall mean any Subsidiary of Parent, or any other entity,
which is consolidated with Parent in accordance with GAAP or which is required
under GAAP to be consolidated with Parent.

 

(b)           “Pledged
Collateral” shall have the meaning assigned thereto in the Pledge
Agreement.

 

2.             Guarantee of Payment and Performance.

 

(a)           Each Guarantor,
jointly and severally, hereby unconditionally and irrevocably guarantees to the
Administrative Agent and the Lenders the prompt and complete payment and
performance by each Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Guarantee Obligations, provided that the
Guarantors shall have no liability hereunder and under the other Credit
Documents other than as specifically stated and in the maximum amounts set
forth in Sections 2(b) and (c) below.

 

(b)           The liability
of the Guarantors hereunder and under the Credit Documents shall be in the full
amount of the Guarantee Obligations, if, at any time within ninety (90) days of
the Amendment Effective Date:

 

(i)            a voluntary bankruptcy or insolvency
proceeding is commenced by any Borrower or Guarantor under the U.S. Bankruptcy
Code or any similar federal or state law; or

 

(ii)           an involuntary bankruptcy or insolvency
proceeding is commenced against any Borrower or any Guarantor under the U.S.
Bankruptcy Code or any similar federal or

 

2

 

state
law and an order for relief is entered in such proceeding (whether or not such
order for relief is entered within such ninety (90) day period).

 

(c)           Except as
provided in the preceding clauses (a) and (b), the maximum liability of
the Guarantors hereunder and under the Credit Documents shall in no event
exceed an amount equal to $10,000,000 in the event of:

 

(i)            a voluntary bankruptcy or insolvency
proceeding is commenced by any Borrower, 2 Herald Mezz or 885 Third Mezz under
the U.S. Bankruptcy Code or any similar federal or state law but only, in the
case of 2 Herald Mezz or 885 Third Mezz, until such time as the Guarantee
Release Event or the Guarantee Release Event – 2 Herald Mezz, as applicable,
has occurred;

 

(ii)           an involuntary bankruptcy or insolvency
proceeding is commenced against any Borrower, 2 Herald Mezz or 885 Third Mezz
under the U.S. Bankruptcy Code or any similar federal or state law and an order
for relief is entered in such proceeding but only, in the case of 2 Herald Mezz
or 885 Third Mezz, until such time as the Guarantee Release Event or the
Guarantee Release Event – 2 Herald Mezz, as applicable, has occurred;

 

(iii)          any Act of
Insolvency not described by the immediately preceding clauses (i) or (ii) above
(other than an Act of Insolvency described in clause (v) of the definition
thereof consisting only of an admission by a Borrower of its inability to pay
its debts when due) occurs with respect to any Person identified in such
clauses, but only, in the case of 2 Herald Mezz or 885 Third Mezz, until such
time as the Guarantee Release Event or the Guarantee Release Event - 2 Herald
Mezz, as applicable, has occurred;

 

(iv)          fraud or intentional misrepresentation by
any Borrower, any Guarantor, 2 Herald Mezz or 885 Third Mezz in connection with
the execution and the delivery of the Amendment No. 2, this Guarantee or
any other Credit Document;

 

(v)           any material breach by the Borrowers of
the separateness covenants contained in Section 5.23 of the Credit
Agreement, other than with respect to a Past Disclosed Separateness Issue;

 

(vi)          any breach by the Borrowers of the
covenant contained in 6.4 of the Credit Agreement; or

 

(vii)         in the event of any bankruptcy or
insolvency proceeding of any of the Guarantors (or any of their Affiliates),
the assets of any Borrower are successfully claimed or otherwise recovered by
such Guarantor’s (or any of their Affiliates) bankruptcy estate in connection
with such proceeding in any manner for any reason.

 

For purposes of clause (v) above, “Past Disclosed
Separateness Issue” means the separateness covenant issues disclosed on
Schedule 2(d).

 

(d)           In addition to the foregoing and
notwithstanding any limitation on liability set forth in subsections (a), (b) or
(c) above, Guarantors shall be jointly and severally liable for any actual
losses, damages, costs or expense incurred by the Administrative Agent or the
Lenders resulting from any material breach by the Guarantors of any of the
representations, warranties or covenants contained in any Credit Document
(including without limitation reasonable legal fees and other costs of
enforcement), in

 

3

 

each case to the extent
adversely affecting any Borrower’s properties or any Collateral; provided,
however, that unless knowing, willful or fraudulent, the Guarantors shall have
no liability with respect to (x) the breach of any representation,
warranty or covenant contained in Schedule 1.1(a) to the Credit
Agreement with respect to a Mortgage Asset, (y) the breach of any
representations, warranties and covenants relating to Environmental Matters or (z) any
indemnity for costs incurred in connection with the violation of any
Environmental Matters, or any Indemnity for costs incurred in connection with
the violation of any Environmental Law, the correction of any environmental
condition, or the removal of any Materials of Environmental Concern.

 

The provisions of
this Section 2(d) are also subject to the following understanding
concerning interest and principal of the Loans: 
(i) in this Section 2(d), “actual losses, damages, costs and
expenses” shall not include interest or principal of the Loans with respect to
any breach occurring on or after the Amendment Effective Date; and (ii) with
respect to any breach to which this Section 2(d) applies that
occurred prior to the Amendment Effective Date, the calculation of the actual
losses, damages, costs or expenses incurred by the Administrative Agent or the
Lenders resulting from such breach may include losses, costs, damages and
expenses resulting from the Administrative Agent’s failure to receive amounts
that were owed by the Borrower or to realize amounts from the Collateral that
would have been applied to pay interest and principal of the Loans.

 

Notwithstanding the fact that the Guarantors
are party to the Credit Agreement, any payment obligation of the Guarantors
with respect to any asserted violation or breach of any provision of the Credit
Agreement prior to the date hereof and as set forth in Schedule 2(d) shall
be limited to the indemnity set forth in the preceding paragraph.

 

(e)           Nothing herein (including, without
limitation, subsections (a), (b) or (c) above) shall be deemed to be
a waiver of any right which the Administrative Agent or any Lender may have
under Section 506(a), 506(b), 1111(b) or any other provision of the
U.S. Bankruptcy Code to file a claim against any of the Borrowers or to the
extent of a consolidation of the Borrower’s assets with those of any
Guarantor(s), such Guarantor(s), for the full amount of the Indebtedness
secured by the Credit Agreement or to require that all Collateral shall
continue to secure all of the Indebtedness owing to the Lenders and the
Administrative Agent in accordance with the Credit Agreement or any other
Credit Documents.

 

(f)            Notwithstanding the limitations set
forth in subsections 2(a), (b) or (c) above, each Guarantor hereby
agrees to pay all reasonable costs, fees and expenses (including reasonable
attorneys’ fees) incurred by the Administrative Agent or the Lenders in
enforcing, or obtaining advice of counsel in respect of, any rights with
respect to, or collecting, any or all of the Guarantee Obligations and/or
enforcing any rights with respect to, or collecting against, any Guarantor
under this Guarantee.  The obligations
contained in this Section 2(f) shall survive the termination
of this Guarantee.

 

(g)           No payment or payments made by any
Borrower or any other Person or received or collected by the Administrative
Agent or any Lender from any Borrower or any other Person by virtue of any
action or proceeding or any set-off or appropriation or application, at any
time or from time to time, in reduction of or in payment of the Obligations
shall be deemed to modify, reduce, release or otherwise affect the liability of
the Guarantors hereunder which shall, notwithstanding any such payment or
payments, remain liable for the amount of the Obligations until the Obligations
are paid in full, subject to the limitations set forth in subsections 2(a), (b) or
(c) above.

 

(h)           Each Guarantor agrees that whenever,
at any time, or from time to time, any Guarantor shall make any payment to the
Administrative Agent for the ratable benefit of the Lenders on account of such
Guarantor’s liability hereunder, such Guarantor will notify the Administrative
Agent in writing that such payment is made under this Guarantee for such
purpose.

 

4

 

3.             Release
of Collateral, Parties Liable, etc.

 

Each Guarantor agrees that (a) any or all of the
Collateral, the Pledged Collateral and other collateral, security and Property
now or hereafter held for the Guarantee or the Guarantee Obligations may be
exchanged, released, terminated, modified, sold, assigned, participated,
pledged, compromised, surrendered or otherwise transferred or disposed of from
time to time; (b) except as expressly set forth in the Credit Documents,
the Administrative Agent and the Lenders shall have no obligation to protect,
perfect, secure or insure any Collateral, the Pledged Collateral or any
collateral, security, Property, Liens, interests or encumbrances now or
hereafter held for the Guarantee or the Guarantee Obligations or the Properties
subject thereto; (c) the time, place, manner or terms of payment of the
Guarantee Obligations may be changed or extended, in whole or in part, to a
time certain or otherwise, and may be renewed or accelerated, in whole or in
part; (d) the Borrowers, the Pledgors, the other Credit Parties and other
Persons may be granted indulgences generally; (e) any of the provisions of
the Credit Agreement and the other Credit Documents and the Guarantee
Obligations may be modified, amended, waived, supplemented, replaced or restated
from time to time; (f) any party liable for the payment of the Guarantee
Obligations, including, without limitation, other guarantors, may be granted
indulgences or released; and (g) any deposit balance for the credit of the
Borrowers or any other Person liable for the payment of the Guarantee
Obligations, including, without limitation, other guarantors, or liable upon
any security therefor, may be released, in whole or in part, at, before and/or
after the stated, extended or accelerated maturity of the Guarantee
Obligations, all of the foregoing in clauses (a) through (g) without
notice to or further assent by such Guarantor, who shall remain bound thereon,
notwithstanding any such exchange, compromise, surrender, extension, renewal,
acceleration, modification, indulgence, release or other act.

 

4.             Waiver
of Rights.

 

Each Guarantor expressly waives:  (a) notice of acceptance of this
Guarantee by the Administrative Agent, the Lenders or any other Guarantor and
of all extensions of credit, loans or advances to or purchases from the
Borrowers by the Administrative Agent or the Lenders; (b) presentment and
demand for payment of any of the Guarantee Obligations; (c) protest and
notice of dishonor or of default to such Guarantor or to any other Person with
respect to the Guarantee Obligations or with respect to any collateral,
security or Property therefor; (d) notice of the Administrative Agent or
the Lenders obtaining, amending, substituting for, releasing, waiving,
modifying, extending, replacing or restating all or any portion of the
Guarantee Obligations, the Credit Agreement, any other Credit Document, other
guarantees or any Lien now or hereafter securing the Guarantee Obligations or
the Guarantee, or the Administrative Agent or the Lenders subordinating,
compromising, discharging, terminating or releasing such Liens; (e) notice
of the execution and delivery by the Borrowers, the Administrative Agent, the
Lenders or any other Person of any other loan, purchase, credit or security
agreement or document or of the Borrowers’ or such other Person’s execution and
delivery of any promissory notes or other documents arising under or in
connection with the Credit Documents or in connection with any purchase of the
Borrowers’ or such other Person’s Property or assets; (f) notice of any
kind concerning the assets, liabilities, financial condition, creditworthiness,
businesses, prospects or other affairs of the Borrowers or any other Person; (g) notice
of the occurrence of any breach by the Borrowers, the Pledgors, any other
Credit Party or any other Person or of any Event of Default; (h) notice of
the Administrative Agent’s or the Lenders’ transfer, disposition, assignment,
sale, pledge or participation of the Guarantee Obligations, the Collateral, the
Pledged Collateral, the Credit Documents, the Mortgage Loan Documents, or any
collateral, security or Property for the Guarantee or the Guarantee Obligations
or any portion of the foregoing; (i) notice of the sale or foreclosure (or
posting or advertising for sale or foreclosure) of all or any portion of any
Collateral, the Pledged Collateral or any collateral, security or Property for
the Guarantee or the Guarantee Obligations; (j) notice of the protest,
proof of non–payment or default by the Borrowers or any other Person; (k) any
other action at any time taken or

 

5

 

omitted by the Administrative Agent or the Lenders,
and, generally, all demands and notices of every kind in connection with this
Guarantee, the Credit Documents, the Guarantee Obligations, the Collateral, the
Pledged Collateral, any collateral, security or Property for the Guarantee or
the Guarantee Obligations, the Mortgage Loan Documents, any documents or
agreements evidencing, securing or relating to any of the Guarantee or the
Guarantee Obligations and the obligations hereby guaranteed; (l) all other
notices to which the Guarantor might otherwise be entitled; (m) demand for
payment under this Guarantee; and (n) any right to assert against the
Administrative Agent or the Lenders, as a defense, counterclaim, set–off or
cross–claim, any defense (legal or equitable), set–off, counterclaim or claim
of any kind or nature whatsoever that the Guarantor may now or hereafter have
against the Administrative Agent or the Lenders (other than payment in full of
the Guarantee Obligations), the Borrowers or any other Person.  It shall not be necessary for the
Administrative Agent or the Lenders (and each Guarantor hereby waives any rights
which such Guarantor may have to require the Administrative Agent or the
Lenders), in order to enforce the obligations of each Guarantor hereunder, to (i) institute
suit, enforce its rights or exhaust its remedies against the Borrowers, the
Pledgors, any other Credit Party, others liable on the Guarantee Obligations,
the Obligors or any other Person, (ii) enforce the Administrative Agent’s
or the Lenders’ rights or exhaust its remedies under or with respect to the
Mortgage Loan Documents and the collateral and Property secured thereby, the Collateral,
the Pledged Collateral or any collateral, security or Property which shall ever
have been given to secure the Guarantee or the Guarantee Obligations, (iii) enforce
the Administrative Agent’s or the Lenders’ rights against any other guarantors
of the Guarantee Obligations, (iv) join the Borrowers, others liable on
the Guarantee Obligations or any other Person in any action seeking to enforce
this Guarantee, (v) mitigate damages or take any other action to reduce,
collect or enforce the Guarantee Obligations or (vi) resort to any other
means of obtaining payment of the Guarantee Obligations.

 

5.             Guarantee
Absolute and Unconditional.

 

The obligations of each Guarantor under this Guarantee
are absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of the obligations of the Borrowers
under the Credit Agreement and, to the fullest extent permitted by applicable
law, irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 5 that the obligations of each
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances, and a separate action or actions may be brought and prosecuted
against each Guarantor to enforce this Guarantee, irrespective of whether any
action is brought against the Borrowers, the Pledgors, any other Guarantors or
any other Credit Party or whether the Borrowers, the Pledgors, the other Guarantors
or any other Credit Party are joined in any such action or actions.  The validity of this Guarantee, the
obligations of each Guarantor hereunder and the Administrative Agent’s and the
Lenders’ rights and remedies for the enforcement of the foregoing shall in no
way be terminated, abated, reduced, released, modified, changed, discharged,
diminished, affected, limited or impaired in any manner whatsoever by the
happening from time to time of any event or condition of any kind whatsoever,
including, without limitation, any of the following (and each Guarantor hereby
waives any common law, equitable, statutory, constitutional, regulatory or
other rights (including rights to notice) which such Guarantor might have as a
result of or in connection with any of the following):  (a) the assertion or non–assertion by
the Administrative Agent or the Lenders of any of the rights or remedies
available to the Administrative Agent or the Lenders pursuant to the provisions
of the Credit Documents, the Mortgage Loan Documents or pursuant to any
Requirement of Law; (b) the waiver by the Administrative Agent or the
Lenders of, or the failure of the Administrative Agent or the Lenders to
enforce, or the lack of diligence by the Administrative Agent or the Lenders in
connection with, the enforcement of any of its rights or remedies under the
Credit Documents, the Mortgage Loan Documents, the Collateral, the Pledged
Collateral or any collateral, security or Property for the Guarantee or the
Guarantee Obligations; (c) the granting by the Administrative Agent or the
Lenders of (or failure by the Administrative Agent or the Lenders to grant) any
indulgence, forbearance,

 

6

 

adjustment, compromise, consent, approval, waiver or
extension of time; (d) the occurrence of any Default or Event of Default
under the Credit Agreement, or the occurrence of any similar event (howsoever
described) under any agreement or instrument referred to therein; (e) any
delay, failure or inability of any Borrower, Pledgor, Guarantor or any other
Credit Party in respect of any of the Guarantee Obligations to perform, willful
or otherwise, any provision of the Credit Agreement beyond any applicable cure
periods; (f) any action or failure to act by the Administrative Agent or
the Lenders that adversely affects any Guarantor’s right of subrogation arising
by reason of any performance by such Guarantor of this Guarantee; (g) any
suit or other action brought by, or any judgment in favor of, any beneficiaries
or creditors of, any Borrower, Pledgor, Guarantor, other Credit Party or any
other Person for any reason whatsoever, including any suit or action in any way
disaffirming, repudiating, rejecting or otherwise calling into question any
issue, matter or thing in respect of the Credit Agreement; (h) any lack or
limitation of status or of power, incapacity or disability of any Borrower, the
Pledgor, Guarantor or any other Credit Party in respect of any of the Guarantee
Obligations; (i) the exercise by the Administrative Agent or the Lenders
of or failure to exercise any so–called self–help remedies; (j) any act,
omission or condition that might in any manner or to any extent vary, alter,
increase, extend or continue the risk to such Guarantor or might otherwise
operate as a discharge or release of such Guarantor under Requirements of Law; (k) any
full or partial release or discharge of or accord and satisfaction with respect
to liability for the Guarantee Obligations, or any part thereof, of the
Borrowers, the Guarantors, the Pledgors, any other Credit Party, any co–guarantors
or any other Person now or hereafter liable, whether directly or indirectly,
jointly, severally, or jointly and severally, to pay, perform, guarantee or
assure the payment of the Guarantee Obligations, or any part thereof; (l) the
impairment, modification, change, release, discharge or limitation of the
liability of the Borrowers, the Guarantors, the Pledgors, any other Credit
Party, any Obligor or any Person liable for or obligated on the Guarantee
Obligations, or any of their estates in bankruptcy, resulting from or pursuant
to the bankruptcy or insolvency of any of the foregoing or the application of
the Insolvency Laws or of or any decision of any court of the United States or
any state thereof; (m) any present or future Requirements of Law or order
of any Governmental Authority (de jure or de facto) purporting to reduce, amend or otherwise
affect the Guarantee Obligations or to vary any terms of payment, satisfaction
or discharge thereof; (n) the waiver, compromise, settlement, release,
extension, acceleration, amendment, change, modification, substitution,
replacement, reduction, increase, alteration, rearrangement, renewal or
termination of the terms of the Guarantee Obligations, the Credit Documents,
the Collateral, the Pledged Collateral, any collateral, security or Property
for the Guarantee or the Guarantee Obligations, the Mortgage Loan Documents,
any or all of the obligations, covenants or agreements of the Borrowers, the
Pledgors, the other Credit Parties, the Obligors or any other Person under the
Credit Documents or Mortgage Loan Documents (except by satisfaction in full of
all Guarantee Obligations) or of the Guarantors under this Guarantee and/or any
failure of the Administrative Agent or the Lenders to notify the Guarantors of
any of the foregoing; (o) the extension of the time for satisfaction,
discharge or payment of the Guarantee Obligations or any part thereof owing or
payable by the Borrowers or any other Person under the Credit Documents or of
the time for performance of any other obligations, covenants or agreements
under or arising out of this Guarantee or the extension or renewal of any
thereof; (p) any existing or future offset, claim or defense (other than
payment in full of the Guarantee Obligations) of the Borrowers or any other
Person against the Administrative Agent or the Lenders or against payment of
the Guarantee Obligations, whether such offset, claim or defense arises in
connection with the Guarantee Obligations (or the transactions creating same)
or otherwise; (q) the taking or acceptance or the existence of any other
guarantee of or collateral, security or Property for the Guarantee Obligations
in favor of the Administrative Agent, the Lenders or any other Person specified
in the Credit Documents or the enforcement or attempted enforcement of such
other guarantee, collateral, security or Property; (r) any sale, lease,
sublease or transfer of or Lien on all or a portion of the assets or Property
of the Borrowers, the Pledgors, the Guarantors or any other Credit Party, or
any changes in the shareholders, partners or members of the Borrowers, the
Pledgors, the Guarantors or any other Credit Party, or any reorganization,
consolidation or merger of the Borrowers, the Pledgors, the Guarantors or any
other Credit Party; (s) any consolidation or amalgamation of the

 

7

 

Borrowers, the Pledgors, the Guarantors or any other
Credit Party with, any merger of the Borrowers, the Pledgors, the Guarantors or
any other Credit Party with or into, or any transfer by the Borrowers, the
Pledgors, the Guarantors or any other Credit Party of all or substantially all
their assets to, another Person, any change in the legal or beneficial ownership
of ownership interests issued by the Borrowers, the Pledgors, the Guarantors or
any other Credit Party, or any other change whatsoever in the objects, capital
structure, constitution or business of the Borrowers, the Pledgors, the
Guarantors or any other Credit Party; (t) the invalidity, illegality or
unenforceability of all or any part of the Guarantee Obligations, the Credit
Documents, the Collateral, the Pledged Collateral, any collateral, security or
Property for the Guarantee or the Guarantee Obligations, the Mortgage Loan
Documents or any document or agreement executed in connection with the
foregoing, for any reason whatsoever, including, without limitation, the fact
that (1) the Guarantee Obligations, or any part thereof, exceeds the
amount permitted by Requirements of Law or violates usury laws, (2) the
act of creating the Guarantee Obligations, the Mortgage Assets, the Collateral,
the Pledged Collateral, any collateral, security or Property for the Guarantee
or the Guarantee Obligations or any part of the foregoing is ultra  vires, (3) the
officers or representatives executing the Mortgage Loan Documents or Credit
Documents or otherwise creating the Guarantee Obligations, the Mortgage Assets,
the Collateral, the Pledged Collateral or any collateral, security or Property
for the Guarantee or the Guarantee Obligations acted in excess of their
authority, (4) the Borrowers, the Pledgors, any other Credit Party, any
Obligor or any other Person has valid defenses, claims or offsets (whether at
law, in equity or by agreement) which render the Guarantee Obligations wholly
or partially uncollectible, (5) the creation, performance or repayment of
the Guarantee Obligations, the Mortgage Assets, the Collateral, the Pledged
Collateral or any collateral, security or Property for the Guarantee or the
Guarantee Obligations (or the execution, delivery and performance of any Credit
Document, Mortgage Loan Document or document or instrument representing part of
the Guarantee Obligations, the Mortgage Assets, the Collateral, the Pledged
Collateral, any collateral, security or Property for the Guarantee or the
Guarantee Obligations or executed in connection with the Guarantee Obligations,
the Mortgage Assets, the Collateral, the Pledged Collateral or any collateral,
security or Property for the Guarantee or the Guarantee Obligations, or given
to secure the repayment of the Guarantee Obligations, the Mortgage Assets or
the other Collateral) is illegal, uncollectible or unenforceable or (6) any
Mortgage Loan Document, any Credit Document or any other document, agreement or
instrument has been forged or otherwise is irregular or not genuine or
authentic; (u) any release, termination, sale, pledge, participation,
transfer, surrender, exchange, subordination, deterioration, waste, loss or
impairment (including, without limitation, negligent, willful, unreasonable or
unjustifiable impairment) of the Collateral, the Pledged Collateral or any
collateral, security or Property at any time existing in connection with, or
assuring or securing payment of, all or any part of the Guarantee or the
Guarantee Obligations; (v) the failure of the Administrative Agent, the
Lenders or any other Person to exercise diligence or reasonable care in the
preservation, protection, enforcement, sale or other handling or treatment of
all or any part of the Collateral, the Pledged Collateral or any other
collateral, security or Property for the Guarantee or the Guarantee
Obligations, including, but not limited to, any neglect, delay, omission,
failure or refusal of the Administrative Agent or the Lenders (1) to take
or prosecute any action for the collection of any of the Guarantee Obligations,
the Pledged Collateral, any Collateral or any collateral, security or Property
for the Guarantee or the Guarantee Obligations, (2) to foreclose, or
initiate any action to foreclose, or, once commenced, prosecute to completion
any action to foreclose, upon any Collateral, the Pledged Collateral or any
security, collateral or Property for the Guarantee or Guarantee Obligations, or
(3) to take or prosecute any action in connection with any instrument or
agreement evidencing or securing all or any part of the Guarantee Obligations; (w) the
fact that the Collateral, the Pledged Collateral or any collateral, security,
Property or Lien contemplated or intended to be given, created or granted as
security for the repayment of the Guarantee or the Guarantee Obligations, or
any part thereof, shall not be properly perfected or created, or shall prove to
be unenforceable or subordinate to any other Lien; (x) any payment by the
Borrowers or any other Person to the Administrative Agent or the Lenders is
held to constitute a preference under Insolvency Laws, or for any reason the
Administrative Agent or the Lenders are required to refund such payment or pay
such

 

8

 

amount to any such Borrower or other Person; or (y) any
event or action that would, in the absence of this Section 5,
result in the full or partial release, discharge or relief of such Guarantor
from the performance or observance of any obligation, covenant or agreement
contained in this Guarantee or any other agreement, whether or not such event
or action increases the likelihood that such Guarantor will be required to pay
the Guarantee Obligations pursuant to the terms hereof or thereof and whether
or not such event or action prejudices such Guarantor, it being the unambiguous
and unequivocal intention of each Guarantor that such Guarantor shall be
obligated to pay the Guarantee Obligations when due, notwithstanding any
occurrence, circumstance, event, action or omission whatsoever, whether
contemplated or uncontemplated, and whether or not otherwise or particularly or
expressly described herein, which obligation shall be deemed satisfied only
upon the full and final indefeasible payment and satisfaction of the Guarantee
Obligations.

 

6.             Primary
Liability of the Guarantors.

 

Without limiting the foregoing provisions, each
Guarantor agrees that this Guarantee may be enforced by the Administrative
Agent and the Lenders without the necessity at any time of resorting to or
exhausting any other security or collateral and without the necessity at any
time of having recourse to any of the Credit Documents, the Collateral, the
Pledged Collateral or any collateral, security or Property now or hereafter
securing the Guarantee or the Guarantee Obligations or otherwise, and each
Guarantor hereby waives the right to require the Administrative Agent or the
Lenders to proceed against the Borrowers, the Pledgors, any other Credit Party,
any Obligor or any other Person (including a co–guarantor) or to require the
Administrative Agent or the Lenders to pursue any other remedy or enforce any
other right.  Each Guarantor further
agrees that such Guarantor shall have no right of subrogation, reimbursement or
indemnity whatsoever against any Person, or any right of recourse to the
Collateral, the Pledged Collateral or any collateral, security or Property for
the Guarantee or the Guarantee Obligations, so long as any such Guarantee
Obligations remain outstanding.  Each
Guarantor further agrees that nothing contained herein shall prevent the
Administrative Agent or the Lenders from suing on the Credit Agreement or any
of the other Credit Documents or foreclosing its security interest in or Lien
on any Collateral, the Pledged Collateral or any collateral, security or
Property now or hereafter securing the Guarantee or the Guarantee Obligations
or from exercising any other rights available to it under the Credit Agreement
or any of the other Credit Documents or any other instrument of security if
none of the Borrowers, the Pledgors, the Guarantors or any other Credit Party
timely perform the obligations of the Borrowers, the Pledgors, all other Credit
Parties or other Persons thereunder, and the exercise of any of the aforesaid
rights and the completion of any foreclosure proceedings shall not constitute a
discharge of such Guarantor’s obligations hereunder; it being the purpose and
intent of each Guarantor that such Guarantor’s obligations hereunder shall be
absolute, independent and unconditional under any and all circumstances.  Each Guarantor recognizes, acknowledges and
agrees that such Guarantor may be required to pay the Guarantee Obligations in
full (subject to the limit set forth in Section 2) without
assistance or support of any other Person, and such Guarantor has not been
induced to enter into this Guarantee on the basis of a contemplation, belief,
understanding or agreement that other parties will be liable to pay or perform
the Guarantee Obligations, or that the Administrative Agent or the Lenders will
look to other parties to pay or perform the Guarantee Obligations.  Each Guarantor recognizes, acknowledges and
agrees that it is not entering into this Guarantee in reliance on, or in
contemplation of the benefits of, the validity, enforceability, collectability
or value of the Collateral, the Pledged Collateral or any of the collateral,
security or Property for the Guarantee or the Guarantee Obligations or of the
validity, enforceability or collectability of this Guarantee against any other
Guarantor.

 

9

 

7.             Payments.

 

Each Guarantor hereby agrees that the Guarantee
Obligations will be paid to the Administrative Agent for the ratable benefit of
the Lenders without set-off or counterclaim in U.S. Dollars at the address
specified in writing by the Administrative Agent.

 

8.             Attorneys’ Fees and Costs of Collection.

 

Each Guarantor hereby
agrees to pay all reasonable costs, fees and expenses (including reasonable
attorneys’ fees) incurred by the Administrative Agent or the Lenders as
provided in Section 2(f).

 

9.             Security Interests and Setoff.

 

Subject to the limitations set forth in Section 2,
each Guarantor agrees that in the event any Guarantor fails to pay its
obligations hereunder when due and payable under this Guarantee, the
Administrative Agent and the Lenders shall be entitled to (a) any and all
remedies available to it including, without limitation, all rights of setoff
and (b) the benefit of all Liens heretofore, now and at any time or times
hereafter granted by such Guarantor or any Borrower to the Administrative Agent
and the Lenders, if any, to secure such Guarantor’s obligations hereunder.

 

10.          Term
of Guarantee.

 

This Guarantee, subject to the limitations set forth
in Section 2, shall continue in full force and effect until the Guarantee
Obligations are fully and indefeasibly paid, performed and discharged and the
Credit Documents are terminated.  This
Guarantee covers the Guarantee Obligations whether presently outstanding or
arising subsequent to the date hereof, including all amounts advanced by the
Administrative Agent or the Lenders in stages or installments.  Notwithstanding the foregoing, this Guarantee
shall continue to be effective, or be reinstated, as the case may be, and any
payment of the Guarantee Obligations hereunder shall be reinstated, if at any
time payment, or any part thereof, of any of the Guarantee Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or the Lenders as a preference, fraudulent conveyance or otherwise upon or in
connection with an Insolvency, Act of Insolvency, Insolvency Proceeding,
bankruptcy, dissolution, liquidation or reorganization with respect to the
Borrowers or any other Person obligated on or for the Guarantee Obligations, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any of the Borrowers or such other
Person or any substantial part of such Borrowers’ or such other Person’s
Property or assets, or otherwise, all as though such payments had not been
made; provided that in the event payment of all or any part of the
Guarantee Obligations is rescinded or must be restored or returned, all costs
and expenses (including, without limitation, any legal fees and disbursements)
incurred by the Administrative Agent or the Lenders in defending and enforcing
such reinstatement shall be deemed to be included as a part of the Guarantee
Obligations.

 

11.          Representations
and Warranties.

 

(a)           Each Guarantor
represents and warrants to, and covenants with, the Administrative Agent and
the Lenders, as of the date of this Guarantee, and shall be deemed to restate
as of each Borrowing Date, that:

 

(i)            it is duly organized, validly existing
and in good standing as a corporation, limited partnership, limited liability
company or real estate investment trust under the laws of the jurisdiction of
its organization or formation, and is duly qualified to do business and is in
good standing in all jurisdictions in which the character of its Property or
assets, the nature of its business or the performance of its obligations under
any agreement to which it is a party or is

 

10

 

bound makes such qualification necessary, except for
any failure to qualify outside of the jurisdiction of organization or formation
that would not have a Material Adverse Effect;

 

(ii)      its execution and delivery of, performance
under and compliance with this Guarantee will not violate its Authority
Documents or constitute a default (or an event that, with notice or lapse of
time, or both, would constitute a default) under, or result in a material
breach of, any material Contractual Obligation, Indebtedness or Guarantee
Obligation to which it is a party or by which it is bound;

 

(iii)     its execution and delivery of, performance
under and compliance with this Guarantee will not violate any law, treaty, rule or
regulation or determination of an arbitrator, a court or other governmental
authority, applicable to or binding upon the Guarantor or any of its property
or to which the Guarantor or any of its property is subject (“Requirement of Law”),
or any provision of any security issued by the Guarantor or of any agreement,
instrument or other undertaking to which the Guarantor is a party or by which
it or any of its property is bound (“Contractual Obligation”), and will not result in
or require the creation or imposition of any Lien on any of the properties or
revenues of the Guarantor pursuant to any Requirement of Law or Contractual
Obligation of the Guarantor;

 

(iv)    the Guarantor has the legal capacity and the
legal right to execute and deliver this Guarantee and to perform the Guarantor’s
obligations hereunder;

 

(v)     it has the full power and authority to
enter into and consummate all transactions contemplated by this Guarantee, has
duly authorized the execution, delivery and performance of this Guarantee, and
has duly executed and delivered this Guarantee;

 

(vi)    this Guarantee constitutes a valid, legal
and binding obligation of such Guarantor, enforceable against it in accordance
with the terms hereof, subject to (A) Insolvency Laws affecting the
enforcement of creditors’ rights generally, and (B) general principles of
equity, regardless of whether such enforcement is considered in a proceeding in
equity or at law;

 

(vii)   it is not in violation of, and its execution
and delivery of, performance under and compliance with this Guarantee shall not
constitute a violation of, its Authority Documents, any Requirement of Law, any
order or decree of any court or arbiter, or any order, regulation or demand of
any Governmental Authority;

 

(viii)  no consent, approval, order or authorization
of, filing with, or other act by or in respect of, any arbitrator or
Governmental Authority and no consent of any other Person (including, without
limitation, any creditor of the Guarantor) is required in connection with the
execution, delivery, performance, validity or enforceability of this Guarantee;

 

(ix)     except as set forth in Schedule 2(d),
no litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Guarantor,
threatened by or against the Guarantor or against any of the Guarantor’s
properties or revenues with respect to this Guarantee or any of the
transactions contemplated hereby;

 

(x)      to the knowledge of the Guarantor, none of
the Guarantors, the Borrowers, the Pledgors, any other Credit Party or any
principal, director, partner, manager or owner of the foregoing (other than
unaffiliated minority owners of publicly traded common stock) has ever been
convicted of a crime or is the subject of any currently pending or threatened
criminal 

 

11

 

proceeding that, in any particular case or taken
collectively, could have a Material Adverse Effect;

 

(xi)     except as disclosed in writing to the
Administrative Agent prior to the date hereof, the Guarantor has filed or caused
to be filed all tax returns which, to the knowledge of the Guarantor, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against the Guarantor or any of the
Guarantor’s Property and all other taxes, fees or other charges imposed on the
Guarantor or any of the Guarantor’s Property by any Governmental Authority
(other than any the amount or validity of which are currently being contested
in good faith by appropriate proceedings); no tax lien has been filed, and, to
the knowledge of the Guarantor, no claim is being asserted, with respect to any
such tax, fee or other charge;

 

(xii)    the Guarantor is not the subject of any
Insolvency Proceeding;

 

(xiii)   the recitals to this Guarantee are true and
correct; and

 

(xiv)   the Guarantor has received valuable
consideration, fair value, fair consideration or reasonable equivalent value
for the Guarantee Obligations, and the Guarantee Obligations (A) will not
render the Guarantor not Solvent, (B) will not leave the Guarantor with an
unreasonably small amount of capital to conduct its business, and (C) will
not cause the Guarantor to have incurred debts (or to have intended to have
incurred debts) beyond its ability to pay such debts as they mature.

 

(b)       Each Guarantor
acknowledges and agrees that it is not relying on the Borrowers’ financial
condition or collateral as an inducement to enter into this Guarantee.  Each Guarantor agrees that the Administrative
Agent and the Lenders shall have no obligation to investigate the financial
condition or affairs of the Borrowers for the benefit of the Guarantor or to
advise the Guarantor of any matter relating to or arising under the Credit
Agreement or any of the other Credit Documents or any fact respecting, or any
change in, the financial condition or affairs of the Borrowers that might come
to the knowledge of the Administrative Agent or the Lenders at any time,
whether or not the Administrative Agent or the Lenders know or believe or have
reason to know or believe that any such fact or change is unknown to the
Guarantor or might (or does) materially increase the risk of the Guarantor as
guarantor or might (or would) affect the willingness of the Guarantor to
continue as guarantor with respect to the Guarantee Obligations.

 

(c)       [reserved].

 

(d)       The
representations and warranties of the Guarantors set forth in this Section 11
shall survive the execution and delivery of this Guarantee and shall inure to
the benefit of the Persons for whose benefit they were made for so long as this
Guarantee is in effect.  Upon discovery
by any party hereto of a breach of any such representations and warranties, the
party discovering such breach shall give prompt written notice thereof to each
other party.

 

(e)       Subject to the
limitations set forth in Section 2, each Guarantor agrees that the
foregoing representations and warranties shall be deemed to have been made by
such Guarantor on the date of each Loan under the Credit Agreement, on and as
of such date of the Transaction, as though made hereunder on and as of such
date.

 

12

 

12.          Covenants.

 

(a)           Financial Statements.  (i) If (x) one of the events
described in Section 2(b) or Section 2(c) of this Guarantee
occurs or (y) the Parent is no longer a public company subject to public
financial disclosure requirements under United States federal securities laws,
then: as soon as available and in any event within forty-five (45) days after
the end of each fiscal quarter of each Guarantor, each Guarantor shall deliver
to the Administrative Agent and each Lender the unaudited consolidated balance
sheets of such Guarantor and its Consolidated Subsidiaries (and, to the extent
available, for each Borrower) as at the end of such period and the related unaudited
consolidated statements of income and retained earnings and of cash flows for
such Guarantor and its Consolidated Subsidiaries (and, to the extent available,
for each Borrower) for such period and the portion of the fiscal year through
the end of such period, accompanied by a schedule of all contingent funding
obligations and hedging positions of Parent and its Consolidated Subsidiaries
(and, to the extent available, for each Borrower) and a certificate of a
Responsible Officer, which certificate shall state that said consolidated
financial statements fairly present in all material respects the consolidated
financial condition and results of operations of Parent and its Consolidated
Subsidiaries (and, to the extent applicable, for each Borrower) in accordance
with GAAP, consistently applied, as at the end of, and for, such period
(subject to normal year-end adjustments); provided, that the
Administrative Agent and any Lender may disclose such financial statements, if
required, to its regulators, or as otherwise required by law.

 

(ii)           As soon as available and in any event
within ninety (90) days after the end of each fiscal year of each Guarantor,
each Guarantor shall deliver to the Administrative Agent and each Lender the
audited consolidated balance sheets of such Guarantor and its Consolidated
Subsidiaries (and, to the extent available, for each Borrower) as at the end of
such fiscal year and the related consolidated statements of income and retained
earnings and of cash flows for such Guarantor and its Consolidated Subsidiaries
(and, to the extent available, for each Borrower) for such year, setting forth
in each case in comparative form the figures for the previous year, accompanied
by an opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall not be qualified as to scope of audit or
going concern and shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of operations
of each Guarantor and its Consolidated Subsidiaries (and, to the extent
applicable, for each Borrower) as at the end of, and for, such fiscal year in
accordance with GAAP, and a certificate of such accountants stating that, in
making the examination necessary for their opinion, they obtained no knowledge,
except as specifically stated, of any Default or Event of Default.

 

(iii)          Each Guarantor covenants and agrees
that such Guarantor will not change its legal name or primary place of business
without having provided to the Administrative Agent thirty (30) day’s prior
written notice of any such change.

 

(iv)          Each Guarantor covenants and agrees
that it shall deliver to the Administrative Agent and each Lender, within
forty-five (45) days of after the end of each fiscal quarter, a statement of
compliance accompanied by a certificate of a responsible officer, in the form
attached hereto as Exhibit A, (A) stating that each of the
representations, warranties and covenants contained herein have been complied
with and (B) attaching a current copy of such Guarantor’s organizational
chart (depicting and delineating all of such Guarantor’s Consolidated and
non-Consolidated Subsidiaries).

 

(b)           Limitation on Distributions.  Parent shall not declare or make any payment
on account of, or set apart assets for, a sinking or other analogous fund for
the purchase, redemption, defeasance, retirement or other acquisition of any
equity or partnership interest of Parent, whether now or 

 

13

 

hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Parent, except, so long as no
Default or Event of Default shall have occurred and be continuing, Parent may make
such payments (X) solely to the extent necessary to preserve its status as
a REIT, or (Y) by way of redemption or repurchase, in connection with the
internalization of management, of equity interests issued by GKK Capital, so
long as the total amount so paid to SLG or any of its Affiliates in connection
with such internalization does not exceed the $3,000,000, whether in cash or
property, that is permitted to be paid under Section 13 of the Second
Amendment, and so long as such internalization otherwise complies with the
requirements of Section 13 of the Second Amendment.

 

(c)           [reserved].

 

(d)           [reserved].

 

(e)           [reserved].

 

(f)            [reserved].

 

(g)           [reserved].

 

(h)           [reserved].

 

(i)            [reserved].

 

(j)            [reserved].

 

(k)           [reserved].

 

(l)            Buy Back of Capital Stock.  No Guarantor shall be permitted to buy back
any of its Capital Stock while this Guarantee remains in effect unless no
Default or Event of Default exists under the Credit Agreement.

 

(m)          REIT Status.  Parent shall at all times continue to be (i) qualified
as a real estate investment trust as defined in Section 856 of the Code, (ii) entitled
to a dividends paid deduction under Section 857 of the code with respect
to dividends paid by it with respect to each taxable year for which it claims a
deduction on its FORM 1120-REIT filed with the United States Internal
Revenue Service for such year.

 

(n)           [reserved].

 

(o)           Interest Rate Protection
Agreements.  Each Guarantor which is
from time to time party to any Interest Rate Protection Agreement related to
any Collateral shall make, or cause to be made, all payments from time to time
due and payable by such Guarantor under such Interest Rate Protection Agreement
directly into the Collection Account as contemplated under Section 2.10
of the Credit Agreement.

 

(p)           [reserved].

 

(q)           Limitation on Conveyances.  No Guarantor shall sell, assign, transfer or
otherwise convey, in a single transaction or in a series of transactions, any
material asset or portion of a material asset which would (A) result in a
Material Adverse Effect or (B) violate the Credit Documents, it 

 

14

 

being understood that
payment obligations of the Guarantors under the Credit Documents are subject to
the limitations set forth in Section 2.

 

(r)            Borrowers’ Performance under the
Credit Documents.  Each Guarantor
shall cause the Borrowers to comply with each and every agreement, obligation,
duty and covenant under the Credit Documents and, to the extent the Borrowers
do not fulfill their agreements, obligations, duties and covenants under the
Credit Documents, the Guarantor shall fulfill the same, subject to the
limitations set forth in Section 2 as regards the Guarantors’ payment
obligations.

 

(s)           Guarantors’ Performance under the
Credit Documents.  Each Guarantor
shall perform each and every agreement, obligation, duty and covenant that it
has agreed to perform under any Credit Documents, subject to the limitations
set forth in Section 2 as regards the Guarantors’ payment obligations.

 

(t)            Maintenance of Security Interest.  Each Guarantor shall take all actions
reasonably required by the Administrative Agent to maintain the Administrative
Agent’s first priority perfected security interest in the Collateral, the
Pledged Collateral and any collateral, security or Property for the Guarantee
and/or the Guarantee Obligations.

 

(u)           The covenants of each Guarantor set
forth in this Section 12 shall survive the execution and delivery
of this Guarantee and shall inure to the benefit of the Persons for whose
benefit they were made for so long as this Guarantee is in effect.  Upon discovery by any party hereto of a
breach of any such covenants, the party discovering such breach shall give
prompt written notice thereof to each other party.

 

(v)           The Guarantors and the Administrative
Agent hereby expressly agree that the deletions of the financial covenants in
Sections 12(c) through (k) from the Existing Guarantee, as effected
by the replacement thereof with “[reserved]” above, shall be effective as of March 31,
2009.

 

13.          Additional
Liability of Guarantors.

 

If any Guarantor is or becomes liable for any
Indebtedness owing by the Borrowers to the Administrative Agent or the Lenders
by endorsement or otherwise than under this Guarantee, such liability shall not
be in any manner impaired or reduced hereby but shall have all and the same
force and effect it would have had if this Guarantee had not existed and such
Guarantor’s liability hereunder shall not be in any manner impaired or reduced
thereby, it being understood that each Guarantor’s liability hereunder is
subject to the limitations set forth in Section 2.

 

14.          Cumulative
Rights.

 

All rights of the Administrative Agent and the Lenders
hereunder or otherwise arising under the Credit Documents or any documents
executed in connection with or as security for the Guarantee Obligations or
under Requirements of Law are separate and cumulative and may be pursued
separately, successively or concurrently, or not pursued, without affecting,
limiting or impairing any other right of the Administrative Agent and the
Lenders and without limiting, affecting or impairing the liability of the
Guarantors.

 

15.          Assignments.

 

(a)           Assignments by the Administrative
Agent or the Lenders.  This Guarantee
is intended for and shall inure to the benefit of the Administrative Agent, the
Lenders and each and every 

 

15

 

Person who shall from time
to time be or become the owner or holder of any of the Guarantee Obligations,
and each and every reference herein to the Administrative Agent and the Lenders
shall include and refer to each and every successor, assignee, pledgee and
participant of the Administrative Agent and the Lenders and the successors,
assignees and participants of the foregoing at any time holding or owning any
part of or interest in any part of the Guarantee Obligations.  This Guarantee shall be transferable and
negotiable by the Administrative Agent and the Lenders with the same force and
effect, and to the same extent, that the Guarantee Obligations are transferable
and negotiable, it being understood and stipulated that, upon assignment or any
such transfer by the Administrative Agent or the Lenders of any of the
Guarantee Obligations, the legal holder or owner of said Guarantee Obligations (or
a part thereof or interest therein thus transferred or assigned) shall (except
as otherwise stipulated by the Administrative Agent or the Lenders in its
assignment) have and may exercise all of the rights granted to the
Administrative Agent and the Lenders under this Guarantee to the extent of that
part of or interest in the Guarantee Obligations thus assigned or so
transferred to said Person.  Each
Guarantor expressly waives notice of any such transfer or assignment of the
Guarantee Obligations, or any part thereof, or of the rights of the
Administrative Agent and the Lenders hereunder. 
Each Guarantor acknowledges and agrees that any action taken hereunder
shall not release or discharge this Guarantee or any obligations of such
Guarantor hereunder.

 

(b)           Assignments by Guarantor.  This Guarantee may not be assigned, and the
Guarantor’s agreements, duties, obligations and covenants hereunder may not be
delegated, in whole or in part by any Guarantor.  All agreements, duties, obligations and
covenants of the Guarantor hereunder shall bind and shall be enforceable
against the Guarantor’s successors and assigns.

 

16.          Application
of Payments.

 

The Administrative Agent and the Lenders may apply any
payments received by them from any source against such portion of the Guarantee
Obligations and in such priority and fashion as they may deem appropriate in
their sole and absolute discretion.

 

17.          Counterclaims;
Setoff.

 

Each Guarantor waives all rights to interpose any
claims, deduction or counterclaims of any kind, nature or description in any
action or proceeding instituted by the Administrative Agent or the Lenders with
respect to this Guarantee, the Guarantee Obligations, the Collateral, the
Pledged Collateral, the collateral, security or Property for the Guarantee or
the Guarantee Obligations or any matter arising from or relating to any of the
foregoing, except compulsory counterclaims. 
Each Guarantor hereby waives any right of setoff it may have or to which
it may be entitled under this Guarantee, the Credit Documents or Requirements
of Law from time to time against the Administrative Agent or the Lenders or
their assets or Property. 
Notwithstanding anything to the contrary contained in this Guarantee,
until the Guarantee Obligations have been indefeasibly paid in full, each
Guarantor hereby unconditionally and irrevocably waives, releases and abrogates
any and all rights it may now or hereafter have under any agreement, at law or
in equity (including, without limitation, any law subrogating such Guarantor to
the rights of the Administrative Agent or the Lenders), to assert any claim
against or seek contribution, indemnification or any other form of
reimbursement from the Borrowers, the Pledgors, any other Credit Party or any
other Person liable for payment of any or all of the Guarantee Obligations for
any payment made by such Guarantor under or in connection with this Guarantee
or otherwise.

 

18.          Bankruptcy
Code Waiver.

 

In the event that a Borrower becomes a debtor in any
proceeding under the Bankruptcy Code, no Guarantor shall be deemed to be a “creditor”
(as defined in Section 101 of the Bankruptcy 

 

16

 

Code) of such Borrower, by reason of the existence of
this Guarantee, and in connection herewith, each Guarantor hereby waives any
such right as a “creditor” under the Bankruptcy Code.  This waiver is given to induce the
Administrative Agent and the Lenders to enter into the transactions
contemplated by the Credit Documents. 
After the Guarantee Obligations are paid in full and there shall be no
obligations or liabilities under this Guarantee outstanding, this waiver shall
be deemed to be terminated.

 

19.          The
Borrowers’ and Pledgor’s Actions.

 

No encumbrance, assignment, leasing, subletting, sale
or other transfer by a Borrower or a Pledgor of any of the Borrowers’ or the
Pledgors’ assets or Property shall operate to extinguish or diminish the
liability of any Guarantor under this Guarantee.

 

20.          Subordination.

 

(a)           As used in this Guarantee, the term “Guarantor Claims”
shall mean all debts, liabilities and other Indebtedness of the Borrowers, the
Pledgors, any Guarantor, any other Credit Party or any other Person obligated
to the Administrative Agent, the Lenders or any other Person specified under
any Credit Document to a Guarantor, whether such debts, liabilities and other
Indebtedness now exist or are hereafter incurred or arise, or whether the
obligations of such Borrower, Pledgor, Guarantor, other Credit Party or such
other Person thereon be direct, contingent, primary, secondary, several, joint
and several, or otherwise, and irrespective of whether such debts, liabilities
or other Indebtedness be evidenced by note, contract, open account or
otherwise, and irrespective of the Person or Persons in whose favor such debts,
liabilities or other Indebtedness may, at their inception, have been, or may
hereafter be created, or the manner in which they have been or may hereafter be
acquired by a Guarantor.  The Guarantor
Claims shall include, without limitation, all rights and claims of a Guarantor
against the Borrowers, the Pledgors, any other Guarantor, other Credit Parties
or other Persons (arising as a result of subrogation or otherwise) as a result
of a Guarantor’s payment of all or a portion of the Guarantee Obligations.  All Guarantor Claims are and shall be
subordinate to the Guarantee Obligations.

 

(b)           In the event of any Insolvency
Proceedings involving any Guarantor as debtor, the Administrative Agent and the
Lenders shall have the right to prove its claim in any such proceeding so as to
establish its rights hereunder and receive directly from the receiver, trustee
or other court custodian dividends and any payments which would otherwise be
payable upon Guarantor Claims to the extent of any sums owed by the Guarantors
hereunder.  Each Guarantor hereby assigns
such dividends and payments to the Administrative Agent as agent for the
Lenders.  Should the Administrative Agent
as agent for the Lenders receive, for application upon the Guarantee
Obligations, any such dividend or payment which is otherwise payable to a
Guarantor, and which, as between the Borrowers, the Pledgors, any other
Guarantor or any other Person described in clause (a) above on the
one hand and the applicable Guarantor on the other, shall constitute a credit
upon the Guarantor Claims, then upon payment to the Administrative Agent as
agent for the Lenders in full of the Guarantee Obligations, such Guarantor
shall become subrogated to the rights of the Administrative Agent and the
Lenders to the extent that such payments to the Administrative Agent as agent
for the Lenders on the Guarantor Claims have contributed toward the liquidation
of the Guarantee Obligations, and such subrogation shall be with respect to
that proportion of the Guarantee Obligations which would have been unpaid if
the Administrative Agent as agent for the Lenders had not received dividends or
payments upon the Guarantor Claims.

 

(c)           In the event that, notwithstanding
anything to the contrary in this Guarantee, any Guarantor should receive any
funds, payment, claim or distribution which is prohibited by this Guarantee,
such Guarantor agrees to hold in trust for the Administrative Agent as agent
for the Lenders an amount equal to the amount of all funds, payments, claims or
distributions so received, and agrees that it shall have absolutely no dominion
over the amount of such funds, payments, claims or distributions so received 

 

17

 

except to pay them promptly
to the Administrative Agent as agent for the Lenders, and the Guarantor
covenants promptly to pay the same to the Administrative Agent as agent for the
Lenders.

 

(d)           Each Guarantor agrees that any
claims, charges or Liens against the Borrowers, the Pledgors, any other
Guarantor, other Credit Parties or any other Persons described under clause (a) above
and/or such Borrower’s, such Pledgor’s, any other Guarantor’s, any other Credit
Party’s or such other Person’s assets and Property with respect to the
Guarantor Claims shall be and remain inferior and subordinate to any claims,
charges or Liens of the Administrative Agent or the Lenders against the
Borrowers, the Pledgors, any Guarantor, any other Credit Party or any such
other Person and/or such Borrower’s, such Pledgor’s, any Guarantor’s, any such
other Credit Party’s or such other Person’s assets and Property, regardless of
whether such claims, charges or Liens in favor of such Guarantor, the
Administrative Agent or the Lenders presently exist or are hereafter created or
attach.  Without the prior written
consent of the Administrative Agent and the Lenders, no Guarantor shall (i) exercise
or enforce any creditor’s right it may have against the Borrowers, the
Pledgors, any other Guarantor, any other Credit Party or any other Person
described under clause (a) above, or (ii) foreclose,
repossess, sequester or otherwise take steps or institute any action or
proceedings (judicial or otherwise, including, without limitation, the
commencement of, or joinder in, any Insolvency Proceeding) to enforce any
claims, charges, Liens, mortgage, deeds of trust, security interests,
collateral rights, judgments or other encumbrances against the Borrowers, the
Pledgors, any other Guarantor, any other Credit Party or such other Person or
the assets or Property of the Borrowers, the Pledgors, any other Guarantor, any
other Credit Party or such other Person held by the applicable Guarantor.

 

21.          Commercial
Transaction.

 

To induce the Administrative Agent and the Lenders to
enter into this Guarantee and the Transactions evidenced by and secured by the
Credit Documents, each Guarantor agrees that said Transactions are commercial
and not consumer transactions.

 

22.          Books
and Records.

 

If (x) one of the events described in Section 2(b) or
Section 2(c) of this Guarantee occurs or (y) the Parent is no
longer a public company subject to public financial disclosure requirements
under United States securities laws, then, in addition to any additional rights
under the Credit Agreement and the other Credit Documents, the Administrative
Agent and the Lenders shall have the right at the applicable Guarantor’s cost,
and each Guarantor shall permit and shall cooperate with the Administrative
Agent and the Lenders in arranging for, at any reasonable time from time to
time, the Administrative Agent, the Lenders and/or their representatives, to
review and audit all books, records and financial statements (including all
supporting data and other records) of such Guarantor, and each Guarantor shall
make all such books of account and records available for such examination, at
the office where the same are regularly maintained.  The Administrative Agent and the Lenders
shall have a right to copy, duplicate and make abstracts from such books and
records as the Administrative Agent and/or the Lenders may require.

 

23.          Notices,
Etc.

 

All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including telex
communication and communication by facsimile copy) and shall be governed by Section 10.2
of the Credit Agreement.  The failure of
the Administrative Agent or the Lenders to give any notice required hereunder
(if any) shall not affect the liability or obligations of the Guarantors
hereunder.  Unless otherwise expressly
provided in this Guarantee, reference to any notice, request, approval, consent
or determination provided for, permitted or required under the terms of this 

 

18

 

Guarantee with respect to the Borrowers, the
Guarantors, the Administrative Agent or the Lenders means, in order for such
notice, request, approval, consent or determination to be effective hereunder,
such notice, request, approval or consent must be in writing.

 

24.          No
Waiver.

 

The Administrative Agent shall not by any act (except
by a written instrument pursuant to Section 25 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default or event of default or in any
breach of any of the terms and conditions hereof.  No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent, any right, power or
privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  A waiver by the Administrative Agent of any
right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which the Administrative Agent would otherwise have on
any future occasion.

 

25.          Amendments
and Waivers.

 

No amendment, waiver or other modification of any
provision of this Guarantee shall be effective unless amended in accordance
with the requirements of Section 10.1 of the Credit Agreement.  Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

 

26.          Severability;
Integration.

 

Each provision of this Guarantee shall be valid, binding
and enforceable to the fullest extent permitted by Requirements of Law.  In case any provision in or obligation under
this Guarantee shall be invalid, illegal or unenforceable in any jurisdiction
(either in its entirety or as applied to any Person, fact, circumstance, action
or inaction), the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction or as applied to any other Person, fact, circumstance, action or
inaction, shall not in any way be affected or impaired thereby.  This Guarantee contains the final and
complete integration of all prior expressions by each Guarantor hereto with
respect to the subject matter hereof and shall constitute the entire agreement
of each Guarantor hereto with respect to the subject matter hereof, superseding
all prior oral or written understandings and there are no promises or
representations by the Administrative Agent or any Lender relative to the
subject matter hereof not reflected herein.

 

27.          Heading
and Exhibits.

 

The headings herein are for purposes of references
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.  The schedules,
exhibits and annexes (if any) attached hereto and referred to herein shall
constitute a part of this Guarantee and are incorporated into this Guarantee
for all purposes.

 

28.          Governing
Law.

 

THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.

 

19

 

29.          Waivers.

 

(a)           EACH GUARANTOR KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHT TO ASSERT A COUNTERCLAIM, OTHER THAN A
COMPULSORY COUNTERCLAIM, IN ANY ACTION OR PROCEEDING BROUGHT AGAINST IT BY THE
ADMINISTRATIVE AGENT, THE LENDERS OR ANY OF THEIR AFFILIATES OR AGENTS.

 

(b)           TO THE EXTENT PERMITTED BY
REQUIREMENTS OF LAW, EACH GUARANTOR KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES HERETO
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
BETWEEN ANY OF THEM IN CONNECTION WITH THIS GUARANTEE, THE CREDIT DOCUMENTS,
THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY DEALINGS, COURSE OF DEALINGS,
COURSE OF CONDUCT AMONG THEM OR ANY STATEMENTS (WRITTEN OR ORAL) OR OTHER
ACTIONS OF ANY PARTY, AND NONE OF THE GUARANTORS WILL SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED.  INSTEAD, ANY SUCH DISPUTE
RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

 

(c)           ANY LEGAL ACTION OR PROCEEDING
AGAINST ANY GUARANTOR HERETO WITH RESPECT TO THIS GUARANTEE OR ANY OTHER CREDIT
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS GUARANTEE, EACH GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY AND ASSETS, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF A
PARTY TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST A PARTY IN ANY
OTHER JURISDICTION.

 

(d)           EACH GUARANTOR HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS GUARANTEE OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE
COURTS REFERRED TO IN CLAUSE (c) ABOVE AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

 

(e)           EACH GUARANTOR AGREES THAT SERVICE OF
PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO THE GUARANTOR AT THE GUARANTOR’S ADDRESS SET FORTH
UNDER THE GUARANTOR’S SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE
ADMINISTRATIVE AGENT AND LENDERS SHALL HAVE BEEN NOTIFIED.

 

(f)            EACH GUARANTOR AGREES THAT NOTHING
HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

 

20

 

(g)           EXCEPT AS PROHIBITED BY LAW,
EACH GUARANTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES. 
EACH GUARANTOR CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
THE ADMINISTRATIVE AGENT OR THE LENDERS HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE ADMINISTRATIVE AGENT OR THE LENDERS WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL–ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS.

 

(h)           EACH GUARANTOR HERETO
ACKNOWLEDGES THAT THE WAIVERS SET FORTH IN THIS SECTION 29
CONSTITUTE A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
THE ADMINISTRATIVE AGENT, THE LENDERS AND EACH PARTY HAS ALREADY RELIED ON
THESE WAIVERS IN ENTERING INTO OR ACCEPTING THE BENEFITS OF THIS GUARANTEE, AND
THAT EACH WILL CONTINUE TO RELY ON THESE WAIVERS IN THEIR RELATED FUTURE
DEALINGS.  EACH GUARANTOR HERETO FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THESE WAIVERS WITH ITS LEGAL
COUNSEL AND KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.

 

(i)            THE WAIVERS SET FORTH IN
THIS SECTION 29 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTEE
OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO ANY TRANSACTION ENTERED INTO HEREUNDER OR THEREUNDER.  IN THE EVENT OF LITIGATION, THIS GUARANTEE MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

30.          Taxes.

 

The provisions of Section 2.14 of the
Credit Agreement shall be equally applicable to each Guarantor and any payments
made under this Guarantee, it being understood that, solely with respect to the
Guarantors, the payment obligations set forth under this Guarantee are subject
to the limitations set forth in Section 2.

 

31.          Recitals.

 

The recital and introductory paragraphs hereof are a
part hereof, form a basis for this Guarantee and shall be considered prima  facie
evidence of the facts and documents referred to therein.

 

32.          Counterparts.

 

This Guarantee may be executed in any number of
counterparts and by different parties hereto in separate counterparts
(including by facsimile), each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same agreement.

 

21

 

33.          Discretion.

 

Reference herein or in any Credit Document to the
Administrative Agent’s or the Lenders’ discretion shall mean, unless otherwise
stated herein or therein, the Administrative Agent’s or the Lenders’ sole and
absolute discretion, and the exercise of such discretion shall be final and
conclusive.  In addition, whenever (a) either
the Administrative Agent or the Lenders has a decision or right of
determination or request, exercises any right given to it to agree, disagree,
accept, consent, grant waivers, take action or no action or to approve or
disapprove or (b) any arrangement or term is to be satisfactory or
acceptable to or approved by (or any similar language or terms) the
Administrative Agent or the Lenders, as applicable, the decision of the
Administrative Agent or the Lenders, as applicable, with respect thereto shall
be in the sole and absolute discretion of the Administrative Agent or the
Lenders, as applicable, and such decision shall be final and conclusive, except
as may be otherwise specifically provided herein.

 

34.          Recourse
Against Certain Parties.

 

No recourse under or with respect to any obligation,
covenant or agreement (including, without limitation, the payment of any fees
or any other obligations) of the Administrative Agent or the Lenders as
contained in this Guarantee, the Credit Documents or any other agreement,
instrument or document entered into by the Administrative Agent, the Lenders, or
any such party pursuant hereto or thereto or in connection herewith or
therewith shall be had against any administrator of the Administrative Agent,
the Lenders or any incorporator, Affiliate (direct or indirect), owner, member,
partner, stockholder, officer, director, employee, agent or attorney of the
Administrative Agent, the Lenders or of any such administrator, as such, by the
enforcement of any assessment or by any legal or equitable proceeding, by
virtue of any statute or otherwise; it being expressly agreed and understood
that the agreements of the Administrative Agent and the Lenders contained in
this Guarantee, the Credit Documents and all of the other agreements,
instruments and documents entered into by it pursuant hereto or thereto or in
connection herewith or therewith are, in each case, solely the corporate
obligations of the Administrative Agent and the Lenders and that no personal
liability whatsoever shall attach to or be incurred by any administrator of the
Administrative Agent, the Lenders or any incorporator, owner, member, partner,
stockholder, Affiliate (direct or indirect), officer, director, employee, agent
or attorney of the Administrative Agent, the Lenders or of any such
administrator, as such, or any other of them, under or by reason of any of the
obligations, covenants or agreements of the Administrative Agent or the Lenders
contained in this Guarantee, the Credit Documents or in any other such
instruments, documents or agreements, or that are implied therefrom, and that
any and all personal liability of every such administrator of the
Administrative Agent or the Lenders and each incorporator, owner, member,
partner, stockholder, affiliate, officer, director, employee, agent or attorney
of the Administrative Agent or the Lenders, or of any such administrator, or
any of them, for breaches by the Administrative Agent or the Lenders of any
such obligations, covenants or agreements, which liability may arise either at
common law or at equity, by statute or constitution, or otherwise, is hereby
expressly waived as a condition of and in consideration for the execution of
this Guarantee.  The provisions of this Section 34
shall survive the termination of this Guarantee.

 

35.          Set–offs.

 

In addition to any rights and remedies of the Administrative
Agent and the Lenders provided by this Guarantee, the Credit Documents and by
Requirements of Law, the Administrative Agent and the Lenders shall have the
right, without prior notice to the Borrowers, the Guarantors, the Pledgors or
any other Credit Party, any such notice being expressly waived by the
Guarantors to the extent permitted by Requirements of Law, and regardless of
the existence of any other collateral, upon any amount becoming due and payable
by the Guarantors to the Administrative Agent and the Lenders hereunder, under
the Credit Documents or otherwise (whether at the stated maturity, by
acceleration or 

 

22

 

otherwise)  (it
is understood, however, that the limitations on the amounts payable by the
Guarantors are subject to the limitations set forth in Section 2) to set–off
and appropriate and apply against such amount any and all monies and other
Property and assets of the Guarantors, any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any and
all other credits, Indebtedness, claims, securities, collateral, Property,
assets or proceeds of any of the foregoing in, as applicable, any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, and in each case at any time held or owing by the Administrative
Agent, the Lenders, any of their Affiliates, any Person under the control of
the Administrative Agent, the Lenders and any successor or assign of the foregoing
to or for the credit or the account of the Guarantors, whether for safekeeping,
custody, pledge, transmission, collection or otherwise but excluding, in each
case, the Additional Cash Collateral except as provided in Section 2 and
to the extent of the L/C Obligations arising with respect to the Mortgage
Obligation LCs and other cash collateral held for L/C Obligations pursuant to Section 5.30
of the Credit Agreement.  The
Administrative Agent agrees promptly to notify the Guarantors after any such set–off
and application made by the Administrative Agent or the Lenders, provided
that the failure to give such notice shall not affect the validity of such set–off
and application.  ANY AND ALL RIGHTS TO
REQUIRE THE ADMINISTRATIVE AGENT AND THE LENDERS TO EXERCISE THEIR RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE AMOUNTS OWING
TO THE ADMINISTRATIVE AGENT AND THE LENDERS BY THE BORROWERS, THE GUARANTORS,
THE PLEDGORS OR ANY OTHER CREDIT PARTY UNDER THE CREDIT DOCUMENTS, PRIOR TO EXERCISING
ITS RIGHT OF SET—OFF WITH RESPECT TO SUCH MONIES, SECURITIES, COLLATERAL,
DEPOSITS, CREDITS OR OTHER PROPERTY OR ASSETS OF THE GUARANTORS, ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY EACH GUARANTOR.

 

36.          Acknowledgments.

 

Each Guarantor hereby acknowledges that:

 

(a)           the Guarantor has been
advised by counsel in the negotiation, execution and delivery of this Guarantee
and the related documents;

 

(b)           neither the Administrative
Agent nor any Lender has any fiduciary relationship to the Guarantor, and the
relationship between the Administrative Agent and the Lenders and the Guarantor
is solely that of surety and creditor; and

 

(c)           no joint venture exists
between or among any of the Administrative Agent, the Lenders, the Guarantors
and the Borrowers.

 

37.          Joint
and Several Obligations.

 

(a)           At all times during which
there is more than one (1) Guarantor under this Agreement, subject to
the  limitations set forth in Section 2,
the liability of each Guarantor shall be joint and several and the joint and
several obligations of each Guarantor under this Guarantee and the other Credit
Documents (a) (i) shall be absolute and unconditional and shall
remain in full force and effect (or be reinstated) until all the Guarantee
Obligations shall have been satisfied and the expiration of any applicable
preference or similar period pursuant to any bankruptcy, insolvency,
reorganization, moratorium or similar law, or at law or in equity, without any
claim having been made before the expiration of such period asserting an
interest in all or any part of any payment(s) received by the
Administrative Agent or the Lenders, and (ii) until such payment has been
made and such obligations satisfied, shall not be discharged, affected,
modified or impaired on the happening from time to time of any event,
including, without limitation, any of the following, whether or not with notice
to or the consent 

 

23

 

of the Borrowers, the
Guarantors, the Pledgors or any other Credit Party, (A) the waiver,
compromise, settlement, release, termination or amendment (including, without
limitation, any extension or postponement of the time for payment or
performance or renewal or refinancing) of any or all of the obligations or agreements
of any Borrower, Guarantor, Pledgor or any other Credit Party under the Credit
Agreement or any Credit Document, (B) the failure to give notice to the
Borrowers, the Guarantors, the Pledgors or any other Credit Party of the
occurrence of an Event of Default under any of the Credit Documents, (C) the
release, substitution or exchange by the Administrative Agent or the Lenders of
any or all of the Collateral, Pledged Collateral or any collateral, Property or
security for the Guarantee or the Guarantee Obligations (in each case, whether
with or without consideration) or the acceptance by the Administrative Agent or
the Lenders of any additional collateral or the availability or claimed
availability of any other collateral or source of repayment or any nonperfection
or other impairment of collateral, (D) the release of any Person primarily
or secondarily liable for all or any part of the Obligations or the Guarantee
Obligations, whether by the Administrative Agent, the Lenders or in connection
with any voluntary or involuntary liquidation, dissolution, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors or similar
event or proceeding affecting any or all of the Borrowers, the Guarantors, the
Pledgors, any other Credit Party or any other Person who, or any of whose
Property or assets, shall at the time in question be obligated in respect of
the Obligations or the Guarantee Obligations or any part thereof, or (E) to
the extent permitted by Requirements of Law, any other event, occurrence,
action or circumstance that would, in the absence of this Section 37,
result in the release or discharge of any or all of the Guarantors from the
performance or observance of any obligation, covenant or agreement contained in
the Credit Agreement or the Credit Documents; (b) each Guarantor expressly
agrees that the Administrative Agent and the Lenders shall not be required
first to initiate any suit or to exhaust its remedies against the Borrowers,
the Guarantors, the Pledgors, any other Credit Party or any other Person to
become liable, or against any of the Collateral, the Pledged Collateral or any
collateral, security or Property for this Guarantee or the Guarantee
Obligations, in order to enforce this Guarantee or the Credit Documents and
each Guarantor expressly agrees that, notwithstanding the occurrence of any of
the foregoing, each Guarantor shall be and remain directly and primarily liable
for all sums due under this Guarantee or any of the Credit Documents; and, (c) on
disposition by the Administrative Agent or the Lenders of any Property
encumbered by any Collateral, the Pledged Collateral or any collateral,
Property or security for this Guarantee or the Guarantee Obligations, each
Guarantor shall be and shall remain jointly and severally liable for any
deficiency.

 

(b)           Each Guarantor hereby agrees
that, to the extent another Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor shall be
entitled to seek and receive contribution from and against any other Guarantor
which has not paid its proportionate share of such payment; provided, however,
that the provisions of this Subsection 37(b) shall in no respect
limit the obligations and liabilities of each Guarantor to the Administrative
Agent and the Lenders, and, notwithstanding any payment or payments made by a
Guarantor (the “paying Guarantor”)
hereunder or any set-off or application of funds of the paying Guarantor by the
Administrative Agent or the Lenders, the paying Guarantor shall not be entitled
to be subrogated to any of the rights of the Administrative Agent and the
Lenders against any other Guarantor or any collateral security or guarantee or
right of offset held by the Administrative Agent or the Lenders, nor shall the
paying Guarantor seek or be entitled to seek any contribution or reimbursement
from the other Guarantors in respect of payments made by the paying Guarantor
hereunder, until all amounts owing to the Administrative Agent or the Lenders
by the Guarantors under this Guarantee and the other Credit Documents are paid
in full.  If any amount shall be paid to
the paying Guarantor on account of such subrogation rights at any time when all
such amounts shall not have been paid in full, such amount shall be held by the
paying Guarantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of the paying Guarantor, and shall, forthwith upon
receipt by the paying Guarantor, be turned over to the Administrative Agent as
agent for the Lenders, in the exact form received by the paying Guarantor (duly
indorsed by the paying Guarantor to the Administrative Agent as agent for the
Lenders, if required), to be applied against 

 

24

 

amounts owing to the
Administrative Agent and the Lenders by the Guarantors under this Guarantee and
the other Credit Documents, whether matured or unmatured, in such order as the
Administrative Agent and the Lenders may determine in their discretion.

 

38.          Third
Party Beneficiary.

 

The Lenders shall be third–party beneficiaries of each
of the terms and provisions of this Guarantee. 
All rights of the Administrative Agent hereunder, if not exercised by
the Administrative Agent, may be exercised by the Required Lenders.

 

[Remainder of Page Intentionally Left Blank.]

 

25

 

IN WITNESS WHEREOF, the undersigned has caused this
Guarantee to be duly executed as of the date first written above.

 

 

	
   

  	
  GRAMERCY CAPITAL CORP., a Maryland corporation, as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert R. Foley

  
	
   

  	
  Name: 

  	
  Robert R. Foley

  
	
   

  	
  Title: 

  	
  Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  
	
   

  	
  420 Lexington
  Avenue

  
	
   

  	
  New York, New
  York 10170

  
	
   

  	
  Telephone:

  	
  (212) 297-1002

  
	
   

  	
  Telecopy:

  	
  (212) 297-1090

  
	
   

  	
  Attention:

  	
  Bob Foley

  
				

 

 

IN WITNESS WHEREOF, the undersigned has caused this
Guarantee to be duly executed as of the date first written above.

 

 

	
   

  	
  GKK CAPITAL LP, a Delaware limited partnership, as a
  Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  GRAMERCY CAPITAL CORP.,
  a Maryland corporation, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Robert R. Foley

  
	
   

  	
   

  	
  Name: 

  	
  Robert R. Foley

  
	
   

  	
   

  	
  Title: 

  	
  Chief Operating Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  
	
   

  	
  420 Lexington
  Avenue

  
	
   

  	
  New York, New
  York 10170

  
	
   

  	
  Telephone:

  	
  (212) 297-1002

  
	
   

  	
  Telecopy:

  	
  (212) 297-1090

  
	
   

  	
  Attention:

  	
  Bob Foley

  
					

 

 

IN WITNESS WHEREOF, the undersigned has caused this
Guarantee to be duly executed as of the date first written above.

 

 

	
   

  	
  GRAMERCY INVESTMENT TRUST, a Maryland real estate investment
  trust, as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert R. Foley

  
	
   

  	
  Name: 

  	
  Robert R. Foley

  
	
   

  	
  Title: 

  	
  Chief Operating Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  
	
   

  	
  420 Lexington
  Avenue

  
	
   

  	
  New York, New
  York 10170

  
	
   

  	
  Telephone:

  	
  (212) 297-1002

  
	
   

  	
  Telecopy:

  	
  (212) 297-1090

  
	
   

  	
  Attention:

  	
  Bob Foley

  
				

 

 

IN WITNESS WHEREOF, the undersigned has caused this
Guarantee to be duly executed as of the date first written above.

 

 

	
   

  	
  GKK TRADING CORP., a Delaware corporation, as a
  Guarantor

  
	
   

  
	
   

  	
  By:

  	
  GRAMERCY CAPITAL CORP.,
  a Maryland corporation, its general partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Robert R. Foley

  
	
   

  	
   

  	
  Name: 

  	
  Robert R. Foley

  
	
   

  	
   

  	
  Title: 

  	
  Chief Operating Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  
	
   

  	
  420 Lexington
  Avenue

  
	
   

  	
  New York, New
  York 10170

  
	
   

  	
  Telephone:

  	
  (212) 297-1002

  
	
   

  	
  Telecopy:

  	
  (212) 297-1090

  
	
   

  	
  Attention:

  	
  Bob Foley

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