Document:

Exhibit
10.01

 

APPENDIX C

 

ENTERCOM EQUITY COMPENSATION PLAN

(As Amended through February 22,
2005)

 

The purpose of the
Entercom Equity Compensation Plan (the “Plan”)
is to provide (i) designated employees of Entercom Communications Corp. (the “Company”) and its subsidiaries, (ii)
certain consultants and advisors who perform services for the Company or its
subsidiaries and (iii) non-employee members of the Board of Directors of the
Company (the “Board”) with the
opportunity to receive grants of incentive stock options, nonqualified stock
options, stock appreciation rights or restricted stock.  The Company believes that the Plan will
enhance the incentive for participants to contribute materially to the growth
of the Company, thereby benefiting the Company and the Company’s shareholders,
and will align the economic interests of the participants with those of the
shareholders.

 

1.                                       Administration.

 

(a)                                  Committee.  The Plan shall be administered and
interpreted by a committee appointed by the Board (the “Committee”). The Committee shall consist of
two or more persons who may be “outside directors” as defined under Section 162(m)
of the Internal Revenue Code of 1986, as amended (the “Code”) and related Treasury regulations and
“non-employee directors” as defined under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”).  However, the Board may
retain the right to ratify, approve or amend any grants as it deems
appropriate.  If the Board requires
ratification or approval of a grant and the grant is not ratified or approved
by the Board, such grant shall not be effective.  Before an initial public offering of the
Company’s stock as described in Section 20(b) (a “Public Offering”), the Plan may be
administered by the Board.  If the Board
administers the Plan during a period prior to a Public Offering, references in
the Plan to the “Committee” shall be deemed to refer to the Board during but
only for such period.

 

(b)                                 Committee
Authority.  Subject to
ratification or approval by the Board if the Board retains such right pursuant
to subsection (a) above, the Committee shall have the sole authority to
(i) determine the individuals to whom grants shall be made under the Plan, (ii)
determine the type, size and terms of the grants to be made to each such
individual, (iii) determine the time when grants will be made and the
commencement and duration of any applicable exercise or restriction period,
including the criteria for exercisability and the acceleration of
exercisability and (iv) deal with any other matters arising under the Plan.

 

(c)                                  Committee
Determinations.  Subject to
ratification, approval or amendment by the Board if the Board retains such
right pursuant to subsection (a) above, the Committee shall have full
power and authority to administer and interpret the Plan, to make factual
determinations and to adopt or amend such rules, regulations, agreements and
instruments for implementing the Plan and for the conduct of its business as it
deems necessary or advisable, in its sole discretion.  Subject to ratification, approval or
amendment by the Board if the Board retains such right pursuant to subsection (a)
above, the Committee’s interpretations of the Plan and all determinations made
by the Committee pursuant to the powers vested in it hereunder shall be
conclusive and binding on all persons having any interest in the Plan or in any
awards granted hereunder.  All powers of
the Committee shall be executed in its sole discretion, in the best interest of
the Company, not as a fiduciary, and in keeping with the objectives of the Plan
and need not be uniform as to similarly situated individuals.

 

(d)                                 Delegation of
Authority. 
Notwithstanding the foregoing, the Committee may delegate to the Chief
Executive Officer of the Company the authority to make grants under the Plan to
employees and Key Advisors (as defined herein) of the Company and its
subsidiaries who are not subject to the restrictions of Section 16(b) of
the Exchange Act and who are not expected to be subject to the limitations of Section 162(m)
of the Code.  The grant of authority
under this subsection 1(d) shall be subject to such conditions and
limitations as may be determined by the Committee, subject to ratification and
approval by the Board if the Board retains such right pursuant to subsection (a)
above.  If the Chief Executive Officer
makes grants pursuant to the delegated authority under this subsection (d),
references in the Plan to the “Committee,” as they relate to making such grants
(but not to the subsequent administration of such grants), shall be deemed to
refer to the Chief Executive Officer.

 

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2.                                       Shares
Subject to the Plan and Types of Grants

 

Before a Public
Offering, awards may be made under the Plan with respect to shares of
non-voting common stock of the Company, and after a Public Offering, awards may
be made with respect to shares of Class A common stock of the Company.  The term “Company Stock” means, before a
Public Offering, non-voting common stock of the Company and, after a Public
Offering, Class A common stock of the Company. 
Awards under the Plan may consist of grants of (a) incentive stock
options as described in Section 5 (“Incentive
Stock Options”), (b) nonqualified stock options as described in Section 5
(“Nonqualified Stock Options”)
(Incentive Stock Options and Nonqualified Stock Options are collectively
referred to as “Options”), (c)
restricted stock as described in Section 6 (“Restricted Stock”) and (d) stock appreciation rights as
described in Section 7 (“SARs”)
(all such awards being hereinafter collectively referred to as “Grants”). 
All Grants shall be subject to the terms and conditions set forth herein
and to such other terms and conditions consistent with this Plan as the
Committee deems appropriate and as are specified in writing by the Committee to
the individual in a grant instrument or an amendment to the grant instrument
made in conformance with the Plan (the “Grant
Instrument”).  The Committee
shall approve the form and provisions of each Grant Instrument.  Grants under a particular Section of the
Plan need not be uniform as among the Grantees (as defined below) or among any
class or grouping of Grantees.

 

3.                                       Limitations
on the Number of Shares Subject to the Plan

 

(a)                                  Limitations.  The aggregate number of shares of Company
Stock that may be issued or transferred pursuant to Grants under the Plan shall
be 8,500,000  (1)  subject to adjustment as described in
subsection (b) below.  In addition
to the foregoing, subject to adjustment as described in subsection (b)
below, commencing on January 1, 2006 and each anniversary thereafter
during the term of the Plan, the number of shares of Company Stock that may be
issued or transferred pursuant to Grants under the Plan shall be increased by
(i) 1,500,000 shares of Company Stock or (ii) a lesser amount determined by the
Board.  As a further limitation, subject
to adjustment as described in subsection (b) below, the aggregate number
of shares of Company Stock that may be subject to Grants of Incentive Stock
Options shall not exceed 1,850,000 shares, and the aggregate number of shares
of Company Stock that may be subject to Restricted Stock Grants shall not
exceed 2,000,000.  Subject to adjustment
as described in subsection (b) below, the aggregate number of shares of
Company Stock that may be subject to Grants made under the Plan to any
individual during any calendar year shall not exceed 925,000 shares.  The shares may be authorized but unissued
shares of Company Stock or reacquired shares of Common Stock, including shares
purchased by the Company on the open market for purposes of the Plan.  If and to the extent Options or SARs granted
under the Plan terminate, expire or are canceled, forfeited, exchanged or
surrendered without having been exercised, or if any shares of Restricted Stock
are forfeited, the shares subject to such Grants shall again be available for
purposes of the Plan.

 

(b)                                 Adjustments.  If there is any change in the number or kind
of shares of Company Stock outstanding (i) by reason of a stock dividend,
spinoff, recapitalization, stock split, or combination or exchange of shares,
(ii) by reason of a merger, reorganization or consolidation in which the
Company is the surviving corporation, (iii) by reason of a reclassification or
change in par value, or (iv) by reason of any other extraordinary or unusual
event affecting the outstanding Company Stock without the Company’s receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company’s payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Grants, the maximum number of shares of Company Stock that
any individual participating in the Plan may be granted in any year, the number
of shares covered by outstanding Grants, the kind of shares issued under the
Plan, and the price per share of such Grants may be appropriately adjusted by
the Committee to reflect any increase or decrease in the number of, or change in
the kind or value of, issued shares of Company Stock to preclude, to the extent
practicable, the enlargement or dilution of rights and benefits under such
Grants; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated.  Any
adjustments determined by the Committee shall be final, binding and conclusive.

 

(1)          Increased
by 1,135,011 shares, from 7,364,989 to 8,500,000 by approval of the Board on February 22,
2005, subject to shareholder approval of such increase being obtained on or
before February 22, 2006.

 

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(c)                                  Provisions
Applicable to Section 162(m) Participants

 

(i)                                     The Committee,
in its discretion, may determine whether a Grant is to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the
Code.

 

(ii)                                  Notwithstanding
anything in the Plan to the contrary, the Committee (provided it is comprised
solely of two or more “outside directors” as defined under Section 162(m)
of the Code) may award any Grant to a Section 162(m) Participant,
including Restricted Stock the restrictions with respect to which lapse upon
the attainment of performance goals which are related to one or more of the
Performance Criteria.

 

(iii)                               To the extent necessary to
comply with the performance-based compensation requirements of Section 162(m)(4)(C)
of the Code, with respect to any Restricted Stock granted under the Plan to one
or more Section 162(m) Participants, no later than ninety (90) days
following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee shall,
in writing, (i) designate one or more Section 162(m) Participants, (ii)
select the Performance Criteria applicable to the fiscal year or other
designated fiscal period or period of service, (iii) establish the various
performance targets, in terms of an objective formula or standard, and amounts
of such Restricted Stock which may be earned for such fiscal year or other
designated fiscal period or period of service, and (iv) specify the
relationship between Performance Criteria and the performance targets and the
amounts of Restricted Stock to be earned by each Section 162(m)
Participant for such fiscal year or other designated fiscal period or period of
service.  Following the completion of
each fiscal year or other designated fiscal period or period of service, the
Committee shall certify in writing whether the applicable performance targets
have been achieved for such fiscal year or other designated fiscal period or
period of service.  In determining the
amount earned by a Section 162(m) Participant, the Committee shall have
the right to reduce (but not to increase) the amount payable at a given level
of performance to take into account additional factors that the Committee may
deem relevant to the assessment of individual or corporate performance for the
fiscal year or other designated fiscal period or period of service.

 

(iv)                              Furthermore,
notwithstanding any other provision of the Plan, any Grant awarded to a Section 162(m)
Participant and that is intended to qualify as performance-based compensation
as described in Section 162(m)(4)(C) of the Code shall be subject to any
additional limitations set forth in Section 162(m) of the Code (including
any amendment to Section 162(m) of the Code) or any regulations or rulings
issued thereunder that are requirements for qualification as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, and the
Plan shall be deemed amended to the extent necessary to conform to such
requirements.

 

(v)                                 For purposes of
the Plan,

 

(A)                              “Performance
Criteria” shall mean the following business criteria with respect to the
Company, any subsidiary or any division or operating unit: (a) net income, (b)
pre-tax income, (c) operating income, (d) cash flow, (e) earnings per share,
(f) return on equity, (g) return on invested capital or assets, (h) cost
reductions or savings, (i) funds from operations, (j) appreciation in the fair
market value of Company Stock, and (k) earnings before any one or more of the
following items: interest, taxes, depreciation or amortization; each as
determined in accordance with generally accepted accounting principles or
subject to such adjustments as may be specified by the Committee.

 

(B)                                “Section 162(m)
Participant” shall mean any key Employee designated by the Committee as a
key Employee whose compensation for the fiscal year in which the key Employee
is so designated or a future fiscal year may be subject to the limit on
deductible compensation imposed by Section 162(m) of the Code.

 

4.                                       Eligibility
for Participation

 

(a)                                  Eligible
Persons.  All employees of the Company
and its subsidiaries (“Employees”),
including Employees who are officers or members of the Board, and members of
the Board who are not Employees (“Non-Employee

 

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Directors”) shall be
eligible to participate in the Plan. 
Consultants and advisors who perform services for the Company or any of
its subsidiaries (“Key Advisors”)
shall be eligible to participate in the Plan if the Key Advisors are natural
persons rendering bona fide services and such services are not in connection
with the offer or sale of securities in a capital-raising transaction.

 

(b)                                 Selection of
Grantees.  The
Committee shall select the Employees, Non-Employee Directors and Key Advisors
to receive Grants and shall determine the number of shares of Company Stock subject
to a particular Grant in such manner as the Committee determines.  Employees, Key Advisors and Non-Employee
Directors who receive Grants under this Plan shall hereinafter be referred to
as “Grantees.”

 

5.                                       Granting of
Options

 

(a)                                  Number of
Shares.  The Committee shall determine
the number of shares of Company Stock that will be subject to each Grant of
Options to Employees, Non-Employee Directors and Key Advisors.

 

(b)                                 Type of Option
and Price.

 

(i)                                     The Committee
may grant Incentive Stock Options which are intended to qualify as “incentive
stock options” within the meaning of Section 422 of the Code or
Nonqualified Stock Options which are not intended so to qualify or any
combination of Incentive Stock Options and Nonqualified Stock Options, all in
accordance with the terms and conditions set forth herein.  Incentive Stock Options may be granted only
to Employees.  Nonqualified Stock Options
may be granted to Employees, Non-Employee Directors and Key Advisors.

 

(ii)                                  The purchase
price (the “Exercise Price”) of
Company Stock subject to an Option shall be determined by the Committee and may
be equal to, greater than, or less than the Fair Market Value (as defined
below) of a share of Company Stock on the date the Option is granted; provided,
however, that (x) the Exercise Price of an Incentive Stock Option shall be
equal to, or greater than, the Fair Market Value of a share of Company Stock on
the date the Incentive Stock Option is granted; (y) an Incentive Stock Option
may not be granted to an Employee who, at the time of grant, owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary of the Company, unless the
Exercise Price per share is not less than 110% of the Fair Market Value of
Company Stock on the date of grant and (z) in the event that the Exercise Price
of an Option is below the Fair Market Value per share on the date of grant,
such Option may also include limitations regarding the exercise of such Option
and may provide that such exercise is subject to certain terms and
restrictions, including a prior election by the Grantee, to the extent such
terms and restrictions are required so as not cause the Option or the shares of
Company Stock issuable pursuant to the exercise of such Option to be includable
in the gross income of the Grantee under Section 409A of the Code prior to
such times or occurrence of such events, as permitted by the Code and the
regulations and other guidance thereunder (including, without limitation, Section 409A
of the Code, and the regulations and other guidance issued by the Secretary of
the Treasury thereunder).

 

(iii)                               If the Company
Stock is publicly traded, then the Fair Market Value per share shall be
determined as follows: (x) if the principal trading market for the Company
Stock is a national securities exchange or the Nasdaq National Market, the last
reported sale price thereof on the relevant date or (if there were no trades on
that date or if the Committee determines otherwise in its discretion) the
latest preceding date upon which a sale was reported, or (y) if the Company
Stock is not principally traded on such exchange or market, the mean between
the last reported “bid” and “asked” prices of Company Stock on the relevant
date, as reported on Nasdaq or, if not so reported, as reported by the National
Daily Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Committee determines.  If the Company Stock is not publicly traded
or, if publicly traded but not subject to reported transactions or “bid” or “asked”
quotations as set forth above, the Fair Market Value per share shall be as
determined by the Committee.

 

(c)                                  Option Term.  The Committee shall determine the term of
each Option.  The term of any Option
shall not exceed ten years from the date of grant.  However, an Incentive Stock Option which is
granted to an

 

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Employee who, at the time of
grant, owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company, or any parent or subsidiary of the
Company, may not have a term that exceeds five years from the date of grant.

 

(d)                                 Exercisability
of Options.  Options
shall become exercisable in accordance with such terms and conditions,
consistent with the Plan, as may be determined by the Committee and specified
in the Grant Instrument.  The Committee
may accelerate the exercisability of any or all outstanding Options at any time
for any reason, and such acceleration need not be uniform as among any class or
grouping of Grantees.  Notwithstanding
the foregoing, a Nonqualified Stock Option intended to comply with Section 409A
of the Code pursuant to Subsection (b)(ii) above shall be exercisable at
such times as are permitted under Section 409A of the Code and shall not
be accelerated to the extent such acceleration would not comply with Section 409A
of the Code.

 

(e)                                  Termination of
Employment, Disability or Death.

 

(i)                                     Except as
provided below, an Option may only be exercised while the Grantee is employed
by, or providing service to, the Company as an Employee, Key Advisor or member
of the Board.  In the event that a
Grantee ceases to be employed by, or provide service to, the Company for any
reason other than a Disability (as defined in subsection (v) below),
death, or termination for Cause (as defined in subsection (v) below), any
Option which is otherwise exercisable by the Grantee shall terminate unless
exercised within 90 days after the date on which the Grantee ceases to be
employed by, or provide service to, the Company (or within such other period of
time as may be specified by the Committee), but in any event no later than the
date of expiration of the Option term. 
Except as otherwise provided by the Committee, any of the Grantee’s
Options which are not otherwise exercisable as of the date on which the Grantee
ceases to be employed by, or provide service to, the Company shall terminate as
of the date such employment or service ceased.

 

(ii)                                  In the event
the Grantee ceases to be employed by, or provide service to, the Company on
account of a termination for Cause by the Company, any Option held by the
Grantee shall terminate as of the date and time the Grantee ceases to be
employed by, or provide service to, the Company.  In addition, notwithstanding any other
provisions of this Section 5, if the Grantee has engaged in conduct that
constitutes Cause at any time while the Grantee is employed by, or providing
service to, the Company or after the Grantee’s termination of employment or
service, any Option held by the Grantee shall immediately terminate.  In the event the Grantee has engaged in
conduct that constitutes Cause, in addition to the immediate termination of all
Grants, the Grantee shall automatically forfeit all shares underlying any
exercised portion of an Option for which the Company has not yet delivered the
share certificates, upon refund by the Company of the Exercise Price paid by
the Grantee for such shares (subject to any right of setoff by the Company).

 

(iii)                               In the event
the Grantee ceases to be employed by, or provide service to, the Company
because the Grantee is Disabled, any Option which is otherwise exercisable by
the Grantee shall terminate unless exercised within one year after the date on
which the Grantee ceases to be employed by, or provide service to, the Company
(or within such other period of time as may be specified by the Committee), but
in any event no later than the date of expiration of the Option term.  Except as otherwise provided by the
Committee, any of the Grantee’s Options which are not otherwise exercisable as
of the date on which the Grantee ceases to be employed by, or provide service
to, the Company shall terminate as of the date such employment or service ceased.

 

(iv)                              If the Grantee
dies while employed by, or providing service to, the Company or within 90 days
after the date on which the Grantee ceases to be employed or provide service on
account of a termination specified in Section 5(e)(i) above (or within such
other period of time as may be specified by the Committee), any Option which is
otherwise exercisable by the Grantee as of the date of his or her death shall
terminate unless exercised within one year after the date on which the Grantee
ceases to be employed by, or provide service to, the Company (or within such
other period of time as may be specified by the Committee), but in any event no
later than the date of expiration of the Option term.  Except as otherwise provided by the
Committee, any of the Grantee’s Options which are not otherwise exercisable as
of the date on which the Grantee ceases to be employed by, or provide service
to, the Company shall terminate as of the date such employment or service
ceased.

 

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(v)                                 For purposes of
this Section 5(e) and Section 6:

 

(A)                              The term “Company”
shall mean the Company and its parent and subsidiary corporations.

 

(B)                                “Employed by,
or provide service to, the Company” shall mean employment or service as an
Employee, Key Advisor or member of the Board (so that, for purposes of
exercising Options and SARs and satisfying conditions with respect to
Restricted Stock, a Grantee shall not be considered to have terminated
employment or service until the Grantee ceases to be an Employee, Key Advisor
or member of the Board), unless the Committee determines otherwise in the Grant
Instrument.

 

(C)                                “Disability” or
“Disabled” shall mean a Grantee’s becoming disabled within the meaning of Section 22(e)(3)
of the Code.

 

(D)                               “Cause” shall
mean, except to the extent specified otherwise by the Committee or separately
defined in a written employment or similar agreement between a Grantee and the
Company, a finding by the Committee that, before or after termination of
employment or service, the Grantee (i) has engaged in fraud, embezzlement,
theft, commission of a felony or proven dishonesty in the course of his or her
employment or service, (ii) has breached any provision of his or her employment
or service contract with the Company, including, without limitation, any
covenant against competition and/or raiding of the Company’s Employees,
Non-Employee Directors or Key Advisors, or (iii) has disclosed trade secrets or
confidential information of the Company to persons not entitled to receive such
information.

 

(f)                                    Exercise of
Options.  A Grantee may exercise an
Option which has become exercisable, in whole or in part, by delivering a
notice of exercise to the Company with payment of the Exercise Price.  The Grantee shall pay the Exercise Price for
an Option as specified by the Committee (x) in cash, (y) with the approval of
the Committee, subject to such restrictions as the Committee deems appropriate,
by delivering shares of Company Stock owned by the Grantee (including Company
Stock acquired in connection with the exercise of an Option) and having a Fair
Market Value on the date of exercise equal to the Exercise Price or (z) by such
other method as the Committee may approve, including, after a Public Offering,
payment through a broker in accordance with procedures permitted by Regulation
T of the Federal Reserve Board.  Shares
of Company Stock used to exercise an Option must, unless otherwise determined
by the Committee, have been held by the Grantee for the requisite period of
time to avoid adverse accounting or tax consequences to the Company with
respect to the Option.  The Grantee shall
pay the Exercise Price and the amount of any withholding tax due (pursuant to Section 8)
at the time of exercise.

 

(g)                                 Limits on
Incentive Stock Options.  Each
Incentive Stock Option shall provide that if the aggregate Fair Market Value of
the stock with respect to which Incentive Stock Options are exercisable for the
first time during any calendar year by a Grantee exceeds $100,000, then the
Option, as to the excess, shall be treated as a Nonqualified Stock Option.  For this purpose, the Fair Market Value of
the stock shall be measured on the date of grant of the Option.  All Incentive Stock Options granted to the
Grantee under the Plan or any other stock option plan of the Company or a
parent or subsidiary corporation shall be taken into consideration in
determining whether the foregoing limit has been met.  An Incentive Stock Option shall not be
granted to any person who is not an employee of the Company or a parent or
subsidiary (within the meaning of Section 424(f) of the Code) at the time
of the grant.

 

6.                                       Restricted
Stock Grants

 

The Committee may
issue or transfer shares of Company Stock to an Employee, Non-Employee Director
or Key Advisor under a Grant of Restricted Stock, upon such terms as the
Committee deems appropriate.  The
following provisions are applicable to Restricted Stock:

 

(a)                                  General
Requirements.  Shares of
Company Stock issued or transferred pursuant to Restricted Stock Grants may be
issued or transferred for consideration or for no consideration, as determined
by the

 

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Committee.  The Committee may establish conditions under
which restrictions on shares of Restricted Stock shall lapse over a period of
time or according to such other criteria as the Committee deems
appropriate.  The period of time during
which the Restricted Stock will remain subject to restrictions will be
designated in the Grant Instrument as the “Restriction Period.”

 

(b)                                 Number of
Shares.  The Committee shall determine
the number of shares of Company Stock to be issued or transferred pursuant to a
Restricted Stock Grant and the restrictions applicable to such shares.

 

(c)                                  Requirement of
Employment or Service.  If
the Grantee ceases to be employed by, or provide service to, the Company (as
defined in Section 5(e)) during a period designated in the Grant
Instrument as the Restriction Period, or if other specified conditions are not
met, the Restricted Stock Grant shall terminate as to all shares covered by the
Grant as to which the restrictions have not lapsed, and those shares of Company
Stock must be immediately returned to the Company.  The Committee may, however, provide for complete
or partial exceptions to this requirement as it deems appropriate.

 

(d)                                 Restrictions on
Transfer and Legend on Stock Certificate.  During the Restriction Period, a Grantee may
not sell, assign, transfer, pledge or otherwise dispose of the shares of
Restricted Stock except to a Successor Grantee under Section 9(a).  Each certificate for a share of Restricted
Stock shall contain a legend giving appropriate notice of the restrictions in
the Grant.  The Grantee shall be entitled
to have the legend removed from the stock certificate covering the shares
subject to restrictions when all restrictions on such shares have lapsed.  The Committee may determine that the Company
will not issue certificates for shares of Restricted Stock until all
restrictions on such shares have lapsed, or that the Company will retain
possession of certificates for shares of Restricted Stock until all
restrictions on such shares have lapsed.

 

(e)                                  Right to Vote
and to Receive Dividends. 
Unless the Committee determines otherwise, during the Restriction
Period, the Grantee shall have the right to vote shares of Restricted Stock and
to receive any dividends or other distributions paid on such shares, subject to
any restrictions deemed appropriate by the Committee.

 

(f)                                    Lapse of
Restrictions.  All
restrictions imposed on Restricted Stock shall lapse upon the expiration of the
applicable Restriction Period and the satisfaction of all conditions imposed by
the Committee.  The Committee may waive
any or all restrictions and conditions of a Restricted Stock Grant.  [Unless otherwise determined by the Committee
in the Grant Instrument, all restrictions imposed on Restricted Stock shall
lapse upon the Grantee’s death.]

 

(g)                                 Deferral
Elections by Grantees.  The
Committee may permit a Grantee to elect to defer the receipt of all or a percentage
of the shares of Restricted Stock that would otherwise be transferred to the
Grantee on the future vesting of such shares (the “Deferred Shares”).  Such
election shall be made on the form attached hereto as Exhibit “A” (the “Election Form”) and shall be filed with the
Committee at any time on or before the December 31st of the year prior to
the year in which such Grantee is scheduled to become vested in his or her
Deferred Shares or such earlier date as may be required to comply with Section 409A
of the Code, and the regulations and other guidance issued by the Secretary of
the Treasury thereunder.  All such
deferral elections shall be subject to the following rules and procedures:

 

(i)                                     Recordkeeping.  The Committee shall establish and maintain an
individual account in the name of each Grantee who files an Election Form and
shall credit to such account cash dividends, if any, that are paid on the
Deferred Shares after the restrictions on the Deferred Shares have lapsed.  On the last day of each fiscal year of the
Company, the Committee shall credit earnings to the balance of the Grantee’s
account at a rate of interest as determined from time to time by the Committee
in its sole discretion.

 

(ii)                                  Distributions
of Deferred Shares.  The Committee shall
distribute the Grantee’s Deferred Shares, and earnings thereon, in accordance
with the Participant’s Election Form and the terms of the Plan.  All distributions made by the Committee
pursuant to elections made by the Grantee hereunder shall be subject to applicable
federal, state and local tax withholding and to such other deductions as shall
at the time of such payment be required under any income tax or other law,
whether of the United States or any other jurisdiction, and, in the

 

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case of payments to a
beneficiary, the delivery to the Committee of all necessary documentation as
may be required by the Committee.  Within
two and one half months after receiving notice of a Grantee’s death or
Qualified Disability, the Committee shall distribute any balance of the Grantee’s
Deferred Shares, and earnings thereon, to the Grantee’s designated beneficiary,
if living, or if such designated beneficiary is deceased or the Grantee fails
to designate a beneficiary, to the Grantee’s estate.  If the Grantee ceases to provide service to
the Company for a reason other than the Grantee’s death or Qualified
Disability, the Grantee’s Deferred Shares (to the extent vested) and earnings
thereon shall be distributed to the Grantee in a lump sum at such time as
elected by the Grantee in his or her Election Form which times shall be limited
to the following events:

 

(a)                                  a date specified in such election,

 

(b)                                 the termination of a Grantee,

 

(c)                                  an Unforeseeable Emergency of such
Grantee; or

 

(d)                                 a Change in Control

 

(iii)                               The
distribution provisions of a Grantee’s Election Form may be changed by the
Grantee at any time provided the change is made at least twelve months prior to
the date on which the Deferred Shares, and the earnings thereon, are
distributable to the Grantee and provided further that any such change results
in the earliest distribution of the Deferred Shares, and any earnings,
occurring not earlier than five years following the original scheduled
distribution date or otherwise complies with Section 409A of the Code, and
the regulations and other guidance issued by the Secretary of the Treasury
thereunder.

 

(iv)                              Rights to
Deferred Shares and Earnings.  A Grantee
may not assign his or her claim to Deferred Shares, and the earnings thereon,
during his or her lifetime, except in accordance with Section 9 of the
Plan.  A Grantee’s right to Deferred
Shares and earnings thereon shall at all times constitute an unsecured promise
of the Company to pay benefits as they come due.  The right of the Grantee or his or her
beneficiary to receive benefits hereunder shall be solely an unsecured claim
against the general assets of the Company. 
Neither the Grantee nor his or her beneficiary shall have any claim
against or rights in any specific assets or other fund of the Company.

 

(v)                                 Issuance of and
Voting of Deferred Shares.  In no event
shall the Company issue certificates for Deferred Shares until such shares are
distributed to the Grantee (or his or her designated beneficiary).  In no event shall a Grantee have the right to
vote Deferred Shares until such shares are distributed to the Grantee.

 

(h)                                 Definitions.  For purposes of this Section 6 and Section 7,
the “Unforeseeable Emergency” of a Grantee shall mean a severe financial
hardship to such Grantee resulting from: 
(i) an illness or accident of such Grantee, or the spouse or a dependent
(as defined in Section 152(a) of the Code) of such Grantee, (ii) the loss
of such Grantee’s property due to casualty, or (iii) other similar extraordinary
and unforeseeable circumstances arising as a result of events beyond the
control of such Grantee.  For purposes of
this Section 6 and Section 7, “Qualified
Disability” shall mean the Grantee is “disabled,” as such term is defined in Section 409A of the
Code, and the regulations and other guidance issued by the Secretary of the
Treasury thereunder.  For purposes of
this Section 6 and Section 7, “Change in Control” shall mean a change
in control as defined as in Section 409A of the Code, and the regulations
and other guidance issued by the Secretary of the Treasury thereunder.

 

7.                                       Stock
Appreciation Rights

 

(a)                                  General
Requirements.  The
Committee may grant SARs to an Employee, Non-Employee Director or Key Advisor
separately or in tandem with any Option (for all or a portion of the applicable
Option).  Tandem SARs may be granted
either at the time the Option is granted or at any time thereafter while the
Option remains outstanding; provided, however, that, in the case of an
Incentive Stock Option, SARs may be granted only at the time of the Grant of
the Incentive Stock Option.  The
Committee shall establish the base amount of the SAR at the time the SAR is
granted.  The base amount of each SAR
shall be equal to the per share Exercise Price of the related

 

8

 

Option or, if there is no
related Option, the Fair Market Value of a share of Company Stock as of the
date of Grant of the SAR.

 

(b)                                 Tandem SARs.  In the case of tandem SARs, the number of
SARs granted to a Grantee that shall be exercisable during a specified period
shall not exceed the number of shares of Company Stock that the Grantee may
purchase upon the exercise of the related Option during such period.  Upon the exercise of an Option, the SARs
relating to the Company Stock covered by such Option shall terminate.  Upon the exercise of SARs, the related Option
shall terminate to the extent of an equal number of shares of Company Stock.

 

(c)                                  Exercisability.  An SAR shall be exercisable during the period
specified by the Committee in the Grant Instrument and shall be subject to such
vesting and other restrictions as may be specified in the Grant
Instrument.  The Committee may accelerate
the exercisability of any or all outstanding SARs at any time for any reason,
and such acceleration need not be uniform as among any class or grouping of
Grantees; provided however, that the terms regarding the issuance of payments
pursuant to an SAR for cash shall not be amended, modified or terminated in any
manner which permits the acceleration of the time or schedule of such
issuance of cash.  SARs may only be
exercised while the Grantee is employed by, or providing service to, the
Company or during the applicable period after termination of employment or
service as described in Section 5(e) with respect to Options, and such
exercise shall be under and subject to all of the limitations and termination
and forfeiture provisions applicable to Options under Section 5(e),
including without limitation forfeiture of any SARs and the release of any
obligations of the Company to respond to the exercise of any SARs under the
circumstances set forth in Section 5(e)(ii).  A tandem SAR shall be exercisable only during
the period when the Option to which it is related is also exercisable.

 

(d)                                 Value of SARs
and Time of Distribution.  When
a Grantee exercises SARs, the Grantee shall receive in settlement of such SARs
an amount equal to the value of the stock appreciation for the number of SARs
exercised, payable in cash, Company Stock or a combination thereof; provided,
that the recipient of any SAR that is payable in other than Company Stock may
elect to receive cash issuable pursuant to such SAR only upon one or more of
the following events:

 

(i)                                     a date specified in such election,

 

(ii)                                  the termination of a Grantee,

 

(iii)                               an Unforeseeable Emergency of such
Grantee;

 

(iv)                              a Change in Control;

 

(v)                                 death; or

 

(vi)                              Qualified Disability;

 

(e)                                  provided,
however, in the case of a Grantee who is a “key employee” as defined in Code Section 416(i)
(determined without regard to paragraph (5) thereof) of the Company, the
payment issuable pursuant to such Grantee’s termination shall not be made
before the date which is six (6) months after the date of such termination.

 

(f)                                    Stock
Appreciation Amount.  The stock
appreciation for an SAR is the amount by which the Fair Market Value of the
underlying Company Stock on the date of exercise of the SAR exceeds the base
amount of the SAR as described in Subsection (a).

 

(g)                                 Form of Payment.  The Committee shall determine whether the
appreciation in an SAR shall be paid in the form of cash, shares of Company
Stock, or a combination of the two, in such proportion as the Committee deems
appropriate; provided, that any SAR that is payable in other than Company Stock
shall contain such terms and provisions as are necessary to comply with Section 409A
of the Code.  For purposes of calculating
the number of shares of Company Stock to be received, shares of Company Stock
shall be valued at their Fair

 

9

 

Market Value on the date of
exercise of the SAR.  If shares of
Company Stock are to be received upon exercise of an SAR, only whole shares of
Company Stock (rounded down to the nearest whole share) shall be issued.

 

8.                                       Withholding
of Taxes

 

(a)                                  Required
Withholding.  All Grants
under the Plan shall be subject to applicable federal (including FICA), state
and local tax withholding requirements. 
The Company may require that the Grantee or other person receiving or
exercising Grants pay to the Company the amount of any federal, state or local
taxes that the Company is required to withhold with respect to such Grants and
may require such payment as a precondition for awarding or exercising such
Grant, or the Company may deduct from other wages paid by the Company the
amount of any withholding taxes due with respect to such Grants.

 

(b)                                 Election to
Withhold Shares.  If the
Committee so permits, a Grantee may elect to satisfy the Company’s income tax
withholding obligation with respect to an Option, SAR or Restricted Stock by
having the Company withhold that number of shares having a Fair Market Value
equal to the minimum amount required to be withheld based on the statutory
withholding rates for federal and state tax purposes that apply to supplemental
taxable income.  The Fair Market Value of
the shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined.  The
election must be in a form and manner prescribed by the Committee and shall be
subject to the prior approval of the Committee.

 

9.                                       Transferability
of Grants

 

(a)                                  Nontransferability
of Grants.  Except as
provided below, only the Grantee may exercise rights under a Grant during the
Grantee’s lifetime.  A Grantee may not
transfer those rights except by will or by the laws of descent and distribution
or, with respect to Grants other than Incentive Stock Options, if permitted in
any specific case by the Committee, pursuant to a domestic relations order (as
defined under the Code or Title I of the Employee Retirement Income Security
Act of 1974, as amended, or the regulations thereunder).  When a Grantee or permitted transferee dies,
the personal representative or other person entitled to succeed to the rights
of the Grantee or permitted transferee (“Successor
Grantee”) may exercise such rights. 
A Successor Grantee must furnish proof satisfactory to the Company of
his or her right to receive the Grant under the Grantee’s will or under the
applicable laws of descent and distribution.

 

(b)                                 Transfer of
Nonqualified Stock Options. Notwithstanding the
foregoing, the Committee may provide, in a Grant Instrument, that a Grantee may
transfer as a gift Nonqualified Stock Options to family members, one or more
trusts for the benefit of family members, or one or more partnerships of which
family members are the only partners, according to such terms as the Committee
may determine; provided that the Grantee receives no consideration for the
transfer of an Option and the transferred Option shall continue to be subject
to the same terms and conditions as were applicable to the Option immediately
before the transfer.

 

10.                                 Shareholder
Agreement

 

Prior to a Public
Offering, the Committee shall, as a condition to any Grant, require that a
Grantee become a party to a shareholder agreement with respect to any Grants
and any Company Stock that may be obtained pursuant thereto.  Such shareholder agreement shall contain the
terms of any then existing shareholder agreement and/or any terms which the
Committee deems appropriate.

 

11.                                 Change of
Control of the Company

 

As used herein, a “Change
of Control” shall be deemed to have occurred if:

 

(a)                                  Any “person”
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (other
than persons who are shareholders of the Company on the date the Plan is
adopted) becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing

 

10

 

more than 50% of all votes
required to elect a majority of the Board, provided that a Change of Control
shall not be deemed to occur as a result of a change of ownership resulting
from the death of a shareholder;

 

(b)                                 The
consummation by the Company of (i) a merger or consolidation of the Company
with another corporation where the shareholders of the Company, immediately
prior to the merger or consolidation, will not beneficially own, immediately
after the merger or consolidation, shares entitling such shareholders to more
than 50% of all votes required to elect a majority of the board of directors of
the surviving corporation or (ii) the consummation of an agreement (or
agreements) providing for the sale or disposition by the Company of all or
substantially all of the assets of the Company;

 

(c)                                  The
shareholders of the Company approve an agreement providing for a liquidation or
dissolution of the Company; or

 

(d)                                 After a Public
Offering, any person has completed a tender offer or exchange offer for shares
representing more than 50% of all votes required to elect a majority of the
Board.

 

12.                                 Consequences
of a Change of Control

 

(a)                                  Notice and
Acceleration.  Upon a
Change of Control, unless the Committee determines otherwise, (i) the Company
shall provide each Grantee with outstanding Grants written notice of such
Change of Control, (ii) all outstanding Options and SARs shall automatically
accelerate and become fully exercisable and (iii) the restrictions and
conditions on all outstanding Restricted Stock shall immediately lapse.

 

(b)                                 Assumption of
Grants.  Upon a Change of Control where
the Company is not the surviving corporation (or survives only as a subsidiary
of another corporation), unless the Committee determines otherwise, all
outstanding Options and SARs that are not exercised shall be assumed by, or
replaced with comparable options and rights by, the surviving corporation.

 

(c)                                  Other
Alternatives. 
Notwithstanding the foregoing, subject to subsection (d) below, in
the event of a Change of Control, the Committee may take one or both of the
following actions: the Committee may (i) require that Grantees surrender their
outstanding Options and SARs in exchange for a payment by the Company, in cash
or Company Stock as determined by the Committee, in an amount equal to the
amount by which the then Fair Market Value of the shares of Company Stock
subject to the Grantee’s unexercised Options and SARs exceeds the Exercise
Price of the Options or the base amount of the SARs, as applicable, or (ii)
after giving Grantees an opportunity to exercise their outstanding Options and
SARs, terminate any or all unexercised Options and SARs at such time as the
Committee deems appropriate.  Such
surrender or termination shall take place as of the date of the Change of
Control or such other date as the Committee may specify.

 

(d)                                 Committee.  The Committee making the determinations under
this Section 12 following a Change of Control must be comprised of the
same members as those on the Committee immediately before the Change of Control.  If the Committee members do not meet this
requirement, the automatic provisions of subsections (a) and (b) shall apply,
and the Committee shall not have discretion to vary them (except to the extent
Grants are rescinded pursuant to subsection (e) below).

 

(e)                                  Limitations.  Notwithstanding anything in the Plan to the
contrary, in the event of a Change of Control, (i) the Committee (including the
Committee in place before a Change of Control and any Committee convened after
a Change of Control) shall not have the right to take any actions described in
the Plan (including without limitation actions described in Subsection (c)
above) that would make the Change of Control ineligible for pooling of
interests accounting treatment or that would make the Change of Control
ineligible for desired tax treatment if, in the absence of such right, the
Change of Control would qualify for such treatment and the Company (or, if
applicable, the successor entity) intends to use such treatment with respect to
the Change of Control, and (ii) without limiting the foregoing, in such event,
the Committee may rescind any Grants (whether or not vested or exercisable)
that would impair the use of pooling of interests accounting treatment, as
determined by the Company’s certified public accountants.

 

11

 

13.                                 Limitations
on Issuance or Transfer of Shares

 

No Company Stock
shall be issued or transferred in connection with any Grant hereunder unless
and until all legal and contractual restrictions applicable to the issuance or
transfer of such Company Stock have been complied with to the satisfaction of
the Committee.  The Committee shall have
the right to condition any Grant made to any Grantee hereunder on such Grantee’s
undertaking in writing to comply with such restrictions on his or her
subsequent disposition of such shares of Company Stock as the Committee shall
deem necessary or advisable as a result of (i) any applicable law, regulation
or official interpretation thereof, or (ii) the provisions of any stockholder
agreement concerning Company Stock, and certificates representing such shares
shall be legended to reflect any such restrictions.  Certificates representing shares of Company
Stock issued or transferred under the Plan will be subject to such
stop-transfer orders and other restrictions as may be required by applicable
laws, regulations and interpretations, including any requirement that a legend
be placed thereon.

 

14.                                 Amendment
and Termination of the Plan

 

(a)                                  Amendment.  The Board may amend or terminate the Plan at
any time; provided, however, that the Board shall not amend the Plan without
shareholder approval if such approval is required in order for Incentive Stock
Options granted or to be granted under the Plan to meet the requirements of Section 422
of the Code or if, after a Public Offering, such approval is required in order
to exempt compensation under the Plan from the deduction limit under Section 162(m)
of the Code.

 

(b)                                 Termination of
Plan.  No additional Grants shall be
made under the Plan after January 20, 2015 or such earlier date as may be
determined by the Board.  The Plan may be
extended by the Board with the approval of the shareholders.

 

(c)                                  Termination and
Amendment of Outstanding Grants.  A termination or amendment of the Plan that
occurs after a Grant is made shall not materially impair the rights of a
Grantee unless the Grantee consents or unless the Committee acts under Section 20(b).  The termination of the Plan shall not impair
the power and authority of the Committee with respect to an outstanding
Grant.  Whether or not the Plan has
terminated, an outstanding Grant may be terminated or amended under Section 20(b)
or may be amended by agreement of the Company and the Grantee consistent with
the Plan.

 

(d)                                 Governing
Document.  The Plan
shall be the controlling document.  No
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. 
The Plan shall be binding upon and enforceable against the Company and
its successors and assigns.

 

15.                                 Savings
Clause.

 

(a)                                  Notwithstanding
anything to the contrary in the Plan or any Grant, if and to the extent the
Committee shall determine that the terms of any Grant may result in the failure
of the such Grant to comply with the requirements of Section 409A of the
Code, or any applicable regulations or guidance promulgated by the Secretary of
the Treasury in connection therewith, the Committee shall have authority to
take such action to amend, modify, cancel or terminate the Plan or any Grant as
it deems necessary or advisable, including without limitation:

 

(i)                                     amendment or
modification of the Plan or any Grant to conform the Plan or such Grant to the
requirements of Section 409A of the Code or any regulations or other
guidance thereunder (including, without limitation, any amendment or
modification of the terms of any Grant regarding vesting, exercise, or the
timing or form of payment).

 

(ii)                                  cancellation or
termination of any unvested Grant, or portion thereof, without any payment to
the Grantee holding such Grant.

 

12

 

(iii)                               cancellation or
termination of any vested Grant, or portion thereof, with immediate payment to
the Grantee holding such Grant of the amount otherwise payable upon the
immediate exercise of any such Grant, or vested portion thereof, by such
Grantee.

 

(b)                                 Any such
amendment, modification, cancellation, or termination of the Plan or any Grant
may adversely affect the rights of a Grantee with respect to such Grant without
the Grantee’s consent

 

16.                                 Funding of
the Plan

 

This Plan shall be
unfunded and is not intended to be subject to the Employee Retirement Income
Security Act of 1974, as amended.  No
provision contained herein shall be construed to require that (i) the Company
be required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Grants under this Plan, or
(ii) interest be paid or accrued on any Grant or on any subsequent distribution
of Company Stock, payment of cash, release or lapse of any restrictions on
Company Stock, or any other distribution or payment of property or cash
pursuant to the exercise of any rights provided by any Grants.

 

17.                                 Rights of
Participants

 

Nothing in this Plan
shall entitle any Employee, Key Advisor, Non-Employee Director or other person
to any claim or right to be awarded a Grant under this Plan.  Neither this Plan nor any action taken
hereunder shall be construed as giving any individual any rights to be retained
by or in the employ of the Company or any other employment rights.

 

18.                                 No
Fractional Shares

 

No fractional
shares of Company Stock shall be issued or delivered pursuant to the Plan or
any Grant.  The Committee shall determine
whether cash, other awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be disregarded or otherwise eliminated.

 

19.                                 Headings

 

Section headings
are for reference only.  In the event of a
conflict between a title and the content of a Section, the content of the Section shall
control.

 

20.                                 Effective
Date of the Plan

 

(a)                                  Effective Date.  Subject to approval by the Company’s
shareholders, the Plan was originally effective on June 24, 1998.  Effective January 21, 2005, but subject
to the approval of the shareholders, the Plan was amended and restated and
extended until January 20, 2015.

 

(b)                                 Public Offering.  The provisions of the Plan that refer to a
Public Offering, or that refer to, or are applicable to persons subject to, Section 16
of the Exchange Act or Section 162(m) of the Code, shall be effective, if
at all, upon the effective date of the initial registration of the Company
Stock under Section 12(g) of the Exchange Act.

 

21.                                 Miscellaneous

 

(a)                                  Grants in
Connection with Corporate Transactions and Otherwise.  Nothing contained in this Plan shall be
construed to (i) limit the right of the Committee to make Grants under this
Plan in connection with the acquisition, by purchase, lease, merger,
consolidation or otherwise, of the business or assets of any corporation, firm
or association, including Grants to employees thereof who become Employees of
the Company, or for other proper corporate purposes, or (ii) limit the right of
the Company to grant stock options or make other awards outside of this
Plan.  Without limiting the foregoing,
the Committee may make a Grant to an employee of another corporation who

 

13

 

becomes an Employee by
reason of a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company or any of its subsidiaries
in substitution for a stock option or restricted stock grant made by such
corporation.  The terms and conditions of
the substitute grants may vary from the terms and conditions required by the
Plan and from those of the substituted stock incentives.  The Committee shall prescribe the provisions
of the substitute grants.

 

(b)                                 Compliance with
Law.  The Plan, the exercise of
Options and SARs and the obligations of the Company to issue or transfer shares
of Company Stock under Grants shall be subject to all applicable laws and to
approvals by any governmental or regulatory agency as may be required.  It is the intent of the Company that the Plan
and applicable Grants under the Plan comply with the applicable provisions of Section 162(m)
of the Code (after a Public Offering), Section 422 of the Code (with
respect to Incentive Stock Options) and Section 409A of the Code (with
respect to Grants subject to Section 409A of the Code).  After a Public Offering it is the intent of
the Company, with respect to persons subject to Section 16 of the Exchange
Act, that the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. To the
extent that any legal requirement of Section 162(m), 409A or 422 of the
Code or of Section 16 of the Exchange Act ceases to be required by law or
that the restrictions thereof are liberalized, the Committee may provide, in
its sole discretion, that Plan provisions and restrictions relating to such
legal requirements shall cease to apply or be liberalized, as appropriate.  The Committee may revoke any Grant if it is
contrary to law or modify a Grant to bring it into compliance with any valid
and mandatory government regulation.  The
Committee may also adopt rules regarding the withholding of taxes on payments
to Grantees.  The Committee may, in its
sole discretion, agree to limit its authority under this Section.

 

(c)                                  Communications
Laws.  Notwithstanding any other
provision in the Plan to the contrary, if prior consent to the issuance or
exercise of any Grant hereunder is required for any reason under the
Communications Act of 1934, as amended, and/or the rules, regulations or
policies of the Federal Communications Commission (the “FCC”) or any successor governmental agency
(the “Communications Laws”) in
effect at the time, whether as a consequence of the extent of the current and
proposed holdings of the Grantee, the citizenship or legal qualifications of
the Grantee or for any other reason under the Communications Laws, then no
Grant shall be issued, become effective or be exercised without the Grantee
first obtaining such prior written consent of the FCC or any successor
governmental agency.

 

(d)                                 Governing Law.  The validity, construction, interpretation
and effect of the Plan and Grant Instruments issued under the Plan shall be
governed and construed by and determined in accordance with the laws of the
Commonwealth of Pennsylvania, without giving effect to the conflict of laws
provisions thereof.

 

	
   

  	
  ENTERCOM COMMUNICATIONS
  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name & Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

14Exhibit 10.17

 

Execution Version

 

 

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

1 MADISON OFFICE HOLDINGS LLC

 

 

Dated as of: April 29, 2005

 

 

 

 

TABLE OF
CONTENTS

 

	
  I.

  	
  DEFINED
  TERMS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.01

  	
  Defined Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.02

  	
  Other Defined Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  II.

  	
  ORGANIZATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.01

  	
  Formation and Continuation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.02

  	
  Name and Principal Place of Business

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.03

  	
  Term

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.04

  	
  Registered Agent, Registered Office and
  Foreign Qualification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.05

  	
  Purpose

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)  The purpose of the Company
  shall be:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.06

  	
  Separateness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
  MEMBERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.01

  	
  Admission of Members

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.02

  	
  Limitation on Liability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.03

  	
  Third-Party Debt Liability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.04

  	
  GKK Special Decision-Making Rules

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
  CAPITAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.01

  	
  Initial Capital Contributions.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.02

  	
  Additional Capital Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.03

  	
  Capital Contributions and Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.04

  	
  Capital Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.05

  	
  No Further Capital Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.06

  	
  Financing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.07

  	
  Book Basis Adjustments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
  INTERESTS IN THE COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.01

  	
  Percentage Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.02

  	
  Return of Capital

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.03

  	
  Ownership

  	
   

  

 

 

	
   

  	
  5.04

  	
  Waiver of Partition; Nature of Interests in
  the Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
  ALLOCATIONS AND DISTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.01

  	
  Allocations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.02

  	
  Special Allocations and Compliance with
  Section 704(b)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.03

  	
  Distributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.04

  	
  Distributions in Liquidation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.05

  	
  [Intentionally omitted.]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.06

  	
  Tax
  Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.07

  	
  Tax Matters Partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.08

  	
  Section 704(c)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
  MANAGEMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.01

  	
  Management

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.02

  	
  Services and Fees; Affiliate Transactions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.03

  	
  Duties and Conflicts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.04

  	
  Company Expenses

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.05

  	
  Officers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
  BUY-SELL AND CALL PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.01

  	
  Buy-Sell Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.02

  	
  Call Provision

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.03

  	
  Termination of Other Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  IX.

  	
  BOOKS AND RECORDS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.01

  	
  Books and Records

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.02

  	
  Accounting and Fiscal Year

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.03

  	
  Reports

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.04

  	
  The Company Accountant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.05

  	
  Distributions and Reserves

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.06

  	
  The Budget and Operating Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
  TRANSFER OF INTERESTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.01

  	
  No Transfer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.02

  	
  Permitted Transfers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.03

  	
  Transferees

  	
   

  

 

 

	
   

  	
  10.04

  	
  Admission of Additional Members

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.05

  	
  Override on Permitted Transfers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XI.

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.01

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XII.

  	
  DISSOLUTION AND TERMINATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.01

  	
  Dissolution

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.02

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.03

  	
  Liquidating Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XIII.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.01

  	
  Covenants, Representations and Warranties
  of the Members

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.02

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.03

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.04

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.05

  	
  Attorney Fees

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.06

  	
  Captions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.07

  	
  Pronouns

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.08

  	
  Successors and Assigns

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.09

  	
  Extension Not a Waiver

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.10

  	
  Creditors Not Benefited

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.11

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.12

  	
  Entire Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.13

  	
  Publicity

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.14

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.15

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.16

  	
  Mandatory Arbitration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.17

  	
  Broker

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  - Initial Budget

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
  -
  Form of Leasing and Property Management Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
  - Form of
  Asset Management Agreement

  	
   

  
					

 

 

	
  EXHIBIT D

  	
  - Project Modifications
  Under Consideration With CSFB

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E

  	
  - Form of Reimbursement and Indemnity Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT F

  	
  -  Example of
  Operation of Calculation Set Forth in Section 4.03(b)(iii)

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 4.01(a)  -Contract and Due Diligence Costs

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 4.01(b)  -Closing Date Contributions

  	
   

  

 

 

LIMITED LIABILITY COMPANY AGREEMENT

OF

1 MADISON OFFICE HOLDINGS LLC

 

This LIMITED LIABILITY COMPANY AGREEMENT of 1
Madison Office Holdings LLC is made and entered into as of April 29, 2005,
by and between SLG Madison Investment LLC, a Delaware limited liability company
(together with its permitted successors and assigns, the “SLG Member”),
and GKK Madison Investment LLC, a Delaware limited liability company (together
with its permitted successors and assigns, the “GKK Member”).

 

R E C I T A L S:

 

WHEREAS, the SLG Member is a wholly owned subsidiary
of SLG;

 

WHEREAS, the GKK Member is a wholly owned subsidiary
of GKK;

 

WHEREAS, the SLG Member and the
GKK Member have formed the Company in order to engage in the business of
acquiring, owning, managing and disposing of the Property;

 

WHEREAS, the Company was formed on April 12,
2005, pursuant to the Delaware Act, and there has been filed a
Certificate of Formation of the Company with the office of the Secretary of
State of the State of Delaware;

 

WHEREAS, the Company is the sole member of 1 Madison
Office Mezz C LLC, a bankruptcy-remote “special purpose entity” organized as a
Delaware limited liability company (“Mezz C LLC”) which, in turn, is the
sole member of 1 Madison Office Mezz B LLC, a bankruptcy-remote “special
purpose entity” organized as a Delaware limited liability company (“Mezz B
LLC”) which, in turn, is the sole member of 1 Madison Office Mezz A LLC, a
bankruptcy-remote “special purpose entity” organized as a Delaware limited
liability company (“Mezz A LLC”) which, in turn, is the sole member of 1
Madison Office Fee LLC, a bankruptcy-remote “special purpose entity” organized
as a Delaware limited liability company (“Fee LLC”);

 

WHEREAS, 1 Madison Venture LLC and Column Financial,
Inc, (“Column”) collectively as buyer, have entered into a purchase and
sale agreement for the acquisition of the Property (the “Purchase Agreement”);

 

WHEREAS, SL Green Operating Partnership, L.P. has
obtained a 15-year, fixed- rate financing commitment from Column to finance a
portion of the purchase price payable under the Purchase Agreement, as more
fully set forth in that certain Commitment Letter, dated March 29, 2005,
of Column to SL Green Operating Partnership, L.P. (the “Financing Commitment”);

 

 

WHEREAS, Fee LLC has entered into that certain
Assignment Agreement, dated as of April 29, 2005, pursuant to which Fee
LLC is to acquire all rights, title and interest to the Property and the
Financing Commitment;

 

WHEREAS, the parties hereto desire to provide for
the respective rights, obligations and interests of the parties to each other
and to the Company; and

 

WHEREAS, this Agreement shall apply to and govern
the management and operation of the Company from the date hereof and shall bind
each and every present and future Member of the Company.

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

I.  DEFINED TERMS

 

1.01         Defined Terms.  As used in this Agreement, the following
terms have the meanings set forth below:

 

“Acceptable Transfer
Terms” has the meaning set forth in Section 10.02 hereof.

 

“Acquisition Financing” means the financing for
the acquisition of the Property contemplated by the Financing Commitment.

 

“Additional Capital Contribution” means, with
respect to any Member, any Mandatory Capital Contribution and Agreed Capital
Contribution made by such Member to the Company pursuant to Section 4.02
or Section 4.03 hereof.

 

“Adjusted Capital Account
Deficit” means, with respect to any Member for any taxable year of the
Company, the deficit balance, if any, in such Member’s Capital Account as of
the end of such taxable year, after giving effect to the following adjustments:

 

(a)         Credit to such Capital Account any amounts that such Member is
obligated to restore or is deemed obligated to restore as described in the
penultimate sentence of Treasury Regulation Section 1.704-2(g)(1) and
in Treasury Regulation Section 1.704-2(i)(5); and

 

(b)        Debit to such Capital
Account the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
(5) and (6).

 

“Affiliate” means,
with respect to any Person, (a) any other Person directly or indirectly
controlling, controlled by, or under common control with such Person, or (b) any
other Person owning or controlling 10% or more of the outstanding voting
interests of such Person, or (c) any officer, general partner or managing
member of such Person, or (d) any other Person which is an officer,
general partner, managing member or 

 

2

 

holder
of 10% or more of the outstanding voting interests of any other Person
described in clauses (a) through (c) of this definition.

 

“Agreed Capital
Contribution” has the meaning set forth in Section 4.02 hereof.

 

“Agreement” means
this Limited Liability Company Agreement, including any exhibits or schedules
attached hereto, as the same may be further amended or restated from time to
time pursuant to the terms of this Agreement.

 

“Asset Management
Agreement” has the meaning set forth in Section 7.02(a).

 

“Book Basis” means,
with respect to any asset of the Company, the adjusted basis of such asset for
federal income tax purposes; provided, however, that (a) if
any asset is contributed to the Company, the initial Book Basis of such asset
shall equal its fair market value on the date of contribution (as agreed to by
the Members), and (b) if the Capital Accounts of the Members are adjusted
pursuant to Treasury Regulation Section 1.704-1(b) to reflect the
fair market value of any asset of the Company, the Book Basis of such asset
shall be adjusted to equal its respective fair market value as of the time of
such adjustment (as agreed to by the Members), in accordance with such Treasury
Regulation.  The Book Basis of all assets
of the Company shall be adjusted thereafter by depreciation or amortization as
provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(g) and any
other adjustment to the basis of such assets other than depreciation or
amortization.

 

“Budget” means the
consolidated annual budget covering the Company’s and the Subsidiaries’
anticipated operations, as approved by the Members and in effect from time to
time pursuant to Section 9.06 hereof.

 

“Budget and Operating
Plan” means collectively, the Budget and the Operating Plan for the Company
and the Subsidiaries, as approved by the Members.

 

“Business Day” means
any day that is not a Saturday, Sunday or a day on which banks are required or
permitted to be closed in the State of New York.

 

“Buy-Sell Notice” has
the meaning set forth in Section 8.01 hereof.

 

“Buy-Sell Value” has
the meaning set forth in Section 8.01(b) hereof.

 

“Capital Account”
means the separate account maintained for each Member under Section 4.04
hereof.

 

“Capital Contribution”
means, with respect to any Member, any Initial Capital Contribution and
Additional Capital Contribution made by such Member to the Company pursuant to
this Agreement.

 

“Certificate of Formation”
has the meaning set forth in Section 2.01 hereof.

 

3

 

“Clock Tower Property” means the two-basement
and fifty-story structure (commonly known as the “Clock Tower”) located at One
Madison Avenue, New York, New York.  The
Clock Tower Property is not part of the Property.  

 

“Closing Date” means
the date of this Agreement.

 

 “Code” means the Internal Revenue Code
of 1986, as amended.  Any reference
herein to any specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of future laws.

 

“Company” means the
limited liability company formed pursuant to the Certificate of Formation and
operated pursuant to the terms of this Agreement.

 

“Company Accountant”
has the meaning set forth in Section 9.04 hereof.

 

“Company Minimum Gain”
means “partnership minimum gain” as defined in Treasury Regulation Section 1.704-2(d).

 

“Condominium Declaration” means that certain Condominium Declaration
under Article 9-B of the Real Property Law of the State of New York
establishing a plan for condominium ownership of the Property, dated December 28,
2001 and recorded in the Office of the Register of the City of New York, New
York County on December 31, 2002 in Reel 3418, Page 0954 as amended
by the Amendment to Declaration dated as of December 17, 2003 and recorded
in the Office of the Register of the City of New York, New York County on February 25,
2005 under CFRN 2005000115754.

 

“Confidential Information”
has the meaning set forth in Section 13.15(a) hereof.

 

“Contributing Member”
has the meaning set forth in Section 4.03(b) hereof.

 

“Control” when used
with respect to any Person means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person whether through the ownership of voting securities, by contract or
otherwise.

 

“CSFB” means Credit
Suisse First Boston (USA), Inc.

 

“Delaware Act” means
the Delaware Limited Liability Company Act, as amended from time to time.

 

“Election” has the
meaning set forth in Section 8.01(d) hereof.

 

“Eligibility Requirements” means an entity that
has total assets (in name or under management) in excess of six hundred million
dollars ($600,000,000) and (except with respect to a pension advisory firm or
similar fiduciary) capital/statutory surplus or shareholder’s equity in excess
of two hundred fifty million dollars ($250,000,000) and is regularly engaged in
the business of owning and operating, or originating and holding

 

4

 

loans secured directly or
indirectly by, properties similar to the Property in major metropolitan areas.

 

“Embargoed Person”
has the meaning set forth in Section 13.01(a)(ix) hereof.

 

“Expenses” means, for any period, the sum of
the total gross cash expenditures of the Company during such period, including
without limitation (a) all cash operating expenses (including all fees,
commissions, expenses and allowances paid to any third party or paid or
reimbursed to any Member or any of its Affiliates pursuant to any contract or
otherwise as permitted hereunder), (b) all debt service payments, (c) all
expenditures which are treated as capital expenditures (as distinguished from
expense deductions) under GAAP, (d) all real estate taxes, personal property
taxes and sales taxes, (e) all deposits to the Company’s Reserve Accounts
pursuant to Section 9.05, (f) all costs and expenditures related to any
acquisition, sale, lease, disposition, financing, refinancing, monetization or
securitization of any asset of the Company or its Subsidiaries (or any interest
therein) and (g) all cash contributions, loans or advances directly or
indirectly made to any Subsidiary; provided, however, that
Expenses shall not include (i) any payment or expenditure to the extent (A) the
sources of funds used for such payment or expenditure are not included in
Revenues or (B) such payment or expenditure is paid out of any Company Reserve
Account, (ii) any expenditure properly attributable to the liquidation of the
Company, or (iii) non-cash expenses such as depreciation or amortization.  In addition, a reference to the “Expenses” of
a Subsidiary shall refer to the total gross cash expenses of such Subsidiary
(subject to the exclusions described in clauses (A) and (B) of the preceding
sentence), without duplication of any Expenses of the Company or any other Subsidiary.

 

“Fee LLC” has the
meaning set forth in the recital paragraphs of this Agreement.

 

“Financing Commitment” has the meaning set
forth in the recital paragraphs of this Agreement.

 

“GAAP” has the
meaning set forth in Section 9.02 hereof.

 

“GKK” means GKK Capital LP, a Delaware limited
liability company, which is the sole member of the GKK Member.

 

“GKK Corp” means Gramercy Capital Corp., a
Delaware corporation, which is the sole member of the GKK Member.

 

“GKK Member” has the meaning set forth in the
Preamble of this Agreement.

 

“GKK Member Certificate” has the meaning set forth in Section 13.01(c)(ii) hereof.

 

5

 

“GKK Member LLC Agreement” has the meaning set forth in Section 13.01(c)(ii) hereof.

 

“Indemnified Party”
has the meaning set forth in Section 11.01(a) hereof.

 

“Initial Budget” has
the meaning set forth in Section 9.06.

 

“Initial Capital
Contributions” means, with respect to any Member, the cash contributions to
the capital of the Company made by such Member pursuant to Section 4.01 of
this Agreement.

 

“Interest” means,
with respect to any Member at any time, the interest of such Member in the
Company at such time, including the right of such Member to any and all of the
benefits to which such Member may be entitled as provided in this Agreement,
together with the obligations of such Member to comply with all of the terms
and provisions of this Agreement.

 

“Leasing and Property
Management Agreement” has the meaning set forth in Section 7.02(b).

 

“Lender” means
Column, the lender under the Loans.

 

“Liquidating Member”
means the SLG Member.

 

“Loans” means,
collectively, the Mortgage Loan and the Mezzanine Loans.

 

 “Loss” means, for each taxable year or
other period, an amount equal to the Company’s items of taxable deduction and
loss for such year or other period, determined in accordance with Section 703(a) of
the Code (including all items of loss or deduction required to be stated
separately under Section 703(a)(1) of the Code), with the following
adjustments:

 

(a)         Any expenditures of the Company described in Section 705(a)(2)(B) of
the Code or treated as Section 705(a)(2)(B) expenditures under
Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Loss, will be considered an item of Loss;

 

(b)        Loss resulting from any disposition of any assets of the Company
(including the Property) with respect to which gain or loss is recognized for
federal income tax purposes will be computed by reference to the Book Basis of
such property, notwithstanding that the adjusted tax basis of such property may
differ from its Book Basis;

 

(c)         In lieu of
depreciation, amortization and other cost recovery deductions taken into
account in computing taxable income or loss, there will be taken 

 

6

 

into
account depreciation for the taxable year or other period as determined in
accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g);

 

(d)        Any items of deduction and loss specially allocated pursuant to Section 6.08
shall not be considered in determining Loss; and

 

(e)         Any decrease to Capital Accounts as a result of any adjustment to the
Book Basis of Company assets pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) shall
constitute an item of Loss.

 

“Major Decision” has
the meaning set forth in Section 7.01(d) hereof.

 

“Managing Member” has
the meaning set forth in Section 7.01(c) hereof.

 

“Mandatory Capital
Contribution” has the meaning set forth in Section 4.02 hereof.

 

“Material Notices”
has the meaning set forth in Section 13.03 hereof.

 

“Member” or “Members”
means one or more (as the case may be) of the SLG Member, the GKK Member and
any other Person who, from time to time, is admitted as a member of the Company
in accordance with this Agreement and applicable law, so long as such Person
continues as a member of the Company.

 

“Member Minimum Gain”
means the Company’s “partner nonrecourse debt minimum gain” as defined in
Treasury Regulation Section 1.704-2(i)(2).

 

“Member Nonrecourse
Deductions” means “partner nonrecourse deductions” as defined in Treasury
Regulation Section 1.704-2(i)(2).

 

“Mezz A LLC” has the
meaning set forth in the recital paragraphs of this Agreement.

 

“Mezzanine Loans”
means, collectively, those certain mezzanine loans made to Mezz A LLC, Mezz B
LLC and Mezz C LLC pursuant to those certain Mezzanine Loan Agreements of even
date herewith.

 

“Mezz B LLC” has the
meaning set forth in the recital paragraphs of this Agreement.

 

“Mezz C LLC” has the
meaning set forth in the recital paragraphs of this Agreement.

 

“Mortgage Loan” means
that certain mortgage loan made by Column to Fee LLC in connection with the
acquisition of the Property pursuant to that certain Loan Agreement of even
date herewith.

 

7

 

“Necessary Expenses”
means expenses of the Company and/or the Subsidiaries to fund (a) real
estate taxes, assessments and utility charges, (b) any payment due in
connection with any financing obtained by the Company, (c) any repair
necessary to protect the life, health or safety of any Person or to prevent or
mitigate material damage to the Property, (d) immediately necessary
expenditures, regular periodic maintenance and repairs, and additions or
modifications to the Property to comply with applicable laws or insurance
requirements, (e) legal compliance and reporting requirements, compliance
with any final orders, judgments or other proceedings and all costs and
expenses related thereto, (f) costs and expenses expressly and
specifically set forth in any approved Budget and Operating Plans to the extent
there is not sufficient net cash flow to pay such costs and expenses, and (g) any
other payment, the failure of which to make could in the judgment of the
Managing Member (1) result in the creation and imposition of a lien (or
the expansion in scope or other modification of a pre-existing lien), whether
at law or in equity, against the Company or any of its current or future assets
or rights, (2) result in a default under any contract or agreement to
which the Company is a party or (3) result in a risk of loss of life or
serious bodily injury to any Person.

 

“Net Cash Flow”
means, for any period, the excess of (a) Revenues for such period over (b) Expenses
for such period.

 

“Net Loss” means, for
any period, the excess of items of Loss over items of Profit, if applicable,
for such period determined without regard to any items of Profit or Loss
allocated pursuant to Section 6.02 hereof.

 

“Net Profit” means,
for any period, the excess of items of Profit over items of Loss, if
applicable, for such period determined without regard to any items of Profit or
Loss allocated pursuant to Section 6.02 hereof.

 

“Non-Contributing Member”
has the meaning set forth in Section 4.03(b) hereof.

 

“Nonrecourse Deductions”
has the meaning set forth in Treasury Regulation Section 1.704-2.

 

 “Officer” has the meaning set forth in Section 7.05.

 

“Operating Plan”
means the overall and annual consolidated strategic and comprehensive operating
plan for the Company and the Subsidiaries covering the Company’s and the
Subsidiaries’ anticipated operations, as approved by the Members and in effect
from time to time pursuant to Section 9.06 hereof.

 

“Partially Adjusted
Capital Account” means, with respect to any Member for any taxable year of
the Company, the Capital Account balance of such Member at the beginning of
such year, adjusted for all contributions and distributions during such year
and all special allocations pursuant to Section 6.02 with respect to such
year but before giving effect to any allocations pursuant to Section 6.01
hereof.

 

8

 

“Percentage Interests”
means, with respect to each Member, the percentages set forth below opposite
its name (in each case, subject to adjustment as provided in this Agreement):

 

	
  Member

  	
   

  	
  Percentage Interest

  	
   

  
	
  SLG Member

  	
   

  	
  55.0

  	
  %

  
	
  GKK Member

  	
   

  	
  45.0

  	
  %

  

 

“Person” means any
individual, partnership, corporation, limited liability company, trust or other
entity.

 

 “Priority Member Advance” means, with
respect to any Contributing Member, any advance made by such Contributing
Member and designated or characterized by the Contributing Member as a Priority
Member Advance pursuant to Section 4.03(b), including both the Non-Contributing
Member’s share of such amount advanced by the Contributing Member pursuant to Section 4.03(b) to
fund Necessary Expenses and the Contributing Member’s share of such amount
advanced by the Contributing Member pursuant to Section 4.02 hereof;
provided, that, in no event may the aggregate Priority Member Advances
outstanding at any time exceed $1,000,000.00.

 

“Profit” means, for
each taxable year or other period, an amount equal to the Company’s taxable
income and gain for such year or other period, determined in accordance with Section 703(a) of
the Code (including all items of income and gain required to be stated
separately under Section 703(a)(1) of the Code), with the following
adjustments:

 

(a)           Any
income of the Company that is exempt from federal income tax and not otherwise
taken into account in computing Profit or Loss will be added to taxable income;

 

(b)           Gain
resulting from any disposition of any assets of the Company (including the
Property) with respect to which gain or loss is recognized for federal income
tax purposes will be computed by reference to the Book Basis of such property,
notwithstanding that the adjusted tax basis of such property may differ from
its Book Basis;

 

(c)           Any
items specially allocated pursuant to Section 6.08 shall not be considered
in determining Profit; and

 

(d)           Any
increase to Capital Accounts as a result of any adjustment to the Book Basis of
Company assets pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) shall
constitute an item of Profit.

 

9

 

“Prohibited Transferee”
means any publicly traded REIT or other entity which is Controlled by a
publicly traded REIT whose principal assets are, or whose significant assets
consist of, office buildings located in New York City or the surrounding
Tri-State area of New Jersey and Connecticut.

 

“Property” means the
office condominium units (comprising approximately 1,176,911 net rentable
square feet and related common area interests) designated and described by the
unit numbers listed on Schedule 1.01 attached hereto together with certain
common elements, each located within the “South Tower” at One Madison Avenue,
New York, New York.  For the avoidance of
doubt, the Property does not include any interest in the Clock Tower Property.

 

 “Purchase Agreement” has the meaning
set forth in the recital paragraphs of this Agreement.

 

“Qualified Institutional
Transferee” means: (a) the SLG Member or any of its wholly owned
Affiliates; (b) the GKK Member or any of its wholly owned Affiliates; (c) any
bank, savings and loan association, investment bank, insurance company, trust
company, commercial credit corporation, pension plan, pension fund, pension
advisory firm, mutual fund, money management firm, “qualified institutional
buyer” within the meaning of Rule 144A of the Securities Act of 1933, as
amended, which satisfies the Eligibility Requirements; (d) any entity
controlling, controlled by or under control with any of the foregoing, an
investment fund, limited liability company, limited partnership or general
partnership in or for which a nationally recognized manager of investment funds
in debt or equity interests relating to commercial real estate (or an entity
that is otherwise an Qualified Institutional Transferee) acts as the managing
partner or managing member and at least 50.01% of the equity interests in such
investment vehicle are owned directly or indirectly by entities that are
otherwise Qualified Institutional Transferees; (e) any entity controlling,
controlled by or under common control with any of the transferees described in
the foregoing clauses (a) through (e) of this definition.  For the avoidance of doubt, a Prohibited
Transferee shall not qualify as a Qualified Institutional Transferee for
purposes of this Agreement.

 

“Reserve Accounts”
has the meaning set forth in Section 9.05 hereof.

 

“Residential Component”
shall mean the residential condominium units located within the building known
as 1 Madison Avenue, New York, New York, which are not a part of the Property.

 

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

 

“Revenues” means, for
any period, the sum of the total gross cash revenues received by the Company
during such period, including all receipts of the Company from (a) proceeds
from the sale or disposition of all or any portion of any assets of the 

 

10

 

Company
(including the Property) or the issuance or sale by the Company of any
securities or additional interests in the Company, (b) rent (including
additional rent and percentage rent) paid to the Company, (c) concessions,
(d) expense reimbursements, (e) condemnation or casualty proceeds
related to the condemnation of or casualty loss with regard to all or any portion
of the assets of the Company (including the Property) not used for restoration
(including any and all insurance awards with regard thereto), (f) proceeds
from rent or business interruption insurance, if any, (g) funds made
available to the extent such funds are withdrawn from the Company’s Reserve
Accounts and deposited into the Company’s operating accounts, (h) proceeds
from the financing, refinancing, residential condominium conversion,
monetization or securitization of the Company or any assets of the Company
(including the Property), or any interest therein and (i) other revenues
and receipts realized by the Company, including, without limitation,
distributions and other payments and amounts received directly or indirectly
from the Subsidiaries; provided, however, that Revenues shall not
include any revenue or receipt realized by the Company incident to the
liquidation of the Company.  In
addition, a reference to the “Revenues” of a Subsidiary shall refer to the
total gross cash revenues of such Subsidiary (other than those realized by such
Subsidiary, if any, upon the liquidation of such Subsidiary), without
duplication of any Revenues of the Company or any other Subsidiary.

 

“SLG” means SL Green
Operating Partnership, L.P., a Delaware limited partnership, or its permitted
successors and assigns.

 

“SLG Corp” means SL
Green Realty Corp., a Maryland corporation.

 

 “SLG Member”
has the meaning set forth in the Preamble of this Agreement.

 

“SLG Member Certificate” has the meaning set forth in Section 13.01(b)(ii) hereof.

 

“SLG Member LLC Agreement” has the meaning set forth in Section 13.01(b)(ii) hereof.

 

“Subsidiary” or “Subsidiaries”
means one or all (as the case may be) of Mezz C LLC, Mezz B LLC, Mezz A LLC,
Fee LLC, and any other wholly owned subsidiary(ies) of the Company organized in
accordance with the terms of this Agreement to directly or indirectly hold the
Property.

 

“Subsidiary Operating
Agreement” has the meaning set forth in Section 2.05(b) hereof.

 

 “Target Account” means, with respect to
any Member for any taxable year of the Company, the excess (which may be either
a positive balance or a negative balance) of (a) an amount equal to the
hypothetical distribution of any such Member would receive if all assets of the
Company, including cash, were sold for cash equal to their Book Basis 

 

11

 

(taking
into account any adjustments to Book Basis for such year), all liabilities
(including prepayment penalties, yield maintenance fees and similar costs) of
the Company were then satisfied according to their terms (limited, with respect
to each nonrecourse liability, to the Book Basis of the assets securing such
liability) and all remaining proceeds from such sale were distributed pursuant
to Section 6.03 over (b) the sum of (i) the amount if any which
such Member is unconditionally obligated to contribute to the capital of the
Company of Company and (ii) such Member’s Share of Company Minimum Gain
and Member Minimum Gain as determined pursuant to Treasury Regulation Section 1.704-2
immediately prior to such sale.

 

“Target Interest” has
the meaning set forth in Section 10.02(d) hereof.

 

“Tax Matters Partner”
has the meaning set forth in Section 6.07 hereof.

 

“Transfer” has the
meaning set forth in Section 10.01 hereof.

 

“Transfer Election”
has the meaning set forth in Section 10.02(d) hereof.

 

“Transfer Response Period”
has the meaning set forth in Section 10.02(d) hereof.

 

“Transfer ROFR Notice”
has the meaning set forth in Section 10.02(d) hereof.

 

“Treasury Regulation”
or “Regulation” means, with respect to any referenced provision, such
provision of the regulations of the United States Department of the Treasury or
any successor provision.

 

“U.S. Government
Blacklists” shall mean, (i) the two (2) lists maintained by the
United States Department of Commerce (Denied Persons and Entities; the Denied
Persons), (ii) the list maintained by the United States Department of
Treasury (Specially Designated Nationals and Blocked Persons), and (iii) the
list by the United States Department of State (Terrorist Organizations and
Debarred Parties).

 

1.02         Other Defined Terms.  As used in this Agreement,
unless otherwise specified, (a) all references to Sections, Articles or
Exhibits are to Sections, Articles or Exhibits of this Agreement, (b) each
accounting term has the meaning assigned to it in accordance with the United
States GAAP, (c) all Exhibits, Schedules, Addenda and other attachments to
this Agreement are specifically incorporated into and made a part of this
Agreement by any reference thereto in this Agreement, (d) the terms “include”
and “including” shall be construed as if followed by the phrase “without
limitation”, and (e) all terms used in this Agreement which are not
defined in this Article I shall have the meaning set forth elsewhere in
this Agreement.

 

12

 

II.  ORGANIZATION

 

2.01         Formation and Continuation.  (a) From and after the
date of this Agreement, the Members hereby agree to continue the Company as a
limited liability company under and pursuant to the Delaware Act, upon and
subject to the terms and conditions set forth in this Agreement.  The Percentage Interest of each Member shall
be personal property for all purposes. 
The Managing Member is hereby authorized to file and record any
amendments to the Certificate of Formation and such other documents as may be
approved or permitted by this Agreement or required or appropriate under the
Delaware Act or the laws of any other jurisdiction in which the Company may
conduct business or own property.

 

(b)        Ms. Racquel
Small, is hereby designated as an “authorized person” within the meaning of the
Delaware Act, and has executed, delivered and filed the certificate of
formation of the Company (the “Certificate of Formation”) with the
Secretary of State of the State of Delaware. 
Upon the filing of the Certificate of Formation with the Secretary of
State of the State of Delaware, her powers as an “authorized person” ceased,
and the Managing Member thereupon became the designated “authorized person” and
shall continue as the designated “authorized person” within the meaning of the
Delaware Act.  The Managing Member shall
execute, deliver and file any other certificates (and any amendments and/or
restatements thereof) necessary for the Company to qualify to do business in
New York and in any other jurisdiction in which the Company may wish to conduct
business.

 

2.02         Name and Principal Place of Business.

 

(a)         The name of the Company shall be 1 Madison Office Holdings LLC.  The Managing Member may change the name of
the Company from time to time and may adopt one or more fictitious names for
use by the Company.  All business of the
Company shall be conducted under such name, and title to all assets of the
Company shall be held in such name.

 

(b)        The principal place of business and office of the Company shall be
initially located at the offices of the Managing Member, at 420 Lexington
Avenue, New York, New York 10170.  The
Managing Member may from time to time change such principal office and place of
business or may change or establish such additional offices or places of
business of the Company as it may deem necessary or appropriate for the
operation of the Company’s business.

 

2.03         Term.  The
term of the Company commenced on the date of the filing of the Certificate of
Formation pursuant to the Delaware Act and shall continue in full force and
effect until the dissolution and termination of the Company pursuant to Article 12,
or unless sooner terminated or further extended by the Managing Member,
pursuant to the provisions of this Agreement.

 

2.04         Registered Agent, Registered Office and
Foreign Qualification.  The name of the Company’s
registered agent for service of process shall be National Registered 

 

13

 

Agents, Inc.
(“NRAI”), and the address of the Company’s registered agent and the
address of the Company’s registered office in the State of Delaware shall be
East Loockerman Street, Suite 1B, Dover, Delaware 19901.  Effective May 1, 2005, NRAI’s new
address shall be 160 Greentree Drive, Suite 101, Dover, Delaware
19904.  Such agent and such office may be
changed from time to time by the Managing Member Any one of the Members, or any
other Person authorized by the Managing Member, is hereby authorized, for the
purpose of authorizing or qualifying the Company to do business in any state,
territory or dependency of the United States in which it is necessary or
expedient for the Company to transact business, to do any and all acts and
things necessary to obtain from such state, territory or dependency any such
authorization or qualification.

 

2.05         Purpose.

 

(a)           The purpose of the Company shall be:

 

(i)            To acquire, own, hold, lease, operate,
manage, mortgage, encumber, finance, refinance, sell, redevelop, rehabilitate,
improve and otherwise deal with and dispose of, directly or indirectly through
one or more direct or indirect subsidiaries, the Property and the Subsidiaries;

 

(ii)           To conduct all activities reasonably necessary or desirable to
accomplish the foregoing purposes and to do anything necessary or incidental to
any of the foregoing, which in each case, is not a breach of this Agreement;
and

 

(iii)          To engage in any other business or activity approved by the Members
(and the Members acknowledge and agree that each of the foregoing matters in
clauses (i) - (iii) is part of the ordinary business of the Company).

 

(b)        The Company shall, directly or indirectly (as the case may be) own the
Subsidiaries, which, in turn, shall, directly or indirectly (as the case may
be) own the Property.  The organizational
documents of the Subsidiaries (individually, a “Subsidiary Operating
Agreement” and collectively, the “Subsidiary Operating Agreements”)
shall (i) to the extent required by any third-party lender and approved by
the Members, be structured to include any bankruptcy remote-type provisions as
are necessary or required by such third-party lender and (ii) contain such
provisions as will together with the provisions of this Agreement have substantially
the same effect as would be the case if the Property were held or all such
business were conducted by the Company pursuant to the terms of this Agreement,
unless otherwise approved by the Members. 
Unless otherwise determined by the Members, the Managing Member of the
Company shall perform the same or substantially identical services for the
Subsidiaries as the Managing Member performs for the Company.  The Managing Member agrees to perform such
duties, and in such circumstances and with regard to such duties, the Managing
Member shall be subject to the same standards of conduct and shall have the
same rights and obligations with regard to such duties performed or to be
performed on 

 

14

 

behalf
of a Subsidiary as are set forth in this Agreement with regard to the same or
substantially identical services to be performed for or on behalf of the
Company (including, without limitation, the indemnification and exculpation
rights and obligations of the Managing Member and the removal or termination
provisions, as set forth in this Agreement).

 

(c)         The Company shall not engage in any other business or activity without
the approval of the Members.

 

2.06         Separateness.  The Company and the Subsidiaries shall, at
all times:

 

(a)         maintain
books and records separate from any other Person, and, without limiting the
generality of the foregoing, maintain their own bank accounts in their own
names;

 

(b)        hold
themselves out to the public and all other Persons as legal entities separate
from any Member and other Person;

 

(c)         file
their own tax returns as may be required under applicable law to the extent (1) not
part of a consolidated group filing a consolidated return or (2) not
treated as a division for tax purposes of another taxpayer, and pay any taxes
so required to be paid under applicable law;

 

(d)        not
commingle assets with those of any other Person, including, without limitation,
any of their Members;

 

(e)         conduct
their respective businesses in their respective names and strictly comply with
all organizational formalities to maintain their separate existence;

 

(f)         maintain
and periodically prepare separate financial statements and not consolidate
their financial statements with any other Person for any purpose; provided,
however, that the Company’s assets may be included in a consolidated
financial statement with its Affiliates provided that appropriate notation
shall be made in such consolidated financial statements to indicate the
separateness of the Company and its Affiliates and to indicate that the Company’s
assets and credit are not available to satisfy the debts and other obligations
of its Affiliates.

 

(g)        pay
their own liabilities out of their own funds and not hold out the credit or
assets of any other Person as being able to satisfy the obligations of the
Company or the Subsidiaries;

 

(h)        observe
all formalities required by the Delaware Act and their organizational documents
and operating agreements;

 

(i)          maintain
an “arms-length relationship” with their Affiliates;

 

15

 

(j)          pay
the salaries of their own employees, if any;

 

(k)         not
hold out their credit or assets as being available to satisfy the obligations
of others;

 

(l)          to
the extent that they share office space with their Members or Affiliates and
pay toward the overhead cost, allocate fairly and reasonably, based on fair
market value, any overhead and expense for shared office space;

 

(m)        use
separate invoices, bank accounts and checks;

 

(n)        not
incur any indebtedness, secured or unsecured, direct or indirect, absolute or
contingent, with any Affiliate, and not pledge any of their assets for the
benefit of any Affiliate;

 

(o)        correct
any known misunderstanding regarding their separate identity;

 

(p)        not
make any loans or advances to any third party other than in the ordinary course
and not acquire the securities of any Member;

 

(q)        maintain
their assets in such a manner that it will not be costly or difficult to
segregate, ascertain or identify their individual asset or assets, as the case
may be, from those of any Affiliate or any other Person;

 

(r)         not
engage in any business or own any assets other than as provided in Section 2.05;

 

(s)         direct
any agent acting on their behalf to hold itself out as acting on their behalf;
and

 

(t)         otherwise
hold themselves out as separate legal entities.

 

The provisions of this Section 2.06 shall not be
revised or amended until the Acquisition Financing shall have been repaid or
except as required by any lender thereof.

 

III.
 MEMBERS

 

3.01         Admission of Members.  The SLG Member and the GKK
Member are the initial members of the Company. 
Except as expressly permitted by this Agreement, no other Person shall
be admitted as a member of the Company, and no additional Interests shall be
issued, without the approval of the Members.

 

16

 

3.02         Limitation on Liability.

 

(a)           Except as otherwise expressly provided in the Delaware Act, the debts,
obligations and liabilities of the Company or any Subsidiary, whether arising
in contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company or such Subsidiary, and no Member shall be obligated
personally for any such debt, obligation or liability of the Company, solely by
reason of being a member of the Company. 
Except as otherwise expressly provided in the Delaware Act or as
provided in Section 11.01(b) hereof, but subject to the provisions of
subparagraph (b) of this Section 3.02, the liability of each Member shall
be limited to the amount of Capital Contributions required to be made by such
Member in accordance with the provisions of this Agreement, but only when and
to the extent the same shall become due and payable pursuant to the provisions
of this Agreement.  Further, no general
or limited partner of any Member, Managing Member, shareholder, member or other
holder of any equity interest of any Member, Managing Member or any officer,
director or employee of any of the foregoing or any of their Affiliates shall
be obligated personally for any debt, obligation or other liability of the
Company or any Subsidiary solely by reason of their being a general or limited
partner of any Member, Managing Member, shareholder or member or other holder
of any equity interest of any Member, Managing Member or officer, director or
employee of any of the foregoing or any of their Affiliates.  Further, failure of the Company or any
Subsidiary to observe any corporate or other formalities or requirements
relating to the exercise of its powers or the management of its business or
affairs under either this Agreement, any Subsidiary Operating Agreement or the
Delaware Act shall not be grounds for any Member, Managing Member, general or
limited partner of any Member, shareholder or member or other holder of any
equity interest of any Member, Managing Member or any officer, director or
employee of any of the foregoing or any of their Affiliates to be held liable
or obligated for any debt, obligation or other liability of the Company or any
Subsidiary.

 

(b)           Notwithstanding any other provision of this
Agreement to the contrary (including the provisions of Section 11.01(b) hereof),
(i) each Member’s liability under this Agreement is explicitly limited to
the assets of such Member, and (ii) neither the Company nor any Member
shall have any recourse against any assets of an Affiliate of another Member or
any past, present or future officers, agents, shareholders, incorporators,
directors, principals (direct or indirect), affiliates, partners, members or
representatives of another Member or any of the assets or property of any of
the foregoing, for the payment or collection of any amount, judgment, judicial
process, arbitration award, fees or costs or for any other obligation or claim
arising out of or based upon this Agreement.

 

(c)           In
accordance with Section 18-1101
of the Delaware Act, no Member, by virtue of its status or actions as a Member
or as Managing Member, shall have any fiduciary duty to any other Member or to
the Company, and any such fiduciary duty that would otherwise exist under the
Delaware Act or applicable law is hereby disclaimed and eliminated to the
fullest extent permitted under the Delaware Act and applicable law.

 

17

 

(d)           The provisions of this Section 3.02 shall survive the termination
or expiration of this Agreement.

 

3.03         Third-Party Debt Liability.  Subject to the provisions of Section 4.06,
the parties intend that no Member, or any of its Affiliates, shall have any
liability under or in connection with any third-party debt, including liability
with regard to any environmental matters, recourse carve-outs, fraud,
intentional misconduct, theft or other commonly called “bad acts” or with
regard to any other matter, unless otherwise approved by the Members or
pursuant to an agreement entered into by such Member.

 

3.04         GKK
Special Decision-Making Rules.  Any provision to the contrary in this
Agreement notwithstanding, any decision to be taken or approval to be granted
by GKK in connection with the Company (or otherwise in connection with the
matters contemplated by this Agreement) shall, for all purposes under this
Agreement, be deemed effective only if approved by either (i) a
majority of the GKK Corp directors who are deemed independent from SLG Corp or (ii) a
subcommittee of directors designated by such independent directors, in either
case after such consultations among themselves and with any members of the
credit committee of the GKK as such independent directors deem necessary.  For the purposes of this Section 3.04, a
GKK Corp director will be deemed independent from SLG if such director would
not be considered an “interested director” under Delaware law or Section 4350
of NASD’s marketplace listing rules in connection with a transaction
between GKK Corp and SLG Corp.

 

IV.  CAPITAL

 

4.01         Initial Capital Contributions.

 

(a)           Due
Diligence Costs. The SLG Member and its Affiliates have heretofore
incurred, and may hereafter incur, third-party out-of-pocket costs and expenses
in connection with their due diligence analyses and other evaluations of the
Property and the potential acquisition of a separate property located at 200
Park Avenue in New York City, New York (the “Potential Property”),
including, without limitation, engineering and feasibility costs and expenses
and costs and expenses related to or associated with analyzing the Property and
the Potential Property (collectively, the “Contract and Due Diligence Costs”;
such costs shall not include cost allocable to the Residential Component or
legal fees and disbursements incurred in connection with the negotiation of
this Agreement, the schedules and exhibits hereto and any other document
entered into in connection with the transactions contemplated hereby) as set
forth on Schedule 4.01(a). 
The Contract and Due Diligence Costs shall be reduced by the amount of
any reimbursed costs and expenses received from SITQ by the SLG member or its
Affiliates.  On the date of execution of
this Agreement, each Member hereof shall contribute its pro rata
share of the Contract and Due Diligence Costs, based on its respective
Percentage Interest.  If the SLG Member
and its Affiliates have, in the aggregate, contributed more than the SLG Member’s
Percentage Interest of the Contract and Due Diligence Costs, then the Company
shall, upon the execution of this 

 

18

 

Agreement, refund to the
SLG Member an amount equal to the excess of: (i) the amount the SLG Member
and its Affiliates, in the aggregate, contributed as the Contract and Due
Diligence Cost, above (ii) the product of (A) the
Contract and Due Diligence Costs multiplied by (B) the SLG Member’s
Percentage Interest.

 

(b)           Closing
Date Contributions.  Immediately
following the execution of this Agreement, the Members shall contribute in cash
to the capital of the Company their pro rata share
(based upon their respective Percentage Interests) of any amount by which the
uses of funds set forth on Schedule 4.01(b) attached hereto exceeds
the net proceeds of the Acquisition Financing funded prior to or concurrent
with such contributions.  It is expected
that, on the Closing Date, the Members shall make the following approximate
cash contributions to the capital of the Company (taking into account deposits
made under the Purchase Agreement and Contract and Due Diligence Costs):

 

	
  SLG Member 

  	
   

  	
  $

  	
  76,500,000 

  	
   

  
	
  GKK Member

  	
   

  	
  $

  	
  62,600,000

  	
   

  

 

(c)           Other
Contributions. In addition to the cash contributions described in Sections
4.01(a),(b) and (c), on the Closing Date, the SLG Member shall (i) acquire
from 1 Madison Venture LLC and Column and contribute to the Company (for
further contribution to the Fee LLC) its rights under the Purchase Agreement to
the extent allocable to the Property (inclusive of all deposits made thereunder
allocable to the Property) and (ii) acquire from SLG and contribute to the
Company (for further contribution to the Fee LLC) the Financing Commitment
(inclusive of all deposits’ made thereunder) and all related rate-lock and
interest rate hedging commitments entered into in connection therewith.

 

4.02         Additional
Capital Contributions.  Subject to the provisions of Section 7.01(a) of
this Agreement, in the event that at any time or from time to time additional
funds are required by the Company or any Subsidiary as determined by the
Managing Member, either (a) to fund Necessary Expenses in an amount in
excess of Initial Capital Contributions, reserves and available cash flow (“Mandatory
Capital Contributions”) or (b) to fund any other expense, in an amount
in excess of Initial Capital Contributions, reserves and available cash flow (“Agreed
Capital Contributions”), then the Managing Member shall request that the
Members make such Additional Capital Contribution to the Company on a pro rata basis in accordance with the Members’ respective
Percentage Interest.  The Members shall
have five (5) Business Days from the request by the Managing Member to
contribute their pro rata share of Mandatory
Capital Contributions (based on their relative Percentage Interest).  To the extent approved by the Members, the
Members shall have fifteen (15) Business Days from the request by the Managing
Member to contribute their pro rata share
of Agreed Capital Contributions based on their relative Percentage Interests.  For the avoidance of doubt, Members do not
have the right 

 

19

 

to approve Mandatory
Capital Contributions but do have the right to approve Agreed Capital
Contributions.

 

4.03         Capital Contributions and Remedies.

 

(a)           All Capital Contributions or advances required by or provided for in
this Article IV shall be made by wire transfer of funds to the Company
account designated by the Managing Member, and any reimbursements or
distributions to any Member required by or provided in this Agreement shall be
made by wire transfer of funds to such account as designated by such Member or
other means mutually acceptable or then commonly used for the receipt and
distribution of proceeds in major commercial transactions.

 

(b)           If either Member (the “Non-Contributing
Member”) fails to timely make any Capital Contribution (or any portion
thereof) required pursuant to Sections 4.01 or 4.02 hereof, and the other
Member (the “Contributing Member”) has made its pro rata
share of such Capital Contribution, then subject to the provisions of Sections
4.03(e) hereof, the Contributing Member may cause any one (but only one)
of the following actions to be taken by delivery of notice to such effect to
the Company and the Non-Contributing Member:

 

(i)            The Contributing Member may advance the
Non-Contributing Member’s pro rata share
of Mandatory Capital Contribution up to an amount of $1,000,000 outstanding at
any time, and the Contributing Member may designate all or any portion of such
Mandatory Capital Contributions made by the Contributing Member in respect of
the related request therefor (including both the Contributing Member’s and the
Non-Contributing Member’s pro rata
portion thereof) as a “Priority Member Advance” (provided, however, such
Priority Member Advance will be considered and treated as Capital Contributions
for federal income tax purposes); or

 

(ii)           The Contributing Member may contribute the Non-Contributing Member’s pro rata share of such requested or required Capital Contributions
and elect to decrease the Percentage Interest of the Non-Contributing Member
(but not below zero) such that, immediately after such decrease, the Percentage
Interest of the Non-Contributing Member shall be a percentage equal to the
Percentage Interest immediately prior to such decrease, less a percentage
expressed as a fraction, the numerator of which is the amount of the Capital
Contribution that such Member failed to contribute, and the denominator of
which is the aggregate amount of the Capital Contributions (other than those
characterized as Priority Member Advances) made by all of the Members prior to
or as of such default (including the applicable Additional Capital
Contributions), and concomitantly, the Percentage Interest of the Contributing
Member shall be increased by the same amount. 
An example of the operation of such calculation is set forth on Exhibit F
attached hereto; or

 

20

 

(iii)          The Contributing Member may withdraw its share of such requested or
required Capital Contribution.

 

(c)           [Intentionally omitted.]

 

(d)           [Intentionally omitted.]

 

(e)           Notwithstanding any other provision of this Agreement to the contrary,
in the event any Member fails to timely make any Capital Contribution (or any
portion thereof) requested or required pursuant to Sections 4.01 or 4.02 hereof
and the resulting exercise of any remedy in this Agreement results in the
immediate or future imposition of a transfer tax on the Company (or any Member
thereof) or any Subsidiary, the Member that failed to make such Capital
Contribution under Sections 4.01 or 4.02 of this Agreement, shall be liable for
and shall be obligated to directly pay any such transfer tax (and such payment
shall not be deemed to be a Capital Contribution and shall have no effect upon
the allocation provisions or any other equity provisions of this Agreement).

 

(f)            Each
Member acknowledges and agrees that the other Member would not be entering into
this Agreement were it not for (i) the Members agreeing to make the
Capital Contributions provided for in Sections 4.01 and 4.02 of this Agreement,
and (ii) the remedy provisions provided for herein.  Each Member acknowledges and agrees that in
the event any Member fails to make its Capital Contributions pursuant to this
Agreement, the other Member will suffer substantial damages and the remedy
provisions set forth above are fair, just and equitable in all respects and
administratively superior to any other method for determining such
damages.  Each Member hereby agrees that
in the event its Interest in the Company is reduced as described above, it
shall execute and deliver such conveyances, agreements, instruments or other
documents which may be reasonably necessary in the judgment of the other Member
to confirm and render fully effective the remedy provisions set forth above,
including, but not limited to, an assignment of a portion of its Interest in
the Company and any amendments to this Agreement or to the Certificate of
Formation.

 

4.04         Capital Accounts.  A separate Capital Account will
be maintained for each Member in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv).  Consistent therewith, the Capital Account of
each Member will be determined and adjusted as follows:

 

(a)           Each Member’s Capital Account will be credited with:

 

(i)            Any contributions of cash made by such Member
to the capital of the Company and any advances of cash made by such Member as
Priority Member Advances plus the Book Basis of any property contributed by
such Member to the capital of the Company (net of any liabilities to which such
property is subject or which are assumed by the Company);

 

21

 

(ii)           The Member’s distributive share of Net Profit and items thereof; and

 

(iii)          Any other increases required by Treasury Regulation Section 1.704-1(b)(2)(iv).

 

(b)           Each Member’s Capital Account will be debited with:

 

(i)            Any distributions of cash made from the
Company to such Member (including all amounts paid or distributed pursuant to
the provisions of Section 6.03 hereof) plus the fair market value of any
property distributed in kind to such Member (net of any liabilities to which
such property is subject or which are assumed by such Member);

 

(ii)           The Member’s distributive share of Net Loss and items thereof; and

 

(iii)          Any other decreases required by Treasury Regulation Section 1.704-1(b)(2)(iv).

 

The
provisions of this Section 4.04 relating to the maintenance of Capital Accounts
have been included in this Agreement to comply with Section 704(b) of
the Code and the Treasury Regulations promulgated thereunder and will be
interpreted and applied in a manner consistent with those provisions.  In the event the Tax Matters Partner shall
determine that it is prudent to modify the manner in which the Capital Accounts
or any debts or credits thereto (including, without limitation, debits or
credits relating to liabilities which are secured by contributed or distributed
property or which are assumed by the Company or any Members) are computed in
order to comply with such Regulations, the Managing Member may make such
modification, provided that it is not likely to have a material effect on the
amounts distributed to any Member pursuant to Section 6.04 hereof upon the
dissolution of the Company.

 

4.05         No Further Capital Contributions.  Except as expressly provided in
this Agreement or with the prior written consent of all the Members, no Member
shall be required or entitled to contribute any other or further capital to the
Company, nor shall any Member be required or entitled to loan any funds to the
Company (provided, however, that for these purposes, amounts
properly incurred by a Member which are reimbursable by the Company pursuant to
and in accordance with the terms of this Agreement shall not be deemed
loans).  No Member will have any
obligation to restore any negative or deficit balance in its Capital Account
upon liquidation or dissolution of the Company (and for purposes of this Section 4.05,
Capital Account shall be deemed to also include the capital account of any
Member for financial or book purposes or as set forth in the Delaware Act or
under common law).  Notwithstanding any
other provision of this Agreement to the contrary, nothing contained herein
will, or is intended or will be deemed to benefit any creditor of the Company
or any Subsidiary or any creditor of any 

 

22

 

Member,
and no such creditor shall have any rights, interests or claims hereunder, be
entitled to any benefits or be entitled to require the Company or any Member to
demand, solicit or accept any loan, advance or Additional Capital Contribution
for or to the Company or any Subsidiary or to enforce any rights which the
Company, any Subsidiary or any Member may have against any other Member or
which any Member may have against the Company or Subsidiary, pursuant to this
Agreement or otherwise.

 

4.06         Financing.  To the extent so required in any third-party
financing obtained by the Company or a Subsidiary, the Managing Member shall
endeavor to obtain the agreement of such lender in respect of such financing
such that each Member shall have the obligation to enter into and deliver (or
cause to be entered into and delivered by creditworthy affiliates of such
Member acceptable to such lender): (i) customary
exceptions-to-non-recourse guarantees relating to, and only to, the acts or
omissions of such Member and its Affiliates; (ii) payment guarantees; and (iii) other
customary guarantees so required by such lender. The Members shall enter into a
Reimbursement and Indemnity Agreement substantially in the form of Exhibit E
hereto in connection with any such third-party financing.

 

4.07         Book Basis Adjustments.  The Book Basis of all assets will be adjusted
to equal their respective fair market values upon the events set forth in
Treasury Regulation § 1.704-1(b)(2)(iv)(f)(5)(i) and (ii).

 

V.  INTERESTS IN THE COMPANY

 

5.01         Percentage Interests.  With regard to each Member separately, the
initial Percentage Interest of each Member will be as set forth in Section 1.01
hereof (in each case, subject to adjustment as provided in this
Agreement).  The Percentage Interests of
the Members may be adjusted only as set forth in this Agreement.

 

5.02         Return of Capital.  No Member shall be liable for
the return of the Capital Contributions (or any portion thereof) of any other
Member, it being expressly understood and agreed that any such return shall be
made solely from the assets of the Company. 
No Member shall be entitled to withdraw or receive a return of any part
of its Capital Contributions or Capital Account, to receive interest on its
Capital Contributions or Capital Account or to receive any distributions from
the Company, except as expressly provided for in this Agreement or under
applicable law (and for purposes of this Section 5.02, Capital Account
shall be deemed to also include the capital account of any Member for financial
or book purposes or as set forth in the Delaware Act or under common law).

 

5.03         Ownership.  All assets of the Company shall
be owned by the Company, subject to the terms and provisions of this Agreement.

 

23

 

5.04         Waiver of Partition; Nature of Interests in
the Company.  Except as otherwise expressly
provided for in this Agreement, each of the Members hereby irrevocably waives
any right or power that such Member might have:

 

(a)           To cause the Company, the Subsidiaries or the assets of the Company or
the Subsidiaries to be partitioned;

 

(b)           To cause the appointment of a receiver for all or any portion of the
assets of the Company or any Subsidiary;

 

(c)           To compel any sale of all or any portion of the assets of the Company
or any Subsidiary pursuant to any applicable law; or

 

(d)           To file a complaint or to institute any proceeding at law or in equity,
to cause the termination, dissolution or liquidation of the Company or any
Subsidiary.

 

No
Member shall have any interest in any specific assets of the Company (including
the Property).

 

VI.  ALLOCATIONS AND
DISTRIBUTIONS

 

6.01         Allocations.  For each Company taxable year or portion
thereof, Net Profit and Net Loss shall be allocated (after all allocations
pursuant to Section 6.02 have been made) among the Members so as to make
the Partially Adjusted Capital Accounts of the Members equal, as nearly as
possible, their respective Target Accounts.

 

6.02         Special Allocations and Compliance with Section 704(b).  The following special
allocations shall, except as otherwise provided, be made in the following
order:

 

(a)           Notwithstanding any other provision of this Article VI, if there
is a net decrease in Company Minimum Gain or in any Member Minimum Gain during
any taxable year of the Company, prior to any other allocation pursuant hereto,
such Member shall be specially allocated items of Profit for such year (and, if
necessary, subsequent years) in an amount and manner required by Treasury
Regulation Sections 1.704-2(f) or 1.704-2(i)(4).  The items to be so allocated shall be determined
in accordance with Treasury Regulation Section 1.704-2.

 

(b)           Items of Profit shall be allocated to each Member receiving
distributions pursuant to Section 6.03(a) hereof until the aggregate
items of Profit allocated to such Member under this Section 6.02(b) is
equal to the aggregate amount theretofore distributed (and immediately
available for distribution) pursuant to such clause (other than amounts
constituting a return of capital with respect to Priority Member Advances).

 

24

 

(c)           Any Member who unexpectedly receives an adjustment, allocation or
distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6) which causes or increases a negative balance in his or its
adjusted Capital Account shall be allocated items of Profit sufficient to
eliminate such increase or negative balance caused thereby, as quickly as
possible, to the extent required by such Treasury Regulation.

 

(d)           Nonrecourse Deductions for any taxable year of the Company or other
period shall be allocated (as nearly as possible) under Treasury Regulation Section 1.704-2
to the Members, pro rata in proportion to their
respective Percentage Interests.

 

(e)           Any Member Nonrecourse Deductions for any taxable year of the Company
or other period shall be allocated to the Member that made, or guaranteed or is
otherwise liable with respect to the loan to which such Member Nonrecourse
Deductions are attributable in accordance with principles under Treasury
Regulation Section 1.704-2(i).

 

(f)            No allocation of Loss or Net Loss shall be
made to any Member if, as a result of such allocation, such Member would have
an Adjusted Capital Account Deficit.  Any
such disallowed allocation shall be made to the Members entitled to receive such
allocation under Treasury Regulation Section 1.704 in proportion to their
respective Percentage Interests.

 

6.03         Distributions.  Except as provided in Section 6.04, and
subject to Sections 6.05, 6.10 and 9.05 hereof, the Company shall, as soon as
reasonably practical (but no less often than quarterly), make distributions or
payments of Net Cash Flow (to the extent and if available) to the Members in
the following manner and order of priority:

 

(a)           First, an amount of such Net Cash Flow shall be paid (in the order and
priority set forth below), to the Members until each of the Members has
received payments of Net Cash Flow, pursuant to this Section 6.03(a) hereof,
in an aggregate amount (for the current period and all previous periods) equal
to the sum of (i) the aggregate amount of its Priority Member Advances
made pursuant to this Agreement and (ii) a cumulative return thereon
compounded quarterly, at a rate equal to six percent (6%) per annum over the
Contributing Member’s cost of funds calculated based on such Member’s
then-existing credit lines (with payments made pursuant to this Section 6.03(b) deemed
to be made first with respect to the interest described in clause (ii) hereof
and then with respect to the aggregate amount of such aggregate Priority Member
Advances described in clause (i) hereof); and

 

(b)           Thereafter, any remaining Net Cash Flow shall be distributed to the
Members pro rata in accordance with and in
proportion to their respective Percentage Interests, as adjusted pursuant to
the provisions of Section 4.03 of this Agreement.

 

25

 

6.04         Distributions in Liquidation.  Upon the dissolution and
winding-up of the Company, the proceeds of sale and other assets of the Company
distributable to the Members under Section 12.02(c)(iii) shall be
distributed, not later than the latest time specified for such distributions
pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(2) to
the Members in accordance with their respective positive Capital Account
balances (after adjustment to reflect the allocations pursuant to this Article VI).  With the approval of the Managing Member, a pro rata portion of the distributions that would otherwise
be made to the Members under the preceding sentence may be distributed to a
trust established (for the benefit of the Members) for the purposes of
liquidating Company and Subsidiary assets, collecting amounts owed to the
Company or any Subsidiary and paying any contingent or unforeseen liabilities
or obligations of the Company and the Subsidiaries arising out of or in
connection with the Company or the Subsidiaries.  The assets of any trust established under
this Section 6.04 will be distributed to the Members from time to time by
the trustee of the trust upon approval of the Managing Member in the same
proportions as the amount distributed to the trust by the Company would
otherwise have been distributed to the Members under this Agreement.

 

6.05         [Intentionally omitted.]

 

6.06         Tax Matters.  The Members intend for the Company
to be treated as a partnership under the Code. 
The Managing Member shall make all applicable elections, determinations
and other decisions under the Code, including, without limitation, the
deductibility of a particular item of expense and the positions to be taken on
the Company’s tax return, and shall approve the settlement or compromise of all
audit matters raised by the Internal Revenue Service affecting the Members
generally.  The Members shall each take
reporting positions on their respective federal, state and local income tax
returns consistent with the positions determined for the Company by the
Managing Member.  The Managing Member
shall cause all federal, state and local income and other tax returns to be
timely filed by the Company.

 

6.07         Tax Matters Partner.  The SLG Member shall be the tax
matters partner within the meaning of Section 6231(a)(7) of the Code
(“Tax Matters Partner”) and, subject to Section 6.06, shall
exercise all rights, obligations and duties of a tax matters partner under the
Code.  The Managing Member may in its
discretion designate any other Member as a substitute or alternative tax
matters partner by written notice thereof to all Members.

 

6.08         Section 704(c).  In accordance with Section 704(c) of
the Code and the applicable Treasury Regulations thereunder, income, gain,
loss, deduction and tax depreciation with respect to any property contributed
to the capital of the Company, or with respect to any property which has a Book
Basis different than its adjusted tax basis, shall, solely for federal income
tax purposes, be allocated among the Members so as to take into account any
variation between the adjusted tax basis of such property to the 

 

26

 

Company and the Book
Basis of such property.  The Company
shall use the “traditional method” without curative allocations.

 

6.09         REIT
Status.  The Members agree to manage
the Company (and cause the Company to manage any other entity in which the
Company owns an interest) in a manner which enables each Member to qualify as a
REIT and which complies with the income, asset and operating requirements of
the Code which are applicable to a REIT. 
In connection therewith, the Members and the Managers shall act in a
manner consistent with that required by applicable law to effect such
compliance.

 

VII.  MANAGEMENT

 

7.01         Management.

 

(a)           Except as otherwise expressly provided in this Agreement or any
Subsidiary Operating Agreement, the business and affairs of the Company
and, indirectly, the Subsidiaries, shall be controlled and managed by the
Managing Member.  The Managing Member
shall, in all cases, act in accordance with customary industry standards and in
accordance with the then-applicable Budget and Operating Plan.  The Managing Member shall regularly consult
with the Members in exercising its authority under this Agreement.

 

(b)           Without limiting the
generality of the foregoing Section 7.01(a), and except as otherwise
expressly provided in this Agreement or any Subsidiary Operating Agreement, the
Managing Member, at the Company’s cost: (i) shall (A) establish the
policies and operating procedures of the Company and the Subsidiaries, (B) implement
all Major Decisions, (C) make decisions (other than Major Decisions and
such other decisions as are reserved to the Members hereunder) as to all
matters which the Company or any Subsidiary has authority to undertake, (D) make
expenditures as are required to implement the then-applicable Budget and
Operating Plan, and (E) make expenditures attributable to Necessary
Expenses; (ii) may delegate such of its powers, duties, responsibilities
and management functions, as it may from time to time determine, to any
officer, employee or agent of any Member, the Company or any Subsidiary; (iii) may,
on behalf of the Company or any Subsidiary, employ, engage or retain any Person
to act as property or asset manager, leasing agent, developer, broker,
accountant, attorney, engineer or in such other capacities as the Managing
Member may determine is necessary or desirable in connection with the Company’s
or any Subsidiary’s business, and the Managing Member shall be entitled to rely
in good faith upon the recommendations, reports and advice given to it by any
such Person in the course of such Person’s professional engagement; (iv) may
perform, or cause to be performed, all of the Company’s or any Subsidiary’s
obligations under any agreement to which the Company or any Subsidiary is a
party; (v) may enter into contracts on behalf of the Company or any
Subsidiary and make expenditures as are required to operate and manage the
Company, the Subsidiaries and the Property; and (vi) may perform any other
act which is necessary or desirable to carry out any of the purposes of the 

 

27

 

Company or any
Subsidiary.  All decisions made, and actions taken, by the Managing Member in
accordance with the foregoing Section 7.01(a) and this Section 7.01(b) shall
be binding on the Company, the Subsidiaries and all Members, as if such person or
persons had personally made such decision or taken such action.

 

(c)           The
Members hereby designate the SLG Member to act as the Managing Member of the
Company (the “Managing Member”). 
The Managing Member shall be entitled to receive reimbursement for its
out-of-pocket expenses attributable to the performance of its duties as the
Managing Member.  The Managing Member may
only be removed or changed: (i) by unanimous consent of the Members; or (ii) upon
the Managing Member’s resignation at its election.  In the event the Managing Member resigns, the
Members shall appoint a successor Managing Member.  Any
provision to the contrary herein notwithstanding, to the extent any Major
Decision has been approved by the Members or is provided for or contemplated in
the then-applicable Budget or the Operating Plan, the Managing Member shall be
authorized, without any further consent or approval, to act in accordance
therewith.

 

(d)           Any
provision to the contrary in this Section 7.01 notwithstanding, unless
provided for in, or contemplated by, the then-applicable Budget or Operating
Plan (in which case, no additional approval shall be required under this Section 7.01(d)),
no action shall be taken, sum expended, decision made or obligation incurred by
or on behalf of the Company or any Subsidiary with regard to the following
material matters unless the same are approved in writing by all of the Members
(each a “Major Decision”):

 

(i)            approval of the final
forms of the documents that evidence, secure or relate to the Acquisition
Financing, to the extent that the same include any terms that are materially
different from those set forth in the Financing Commitment;

 

(ii)           approval of any easements, amendments to the Condominium Declaration or
similar instruments to be entered into by the Company in connection with the
transactions contemplated on Exhibit D (which approval shall not be
unreasonably withheld by the Members);

 

(iii)          any of the following which would have any material adverse effect on
the Company or the Property:  acquisition
of any land or other real property or interest therein; further subdivision of
the Property; modification of any material land use permits, approvals or
entitlements relating to the Property or of the terms of the Condominium
Declaration or other condominium-related documents.  It is understood and agreed that the
redevelopment of any portion of the Property (including, without limitation,
any portion of the 11th through 13th floors of the “South
Tower”) for residential condominium or any use other than for general office
purposes – other than as set forth on Exhibit D attached hereto 

 

28

 

attached hereto – shall
be deemed to involve a material adverse effect on the Company and the Property;

 

(iv)          except for the Acquisition Financing, any (i) financing or
refinancing of the Company or any assets of the Company or (ii) financing
or other arrangements under which individual Members would have recourse
liability;

 

(v)           any (i) sale, ground lease or other transfer of, or mortgaging or
the placing or suffering of any other encumbrance on or affecting the Property
or any part or parts thereof, or the sale or other disposition of all or
substantially all of the Company’s assets, or (ii) selection of any broker
or agent in connection with any sale or other transaction;

 

(vi)          execution, modification, termination or waiver of any material rights
under the CSFB’s lease of the Property or other arrangement involving the
rental, use or occupancy of the Property, or any part thereof, by CSFB;

 

(vii)         construction of any material improvements or the making of any material
capital improvements, repairs, alterations or changes in, to or of the Property
or any part thereof, except for such matters as may be expressly provided for
in any Budget or Operating Plan, resulting from an emergency, or as may be
required to be performed under any agreements (such as loan documents or
leases), or pursuant to legal requirements, affecting the Property;

 

(viii)        selecting or varying depreciation and accounting methods and making
other decisions with respect to treatment of various transactions for state or
federal income tax purposes or other financial purposes not otherwise
specifically provided for herein, provided that such methods and decisions
shall be consistent with the other provisions of this Agreement;

 

(ix)           approval of contracts, plans, specifications and drawings prior
relating to construction occurring on the Property; approval of any additions
to and/or alterations of the Property or any portion thereof; and approval of
any modifications of such contracts, plans, specifications and drawings, (it
being understood that with respect to the matters contemplated on Exhibit D,
such approvals will not be unreasonably withheld);

 

(x)            determining any reserves to be established
prior to the distribution of distributable cash to the Members;

 

(xi)           approval of any proposed budget or operating plan and approval of any
modifications to any Budget or Operating Plan;

 

29

 

(xii)          making
any expenditure or incurring any obligation by or on behalf of the Company
involving an expenditure which is not included in the then current Budget or
provided by Mandatory Capital Contributions or Agreed Capital Contributions
pursuant to Section 4.02 hereof;

 

(xiii)         approval of any contracts with a person related to or affiliated with
the Managing Member or any Member, unless the terms and conditions of such
contract are made at arms length
and shall be for a price and for such other terms as are no less favorable to
the Company and no more favorable to such Affiliate than market terms for
similar services.

 

(xiv)        institution of any legal action or settlement of any legal action
involving more than $100,000 or the settlement of any uninsured claim or legal
action against the Company involving more than $100,000;

 

(xv)         determination of any Agreed Capital Contribution, and the amount of
such Agreed Capital Contribution, if required;

 

(xvi)        any election to admit any other person as a Member to the Company other
than as expressly permitted hereunder without the consent of the Members; or

 

(xvii)       any election to dissolve
the Company other than in accordance with the terms of this Agreement; any
election to merge the Company with any other entity; and any election to file a
bankruptcy or similar insolvency petition on behalf of the Company.

 

(e)           Major Decisions may be introduced for
consideration of the Members only by the Managing Member, except as provided in
Section 8.01 hereof; provided, however, that if any event or circumstance
(other than those introduced for consideration by the GKK Member) arises
outside of the ordinary course of business which would reasonably be expected
to require a Major Decision in the Managing Member’s discretion, the Managing
Member will promptly propose such Major Decisions to the Members for
consideration.  Any provision to the
contrary herein notwithstanding, the Managing Member shall have no power or
authority to authorize or approve any Major Decision or to take any material
action or make any material decision with regard thereto, unless the (i) same
has been approved in writing by the Members, (ii) has been provided for
in, or contemplated by the Budget or, to the extent applicable, the Operating
Plan, or (iii) same qualify as Necessary Expenses in the Managing Member’s
reasonable judgment.

 

(f)            The Members hereby acknowledge that each of
the Members has approved the following (including to the extent such may
constitute Major Decisions):

 

30

 

(i)            Without
limiting the provisions of Section 7.01(d) hereof, the Project
Modifications Under Consideration with CSFB, attached hereto as Exhibit D;

 

(ii)           Form of
Asset Management Agreement, attached hereto as Exhibit C;

 

(iii)          Form of
Leasing and Property Management Agreement, attached hereto as Exhibit B;

 

(iv)          Form of
Reimbursement and Indemnity Agreement, attached hereto as Exhibit E;
and

 

(v)           The
closings to occur under the Purchase Agreement and the Acquisition Financing
documents.

 

(g)           [Intentionally omitted.]

 

(h)        Except as expressly
provided in this Agreement, no Member, other than Managing Member, shall have
any right or power to participate in or have any control over the Company’s or
any Subsidiary’s business, affairs or operations or to act for or to bind the
Company or any Subsidiary in any matter whatsoever.

 

(i)          [Intentionally omitted.]

 

(j)          If, at the beginning of any calendar year beginning after the date
hereof, the Budget and Operating Plan, or any item or portion thereof, shall
not have been approved in writing by the Members, then:

 

(i)            Any items or portions of such Budget and
Operating Plan and amounts of expenses provided therein which have been so
approved shall become operative immediately and the Managing Member shall be
entitled to expend funds in accordance with those operative portions;

 

(ii)           The Managing Member shall be entitled to expend, in connection with
Necessary Expenses, an amount equal to the actual Necessary Expenses incurred
by the Company or any Subsidiary; and

 

(iii)          The Managing Member shall be entitled to expend, in respect of other
noncapital, recurring expenses in any fiscal quarter of the then-current
calendar year, an amount equal to the lesser of (x) actual expenses incurred by
the Company or any Subsidiary or (y) an amount equal to one hundred ten percent
(110%) of the budgeted amount for the corresponding fiscal quarter of the
immediately preceding calendar year, as set forth on the immediately preceding
calendar year Budget and Operating Plan, after giving 

 

31

 

effect
to any dispositions or other material changes to the Property during the prior
or current year; provided, however, that if any contract approved
by the Members provides for an automatic increase in costs thereunder after the
beginning of the then-current calendar year, then the Managing Member shall be
entitled to expend the amount of such increase.

 

(k)         Notwithstanding anything to the contrary contained in this Agreement,
the Managing Member shall not be obligated to make any expenditures or advance
any funds on behalf of the Company or any Subsidiary, except from the accounts
of funds of the Company or the applicable Subsidiary, nor shall the Managing
Member be obligated to perform its duties and obligations hereunder if Company
or Subsidiary funds are not available in amounts required to perform such
duties and obligations.

 

7.02         Services and Fees; Affiliate Transactions.

 

(a)         The SLG Member or its Affiliate will perform asset management services
with respect to GKK’s or its Affiliate’s Interest with the terms of an asset
management agreement in the form attached hereto as Exhibit C (the “Asset
Management Agreement”), which form, and which appointment, are hereby
deemed approved by the Members.  Any
changes in the form of the Asset Management Agreement or any amendments or
modifications thereto, or any changes in the schedule of fees previously
approved by the Members, must be approved by the Members.  Any provision to the contrary in this
Agreement notwithstanding, the GKK Member shall have no right to terminate the
Asset Management Agreement unless and until SLG no longer has any direct or
indirect Interest in the Company.

 

(b)        Additionally, the SLG Member or its Affiliate will perform management
services with respect to the Property in accordance with the terms of a leasing
and property management agreement in the form attached hereto as Exhibit B
(the “Leasing and Property Management Agreement”), which form, and which
appointment, are hereby deemed approved by the Members.  Any changes in the form of the Leasing and
Property Management Agreement or any amendments or modifications thereto, or
any changes in the schedule of fees previously approved by the Members,
must be approved by the Members.  Any
provision to the contrary in this Agreement notwithstanding, the GKK Member
shall have no right to terminate the Leasing and Property Management Agreement
unless and until SLG no longer has any direct or indirect Interest in the
Company.

 

(c)         Any agreements with any Member or an Affiliate of any Member must be
approved by all Members, and no fees or compensation will be paid by the
Company or any Subsidiary to any Member or any of its Affiliates, unless the
same has been approved by all Members or expressly and specifically
contemplated in an approved Budget and Operating Plan.

 

32

 

(d)        In addition to, and notwithstanding, the foregoing provisions of this Section 7.02,
but subject in all cases to the provisions of Section 7.01(d) hereof,
the Managing Member may determine that it is appropriate for the Company to
enter into agreements with one or more third parties to sell, or provide other
professional services with respect to, the Property, the Company or any
Subsidiary, which agreements shall be subject to the approval of the Managing
Member.  The fees for services from such
third parties shall be included in any proposed budget and subject to approval
in accordance with Section 7.01(d)(xi), and shall not exceed the
prevailing competitive fees being charged for such services for similar
properties in the market where the Property is located.

 

7.03         Duties and Conflicts.

 

(a)           The Members, including the Managing Member, shall devote such time to
the business of the Company and the Subsidiaries as they deem to be necessary
or desirable in connection with their respective duties and responsibilities
hereunder.  Except as otherwise provided
in this Agreement or as otherwise approved by all Members, no Member nor any
member, partner, shareholder, officer, director, employee, agent or
representative of any Member shall receive any salary or other remuneration for
its services rendered pursuant to this Agreement.

 

(b)           Each of the Members recognizes that the other Member and its members,
partners, shareholders, officers, directors, employees, agents, representatives
and Affiliates, has or may in the future have other business interests,
activities and investments, some of which may be in conflict or competition
with the business of the Company, and that the other Member and its members,
partners, shareholders, officers, directors, employees, agents, representatives
and Affiliates, are entitled to carry on such other business interests,
activities and investments.  Each of the
Members may engage in or possess an interest in any other business or venture
of any kind, independently or with others, including, without limitation,
owning, financing, acquiring, leasing, promoting, developing, improving,
operating, managing and servicing real property on its own behalf or on behalf
of other entities with which any of the Members is affiliated or otherwise, and
each of the Members may engage in any such activities, whether or not competitive
with the Company or any Subsidiary, without any obligation to offer any
interest in such activities to the Company or any Subsidiary or to the other
Member.  Neither the Company, the
Subsidiaries nor the other Member shall have any right, by virtue of this
Agreement or any Subsidiary Operating Agreement, in or to such activities, or
the income or profits derived therefrom, and the pursuit of such activities,
even if competitive with the business of the Company or any Subsidiary, shall
not be deemed wrongful or improper.  For
the avoidance of doubt, no provision contained herein is intended to modify any
term or condition of that certain Origination Agreement, dated August 2,
2004, by and among GKK, GKK Capital LP and SL Green Operating Partnership, L.P.,
as the same may be amended from time to time.

 

33

 

7.04         Company
Expenses.  Except as otherwise
provided in this Agreement or in the Leasing and Property Management Agreement
or in the Asset Management Agreement, and except for any costs to be borne by
any third party under any agreement with the Company, the Company shall be
responsible for paying, and shall pay, all direct costs and expenses related to
the business of the Company and any Subsidiary and of acquiring, holding,
owning, developing, redeveloping, operating, managing and leasing the Property,
including, without limitation, transfer taxes in connection with the
acquisition of the Property (or interests in the applicable Subsidiaries), all
fees payable under Section 7.02, costs of financing, fees and
disbursements of attorneys, financial advisors, accountants, appraisers,
brokers and engineers, and all other fees, costs and expenses directly
attributable to the business and operations of the Company or any
Subsidiary.  In the event any such costs
and expenses are or have been paid by any Member, such Member shall be entitled
to be reimbursed for such payment so long as such payment is otherwise in
accordance with the terms of this Agreement, the Leasing and Property
Management Agreement and the Asset Management Agreement.

 

7.05         Officers.

 

(a)           The
Managing Member may, from time to time, appoint one or more officers of the
Company holding such offices of President, Executive Vice President and
Secretary, Treasurer, Assistant Treasurer, Assistant Secretary, or any of them,
or any other offices of the Company as may, from time to time, be established
by the Managing Member (each an “Officer”
and, collectively, the “Officers”). 
Upon such appointment, and subject to the terms of this Agreement, each
Officer shall be vested with the authority, rights and obligations as the
Managing Member may designate; provided, however, (i) that
the Managing Member may, from time to time, in its sole discretion (A) appoint
one or more additional Officers, (B) remove, replace or substitute one or
more Officers and (C) limit or restrict the authority of one or more
Officers, and (ii) that no Officer may be authorized to take any action
which the Managing Member would not validly be allowed to take under the terms
of this Agreement.

 

(b)           Any
Officer, to the extent of his or her power vested in him or her by action of
the Managing Member in accordance with the terms of this Agreement, shall be an
agent of the Company for the purpose of the Company’s business and the actions
of such Officer taken in accordance with such powers shall bind the Company.

 

VIII.  BUY-SELL AND CALL
PROVISIONS

 

8.01         Buy-Sell Provisions.

 

(a)           In the event that the Members are unable to agree upon a Major Decision:
(i) involving the sale or refinancing of the Property proposed to the
Members by (x) the SLG Member at any time for any reason or (y) by the GKK
Member solely in either of the following two circumstances: (1) on the
first Business Day of any year after the tenth (10th) anniversary of the date
of this Agreement, only if the GKK Member 

 

34

 

reasonably
determines that it will likely incur “phantom income” in the succeeding annual
period; or (2) at any time, in the event that the credit rating of CSFB
falls below a published rating of “BBB” by Standard and Poor’s or “Baa” by
Moody’s; (ii) involving an extension of, or material modification to, the
CSFB space lease, or the re-tenanting of the space currently demised to CSFB
under the CSFB space lease; (iii) involving any material capital
expenditure by the Company or with respect to the Property, other than as set
forth on Exhibit D attached hereto; or (iv) which would
otherwise materially impair the value of the Property, either Member may notify
the other Member of a deadlock with respect to such Major Decision(s) (such
notification, a “Major Decision Deadlock Notice”).  Within thirty (30) calendar days of the
delivery of a Major Decision Deadlock Notice, the GKK Member may deliver a
written notice as described below (the “Buy-Sell Notice”) to the SLG
Member, as set forth below.

 

(b)           The Buy-Sell Notice shall be signed by the GKK Member and shall state
the amount at which the GKK Member values the Property and all other assets of
the Company (the “Buy-Sell Value”).

 

(c)           Within such thirty (30) calendar day period, a copy of the Buy-Sell
Notice shall be delivered to the Company Accountant who shall, within five (5) Business
Days, determine and notify the Members of the amount each Member would receive
if all Company assets were sold for the Buy-Sell Value (less deductions
therefrom for normal and customary charges and expenses incurred in connection
with the sale of real estate in New York City, which shall be imputed, if not
actually incurred, including, without limitation, broker’s commissions,
transfer taxes, if applicable, and other closing costs), all liabilities of the
Company and each Subsidiary (including any loans by any such Member to the
Company or any Subsidiary) were paid in full, and the remaining proceeds were
distributed to the Members in accordance with Section 6.04 (the “Member
Buy/Sell Proceeds”).

 

(d)           The SLG Member shall have the right, exercisable by delivery of notice
in writing (the “Election”) to the GKK Member within thirty (30)
calendar days after the receipt of the Buy-Sell Notice, to elect to either:

 

(i)            sell to the GKK Member all of the SLG Member’s
rights, title and interests in and to its Interest in the Company, interest in
the Subsidiaries, if applicable, and interest in any loans to the Company and
the Subsidiaries, for a cash purchase price equal to the applicable Member
Buy/Sell Proceeds; or

 

(ii)           purchase all of the GKK Member’s rights, title and interests in and to
its Interest in the Company, interest in the Subsidiaries, if applicable, and
interest in any loans to the Company and the Subsidiaries, in each case free of
all liens and encumbrances, for a cash purchase price equal to the applicable
Member Buy/Sell Proceeds.

 

35

 

Failure
of the SLG Member to give the GKK Member notice of the SLG’s Election shall be
deemed, upon the expiration of such 30-day period, to be an Election to sell
under Section 8.01(d)(i).

 

(e)           Contemporaneously
with the SLG Member’s Election or deemed Election, the purchasing Member shall (i) have
the right to direct the Managing Member on behalf of the Company and otherwise
make decisions on behalf of the Company with respect to (1) the day-to-day
operations of the Company that would otherwise require direction by the
Managing Member, (2) the decisions of the Company that are referred to in Exhibit D
to this Agreement and (3) any Major Decisions other than those identified
in (i)-(iv) of Section 8.01(a); provided, however,
prior to the closing of the purchase under this Section 8.01, all such
direction and decisions shall be consistent with past practices of the Company
and be in the ordinary course of the Company’s business, and (ii) deposit
in escrow with a bank or other financial institution selected by the selling
Member as escrowee an earnest money deposit in cash in an amount equal to ten
percent (10%) multiplied by the purchase price to be paid in connection with
such purchase, and, if such purchasing Member fails to close such purchase as
provided in this Section 8.01(e), then the selling Member may retain such
deposit and either elect to purchase all of the right, title and interest of
the purchasing Member in and to its Interest in the Company and interest in the
Subsidiaries, if applicable, and in any loans to the Company and the
Subsidiaries, for a cash purchase price equal to ninety percent (90%) of the
applicable Member Buy/Sell Proceeds, or exercise any other rights or remedies
available at law or in equity, including the rights set forth in Article XIII
hereof.  All closings of any purchase and
sale under this Section 8.01 will be held at the Company’s principal
office and shall take place no later than that date which is 45 calendar days
after the later of the SLG Member’s Election or deemed Election.

 

(f)            [Intentionally
omitted.]

 

(g)           Each Member shall be entitled to enforce its rights under this Section 8.01
by specific performance.  If the
purchasing Member defaults under this Section 8.01, it shall have no right
to make any future Buy-Sell Notice hereunder. 
No Buy-Sell Notice may be made until all periods for making elections
and performing obligations under any previous Buy-Sell Notice pursuant to this Section 8.01
shall have terminated.

 

(h)           Any Member may freely assign its rights and obligations pursuant to
this Section 8.01 to an wholly-owned Affiliate by delivering notice of
such assignment to the other Member, provided that the assigning Member shall
remain liable for any and all obligations of its assignee, as if such Member
had not assigned its rights pursuant to this Section 8.01(f).

 

(i)            Notwithstanding the foregoing, if the
provisions of Section 10.02(d) of this Agreement have been initiated
by any Member, then no Member 

 

36

 

may
initiate the provisions of this Section 8.01 until the procedures set
forth in Article X have been completed or terminated pursuant to the terms
thereof.

 

8.02         Call
Provision.

 

(a) At
any time and from
time to time, unless (i) a Major Decision Deadlock Notice has been
delivered and the thirty (30) calendar
day period during which the GKK Member has a right to deliver a Buy-Sell
Notice has yet to expire or (ii) the GKK Member has delivered a Buy-Sell
Notice pursuant to Section 8.01 and the purchasing Member in connection
therewith has not defaulted in respect thereof (as contemplated by Section 8.1(g)),
the SLG Member shall have the right at any time, upon at least thirty (30)
calendar days prior written notice (the “Call Notice”), to cause all or
a portion of the Interest of the GKK Member (and any Member, or other permitted
transferee in accordance with Article X, whose interest derives from the
initial Interest of the GKK Member) to be redeemed by the Company or purchased
by the SLG Member or its Affiliate in full. 
The redemption or purchase price, as the case may be, shall be equal to
the amount that would have been distributed to such Member if the Property and
all other assets of the Company had been sold at the then-fair-market value
thereof (less deductions therefrom for
normal and customary charges and expenses incurred in connection with the sale
of real estate in New York City, which shall be imputed, if not actually
incurred, including, without limitation, broker’s commissions, transfer taxes,
if applicable, and other closing costs), and the proceeds of such sale,
after paying all debts and liabilities of the Company, were distributed to the
Members in accordance with Section 6.03 hereof; provided that, if such
exercise occurs after the expiration of the term of the lease of the Property
to CSFB, the redemption or purchase price (as the case may be) payable to such
Member shall be not less than the value of such Member’s Capital Account in the
Company as determined in accordance with Section 4.04 and the books and
records of the Company.  Unless the SLG
Member and the GKK Member agree upon the fair market value of the Property and
the other assets of the Company (the “Call Provision FMV”)(which
agreements shall be as determined or approved by the independent members of the
Boards of Directors of SLG and GKK), the Call Provision FMV shall be determined
based on an independent third-party appraiser’s determination of the Call
Provision FMV.  Such appraiser shall be
selected as follows: the SLG Member and the GKK Member shall each promptly
choose an independent appraiser (“SLG’s Appraiser” and “GKK’s
Appraiser,” respectively), each of which shall not have performed or been
engaged to perform any appraisal or valuation services for the Company, SLG or
GKK (or any of their respective Affiliates) within the then-preceding three (3) years.  All appraisers shall be MAI appraisers and
have at least ten (10) years experience in commercial real estate
valuation.  If the lower of the two (2) appraisals
so obtained is not less than ninety percent (90%) of the higher of such two (2) appraisals,
the average of such two (2) appraisals shall be the Call Provision
FMV.  In the lower of the two (2) appraisals
so obtained is less than ninety percent (90%) of the higher of such two (2) 
appraisals, then SLG’s Appraiser and GKK’s Appraiser shall promptly select a
third appraiser (the “Third Appraiser”), who shall promptly select the
Call Provision FMV from 

 

37

 

either the amount stated by either the SLG Appraiser
or the GKK Appraiser and the Third Appraiser shall have no discretion to select
an amount different from either thereof. 
Such selection shall be binding upon the parties and shall immediately
thereafter be the Call Provision FMV for all purposes under this
Agreement.  If SLG’s Appraiser and GKK’s
Appraiser cannot agree on the selection of the Third Appraiser, such Third
Appraiser shall be selected as provided by the Commercial Arbitration Rules of
the American Arbitration Association as in effect on the date hereof for
selection of “arbitrators” in comparable situations.  The cost of the appraisals shall be an
expense of the Company.

 

(b)           Upon
delivery of the Call Notice under Section 8.02(a), the SLG Member shall
have the right to make direct the Managing Member on behalf of the Company and
otherwise make all decisions on behalf of the Company with respect to (A) the
day-to-day operations of the Company that would otherwise require direction by
the Managing Member, (B) the decisions of the Company that are referred to
in Exhibit D to this Agreement and (C) any and all Major
Decisions. In the event of a transfer if any Interest by the GKK Member to a
Prohibited Transferee or other breach or violation of Article X of this
Agreement, the applicable redemption price payable by the SLG Member to the GKK
Member under Section 8.02(a) shall be reduced to an amount equal to
ninety percent (90%) of the Call Provision FMV.

 

(c)           For
the avoidance of doubt, the SLG Member shall have the right to invoke the
provisions of this Section 8.02 even if the parties are engaged in
mandatory arbitration pursuant to Section 13.16 of this Agreement.

 

8.03         Termination of Other Agreements.  If any Member’s Interest is
purchased under this Article VIII or the corresponding provisions of any
Subsidiary Operating Agreement, all other agreements with such Member or its
Affiliates will (at the election of the purchasing Member) be terminated on the
date such Member’s Interest is purchased.

 

IX.  BOOKS AND RECORDS

 

9.01         Books and Records.  The Managing Member shall
maintain, or cause to be maintained, at the expense of the Company, in a manner
customary and consistent with good accounting principles, practices and procedures,
a comprehensive system of office records, books and accounts (which records,
books and accounts shall be and remain the property of the Company) in which
shall be entered fully and accurately each and every financial transaction with
respect to the operations of the Company and each Subsidiary and the ownership
and operation of the Property.  Bills,
receipts and vouchers shall be maintained on file by the Managing Member.  The Managing Member shall maintain said books
and accounts in a safe manner and separate from any records not having to do
directly with the Company.  The Managing
Member shall cause audits to be performed and audited statements and income tax
returns to be prepared as required by Section 9.03 hereof.  Such books and records of account shall be
prepared and maintained by the Managing Member at the principal place of
business of the Company or such other place 

 

38

 

or
places as may from time to time be determined by the Managing Member.  Each Member or its duly authorized
representative shall have the right to inspect, examine and copy such books and
records of account at the Company’s office during reasonable business hours.

 

9.02         Accounting and Fiscal Year.  The books of the Company and
each Subsidiary shall be kept on the accrual basis in accordance with generally
accepted accounting practices and principles (“GAAP”), and the Company
and each Subsidiary shall report its operations for tax purposes on the accrual
method.  The taxable year of the Company
and each Subsidiary shall end on December 31 of each year, unless a
different taxable year shall be required by the Code.

 

9.03         Reports.

 

(a)           The Managing Member shall prepare at the Company’s expense the
financial reports and other information that the Members may determine are
appropriate, including those provided for in Section 7.03(c).  In any event, the Managing Member shall
prepare or cause to be prepared at the expense of the Company and furnish to
each of the Members: (i) within twenty (20) calendar days after the close
of each fiscal year of the Company, a preliminary and unaudited consolidated
balance sheet of the Company and each Subsidiary dated as of the end of such
fiscal year, a preliminary and unaudited statement of income and expense and a
preliminary and unaudited statement of cash flow; (ii) as early as
practicable but in no event later than seventy-five (75) calendar days after
the close of each fiscal year of the Company, a consolidated balance sheet of
the Company and each Subsidiary dated as of the end of the fiscal year, a
related statement of income and expense and a statement of cash flow, all of
which shall be certified in the customary manner by the Company Accountant; (iii) within
20 days after the close of each fiscal quarter of the Company (other than the
last fiscal quarter in any fiscal year), a consolidated balance sheet of the
Company and each Subsidiary dated as of the end of the fiscal quarter, a
related statement of income and expense and a statement of cash flow; and (iv) within
20 days after the end of each calendar month, a consolidated income statement
for the Company and each Subsidiary and a related statement of cash flow.  In addition, promptly after the end of each
fiscal year and at the expense of the Company, the Managing Member will cause
the Company Accountant to prepare and deliver to each Member a report setting
forth in sufficient detail all such information and data with respect to
business transactions effected by or involving the Company and each Subsidiary
during such fiscal year as will enable the Company and each Member to timely
prepare its federal, state and local income tax returns in accordance with the
laws, rules and regulations then prevailing.  The Managing Member will also cause the
Company Accountant to prepare federal, state and local tax returns required of
the Company, submit those returns to the Members for their approval as early as
practicable but in no event later than ninety (90) calendar days following the
end of the preceding fiscal year and will file the tax returns after they have
been approved by the Members.  In the
event any Member shall not in 

 

39

 

good
faith be able to approve any such tax return prior to the date required for the
filing thereof, the Managing Member will timely obtain an extension of such
date if such extension is available under applicable law.  The Managing Member shall prepare and
distribute the reports and statements described in this Section 9.03.

 

(b)           All decisions as to accounting principles shall be made by the Managing
Member, subject to the provisions of this Agreement.

 

9.04         The Company Accountant.  The Company shall retain as the regular
accountant and auditor for the Company and each Subsidiary (the “Company
Accountant”) a nationally-recognized accounting firm designated by the
Managing Member.  The fees and expenses
of the Company Accountant shall be a Company expense.  The initial Company Accountant shall be Ernst &
Young, LLP, until such time as the Managing Member shall elect to change
such Company Accountant.

 

9.05         Distributions and Reserves.  The Budget and Operating Plan
will contain provisions governing the payment of distributions (in accordance
with Section 6.03) and establishment of reserves (“Reserve Accounts”),
provided, that, the Managing Member may require reserves be established in
excess of the Reserve Accounts to the extent the Managing Member reasonably
determines that said amounts are required to satisfy (i) requirements of
applicable law, or (ii) Necessary Expenses.  Disputes regarding the reasonableness of the
determination by the Managing Member hereunder will be subject to arbitration
pursuant to Section 13.16 hereof.

 

9.06         The
Budget and Operating Plan. 
The Managing Member shall be responsible for preparing and submitting to
the Members for their approval a proposed budget and strategic operating plan
with regard to the Property and/or the Subsidiaries on a consolidated basis
along with operations of the Company, for each fiscal year.  Within forty-five (45) calendar days after
the date hereof, an initial Budget for the Company and the Subsidiaries (the “Initial
Budget”) shall be attached hereto as Exhibit A.  For each year thereafter, the Budget and
Operating Plan shall be prepared in proposed form by the Managing Member and
submitted by the Managing Member to the Members in draft form by November 1
of each year with respect to the following fiscal year for approval no later
than December 15 of each fiscal year with respect to the following fiscal
year.

 

X.  TRANSFER OF INTERESTS

 

10.01       No Transfer.

 

(a)           Except as expressly permitted or contemplated by this Agreement: (i) no
Member may sell, assign, give, hypothecate, pledge, encumber or otherwise
transfer (“Transfer”), directly or indirectly, all or any portion of its
Interest without the prior written consent of the other Members (which may be
withheld or granted in the sole discretion of such other Members); (ii) GKK
may not Transfer, directly or indirectly, all or any portion of its equity
interest in the GKK Member 

 

40

 

without
the prior written consent of the SLG Member, which may be withheld or granted
in the sole discretion of the SLG Member; (iii) SLG may not Transfer,
directly or indirectly, all or any portion of its indirect equity interest in
the SLG Member without the prior written consent of the GKK Member, which may
be withheld or granted in the sole discretion of the GKK Member; and (iv) no
Member may Transfer all or any portion of its Interest to a Prohibited
Transferee.

 

(b)           Any Transfer in contravention of clause (i) through clause (iv) of
Section 10.01(a) above shall be null and void.  No Member, without the prior written consent
of the other Member, may resign from the Company, except as a result of such
Member’s involuntary dissolution or final adjudication as bankrupt or in
connection with a permitted Transfer.

 

10.02       Permitted Transfers.

 

(a)           Subject to the provisions of this Section 10.02 and Section 10.05,
the GKK Member may, from time to time and in its sole discretion, without the
consent of the SLG Member, sell or assign its Interest in whole or in part to
any wholly owned and controlled Affiliate of the GKK Member, provided such
transferee agrees to be bound by all the terms, conditions and provisions of
this Agreement (including the provisions of this Article X).  In addition, the GKK Member may, from time to
time, sell or assign up to forty-nine percent (49%) of its Interest in the
Company to a Qualified Institutional Transferee approved by the SLG Member
(which approval shall not be unreasonably withheld, conditioned or delayed),
provided that the GKK Member retains all voting and decision-making authority
with respect to such transferred Interest.

 

(b)           Subject to the provisions of Section 10.05, the SLG Member may,
from time to time and in its sole discretion, without the consent of the GKK
Member, sell or assign its Interest in whole or in part to any wholly owned and
controlled Affiliate of SLG, provided such transferee agrees to be bound by all
the terms, conditions and provisions of this Agreement (including the
provisions of this Article X).  In
connection with the foregoing, the SLG Member shall have the absolute right to
designate any wholly owned and controlled Affiliate transferee as a Member
(including the Managing Member).  In
addition, the SLG Member may, from time to time, sell or assign up to
forty-nine percent (49%) of its Interest in the Company to a Qualified
Institutional Transferee approved by the GKK Member (which approval shall not
be unreasonably withheld, conditioned or delayed), provided that the SLG Member
retains all voting and decision-making authority with respect to such
transferred Interest.

 

(c)           Any permitted Transfer pursuant to subsection (a) or subsection (b) above
shall not relieve the transferor of any of its obligations prior to such
Transfer.  Subject to Sections 10.03 and
10.04, any transferee pursuant to this Section 10.02 shall become a
substitute Member of the Company and each Member and its permitted
transferee(s) shall be treated as one Member for all purposes of this
Agreement.  Except as set forth in the
last sentence of Section 10.02(b) hereof, the provisions of this Section 10.02

 

41

 

will
not apply to or be deemed to authorize or permit any collateral transfer of, or
grant of a security interest in, a Member’s interest in the Company, or in any
Company property (which transfer or grant shall be subject to the other
provisions of this Agreement).

 

(d)           (i)            Subject to the limitations on transfer as set
forth in Section 10.02(a) and (b), in the event either member (the “Transferring
Member”) receives a written bona fide offer from a third party that is not
an Affiliate of said Member to purchase all or a portion of its Interest (the “Target
Interest”) and said Member desires to Transfer all or a part of its Target
Interest pursuant to the terms of said bona fide offer (“Acceptable Transfer
Terms”), the Transferring Member shall deliver to the other Member (the “Non-Transferring
Member”) notice of the terms of such Acceptable Transfer Terms (“Transfer
ROFR Notice”), including the proposed cash purchase price, other economic
terms and conditions and all other material terms and conditions of such
Acceptable Transfer Terms, and shall include a true and correct copy
thereof.  At any time within forty-five
(45) calendar days after the date the Non-Transferring Member receives the
Transfer ROFR Notice (the “Transfer Response Period”), the
Non-Transferring Member shall have the right, exercisable by delivery of notice
in writing (the “Transfer Election”) to the Transferring Member, to
either:

 

(A)          approve the Acceptable Transfer Terms and
authorize the Transferring Member to attempt to sell or dispose of the Target
Interest in accordance with the Acceptable Transfer Terms; or

 

(B)           elect to purchase all of the Target Interest
for a cash purchase price as set forth in the Acceptable Transfer Terms
(including any assumption of debt, if applicable) and subject to no other terms
and conditions.

 

(ii)           Any election pursuant to subparagraph (B) of Section 10.02(d)(i) above,
shall be made by (1) delivering to the Transferring Member the Transfer
Election, which shall affirmatively state that the Non-Transferring Member is
exercising such option, and (2) depositing in an escrow account at a bank
or other financial institution selected by the Transferring Member (the “Transfer
Escrow Agent”), a deposit equal to five percent (5%) of the purchase price
(the “Transfer Escrow Deposit”) (as set forth in the applicable
Acceptable Transfer Terms).  In such
event, (or in the event of a deemed election to permit a sale pursuant to Section 10.02(d)(iii) below)
the Non-Transferring Member and the Transferring Member shall close the
purchase of the Target Interest and the Transferring Member shall assign the
Target Interest to the Non-Transferring Member or to a designee of the
Non-Transferring Member on the terms and conditions set forth in the Transfer
ROFR Notice, against receipt of payment of the cash portion of the purchase
price and assumption of any debt as aforesaid. 

 

42

 

All
closings of any purchase and sale under this Section 10.02(d) will be
held at the Company’s principal office and will take place on the closing date
set forth in the applicable Acceptable Transfer Terms.

 

(iii)          If at the expiration of the Transfer Response Period the
Non-Transferring Member neither (A) authorizes the Transferring Member to
sell the applicable Target Interest as provided in Section 10.02(d)(i)(A) above,
or (B) elects to purchase the Target Interest of the Transferring Member
by following the procedures in Section 10.02(d)(i)(B) above, then the
Non-Transferring Member shall be deemed to have authorized and have approved a
Transfer of the Target Interest (subject to Sections 10.02(a) and 10.02(b) hereof)
pursuant to Section 10.02(d)(i)(A) hereof, for a purchase price not
less than the purchase price set forth in the Acceptable Transfer Terms, and
otherwise pursuant to such other terms, conditions and provisions as are
determined appropriate in the reasonable discretion of the Transferring
Member.  In the event the Non-Transferring
Member authorizes or is deemed to have authorized the Transfer of the
applicable Target Interest pursuant to the terms described above, and the
Transferring Member thereafter receives a bona fide offer for the purchase of
the Target Interest from any party for a purchase price which is at least equal
to the purchase price set forth in the Acceptable Transfer Terms, other than as
set forth below in subparagraph (iv) below, the Transferring Member may
consummate the sale of the Target Interest on such terms, without the
requirement of any consent or approval of the Members; provided, the
Transferring Member shall have entered into a binding contract for the transfer
of the Target Interest within one hundred eighty (180) calendar days after the
date on which the Non-Transferring Member authorized or was deemed to have
authorized such transfer, and such transfer must be consummated within the
closing date set forth in the Transfer ROFR Notice.  The failure of the Transferring Member to
enter into such binding contract within the 180-day period referred to in the
immediately preceding sentence or the failure of such transfer to occur within
such closing period shall require the Transferring Member to again deliver to
the Non-Transferring Member an additional Transfer ROFR Notice and to again follow
the procedures set forth in this Section 10.02(d) hereof prior to any
Transfer.

 

(iv)          In the event the Non-Transferring Member Group should
default in its obligation to purchase any Target Interest pursuant to the terms
of this Section 10.02(d), the following shall be the sole and exclusive
remedy for such default: the Interest Transfer Escrow Agent shall immediately
deliver to the Transferring
Member the Transfer Escrow Deposit (such amount shall not be deemed to be a
contribution or distribution of capital, or effect in any way the Capital
Account of any Member, the allocation provisions or any other equity provisions
of this Agreement).

 

43

 

(e)           Notwithstanding anything to the contrary contained in this Agreement,
no Member shall Transfer, directly or indirectly, all or any portion of its
Interest to a Prohibited Transferee.

 

(f)            Notwithstanding the foregoing, if the
provisions of Section 8.01 or Section 8.02 hereof have been initiated
by any Member, then no Member may not initiate the provisions of this Section 10.02
until the procedures set forth in Section 8.01 or Section 8.02 hereof
have been completed or terminated pursuant to the provisions of Section 8.01
or Section 8.02 hereof.

 

10.03       Transferees.  Notwithstanding anything to the
contrary contained in this Agreement, no Transfer of all or any part of any
Interest shall be made (a) except in compliance with all applicable
securities laws or (b) if such Transfer would violate any loan commitment
or agreement or any mortgage, deed of trust or other security instrument
encumbering all or any portion of the Property or any other asset of the
Company.  Further, no transferee of all
or any portion of any Interest shall be admitted as a substitute Member unless (i) such
Interest is transferred in compliance with the applicable provisions of this
Agreement, (ii) such transferee shall have furnished evidence of
satisfaction of the requirements of Section 10.02 hereof, reasonably
satisfactory to the remaining Member(s), and (iii) such transferee shall
have executed and delivered to the Company such instruments as the remaining
Member(s) reasonably deem necessary or desirable to effectuate the admission of
such transferee as a Member and to confirm the agreement of such transferee to
be bound by all the terms, conditions and provisions of this Agreement with
respect to such Interest.  At the request
of any remaining Member, each such transferee shall also cause to be delivered
to the Company at the transferee’s sole cost and expense, a favorable opinion
of legal counsel reasonably acceptable to the remaining Members, to the effect
that (a) such transferee has the legal right, power and capacity to own
the Interest proposed to be transferred, (b) such Transfer does not
violate any provision of any loan commitment or agreement or any mortgage, deed
of trust or other security instrument encumbering all or any portion of the
Property or any other asset of the Company, and (c) such Transfer does not
violate any federal or state security laws and will not cause the Company to
become subject to the Investment Company Act of 1940, as amended.  As promptly as practicable after the
admission of any Person as a Member, the books and records of the Company shall
be changed to reflect such admission. 
All reasonable costs and expenses incurred by the Company in connection
with any Transfer of any Interest and, if applicable, the admission of any
transferee as a Member shall be paid by such transferee.

 

10.04       Admission of Additional Members.

 

(a)           No person may be admitted as an additional Member of the Company (in
contrast with admission as a substitute Member in connection with a permitted
Transfer) without the consent of the Members.

 

44

 

(b)           Any additional or substitute Member admitted to the Company shall
execute and deliver documentation in form satisfactory to the Members accepting
and agreeing to be bound by this Agreement, and such other documentation as the
Members shall require in order to effect such Person’s admission as an
additional Member.  The admission of any
Person as an additional Member shall become effective on the date upon which
the name of such person is recorded on the books and records of the Company
following the consent of the Members to such admission.

 

10.05       Override
on Permitted Transfers.

 

(a)           It
is expressly understood and agreed that any Transfer permitted pursuant to this
Article X shall in all instances be prohibited (and, if consummated, shall
be void ab initio) if such Transfer does not
comply with all applicable laws, rules and regulations and other
requirements of governmental authorities, including, without limitation,
Executive Order 13224 (September 23, 2001), the rules and regulations
of the Office of Foreign Assets Control, Department of Treasury, and any
enabling legislation or other Executive Orders in respect thereof.

 

(b)           Each
admitted Member shall be required to make the representations and warranties
set forth in Section 13.01(a) of this Agreement to the other
Member(s) and the Company as of the date of such Member’s admission into the
Company.  Each Member shall be deemed to
make the representations and warranties set forth in Section 13.01(a)(ix)-(xii)
of this Agreement to the Members and the Company on behalf of any Person that
acquires a beneficial ownership interest in such Member as of the date of such
acquisition.

 

XI.  INDEMNIFICATION

 

11.01       Indemnification.

 

(a)           The Company shall, to the fullest extent permitted by applicable law, indemnify,
defend and hold harmless each Member and Managing Member and each general or
limited partner of any Member and Managing Member, each shareholder, member or
other holder of any equity interest in such Member or any officer, director or
employee of any of the foregoing (each an “Indemnified Party”), against
any losses, claims, damages or liabilities to which such Indemnified Party may
become subject in connection with any matter arising out of or incidental to
any act performed or omitted to be performed by any such Indemnified Party in
connection with this Agreement, any Subsidiary Operating Agreement or the
Company’s or any Subsidiary’s business or affairs, including any action or
omission constituting a breach of any fiduciary duties; provided, however,
that such act or omission (i) was taken in good faith, was reasonably
believed by the applicable Indemnified Party to be in the best interest of the
Company or the applicable Subsidiary and was within the scope of authority
granted to such Member or applicable Indemnified Party, (ii) was not a
transaction for which the Indemnified Party received a personal benefit in
violation or 

 

45

 

breach
of the provisions of this Agreement or any Subsidiary Operating Agreement, (iii) was
not attributable in whole or in part to such Indemnified Party’s breach of this
Agreement or any Subsidiary Operating Agreement or a knowing violation of law,
or (iv) was not attributable in whole or in part to such Indemnified Party’s
fraud, bad faith, willful misconduct or gross negligence.  If an Indemnified Party becomes involved in
any capacity in any action, proceeding or investigation in connection with any
matter arising out of or in connection with this Agreement or any Subsidiary
Operating Agreement or the Company’s or any Subsidiary’s business or affairs,
the Company shall reimburse such Indemnified Party for its reasonable legal and
other reasonable out-of-pocket expenses (including the cost of any
investigation and defense preparation) as they are incurred in connection
therewith, provided that such Indemnified Party shall promptly repay to the
Company the amount of any such reimbursed expenses paid to it if it shall
ultimately be determined that such Indemnified Party was not entitled to be
indemnified by the Company in connection with such action, proceeding or
investigation.  If for any reason (other
than the fraud, gross negligence, intentional misconduct, breach of this
Agreement or any Subsidiary Operating Agreement or a knowing violation of law
by such Indemnified Party or a transaction for which such Indemnified Party
received a personal benefit in violation or breach of the provisions of this
Agreement or any Subsidiary Operating Agreement) the foregoing indemnification
is unavailable to such Indemnified Party, or insufficient to hold it harmless,
then the Company shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage, liability or expense
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and such Indemnified Party on the other hand or,
if such allocation is not permitted by applicable law, to reflect not only the
relative benefits referred to above but also any other relevant equitable
considerations.  Any indemnity under this
Section 11.01(a) shall be paid solely out of and to the extent of
Company assets and shall not be a personal obligation of any Member and in no
event will any Member be required or permitted, without the consent of the
other Member, to contribute additional capital under Article IV to enable
the Company to satisfy any obligation under this Section 11.01.

 

(b)           The provisions of this Section 11.01 shall survive for a period of
six years from the date of dissolution of the Company, provided that if at the
end of such period there are any actions, proceedings or investigations then
pending, an Indemnified Party may so notify the Company and the Members at such
time (which notice shall include a brief description of each such action,
proceeding or investigation and the liabilities asserted therein) and the
provisions of this Section 11.01 shall survive with respect to each such
action, proceeding or investigation set forth in such notice (or any related
action, proceeding or investigation based upon the same or similar claim) until
such date that such action, proceeding or investigation is finally resolved,
and the obligations of the Company under this Section 11.01 shall be
satisfied solely out of Company assets.

 

46

 

(c)           Notwithstanding anything to the contrary contained in this Agreement,
the obligations of the Company or any Member under this Section 11.01
shall be in addition to any liability which the Company or such Member may
otherwise have and inure to the benefit of such Member, its Affiliates and
their respective members, directors, officers, employees, agents and Affiliates
and any successors, assigns, heirs and personal representatives of such
Persons.

 

XII.  DISSOLUTION AND
TERMINATION

 

12.01       Dissolution.  The Company shall be dissolved
and its business wound up upon the earliest to occur of any of the following
events:

 

(a)           The sale, condemnation or other disposition of all the assets of the
Company and the receipt of all consideration therefor;

 

(b)           The expiration of the period related to the election under Section 13.02(a) hereof;

 

(c)           The expiration of the period set forth in Section 2.03 hereof;

 

(d)           The determination of the Members to dissolve the Company; or

 

(e)           The resignation, expulsion, bankruptcy or dissolution of any Member or
the occurrence of any other event that terminates the continued membership of
any Member in the Company, unless, within 90 days after such event, each of the
remaining Members elects in writing to continue the business of the Company.

 

Without limiting, but
subject to, the other provisions hereof, the assignment of all or any part of a
Member’s Interest permitted hereunder will not result in the dissolution of the
Company.  Except as otherwise
specifically provided in this Agreement, each Member agrees that, without the
consent of the other Member, no Member may withdraw from or cause a voluntary
dissolution of the Company or any Subsidiary. 
In the event any Member withdraws from or causes a voluntary dissolution
of the Company or any Subsidiary in contravention of this Agreement, such withdrawal
or the causing of a voluntary dissolution shall not affect such Member’s
liability for obligations of the Company and the Subsidiaries.

 

12.02       Termination.  In all cases of dissolution of
the Company, the business of the Company shall be wound up and the Company
terminated as promptly as practicable thereafter, and each of the following
shall be accomplished:

 

(a)           The Liquidating Member shall cause to be prepared a statement setting
forth the assets and liabilities of the Company and the Company Subsidiaries as
of the date of dissolution, a copy of which statement shall be furnished to all
of the Members.

 

47

 

(b)           The Property and all other assets of the Company shall be liquidated by
the Liquidating Member as promptly as possible, but in an orderly and
businesslike and commercially reasonable manner and subject to the provisions
of the Operating Plan then in effect or a liquidating plan approved by the
Managing Member.  The Liquidating Member
may distribute property, interests in Subsidiaries and other assets of the
Company in kind, only with the consent of the Members.

 

(c)           The proceeds of sale and all other assets of the Company shall be
applied and distributed as follows and in the following order of priority:

 

(i)            To the payment of (A) the debts and
liabilities of the Company (including any outstanding amounts due on any
indebtedness encumbering the Property and the other assets of the Company, or
any part thereof) and (B) the expenses of liquidation.

 

(ii)           To the setting up of any reserves which the Liquidating Member and the
Managing Member shall determine to be reasonably necessary for contingent,
unliquidated or unforeseen liabilities or obligations of the Company, any
Subsidiary or any Member arising out of or in connection with the Company or
any Subsidiary.  Such reserves may, in
the discretion of the Liquidating Member, be paid over to a national bank or
national title company selected by it and authorized to conduct business as an
escrowee to be held by such bank or title company as escrowee for the purposes
of disbursing such reserves to satisfy the liabilities and obligations
described above, and at the expiration of such period as the Liquidating Member
may reasonably deem advisable, distributing any remaining balance as provided in
Section 12.02(c)(iii) hereof; provided, however, that,
to the extent that it shall have been necessary, by reason of applicable law or
regulation, to create any reserves prior to any and all distributions which
would otherwise have been made under Section 12.02(c)(i) above and,
by reason thereof, a distribution under Section 12.02(c)(i) has not
been made, then any balance remaining shall first be distributed pursuant to Section 12.02(c)(i) above.

 

(iii)          The balance, if any, to the Members in accordance with Section 6.04
hereof.

 

12.03       Liquidating
Member.  The Liquidating
Member is hereby irrevocably appointed as the true and lawful attorney in the
name, place and stead of each of the Members, such appointment being coupled
with an interest, to make, execute, sign, acknowledge and file with respect to
the Company and all Subsidiaries all papers which shall be necessary or
desirable to effect the dissolution and termination of the Company and each
Subsidiary in accordance with the provisions of this Article XII.  Notwithstanding the foregoing, each Member,
upon the request of the Liquidating Member, shall promptly execute, acknowledge
and deliver all such documents, certificates and other instruments as the
Liquidating Member shall reasonably request to

 

48

 

effectuate the proper
dissolution and termination of the Company and each Subsidiary, including the
winding up of the business of the Company and each Subsidiary.

 

XIII.  MISCELLANEOUS

 

13.01       Covenants, Representations and Warranties of
the Members.

 

(a)           Each Member represents and warrants to the other Member as follows:

 

(i)            It is duly organized, validly existing and in
good standing under the laws of its jurisdiction of formation with all
requisite power and authority to enter into this Agreement and to conduct the
business of the Company.

 

(ii)           This Agreement constitutes the legal, valid and binding obligation of
the Member enforceable in accordance with its terms, subject to the application
of principles of equity and laws governing insolvency and creditors’ rights
generally.

 

(iii)          No consents or approvals (which have not been obtained) are required
from any governmental authority or other Person for the Member to enter into
this Agreement and be admitted to the Company. 
All limited liability company, corporate or partnership action on the
part of the Member (and its direct or indirect equity owners) necessary for the
authorization, execution and delivery of this Agreement, and the consummation
of the transactions contemplated hereby, have been duly taken.

 

(iv)          The execution and delivery of this Agreement by the Member, and the
consummation of the transactions contemplated hereby, does not conflict with or
contravene the provisions of its organic documents or any agreement or
instrument by which it or its properties are bound or any law, rule,
regulation, order or decree to which it or its properties are subject.

 

(v)           Each Member is acquiring its interest in the Company for investment,
solely for its own account, with the intention of holding such interest for
investment and not with a view to, or for resale in connection with, any
distribution or public offering or resale of any portion of such interest
within the meaning of the Securities Act of 1933 (the “Securities Act”)
or any other applicable federal or state security law, rule or regulation
(“Securities Laws”).

 

(vi)          Each Member acknowledges that it is aware that its interest in the
Company has not been registered under the Securities Act or under any other
Security Law in reliance upon exemptions contained therein.  Each Member understands and acknowledges that
its representations and warranties contained 

 

49

 

herein
are being relied upon by the Company, the other Member and the constituent
owners of such other Member as the basis for exemption of the issuance of
interest in the Company from registration requirements of the Securities Act
and other Securities Laws.  Each Member
acknowledges that the Company will not and has no obligation to register any
Interest in the Company under the Securities Act or other Securities Laws.

 

(vii)         Each Member acknowledges that prior to its execution of this Agreement,
it received a copy of this Agreement and that it examined this document or
caused this document to be examined by its representative or attorney.  Each Member does hereby further acknowledge
that it or its representative or attorney is familiar with this Agreement, and
with the business and affairs of the Company, and that except as otherwise
specifically provided in this Agreement, it does not desire any further
information or data relating to the Company, any Subsidiary, the Property or
the other Member.  Each Member does
hereby acknowledge that it understands that the acquisition of its Interest in
the Company is a speculative investment involving a high degree of risks and
does hereby represent that it has a net worth sufficient to bear the economic
risk of its investment in the Company and to justify its investing in a highly
speculative venture of this type.

 

(viii)        The
Member is in compliance with Executive Order 13224 (September 23, 2001),
the rules and regulations of the Office of Foreign Assets Control,
Department of Treasury, and any enabling legislation or other Executive Orders
in respect thereof.

 

(ix)           At
all times, including after giving effect to any Transfers permitted pursuant to
this Agreement, (a) none of the funds or other assets of the Member
constitutes property of, or are beneficially owned, directly or indirectly, by
any person, entity or government subject to trade restrictions under U.S. law
(including, but not limited to, the International Emergency Economic Powers
Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C.
App. 1 et seq., and any Executive Orders or regulations promulgated thereunder)
(any such person, entity or government, an “Embargoed Person”) with the
result that the investment in the Member (whether directly or indirectly), is
prohibited by any applicable law, rule, regulation, order or decree is in
violation thereof; (b) no Embargoed Person has any interest of any nature
whatsoever in the Member with the result that the investment in the Member
(whether directly or indirectly), is prohibited by any applicable law, rule,
regulation, order or decree is in violation thereof; and (c) none of the
funds of the Member have been derived from any unlawful activity with the
result that the investment in the Member (whether directly or indirectly), is
prohibited by any applicable law, rule, regulation, order or decree is in
violation thereof.

 

50

 

(x)            If
applicable to such Member, the Member has implemented a corporate anti-money
laundering plan that is reasonably designed to ensure compliance with
applicable foreign and U.S. anti-money laundering law.

 

(xi)           The
Member is familiar with the U.S. Government Blacklists maintained by applicable
U.S. Federal agencies and none of its investors, officers or directors is on the
U.S. Government Blacklists.

 

(b)           In addition to the representations and warranties set forth above, the
SLG Member represents and warrant to the GKK Member as follows:

 

(i)            The SLG Member is acquiring its interest in
the Company with, and the source of its Capital Contributions is, its own funds
or the funds of SLG, and not the funds of any third-party or equity investor.

 

(ii)           The SLG Member is a
Delaware limited liability company currently existing pursuant to that certain
Limited Liability Company Agreement entered into as of on or about the date of
this Agreement (the “SLG Member LLC Agreement”), and that certain
certificate of formation filed with Secretary of State of Delaware on April 12,
2005 (the “SLG Member Certificate”). 
The aforementioned SLG Member LLC Agreement and SLG Member Certificate
have not been terminated and continue to be in full force and effect.  The only member of the SLG Member is SLG.

 

(c)           The GKK Member represents and warrants to the SLG Member as follows:

 

(i)            The GKK Member is acquiring its interest in
the Company with, and the source of its Capital Contributions is, its own funds
or the funds of GKK, and not the funds of any third-party or equity investor.

 

(ii)           The
GKK Member is a Delaware limited liability company currently existing pursuant
to that certain Limited Liability Company Agreement entered into as of on or
about the date of this Agreement (the “GKK Member LLC Agreement”), and
that certain certificate of formation filed with Secretary of State of Delaware
on April 26, 2005 (the “GKK Member Certificate”).  The aforementioned GKK Member LLC Agreement
and GKK Member Certificate have not been terminated and continue to be in full
force and effect.  The only member of the
GKK Member is GKK.

 

(d)           Subject to the provisions of Section 3.02(b) hereof, each
Member agrees to indemnify and hold harmless the Company and the other Member
and their officers, directors, shareholders, partners, members, employees,
successors and assigns from and against any and all loss, damage, liability or
expense (including costs and attorneys fees) which they may incur by reason of,
or in connection with, any breach of 

 

51

 

the
foregoing representations and warranties by such Member and all such representations
and warranties shall survive the execution and delivery of this Agreement and
the termination and dissolution of the SLG Member, the GKK Member and/or the
Company.

 

13.02       Further Assurances.  Each Member agrees to execute,
acknowledge, deliver, file, record and publish such further instruments and
documents, and do all such other acts and things as may be required by law, or
as may be reasonably required to carry out the intent and purposes of this
Agreement.

 

13.03       Notices.  All notices of default,
demands, requests for or grants of consents or approvals, which any of the
parties to this Agreement may desire or be required to give hereunder
(collectively, “Material Notices”) shall be in writing and shall be
given by (a) personal delivery, (b) facsimile transmission with proof
of receipt or (c) a nationally recognized overnight courier service, fees
prepaid, addressed as follows:

 

	
  If to the GKK Member,
  to:

  	
   

  	
  c/o Gramercy Capital
  Corp.

  
	
   

  	
   

  	
  420 Lexington Avenue

  
	
   

  	
   

  	
  New York, New York
  10170

  
	
   

  	
   

  	
  Attn: Robert R. Foley

  
	
   

  	
   

  	
  Facsimile No.: (212)
  297-1002

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Morrison &
  Forrester LLP

  
	
   

  	
   

  	
  1290 Avenue of the
  Americas

  
	
   

  	
   

  	
  New York, New York
  10104

  
	
   

  	
   

  	
  Attn: Mark S.
  Edelstein, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (212)
  468-7900

  
	
   

  	
   

  	
   

  
	
  If to the SLG Member,
  to:

  	
   

  	
  c/o SL Green Realty
  Corp.

  
	
   

  	
   

  	
  420 Lexington Avenue

  
	
   

  	
   

  	
  New York, New York
  10170

  
	
   

  	
   

  	
  Attn: Andrew S. Levine

  
	
   

  	
   

  	
  Facsimile No.: (212)
  216-1785

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Paul, Hastings,
  Janofsky & Walker LLP

  
	
   

  	
   

  	
  75 East 55th Street

  
	
   

  	
   

  	
  New York, New York
  10022

  
	
   

  	
   

  	
  Attn: Robert J.
  Wertheimer, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (212)
  319-4090

  
	
   

  	
   

  	
   

  
	
  With an additional copy
  to:

  	
   

  	
  Paul, Hastings,
  Janofsky & Walker LLP

  
	
   

  	
   

  	
  1055 Washington
  Boulevard

  
	
   

  	
   

  	
  Stamford, Connecticut
  06901

  
	
   

  	
   

  	
  Attn: Mark G.
  Pedretti, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (203)
  674-7707

  

 

52

 

Any Member may designate
another addressee (and/or change its address) for Material Notices hereunder by
a Notice given pursuant to this Section 13.03.  A Notice sent in compliance with the
provisions of this Section 13.03 shall be deemed given on the date of
receipt.  Other than with regard to
Material Notices, communications under this Agreement shall be delivered and
exchanged among the Members in such mutually acceptable form as shall be
conducive to the use and implementation of the materials in question (e.g., by electronic mail or telecopier with regard to the
exchange of periodic financial information). 
Any mutually acceptable method of communication must provide for
confirmation of delivery or refusal thereof.

 

13.04       Governing Law.  This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Delaware applicable to agreements made and to be performed wholly within that
State.

 

13.05       Attorney Fees.  If the Company or any Member
obtains a judgment against any Member by reason of the breach of this Agreement
or the failure to comply with the terms hereof, reasonable attorneys’ fees and
costs as fixed by the court shall be included in such judgment.

 

13.06       Captions.  All titles or captions contained
in this Agreement are inserted only as a matter of convenience and for
reference and in no way define, limit, extend, or describe the scope of this
Agreement or the intent of any provision in this Agreement.

 

13.07       Pronouns.  All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, and neuter,
singular and plural, as the identity of the party or parties may require.

 

13.08       Successors and Assigns.  This Agreement shall be binding upon the
parties hereto and their respective executors, administrators, legal
representatives, heirs, successors and assigns, and shall inure to the benefit
of the parties hereto and, except as otherwise provided herein, their
respective executors, administrators, legal representatives, heirs, successors
and assigns.

 

13.09       Extension Not a Waiver.  No delay or omission in the exercise of any
power, remedy or right herein provided or otherwise available to a Member or
the Company shall impair or affect the right of such Member or the Company
thereafter to exercise the same.  Any
extension of time or other indulgence granted to a Member hereunder shall not
otherwise alter or affect any power, remedy or right of any other Member or of
the Company, or the obligations of the Member to whom such extension or
indulgence is granted.

 

13.10       Creditors Not Benefited.  Nothing contained in this
Agreement is intended or shall be deemed to benefit any creditor of the
Company, any Subsidiary or any 

 

53

 

Member,
and no creditor of the Company, any Subsidiary or any Member shall be entitled
to require the Company or any Subsidiary to solicit or the Members to make any
Capital Contribution to the Company or any Subsidiary or to enforce any right
which the Company, any Subsidiary or any Member may have against any Member
under this Agreement or otherwise.

 

13.11       Severability.  In case any one or more of the
provisions contained in this Agreement or any application thereof shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and other
application thereof shall not in any way be affected or impaired thereby.

 

13.12       Entire Agreement.  This Agreement contains the
entire agreement between the parties relating to the subject matter hereof and
all prior agreements relative hereto which are not contained herein are
terminated.  Amendments, variations,
modifications or changes herein may be made effective and binding upon the
Members only by the setting forth of same in a document duly executed by each
Member, and any alleged amendment, variation, modification or change herein
which is not so documented shall not be effective as to any Member.

 

13.13       Publicity.  The parties agree that no
Member or any of its advisors shall issue any press release or otherwise
publicize or disclose the terms of this Agreement or the terms of the
acquisition of the Property, without the consent of the Managing Member, except
as such disclosure may be made in the course of normal reporting practices by
any Member to its members, shareholders or partners or as otherwise required by
law or rule of any stock exchange (and prior to any such disclosure the
disclosing Member will notify the other Member and provide it with a copy of
the proposed disclosure and an opportunity to comment thereon before the
disclosure is made).

 

13.14       Counterparts.  This Agreement may be executed
in multiple counterparts, each of which shall be an original but all of which
together shall constitute but one and the same agreement.

 

13.15       Confidentiality.

 

(a)           The terms of this
Agreement and all other business, financial or other information relating
directly to the conduct of the business and affairs of the Company or the
relative or absolute rights or interests of any of the Members that has not
been publicly disclosed pursuant to authorization by the Managing Member
(collectively, the “Confidential Information”) is confidential and
proprietary information of the Company, the disclosure of which would cause
irreparable harm to the Company and the Members.  Accordingly, each Member represents that it
has not and agrees that it will not and will direct its members, shareholders,
partners, directors, officers, agents, advisors and Affiliates not to, disclose
to any Person any Confidential Information or confirm any statement made by
third Persons regarding Confidential 

 

54

 

Information until the
Company has publicly disclosed the Confidential Information (which disclosure
shall be subject to approval by the Members and the Managing Member and has
notified each Member that it has done so; provided, however, that
any Member (or its Affiliates) may disclose such Confidential Information (i) if
required by law or rule of any stock exchange (it being specifically
understood and agreed that anything set forth in a registration statement or
any other document filed pursuant to law will be deemed required by law, and
provided that before making any disclosure of Confidential Information required
by law or rule of any stock exchange, the disclosing Member will notify
the other Member and provide it with a copy of the proposed disclosure and an
opportunity to comment thereon before the disclosure is made), (ii) in
connection with a Transfer of Interests or sale of the Property permitted
hereunder, (iii) as reasonably necessary in connection with any
transaction authorized pursuant to the terms of this Agreement or any Subsidiary
Agreement, (iv) if necessary for it to perform any of its duties or
obligations hereunder or in any property management, leasing, development or
construction management agreement to which it is a party covering the Property,
or (v) to any its attorneys, accountants, lenders and other professional
advisors who agree to maintain a similar confidence.

 

(b)           Subject to the provisions of Section 13.15(a), each Member agrees
not to disclose any Confidential Information to any Person (other than a Person
agreeing to maintain all Confidential Information in strict confidence or a
judge, magistrate or referee in any action, suit or proceeding relating to or
arising out of this Agreement or otherwise), and to keep confidential all
documents (including, without limitation, responses to discovery requests)
containing any Confidential Information. 
Each Member hereby consents in advance to any motion for any protective
order brought by any other Member represented as being intended by the movant
to implement the purposes of this Section 13.15 provided that, if a Member
receives a request to disclose any Confidential Information under the terms of
a valid and effective order issued by a court or governmental agency and the
order was not sought by or on behalf of or consented to by such Member, then
such Member may disclose the Confidential Information to the extent required if
the Member as promptly as practicable notifies the other Member of the
existence, terms and circumstances of the order, consults in good faith with
the other Member on the advisability of taking legally available steps to
resist or to narrow the order, and if disclosure of the Confidential
Information is required, exercises its best efforts to obtain a protective
order or other reliable assurance that confidential treatment will be accorded
to the portion of the disclosed Confidential Information that the other Member
may designate.  The cost (including,
without limitation, attorneys’ fees and expenses) of obtaining a protective
order covering Confidential Information designated by such other Member will be
borne by the Company.

 

(c)           The covenants contained in this Section 13.15 will survive the
Transfer of the Interest of any Member and the dissolution of the Company.

 

55

 

(d)           Notwithstanding anything contained in this Section 13.15 to the
contrary, nothing contained in this Agreement shall be deemed to prevent any
Member from making such disclosures as are required by applicable law,
including, without limitation, Federal or state securities laws.

 

13.16       Mandatory Arbitration.  Except for the Major Decisions described in Section 8.01,
any claim or controversy arising out of or relating to this Agreement,
including, without limitation, any dispute regarding a Major Decision that is
not resolved in accordance with the Buy-Sell Provision hereof (Section 8.01),
shall be resolved by arbitration administered by the American Arbitration
Association (“AAA”) in accordance with its Commercial Arbitration Rules and
its Optional Rules for Emergency Measures of Protection.  Any arbitration shall be held in New York,
New York before a single independent arbitrator.  Such arbitrator (i) shall not have
performed or been engaged to perform any services for the Company, SLG or GKK
(or any of their respective Affiliates) within the then-preceding three (3) years
and (ii) shall have had at least ten (10) years professional
experience in commercial real property development or management in New York
City, New York.  The arbitrator shall be
appointed by agreement of the Members or, if the Members cannot agree on an
arbitrator within fifteen (15) calendar days of the initiation of arbitration,
the arbitrator shall be appointed in accordance with the AAA’s default rules for
the appointment of arbitrators.  The
arbitrator shall apply the substantive laws of the State of Delaware, without
regard to choice of law considerations, and may grant any remedy or relief he
or she deems just and equitable, including, without limitation, provisional,
interim, or injunctive relief (in which case the Member granted such
provisional, interim, or injunctive relief may seek enforcement thereof in any
court of competent jurisdiction, without prejudice to the continued arbitration
of the claim or controversy).  The award
shall be in writing and shall set forth the reasoning on which it is
based.  The award shall be final,
binding, and non-appealable, and judgment upon the award may be entered by any
court of competent jurisdiction.  Any
claim will be time-barred unless arbitration is commenced within one (1) year
after the basis for the claim became known to the Member asserting it.  This time limit may be tolled by written
agreement of the Members.  All issues
relating to the timeliness of claims shall be resolved by the arbitrator. All
matters relating to the enforceability of this arbitration provision and any
award shall be governed by the Federal Arbitration Act, 9 U.S.C. Sec. 1, et
seq.  The pendency of an arbitration
shall not affect the ability of the SLG Member to exercise its rights under the
Call Provision hereof, which may be exercised at any time, except as expressly
set forth in Section 8.02.

 

13.17       Broker.  Each of the Members represent
that neither Member has retained any broker, finder or other commission or fee
agent, and no such person has acted on its behalf in connection with the
acquisition of the Property, its Interest in the Company or any interest in any
Subsidiary or the execution and delivery of 

 

56

 

this
Agreement or any Subsidiary Operating Agreement.  The Members agree that any brokerage fee,
finders fee or similar fee payable to the broker in connection with the
acquisition of the Property, its Interest in the Company or any interest in any
Subsidiary or the execution and delivery of this Agreement or any Subsidiary
Operating Agreement shall be paid by the SLG Member under a separate agreement
between the SLG Member and the broker, and that the SLG Member shall indemnify
and hold the GKK Member harmless in connection therewith.

 

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57

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date set forth in the
introductory paragraph hereof.

 

	
   

  	
  GKK MEMBER:

  
	
   

  	
   

  
	
   

  	
  GKK Madison Investment LLC, a Delaware

  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SLG MEMBER:

  
	
   

  	
   

  
	
   

  	
  SLG Madison Investment LLC, a Delaware limited

  liability company

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

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