Document:

Exhibit
10.3

 

 

 

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

MACK-GREEN-GALE LLC

 

 

             ,
2006

 

 

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  I.

  	
  DEFINED
  TERMS

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  1.01

  	
  Defined
  Terms

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.02

  	
  Other
  Terms

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
  ORGANIZATION

  	
  19

  
	
   

  	
   

  	
   

  
	
   

  	
  2.01

  	
  Formation

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.02

  	
  Name
  and Principal Place of Business

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.03

  	
  Term

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.04

  	
  Registered
  Agent, Registered Office and Foreign Qualification

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.05

  	
  Purpose

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
  MEMBERS

  	
  21

  
	
   

  	
   

  	
   

  
	
   

  	
  3.01

  	
  Admission
  of Members

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.02

  	
  Limitation
  on Liability.

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.03

  	
  Third-Party
  Debt Liability

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
  CAPITAL

  	
  22

  
	
   

  	
   

  	
   

  
	
   

  	
  4.01

  	
  Initial
  Capital Contributions

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.02

  	
  Additional
  Class B Property Capital Contributions

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.03

  	
  Deadlock
  Advances

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.04

  	
  Class
  B Property Capital Contributions and Remedies.

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.05

  	
  Class
  A Property Capital Contributions

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.06

  	
  Class
  C Property Capital Contributions

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.07

  	
  Capital
  Accounts

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.08

  	
  No
  Further Capital Contributions

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.09

  	
  Book
  Basis Adjustments

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.10

  	
  Reconciliation

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
  INTERESTS
  IN THE COMPANY

  	
  30

  
	
   

  	
   

  	
   

  
	
   

  	
  5.01

  	
  Percentage
  Interests

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.02

  	
  Return
  of Capital

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.03

  	
  Ownership

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.04

  	
  Waiver
  of Partition; Nature of Interests in the Company

  	
  30

  

 

ii

 

	
  VI.

  	
  ALLOCATIONS
  AND DISTRIBUTIONS

  	
  31

  
	
   

  	
   

  	
   

  
	
   

  	
  6.01

  	
  Allocations

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.02

  	
  Special
  Allocations and Compliance with Section 704(b)

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.03

  	
  Distributions

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.04

  	
  Distributions
  in Liquidation

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.05

  	
  Reinvestment
  of Cash Flow

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.06

  	
  Tax
  Matters

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.07

  	
  Tax
  Matters Partner

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.08

  	
  Section
  704(c)

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.09

  	
  REIT
  Compliance.

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
  MANAGEMENT

  	
  37

  
	
   

  	
   

  	
   

  
	
   

  	
  7.01

  	
  Management.

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.02

  	
  Members
  of the Executive Committee.

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.03

  	
  Manager.

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.04

  	
  Management
  of the Class A Properties

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.05

  	
  Management
  of the Class C Properties

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.06

  	
  Services
  and Fees; Affiliate Transactions.

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.07

  	
  Duties
  and Conflicts.

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.08

  	
  Company
  Expenses

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.09

  	
  Sale
  of the Class B Properties.

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.10

  	
  Termination
  of Other Agreements

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.11

  	
  Distributions
  in Kind

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.12

  	
  CLI
  Special Right to Acquire Class B Property Subsidiary

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.13

  	
  Resolution
  of Deadlock

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
  BUY-SELL
  PROVISIONS

  	
  62

  
	
   

  	
   

  	
   

  
	
   

  	
  8.01

  	
  General
  Provisions

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.02

  	
  Termination
  of Other Agreements

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.03

  	
  Power
  of Attorney

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  IX.

  	
  BOOKS
  AND RECORDS

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.01

  	
  Books
  and Records

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.02

  	
  Accounting
  and Fiscal Year

  	
  64

  

 

iii

 

	
   

  	
  9.03

  	
  Reports.

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.04

  	
  The
  Company Accountant

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.05

  	
  Reserves

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.06

  	
  The
  Budget and Operating Plan.

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
  TRANSFER
  OF INTERESTS

  	
  69

  
	
   

  	
   

  	
   

  
	
   

  	
  10.01

  	
  No
  Transfer.

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.02

  	
  Permitted
  Transfers.

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.03

  	
  Transferees

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.04

  	
  Admission
  of Additional Members.

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.05

  	
  Tag-Along
  Rights.

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.06

  	
  Drag-Along
  Rights

  	
  74

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.07

  	
  Override
  on Permitted Transfers.

  	
  75

  
	
   

  	
   

  	
   

  	
   

  
	
  XI.

  	
  EXCULPATION
  AND INDEMNIFICATION

  	
  76

  
	
   

  	
   

  	
   

  
	
   

  	
  11.01

  	
  Exculpation

  	
  76

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.02

  	
  Indemnification.

  	
  76

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.03

  	
  CLI
  Member Reimbursement; Indemnity.

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.04

  	
  Gale/SLG
  Member Reimbursement; Indemnity.

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.05

  	
  Special
  Indemnities.

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
  XII.

  	
  DISSOLUTION
  AND TERMINATION

  	
  80

  
	
   

  	
   

  	
   

  
	
   

  	
  12.01

  	
  Dissolution

  	
  80

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.02

  	
  Termination

  	
  80

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.03

  	
  Liquidating
  Member

  	
  81

  
	
   

  	
   

  	
   

  	
   

  
	
  XIII.

  	
  DEFAULT
  BY MEMBER

  	
  82

  
	
   

  	
   

  	
   

  
	
   

  	
  13.01

  	
  Events
  of Default

  	
  82

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.02

  	
  Effect
  of Event of Default

  	
  82

  
	
   

  	
   

  	
   

  	
   

  
	
  XIV.

  	
  MISCELLANEOUS

  	
  84

  
	
   

  	
   

  	
   

  
	
   

  	
  14.01

  	
  Covenants,
  Representations and Warranties of the Members.

  	
  84

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.02

  	
  Further
  Assurances

  	
  86

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.03

  	
  Notices

  	
  86

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.04

  	
  Governing
  Law

  	
  88

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.05

  	
  Captions

  	
  88

  

 

iv

 

	
   

  	
  14.06

  	
  Pronouns

  	
  88

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.07

  	
  Successors
  and Assigns

  	
  88

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.08

  	
  Extension
  Not a Waiver

  	
  88

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.09

  	
  Creditors
  Not Benefited

  	
  88

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.10

  	
  Recalculation
  of Interest

  	
  88

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.11

  	
  Severability

  	
  89

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.12

  	
  Entire
  Agreement

  	
  89

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.13

  	
  Publicity

  	
  89

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.14

  	
  Counterparts

  	
  89

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.15

  	
  Confidentiality.

  	
  89

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.16

  	
  Venue

  	
  90

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.17

  	
  Waiver
  of Jury Trial

  	
  91

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.18

  	
  Transition
  Services

  	
  91

  

 

	
  EXHIBIT A

  	
   

  	
  - Properties and Gross
  Asset Values

  
	
  EXHIBIT B

  	
   

  	
  - Operating Plan

  
	
  EXHIBIT C

  	
   

  	
  - Form of Management
  Agreement

  
	
  EXHIBIT D

  	
   

  	
  - Reconciliation Example

  

 

v

 

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

OF

MACK-GREEN-GALE LLC

 

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT of MACK-GREEN-GALE LLC
is made and entered into as of           
     , 2006, by and between MACK-CALI VENTURES L.L.C., a Delaware limited liability
company (together with its permitted successors and assigns, the “CLI Member”),
and GALE SLG NJ LLC, a New Jersey
limited liability company (together with its permitted successors and assigns,
the “Gale/SLG Member”).

 

R E C I T A L S:

 

WHEREAS, the Company (as hereinafter defined) was
formed pursuant to a Certificate of Formation, dated as of [March]        
2006, and filed with the Secretary of State of Delaware on [March]        ,
2006 (the “Certificate of Formation”) for the purpose of, among other
things, acquiring the Contributed Interest (as hereinafter defined);

 

WHEREAS, the Gale/SLG Member was the original member
of the Company and, pursuant to the terms of the Contribution and Sale
Agreement (as defined below), the CLI Member has acquired the CLI Member’s
Interest and been admitted as Member; and

 

WHEREAS, the parties desire to enter into this
Agreement to set forth the terms and conditions on which the Company will be
operated and governed.

 

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 Offer” has
the meaning set forth in Section 7.09(b) hereof.

 

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

 

“Additional Class B
Property Capital Contribution” means, with respect to any Member, any
contribution to the capital of the Company made by such Member pursuant to
Section 4.02 hereof (excluding Priority Loans on behalf of a Non-Contributing
Member arising for the failure to make a Required Capital Call).

 

“Adjusted Capital Account
Balance” means, with respect to any Member for any period, the balance, if
any, in such Member’s Capital Account as of the end of such period, 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).

 

“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, any other Person directly or indirectly controlling,
controlled by, or under common control with such Person or owning or
controlling, directly or indirectly, 51% or more of the outstanding voting
interests of such Person.  For purposes
of this definition, the term “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.

 

“Aggregate Class B
Property Capital Contributions” means, with respect to a Member, from time
to time, the aggregate Class B Property Capital Contributions made by such
Member to the Company pursuant to this Agreement.

 

“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.

 

“Allocated Percentage”
means, as to each Pool Owner, the relationship, expressed as a percentage, that
the Allocated Loan Amount (as defined in, and set forth in, the Pool Note) for
the Property owned by such Pool Owner bears to the original principal balance
of the Pool Loan.

 

“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.

 

2

 

“Budget” means the
consolidated annual budget covering the Company’s, GP’s, the OP’s and the Class
B Property Subsidiaries’ anticipated operations, as approved by the Executive
Committee 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, the GP, the OP and the Class B Property Subsidiaries, as approved by
the Executive Committee.

 

“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 Offer” has
the meaning set forth in Section 8.01 hereof.

 

“Buy-Sell Offer Price”
has the meaning set forth in Section 8.01(a) hereof.

 

“Capital Account”
means the separate account maintained for each Member under Section 4.07
hereof.

 

“Capital Contribution”
means the contributions made by the Members to the capital of the Company
pursuant to Article IV hereof.

 

“Cash Equivalents”
shall mean (a) debt instruments issued or guaranteed by the United States
or its agencies or instrumentalities and maturing within six months or less
from the date of acquisition; (b) commercial paper rated P-1 or A-1 on the
date of acquisition and maturing within six months or less from the date of
acquisition; (c) overnight time deposits (whether or not insured); (d) interest
bearing deposits in domestic and foreign branches of United States commercial
banks having capital and surpluses of at least $250,000,000; (e) money
market mutual funds with assets of at least $750,000,000, substantially all of
which assets consist of obligations of the type described in the foregoing
clauses; and (f) similar quality short term investments.

 

“Certificate of Formation”
has the meaning set forth in the Recitals to this Agreement.

 

“Class” means any of
the Class A Properties, the Class B Properties and the Class C Properties.

 

“Class A Overpayment”
means (a) the payment by Class A Pool Owners of amounts in respect of Debt
Service in excess of their aggregate Allocated Percentage thereof and (b) the
payment by Class A Pool Owners, by application of common reserve funds held by
the Loan Lender or otherwise, of amount incurred by or other otherwise properly
allocable to the Class B Pool Owner. “Class A Pool Default” means any
Event of Default (as defined in the Pool Loan Documents) occasioned or caused
by the action or inaction of a Class A Pool Owner or its direct or indirect
beneficial owners, or a condition or state of facts with respect to a Class A
Pool Property.

 

“Class A Pool Owners”
means 85 Livingston SPE LLC, 20 Waterview SPE LLC and 6 Becker SPE LLC.  Each of them is a “Class A Pool Owner”.

 

3

 

“Class A Pool Property”
means a Property owned by a Class A Pool Owner.

 

“Class A Properties”
means the properties identified on Exhibit A as Class A Properties.

 

“Class A Property Capital
Contribution” means, with respect to any Member, the Initial Class A
Property Equity Value of such Member and the cash contributions to the capital
of the Company made by such Member pursuant to Section 4.05 of this Agreement.

 

“Class A Property
Expenses” means, for any period, the sum of the total gross cash
expenditures of the Company and/or the Class A Property Subsidiaries during
such period relating solely to, or derived solely from, the Class A Properties
and Class A Property Subsidiaries, including without limitation (and the
following relate solely to the Class A Properties and Class A Property
Subsidiaries) (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 solely
attributable to the Class A Properties including debt service on any loans made
to the Company by the Members or any of their Affiliates, (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,  and (e) all
costs and expenditures related to any acquisition, sale, lease, disposition,
financing, refinancing, monetization or securitization of the Class A
Properties; provided, however, that Class A Property Expenses
shall not include (i) any expenditure properly attributable to the
liquidation of the Company and not specifically related to the Class A
Properties, (ii) non-cash expenses such as depreciation or amortization,
or (iii) any Class B Property Expenses or Class C Property Expenses.

 

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

 

“Class A Property Net
Profit” or “Class A Property Net Loss” means, for any taxable year
or portion thereof, Net Profit or Net Loss, as the case may be, determined by
reference only to Profit and Loss attributable to the Class A Properties.

 

“Class A Property Payout
Percentages” means with regard to each Member, the percentages set forth
below opposite its name as follows (subject to adjustment as provided in this
Agreement):

 

	
  Member

  	
   

  	
  Class A Property Payout Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CLI MEMBER

  	
   

  	
  98.958

  	
  %

  
	
  GALE/SLG MEMBER

  	
   

  	
  1.042

  	
  %

  

 

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

 

	
  CLI MEMBER 

  	
   

  	
  98.958 

  	
  %

  
	
  GALE/SLG MEMBER

  	
   

  	
  1.042

  	
  %

  

 

4

 

“Class A Property
Revenues” means, for any period, the sum of the total gross cash revenues
received by the Company and/or the Class A Property Subsidiaries during such
period relating solely to, or derived solely from, the Class A Properties,
including, without limitation, all receipts of the Company from (a) proceeds
from the sale or disposition of all or any portion of any Class A Properties or
the issuance or sale by the Company of any securities or additional interests
in the Company which relate solely to the Class A Properties, (b) rent
(including additional rent and percentage rent) paid to the Company from Class
A Properties, (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 Class A Properties
(including any and all insurance awards with regard thereto), (f) proceeds
from rent or business interruption insurance, if any, from the Class A
Properties, (g) proceeds from the financing, refinancing, monetization or
securitization of any of the Class A Properties, or any interest therein and
(h) other revenues and receipts realized by the Company, including,
without limitation, distributions and other payments and amounts received
directly or indirectly from the Class A Property Subsidiaries.

 

“Class A Property
Subsidiary” or “Class A Property Subsidiaries” means any direct or
indirect property-owning subsidiaries of the Company organized to directly or
indirectly hold, or hold interests in, any of the Class A Properties.

 

“Class B Overpayment”
means (a) the payment by the Class B Pool Owner of amounts in respect of Debt
Service in excess of its Allocated Percentage thereof and (b) the payment by
the Class B Pool Owner, by application of common reserve funds held by the Loan
Lender or otherwise, of amounts incurred by or otherwise properly allocable to
the Class A Pool Owner.

 

“Class B Pool Default”
means any Event of Default (as defined in the Pool Loan Documents) occasioned
or caused by the action or inaction of the Class B Pool Owner or its direct or
indirect beneficial owners, or a condition or state of facts with respect to
the Class B Pool Property.

 

“Class B Pool Owner”
means 75 Livingston SPE LLC.

 

“Class B Pool Property”
means the Property owned by the Class B Pool Owner.

 

“Class B Properties”
means the properties identified on Exhibit A as Class B Properties.

 

“Class B Property Capital
Contribution” means, with respect to any Member, the Initial Class B
Property Equity Value of such Member and the contributions to the capital of
the Company made by such Member pursuant to Sections 4.01, 4.02, 4.03 and 4.04
of this Agreement.

 

“Class B Property
Expenses” means, for any period, the sum of the total gross cash
expenditures of the Company during such period relating solely to, or derived
solely from, the Class B Properties or the operations of the Company, the GP
and the OP, including without limitation (a) all cash operating expenses
(including all fees, commissions, expenses and

 

5

 

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 solely attributable to the Class B Properties including debt service
on the CLI Loan and any other loans made to the Company by the Members or any
of their Affiliates, (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
the Class B Properties, (g) all Class B Property Uncontrollable Expenses
and (h) all Class B Property Necessary Expenses; provided, however,
that Class B Property Expenses shall not include (i) any payment or
expenditure to the extent such payment or expenditure is paid out of any
Reserve Account, (ii) non-cash expenses such as depreciation or
amortization, or (iii) any Class A Property Expenses or Class C Property
Expenses.  For the avoidance of doubt,
the Members shall use all reasonable efforts to determine which expenses of the
Company should be categorized as Class A Property Expenses, Class B Property
Expenses and Class C Property Expenses. 
Any expenses, however, which are not Class A Property Expenses or Class
C Property Expenses shall be Class B Property Expenses.

 

“Class B Property IRR”
means, with respect to a Member, the distribution of Class B Property Net Cash
Flow to such Member equal to all of such Member’s Aggregate Class B Property
Capital Contributions and an internal rate of return on such Aggregate Class B Property
Capital Contributions at the applicable percentage per annum, based on a 365 or
366-day year, as the case may be, commencing on the date or dates that such
Member’s Class B Property Capital Contribution(s) is (or are) received by the
Company, taking into account the timing and amounts of all such distributions
of Class B Property Net Cash Flow from the Company to such Member.  Class B Property IRR shall be computed by
assuming that such Class B Property Capital Contribution(s) made by a Member,
and all such distributions received by a Member, occur on the day on which they
are actually made or received.  Class B
Property IRR shall be calculated on a quarterly basis in arrears to achieve the
effective rates described in the definition of Class B Property Payout
Percentages.

 

“Class B Property
Necessary Expenses” means expenses of the Company and/or the Subsidiaries
to fund (a) debt service payments on the Company’s and/or the Class B
Property Subsidiaries’ financing (including expenses of curing any defaults
thereunder) of the Class B Properties, (b) real estate taxes, assessments
and utility charges on the Class B Properties, (c) any repairs necessary
to protect the life, health or safety of any Person or to prevent or mitigate
material damage to the Class B Properties, (d) other immediately necessary
expenditures, regular periodic maintenance and repairs, and additions or
modifications to the Class B Properties to comply with applicable laws or
insurance requirements, (e) legal compliance and reporting requirements in
connection with the Class B Properties, compliance with any final orders,
judgments or other proceedings and all costs and expenses related thereto
relating to the Class B Properties, and (f) all other costs and expenses
set forth in any approved Budget and Operating Plan.

 

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

 

6

 

“Class B Property Net
Profit” or “Class B Property Net Loss” means, for any taxable year
or portion thereof, Net Profit or Net Loss, as the case may be, determined by
reference only to Profit and Loss attributable to the Class B Properties
(including deductions with respect to Priority Loans under Section 4.03).

 

“Class B Property Payout
Percentages” means with regard to each Member, the percentages set forth
below opposite its name in the circumstances described below (in each case,
subject to adjustment as provided in this Agreement), with such percentages
being determined as of the moment each dollar of distribution is made to the
Members, as the same may vary from time-to-time as each dollar of distribution
is made to the Member:

 

(a)           Until such time as the CLI Member and the
Gale/SLG Member shall have received aggregate distributions of Class B Property
Net Cash Flow pursuant to Section 6.03(b)(ii) of this Agreement in an amount
equal to a Class B Property IRR of 10% per annum compounded quarterly, the Class
B Property Payout Percentages of the Members shall be as follows:

 

	
  Member

  	
   

  	
  Class B Property Payout Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CLI MEMBER 

  	
   

  	
  50

  	
  %

  
	
  GALE/SLG MEMBER

  	
   

  	
  50

  	
  %

  

 

(b)           Then, until such time as the Gale/SLG Member
shall have received aggregate distributions of Class B Property Net Cash Flow
pursuant to Section 6.03(b)(ii) of this Agreement in an amount equal to
$5,000,000, the Class B Property Payout Percentages of the Members shall be as
follows:

 

	
  Member

  	
   

  	
  Class B Property Payout Percentage

  	
   

  
	
  CLI MEMBER

  	
   

  	
  0

  	
  %

  
	
  GALE/SLG MEMBER

  	
   

  	
  100

  	
  %

  

 

(c)           Then, until such time as the CLI Member shall
have received aggregate distributions of Class B Property Net Cash Flow
pursuant to Section 6.03(b)(ii) of this Agreement in an amount equal to
$7,500,000, the Class B Property Payout Percentages of the Members shall be as
follows:

 

	
  Member

  	
   

  	
  Class B Property Payout Percentage

  	
   

  
	
  CLI MEMBER

  	
   

  	
  75

  	
  %

  
	
  GALE/SLG MEMBER

  	
   

  	
  25

  	
  %

  

 

(d)           Thereafter, the Class B Property Payout
Percentages of the Members will be as follows:

 

	
  Member

  	
   

  	
  Class B Property Payout Percentage

  	
   

  
	
  CLI MEMBER

  	
   

  	
  50

  	
  %

  
	
  GALE/SLG MEMBER

  	
   

  	
  50

  	
  %

  

 

7

 

“Class B Property
Percentage Interests” means with respect to each Member, the percentage set
forth below opposite its name which related solely to the Class B Properties
(subject to adjustment as provided in this Agreement):

 

	
  CLI MEMBER 

  	
   

  	
  50

  	
  %

  
	
  GALE/SLG MEMBER

  	
   

  	
  50

  	
  %

  

 

“Class B Property Return
of Capital Distributions” means, for any Member, that portion of the
aggregate distributions made to such Member pursuant to Section 6.03(b)(ii)
that constitute a return of Class B Property Capital Contributions of such
Member as distinguished from a return thereon. 
For this purpose, distributions made to a Member pursuant to Section
6.03(b)(ii) shall be deemed to constitute first a return on the Aggregate
Class B Property Capital Contributions of such Member until such Member shall
have received from all such distributions a Class B Property IRR of ten percent
(10%)  per annum, compounded quarterly,
on such Aggregate Class B Capital Contributions and thereafter shall constitute
a return of Class B Property Capital Contributions.  For example, assume that the Class B Capital
Contributions of a Member were $1,000X contributed on January 1, 2006.  On December 31, 2006, such Member receives a
Distribution under Section 6.03(b)(ii) in the amount of $150X.  In such case, the first $103.81 of the
Distribution represents the 10% per annum return on the $1,000X compounded
quarterly.  The remaining $46.19 of the
Distribution therefore constitutes a Class B Property Return of Capital
Distribution.

 

“Class B Property
Revenues” means, for any period, the sum of the total gross cash revenues
received by the Company during such period relating solely to, or derived solely
from, the Class B Properties, including all receipts of the Company from (a)
proceeds from the sale or disposition of all or any portion of any Class B
Properties or the issuance or sale by the Company of any securities or
additional interests in the Company which relate solely to the Class B
Properties, (b) rent (including additional rent and percentage rent) paid to
the Company from Class B Properties, (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 Class B Properties
(including any and all insurance awards with regard thereto), (f) proceeds from
rent or business interruption insurance, if any, from Class B Properties, (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 relating
solely to the Class B Properties, (h) proceeds from the financing,
refinancing, monetization or securitization of the Company or any of the Class
B Properties, 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 Class B Property
Subsidiaries; provided, however, that Class B Property Revenues shall not
include any revenue or receipt realized by the Company incident to the
liquidation of the Company or any Class A Property Revenue or Class C Property
Revenue.  For the avoidance of doubt, the
Members shall use all reasonable efforts to determine which revenues of the
Company should be categorized as Class A Property Revenues, Class B 

 

8

 

Property Revenues and Class
C Property Revenues.  Any revenues,
however, which are not Class A Property Revenues or Class C Property Revenues
shall be Class B Property Revenues.

 

“Class B Property
Subsidiary” or “Class B Property Subsidiaries” means Portfolio TRS
and any direct or indirect property-owning subsidiary of the Company organized
to directly or indirectly hold, or hold interests in, any of the Class B
Properties.

 

“Class B Property
Subsidiary Notice” has the meaning set forth in Section 7.12(b) hereof.

 

“Class B Property
Uncontrollable Expenses” means expenses of the Company related to the Class
B Properties and/or the Class B Property Subsidiaries to fund
(a) uncontested real estate taxes, assessments and utility charges,
(b) any repairs necessary to protect the life, health and safety of any
Person or to prevent or mitigate material damage to the Class B Properties,
(c) salaries and other payroll costs and expenses incurred in accordance
with applicable union and collective bargaining agreements relating to the
Class B Properties, and (d) all other costs and expenses which (in the
best judgment of the Manager) the failure to pay (i) would result in a
material default pursuant to any material contract or agreement to which the
Company and/or any Class B Property Subsidiary is a party or (ii) would
have a material adverse effect upon the value of or cause material damage to
the Class B Properties or (iii) would result in a material risk of loss of
life or serious bodily injury to any Person.

 

“Class C Properties”
means the properties identified on Exhibit A as Class C Properties.

 

“Class C Property Capital
Contribution” means, with respect to any Member, the Initial Class C
Property Equity Value of such Member and the cash contributions to the capital
of the Company made by such Member pursuant to Section 4.06 of this
Agreement.

 

“Class C Property
Expenses” means, for any period, the sum of the total gross cash
expenditures of the Company and/or the Class C Property Subsidiaries during
such period relating solely to, or derived solely from, the Class C Properties
and Class C Property Subsidiaries, including without limitation (and the
following relate solely to the Class C Properties and Class C Property
Subsidiaries) (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 solely
attributable to the Class C Properties including debt service on any loans made
to the Company by the Members or any of their Affiliates, (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, and (e) all costs and expenditures related to any
acquisition, sale, lease, disposition, financing, refinancing, monetization or
securitization of the Class C Properties; provided, however, that
Class C Property Expenses shall not include (i) any expenditure properly
attributable to the liquidation of the Company and not specifically related to
the Class C Properties, (ii) non-cash expenses such as depreciation or
amortization, or (iii) any Class A Property Expenses or Class B Property Expenses.

 

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

 

9

 

“Class C Property Net
Profit” or “Class C Property Net Loss” means, for any taxable year
or portion thereof, Net Profit or Net Loss, as the case may be, determined by
reference only to Profit and Loss attributable to the Class C Properties.

 

“Class C Property Payout
Percentages” means with regard to each Member, the percentages set forth
below opposite its name as follows (subject to adjustment as provided in this
Agreement):

 

	
  Member

  	
   

  	
  Class C Property Payout Percentage

  	
   

  
	
  CLI MEMBER 

  	
   

  	
  1.042 

  	
  %

  
	
  GALE/SLG MEMBER

  	
   

  	
  98.958

  	
  %

  

 

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

 

	
  CLI MEMBER 

  	
   

  	
  1.042

  	
  %

  
	
  GALE/SLG MEMBER

  	
   

  	
  98.958

  	
  %

  

 

“Class C Property
Revenues” means, for any period, the sum of the total gross cash revenues
received by the Company and/or the Class C Property Subsidiaries during such
period relating solely to, or derived solely from, the Class C Properties,
including, without limitation, all receipts of the Company from (a) proceeds
from the sale or disposition of all or any portion of the Class C Properties or
the issuance or sale by the Company of any securities or additional interests
in the Company which relate solely to the Class C Properties, (b) rent (including
additional rent and percentage rent) paid to the Company from Class C
Properties, (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 Class C Properties (including any and all
insurance awards with regard thereto), (f) proceeds from rent or business
interruption insurance, if any, from the Class C Properties, (g) proceeds from
the financing, refinancing, monetization or securitization of any of the Class
C Properties, or any interest therein and (h) other revenues and receipts
realized by the Company, including, without limitation, distributions and other
payments and amounts received directly or indirectly from the Class C Property
Subsidiaries.

 

“Class C Property
Subsidiary” or “Class C Property Subsidiaries” means any direct or
indirect property-owning subsidiaries of the Company organized to directly or
indirectly hold, or hold interests in, any of the Class C Properties.

 

“CLI” means Mack-Cali
Realty Corporation, a Maryland corporation.

 

“CLI Loan” has the
meaning set forth in Section 4.02 hereof.

 

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

 

“CLI Member Indemnity
Share” of any amount means the difference between (a) the OP Percentage
Interest, times the CLI Member’s Class A Property Percentage Interest, times
the 

 

10

 

Gale/SLG Member’s Class B
Property Percentage Interest, times such amount, and (b) the OP Percentage
Interest, times the Gale/SLG Member’s Class A Property Percentage Interest,
times the CLI Member’s Class B Property Percentage Interest, times such amount.

 

“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
Mack-Green-Gale LLC, 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).

 

“Confidential Information”
has the meaning set forth in Section 14.16(a) hereof.

 

“Contributed Interest”
means 100% of the membership interests in the GP and 32,427,292 limited
partnership units of the OP.

 

“Contributing Member”
has the meaning set forth in Section 4.04(b) hereof.

 

“Contribution and Sale
Agreement” has the meaning set forth in Section 2.05(a)(i) hereof.

 

“Contribution and
Subscription Agreements” has the meaning set forth in the Contribution and
Sale Agreement.

 

“Deadlock” has the
meaning set forth in Section 7.13(a).

 

“Deadlock Advance”
has the meaning set forth in Section 4.03 hereof.

 

“Deadlock Advancing
Member” has the meaning set forth in Section 4.03 hereof.

 

“Deadlock Non-Advancing
Member” has the meaning set forth in Section 4.03 hereof.

 

“Deadlock Notice” has
the meaning set forth in Section 7.13(a).

 

“Debt Service” means
any payment of principal or interest on the Pool Note, together with payment of
any fees required by the Pool Loan Documents (other than fees associated with a
default or Event of Default (as defined in the Pool Loan Documents) or fees
chargeable to a particular Pool Owner by reason of any request for consent,
withdrawals from reserves or escrows or similar matters).

 

“Defaulting Member”
has the meaning set forth in Section 13.01 hereof.

 

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

 

11

 

“Drag-Along Notice”
has the meaning set forth in Section 10.06(a) hereof.

 

“Drag-Along Period”
has the meaning set forth in Section 10.06(a) hereof.

 

“Drag-Along Right”
has the meaning set forth in Section 10.06(a) hereof.

 

“Eastdil Commission”
means the commission due Eastdil Realty in connection with the transactions
contemplated by the Contribution and Sale Agreement.

 

“Electing Member” has
the meaning set forth in Section 7.09(b) hereof.

 

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

 

“Electronic Participation”
has the meaning set forth in Section 7.02(f) hereof.

 

“Embargoed Person”
has the meaning set forth in Section 14.01(a)(x) hereof.

 

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

 

“Executive Committee”
means the committee formed and operated by representatives of the Managers
pursuant to Sections 7.01 and 7.02 hereof.

 

“Expenses” means any
of the Class A Property Expenses, Class B Property Expenses and Class C
Property Expenses.

 

“Expert” has the
meaning set forth in Section 7.13(h) hereof.

 

“Expert Determination”
has the meaning set forth in Section 7.13(h) hereof.

 

“Final Fair Market Value”
has the meaning set forth in Section 7.12(b) hereof.

 

“Final Lease Proposal”
has the meaning set forth in Section 7.01(a)(xv) hereof.

 

“Formation Costs” has
the meaning set forth in Section 4.01 hereof.

 

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

 

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

 

“Gale/SLG Member
Indemnity Share” of any amount means the difference between (a) the OP
Percentage Interest, times the Gale/SLG Member’s Class B Property Percentage
Interest, times CLI Member’s Class A Property Percentage Interest, times such
amount, and (b) the OP Percentage Interest, times the CLI Member’s Class B
Property Percentage Interest, times the Gale/SLG Member’s Class A Property Percentage
Interest, times such amount.

 

“GP” means Gale SLG
NJ GP LLC, a Delaware limited liability company and the general partner of the
OP.

 

“Indemnified Party”
has the meaning set forth in Section 11.02 hereof.

 

12

 

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

 

“Initial Class A Property
Equity Value” means, with respect to any Member, the equity value
attributable to the Class A Properties in connection with the contribution by
such Member of the Retained Interest or the Sold Interest, as the case may be,
as described in Section 4.01.

 

“Initial Class B Property
Equity Value” means, with respect to any Member, the equity value
attributable to the Class B Properties in connection with the contribution
by such Member of the Retained Interest or the Sold Interest, as the case may
be, as described in Section 4.01.

 

“Initial Class C Property
Equity Value” means, with respect to any Member, the equity value
attributable to the Class C Properties in connection with the contribution by
such Member of the Retained Interest or the Sold Interest, as the case may be,
as described in Section 4.01.

 

“Initial Operating Plan”
has the meaning set forth in Section 9.06 hereof.

 

“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.

 

“Lease Proposal” has
the meaning set forth in Section 7.01(a)(xv) hereof.

 

“Lender” has the
meaning set forth in Section 8.01(c) hereof.

 

“LIBOR Business Day”
shall mean any day other than a Saturday, Sunday or any other day on which
commercial banks in London, England are not open for business.

 

“LIBOR” means with
respect to each calendar month during any part of which any principal is
advanced and outstanding under the CLI Loan, the rate (expressed as a
percentage per annum and rounded upward, if necessary, to the next nearest
1/1000 of 1%) for deposits in U.S. dollars, for a one-month period, that
appears on Telerate Page 3750 (or the successor thereto) as of 11:00 a.m.,
London time, on the first LIBOR Business Day of such month.  If such rate does not appear on Telerate Page
3750 as of 11:00 a.m., London time, on such determination date, the LIBOR Rate
shall be the arithmetic mean of the offered rates (expressed as a percentage
per annum) for deposits in U.S. dollars for a one month period that appear on
the Reuters Screen Libor Page as of 11:00 a.m., London Time, on such
determination date, if at least two such offered rates so appear.

 

“Liquidating Member”
means the Member designated as such by the Executive Committee from
time-to-time; provided, however, that any Member that causes the
dissolution of the Company under Section 12.01(d) hereof or with respect to
which an Event of Default has occurred shall not serve as the Liquidating
Member.

 

“Loan Lender” means
the lender under the Pool Loan.

 

“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 

 

13

 

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 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 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.

 

“Losses” means all
damages, losses, liabilities, claims, costs or expenses (including, without
limitation, attorneys’ fees, expenses, disbursements and court costs) suffered
or incurred.

 

“LP Claim” has the
meaning set forth in Section 11.05(a).

 

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

 

“Management Agreement”
has the meaning set forth in Section 7.06(a) hereof.

 

“Manager” means the
CLI Member and any other Person who, from time-to-time, is appointed as a
Manager of the Company in accordance with this Agreement, so long as such
Person continues as a Manager of the Company.

 

“Material Disagreement”
means a material irreconcilable dispute among the Members regarding the
management, operations or strategic direction of the Company and/or its
Subsidiaries that continues to be in effect for a period of not less than
thirty (30) calendar days.

 

“Material Notices”
has the meaning set forth in Section 14.03 hereof.

 

“Mediation” has the
meaning set forth in Section 7.13(c) hereof.

 

“Mediator” has the
meaning set forth in Section 7.13(c) hereof.

 

14

 

“Member” or “Members”
means one or more (as the case may be) of the CLI Member or the Gale/SLG 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).

 

“Net Cash Flow” means
any of the Class A Property Net Cash Flow, the Class B Property Net Cash Flow
and the Class C Property Net Cash Flow.

 

“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 4.04(b) hereof.

 

“Non-Defaulting Member”
has the meaning set forth in Section 13.02 hereof.

 

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

 

“Notice” has the
meaning set forth in Section 7.09(b) hereof.

 

“Offeree” has the
meaning set forth in Section 8.01 hereof.

 

“Offeror” has the
meaning set forth in Section 8.01 hereof.

 

“OP” means Gale SLG
NJ Operating Partnership, L.P., a New Jersey limited partnership.

 

“OP Percentage Interest”
has the meaning set forth in the Contribution and Sale Agreement.

 

“Operating Plan”
means the overall and annual consolidated strategic and comprehensive operating
plan for the Company, the GP, the OP and the Class B Property Subsidiaries
covering the Company’s, the GP’s, the OP’s and the Class B Property
Subsidiaries’ anticipated operations, as approved by the Executive Committee
and in effect from time-to-time pursuant to Section 9.06 hereof.  The Operating Plan will generally include no
less than those matters described in Section 9.06(b) hereof and no less than
the details and other matters of the type set forth on Exhibit B
attached hereto and such other matters as are reasonably requested by the
Members.

 

15

 

“Ordinary Course” has
the meaning set forth in Section 7.01(a)(xxviii) hereof.

 

“Owner” means a
property-owning Subsidiary which is the owner of a Property.

 

“Payout Percentages”
means the Class A Property Payout Percentages, the Class B Property Payout
Percentages and the Class C Property Payout Percentages.

 

“Percentage Interest”
means, as applicable, a Class A Property Percentage Interest, Class B Property
Percentage Interest or Class C Property Percentage Interest.

 

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

 

“Pool Debt Service”
means any payment of principal or interest on the Pool Note, together with
payment of any fees required by the Pool Loan Documents (other than fees
associated with a default or Event of Default or fees chargeable to a
particular Pool Owner by reason of any request for consent, withdrawals from
reserves or escrows or similar matters).

 

“Pool Loan” means the
loan evidence by the Pool Note.

 

“Pool Loan Documents”
means any and all documents evidencing or securing the Pool Loan.

 

“Pool Owners” means
the Class A Pool Owners and the Class B Pool Owner.

 

“Pool Note” means
that certain Promissory Note, dated July 30, 2004, in the principal amount of
$72,955,000.00 made by Pool Owners to Wachovia Bank, National Association.

 

“Portfolio TRS” means
Gale SLG NJ TRS Corp., a Delaware corporation.

 

“Priority Loans”
means (i) with respect to any Contributing Member, any advance made by such
Contributing Member and designated or characterized by the Contributing Member
as a Priority Loan pursuant to Section 4.03, including both the
Non-Contributing Member’s share of such amount advanced by the Contributing
Member pursuant to Section 4.04(b)(ii) and the Contributing Member’s share of
such amount advanced by the Contributing Member pursuant to Section 4.02 hereof
or (ii) with respect to any Deadlock Advancing Member, any advance made by such
Deadlock Advancing Member and designated or characterized by the Deadlock
Advancing Member as a Priority Loan pursuant to Section 4.03 hereof.

 

“Priority Loans IRR”
means, with respect to a Member, the distribution of Class B Property Net Cash
Flow to such Member equal to the principal amount of all of such Member’s
Priority Loans and an internal rate of return on such Member’s Priority Loans
at the applicable percentage per annum, based on a 365 or 366-day year, as the
case may be, commencing on the date or dates that such Member’s Priority
Loan(s) is (or are) received by the Company, taking into account the timing and
amounts of all such distributions of Class B Property Net Cash Flow from the
Company to such Member.  Priority Loans
IRR shall be computed by assuming that such Priority Loan(s) made by a Member,
and all such distributions received by a Member, occur

 

16

 

on the day on which they are
actually made or received.  Priority
Loans IRR shall be calculated on a quarterly basis in arrears to achieve the
effective rates described in Section 6.03(b)(i).

 

“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.

 

“Properties” means
the Class A Properties, Class B Properties and Class C Properties.

 

“Property Subsidiary”
means a Class A Property Subsidiary, Class B Property Subsidiary or Class C
Property Subsidiary.

 

“Proposing Member”
has the meaning set forth in Section 7.09(a) hereof.

 

“Purchaser” means any
third-party prospective purchaser or purchasers of all or any portion of the
Interests of a Member which is not a Related Person of such Member.

 

“Qualified Manager”
means a reputable and experienced professional management organization which
manages, together with its Affiliates, at least ten (10) properties of a type,
quality and size similar to the Properties, totaling at least, in the
aggregate, no less than 5,000,000 square feet.

 

“Readily Marketable
Securities” means those securities that (a) are (i) debt or
equity securities of or other interests in any Person that are traded on a
national security exchange, reported on by the National Association of Securities
Dealers Automated Quotation System or otherwise actively traded over the
counter or (ii) debt securities of an issuer that has debt or equity
securities that are so traded or so reported on and that a nationally
recognized securities firm has agreed to make a market in and (b) are not
subject to restrictions on transfer as a result of any applicable contractual
provisions or the provisions of the Securities Act of 1933, as amended.

 

17

 

“Reasonable Period”
means, with respect to any Defaulting Member, a period of thirty (30) calendar
days after such Defaulting Member receives written notice of its default from
the Non-Defaulting Member; provided, however, that if such breach
can be cured but cannot reasonably be cured within such 30-day period, the
period shall continue, if such Defaulting Member commences to cure the breach
within such 30-day period, for so long as such Defaulting Member diligently
prosecutes the cure to completion up to a maximum of one hundred eighty (180)
calendar days.

 

“REIT” means a real
estate investment trust as defined under the Code.

 

“REIT Requirements”
has the meaning set forth in Section 6.09(a) hereof.

 

“Related Persons”
means, as to any Person, its Affiliates, members, partners, directors,
officers, shareholders and employees.

 

“Required Capital Call”
has the meaning set forth in Section 4.02 hereof.

 

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

 

“Response Period” has
the meaning set forth in Section 7.09(b) hereof.

 

“Retained Interest”
has the meaning set forth in Section 4.01 hereof.

 

“ROFO Class B Property
Interests” has the meaning set forth in Section 7.09(a) hereof.

 

“ROFO Trigger Sale”
has the meaning set forth in Section 7.09(a) hereof.

 

“Sale” has the
meaning set forth in Section 10.05 hereof.

 

“Shortfall” has the
meaning set forth in Section 4.02 hereof.

 

“Similar CLI/Gale
Properties” has the meaning set forth in Section 7.07(c) hereof.

 

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

 

“Sold Interest” has
the meaning set forth in Section 4.01 hereof.

 

“Status Reports”
means those monthly status reports and other information provided for in
Section 7.03(d)(vii) hereof.

 

“Subsidiaries” means
the GP, the OP, the Class A Property Subsidiaries, the Class B Property
Subsidiaries and the Class C Property Subsidiaries.

 

“Tag-Along Right” has
the meaning set forth in Section 10.05(b) hereof.

 

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

 

18

 

Basis (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 (except that if the nonrecourse
liabilities secured by an asset exceed the Book Basis of such asset, such
calculation shall be made assuming that the asset were transferred to the
lender in satisfaction of the debt) and all remaining proceeds from such sale
were distributed pursuant to Section 6.03 over (b) such Member’s share of
Company Minimum Gain and Member Minimum Gain immediately prior to such sale.

 

“Target Class B Property
Subsidiary” has the meaning set forth in Section 7.12(b) hereof.

 

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

 

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

 

“Transfer ROFO Notice”
has the meaning set forth in Section 10.02(e) 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 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 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.

 

II.            ORGANIZATION

 

2.01         Formation.  The Gale/SLG Member has formed
the Company by the filing of the Certificate of Formation with the Secretary of
State of the State of Delaware on [March]      ,
2006.  From and after the date of this
Agreement, the Members hereby agree that the Company shall be 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 Manager, or any other Person

 

19

 

authorized by the Executive
Committee, is hereby authorized to file and record any amendments to the
Certificate of Formation and such other documents as may be required or
appropriate under the Delaware Act or the laws of any other jurisdiction in
which the Company may conduct business or own property.

 

(a)           [                ],
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 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,
his powers as an “authorized person” ceased, and the Manager thereupon became
the designated “authorized person” and shall continue as the designated
“authorized person” within the meaning of the Delaware Act.  The Manager 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 the State of New Jersey
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
Mack-Green-Gale LLC.  The Executive
Committee 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 Manager, c/o
Mack-Cali Realty Corporation, 11 Commerce Drive, Cranford, New Jersey.  The Executive Committee 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.  The Manager may from time to time change its
place of business or may change or establish such substitute or additional
offices or places of business as it may deem necessary or appropriate, so long
as any such additional offices or places of business are in the State of New
Jersey.

 

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 by the unanimous written consent of the Members.

 

2.04         Registered Agent, Registered Office and
Foreign Qualification.  The name of the Company’s registered agent
for service of process shall be Corporation Service Company, 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 [                          ].  Such agent and such office may be changed
from time-to-time by the Executive Committee. 
The Manager, or any other Person authorized by the Executive Committee,
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

 

20

 

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 accept and hold the Contributed Interest
at closing under that certain Contribution and Sale Agreement dated as of
March       , 2006 (as such agreement may be
amended from time to time, the “Contribution and Sale Agreement”) by and
among the Gale/SLG Member, Gale SLG NJ MEZZ LLC, Gale SLG Ridgefield MEZZ LLC
and MACK-CALI VENTURES L.L.C.;

 

(ii)           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 Properties;

 

(iii)          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 or in violation of the Delaware Act or the laws of any
other jurisdiction in which the Company transacts or conducts its business; and

 

(iv)          To engage in any other business or activity
approved by the Executive Committee (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 not engage in any other
business or activity without the approval of the Executive Committee.

 

III.           MEMBERS

 

3.01         Admission of Members.  The
CLI Member and the Gale/SLG 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 prior written approval of the
Executive Committee.

 

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 the applicable 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 11.02(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 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 member of the Executive

 

21

 

Committee, general or
limited partner of any Member, shareholder, member or other holder of any
equity or other ownership or beneficial interest of any Member, or any officer,
director or employee of any of the foregoing or any of their Related Persons
shall be obligated personally for any debt, obligation or other liability of
the Company or any Subsidiary solely by reason of their being a member of the
Executive Committee, general or limited partner of any Member, shareholder or
member or other holder of any equity interest of any Member, or officer,
director or employee of any of the foregoing or any of their Related Persons.  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 or the Delaware Act shall not be grounds
for the Manager, any Member, member of the Executive Committee, general or
limited partner of any Member, shareholder or member or other holder of any
equity interest of any Member, or any officer, director or employee of any of
the foregoing or any of their Related Persons 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 11.02(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 any Related Person of another
Member (unless such Related Person is itself a Member) or any past, present or
future officers, agents, shareholders, incorporators, directors, principals
(direct or indirect), affiliates, partners, members or representatives of
another Member (unless the same is itself a 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)           The provisions of this Section 3.02 shall
survive the termination or expiration of this Agreement.

 

3.03         Third-Party Debt Liability.  The
parties intend that no Member, or any of its Related Persons, 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-boy acts” or with
regard to any other matter, unless otherwise approved by the Executive
Committee.

 

IV.           CAPITAL

 

4.01         Initial Capital Contributions.  (a)
The Gale/SLG Member shall be treated, for all purposes of this Agreement,
as having sold to the CLI Member a portion of the Contributed Interest
(the “Sold Interest”) on the date hereof and retained the balance of the
Contributed Interest (the “Retained Interest”), immediately following
which the Gale/SLG Member contributed the Retained Interest and the CLI
Member contributed the Sold Interest to the Company.  The parties agree
that the fair market value of the Sold Interest as of the date hereof, and
thus its initial Gross Asset Value, is
$           and the fair
market value of the Retained Interest as of the date hereof, and thus its
initial Gross Asset Value, is $              . 
The parties further agree that the initial Gross Asset Value of the
Retained Interest is composed of
$           equity value
attributable to the Class A Properties, $          
equity value attributable to the Class B Properties and $         
equity value attributable to the Class C Properties and that the
initial Gross Asset Value of the Sold Interest is composed of $         
equity value attributable to the 

 

22

 

Class A Properties,
$          equity value
attributable to the Class B Properties and
$            equity
value attributable to the Class C Properties.  Set forth on Exhibit A is the Gross
Asset Value for each of the Properties.  [Note:  Final
values to be determined at Closing.]

 

(b)           Subject to Section 7.08 hereof, the Initial Class
B Capital Contributions include funds to pay $          [Note: Amount to be agreed at Closing]
related to the Eastdil Commission and to pay (or reimburse each Member to the
extent already paid by such Member) the estimated formation costs, including legal,
and other professional fees, as agreed to by the Members (collectively, “Formation
Costs”).

 

4.02         Additional Class B Property 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 for any purpose relating to the
Class B Properties or the operations of any Class B Property Subsidiary in
excess of the Initial Class B Capital Contributions, reserves held by or on
behalf of the Company and available cash flow (a “Shortfall”), such
funds, up to $10,000,000, shall be provided by the CLI Member to the Company,
pursuant to an unsecured floating rate line of credit bearing interest at LIBOR
plus 400 basis points per annum (the “CLI Loan”).  Notwithstanding Section 6.0(b), the Company
shall not make any distributions of Class B Property Net Cash Flow if any
amount of the CLI Loan shall be outstanding. 
If the CLI Loan is insufficient to cover all of the Shortfall, the
Executive Committee shall have the option to request in writing that the
Members make Additional Class B Property Capital Contributions to the Company
in the amount of the excess of such Shortfall over the principal amount of the
CLI Loan (a “Required Capital Call”). 
If so requested by the Executive Committee, each Member shall, within
fifteen (15) Business Days thereafter, contribute its pro rata share (based
upon its then Class B Property Percentage Interest) of the amount of the
applicable Shortfall.  If within such fifteen
(15) Business Day period, any Non-Contributing Member fails to contribute the
foregoing amount to the Company, the Contributing Member may exercise any one
of the remedies set forth in Section 4.04(b).

 

4.03         Deadlock Advances.  To
the extent reserves held by or on behalf of the Company, available cash flow
and the CLI Loan are insufficient to pay Class B Property Necessary Expenses
and the Executive Committee is unable or unwilling for any reason for more than
five (5) Business Days after the written request by any Member or any member of
the Executive Committee to make a Required Capital Call from the Members to pay
Class B Property Necessary Expenses, either Member will have the option (but
not the obligation), in its sole and absolute discretion, to advance (a “Deadlock
Advance”) to the Company the amount of such Class B Property Necessary
Expenses which are unfunded by reserves, available cash flow and the CLI Loan; provided,
however, the aggregate amount advanced by the Member to the Company
pursuant to the provisions of this Section 4.03 for Class B Property Necessary
Expenses (including, in each case, Deadlock Advances designated or
recharacterized as Priority Loans as set forth below) may not exceed an
aggregate amount which, when added to the amounts previously advanced by such
Member to the Company pursuant to the provisions of this Section 4.03
(excluding any Deadlock Advances designated or recharacterized as Additional
Class B Property Capital Contributions), exceeds an aggregate amount equal to
five (5%) percent of the aggregate amount of the Initial Class B Capital
Contributions of all of the Members to the

 

23

 

Company.  Upon making a Deadlock Advance, the Member
making such Deadlock Advance (the “Deadlock Advancing Member”) will
notify the non-advancing Member (the “Deadlock Non-Advancing Member”) in
writing of the amount of such Deadlock Advance. 
Within fifteen (15) calendar days after receipt of such notice, the
Deadlock Non-Advancing Member may advance to the Company an amount of cash
equal to the amount of such Deadlock Advance multiplied by its then Class B
Property Percentage Interest.  Any amount
advanced pursuant to the preceding sentence will be immediately distributed to
the Deadlock Advancing Member.  If,
within such fifteen (15) calendar-day period, the Deadlock Non-Advancing Member
advances the foregoing amount to the Company, then (i) neither the amount
initially advanced by the Deadlock Advancing Member, nor the amount
subsequently advanced by the Deadlock Non-Advancing Member shall be deemed a
Deadlock Advance, (ii) each of the Deadlock Advancing Member and Deadlock
Non-Advancing Member shall be deemed to have made Additional Class B Property
Capital Contributions equal to the product of their then-respective Class B
Property Percentage Interest and the amount of the Deadlock Advance initially
contributed by the Deadlock Advancing Member, and (iii) such Additional
Class B Property Capital Contributions shall be used by the Company to pay the
applicable Class B Property Necessary Expenses.

 

4.04         Class B Property Capital Contributions and
Remedies.

 

(a)           All Class B Property 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 Executive
Committee, 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.

 

(b)           If either Member (the “Non-Contributing
Member”) fails to timely make any Class B Property Capital Contribution (or
any portion thereof) in accordance with Sections 4.01, 4.02 or 4.03 hereof, and
the other Member (the “Contributing Member”) has made its pro rata share
of such Class B Property Capital Contribution, then the Contributing Member
may, at its election, cause any one (but only one) of the following actions to
be taken by delivery of written 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 such required Class B Property
Capital Contributions, and the Contributing Member may designate all of the
Class B Property 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 Loan; or

 

(ii)           The Contributing Member may contribute the
Non-Contributing Member’s pro rata share of such requested or required Class B
Property Capital Contributions and elect to decrease the Class B Property
Percentage Interest of the Non-Contributing Member (but not below zero) such
that, immediately after such decrease, the Class B Property Percentage Interest
of the Non-Contributing Member shall be a percentage equal to the Class B
Property Percentage Interest immediately prior to such decrease less a
percentage expressed as a fraction, the numerator of which is 175% multiplied
by the amount of the Class B Property Capital Contribution that such Member

 

24

 

failed to contribute, and
the denominator of which is the aggregate amount of the Class B Property
Capital Contributions (other than those characterized as Priority Loans) made
by all of the Members prior to or as of such default (including the applicable
Additional Class B Property Capital Contributions), and concomitantly, the
Class B Property Percentage Interest of the Contributing Member shall be
increased by the same amount.  In
addition, the Class B Property Payout Percentages of each Member shall be
adjusted (increased or decreased) in the same proportions as such Member’s Class
B Property Percentage Interest is adjusted pursuant to the foregoing
provisions.

 

(c)           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, 4.02 and 4.03 of this Agreement, and (ii) the remedy provisions above in
this Section 4.04.  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.  For example:

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Class B Property

  	
   

  
	
   

  	
   

  	
   

  	
  Initial Capital

  	
   

  	
  Percentage Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Percentage Interest

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Before Change

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CLI Member

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  50.00

  	
  %

  
	
   

  	
  Gale/SLG Member

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  50.00

  	
  %

  
	
   

  	
   

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
   

  	
   

  

 

Gale/SLG
Member fails to contribute its pro rata share of a $1,000,000 Class B Property Capital
Call of $500,000.  CLI Member contributes
its pro rata share of the Class B Property Capital Call and contributes
Gale/SLG Member’s pro rata share of such capital call.

 

	
  2.

  	
  Change in Percentage

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Interests

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ($500,000 x 1.75)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ($10,000,000+$1,000,000)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CLI
  Member

  	
   

  	
   

  	
   

  	
  8.00

  	
  %

  
	
   

  	
  Gale/SLG
  Member

  	
   

  	
   

  	
   

  	
  -8.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Percentage Interests 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  after Change

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CLI
  Member

  	
   

  	
  $

  	
  6,000,000

  	
   

  	
  58.00

  	
  %

  
	
   

  	
  Gale/SLG
  Member

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
   

  	
  42.00 

  	
  %

  
	
   

  	
  (Gale/SLG diluted by 8.00%)

  	
   

  	
   

  	
   

  	
   

  	
  100

  	
  %

  

 

25

 

4.05         Class A Property Capital Contributions. In the event that at any time or from
time-to-time additional funds are required by the Company or any Class A
Property Subsidiary, for any purpose relating to the Class A Properties or the
operations of any Class A Property Subsidiary, the CLI Member may request that
each of the CLI Member and the Gale/SLG Member make Class A Property Capital
Contributions to the Company in proportion to their Class A Property Percentage
Interest or make loans to the Company for such amounts. If, within fifteen (15)
calendar days following a request for such a Class A Property Capital
Contribution, the Gale/SLG Member fails to make its pro rata share of such
requested Class A Property Capital Contribution and the CLI Member shall have
made its pro rata share of such requested Class A Property Capital Contribution
in full (and not sought its return or treated it as a loan to the Company), the
CLI Member may contribute the Gale/SLG Member’s pro rata share of such
requested Class A Property Capital Contributions and elect to decrease the
Gale/SLG Member’s Class A Property Percentage Interest (but not below zero),
such that, immediately after such decrease, the Gale/SLG Member’s Class A
Property Percentage Interest shall be a percentage equal to the Class A
Property Percentage Interest immediately prior to such decrease less a
percentage expressed as a fraction, the numerator of which is 175% multiplied
by the amount of the Class A Property Capital Contribution that the Gale/SLG
Member failed to contribute, and the denominator of which is the aggregate
amount of the Class A Property Capital Contributions made by all of the Members
prior to or as of such default, and concomitantly, the Class A Property
Percentage Interest of the CLI Member shall be increased by the same amount. In
addition, the Class A Property Payout Percentages of each Member shall be
adjusted (increased or decreased) in the same proportions as such Member’s
Class A Property Percentage Interest as adjusted pursuant to the foregoing
provisions. See example set forth in Section 7.04(b)(ii). After such Class A
Property Capital Contributions shall have been made, the CLI Member shall
direct the Company and the Class A Property Subsidiaries as to the manner in
which such funds shall be used. In addition, if the CLI Member shall treat its
share of such Class A Property Capital Contribution as a loan to the Company,
the Company shall use only Class A Property Net Cash Flow to pay principal and
interest on such loan.

 

4.06         Class C Property Capital Contributions. In the event that at any time or from
time-to-time additional funds are required by the Company or any Class C
Property Subsidiary, for any purpose relating to the Class C Properties, the
Gale/SLG Member may request that each of the Gale/SLG Member and the CLI Member
make Class C Property Capital Contributions to the Company in proportion to its
Class C Property Percentage Interest or make loans to the Company for such
amounts. If, within fifteen (15) calendar days following a request for a Class
C Property Capital Contribution, the CLI Member fails to make its pro rata
share of such requested Class C Property Capital Contributions and the Gale/SLG
Member shall have made its pro rata share of such requested Class C Property Capital
Contribution in full (and not sought its return or treated it as a loan to the
Company), the Gale/SLG Member may contribute the CLI Member’s pro rata share of
such requested Class C Property Capital Contributions and elect to decrease the
CLI Member’s Class C Property Percentage Interest (but not below zero), such
that, immediately after such decrease, the CLI Member’s Class C Property
Percentage Interest shall be a percentage equal to the Class C Property
Percentage Interest immediately prior to such decrease, less a percentage
expressed as a fraction, the numerator of which is 175% multiplied by the
amount of the Class C Property Capital Contribution that the CLI Member failed
to contribute, and the denominator of which is the aggregate amount of the
Class C Property Capital Contributions made by all of the Members prior to or
as of such default, and

 

26

 

concomitantly, the Class C
Property Percentage Interest of the Gale/SLG Member shall be increased by the
same amount. In addition, the Class C Property Payout Percentages of each
Member shall be adjusted (increased or decreased) in the same proportions as
such Member’s Class C Property Percentage Interest as adjusted pursuant to the
foregoing provisions. See example set forth in Section 7.04(b)(ii). After such
Class C Property Capital Contributions shall have been made, the Gale/SLG
Member shall direct the Company and the Class C Property Subsidiaries as to the
manner in which such funds shall be used. In addition, if the Gale/SLG Member
shall treat its share of such Class C Property Capital Contribution as a loan
to the Company, the Company shall use only Class C Property Net Cash Flow to
pay principal and interest on such loan.

 

4.07         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 fair market value 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);

 

(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 other than distributions made pursuant to
Section 6.03(b)(i)) 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 4.07 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 

 

27

 

distributed property or
which are assumed by the Company or any Members) are computed in order to
comply with such Regulations, the Executive Committee 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.

 

4.08         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 (it being understood, however, that 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 4.08, 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 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, the Executive Committee 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.

 

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

 

4.10         Reconciliation. The Members recognize that, although they
are entitled under Article VI to indirect shares of Net Cash Flow from the
different Classes of Properties based on their applicable Payout Percentages
with respect to each Class, it is possible that Net Cash Flow of any Class (a “Payor
Class”) may be expended by the OP to satisfy Expenses of another Class (a “Payee
Class”), in which case: (i) the amount of Net Cash Flow of the Payor Class
actually distributed by the OP and the GP to the Company and thus available for
distribution to the Members under Article VI in accordance with the Payout
Percentages of the Payor Class may be reduced; (ii) the amount Net Cash Flow
actually distributed to a Member by the Company with respect to such Payor
Class may be less than such Member would have otherwise received had Net Cash
Flow not been expended to satisfy Expenses of another Class; and (iii) the
amount of additional funds required to be advanced under the CLI Loan or called
for pursuant to Sections 4.02 through 4.06 as additional Capital Contributions
with respect to the Payee Class may be reduced. The Members hereby agree and
acknowledge that it is the intent of the Members to implement the provisions of
Article IV and Article VI as if the OP determined and segregated the Net Cash
Flow of each Class, such that Net Cash Flow of one Class was not expended to
satisfy Expenses of any other Class. In furtherance of such intent, the Manager
shall cause the Company Accountant no less frequently than annually to conduct
a reconciliation accounting (a “Reconciliation”) for the period (a “Reconciliation
Period”) beginning on the day following the end of the prior Reconciliation
Period (or, in the case of the first Reconciliation Period,

 

28

 

beginning on the Closing
Date) and ending within one year of the first day of such Reconciliation
Period, pursuant to which it shall determine (i) the Net Cash Flow of each
Class for such Reconciliation Period, (ii) whether, taking into account all
transactions of the OP and the Subsidiaries during such Reconciliation Period,
Net Cash Flow of any Class was expended by the OP to satisfy Expenses of any
other Class (a “Reconciliation Event”) and (iii) any consequences
described in paragraphs (a) through (d) below with respect to such
Reconciliation Period. Additional Reconciliations shall be performed at the
request of either Member up to three (3) times in any calendar year by either
Member, provided that the first Reconciliation requested by a Member during any
calendar year shall be performed at the cost of the Company and any additional
Reconciliations performed at the request of such Member shall be performed at
the cost of such requesting Member. The Company Accountant shall issue a
written report of its Reconciliation within ten (10) calendar days after the
later of the end of the Reconciliation Period or the date on which the
Reconciliation was requested. If it is determined pursuant to such
Reconciliation that a Reconciliation Event occurred, then for all purposes of
this Agreement:

 

(a)   each Member shall be deemed to have received
a Distribution on the last day of the calendar quarter during which the
Reconciliation Event occurred (the “Deemed Distribution Date”) with
respect to each Payor Class equal to the aggregate amount of additional
Distributions such Member would have received pursuant to Section 6.03 with
respect to such Payor Class during such Reconciliation Period had the OP not
expended Net Cash Flow of such Payor Class to satisfy Expenses of any Payee
Class during such Reconciliation Period;

 

(b)   if the Class B Properties is a Payee Class
for such Reconciliation Period, then the CLI Member shall be considered to have
advanced funds to the Company under the CLI Loan on the date of the
Reconciliation Event in the amount that it would have been required to advance
under the CLI Loan had there been a Shortfall, as defined in Section 4.02
hereof, equal to the OP Percentage Share of the Net Cash Flow of a Payor Class
expended by the OP to satisfy Class B Property Expenses;

 

(c)   each Member shall be deemed to have made a
Capital Contribution on the Deemed Distribution Date with respect to each Payee
Class equal to the OP Percentage Share of the amount of Capital Contributions
that such Member would have been called to make with respect to such Payee
Class pursuant to Sections 4.02 through 4.06 during such Reconciliation Period
(if the Class B Properties is a Payee Class, after the application of paragraph
(b) above) had the OP not expended Net Cash Flow of a Payor Class to satisfy
Expenses of such Payee Class during such Reconciliation Period; and

 

(d)   notwithstanding anything in this Agreement to
the contrary, any Member that is deemed pursuant to paragraph (b) or (c) above
to make a CLI Loan advance or a Capital Contribution during such Reconciliation
Period shall pay to the other Member, within five (5) calendar days after the
Company Accountant issues the report of the Reconciliation, the excess, if any,
of (i) the sum of all such CLI Loan advances or Capital Contributions deemed
made by such Member during such Reconciliation Period over (ii) the sum of the
amount of any Distributions deemed received by such Member pursuant to
paragraph (a) during such Reconciliation Period, together with interest at the
CLI Loan rate calculated on such excess for the

 

29

 

period
beginning on the Deemed Distribution Date and ending on the last day of the
Reconciliation Period.

 

An example of the
application of the foregoing provisions is attached as Exhibit D
attached hereto.

 

V.            INTERESTS IN THE COMPANY

 

5.01         Percentage Interests. With regard to each Member separately, the
initial Percentage Interest and the Payout Percentages 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 and the Payout
Percentages 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.

 

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.

 

Each of the Members has been
induced to enter into this Agreement in reliance upon the waivers set forth in
this Section 5.04, and without such waivers no Member would have entered into
this Agreement. No Member shall have any interest in any specific assets of the
Company (including the Property). The interests of all Members in this Company
are personal property.

 

30

 

VI.           ALLOCATIONS AND DISTRIBUTIONS

 

6.01         Allocations. For each Company taxable year or portion thereof, Net Profit and Net
Loss shall be allocated as follows:

 

(a)           Class A Property Allocations. Class A Property Net Profit and Class A
Property Net Loss shall be allocated (after all allocations pursuant to Section
6.02 have been made) to the Members in accordance with the Members’ respective
Class A Property Percentage Interests (adjusted as may be necessary to reflect
any change in the Class A Property Percentage Interests during such taxable
year or portion thereof).

 

(b)           Class B Property Allocations.

 

(i)            Class B Property Net Profit shall be
allocated (after all allocations pursuant to Section 6.02 have been made) as
follows:

 

(A)          first, to the Members, to the extent of and in proportion to the respective
excess (if any), for each Member, of (i) the cumulative amount of Class B
Property Net Loss previously allocated to such Member under Section
6.01(b)(ii)(E) over (ii) the cumulative amount of Class B Property Net
Profit previously allocated to such Member under this Section 6.01(a)(i)(A);

 

(B)           second, to the Members, to the extent of and in proportion to the respective
excess (if any), for each Member, of (i) the sum of (x) the cumulative amount
distributed or distributable to such Member under Section 6.03(b)(ii) in
accordance with the Class B Property Payout Percentage described in clause (a)
of the definition thereof (other than Class B Property Return of Capital
Distributions) and (y) the Class B Property Net Loss previously allocated to
such Member under Section 6.01(b)(ii)(D), over (ii) the cumulative
amount of Class B Property Net Profit previously allocated to such Member under
this Section 6.01(b)(i)(B);

 

(C)           third, to the Members, to the extent of and in proportion to the respective
excess (if any), for each Member, of (i) the sum of (x) the cumulative amount
distributed or distributable to such Member under Section 6.03(b)(ii) in
accordance with the Class B Property Payout Percentage described in clause (b)
of the definition thereof and (y) the Class B Property Net Loss previously
allocated to such Member under Section 6.01(b)(ii)(C), over (ii) the
cumulative amount of Class B Property Net Profit previously allocated to such
Member under this Section 6.01(b)(i)(C);

 

(D)          fourth, to the Members, to the extent of and in proportion to the respective
excess (if any), for each Member, of (i) the sum of (x) the cumulative amount
distributed or distributable to such Member under Section 6.03(b)(ii) in
accordance with the Class B Property Payout Percentage described in clause (c)
of the definition thereof and (y) the Class B Property Net Loss previously
allocated to such Member under Section 6.01(b)(ii)(B), over (ii) the
cumulative amount of Class B Property Net Profit previously allocated to such
Member under this Section 6.01(b)(i)(D); and

 

31

 

(E)           fifth, to the Members, to the extent of and in proportion to the respective
excess (if any), for each Member, of (i) the sum of (x) the cumulative amount
distributed or distributable to such Member under Section 6.03(b)(ii) in
accordance with the Class B Property Payout Percentage described in clause (d)
of the definition thereof and (y) the Class B Property Net Loss previously
allocated to such Member under Section 6.01(b)(ii)(A), over (ii) the
cumulative amount of Class B Property Net Profit previously allocated to such
Member under this Section 6.01(b)(i)(E).

 

(ii)           Class B Property Net Loss shall be allocated
(after all allocations pursuant to Section 6.02 have been made) as follows:

 

(A)          first, to the Members, to the extent of and in proportion to the respective
excess (if any), for each Member, of (i) the cumulative amount of Class B
Property Net Profit previously allocated to such Member under Section
6.01(b)(i)(E) over (ii) the sum of (x) the cumulative amount distributed to
such Member under Section 6.03(b)(ii) in accordance with the Class B
Property Payout Percentage described in clause (d) of the definition thereof
and (y) the cumulative amount of Class B Property Net Loss previously allocated
to such Member under this Section 6.01(b)(ii)(A);

 

(B)           second, to the Members, to the extent of and in proportion to the respective
excess (if any), for each Member, of (i) the cumulative amount of Class B
Property Net Profit previously allocated to such Member under Section
6.01(b)(i)(D) over (ii) the sum of (x) the cumulative amount distributed to
such Member under Section 6.03(b)(ii) in accordance with the Class B
Property Payout Percentage described in clause (c) of the definition thereof
and (y) the cumulative amount of Class B Property Net Loss previously allocated
to such Member under this Section 6.01(b)(ii)(B);

 

(C)           third, to the Members, to the extent of and in proportion to the respective
excess (if any), for each Member, of (i) the cumulative amount of Class B
Property Net Profit previously allocated to such Member under Section
6.01(b)(i)(C) over (ii) the sum of (x) the cumulative amount distributed to
such Member under Section 6.03(b)(ii) in accordance with the Class B
Property Payout Percentage described in clause (b) of the definition thereof
and (y) the cumulative amount of Class B Property Net Loss previously allocated
to such Member under this Section 6.01(b)(ii)(C);

 

(D)          fourth, to the Members, to the extent of and in proportion to the respective
excess (if any), for each Member, of (i) the cumulative amount of Class B
Property Net Profit previously allocated to such Member under Section
6.01(b)(i)(B) over (ii) the sum of (x) the cumulative amount distributed to
such Member under Section 6.03(b)(ii) in accordance with the Class B
Property Payout Percentage described in clause (a) of the definition thereof and
(y) the cumulative amount of Class B Property Net Loss previously allocated to
such Member under this Section 6.01(b)(ii)(D); and

 

(E)           fifth, to the Members, in proportion to their respective Class B Property
Percentage Interests.

 

32

 

(c)           Class C Property Allocations. Class C Property Net Profit and Class C
Property Net Loss shall be allocated (after all allocations pursuant to Section
6.02 have been made) to the Members in accordance with the Members’ respective
Class C Property Percentage Interests (adjusted as may be necessary to reflect
any change in the Class C Property Percentage Interests during such taxable
year or portion thereof).

 

6.02         Special Allocations and Compliance with
Section 704(b). The following
special allocations shall, except as otherwise expressly provided in this
Agreement, 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)           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.

 

(c)           Nonrecourse Deductions for any taxable year
of the Company or other period with respect to the Class A Properties, the
Class B Properties or the Class C Properties shall be allocated (as nearly as
possible) under Treasury Regulation Section 1.704-2 to the Members, pro rata in
proportion to their respective Class A Property Percentage Interests, Class B
Property Percentage Interests or Class C Property Percentage Interests, as the
case may be.

 

(d)           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).

 

(e)           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.

 

6.03         Distributions. Except as provided in Section 6.04, and
subject to Sections 6.05 and 6.10 hereof, the Company shall make
distributions or payments as follows:

 

(a)           As soon as reasonably practical (but no less
often than monthly), make distributions or payments of Class A Property Net
Cash Flow (to the extent and if available) to the Members first to pay off any
principal and interest on any loans the Members may have made to the Company
pursuant to Section 4.05 and next in accordance with and in proportion to each
Member’s Class A Property Payout Percentages, determined as of the moment each
dollar of such distribution is made (as such Class A Property Payout
Percentages may vary from time-to-time as each dollar of such Class A Property
Net Cash Flow is distributed to the Members);

 

33

 

(b)           As soon as reasonably practical (but no less
often than monthly), make distributions or payments of Class B Property Net
Cash Flow (to the extent and if available) to the Members in the following
manner and order of priority:

 

(i)            First, an amount of such Class B Property Net
Cash Flow shall be paid to the Members in respect of all Priority Loans made by
the Members until each of the Members shall have received payments of Class B
Property Net Cash Flow, pursuant to this Section 6.03(b)(i), in an aggregate
amount (for the current period and all previous periods) equal to a Priority
Loans IRR of 12% per annum, compounded quarterly, until such all such Priority
Loans shall have been repaid in full; and

 

(ii)           Thereafter, any remaining Class B Property
Net Cash Flow shall be distributed to the Members in accordance with and in
proportion to their respective Class B Property Payout Percentages, determined
as of the moment each dollar of such distribution is made (as such Class B
Property Payout Percentages may vary from time-to-time as each dollar of such
Class B Property Net Cash Flow is distributed to the Members).

 

(c)           As soon as reasonably practical (but no less
often than monthly), make distributions or payments of Class C Property Net
Cash Flow (to the extent and if available) to the Members first to pay off any
principal and interest on any loans the Members may have made to the Company
pursuant to Section 4.06 in accordance with and in proportion to their
respective Class C Property Payout Percentages, determined as of the moment
each dollar of such distribution is made (as such Class C Property Payout
Percentages may vary from time-to-time as each dollar of such Class C Property Net
Cash Flow is distributed to the Members).

 

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
Section 6.03. With the approval of the Managers, 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 Managers 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         Reinvestment of Cash Flow. Notwithstanding the provisions of Section
6.03(b), at the discretion of the Executive Committee, the Company may retain
Class B Property Net Cash Flow of the Company for any purpose, including,
without limitation, the funding of operations of the Company, the GP, the OP
and the Class B Property Subsidiaries and capital improvements on the Class B
Properties, but not for the purpose of funding the Class A

 

34

 

Properties, the Class A
Property Subsidiaries, the Class C Properties or the Class C Property
Subsidiaries.

 

6.06         Tax Matters. The Members intend for the Company to be treated as a partnership
under the Code. The Executive Committee 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 Executive Committee. The Manager 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 CLI 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 Executive
Committee may in its discretion designate any other Member as a substitute or
alternative tax matters partner by written notice thereof to all Members. The
Executive Committee and the CLI Member, in its capacity as Tax Matters Partner,
shall oversee the Company tax affairs in the overall best interests of the
Company and shall comply with the requirements of Sections 6221 through 6232 of
the Code and regulations promulgated thereunder, and the Members further agree
as follows:

 

(a)           The Tax Matters Partner shall have a
continuing obligation to provide the Internal Revenue Service with sufficient
information so that proper notice can be mailed to all Members as provided in
Section 6223 of the Code.

 

(b)           The Tax Matters Partner shall keep the
Members informed of all administrative and/or judicial proceedings for the
adjustment of partnership items (as defined in Section 6231(a)(3) of the Code
and regulations promulgated thereunder). Without limiting the generality of the
foregoing sentence, (i) within fifteen (15) days of receiving any written or
oral notice of the time and place of a meeting or other proceeding from the
Internal Revenue Service regarding the Company (and in any event, within a
reasonable time prior to such meeting or proceeding), the Tax Matters Partner
shall furnish a copy of such written communication or notice or inform the
Members in writing of the substance of any such oral communication, and (ii)
within fifteen (15) days of receiving any other significant written or oral
communication from the IRS regarding the Company, the Tax Matters Partner shall
furnish a copy of such written communication or inform the Members of the
substance of any such oral communication.

 

(c)           Neither the Executive Committee nor the Tax
Matters Partner may extend or waive the statute of limitations or enter into
any settlement or compromise agreement relating to any Company item of income,
gain, loss, deduction or credit for any Fiscal Year without receiving the prior
written consent of each Member.

 

(d)           The Tax Matters Partner may from time to time
request that a Member provide such documents and information necessary for the
Tax Matters Partner to perform its duties and obligations as Tax Matters
Partner. Each Member shall reasonably cooperate with

 

35

 

any such request by the Tax
Matters Partner with respect to any such document or other information that may
be in such Member’s possession.

 

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

 

6.09         REIT Compliance.

 

(a)           Notwithstanding anything herein to the
contrary, the Members hereby acknowledge the status of CLI and SLG (Affiliates
of, respectively, the CLI Member and the Gale/SLG Member) as REITs. The Members
further agree that the Company and the Properties shall be managed in a manner
so that:  (a) the Company’s gross income
meets the tests provided in Section 856(c)(2) and (3) of the Code as if the
Company were a REIT; (b) the Company’s assets meet the tests provided in
Section 856(c)(4) of the Code as if the Company were a REIT; and (c) the
Company minimizes federal, state and local income and excise taxes that may be
incurred by CLI or SLG, or any of their Affiliates, including taxes under
Section 857(b), 860(c) or 4981 of the Code. The Members hereby acknowledge,
agree and accept that, pursuant to this Section 6.09(a), the Company may be
precluded from taking, or may be required to take, an action which it would not
have otherwise taken, even though the taking or the not taking of such action
might otherwise be advantageous to the Company and/or to one or more of the
Members (or one or more of their Affiliates). After consultation with the
Members, if the Tax Matters Partner determines that a taxable REIT subsidiary
(as described in Section 856(l) of the Code) (a “TRS”) should be
established in order to meet the requirements of this Section 6.09(a), the Tax
Matters Partner may form such TRS only if it (i) provides at least ten (10)
days prior written notice thereof to CLI and SLG and (ii) prepares forms for
joint elections under Section 856(l)(l)(B) of the Code (in accordance with
guidance issued by the Internal Revenue Service) for both CLI and SLG and
causes the TRS to execute such election forms and forward them to CLI and SLG
within seven (7) days after formation of the TRS, for execution and filing by
CLI and SLG if they so choose. If a TRS is formed to serve as the lessee of
space that will be subleased to a party with respect to which CLI or SLG would
own an interest of ten percent (10%) or more for purposes of Section
856(d)(2)(B) of the Code, then CLI Member or Gale/SLG Member, as the case may
be, will bear all net costs associated with the formation and operation of such
TRS (including any federal income tax liability of such TRS).

 

(b)           The Members acknowledge that each of SLG and
CLI is a REIT and agree to formulate each Budget and Operating Plan in a manner
that recognizes the status of each of SLG and CLI as a REIT and the income,
asset and operating requirements of the Code which are applicable to a REIT
(the “REIT Requirements”). Each Budget and Operating Plan will include
leasing guidelines consistent with the REIT Requirements, and the Manager will
not knowingly enter into leases in contravention of such lease guidelines and
will not knowingly provide or allow the Company or any Subsidiary to provide
any services to any tenant that is not required by such tenant’s lease (except,
in each case, as approved by the Executive Committee).

 

36

 

(c)           Notwithstanding any other provision of this
Agreement to the contrary, neither the Manager, the Executive Committee nor any
Member will require the Company to take any material action which may, in the
opinion of SLG’s or CLI’s independent auditors or legal counsel, result of the
loss of either of SLG’s or CLI’s status as a REIT. Furthermore, the Manager
shall use its reasonable efforts to structure its transactions to minimize any
prohibited transaction tax or other taxes applicable to any Member, CLI and
SLG.

 

VII.          MANAGEMENT

 

7.01         Management.

 

(a)           Except as otherwise expressly provided in
this Agreement (including Sections 7.04 and 7.05), the business and affairs of
the Company and, indirectly, the Subsidiaries, shall be controlled by the
Members. The Members shall act by means of and through their authorized
representatives appointed in writing pursuant to Section 7.02 hereof, who
shall serve as members of an Executive Committee of the Members. Subject to
Sections 7.04 and 7.05, the members of the Executive Committee shall have
responsibility for supervising, directing and overseeing the activities of the
Manager, establishing the policies and operating procedures of the Company, the
GP, the OP and the Class B Property Subsidiaries, managing the business and
affairs of the Company, the GP, the OP and the Class B Property Subsidiaries,
and making all decisions as to all matters which the Company, the GP, the OP or
any Class B Property Subsidiary has authority to perform, as fully as if all
the Members were themselves making such decisions in lieu thereof. Subject to
Sections 7.04 and 7.05, all decisions made with respect to the management and
control of the Company, the GP, the OP or any Class B Property Subsidiary and
approved by the Executive Committee (except for decisions which by the express
terms of this Agreement require the approval of all Members or the Manager)
shall be binding on the Company, the Subsidiaries and all Members. The
Executive Committee may, unless otherwise determined by the Executive
Committee, delegate certain administrative functions to the Manager. The
Manager shall be responsible for performing, or for causing to be performed,
the duties described in Section 7.03 hereof. The Executive Committee may also
delegate such other of their powers, duties, responsibilities and management
functions, as it may from time-to-time determine, to the Manager, or to any
officer, employee or agent of any Member, the Company, the GP, the OP or any
Class B Property Subsidiary. Except as otherwise expressly provided in this
Agreement (including as provided in Sections 7.04 and 7.05 hereof), the Manager
of the Company shall conduct the business of the Company, the GP, the OP and
any Class B Property Subsidiary on a day-to-day basis except the following
matters (each a “Major Decision”) may only be taken upon the affirmative
vote or consent of the Executive Committee:

 

(i)            The making of any decision or the
implementing of any decision to acquire any real property (or any interest in
any real property, directly or indirectly);

 

(ii)           The approval of Budgets, any significant
capital expenditures by the GP, the OP or the Class B Property Subsidiaries,
Operating Plans and any amendments or modifications thereto;

 

37

 

(iii)          Subject to the terms of any Operating Plan
approved by the Executive Committee, any financing (including, without
limitation, acquisition, interim, permanent, development or construction
financing), refinancing or securitization involving the Company, the GP, the OP
and the Class B Properties or any Class B Property Subsidiary, and the
execution and delivery of any documents, agreements or instruments evidencing,
securing or relating to any such financing, including the terms, conditions and
provisions of any guaranties and the approval of any modification, extension,
renewal or any recasting of any such financing and the execution and delivery
of any documents, agreements or instruments related thereto;

 

(iv)          Except as provided in Section 7.09
hereof and other than with regard to obsolete equipment, fixtures and personal
property and other equipment, fixtures and personal property removed or
replaced in connection with ordinary repairs and maintenance, any sale,
transfer or other disposition of all or any portion of the Class B Properties,
the Company’s interest in any Class B Property Subsidiary or any property of
the Company, the GP, the OP or any Class B Property Subsidiary, or any merger,
consolidation or other business combination transaction involving the Company,
the GP, the OP or any Class B Property Subsidiary;

 

(v)           The establishment of working capital and any
other cash reserves, determination of the amount of available Class B Property
Net Cash Flow and making of distributions to Members;

 

(vi)          Except as provided in Section 4.10(d), the
making of any request that the Members make any Additional Class B Property
Capital Contribution to the Company;

 

(vii)         The entering into or consummation of any
transaction or arrangement with any Member or any Related Persons of any
Member, or any other transaction involving an actual or potential conflict of
interest, other than the Management Agreement and as expressly provided for in
this Agreement;

 

(viii)        The institution of any legal proceedings in
the name of the Company, the GP, the OP or any Class B Property Subsidiary,
settlement of any legal proceedings against the Company, the GP, the OP or any
Class B Property Subsidiary, and confession of any judgment against the
Company, the GP, the OP, any Class B Property Subsidiary, or the property of the
Company (other than the Class A Properties and the Class C Properties), the GP,
the OP or any Class B Property Subsidiary other than as contemplated or
provided for in the Operating Plan, provided that Executive Committee approval
shall not be required for (A) the institution or settlement of any eviction or
similar proceedings or any other lease enforcement proceedings or (B) the
institution or settlement of any legal proceedings, or the confession of any
judgment, where the amounts in dispute or to be settled or confessed shall not
exceed $200,000 and, with respect to any settlement or confession of judgment,
the Company or the relevant Subsidiary shall have sufficient funds to pay such
settlement or judgment and continue to pay ordinary course Class B Property
Expenses without seeking Additional Class B Property Capital Contributions from
the Members;

 

38

 

(ix)           Any change in the Company Accountant or the
selection of any other auditor or independent accounting firm for the Company,
the GP, the OP or any Class B Property Subsidiary or the making of any decision
to change any other auditor or independent accounting firm of the Company, the
GP, the OP or any Class B Property Subsidiary;

 

(x)            The making of any decision and the
implementing of any decision to form a subsidiary of the Company or to assign,
transfer or convey all or any portion of the Class B Properties to such
subsidiary, and any decision to capitalize such subsidiary with equity or
loans, and the execution and delivery of any documents, agreements or
instruments implementing, evidencing or relating to any such decision or action
(including any organizational documents relating to such subsidiary);

 

(xi)           The making of any decision to develop, redevelop,
rehabilitate or construct any material improvements upon any of the Class B
Properties (or any material variation of any decision previously approved by
the Executive Committee), the implementation of any such decision, the
execution and delivery of any material documents, agreements or instruments,
implementing, evidencing or relating to any such decision or action, including
the entering into, amendment, modification, extension or termination of any
construction contracts, development agreements or any construction management
or development management agreement (or any documents or agreements relating to
the financing of any of the foregoing) with regard to the Company, the GP, the
OP or any Class B Property Subsidiary, or the Class B Properties, and
determining the amount of any construction, development or any construction or
development management fees and the parties to share in such fees, and, subject
to the provisions of Section 7.01(a)(vii), the expending of any funds in
connection with any such activity, unless in each case, the same has been
previously approved in writing by the Executive Committee or is provided for or
contemplated in a Budget and, to the extent applicable, provided for in the
Operating Plan;

 

(xii)          The approval of the initial and any
subsequent plans and specifications with regard to the development,
redevelopment, rehabilitation, or construction of any material improvements
with regard to the Class B Properties and the approval of or consent to any
material modification or variation thereof (including any material change
orders), unless the same has been previously approved in writing by the
Executive Committee or is provided for or contemplated in a Budget and, to the
extent applicable, provided for in the Operating Plan (or to the extent such
approval rights are waived or modified in connection therewith);

 

(xiii)         The making of any expenditure or the
incurrence of any obligation by or on behalf of the Company, the GP, the OP or
any Class B Property Subsidiary that varies materially from the Budget and
Operating Plan, the entering into of any agreement not provided for or
contemplated in the Budget and Operating Plan or the amendment or modification
of any agreement which would cause a material variance from the Budget and Operating
Plan or which would cause such agreement to not comply with the provision of
the Budget and Operating Plan (for purposes of this Section 7.01(a)(xiii), such
a material variance shall be (A) expenditures or obligations involving an
amount

 

39

 

that is in excess of any
individual major line item expenditure amount (year-to-date) set forth in the
Budget and Operating Plan for the applicable fiscal year by more than 5% of
such individual major line item expenditure amount, or (B) expenditures or
obligations involving the incurrence of an expenditure or obligation for the
Company, the GP, the OP or any Class B Property Subsidiary or the Class B
Properties or for any transaction or any series of related transactions when
taken with all prior expenditures or obligations during the particular fiscal
year related thereto exceeds the maximum expenditure amount provided in the
current Budget and Operating Plan for such particular transaction or series of
transactions for such fiscal year by 5% of such maximum expenditure amount for
such fiscal year;

 

(xiv)        The entering into of any agreement that is
not terminable (without penalty) by the Company, the GP, the OP or the
applicable Class B Property Subsidiary on thirty (30) calendar days or less
written notice to the other parties, unless the same has been approved in
writing by the Executive Committee or is provided for or contemplated in a
Budget and provided for in the Operating Plan (or to the extent such approval rights
are waived or modified in connection therewith);

 

(xv)         Any lease of any portion of the Class B
Properties or any improvements existing or constructed thereon, or any
amendment or modification thereto, which is either (A) greater than 10,000
square feet per building or (B) not in accordance with lease guidelines for the
Class B Properties included in the Operating Plan (regardless of the amount of
square feet), or any extension, termination or buyout thereof (other than
extensions, terminations or buyouts of leases within the policies established
in the Operating Plan). The Manager shall submit a request for approval to the
Executive Committee of the terms of any such lease being proposed (“Lease
Proposal”), which Lease Proposal shall include (i) a summary of the
material lease terms; (ii) a copy of the proposed form of lease and (iii) a
budget for all costs required to be paid by the Company in connection with such
lease including, without limitation, leasing commissions, tenant improvement
costs, tenant concessions, projected legal fees and expenses and all other
projected out-of-pocket costs. If the Executive Committee fails to respond to
any such Lease Proposal within ten Business Days of its receipt of a written
request for the approval thereof, the Manager shall submit a second Lease
Proposal (which second Lease Proposal shall specify changes to the proposed
leasing transaction, if any, since the initial Lease Proposal) to the Executive
Committee for its approval. If the Executive Committee fails to respond to the
second Lease Proposal (y) within three (3) Business Days if there were no
changes from the first Lease Proposal to the second Lease Proposal and (z) six
(6) Business Days if there were changes from the first Lease Proposal to the
second Lease Proposal, such second Lease Proposal shall be deemed to be
approved by the Executive Committee. If after a Lease Proposal is approved or
deemed approved in accordance with this paragraph, there are any material
changes negotiated to the lease form included in the Lease Approval, the
Manager shall submit a request for approval to the Executive Committee of the
revised lease form (“Final Lease Proposal”), which Final Lease Proposal
shall include a copy of the proposed form of lease marked to show the changes
from the previously approved lease. If the Executive Committee fails to respond
to any such Final Lease Proposal within five (5) Business Days of its receipt
of a written request for the approval thereof, the Manager shall submit a
second Final Lease Proposal

 

40

 

to the Executive Committee
for its approval. If the Executive Committee fails to respond to the second
Final Lease Proposal within three (3) Business Days, such second Final Lease
Proposal shall be deemed to be approved by the Executive Committee. Any
approval, or deemed approval, of a Lease Proposal(or, if applicable, a Final
Lease Proposal) shall also be deemed to be the Executive Committee’s approval
of a request that Members make an Additional Class B Property Capital
Contribution in the amount of the budget set forth in the Lease Proposal (or,
if applicable, the Final Lease Proposal);

 

(xvi)        The approval of a standard lease form to be
utilized with regard to the Class B Properties, any material changes to such
standard lease form and the entering into, consummation of or approval of the
terms of any lease which materially varies from such standard lease form (or
any modification which causes such lease to materially vary from such standard
lease form), unless the same has been approved in writing by the Executive
Committee (or to the extent such approval rights are waived or modified in
connection therewith or in connection with the applicable lease guidelines
included in the Operating Plan);

 

(xvii)       The entering into, amendment, modification,
extension or termination of any asset or property management or leasing
agreement with regard to the Company, any Class B Property Subsidiary or the
Class B Properties or the property of any Class B Property Subsidiary, unless
the same has been approved in writing by the Executive Committee or is provided
for or contemplated in a Budget and provided for in the Operating Plan (or to
the extent such approval rights are waived or modified in connection therewith);

 

(xviii)      The selection of environmental consultants
and the adoption of and implementation of any operation and maintenance program
or any other program to remove or otherwise remediate hazardous materials
(other than as provided for in the Operating Plan);

 

(xix)         The possession of any assets of the Company,
the GP, the OP or any Class B Property Subsidiary (including any portion of the
Class B Properties) for other than Company purposes;

 

(xx)          Any issuance or sale by the Company, the GP,
the OP or any Class B Property Subsidiary of any debt or equity securities or
of additional ownership interests in the Company, the GP, the OP or any Class B
Property Subsidiary, any monetization transaction or activities and any
valuation of assets or pricing of securities related to the foregoing;

 

(xxi)         The filing of any voluntary petition in
bankruptcy on behalf of the Company, the GP, the OP or any Class B Property
Subsidiary, the consenting to the filing of any involuntary petition in
bankruptcy against the Company, the GP, the OP or any Class B Property
Subsidiary, the filing of any petition seeking, or the consenting to,
reorganization or relief under any applicable federal or state law relating to
bankruptcy or insolvency, on behalf of the Company, the GP, the OP or any Class
B Property Subsidiary, the consenting to the appointment of a receiver,
liquidator, assignee, trustee, 

 

41

 

sequestrator (or other
similar official) for the Company, the GP, the OP or any Class B Property
Subsidiary or the Class B Properties, the making of any assignment for the
benefit of creditors on behalf of the Company or any Class B Property
Subsidiary, the admission in writing of the Company’s, the GP’s, the OP’s or
any Class B Property Subsidiary’s inability to pay its debts generally as they
become due, or the taking of any action by the Company, the GP, the OP or any
Class B Property Subsidiary in furtherance of any such action;

 

(xxii)        The engagement of any sales or placement
agent or broker for the disposition, financing or refinancing of the Company,
the GP, the OP, the Class B Properties or any Class B Property Subsidiary other
than in accordance with Section 7.04(d) hereof, to the extent applicable;

 

(xxiii)       Determining the amount of overhead and other
reimbursements or any compensation payable to any Member or any of its Related
Persons pursuant to the terms hereof or any separate agreement between the
Company, the GP, the OP or any Class B Property Subsidiary and a Member or any
of its Related Persons, and determining the amount of compensation, benefits or
other remunerations payable to any employees of the Company, the GP, the OP or
any Class B Property Subsidiary;

 

(xxiv)       Determining the types of and amounts of
insurance coverage on the Class B Properties, and the deductibles and
underwriters with regard thereto, other than as provided for in the Operating
Plan;

 

(xxv)        Obligating the Company, the GP, the OP or any
Class B Property Subsidiary as a surety, guarantor, indemnitor or accommodating
party to any obligation;

 

(xxvi)       Lending funds belonging to the Company, the
GP, the OP or any Class B Property Subsidiary to any third Person or extending
to any Person credit on behalf of the Company, the GP, the OP or any Class B
Property Subsidiary other than in the Ordinary Course;

 

(xxvii)      The adoption or amendment, or permitting the
Company, the GP, the OP or any Class B Property Subsidiary, to adopt or amend,
any plan, program, arrangement, fund, policy, practice, agreement or contract
and any medical, dental and health insurance plans, workers compensation,
severance pay plans, savings plans, pension plans and retirement plans through
or under which the Company, the GP, the OP or any Class B Property Subsidiary
provides benefits, compensation or assurances with respect to employment to or
on behalf of one or more employees or former employees of the Company, the GP,
the OP or any Class B Property Subsidiary;

 

(xxviii)     Any material amendment, modification,
extension or termination of any agreement or other arrangement which itself
would have been a Major Decision at the time such agreement or arrangement was
entered into, other than as included in or contemplated under any current
Budget and Operating Plan;

 

(xxix)       The admission of any Person as a Member
(other than the admission of any transferee in connection with any Interest
Transfer by one Member

 

42

 

which (a) pursuant to the
express terms of this Agreement, does not require the consent of the other
Member, or (b) has already been consented to, or deemed consented to, by the
other Member);

 

(xxx)        In the case of an election by a Member under
Section 7.11 to cause an in-kind distribution to be made by the OP, whether the
in-kind distribution takes the form described in clause (i) or clause (ii) of
Section 7.11.

 

(xxxi)       Any amendment, modification or waiver of the
terms of this Agreement;

 

(xxxii)      With regard to the GP, the OP or any Class B
Property Subsidiary, the making of any decision, taking any action or providing
any consent or approval with regard to any matter which if made or taken by the
Company would have been a Major Decision as set forth in this Agreement or
which requires the consent or approval of the limited partners of the OP or the
shareholders, board of directors, executive committee, managing members,
general partners or similar management body of any other Person in which the
Company, the GP, the OP or such Class B Property Subsidiary holds an equity
interest; and

 

(xxxiii)     The approval, determination or any other
action expressly reserved to the Executive Committee under this Agreement,
including, without limitation, any material modification, amendment, or renewal
of any matter previously requiring the approval of the Executive Committee.

 

(b)           Other than as set forth above and subject to
the terms and limitations of this Agreement and the limitations imposed by law,
the Manager (acting on behalf of the Executive Committee) shall have all of the
same powers as a general partner of a general partnership under the laws of the
State of Delaware, including without limitation, the power and authority to:
(i) acquire, hold, improve, operate, sell, transfer, assign, convey,
exchange, lease, sublease, mortgage or otherwise dispose of or deal with all or
any part of the Class B Properties, (ii) in furtherance of the Company’s,
the GP’s, the OP’s or any Class B Property Subsidiary’s purposes and business,
borrow money, whether on a secured or unsecured basis, refinance, recast,
modify, amend, extend, compromise or otherwise deal with any such loan, and in
connection therewith, issue evidences of such indebtedness and secure the same
by mortgages, deeds of trust, security agreements or other similar documents
affecting the assets of the Company, (iii) authorize other persons to
execute and deliver such documents on behalf of the Company, the GP, the OP or
any Class B Property Subsidiary as the Executive Committee may deem necessary
or desirable for the Company’s, the GP’s, the OP’s or any Class B Property
Subsidiary’s business, including without limitation, guarantees and
indemnities; (iv) perform, or cause to be performed, all of the Company’s,
the GP’s, the OP’s or any Class B Property Subsidiary’s obligations under any
agreement to which the Company, the GP, the OP or any Class B Property
Subsidiary is a party; (v) enter into contracts on behalf of the Company,
the GP, the OP or any Class B Property Subsidiary and make expenditures as are
required to operate and manage the Company, the GP, the OP the Class B Property
Subsidiaries and the Class B Properties; and (vi) do any act which is
necessary or desirable to carry out any of the purposes of the Company, the GP,
the OP or any Class B Property Subsidiary.

 

43

 

(c)           The Executive Committee may, on behalf of the
Company, the GP, the OP or any Class B Property Subsidiary, employ, engage or
retain any Persons (including any Related Persons of any Member) to act as
property or asset managers, leasing agents, developers, brokers, accountants,
attorneys, engineers or in such other capacities as the Executive Committee may
determine are necessary or desirable in connection with the Company’s, the GP’s,
the OP’s or any Class B Property Subsidiary’s business, and the Manager and the
members of the Executive Committee shall be entitled to rely in good faith upon
the recommendations, reports and advice given them by any such Persons in the
course of their professional engagement.

 

(d)           Except as otherwise set forth in Sections
7.04 and 7.05, no Member, other than the Manager, shall have any right or power
to participate in or have any control over the Company’s, the GP’s, the OP’s or
any Class B Property Subsidiary’s business, affairs or operations or to act for
or to bind the Company or any Class B Property Subsidiary in any matter
whatsoever and no Member other than the Manager shall be required or permitted
to consent to, acquiesce in, vote on or approve any action or act taken or
decision made by the Manager or the Executive Committee, except as otherwise
expressly provided in this Agreement and except with regard to such Member’s
right to appoint one or more members of the Executive Committee, if any.

 

(e)           To the extent the Company shall obtain and
maintain insurance on the Class B Properties that is not separate and distinct
from any insurance policy maintained by any Member or their Affiliates, then
the allocated premiums payable for such insurance by the Company shall be
agreed upon by the Executive Committee and the Company shall not pay any
amounts for such insurance in excess of such agreed upon amounts.

 

(f)            None of the CLI Member, the Gale/SLG Member
and the Manager shall take any action or cause the GP to take any action with
respect to a Class B Property if such action is in violation of any of the
obligations of the OP and the GP pursuant to the Contribution and Subscription
Agreements or which would give rise to any claim of damages by the parties
protected thereunder.

 

7.02         Members of the Executive Committee.

 

(a)           The Executive Committee initially shall be
comprised of six (6) members, three (3) of whom shall be appointed by the CLI
Member and three (3) of whom shall be appointed by the Gale/SLG Member. In
connection with the determination of any and all matters presented to the
Executive Committee for action, the Members agree and acknowledge that each
member of the Executive Committee will be acting as the representative of the
Member that appointed such member of the Executive Committee. Therefore, each
member of the Executive Committee may act, and to the fullest extent permitted
by law, will be protected from acting, at the discretion and control of, or in
the manner that the member of the Executive Committee believes is in the best
interest of, the Member that appointed such member of the Executive Committee,
without regard to the interest of any other Member, the Company or any
Subsidiary, and each Member therefore waives, to the fullest extent permitted
by law, any claim or cause of action against the Manager or any member of the
Executive Committee for any breach of any fiduciary duty, duty of care or any
other duty, breach of the Delaware Act, or breach of any duty created by
special circumstances, with regard to or arising as a result of this 

 

44

 

Agreement, the Company or
any Subsidiary; provided, however, the foregoing will not limit
any Member’s obligation under or liability for breach of the express terms and
provisions of this Agreement. Each Member may, by written notice to the others,
remove any member of the Executive Committee appointed by such Member and
appoint a substitute therefor; provided, however, that any new
member appointed to the Executive Committee by any Member must either be a
partner, member, officer, director or employee of such Member or of an
Affiliate of such Member or, if not, be approved by the Executive Committee
members appointed by the other Member, such approval not to be unreasonably
withheld or delayed. Any appointing Member may, by written instrument and by
delivering written notice to the Executive Committee members of the other
Member, delegate any or all of the duties of one or more of its representatives
on the Executive Committee to (x) another of its representatives on the
Executive Committee or to an alternate member or (y) any other
representative on the Executive Committee of any other Member or any employee
of such Member or any of its Affiliates (and such delegate shall also be an
agent of and operate at the sole discretion of the appointing Member), and any
decisions or actions taken by such delegate shall be fully binding upon the
Company and the Members as if taken by the member of the Executive Committee
for whom such delegate was acting. One Person may not represent more than one
Member on the Executive Committee.

 

(b)           The initial members of the Executive
Committee appointed by the CLI Member are Mitchell Hersh, Michael Grossman and
Mark Yeager. The initial members of the Executive Committee appointed by the
Gale/SLG Member are Marc Holliday, Andrew Mathias and Andrew S. Levine.

 

(c)           The number of members of the Executive
Committee may be increased or decreased from time-to-time by the Executive
Committee, so long as half of the members of the Executive Committee shall
represent and shall have been appointed by the CLI Member and half of the
members of the Executive Committee shall represent and shall have been
appointed by the Gale/SLG Member.

 

(d)           A majority (in number) of the members of the
Executive Committee shall constitute a quorum for the transaction of business
at any meeting of the Executive Committee, provided that if less than a
majority of such number of members of the Executive Committee are present at
said meeting, a majority of the members of the Executive Committee present at
such meeting may act solely to adjourn the meeting without further notice. The
act or affirmative vote of a majority (in number) of the members of the
Executive Committee present at a meeting at which a quorum is present shall be
the act of the Executive Committee, unless the act of a greater number is
required by this Agreement; provided at least two-thirds of the members
of the Executive Committee appointed by the CLI Member and at least
two-thirds of the members of the Executive Committee appointed by the Gale/SLG
Member shall have consented to such action.

 

(e)           Any action required to be taken at a meeting
of the Executive Committee or any other action which may be taken at a meeting
of the Executive Committee may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by the number of
members of the Executive Committee required to approve such action at a
properly called and constituted meeting of the Executive Committee at which all
of the members of the Executive Committee were present and voting. Any such
consent signed by the number of the

 

45

 

members of the Executive
Committee indicated above in the immediately preceding sentence shall be a
valid and proper act of the Executive Committee at a properly called and
constituted meeting of the Executive Committee at which all of the members of
the Executive Committee were present and voting.

 

(f)            The members of the Executive Committee may
participate in and act at meetings of the Executive Committee through the use
of a conference telephone or other communications equipment or system by means
of which all persons participating in the meeting can hear each other (“Electronic
Participation”). Participation in such meeting shall constitute attendance
in person at the meeting of the person or persons so participating.

 

(g)           Regular meetings of the Executive Committee
shall be held at such times and places as shall be designated from time-to-time
by resolution of the Executive Committee, provided the Executive Committee
shall meet no less frequently than quarterly and provided such regular meetings
of the Executive Committee shall be as often as necessary or desirable to carry
out its management functions.

 

(h)           Special meetings of the Executive Committee
may be called by or at the request of the Manager for any reasonable purpose. Special
meetings of the Executive Committee shall be held at a location mutually agreed
to by the members of the Executive Committee, and should they fail to agree, at
the office of the Manager, as specified in the notice regarding such special
meeting.

 

(i)            Notice of any meeting of the Executive
Committee shall be given no fewer than five (5) Business Days and no more than
twenty (20) Business Days prior to the date of the meeting (unless such notice
is waived in writing). Notice of any meeting of the Executive Committee shall
specify the date, time and place of the proposed meeting and the agenda for the
meeting. Notice shall be delivered in the manner set forth in
Section 14.03 hereof. The attendance (whether in person or by Electronic
Participation) of a member of the Executive Committee at a meeting of the
Executive Committee (as reflected in the minutes of the meeting) shall
constitute a waiver of notice of such meeting, except where a member of the
Executive Committee attends a meeting for the express purpose of objecting to
the transaction of any business because the meeting is not properly called or
convened.

 

(j)            The Executive Committee may, by resolution,
designate one or more individuals as officers, employees or agents of the
Company, the GP, the OP or any Class B Property Subsidiary. No officer,
employee or agent need be a Member of the Company or a Class B Property
Subsidiary. Each officer, employee or agent shall have the authority and shall
perform the duties as designated by the Executive Committee from time-to-time. Any
officer, employee or agent appointed by the Executive Committee may be removed
by the Executive Committee, with or without cause, whenever, in their judgment,
the interest of the Company, the GP, the OP or any Class B Property Subsidiary
would be served.

 

(k)           A written record of all meetings of the
Executive Committee and all decisions made by it shall be made by the Manager,
as Secretary of the Executive Committee, or such other member of the Executive
Committee or officer appointed by the Executive Committee, and kept in the
records of the Company and shall be initialed, signed or confirmed

 

46

 

by electronic means from a
verifiable, identifiable source by at least one member of the Executive
Committee appointed by the CLI Member and at least one member of the Executive
Committee appointed by the Gale/SLG Member. The approval of any Budget and
Operating Plan will be evidenced by the signing or initialing of a copy of the
approved version by at least the members required of the Executive Committee as
set forth in Section 7.02(d). Minutes and/or resolutions of the Executive
Committee when initialed or signed as indicated above shall be binding and
conclusive evidence of the decisions reflected therein and any authorizations
granted thereby.

 

(l)            Except as otherwise determined by the Executive
Committee, no member thereof shall be entitled to receive any salary or other
remuneration or expense reimbursement from the Company, the GP, the OP or any
Class B Property Subsidiary for his services as a member of the Executive
Committee.

 

7.03         Manager.

 

(a)           The Executive Committee may designate one of
the Members to act as the Manager of the Company to implement the decisions of
the Executive Committee. Subject to the provisions of Section 7.01, 7.04, 7.05
and the other provisions of this Agreement, the Manager shall (i) conduct
the business of the Company, the GP, the OP and any Class B Property Subsidiary
on a day-to-day basis, (ii) perform the duties assigned to it hereunder
and (iii) carry out all decisions and resolutions of the Executive Committee,
in each case in accordance with the standard of care required of prudent and
experienced third-party asset or property managers, as the case may be,
performing similar functions, in accordance with customary industry standards
and in accordance with the current Budget and Operating Plan and such other
guidelines as shall be adopted by the Executive Committee. Except as set forth
below (including as set forth in Section 7.08 hereof) or in any separate
written agreement approved in writing by the Executive Committee, the Manager
shall not be entitled to receive any fees or other compensation in respect of
its activities as the Manager, and will not receive reimbursement for
compensation payable to any of its employees or other direct or indirect overhead
which may be attributable to the performance of its duties as the Manager. The
Manager shall, however, receive reimbursement for all out-of-pocket costs and
expenses incurred by it for third-party accountants and auditors engaged to
perform year-end audits and prepare year-end audited financial statements and
tax returns and reports, to the extent such out-of-pocket costs and expenses
are provided for or contemplated in the current Budget, and to the extent
applicable, provided for in the Operating Plan. The initial Manager shall be
the CLI Member, which shall remain the Manager until changed by unanimous
action of all of the members of the Executive Committee or unless the CLI
Member is terminated as the Manager pursuant to Section 7.03(f) hereof. The CLI
Member, as the initial Manager, shall not resign as Manager until a successor
Manager shall have been appointed by the Executive Committee, so long as none
of the Company or any of the Class B Subsidiaries is in default under the
relevant Management Agreement. In the event that the CLI Member or any
other Person should retire or resign (with the consent of the other Member) or
be removed as the Manager, the Executive Committee may (but shall be under no
obligation to) appoint a replacement thereof (including any third-party
acceptable to the Executive Committee and at such rates of compensation as
determined appropriate by the Executive Committee).

 

47

 

(b)           Except as otherwise expressly provided in
this Agreement, the Manager, on behalf of the Company, the GP, the OP and each
Class B Property Subsidiary, shall be authorized, without any further consent
or approval of the Members or the Executive Committee, to (i) enter into
contracts, leases and otherwise act on behalf of the Company, the GP, the OP
and each Class B Property Subsidiary, to the extent the same is provided for or
contemplated in the current Budget and, to the extent applicable, provided for
in the Operating Plan, or (ii) make expenditures as are required to
implement such Budget and to perform (or cause the Company to perform) the
obligations, and to enforce (or cause the Company to enforce) the rights, of
the Company under the contracts, leases and other agreements entered into in
accordance with this Agreement, but in each case only to the extent that any
such expenditures and amounts required to be paid by the Company, the GP, the
OP or any Class B Property Subsidiary, including expenditures and amounts
required to be paid by the Company, the GP, the OP or any Class B Property
Subsidiary under any such contracts, leases or other instruments and documents,
are not in excess of the limitations provided for in Section 7.01(a)(vii)
unless such excess has been approved in writing by the Executive Committee or
is attributable to Class B Property Uncontrollable Expenses; provided, however,
with regard to any excess attributable to Class B Property Uncontrollable
Expenses, to the extent reasonably practical, prior to expending such excess,
the Manager shall provide the Executive Committee with written notice of its
intention to expend such funds, together with the Manager’s best estimate of
the amount of such excess, prior to the expending of such funds, and in the
event such prior written notice is not practical, the Manager shall thereafter
give the other Manager prompt written notice of the expenditure of any such
excess amount. To the extent any Major Decision has been approved in writing by
the Executive Committee or is provided for or contemplated in the Budget and,
to the extent applicable, provided for in the Operating Plan (or to the extent
such approval rights are waived or modified in connection therewith), except as
otherwise expressly provided for in this Agreement, the Manager shall be authorized,
without any further consent or approval of the Executive Committee, to act in
accordance therewith.

 

(c)           Notwithstanding the foregoing, the Manager
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 same has been approved in writing by the Executive Committee, and
provided for or contemplated in the Budget and, to the extent applicable,
provided for in the Operating Plan, unless (in the best commercially reasonable
judgment of the Manager) the failure to take any such action (i) would
result in a material default pursuant to any material contract or agreement to
which the Company, the GP, the OP or any Class B Property Subsidiary is a party
or (ii) would result in a material risk of loss of life or serious bodily
injury to any Person (in which case, the Manager is authorized, without any
further consent or approval of the Executive Committee, to the extent
reasonably necessary in accordance therewith; provided, however, such
authorization shall not be applicable if the Manager has sufficient time to
notify the Executive Committee of such circumstances prior to the taking of
such action. In addition, if at the beginning of any calendar year the Budget
and Operating Plan, or any item or portion thereof, shall not have been
approved in writing by the Executive Committee, 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

 

48

 

operative immediately and
the Manager shall be entitled to expend funds in accordance with those
operative portions;

 

(ii)           The Manager shall be entitled to expend, in
connection with Class B Property Uncontrollable Expenses, an amount equal to
the actual Class B Property Uncontrollable Expenses incurred by the Company,
the GP, the OP or any Class B Property Subsidiary and the Manager shall notify
the Executive Committee as promptly as practicable after making such Class B
Property Uncontrollable Expenses; and

 

(iii)          The Manager 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 actual expenses
incurred by the Company, the GP, the OP or any Class B Property Subsidiary or
the budgeted amount for the corresponding fiscal quarter of the immediately
preceding calendar year plus, so long as the Company does not seek any Additional
Class B Property Capital Contributions, three percent (3%), as set forth on the
immediately preceding calendar year Budget and Operating Plan, after giving
effect to any dispositions or other material changes to the Class B Properties
during the prior or current year (and the Manager shall notify the Executive
Committee as promptly as practicable after making such excess expense); provided,
however, that if any contract approved by the Executive Committee
provides for an automatic increase in costs thereunder after the beginning of
the then current calendar year, then the Manager shall be entitled to expend
the amount of such increase.

 

(d)           In addition to and without limiting any other
duties set forth in this Agreement, the Manager, subject to Sections 7.04 and
7.05, shall:

 

(i)            Promptly take all proper and necessary
actions reasonably required to fully advise and apprise the Executive Committee
with regard to all material matters relating to the business of the Company,
the GP, the OP, the Class B Property Subsidiaries and the Class B Properties
and for which the Manager has knowledge;

 

(ii)           Oversee the operations and management on a
day-to-day basis of the Class B Properties in accordance with the Budget and
Operating Plan (including property management, leasing, consulting,
development, disposition and tenant services and management of both capital
improvements and tenant improvements);

 

(iii)          Pay in a timely manner all non-disputed
operating expenses of the Company, the GP, the OP and each Class B Property
Subsidiary in accordance with the terms of the Budget and Operating Plan or as
otherwise provided herein;

 

(iv)          Obtain and maintain insurance coverage on the
Class B Properties as required and approved by the Executive Committee, and pay
all non-disputed taxes, assessments, charges and fees payable in connection
with the ownership, use and occupancy of the Class B Properties;

 

(v)           Deliver to the Executive Committee promptly
upon the receipt or sending thereof, copies of any material correspondence with
any municipality and all notices, reports and communications between the
Company, the GP, the OP or any Class

 

49

 

B Property Subsidiary and
any landlord or tenant under any lease or any lender under any mortgage loan or
any holder of a mortgage affecting all or any portion of the Class B Properties
which relates to any existing or pending default thereunder or to any financial
or operational information required by such Person;

 

(vi)          With regard to any disposition of any Class B
Property previously approved by the Executive Committee in accordance with the
terms of this Agreement, prepare and deliver to all the members of the
Executive Committee, at the expense of the Company, monthly updates and monthly
status reports to advise and apprise the members of the Executive Committee of
the status of such disposition (“Status Reports”). Such Status Reports
shall include such additional information as shall be reasonably requested by
the Executive Committee and shall be delivered to the members of the Executive
Committee as soon as reasonably practicable after the end of such monthly
period;

 

(vii)         Maintain, or cause to be maintained, the
books and records provided for in Article IX and promptly deliver to the
Executive Committee the reports, financial statements and other information
provided for in Article IX hereof;

 

(viii)        Unless otherwise required by applicable loan
agreements, deposit all receipts from the operations of the Class B Properties
into an account established and maintained by the Manager in the name of the
Company, the GP, the OP or the applicable Class B Property Subsidiary and shall
not commingle those receipts with any other funds or accounts of the Manager or
any other Person;

 

(ix)           If the Manager subcontracts with, or
delegates to, third parties or any of its Related Persons for the performance
of any of the services to be performed by the Manager, supervise and oversee
the performance of the services performed by such third parties or Related
Persons (in the event of any such subcontract, references in this Agreement to
actions taken or to be taken by the Manager shall include actions taken or to
be taken by such subcontractors); and

 

Advising
the Executive Committee with regard to the amount and timing of any Class B
Property Capital Contribution which may be required by the Company or necessary
to the operations of the Company and each Class B Property Subsidiary.

 

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

 

(f)            In the event the Company (or any Subsidiary)
has the right to terminate any management, leasing, development, construction,
development or construction management or other agreement with the CLI Member
or any of its Related Persons (including the Management Agreement) pursuant to
the terms of this Agreement, the Management Agreement

 

50

 

or pursuant to the terms of
any other management, leasing, construction, development, development or
construction management or other agreement with the CLI Member or any of its
Related Persons (and the Company or any such Subsidiary are not otherwise in
breach or default under any such agreement), then, notwithstanding any other
provision of this Agreement to the contrary (including any other provisions of
this Article VII), the exercise of any such right upon the occurrence of the
event or circumstance giving rise thereto, including the giving of any notice
with regard thereto (on behalf of the Company or any Subsidiary) shall be controlled
by the Gale/SLG Member (subject to any applicable grace and cure period). In
addition, if an event or circumstance occurs giving rise to the Company (or any
Subsidiary) having the right to terminate any management, leasing,
construction, development, construction or development management or other
agreement with the CLI Member or any of its Related Persons (including the
Management Agreement) pursuant to the terms of this Agreement, the Management
Agreement or pursuant to the terms of any other management, leasing,
construction, development, construction or development management or other
agreement with the CLI Member or any of its Related Persons, provided any
required notice is given in accordance therewith and subject to any applicable
grace and cure period (regardless of whether such right of termination is
exercised), notwithstanding any other provision of this Agreement to the
contrary (including any other provision of this Article VII), then in such
event the Gale/SLG Member (on behalf of the Company and the Subsidiaries) shall
also have the absolute right, power and authority at any time thereafter, upon
thirty (30) days prior written notice, to terminate any such management,
leasing, construction, development, construction or development management
agreement or other agreement with the CLI Member or its Related Persons
(including, if applicable, the Management Agreement), and, if necessary
pursuant to a termination of the Management Agreement (as determined by the
Gale/SLG Member), to appoint a successor Manager (including, any third party
acceptable to the Gale/SLG Member) at such rates of compensation as determined
appropriate by the Gale/SLG Member.

 

(g)           Notwithstanding any other provision of this
Agreement to the contrary, the Manager, as such, shall have no authority to act
on behalf of the Company with respect to the Class A Properties or the Class C
Properties unless otherwise specifically directed by the Executive Committee.

 

(h)           The Members agree that the Manager may cause
each Class A Property Subsidiary and each Class B Property Subsidiary to
appoint a non-Member manager designated by Manager and hire or retain one or
more Persons to implement at such Class A Property Subsidiary and Class B
Property Subsidiary, as the case may be, the duties, responsibilities and
actions of the Manager hereunder. The Members will cause the GP to cause the OP
to implement the duties, responsibilities and actions of the Manager hereunder
and to implement the transactions hereunder.

 

7.04         Management of the Class A Properties. Notwithstanding any other provision of this
Agreement to the contrary, the CLI Member shall have the sole, complete and
absolute authority and discretion to authorize and approve all matters
pertaining to the Class A Properties (including any disposition thereof) and to
control, conduct and manage the business and affairs of the Company, and to
cause the GP to control, conduct and manage the business and affairs of the OP,
with respect to (i) the Class A Properties and (ii) the Class A Subsidiaries.
The CLI Member shall have the power and authority to do any and all acts
necessary or convenient to or

 

51

 

for the furtherance of the
purposes described herein, including all powers and authorities, statutory or
otherwise, possessed by members of limited liability companies under the laws
of the State of Delaware. In connection with the foregoing, the CLI Member is
hereby authorized and empowered to act through its officers and employees and
other persons designated by the CLI Member in carrying out any and all of its
powers and authorities to any of its officers and employees and to any other
person designated by the CLI Member. Notwithstanding the foregoing, the CLI
Member shall not take any action or cause the GP to take any action with
respect to a Class A Property if such action is in violation of any of the
obligations of the OP and the GP pursuant to the Contribution and Subscription
Agreements or which would give rise to any claim of damages by the parties
protected thereunder.

 

7.05         Management of the Class C Properties. Notwithstanding any other provision of this
Agreement to the contrary, the Gale/SLG Member shall have the sole, complete
and absolute authority and discretion to authorize and approve all matters
pertaining to the Class C Properties (including any disposition thereof) and to
control, conduct and manage the business and affairs of the Company, and to
cause the GP to control, conduct and manage the business and affairs of the OP,
with respect to (i) the Class C Properties and (ii) the Class C Subsidiaries.
The Gale/SLG Member shall have the power and authority to do any and all acts
necessary or convenient to or for the furtherance of the purposes described
herein, including all powers and authorities, statutory or otherwise, possessed
by members of limited liability companies under the laws of the State of
Delaware. In connection with the foregoing, the Gale/SLG Member is hereby
authorized and empowered to act through its officers and employees and other
persons designated by the Gale/SLG Member in carrying out any and all of its
powers and authorities to any of its officers and employees and to any other
person designated by the Gale/SLG Member. Notwithstanding the foregoing, the Gale/SLG
Member shall not take any action or cause the GP to take any action with
respect to a Class C Property if such action is in violation of any of the
obligations of the OP and the GP pursuant to the Contribution and Subscription
Agreements or which would give rise to any claim of damages by the parties
protected thereunder.

 

7.06         Services and Fees; Affiliate Transactions.

 

(a)           The Company will cause the Owners of the
Class B Properties to enter into (i) property management agreements with the
CLI Member or one of its Affiliates, providing for property management fees of
3.0%, (ii) leasing agreements with the CLI Member or one of its Affiliates,
providing for leasing commissions of 5.0% of fixed base minimum rent, with an
additional 1.5% override if a third-party broker is involved, and (iii) from
time to time as required, construction management agreements with the CLI
Member or one of its Affiliates, providing for construction management fees of
4.0%, all substantially in the forms attached hereto as Exhibit C
(collectively, the “Management Agreement”), which Management Agreement,
is hereby deemed approved by the Executive Committee. No acquisition fees shall
be paid to any of CLI or SLG or any of their respective Affiliates in
connection with the acquisition by the Company of its indirect interests in the
Properties. Any changes in the form of the Management Agreement or any
amendments or modifications thereto, or any changes in the schedule of fees
previously approved by the Executive Committee, must be approved by the
Executive Committee.

 

52

 

(b)           Any agreements with any Member or a Related
Person of any Member with respect to the Class B Properties must be approved by
the Executive Committee, and no fees or compensation will be paid by the
Company, the GP, the OP or any Class B Property Subsidiary to any Member or any
of its Related Persons, unless the same has been approved by the Executive
Committee or contemplated in an approved Budget and Operating Plan.

 

(c)           In addition and notwithstanding the foregoing
provisions of this Section 7.06, the Executive Committee 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
Class B Properties, the Company, the GP, the OP or any Class B Property
Subsidiary, which agreements shall be subject to the approval of the Executive
Committee. The fees for services from such third parties shall not exceed the
prevailing competitive fees being charged for such services for similar
properties in the market where the Properties are located.

 

(d)           The Members agree that SLG will assist the
Company, the OP the GP and the Class B Property Subsidiaries in arranging third
party financing and sale arrangements with respect to the Class B Properties,
including lines of credit, third-party mezzanine investments, securitized debt,
portfolio sales and equity offerings, in each case as may be approved by the
Executive Committee. SLG will receive such fees for such services to be
determined on as case by case basis and as may be approved by the Executive
Committee.

 

7.07         Duties and Conflicts.

 

(a)           The Manager and appointed members of the
Executive Committee shall devote such time to the business of the Company, the
GP, the OP and the Class B Subsidiaries as they deem to be necessary or
desirable in connection with their respective duties and responsibilities
hereunder. Except as otherwise expressly provided in this Agreement or as
otherwise approved by the Executive Committee, 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 with respect to the Class B Properties.

 

(b)           Each of the Members recognizes that the other
Member and its members, partners, shareholders, officers, directors, employees,
agents, representatives and Related Persons, 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 Related Persons, are entitled to carry on such
other business interests, activities and investments. Subject to the
restrictions on certain leasing conduct on the part of the CLI Member and its
Related Persons set forth in the Management Agreement, each of the Members may
engage in or possess an interest in other business ventures of any nature and
description, independently or with others, including, but not limited to, the
ownership, financing, acquiring, leasing, promoting, improving, operation,
management, syndication, brokerage and/or development of real property other
than the Properties, including, but not limited to, property in the area which
the Property is located, 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 

 

53

 

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 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.

 

(c)           Each of the CLI Member and the Gale/SLG
Member hereby agrees that it will present in a fair and equitable manner all
available lease space in the Properties in the same manner which it presents
available lease space for properties which it or its respective Affiliates own,
or for which the CLI Member, the Gale/SLG Member or their respective Affiliates
provide management or leasing services (“Similar CLI/Gale Properties”)
to existing and prospective tenants. In addition, each of the CLI Member and
the Gale/SLG Member hereby agrees that it will not provide internal or third
party brokers or leasing agents with any additional incentives or preferences
with respect to leasing one available space versus another in a manner that is
not fair and equitable across all available space in the Properties and the
Similar CLI/Gale Properties, without first offering to provide to the Company
the same incentives and preferences for the Class B Properties. Each of the CLI
Member and the Gal/SLG Member agree that they shall not approach and attempt to
move existing tenants away from the Class B Properties but may negotiate with
such an existing tenant concerning other than Class B Properties if approached
by such tenant.

 

7.08         Company Expenses. (a) 
Except as otherwise expressly provided in this Agreement or in the
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 Properties, including,
without limitation, transfer taxes in connection with the acquisition of the
Properties (or interests in the applicable Subsidiaries), all fees payable
under Section 7.06, 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 reasonably necessary for
Company or any Subsidiary business or operations and has been approved by the
Executive Committee or set forth in the Budget and Operating Plan (solely with
respect to the Class B Properties), approved by the CLI Member (solely with
respect to the Class A Properties), approved by the Gale/SLG Member (solely
with respect to the Class C Properties) or is expressly authorized in this
Agreement. Anything in this Agreement to the contrary notwithstanding,
Formation Costs shall be aggregated, allocated between the Gale/SLG Member and
the CLI Member as provided in Section 4.01. Notwithstanding the foregoing, in
no event shall the Company or any Subsidiary have any obligation to pay or
reimburse any Member for (a) any direct or indirect general overhead
expense of such Member, (b) the costs and expenses, including legal costs,
relating to any employees, staff or other personnel necessary to conduct the
day-to-day operations of the Company or any Subsidiary or to provide the
financial reporting of the Company or any Subsidiary (other than those required
by the express terms of this Agreement, or any other agreement, to be provided
by third parties, including year-end audited financial statements and tax
returns and reports prepared by third parties) or to oversee the operations of 

 

54

 

the Properties, or
(c) any travel expenses, unless in each such case the same have been
approved by the Executive Committee or are expressly authorized in this
Agreement or set forth in an approved Budget and Operating Plan.

 

(b)           For the avoidance of doubt, the Members shall
use all reasonable efforts to determine which expenses of the Company should be
categorized as Class A Property Expenses, Class B Property Expenses and Class C
Property Expenses. Any expenses, however, which are not Class A Property
Expenses or Class C Property Expenses shall be Class B Property Expenses.
Similarly, for the avoidance of doubt, the Members shall use all reasonable
efforts to determine which revenues of the Company should be categorized as
Class A Property Revenues, Class B Property Revenues and Class C Property
Revenues. Any revenues, however, which are not Class A Property Revenues or
Class C Property Revenues shall be Class B Property Revenues.

 

7.09         Sale of the Class B Properties.

 

(a)           Member’s Right to Sell. Subject to the provisions of subparagraph
(b) below and provided the provisions of Article VIII or the provisions of
Section 10.02(e) hereof have not been initiated, either Member (the “Proposing
Member”) may cause the sale of 100% of the Interests of the Members as such
Interests relates solely to the Class B Properties (the “ROFO Class B
Property Interests”) at any time after the last day of the 30th month after
the consummation of the transactions contemplated by the Contribution and Sale
Agreement (a “ROFO Trigger Sale”) without the consent of the other
Member or the Executive Committee and without any other restriction or
limitation as to the terms of such transactions (including a sale to any
Related Person).

 

(b)           Right of First Offer. In the event such Proposing Member desires
to solicit, offer or enter into a ROFO Trigger Sale upon terms proposed by such
Proposing Member and which such Proposing Member is in good faith willing to
accept (an “Acceptable Offer”), prior to going to market to sell,
exchange, transfer, assign or otherwise dispose of the ROFO Class B Property
Interests, the Proposing Member shall deliver to the other Member (the “Electing
Member”) the terms of such Acceptable Offer in writing (the “Notice”)
including the proposed purchase price, the other economic terms and conditions
and other material conditions of such Acceptable Offer (including, without
limitation, whether the Proposing Member will be released from any existing
guaranties or receive an indemnity from a Person with creditworthiness
satisfactory to the Proposing Member in lieu thereof), and such Notice to the
Electing Member shall contain and be accompanied by detailed computations
setting forth the Proposing Member’s best estimate of the amount of cash which
would be received by each of the Members were such ROFO Trigger Sale
consummated in accordance with the terms of such Acceptable Offer. The terms of
such Acceptable Offer delivered to the Electing Member shall include a
statement by the Proposing Member setting forth the cash amount of such
purchase price stated in U.S. dollars only. In no event shall an Acceptable
Offer consist of a purchase price less than the amount necessary to avoid an
allocated loss to the Members based on the Members basis in the Class B
Properties at the time of the closing pursuant to the ROFO Trigger Sale. At any
time within forty-five (45) days of the date the Electing Member receives the
Notice with respect to any ROFO Trigger Sale described above (the “Response
Period”), the

 

55

 

Electing Member shall have
the right, exercisable by delivery of notice in writing (the “Election”)
to the Proposing Member, to either:

 

(i)            Approve the Acceptable Offer and authorize
the Proposing Member to attempt to cause the ROFO Trigger Sale of the ROFO
Class B Property Interests in accordance with the Acceptable Offer; or

 

(ii)           Elect to purchase the ROFO Class B Property
Interests of the Proposing Member for a cash purchase price equal to one-half
the sum of 95% of the amount of cash (as set forth in the Acceptable Offer)
which the Members would have received had the ROFO Class B Property Interests
been sold pursuant to the Acceptable Offer as set forth in the Acceptable Offer
and subject to the other terms and conditions of the Acceptable Offer. Such
Election shall be made by (1) delivering to the Proposing Member the Election
which shall affirmatively state that it is exercising such option, that it has
established the escrow account or letter of credit called for below and provide
the name, address and other details of such escrow agent or issuer and the
escrow account or letter of credit and (2) depositing in an escrow account
at a title insurance company or attorney in New York City a deposit equal to 5%
of the cash portion of the purchase price (as set forth in the Acceptable
Offer) which the Members would have received had the ROFO Trigger Sale been
consummated pursuant to the Acceptable Offer, such 5% deposit to take the form
of either cash (or a certified check) or delivery to the escrow agent of an
irrevocable letter of credit drawn on a reputable and financially sound bank
which is a member of the New York Clearing House payable to the Proposing
Member; in which event, on the closing date set forth in the Election (such
date to be not less than 15 and not more than 90 Business Days after the date
such Election is delivered to the Proposing Member), the Proposing Member and
the Electing Member shall close the purchase of the ROFO Class B Property
Interests, and the Proposing Member shall convey title to the Proposing Member’s
ROFO Class B Property Interests to the Electing Member or to a designee of the
Electing Member free and clear of all liens and other encumbrances, against
receipt of payment of the purchase price.

 

(c)           Authorization to Sell. If (i) the Electing Member shall have
authorized the Proposing Member to attempt to sell the ROFO Class B Property
Interests or (ii) by the expiration of the Response Period the Electing Member
neither (A) authorizes the Proposing Member to attempt to sell the ROFO
Class B Property Interests, nor (B) elects to purchase ROFO Class B Property
Interests by delivering the Election and opening the escrow account
called for above, then the Electing Member shall be deemed to have authorized
and have approved the ROFO Trigger Sale to any party (including a Member or its
Related Persons) for a price not less than ninety-five percent (95%) of the
purchase price set forth in the Acceptable Offer and otherwise pursuant to
terms no less favorable to the Members than those set forth in the Acceptable
Offer. In the event the Electing Member authorizes or is deemed to have
authorized the ROFO Trigger Sale pursuant to the terms described above, and the
Proposing Member thereafter obtains or finalizes a bona fide offer for the
purchase of the ROFO Class B Property Interests from any party (including any Member
or its Related Persons) for a price which is not less than ninety-five percent
(95%) of the purchase price set forth in the Acceptable Offer and otherwise
upon terms no less favorable to the Members than those set forth in the
Acceptable Offer, the Proposing Member may (on behalf of all the Members and
the Company)

 

56

 

consummate the ROFO Trigger
Sale on such terms, without the requirement of any consent or approval of the
Executive Committee or any consent or approval of the Electing Member, provided
the Proposing Member shall have entered into (on behalf of all the Members and
the Company) a binding contract for the ROFO Trigger Sale within 180 calendar
days after the date on which the Electing Member authorized or was deemed to
have authorized such ROFO Trigger Sale, and such ROFO Trigger Sale must be
consummated within 240 calendar days after the date on which the Electing
Member authorized or was deemed to have authorized such ROFO Trigger Sale (in each
case, subject to normal and customary extensions of not more than an additional
60 calendar days). The failure of the Proposing Member to enter into such
binding contract within the 180-day period referred to in the immediately
preceding sentence (as the same may be extended as set forth above) or the
failure of such ROFO Trigger Sale to occur within the 240 calendar days
referred to in the immediately preceding sentence (as the same may be extended
as set forth above) shall require the Proposing Member to deliver to the
Electing Member another Acceptable Offer in accordance with the terms of this
Section 7.09 prior to going to market to sell, exchange, transfer, assign or
otherwise dispose of the ROFO Class B Property Interests.

 

(d)           Closing of ROFO. If the ROFO Class B Property Interests are
to be conveyed or assigned to the Proposing Member pursuant to the foregoing
provisions, the Electing Member shall convey its ROFO Class B Property
Interests without representations and warranties about the Company or its
assets. Transfer taxes, escrow fees and all other closing costs in connection
with such conveyance or assignment shall be allocated between and paid by the
purchaser and seller in the usual and customary manner (with each party being
responsible for its own legal fees). The Electing Member shall be entitled to
enforce its rights under this Section 7.09 by specific performance. The closing
of any such sale shall be held at the offices of the Proposing Member.

 

(e)           Default. In the event the Electing Member should default in its obligations to
purchase ROFO Class B Property Interests pursuant to the terms of this Section
7.09, as the sole and exclusive remedy for such default, the following shall
apply:

 

(i)            the Electing Member shall cease to have any
rights of first offer pursuant to Section 7.09(b) hereof and the Electing
Member shall cease to have any right to deliver a Buy-Sell Offer pursuant to or
otherwise initiate the provisions of Section 8.01 hereof; and

 

(ii)           the escrow agent shall immediately deliver to
the Proposing Member the escrow deposit delivered by the Electing Member (such
amount shall not be deemed to be a distribution affecting the Capital Account,
the Payout Percentages, the allocation provisions or any other equity
provisions of this Agreement); and

 

(iii)          thereafter, with regard to the Company, the
Proposing Member may at any time (A) solicit, offer and sell, exchange,
transfer, assign or otherwise dispose of its ROFO Class B Property Interests,
without the consent or approval of the Electing Member and without the consent
or approval of the Executive Committee (as would otherwise been required
pursuant to the terms of this Agreement), notwithstanding that the dates or
other circumstances entitling such Proposing Member to sell its ROFO Class B
Property Interests may not have occurred, and without any other restrictions or

 

57

 

limitations as to the terms
of such transaction, and (B) trigger or initiate the buy-sell provisions
set forth in Section 8.01 hereof, notwithstanding that the dates or any other
circumstances entitling the Proposing Member to trigger or initiate either of
the Buy-Sell procedures may not have occurred.

 

7.10         Termination of Other Agreements. If any Member’s Interest is purchased under
this Article VII, all other agreements with such Member or its Related Persons
with respect to the Class B Properties, will (at the election of the purchasing
Member) be terminated on the date such Member’s Interest is purchased.

 

7.11         Distributions in Kind. Notwithstanding anything to the contrary in
this Agreement, no Member shall have the right to cause the OP, or to cause the
GP to cause the OP, to distribute any Property or any interest in a Property
Subsidiary, without the consent of the other Member, which may be withheld in
the sole and absolute discretion of such other Member, provided that at any
time on or after May 1, 2007, either the CLI Member or Gale/SLG Member shall
have the right to elect to cause an in-kind distribution to be made by the OP
of any of (i) all of the Class A Property Subsidiaries (in which case such
distribution would be made in accordance with the Class A Property Payout
Percentages) or (ii) both (A) all of the Class B Property Subsidiaries (in
which case all of the OP’s interests in the Class B Property Subsidiaries would
first be contributed to a new limited liability company having terms identical
to the terms contained in this Agreement with respect to the Class B Properties
and the interests in such new limited liability company would be distributed in
accordance with the Class B Property Payout Percentages) and (B) all of the
Class C Property Subsidiaries (in which case such distribution would be made in
accordance with the Class C Property Payout Percentages). In the case of an
election by any Member to cause an in-kind distribution pursuant to the
preceding sentence, the Executive Committee shall determine whether the form of
the distribution shall be as described in clause (i) or clause (ii), provided
that in either case the Member electing to cause the in-kind distribution shall
bear all the costs associated with such distribution. In the event of an
in-kind distribution contemplated by this Section 7.11, the Members shall cause
either (i) any CLI Loan to be paid off, in full, prior to such in-kind
distribution of the Class B Property Subsidiaries, including by paying off any
outstanding amount of such CLI Loan in accordance with their Class B Property
Percentage Interests or (ii) any new limited liability company to which the
Class B Property Subsidiaries are contributed to assume, in full, the
liabilities of the Company with respect to such CLI Loan and the Company shall
be released from any such liabilities.

 

7.12         CLI Special Right to Acquire Class B Property
Subsidiary. (a)  Right to Acquire Class B Property
Subsidiary. Provided the provisions of Section 7.09, Article VIII or
Section 10.02(e) hereof have not been initiated, from and after [insert date one year after date of Agreement, but not
earlier than May 1, 2007] the CLI Member shall have the right,
exercisable from time to time, to acquire the interests of the Gale/SLG Member
in any Class B Property Subsidiary pursuant to and in accordance with the
provisions of this Section 7.12.

 

(b)           Valuation Determination. In the event the CLI Member desires to
acquire the interests of the Gale/SLG Member in any Class B Property Subsidiary
(the “Target Class B Property Subsidiary”), the CLI Member shall (1)
provide written notice thereof to the Gale/SLG Member (a “Class B Property
Subsidiary Notice”), which notice shall contain the CLI Member’s good faith
estimate of the fair market value of the Target Class B Property Subsidiary and

 

58

 

(2) deposit in an
escrow account at a title insurance company or attorney in New York City a
deposit equal to five percent (5)% of the fair market value of the Target Class
B Property Subsidiary as specified in the Class B Notice, such five percent
(5%) deposit to take the form of either cash (or a certified check) or delivery
to the escrow agent of an irrevocable letter of credit drawn on a reputable and
financially sound bank which is a member of the New York Clearing House payable
to the Gale/SLG Member. If the Gale/SLG Member shall not, within thirty (30)
calendar days after receiving the Class B Property Subsidiary Notice, deliver a
written notice of objection to the fair market value of the Target Class B
Property Subsidiary contained in the Class B Property Subsidiary Notice, then
the Gale/SLG Member shall automatically be deemed to have accepted such fair
market value for purposes of this Section 7.12. If, however, the Gale/SLG
Member shall have delivered to the CLI Member a written notice objecting to the
fair market value of the Target Class B Property Subsidiary contained in the
Class B Property Subsidiary Notice, then, within thirty (30) calendar days
after delivery of such notice of objection, the Members shall hire a mutually
agreed upon appraisal firm to appraise the fair market value of the Class B
Property Subsidiary. Such appraiser shall determine such fair market value of
the Target Class B Property Subsidiary as a whole, without giving any
consideration or value to who has control or management of the Target Class B
Property Subsidiary. Such appraiser shall render its report within sixty (60)
calendar days after being retained and such report of the appraiser shall be
final and binding on the Members. For purposes of this Section 7.12, “Final
Fair Market Value” shall be either (i) the fair market value of the Target
Class B Property Subsidiary specified in the Class B Property Subsidiary Notice
if the Gale/SLG Member shall not have delivered a timely notice of objection
thereto as provided above or (ii) the fair market value of the Target Class B
Property Subsidiary as determined by the appraiser as provided above.

 

(c)           Distribution of Membership Interests of
Target Class B Property Subsidiary. As promptly as practicable after the determination of the Final Fair
Market Value (and, in any event, within thirty (30) days thereafter), the
Members shall cause the GP and the OP to make a distribution in kind of the
membership interests of the Target Class B Property Subsidiary to the partners
of the OP in accordance with the limited partnership agreement of the OP
(including causing the GP to distribute its distributed share of the membership
interests of the Target Class B Property Subsidiary to the Company).
Immediately thereafter, the Members shall cause the Company to make a
distribution in kind of the membership interests of the Target Class B Property
Subsidiary then held by the Company to the Members, with the CLI Member
receiving one half of such membership interests and the Gale/SLG Member
receiving the other half of such membership interests.

 

(d)           Acquisition of Target Class B Property
Subsidiary. Within five (5)
Business Days after the distribution by the Company of the membership interests
of the Target Class B Property Subsidiary to the Members, the Gale/SLG Member
shall sell to the CLI Member, and the CLI Member shall purchase from the
Gale/SLG Member, the membership interests in the Target Class B Property
Subsidiary held by the Gale/SLG Member for a purchase price equal to ninety
five percent (95%) of the Final Fair Market Value multiplied by a fraction, the
numerator of which shall be the membership interests of the Target Class B
Property Subsidiary held by the Gale/SLG Member and the denominator of which
shall the total outstanding membership interests of the Target Class B Property
Subsidiary (including those membership interests held by the limited partners
of the OP). The closing of any such sale shall 

 

59

 

be held at the offices of
the Gale/SLG Member. In connection with such closing, the Members shall deliver
such documents and instruments as may be reasonably required to convey to the
CLI Member the membership interests of the Target Class B Property Subsidiary
then held by the Gale/SLG Member and the CLI Member shall pay the purchase
price as calculated above. Each of the CLI Member and the Gale/SLG Member shall
be entitled to enforce its rights under this Section 7.12 by specific
performance.

 

(e)           Default. In the event the CLI Member should default in its obligations to
purchase the membership interests of the Target Class B Property Subsidiary
pursuant to the terms of this Section 7.12, as the sole and exclusive remedy
for such default, the following shall apply:

 

(i)            the CLI Member shall cease to have any rights
with respect to any Class B Subsidiaries pursuant to this Section 7.12; and

 

(ii)           the escrow agent shall immediately deliver to
the Gale/SLG Member the escrow deposit delivered by the CLI Member (such amount
shall not be deemed to be a distribution affecting the Capital Account, the
Payout Percentages, the allocation provisions or any other equity provisions of
this Agreement).

 

7.13         Resolution of Deadlock. (a)                Deadlock Notice. At any time during the term of this
Agreement, either Member may deliver to the other and the Executive Committee a
written notice (a “Deadlock Notice”) within forty five (45) calendar
days after the occurrence of the following events (each such event being
referred to herein as a “Deadlock”): 
(i) the Executive Committee is unable, after two (2) duly convened
meetings of the Executive Committee to reach any approval or decision with
respect to any of the matters set forth in Sections 7.01(a), (ii) if a quorum
of members of the Executive Committee to vote on the matters set forth in
Sections 7.01(a) is not obtained for two (2) consecutive meetings of the
Executive Committee or (iii) there is a Material Disagreement.

 

(b)           Resolution of Dispute. Promptly, but not later than ten (10)
calendar days after receipt of a timely Deadlock Notice as provided above, the
Executive Committee shall meet pursuant to the terms of such Deadlock Notice to
discuss alternative solutions in order to resolve the Deadlock.

 

(c)           Appointment of Mediator. If the Executive Committee fails to meet as
provided above or fails to resolve the Deadlock within ten (10) calendar days
after the receipt of the Deadlock Notice, each of the Members shall jointly
select and appoint a mediator (the “Mediator”) within the next twenty
one (21) calendar days, who shall be familiar with the Business and who
shall not have, or have had, any connection or affiliation, including as a
director, employee, advisor, agent or attorney, with any Member or its
Affiliates in order to mediate the difference of opinion and suggest solutions to
the Deadlock that are acceptable to the Members (the “Mediation”).

 

(d)           Written Representations to Mediator. In advance of the Mediation, the Mediator
shall give the Members the opportunity of making written representations to him
or her and he or she shall make a decision after taking into account such
representations and the

 

60

 

remaining provisions of this
Section 7.13. The parties agree that, subject to the completion of reasonable
and commercially acceptable confidentiality undertakings, the Mediator shall be
given access to all such personnel, books, records and information as he or she
may reasonably require.

 

(e)           Duration of the Mediation. The Mediation shall last for a period of
three (3) calendar days, or such other period as the parties may agree.

 

(f)            Non-termination of the Mediation. No party may terminate the Mediation until
each party has made its opening presentation and the Mediator has met each
party separately for at least one (1) hour.

 

(g)           Agreement Between the Parties. Any agreement reached between the Members
as a result of the Mediation shall be final and binding on the Company and all
Members.

 

(h)           Expert Determination. If, after the three (3) day period (or such
other period as the parties may agree) referred to in paragraph (e) above, no
agreement has been reached by the Members, the Mediator shall be discharged and
the Members shall, within the (10) Business Days appoint an expert (the “Expert”),
who shall be familiar with the Business and who shall not have, or have had,
any connection or affiliation, including as a director, employee, advisor,
agent or attorney with any Member or its Affiliates to determine a resolution
to the Deadlock (the “Expert Determination”). The procedure of the
Expert Determination shall be agreed between Members, the details of which
shall be contained in a joint letter addressed to the appointed Expert.

 

(i)            Written Representations to Expert. The Expert shall give the parties the
opportunity of making written representations to him or her and he or she shall
make a decision after taking into account such representations and the
remaining provisions of this Section 7.13. The parties agree that, subject
to the completion of reasonable and commercially acceptable confidentiality
undertakings, the Expert shall be given access to all personnel, books, records
and information as he or she may reasonably require.

 

(j)            Legal Advisers. The Expert may appoint his or her own legal
advisers to advise on matters of legal interpretation on which the Members are
not agreed and the expenses thereof shall be dealt with in accordance with
paragraph (m) below.

 

(k)           Final and Binding Decision. The Expert shall act as an expert and not
an arbitrator and his or her reasoned decision in the absence of manifest error
shall be final and binding on the Company and all of the Members.

 

(l)            Determination of the Expert. The Expert shall determine a resolution to
the Deadlock as soon as is practicable but in any event no later than one (1)
month from the date the Expert is appointed (or such other period as the
Members may agree).

 

(m)          Costs. The fees and expenses of the Mediator and the Expert shall be borne
one half by each Member, unless the Mediator or the Expert (as applicable)
otherwise

 

61

 

determines. Each party will
bear its own costs and expenses of its participation in the Mediation and
Expert Determination.

 

VIII.        BUY-SELL PROVISIONS

 

8.01         General Provisions. Either the CLI Member or the Gale/SLG
Member (the “Offeror”) may, in the event of a Material Disagreement
commencing on or after the first anniversary of the consummation of the
transactions contemplated by the Contribution and Sale Agreement, make an offer
as described below (the “Buy-Sell Offer”) to the other Member (the “Offeree”),
as set forth below (unless the consummation of the Buy-Sell Offer would give
rise to any claim of damages by the parties protected under the Contribution
and Subscription Agreements).

 

(a)           The Buy-Sell Offer shall be in writing and be
signed by the Offeror, specify a cash purchase price (the “Buy-Sell Offer
Price”) at which the Offeror would purchase the Interests of the Offeree,
specify the other major economic terms and conditions upon which the Offeror
would be willing to purchase from the Offeree its Interest, including its
interest in any loans to the Company (and, in such case, under the
circumstances described below, those same terms and conditions shall apply to
the sale by the Offeror to the Offeree of its Interest) consistent with the
terms of the alternative elections set forth in Section 8.01(b).

 

(b)           The Offeree shall have the right, exercisable
by delivery of notice in writing (the “Election”) to the Offeror within
75 calendar days after the receipt of the Buy-Sell Offer, to elect to either:

 

(i)            sell to the Offeror all of the Offeree’s
rights, title and interests in and to its Interest in the Company, and interest
in any loans to the Company, in each case free of all liens and encumbrances
for a cash purchase price equal to the Buy-Sell Offer Price; or

 

(ii)           purchase all of the Offeror’s rights, title
and interests in and to its Interest in the Company, and interest in any loans
to the Company, for a cash purchase price equal to the Buy-Sell Offer Price.

 

Failure
of the Offeree to give the Offeror notice of the Offeree’s Election shall be
deemed, upon the expiration of such 75-day period, to be an Election to sell
under Section 8.01(b)(i).

 

(c)           Within two (2) calendar days after the
Offeree’s Election or deemed Election, the purchasing Member under this Section
8.01 shall deposit in escrow with a title insurance company or attorney
selected by the selling Member as escrowee an earnest money deposit in cash in
an amount equal to 5% 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(c), 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 in any loans to
the Company, for a cash purchase price equal to the Buy-Sell Offer Price, or
not cause the sale of such Interests and interests in any such loans. All
closings of any purchase and sale under this Section 8.01 will be held at the
Company’s principal office and

 

62

 

shall take place no later
than that date which is 60 calendar days after the later of the Offeree’s
Election or deemed Election. All transfer, stamp and recording taxes imposed on
the transfer, and all other closing costs shall be allocated 50% to the selling
Member and 50% to the purchasing Member. On or prior to the closing of the
purchase under this Section 8.01(c), the selling Member shall receive, as
applicable (i) a release from all liability under any guaranty and/or indemnity
issued by the selling Member and/or its Related Persons (with respect to
actions after the closing of the sale); provided, however, that if the lender
under the applicable loan documents (the “Lender”), after request from
either the selling Member or the purchasing Member, will not agree to release
the selling Member and/or its Related Persons (with respect to actions after
the closing of the sale), then the purchasing Member shall deliver to the
selling Member an indemnity, in form and substance and from a Person with
creditworthiness satisfactory to the selling Member, indemnifying it and/or its
Related Persons in the event of any liability on its (or their) part under the
guaranty and/or indemnity for claims arising from and after the closing (but
not for any claim made by the Lender under any such guaranty and/or indemnity
that was asserted by the Lender prior to the closing); and (ii) an agreement,
in mutually acceptable form, providing that a Person with creditworthiness
satisfactory to the selling Member will indemnify and hold the selling Member
(and its Related Persons) harmless against any post-closing liabilities it (or
they) may incur as a result of the selling Member having been an indirect owner
of the Properties (other than any liabilities arising out of the selling Member’s
(or the selling Member’s Related Persons’) gross negligence or willful
misconduct.

 

(d)           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 Offer hereunder, to be a Proposing Member under
Section 7.09 hereof or any rights under Section 10.02(e), 10.05 or 10.06
hereof. No Buy-Sell Offer may be made until all periods for making elections
and performing obligations under any previous Buy-Sell Offer pursuant to this
Section 8.01 shall have terminated.

 

(e)           Any Member may freely assign its rights and
obligations pursuant to this Section 8.01 to an 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(e).

 

(f)            Notwithstanding the foregoing, if the
provisions of Section 10.02(e) or Section 7.09 of this Agreement have
been initiated by any Member, then no Member may initiate the provisions of
this Section 8.01 until the procedures set forth in such
Sections 7.09 or 10.02(e), as applicable, have been completed or
terminated pursuant to the provisions of such Sections 7.09 or 10.02(e),
as the case may be.

 

8.02         Termination of Other Agreements. If any Member’s Interest is purchased under
this Article VIII, all other agreements with such Member or its Related Persons
will (at the election of the purchasing Member) be terminated on the date such
Member’s Interest is purchased.

 

8.03         Power of Attorney. In the event that either the Offeror or the
Offeree under Section 8.01 (as the selling Member) shall have failed or
refused, within five (5) calendar days after receipt of a notice from the
other Member requesting such Offeror or Offeree to execute,

 

63

 

acknowledge and deliver such
documents, or cause the same to be done, as shall be required to effectuate the
provisions of Sections 8.01, as applicable, then the purchasing Member may
execute, acknowledge and deliver such documents for, on behalf of and in the
stead of the selling Member, and such execution, acknowledgment and delivery by
the purchasing Member shall be for all purposes effective against and binding
upon the selling Member as though such execution, acknowledgment and delivery
had been by the selling Member. Each Member does hereby irrevocably constitute
and appoint other Member as the true and lawful attorney-in-fact of such Member
and the successors and assigns thereof, in the name, place and stead of such
Member or the successors or assigns thereof, as the case may be, to execute,
acknowledge and deliver such documents in the event such Member shall be a
selling Member under the circumstances contemplated by this Section 8.03. It is
expressly understood, intended and agreed by each Member, for such Member and
its successors and assigns, that the grant of the power of attorney to any
other Member pursuant to this Section 8.03 is coupled with an interest, is
irrevocable and shall survive the death, dissolution, termination or legal
incompetency, as applicable, of such granting Member, or the assignment of the
Interest of such granting Member, or the dissolution of the Company.

 

IX.           BOOKS AND RECORDS

 

9.01         Books and Records. The Manager 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 Properties. Bills, receipts and vouchers shall be maintained on file by
the Manager. The Manager shall maintain said books and accounts in a safe
manner and separate from any records not having to do directly with the
Company. The Manager 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 Manager at
the principal place of business of the Company or such other place or places as
may from time-to-time be determined by the Executive Committee. 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 United States
generally accepted accounting 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 Manager shall prepare or cause to be
prepared at the Company’s expense the financial reports and other information
that the Executive Committee may determine are appropriate, including those
provided for in Section 7.03(c). In any event, the Manager shall prepare or
cause to be prepared at the expense of the Company and furnish to each of the

 

64

 

Members: (i) within
thirty (30) 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 (with material budget variance explanations)
and a preliminary and unaudited statement of changes in Members’ capital for
such fiscal year; (ii) as early as practicable but in no event later than
ninety (90) 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 (with
material budget variance explanations), a statement of cash flow and a
statement of changes in Members’ capital for the Company for the fiscal year
and information for the fiscal year as to the balance in each Member’s Capital
Account, and all other information reasonably required by each Member, all of
which shall be certified to by the Manager as being, to the best of its
knowledge, true and correct, and all of which shall be certified in the
customary manner by the Company Accountant (which firm shall provide such
balance sheet, statement of income and expense, statement of cash flow,
statement of changes in Members’ capital and other information in draft form to
the Members for review prior to finalization and certification thereof);
(iii) within thirty (30) 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 (with
material budget variance explanations), an estimated statement of cash flow and
a statement of changes in Members’ capital for the fiscal quarter and
information for the fiscal quarter as to the balance in each Member’s Capital
Account, and all other information, including a market update, reasonably
required by each Member, all of which shall be certified to by the Manager as
being, to the best of its knowledge, true and correct; and (iv) within
thirty (30) days after the end of each calendar month, a consolidated income
statement (with material budget variance explanations) for the Company and each
Subsidiary and a related estimated statement of cash flow, and a sales,
marketing and development activity report indicating details with regard to any
progress made in connection with the sale, marketing or development of the
Properties (including a report of development expenditures, with budget
variance explanations), marketing programs, sales contracts or construction
contracts or letters of intent received, entered into or closed or terminated,
new leases, renewals, extensions and terminations, and a report of capital
expenditures, each for the previous calendar month, and an accounts receivable
aging report and insurance certificate status report, each dated as of the end
of the previous calendar month. The Manager will also promptly furnish to each
Member, at the expense of the Company, copies of all reports required to be
furnished to any lender of the Company or any Subsidiary. At the expense of the
Company, the Manager shall, within thirty (30) days after the end of each
calendar half-year, prepare (or cause to be prepared) and deliver to the
Executive Committee for approval semi-annual updates of the current year Budget
and Operating Plan for review and approval by the Executive Committee within
sixty (60) days after the end of each calendar half-year; it is specifically
understood by the Members that the Manager by preparing such projections will
not be deemed to be representing or warranting or guaranteeing that the
projected returns on the Members’ investments set forth therein will be
attained, in whole or in part. In addition, promptly after the end of each
fiscal year and at the expense of the Company, the Manager 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

 

65

 

prepare its federal, state
and local income tax returns in accordance with the laws, rules and regulations
then prevailing. The Manager will also cause the Company Accountant to prepare
federal, state and local tax returns required of the Company, submit those
returns to the Executive Committee for its 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 or cause to be filed the tax returns after
they have been approved by the Executive Committee. In the event the members of
the Executive Committee shall not in good faith be able to approve any such tax
return prior to the date required for the filing thereof, the Manager will
timely obtain or cause to be obtained an extension of such date if such
extension is available under applicable law or, if such extension is not
available, file the tax return. The Manager shall prepare and distribute or
cause to be prepared and distributed the reports and statements described in
this Section 9.03.

 

(b)           All decisions as to accounting principles
shall be made by the Executive Committee, 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 or any other
accounting firm approved and designated by the Executive Committee. The fees
and expenses of the Company Accountant shall be a Company expense. The initial
Company Accountant shall be Price Waterhouse Coopers, until such time as the
Executive Committee shall elect to change such Company Accountant.

 

9.05         Reserves. The Executive Committee may, in its discretion, subject to such
conditions as it shall determine, establish cash reserves for the purposes and
requirements as it may deem appropriate in connection with the Class B
Properties (the “Reserve Accounts”). Such Reserve Accounts will be
increased by any deposits thereto from time-to-time of amounts of the revenues
of the Company from operations, the net proceeds from capital transactions, and
contributions and other sources, before any distributions of such amounts to
the Members, as determined reasonably necessary by the Executive Committee.
Once established, such Reserve Accounts may be charged by the Manager with any
expenditure for the operation of the Company, the GP, the OP, any Class B
Property Subsidiary or the Class B Properties, the maintenance or repair of any
item and the purchase, acquisition, repair, maintenance or construction of
items at or on the Class B Properties and any contingent, unforeseen or other
liabilities or obligations of the Company, the GP, the OP or any Class B
Property Subsidiary, whether such items are treated as current expense
deductions or as capital expenditures under GAAP. Nothing contained in this
Section 9.05 shall in any way limit or restrict the right of the Executive
Committee to use other assets or funds of the Company (other than deposits to
the Reserve Accounts) for any such expenditures with respect to the Class B
Properties.

 

9.06         The Budget and Operating Plan.

 

(a)           The Manager shall be responsible for
preparing and submitting to the Executive Committee for its approval a proposed
budget and strategic operating plan with regard to the Class B Properties
and/or the Class B Property Subsidiaries on a consolidated basis along with
operations of the Company, the GP and the OP for each fiscal year. As soon as
reasonably practical, but in any event within thirty (30) days after the date
of this Agreement, the Manager shall prepare and submit to the Executive
Committee, for its approval, (i) an initial Budget for

 

66

 

the Company, the GP, the OP
and the Class B Property Subsidiaries (as approved by the Executive Committee,
the “Initial Budget”) and (ii) the initial proposed strategic
operating plan for the Company, the GP, the OP and the Class B Property
Subsidiaries (as approved by the Executive Committee, the “Initial Operating
Plan”). In the absence of an approved Operating Plan (including in the
absence of an approved Initial Operating Plan), no Member or Manager shall have
any authority, with regard thereto, other than as provided in Section 7.03(c)
hereof (if applicable), to authorize or approve or to take any action, expend
any sum, make any decision or incur any obligation on behalf of the Company,
the GP, the OP or any Class B Property Subsidiary with respect to any matter
which by the express terms of this Agreement was contemplated to be included in
the approved Operating Plan, without the consent or approval of the Executive
Committee. Further, in the absence of an approved Budget (including in the
absence of an approved Initial Budget), no Manager shall have any authority,
with regard thereto, other than as provided in Section 7.03(c), hereof (if
applicable), to authorize or approve or to take any action, expend any sum,
make any decision or incur any obligation on behalf of the Company, the GP, the
OP or any Class B Property Subsidiary, without the consent or approval of the
Executive Committee. Each Budget and Operating Plan (including the Initial
Budget and Initial Operating Plan) shall set forth all anticipated construction
costs for any improvements or developments to be constructed on the Class B
Properties and shall set forth on an annual basis all anticipated income,
operating expenses, proposed and/or actual debt service terms and payments and
capital and other costs and expenses of the Class B Properties for the Company,
the GP, the OP and each Class B Property Subsidiary (including, without
limitation, a projected 12-month expense budget, a 12-month capital plan and a
60-month strategic operating plan), all of which will be based on the strategic
and comprehensive business plan designed to maximize the net operating income
of the Company and the Company’s returns on the Class B Properties. The
Executive Committee will review the Initial Budget and Initial Operating Plan
and each subsequent Budget and Operating Plan for the Class B Properties after
six months of actual operating results and make such amendments or
modifications thereto as the Executive Committee shall determine appropriate or
necessary in its reasonable judgment. For each year thereafter, the Budget and
Operating Plan shall be prepared in proposed form by the Manager and submitted
by the Manager to the Executive Committee in draft form within thirty (30) days
after the end of each of the fiscal year of the Company. The Budget and
Operating Plan will include a comprehensive update of the initial projections
with regard to the Class B Properties, the Company, the GP, the OP and each
Class B Property Subsidiary. Until such time as the Budget and Operating Plan
for any fiscal year has been approved by the Executive Committee, the Manager
shall have no authority or power to enter into any contract or lease on behalf
of the Company, the GP, the OP or any Class B Property Subsidiary or expend
Company, GP, OP or Class B Property Subsidiary funds, other than to the extent
approved by the Executive Committee or as expressly provided in this Agreement.
Once the Budget and Operating Plan (including the Initial Budget and Operating
Plan) has been approved by the Executive Committee, the manager shall be
responsible for the day-to-day operations of the Company, the GP and the OP in
accordance with such plans.

 

(b)           In formulating the Operating Plan for the
Company, the GP, the OP and all Class B Property Subsidiaries, to the extent
reasonably feasible at the time of preparation thereof, the Manager will
develop (for approval by the Executive Committee) proposed strategies regarding
(i) plans for development, construction or rehabilitation of the Class B
Properties, (ii) preparation and release of all promotion and advertising
material relating to the

 

67

 

Class B Properties or
concerning the Company and/or the Class B Property Subsidiaries,
(iii) terms for any proposed sale or disposition of the Class B
Properties, and (iv) selection of contractors, construction or other
managers, legal counsel, accountants, structural and environmental engineers,
appraisers and other consultants for the Company, the GP, the OP or any of the
Class B Property Subsidiaries to efficiently implement the current Budget and
Operating Plan.

 

(c)           The Manager will also consider and make
recommendations, to the extent it deems the same appropriate, regarding the
amendment, modification, alteration, change, cancellation, or prepayment of any
indebtedness evidenced by any mortgage or mezzanine loan presently or hereafter
affecting the Class B Property, and procurement of title insurance and other
insurance for the Company, the GP, the OP or any Class B Property Subsidiary or
any decrease, increase or other variance with regard to the insurance carried
by or on behalf of the Company or any Class B Property Subsidiary. Prior to
closing the sale of the Class B Properties, the Manager will consider and make
recommendations regarding the amendment, modification, alteration and change of
the existing Budget and Operating Plan to take into account the sale of the
Class B Property. No amendment, modification, alteration or change of any
Budget and Operating Plan will be effective until the same has been approved by
the Executive Committee.

 

(d)           In conjunction with the formulation of the
Operating Plan for the Class B Properties, the Manager will also develop (for
approval by the Executive Committee) proposed leasing and other operating
guidelines for the Class B Properties for the upcoming fiscal year, which leasing
and other operating guidelines shall include, to the extent reasonably feasible
at the time of preparation thereof, (i) any changes to the standard form
or forms of lease to be offered to prospective tenants, (ii) a rent
schedule setting forth proposed terms and rentals for the current and upcoming
fiscal year, (iii) a description of any proposed tenant inducements,
concessions, improvements or allowance to be offered prospective tenants,
(iv) a schedule of existing leases affecting the Class B Properties
(including their termination dates), including and specifying those spaces
which remain unleased and leases which are scheduled to expire during the
current and upcoming fiscal year, (v) a proposed budget for the cost to be
incurred for the balance of the projected development and/or lease-up period,
(vi) a schedule of spaces that require significant remodeling, repairing
or rehabilitation and a proposed budget for the cost to be incurred for the
balance of the fiscal year with respect thereto and (vii)  a summary of
the proposed general content and methodology of presenting the advertising
program to be implemented with respect to the Class B Properties. In addition,
the Manager will include in each proposed Operating Plan for approval by the Executive
Committee a schedule of the employees, if any, to be employed “on site” in the
direct management of the Class B Properties and all job titles whose salaries
or wages may from time-to-time be charged to the Company, GP, the OP or any
Class B Property Subsidiary. Such schedules shall be updated from time-to-time
but at least annually. The schedules shall include the name of such employees,
their job description and title, their office address and their salary.

 

68

 

X.            TRANSFER OF INTERESTS

 

10.01       No Transfer.

 

(a)           Except as expressly permitted or contemplated
by this Agreement: (i) no Member may, directly or indirectly, sell, assign,
give, hypothecate, pledge, encumber or otherwise transfer (“Transfer”)
all or any portion of its Interest without the prior written consent of the
other Member (which may be withheld or granted in the sole discretion of such
other Member); (ii) CLI may not Transfer all or any portion of its equity
interest in the CLI Member without the prior written consent of the Gale/SLG
Member, which may be withheld or granted in the sole discretion of the Gale/SLG
Member (it being understood this clause shall not apply to the direct or
indirect equity owners of CLI); and (iii) no direct or indirect equity owner of
the Gale/SLG Member (excluding the direct or indirect equity owners of SLG) may
Transfer all or any portion of its equity interest in the Gale/SLG Member
without the prior written consent of the CLI Member, which may be withheld or
granted in the sole discretion of the CLI Member.

 

(b)           Any Transfer in contravention of this
Article X 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 Section 10.07,
the CLI Member may, from time-to-time and in its sole discretion, without the
consent of the Gale/SLG Member, sell or assign its Interests in whole or in
part to any wholly owned and controlled Affiliate of CLI; 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 CLI Member shall have the absolute right to assign to
such Person the right to appoint one or more of the three Executive Committee
members the CLI Member is entitled to appoint pursuant to the terms of Section
7.02 hereof. In addition, the CLI Member shall have the right to pledge or
encumber its Interest with equity based financing from an institutional lender
in an amount of up to 50% of its Adjusted Capital Account Balance. Furthermore,
CLI may consummate a merger, consolidation or other business combination
transaction with a third party, provided that, following any such merger,
consolidation or other business combination transaction with a third party, the
Management Agreement shall be amended, if so requested by the Gale/SLG Member,
to reflect such agreed-upon terms and standards as the Members agree.

 

(b)           Subject to the provisions of Section 10.07,
the Gale/SLG Member may, from time-to-time and in its sole discretion, without
the consent of the CLI Member, sell or assign its Interest in whole or in part
to any wholly-owned and controlled Affiliate of Gale/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 Gale/SLG Member shall have the absolute right to assign to
such Person the right to appoint one or more of the three Executive Committee
members the Gale/SLG Member is entitled to appoint pursuant to the terms of
Section 7.02 hereof. In addition, the Gale/SLG Member shall have the right to
pledge or encumber its Interest with equity based financing from an
institutional lender in an amount of up to 50% of its Adjusted Capital Account
Balance.

 

(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

 

69

 

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
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)           Notwithstanding the foregoing (including
Section 10.01(a)), but subject to the provisions of Sections 10.02(c),
10.02(e), 10.03, 10.05, 10.06 and 10.07 hereof, from and after the earlier of
the second anniversary of the formation of the Company or the termination of
the Company pursuant to Article XII, the CLI Member may Transfer all or any
part of its Interest to any Purchaser, without the prior written consent of the
Gale/SLG Member, provided such transferee agrees to be bound by all of the
terms, conditions and provisions of this Agreement, including the provisions of
this Article X). Notwithstanding the foregoing, in no event shall the CLI
Member sell or assign its Interest in whole or in part to either Reckson
Associates, a Maryland corporation, Vornado Realty Trust, a Maryland
corporation or any of their respective Affiliates, unless, in connection with
such a Transfer, the SLG/Green Member shall have exercised its Tag-Along Right
in accordance with the provisions of Section 10.05.

 

(e)           (i) If the CLI Member desires to
Transfer all or a part of its Interest (the “Target Interest”) to a
Purchaser in accordance with Section 10.02(d) upon terms proposed by such
Purchaser and which the CLI Member is in good faith willing to accept (“Acceptable
Transfer Terms”), the CLI Member shall deliver to the Gale/SLG Member
notice of the terms of such Acceptable Transfer Terms (“Transfer ROFO Notice”),
including the identification of the proposed transferee, the proposed
consideration, other economic terms and conditions and all other material terms
and conditions of such Acceptable Transfer Terms (including, without
limitation, whether the CLI Member will be released from any existing
guaranties or receive an indemnity from a Person with creditworthiness
satisfactory to the CLI Member in lieu thereof). At any time within 30 calendar
days after the date the Gale/SLG Member receives the Transfer ROFO Notice (the “Transfer
Response Period”), the Gale/SLG Member shall have the right, exercisable by
delivery of notice in writing (the “Transfer Election”) to the CLI
Member, to:

 

(A)          approve the Acceptable Transfer Terms and
authorize the CLI Member to sell or dispose of the Target Interest to the named
proposed transferee in accordance with the Acceptable Transfer Terms and such
other terms and conditions as determined appropriate in the reasonable
discretion of the CLI Member; or

 

(B)           to the extent the provisions of Section 10.05
hereof are applicable, approve the Acceptable Transfer Terms and authorize the
CLI Member to sell or dispose of the Target Interest of the CLI Member and the
Gale/SLG Member’s Interest in accordance with such Acceptable Transfer Terms as
set forth in Section 10.05 hereof; or

 

(C)           elect to purchase all of the Target Interest
for a cash purchase price equal to 95% of the consideration set forth in the
Acceptable Transfer Terms (including any assumption of debt, if applicable) and
subject to no other terms and conditions.

 

70

 

(ii)           Any election pursuant to subparagraph (C) of
Section 10.02(e)(i) above shall be made by (1) delivering to the CLI
Member the Transfer Election, which shall affirmatively state that the Gale/SLG
Member is exercising such option, and (2) depositing in an escrow account
at a title insurance company or attorney selected by the CLI Member (the “Transfer
Escrow Agent”), a deposit equal to 5% of the purchase price specified in
subparagraph (C) of Section 10.02(e)(i) (the “Transfer Escrow Deposit”).
In the event of a purchase pursuant to subparagraph (C) of Section 10.02(e)(i)
above, on the later of the closing date set forth in the applicable Acceptable
Transfer Terms or within 30 calendar days of the date of the Gale/SLG Member’s
election to purchase (pursuant to subparagraph (C) of Section 10.02(e)(i)
above), the Gale/SLG Member and the CLI Member shall close the purchase of the
Target Interest and the CLI Member shall assign the Target Interest to the
Gale/SLG Member or to a designee of the Gale/SLG Member (pursuant to such
documentation as shall be reasonably required by the Gale/SLG Member), against
receipt of payment of the cash portion of the purchase price and assumption of
any debt as aforesaid free and clear of all liens and other encumbrances. All
closings of any purchase and sale under this Section 10.02(e) will be held
at the Company’s principal office and will take place no later than the closing
date set forth in the applicable Acceptable Transfer Terms.

 

(iii)          If during the Transfer Response Period, the
Gale/SLG Member neither (A) authorizes the CLI Member to sell the
applicable Target Interest as provided in Section 10.02(e)(i)(A) or (B) above
or (B) elects to purchase the Target Interest of the CLI Member by following
the procedures in Section 10.02(e)(i)(C) above, then the Gale/SLG Member shall
be deemed to have authorized and approved a Transfer of the Target Interest
pursuant to Section 10.02(e)(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 CLI Member. If the Gale/SLG
Member shall have elected or have been deemed to have elected to authorize the
CLI Member to sell the applicable Target Interest as provided in Section
10.02(e)(i)(A), the CLI Member shall enter into a binding contract for the
Transfer of the Target Interest within 30 calendar days after the date on which
the Gale/SLG Member authorized or was deemed to have authorized such Transfer,
and such Transfer must be consummated within 60 calendar days after the date on
which the Gale/SLG Member authorized or was deemed to have authorized such
Transfer. The failure of the CLI Member to enter into such binding contract
within the 30-day period referred to in the immediately preceding sentence or
the failure of such Transfer to occur within the 60-day period referred to in
the immediately preceding sentence shall require the CLI Member to again
deliver to the Gale/SLG Member an additional Transfer ROFO Notice and to again
follow the procedures set forth in this Section 10.02(e) hereof in order
to Transfer all or part of its Interests.

 

(iv)          In the event the Gale/SLG Member should
default in its obligation to purchase any Target Interest pursuant to the terms
of this Section 10.02(e), the following shall be the sole and exclusive remedy
for such default:

 

(A)          The Gale/SLG Member shall cease to have any
rights of first offer or Tag-Along Rights pursuant to the provisions of both
Section 10.02(e) and Section

 

71

 

10.05 hereof, respectively
(including with regard to any future or subsequent Transfer of an Interest by
the CLI Member); and

 

(B)           The Interest Transfer Escrow Agent shall
immediately deliver to the CLI 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 or the Payout Percentages, the
allocation provisions or any other equity provisions of this Agreement); and

 

(C)           Thereafter, the CLI Member may at any time
Transfer all or any portion of its Interest to any party without the prior
written consent of the Gale/SLG Member or the Executive Committee and without
having to comply with the provisions of either Sections 10.02(e) and 10.05
hereof (and in any such case, the transferee shall be deemed to be a permitted
transferee pursuant to this Section 10.02 and shall become a substitute Member
of the Company, and if applicable, an additional or substitute Manager of the
Company).

 

(v)           Notwithstanding the foregoing, if the
provisions of Section 7.09 or Section 8.01 hereof have been initiated by any
Member, then the CLI Member may not initiate the provisions of this Section
10.02(e) until the procedures set forth in Section 7.09 or Section 8.01 hereof
have been completed or terminated pursuant to the provisions of Section 7.09 or
Section 8.01 hereof.

 

10.03       Transferees. 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.

 

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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 Executive
Committee.

 

(b)           Any additional or substitute Member admitted
to the Company shall execute and deliver documentation in form satisfactory to
the Executive Committee accepting and agreeing to be bound by this Agreement,
and such other documentation as the Executive Committee shall reasonably
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 Executive Committee to such admission.

 

10.05       Tag-Along Rights.

 

(a)           Subject to the other provisions of this
Article X, if the CLI Member proposes to sell, exchange or otherwise
dispose of (a “Sale”) all (but not less than all) of its Interest in the
Company for cash, Cash Equivalents or Readily Marketable Securities or any
combination thereof, to any Purchaser, and the Gale/SLG Member does not intend
to approve such Sale in accordance with the provisions of Section 10.02(e)(i)(A)
hereof or to exercise its right of first offer to purchase the Interest of the
CLI Member pursuant to the provisions of Section 10.02(e)(i)(C) hereof, the
Gale/SLG Member may, in its discretion, elect within the Transfer Response
Period to require the CLI Member to sell, exchange or otherwise dispose of all
of the Gale/SLG Member’s Interest in the Company pursuant to such Sale for the
same proportionate consideration and otherwise on the same terms and conditions
upon which the CLI Member proposes to sell, exchange or otherwise dispose of
its Interest. The consideration received in connection with such sale shall be
allocated between the CLI Member and the Gale/SLG Member on the same basis and
in the same proportions that such consideration would be distributed pursuant
to Section 6.03 hereof if it had been paid to the Company. Subject to the other
provisions of this Article X, if the CLI Member proposes a Sale of less than
all of its Interest in the Company for cash, Cash Equivalents or Readily
Marketable Securities or any combination thereof, in one transaction, to any
Purchaser, and the Gale/SLG Member does not intend to approve such Sale in
accordance with the provisions of Section 10.02(e)(i)(A) hereof or to exercise
its right of first offer to purchase the Interest of the CLI Member pursuant to
the provisions of Section 10.02(e)(i)(C) hereof, the Gale/SLG Member may, in
its discretion, elect within the Transfer Response Period to require the CLI
Member to sell, exchange or otherwise dispose of the same proportionate part of
the Gale/SLG Member’s Interest in the Company as the CLI Member is proposing to
sell, for the same proportionate consideration and otherwise on the same terms
and conditions upon which the CLI Member proposes to sell, exchange or
otherwise dispose of a portion of its Interest. For example, if the CLI Member
proposes to sell 40% of its Interest in the Company, then subject to the terms
set forth above, the Gale/SLG Member may “tag along” and require the sale of
40% of its Interest in the Company. If the Gale/SLG Member shall have exercised
its Tag-Along Right under this Section 10.05(a), the CLI Member shall not
consummate any Sale that does not also include the Interests of the Gale/SLG
Member.

 

(b)           In connection with any proposed Sale, the CLI
Member shall include in any Transfer ROFO Notice delivered pursuant to Section
10.02(e)(i) hereof (i) an offer to the Gale/SLG Member to have the
Gale/SLG Member’s Interest included in such Sale in accordance

 

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with Section 10.05(a) hereof
(the “Tag-Along Right”) and (ii) all documents required to be
executed by the Gale/SLG Member in order to include the Gale/SLG Member’s
Interest in such Sale, which documents shall be on terms no less favorable than
the documents to be executed by the CLI Member. The Gale/SLG Member must
exercise its Tag-Along Right by making the Transfer Election set forth in
Section 10.02(e)(i)(B) hereof within the Transfer Response Period as provided
in Section 10.02(e)(i) hereof. In such circumstances, the Transfer Election
must include, and the Gale/SLG Member must execute and deliver to the CLI
Member with the Transfer Election, the documents previously furnished to the
Gale/SLG Member for execution in connection with the Sale. Delivery by the
Gale/SLG Member of such documents shall constitute an irrevocable exercise by
the Gale/SLG Member of its Tag-Along Rights with respect to the Sale. The
failure of the Gale/SLG Member to timely execute the documents previously
furnished to them for execution in connection with the Sale and to deliver such
documents, together with the Transfer Election, in accordance with the
provisions of Section 10.02(e)(i)(B) hereof shall constitute an irrevocable
election by the Gale/SLG Member not to exercise their Tag-Along Rights with
respect to the Sale.

 

(c)           In connection with any such Sale pursuant to
which the Gale/SLG Member shall have participated in accordance with its
Tag-Along Rights as set forth above, the CLI Member shall, promptly after
consummation of such Sale, notify the Gale/SLG Member to that effect, shall
furnish evidence of such Sale (including the date and the time of sale) and of
the terms thereof as the Gale/SLG Member may reasonably request and shall
promptly (and in any event within 15 Business Days following the consummation
of such Sale) cause to be remitted to the Gale/SLG Member the proceeds
attributable to the sale of the Gale/SLG Member’s Interest.

 

(d)           Notwithstanding anything in this
Section 10.05 to the contrary, there shall be no liability on the part of
any Member to any other Member if any sale of Interest pursuant to this
Section 10.05 is not consummated for whatever reason other than a failure
to comply with the foregoing provisions. It is understood that the CLI Member,
in its sole discretion, shall determine whether to effect a Sale to any third
party pursuant to this Section 10.05.

 

10.06       Drag-Along Rights

 

(a)           Subject to the other provisions of this
Article X, if the CLI Member proposes a Sale of all (but not less than all) of
its Interest in the Company for cash or Cash Equivalents or any combination
thereof, to any Purchaser, and the Gale/SLG Member does not exercise its
Tag-Along Rights pursuant to the provisions of Section 10.02(e)(i)(B) hereof or
exercise its right of first offer to purchase the Interest of the CLI Member
pursuant to the provisions of Section 10.02(e)(i)(C) hereof, the CLI Member
may, in its discretion, elect, within the 15 calendar day period following the
expiration of the Transfer Response Period (the “Drag-Along Period”), to
require the Gale/SLG Member to sell, exchange or otherwise dispose of all of
the Gale/SLG Member’s Interest in the Company pursuant to such Sale for the
same proportionate consideration and otherwise on the same terms and conditions
upon which the CLI Member proposes to sell, exchange or otherwise dispose of
its Interest. The consideration received in connection with such sale shall be
allocated between the CLI Member and the Gale/SLG Member on the same basis and
in the same proportions that such consideration would be distributed pursuant
to Section 6.03 hereof if it had been paid to the Company. The CLI Member must
exercise its rights under this Section 10.06(a) (the “Drag-Along Right”)
by

 

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delivering written notice
(the “Drag-Along Notice”) of the exercise by the CLI Member of such
Drag-Along Right to the Gale/SLG Member during the Drag-Along Period.

 

(b)           In connection with the exercise of the CLI
Member of the Drag-Along Right, the CLI Member shall include in any Drag-Along
Notice delivered pursuant to Section 10.06(a) hereof all documents required to
be executed by the Gale/SLG Member in order to include the Gale/SLG Member’s
Interest in such Sale (which documents shall be on terms that are identical to
the terms of the CLI Member’s Transfer, except that the Gale/Member shall not
be required to make any representations, warranties, covenants or agreements
other than its authority to sign such documents, its title to its Interests
being sold and its obligation to Transfer its Interests). The Gale/SLG Member
must promptly execute and deliver to the CLI Member the documents previously
furnished to the Gale/SLG Member for execution in connection with the Sale. The
failure of the Gale/SLG Member to timely execute the documents previously
furnished to it for execution in connection with the Sale and to deliver such
documents shall constitute an Event of Default by the Gale/SLG Member, so long
as such documents are in conformity with the provisions of this Section 10.06.

 

(c)           In connection with any such Sale pursuant to
which the Gale/SLG Member shall be required to participate in accordance with
the Drag-Along Rights as set forth above, the CLI Member shall, promptly after
consummation of such Sale, notify the Gale/SLG Member to that effect, shall
furnish evidence of such Sale (including the date and the time of sale) and of
the terms thereof as the Gale/SLG Member may reasonably request and shall
promptly (and in any event within 15 Business Days following the consummation
of such Sale) cause to be remitted to the Gale/SLG Member the proceeds
attributable to the sale of the Gale/SLG Member’s Interest.

 

(d)           Notwithstanding anything in this Section
10.06 to the contrary, there shall be no liability on the part of any Member to
any other Member if any sale of Interest pursuant to this Section 10.06 is not
consummated for whatever reason other than a failure to comply with the
foregoing provisions. It is understood that the CLI Member, in its sole
discretion, shall determine whether to effect a Sale to any third party
pursuant to this Section 10.06.

 

10.07       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 14.01(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 14.01(a)(ix)-(xii) of this

 

75

 

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.

 

(c)           If any Member shall fail to remain 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, such
failure shall constitute an “Event of Default” committed by such Member for
purposes of Article XIII hereof.

 

(d)           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.

 

XI.           EXCULPATION AND INDEMNIFICATION

 

11.01       Exculpation.  Notwithstanding any contrary provision of the Delaware
Act, no Member (and no Manager, member of the Executive Committee, general or
limited partner of any Member, shareholder, member or other holder of an equity
interest in such Member or officer, director or employee of any of the
foregoing or any of their Affiliates) shall be liable to the Company, any
Subsidiary or to any other Member or Manager for monetary damages for any
losses, claims, damages or liabilities arising from any act or omission
performed or omitted by it arising out of or in connection with this Agreement
or the Company’s or any Subsidiary’s business or affairs; provided, however,
such act or omission was taken in good faith, was reasonably believed to be in
the best interests of the Company or the applicable Subsidiary and was within
the scope of authority granted to such Person was not attributable in whole or
in part to (a) a breach of this Agreement which has a material adverse
effect upon the value of, or causes material damage to, the Company or the
Properties, (b) a knowing violation of law which has a material adverse
effect upon the value of, or causes material damage to, the Company or the
Properties, (c) a transaction for which such Member received a personal
benefit in violation or breach of the provisions of this Agreement, or
(d) such Member’s or Person’s fraud, bad faith, willful misconduct or
gross negligence, or in the case of the Manager or any Related Person, the
Manager’s or Related Person’s fraud, bad faith, willful misconduct or gross
negligence.

 

11.02       Indemnification.

 

(a)           Except as set forth in Section 11.02(c)
below, the Company shall, to the fullest extent permitted by applicable law,
indemnify, defend and hold harmless each Member, the Manager, each member of
the Executive Committee and each general or limited partner of any 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 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,

 

76

 

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 breach
of the provisions of this Agreement, (iii) was not attributable in whole
or in part to such Indemnified Party’s breach of this Agreement or a knowing
violation of law, in either case which has a material adverse effect upon the
value of, or causes material damage to, the Company or the Properties, or
(iv) in the case of a Member or related Indemnified Party (other than in
its capacity as the Manager), was not attributable in whole or in part to such
Indemnified Party’s fraud, bad faith, willful misconduct or gross negligence,
or in the case of the Manager or related Indemnified Party, was not
attributable in whole or in part to the Manager’s or related 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 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 or gross negligence, intentional misconduct, breach of
this 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) 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 11.02(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 Members, to contribute
additional capital under Article IV to enable the Company to satisfy any
obligation under this Section 11.02.

 

(b)           Notwithstanding the provisions of Section
3.02(a) hereof, each Member shall indemnify and hold harmless the Company, the
Subsidiaries and the other Member from and against any and all claims, demands,
liabilities, costs, damages, expenses and causes of action of any nature
whatsoever arising out of or incidental to (i) any act performed by or on
behalf of any such Member (including acts performed as the Manager) or its
designated Executive Committee members which is not performed in good faith or
is not reasonably believed by such Member or its designated Executive Committee
members to be in the best interests of the Company and the Subsidiaries and
within the scope of authority conferred upon such Member or its designated
Executive Committee members under this Agreement, (ii) the fraud, bad
faith, intentional or willful misconduct or gross negligence of such Member or
its designated Executive Committee members, or Manager, (iii) a breach of
this Agreement or a knowing violation of law by such Member or its designated
Executive Committee members, in

 

77

 

either case which has a
material adverse effect upon the value of, or causes material damage to, the
Company or the Properties, (iv) any transaction for which such Member or
its designated Executive Committee members received a personal benefit in
violation or breach of the provisions of this Agreement, or (v) the breach
by the Company or any Subsidiary of any of its representations and warranties
made under any purchase, loan or other agreement entered into in connection
with the acquisition, development or sale of the Properties, which breach was
the result of information or matters furnished by and relating to such Member.

 

(c)           Notwithstanding any other provision of this
Agreement, the CLI Member shall indemnify and hold harmless the Gale/SLG Member,
the Company, the GP, the OP, the Class B Property Subsidiaries, the Class C
Property Subsidiaries and any of their Affiliates from and against any and all
claims, demands, liabilities, costs, damages, expenses and causes of action of
any nature whatsoever arising out of or incidental to any act of the CLI Member
(i) which caused the Company, the OP or the GP to breach any of the obligations
of the OP and the GP under the Contribution and Subscription Agreements, or
(ii) causes a violation of any REIT Requirements applicable to SLG.

 

(d)           The provisions of this Section 11.02 shall
survive for a period of four (4) 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 11.02 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 11.02 shall be satisfied solely out of Company assets.

 

(e)           Notwithstanding any other provision of this
Agreement to the contrary, the obligations of the Company or any Member under
this Section 11.02 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
Related Persons and their respective members, directors, officers, employees,
agents and Affiliates and any successors, assigns, heirs and personal
representatives of such Persons.

 

11.03       CLI Member Reimbursement; Indemnity.

 

(a)           The CLI Member agrees to pay to the Gale/SLG
Member from time to time on demand the Gale/SLG Member Indemnity Share of any
Class B Overpayment.

 

(b)           The CLI Member hereby indemnifies and holds
the Gale/SLG Member harmless from the Gale/SLG Member Indemnity Share of any
Losses incurred by the Class B Owner as a result of a Class A Pool Default.

 

11.04       Gale/SLG Member Reimbursement; Indemnity.

 

(a)           The Gale/SLG Member agrees to pay to the CLI
Member from time to time on demand the CLI Member Indemnity Share of any Class
A Overpayment.

 

78

 

(b)           The Gale/SLG Member hereby indemnifies and
holds the CLI Member harmless from the CLI Member Indemnity Share of any Losses
incurred by any Class A Pool Owner as a result of a Class B Pool Default.

 

11.05       Special Indemnities.

 

(a)           The CLI Member acknowledges that certain of
the Properties or interests therein which were contributed to the OP pursuant
to the Contribution and Subscription Agreements are subject to certain tax
protection provisions contained in such Agreements for the periods described
therein. The CLI Member agrees that it will not take or cause or permit the
Company, GP, OP, Gale SLG NJ Mezz LLC or any Class A Property Subsidiary or
Class B Property Subsidiary to take any actions in violation of any of the
obligations of the OP and the GP pursuant to the Contribution and Subscription
Agreements or which would give rise to any claim (an “LP Claim”) of
damages by any party protected under a Contribution and Subscription Agreement.

 

(b)           The Gale/SLG Member hereby indemnifies CLI
Member for any Losses that the CLI Member may incur, directly or as an indirect
owner of a limited partnership interest in the OP or a membership interest in
the GP, as a result of actions taken or omitted to be taken, prior to the date
hereof, by the Gale/SLG Member or any of the Gale SLG Entities (as defined in
the Contribution and Sale Agreement) in breach of a Contribution and
Subscription Agreement. The maximum amount of the Gale/SLG Member’s liability
under this paragraph (b), together with its post closing liability with
respect to Entity-Related Representations under and as defined in the
Contribution and Sale Agreement, shall not exceed $100,000,000 in the
aggregate.

 

(c)           The Gale/SLG Member and the CLI Member agree
that they shall each be liable for one-half of any Losses resulting from the
transactions contemplated by the Contribution and Sale Agreement or by this
Agreement being in breach, or claimed to be in breach, of a Contribution and
Subscription Agreement.

 

(d)           The Gale/SLG Member hereby indemnifies the
CLI Member for any Losses resulting from any breach or claimed breach of any
Contribution and Subscription Agreement caused by the actions or inactions of
the Gale/SLG Member from and after the date hereof. The CLI Member hereby
indemnifies the Gale/SLG Member for any Losses resulting from any breach or
claimed breach of a Contribution and Subscription Agreement caused by the
actions or inactions of the CLI Member from and after the date hereof.

 

(e)           The Gale/SLG Member and the CLI Member agree
that they shall each be liable for one-half of any Losses resulting from any
breach or claimed breach of any Contribution and Subscription Agreement caused
by the actions or inactions taken from and after the date hereof by the
Gale/SLG Member and the CLI Member jointly, or by either of them with the express
written consent of the other, individually or on behalf of the Company, the GP,
the OP or any of its Subsidiaries.

 

(f)            The Company shall cause the OP and the GP to
notify the Gale/SLG Member and CLI Member of any LP Claim made against the OP
or the GP promptly after such claim is made. Notwithstanding any other
provision to the contrary, (i) Gale/SLG shall have the

 

79

 

exclusive right to control
the defense, settlement or compromise of any LP Claim that relates to actions
taken, or omitted to be taken, either (ii) prior to the date hereof by Gale/SLG
or any of the Gale SLG Entities, or (y) from and after the date hereof, by
Gale/SLG (except as provided in clause (iii) hereof), (ii) CLI Member shall have
the exclusive right to control the defense, settlement or compromise of any LP
Claim that relates to actions taken, or omitted to be taken, by CLI Member from
and after the date hereof (except as provided in clause (iii) hereof), and
(iii) Gale/SLG and CLI Member shall have the joint right to control the
defense, settlement or compromise of any LP Claim that relates to either (x)
the transactions contemplated by the Contribution and Sale Agreement or
(y) actions or inactions taken from and after the date hereof by Gale/SLG
and CLI Member jointly, or by either of them with the express written consent
of the other.

 

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 determination of the Executive Committee
to dissolve the Company; or

 

(d)           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 ninety
(90) calendar days after such event, each of the remaining Members elects in
writing (i) to continue the business of the Company, and (ii) if any such
time there exists only one (1) remaining Member, effective as of the date of
such event, to admit at least one (1) additional Member to the Company and
(iii) if applicable, to appoint a new Manager.

 

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 expressly 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, the GP, the OP or any
Class B Property Subsidiary. In the event any Member withdraws from or causes a
voluntary dissolution of the Company, the GP, the OP or any Class B Property
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:

 

80

 

(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.

 

(b)           The interests 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 to
the extent applicable, subject to the provisions of the Operating Plan then in
effect or a liquidating plan approved by the Executive Committee. The
Liquidating Member may distribute the interests in Subsidiaries and other
assets of the Company in kind, only with the consent of the Executive
Committee.

 

(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 Properties 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 Executive Committee 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

 

81

 

request to 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.        DEFAULT BY MEMBER

 

13.01       Events of Default.  In the event (a) a Member
commits a material violation or material breach of any of the provisions of
this Agreement (other than any failure to make a Capital Contribution pursuant
to Article IV hereof which is not cured (including, without limitation, by the
breaching Member reimbursing the Company and any Subsidiary for the resulting
damage or loss) within a Reasonable Period, or (b) a dissolution event
described in Section 12.01(d) hereof occurs or exists with respect to a Member,
in each such case, such Member (a “Defaulting Member”) shall have
committed an “Event of Default”.

 

13.02       Effect of Event of Default.  Upon the occurrence of an Event of Default by either Member, the
non-defaulting Member (the “Non-Defaulting Member”) shall have the
right, at any time within one (1) year from the date such Non-Defaulting Member
receives notice of such Event of Default and upon giving the Defaulting Member
ten (10) Business Days’ written notice of such election (and provided such
Event of Default is continuing through the end of such 10-Business Day period)
to take any one or more of the following actions (in addition to any other
remedies or actions provided for in this Agreement):

 

(a)           Dissolve the Class B Subsidiaries, without
regard to and without complying with the provisions of Section 7.09 hereof;

 

(b)           Transfer its Interest, without regard to and
without complying with the provisions of Sections 7.09, 8.01, 10.02(e) or 10.05
hereof;

 

(c)           Solicit offers and sell, exchange, transfer,
assign or otherwise dispose of all or any portion of the Class B Properties or
the Class B Property Subsidiaries, to any party (other than to any Member or
any Related Person of any Member), without the consent or approval of any other
Member or the Executive Committee and without any restrictions or limitations
as to the terms of such transaction;

 

(d)           Elect to divest the Defaulting Member of (A)
its right to vote or consent to or approve any matter under this Agreement or
otherwise act on behalf of or bind the Company, the GP, the OP or any Class B
Subsidiary, and (B) its right to appoint any member of the Executive Committee,
and the current Executive Committee members appointed by the Defaulting Member
shall cease to be members of the Executive Committee and any action requiring
the consent of the Executive Committee (including those set forth in
Section 7.01(a) hereof), will only require the consent of the members of
Executive Committee appointed by the Non-Defaulting Member, and no action will
require the consent or action of any member appointed by the Defaulting Member
and the provisions of Section 7.02(d) hereof which require the consent of
at least two members of the Executive Committee appointed by the Defaulting
Member shall cease to apply and will have no further force and effect
(provided, however, in the event the Non-Defaulting Member elects the remedies
provided for in this Section 13.02(d), if thereafter the Defaulting Member
fails to timely make any Capital Contribution (or any portion

 

82

 

thereof) requested by the
Executive Committee after such date, the remedy provisions of Section
4.04(b)(i) shall not be available);

 

(e)           Terminate the appointment of the Defaulting
Member as the Manager hereunder (if the CLI Member is the Defaulting Member)
and appoint a successor Manager (including any third party acceptable to the
Gale/SLG Member) at commercially reasonable rates of compensation and
reasonable terms and conditions as determined appropriate by the Gale/SLG
Member; provided that if the Gale/SLG Member is appointed Successor Manager,
then the Gale/SLG Member, as Successor Manager, shall receive no compensation;

 

(f)            Terminate (without payment of any termination
fee or termination penalty but with payment of all other amounts due or
incurred prior to the date of termination) any or all contracts or other
agreements then in effect with the Defaulting Member or any of its Related
Persons (including, without limitation, the Management Agreement)); and

 

(g)           Pursue any other right or remedy available at
law or in equity with respect to the Class B Properties or the Class B Property
Subsidiaries.

 

Notwithstanding the
foregoing, the Non-Defaulting Member shall not be entitled to take any action
or cause the GP to take any action if such action is in violation of any of the
obligations of the OP and the GP pursuant to the Contribution and Subscription
Agreements or which would give rise to any claim of damages by the parties
protected thereunder.

 

In the event a Member
initiates the buy-sell procedure set forth in Section 8.01 of this
Agreement after an Event of Default is committed by the other Member and in
such Non-Defaulting Member’s reasonable opinion, the value of the assets of the
Company have been impaired by the gross negligence, willful misconduct, fraud
or bad faith of the Defaulting Member, the exercising Non-Defaulting Member may
pursue against the Defaulting Member such additional remedies as may exist at
law or in equity to compensate for such impairment; provided that this
additional remedy shall be available for only one (1) year following the
closing of such buy-sell transaction. The default of a Member hereunder shall
not relieve the other Member from its agreements, liabilities, and obligations
hereunder. Upon receipt of the purchase price (or notice that the purchase
price is available to the Defaulting Member) incident to the implementation of
the buy-sell procedure set forth in Section 8.01, the Defaulting Member shall
not have any further Interest in the Company or its business or assets, and the
Defaulting Member shall execute and deliver such assignments and instruments as
may be reasonable to evidence and fully and effectively transfer the Interest
of the Defaulting Member to the Non-Defaulting Member. In the event the
appropriate instruments are not delivered, after notice by the Non-Defaulting
Member that the consideration is available to the Defaulting Member, the
Non-Defaulting Member may deliver such consideration to the Defaulting Member
and execute, as the irrevocable agent of the Defaulting Member, and deliver any
such legal instruments to the appropriate continuing Member(s). Such agency is
coupled with an interest and will survive the insolvency, bankruptcy or
dissolution of any Member. However, all parties hereto agree that the
Non-Defaulting Member shall not have any individual liability for any actions
taken under the authority of such agency. No assignment or transfer of the
Interest of the Defaulting Member as provided herein shall relieve the
Defaulting Member from any liability under this Agreement for any outstanding
indebtedness, liabilities, liens and obligations relating to the Company. The

 

83

 

Interests in the Company of
the Defaulting Member shall not be considered in any Company or Subsidiary
voting requirement, if at the time of any such vote, such Event of Default is
continuing or in the event the Non-Defaulting Member shall have elected the remedy
provided for above in subparagraph (e) of this Section 13.01.

 

In the event the CLI Member
fails to provide the CLI Loan or breaches any of the provisions of Sections
11.03 or 11.05, the Gale/SLG Member may treat the CLI Member as a Defaulting
Member for the purpose of exercising its rights under clauses (d), (e), (f) and
(g) above with respect to the CLI Member. Similarly, if the Gale/SLG Member
breaches any of the provisions Sections 11.04 or 11.05, the CLI Member may
treat the Gale/SLG Member as a Defaulting Member for the purpose of exercising
its rights under clauses (d), (e), (f) and (g) above with respect to the
Gale/SLG Member.

 

In the event the Gale/SLG
Member exercises its rights under clause (f) above after an Event of Default is
committed by the CLI Member and terminates the Management Agreement, the
Members and Executive Committee agree that the Gale/SLG Member shall appoint a
Qualified Manager to manage the Property.

 

XIV.        MISCELLANEOUS

 

14.01       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, do
not conflict with or contravene the provisions of such Member’s 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)           Other than with respect to the Eastdil
Commission, the Member has not 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 Properties, its Interest in

 

84

 

the Company or any interest
in any Subsidiary or the execution and delivery of this Agreement.

 

(vi)          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 as amended
from time to time (the “Securities Act”) or any other applicable federal
or state securities law, rule or regulation (“Securities Laws”).

 

(vii)         Each Member acknowledges that it is aware
that its interest in the Company has not been registered under the Securities
Act or under any Securities Laws, or other Federal or state securities law in
reliance upon exemptions contained therein. Each Member understands and
acknowledges that its representations and warranties contained 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.

 

(viii)        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 expressly
provided in this Agreement, it does not desire any further information or data
relating to the Company, any Subsidiary, the Properties 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 risk 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.

 

(ix)           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.

 

(x)            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

 

85

 

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.

 

(xi)           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.

 

(xii)          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 are on the U.S. Government Blacklists.

 

(b)           Each of the Members shall cause themselves or
their Affiliates (as necessary) to enter into such supporting agreements as may
be required pursuant to the Contribution and Sale Agreement including, without
limitation, (i) standard and customary non-recourse carve-out guarantees for
the benefit of the applicable first mortgage and mezzanine lenders of the
Properties, and (ii) a contribution and indemnity agreement.

 

(c)           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 reasonable costs and reasonable attorneys fees)
which they may incur by reason of, or in connection with, any material breach
of 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 either of the Members and/or
the Company.

 

14.02       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 required to carry out the intent and purposes of this Agreement.

 

14.03       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 and provided such notice
is also delivered by method (a) or (c) or (c) a nationally recognized
overnight courier service, fees prepaid, addressed as follows:

 

	
  If to the CLI Member, to:

  	
   

  	
  c/o Mack-Cali Realty
  Corporation

  11 Commerce Drive

  Cranford, New Jersey 07016

  

 

86

 

	
   

  	
   

  	
  with two (2)

  separate copies
of the notice sent
to the attention of:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  Telecopy: 908 272-0214
Telephone: 908 272-2009

  Email: mhersh@mack-cali.com
Attention: Mitchell E. Hersh

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  And

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Executive Vice President
  and General Counsel

  Telecopy: 908 272-0485
Telephone: 908 272-2612
Email: rthomas@mack-cali.com
Attention: Roger W. Thomas

  
	
   

  	
   

  	
   

  
	
  With a copy (which shall
  not constitute notice) to:

  	
   

  	
  Seyfarth Shaw LLP

  1270 Avenue of the Americas

  25th Floor
New York, New York 10020
Telecopy: 212 218-5527
Telephone: 212 218-5620
Email: jnapoli@seyfarth.com
Attention: John P. Napoli

  
	
   

  	
   

  	
   

  
	
  If to the Gale/SLG Member,
  to:

  	
   

  	
  [                                 ]

  [                                 ]

  [                                 ]

  [                                 ]
Attn:
Telephone:

  Facsimile No.:

  
	
   

  	
   

  	
   

  
	
  With a copy (which shall
  not constitute notice) to:

  	
   

  	
  Greenberg Traurig, LLP

  200 Park Avenue

  New York, New York 10166
Attn: Robert J. Ivanhoe, Esq.
Telephone: 212-801-9200

  Facsimile No.: 212-801-6400

  

 

Any Member may designate
another addressee (and/or change its address) for Material Notices hereunder by
a notice given pursuant to this Section 14.03. A Notice sent in compliance with
the provisions of this Section 14.03 shall be deemed given on the date of
receipt if delivered by method (a) or (b) and on the next Business Day after
deposit with the courier if delivered by method (c). 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

 

87

 

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.

 

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

 

14.05       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.

 

14.06       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.

 

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

 

14.08       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.

 

14.09       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 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.

 

14.10       Recalculation of Interest.  If any applicable law is ever
judicially interpreted so as to deem any distribution, contribution, payment or
other amount received by any Member or the Company under this Agreement as
interest and so as to render any such amount in excess of the maximum rate or
amount of interest permitted by applicable law, then it is the express intent
of the Members and the Company that all amounts in excess of the highest lawful
rate or amount theretofore collected be credited against any other
distributions, contributions, payments or other amounts to be paid by the
recipient of the excess amount or refunded to the appropriate Person, and the
provisions of this Agreement immediately be deemed reformed, without the
necessity of the execution of any new document, so as to comply with the
applicable law, but so as to permit the payment of the fullest amount otherwise
required hereunder. All sums paid or agreed to be

 

88

 

paid that are judicially
determined to be interest shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the term of such
obligation so that the rate or amount of interest on account of such obligation
does not exceed the maximum rate or amount of interest permitted under
applicable law.

 

14.11       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.

 

14.12       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.

 

14.13       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 Executive Committee, except as such disclosure may be made in
the course of normal reporting practices by any Member or Related Persons 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).

 

14.14       Counterparts.  This Agreement may be executed
in multiple counterparts (and by facsimile or portable document format (PDF)
transmission), each of which shall be an original but all of which together
shall constitute but one and the same agreement.

 

14.15       Confidentiality.

 

(a)           Subject to Section 14.14, 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 Executive Committee
(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
Related Persons not to, disclose to any Person other than its attorneys,
accountants, consultants, advisors and other agents who have a need to know
such information any Confidential Information or confirm any statement made by
third Persons regarding Confidential Information until the Company has publicly
disclosed the Confidential Information pursuant to authorization by the
Executive Committee and has notified each Member that it has done so; provided,
however, that any Member (or its Related Persons) 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

 

89

 

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 an actual or proposed Transfer of Interests
or sale of the Properties permitted hereunder, (iii) reasonably necessary
in connection with any transaction authorized pursuant to the terms of this
Agreement, or (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
Properties.

 

(b)           Subject to the provisions of Section
14.16(a), each Member agrees not to disclose any Confidential Information to
any Person (other than a Person agreeing in writing 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 14.16 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, reasonable 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 14.16
will survive the Transfer of the Interest of any Member and the dissolution of
the Company.

 

(d)           Notwithstanding anything contained in this
Section 14.16 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.

 

14.16       Venue.  Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with this
Agreement or the transactions contemplated hereby or thereby may be brought in
any state or federal court in The City of New York, Borough of Manhattan, and
each Member hereby consents to the exclusive jurisdiction of any court in the
State of New York (and of the appropriate appellate courts therefrom) in any
suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such suit, action

 

90

 

or proceeding in any such
court or that any such suit, action or proceeding which is brought in any such
court has been brought in an inconvenient forum. Each Member hereby waives the
right to commence an action, suit or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with this
Agreement or the transactions contemplated hereby or thereby in any court
outside of The City of New York, Borough of Manhattan. Process in any suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 14.03 shall be deemed effective service of process on such party.

 

14.17       Waiver of Jury Trial.  EACH OF THE MEMBERS HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION ARISING OUT OF MATTERS RELATED TO THIS AGREEMENT,
WHICH WAIVER IS INFORMED AND VOLUNTARY.

 

14.18       Transition Services.  If the Gale/SLG Member
purchases, directly or indirectly, all of the interests of the CLI Member in
the Company (whether pursuant to the buy-sell provisions of Section 8.01 hereof
or otherwise), in connection with the closing of any such purchase, at the
request of the Gale/SLG Member, the CLI Member shall agree to provide or cause
to be provided to the Gale/SLG Member for a period of ninety (90) days after
the closing, accounting, electronic data processing and other transitional
services reasonably requested by the Gale/SLG Member and the Gale/SLG Member
agrees to reimburse or cause to be reimbursed to the CLI Member the
out-of-pocket third party costs and expenses attributable to such services.

 

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91

 

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

 

	
   

  	
  MACK-CALI
  VENTURES L.L.C.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GALE SLG
  NJ LLC:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:EXHIBIT 10.1

 

DEFERRED
COMPENSATION AGREEMENTS WITH BANK DIRECTORS

 

SCHEDULE OF DIRECTORS WHO
HAVE ENTERED INTO DEFERRED COMPENSATION ARRANGEMENT PURSUANT TO A DIRECTOR’S
COMPENSATION AGREEMENT WITH FARMERS & MERCHANTS TRUST COMPANY OF
CHAMBERSBURG.

 

	
   

  	
   

  	
  Monthly Payment

  	
   

  	
  Monthly Payment

  	
   

  
	
  Director

  	
   

  	
  Under 1-1-82 Agreement

  	
   

  	
  Under 1-1-83 Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Charles S.
  Bender, II

  	
   

  	
  $

  	
  1,294

  	
   

  	
  $

  	
  315

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jay L. Benedict,
  Jr.

  	
   

  	
  395

  	
   

  	
  96

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  John M. Hull,
  III

  	
   

  	
  557

  	
   

  	
  139

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jeryl C. Miller

  	
   

  	
  N/A

  	
   

  	
  1,310

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Charles Sioberg

  	
   

  	
  1,078

  	
   

  	
  812

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Martha B. Walker

  	
   

  	
  1,366

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Robert G.
  Zullinger

  	
   

  	
  684

  	
   

  	
  172

  	
   

  
								

 

FORM OF DIRECTOR’S
COMPENSATION AGREEMENT  1982 VERSION

 

This Agreement is entered
into this first day of January, 1982 between FARMERS & MERCHANTS TRUST CO.
OF CHAMBERSBURG, P.O. Box T, Chambersburg, Pennsylvania 17201 (Herein referred
to as the “Bank”) and                           
(Herein referred to as the “Director”).

 

WITNESSETH

 

WHEREAS, the Bank
recognizes that the competent and faithful efforts of Director on behalf of the
Bank have contributed significantly to the success and growth of the Bank; and

 

WHEREAS, the Bank values
the efforts, abilities and accomplishments of the Director and recognizes that
his services are vital to its continued growth and profits in the future; and

 

WHEREAS, the Bank desires
to compensate the Director and retain his services for five years, if elected,
to serve on the Board of Directors.  Such
compensation is set forth below; and

 

WHEREAS, the Director, in
consideration of the foregoing, agrees to continue to serve as a Director, if
elected,

 

NOW, THEREFORE, it is
mutually agreed as follows:

 

1.  Compensation.  The Bank agrees to pay Director the total sum
of $            
payable in monthly installments of $             
for 120 consecutive months, commencing on the first day of the month following
Director’s 65th birthday. 
Payments to the Director will terminate when the 120 payments have been
made or at the time of the Director’s death, whichever occurs first.

 

2.  Death of Director Before Age 65.  In the event Director should die before
reaching age 65, the Bank agrees to pay to Director’s beneficiary designated in
writing to the Bank, the sum of $             
per month for 120 consecutive months. 
Payments will begin on the first day of the month following Director’s
death.

 

1

 

3.  Death of Director After Age 65.  If the Director dies after age 65 prior to
receiving the full 120 monthly installments, the remaining monthly installments
will be paid to the Director’s designated beneficiary(ies).  The beneficiary(ies) shall receive all
remaining monthly installments which the Director would have received until the
total sum of $             
set forth in Paragraph “1” is paid.  If
the Director fails to designate a beneficiary in writing to the Bank, the
balance of monthly installments remaining at the time of his death shall be
paid to the legal representative of the estate of the Director.

 

4.  Termination of Service as a Director.  If the Director, for any reason other than
death, fails to serve five consecutive years as a Director, he will receive
monthly compensation beginning at age 65 on the basis that the number of full
months served bears to the required number of 60 months times the compensation
stated in paragraph “1”.  For example, if
the Director serves only 36 months, he will be entitled to 36/60 or 60% of the
compensation stated in paragraph “1”.

 

5.  Suicide.  No payments will be made to the Director’s
beneficiary(ies) or to this estate in the event of death by suicide during the
first three years of this Agreement.

 

6.  Status of Agreement.  This Agreement does not constitute a contract
of employment between the parties, nor shall any provision of this Agreement
restrict the right of the Bank’s Shareholders to replace the Director or the
right of the Director to terminate his service.

 

7.  Binding Effect.  This Agreement shall be binding upon the
parties hereto and upon the successors and assigns of the Bank, and upon the
heirs and legal representatives of the Director.

 

8.  Interruption of Service.  The service of the Director shall not be
deemed to have been terminated or interrupted due to his absence from active
service on account of illness, disability, during any authorized vacation or
during temporary leaves of absence granted by the Bank for reasons of
professional advancement, education, health or government service, or during
military leave for any period if the Director is elected to serve on the Board
following such interruption.

 

9.  Forfeiture of Compensation by Competition.  The Director agrees that all rights to
compensation following age 65 shall be forfeited by him if he engages in
competition with the Bank, without the prior written consent of the Bank,
within a radius of 50 miles of the main office of the Bank for a period of ten
years, coinciding with the number of years that the Director shall receive such
compensation.

 

10. Assignment of
Rights.  None of the rights to
compensation under this Agreement are assignable by the Director or any
beneficiary or designee of the Director and any attempt to anticipate, sell,
transfer, assign, pledge, encumber or change Director’s right to receive
compensation, shall be void.

 

11. Status of Director’s
Rights.  The rights granted to the
Director or any designee or beneficiary under this Agreement shall be solely
those of an unsecured creditor of the Bank.

 

12. Amendments.  This Agreement may be amended only by a
written Agreement signed by the parties.

 

13. If the Bank shall
acquire an insurance policy or any other asset in connection with the
liabilities assumed by it hereunder, it is expressly understood and agreed that
neither Director nor any beneficiary of Director shall have any right with
respect to, or claim against, such policy or other asset except as expressly
provided by the terms of such policy or in the title to such other asset.  Such policy or asset shall not be deemed to
be held under any trust for the benefit of Director or his beneficiaries or to
be held in any way as collateral security for the fulfilling of the obligations
of the Bank under this Agreement except as may be expressly provided by the
terms of such policy or other asset.  It
shall be, and remain, a general, unpledged, unrestricted asset of the Bank.

 

14. This Agreement shall
be construed under and governed by the laws of the State of Pennsylvania.

 

15. Interpretation.  Wherever appropriate in this Agreement, words
used in the singular shall include the plural and the masculine shall include
the feminine gender.

 

16. Period of Economic
Hardship.  If, in any year, payments
made under this Agreement would, in the sole judgment of the Board of
Directors, create economic hardship for the Bank’s Depositors, the Board of
Directors has full authority to postpone such payments.

 

IN WITNESS HEREOF, the
parties have signed this Agreement the day and year above written.

 

2

 

	
  FARMERS & MERCHANTS
  TRUST CO. OF CHAMBERSBURG

  
	
   

  
	
  (SEAL)

  	
  By

  	
   

  	
  , President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  , Witness (SEAL)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  , Director

  
						

 

3

 

FORM OF DIRECTOR’S
COMPENSATION AGREEMENT 1983 VERSION

 

This Agreement is entered
into this first day of January, 1983, between FARMERS & MERCHANTS TRUST CO.
OF CHAMBERSBURG, P.O. Box T., Chambersburg, Pennsylvania 17201 (Hereinafter
referred to as the “Bank”) and                           
(Herein referred to as the “Director”).

 

WITNESSETH

 

WHEREAS, the Bank
recognizes that the competent and faithful effort of Director on behalf of the
Bank have contributed significantly to the success and growth of the Bank; and

 

WHEREAS, the Bank values
the efforts, abilities and accomplishments of the Director and recognizes that
his services are vital to its continued growth and profits in the future; and

 

WHEREAS, the Bank desires
to compensate the Director and retain his services for five years, if elected,
to serve on the Board of Directors.  Such
compensation is set forth below; and

 

WHEREAS, the Director, in
consideration of the foregoing, agrees to continue to serve as a Director, if
elected,

 

NOW, THEREFORE, it is
mutually agreed as follows:

 

1.  Compensation.  The Bank agrees to pay Director the total sum
of $            
payable in monthly installments of $             
for 120 consecutive months, commencing on the first day of the month following
Director’s 65th birthday. 
Payments to the Director will terminate when the 120 payments have been
made or at the time of the Director’s death, whichever occurs first.

 

2.  Death of Director Before Age 65.  In the event Director should die before
reaching age 65, the Bank agrees to pay to Director’s beneficiary designated in
writing to the Bank, the sum of $             
per month for 120 consecutive months. 
Payments will begin on the first day of the month following Director’s
death.

 

3.  Death of Director After Age 65.  If the Director dies after age 65 prior to
receiving the full 120 monthly installments, the remaining monthly installments
will be paid to the Director’s designated beneficiary(ies).  The beneficiary(ies) shall receive all
remaining monthly installments which the Director would have received until the
total sum of $             
set forth in Paragraph “1” is paid.  If
the Director fails to designate a beneficiary in writing to the Bank, the
balance of monthly installments remaining at the time of his death shall be
paid to the legal representative of the estate of the Director.

 

4.  Termination of Service as a Director.  If the Director, for any reason other than
death, fails to serve five consecutive years as a Director, he will receive
monthly compensation beginning at age 65 on the basis that the number of full
months served bears to the required number of 60 months times the compensation
stated in paragraph “1”.  For example, if
the Director serves only 36 months, he will be entitled to 36/60 or 60% of the
compensation stated in paragraph “1”.

 

5.  Suicide.  No payments will be made to the Director’s
beneficiary(ies) or to his estate in the event of death by suicide during the
first three years of this Agreement.

 

6.  Status of Agreement.  This Agreement does not constitute a contract
of employment between the parties, nor shall any provision of this Agreement
restrict the right of the Bank’s Shareholders to replace the Director or the
right of the Director to terminate his service.

 

7.  Binding Effect.  This Agreement shall be binding upon the
parties hereto and upon the successors and assigns of the Bank, and upon the
heirs and legal representatives of the Director.

 

8.  Interruption of Service.  The service of the Director shall not be
deemed to have been terminated or interrupted due to his absence from active
service on account of illness, disability, during any authorized vacation or
during temporary leaves of absence granted by the Bank for reasons of
professional advancement, education, health or government service, or during
military leave for any period if the Director is elected to serve on the Board
following such interruption.

 

9.  Forfeiture of Compensation by Competition.  The Director agrees that all rights to
compensation following age 65 shall be forfeited by him if he engages in
competition with the Bank, without the prior written consent of the Bank,
within a radius of 50 miles of the main office of the Bank for a period of ten
years, coinciding with the number of years that the Director shall receive such
compensation.

 

4

 

10. Assignment of
Rights.  None of the rights to
compensation under this Agreement are assignable by the Director or any
beneficiary or designee of the Director and any attempt to anticipate, sell,
transfer, assign, pledge, encumber or change Director’s right to receive
compensation, shall be void.

 

11. Status of Director’s
Rights.  The rights granted to the
Director or any designee or beneficiary under this Agreement shall be solely
those of an unsecured creditor of the Bank.

 

12. Amendments.  This Agreement may be amended only by a
written Agreement signed by the parties.

 

13. If the Bank shall
acquire an insurance policy or any other asset in connection with the
liabilities assumed by it hereunder, it is expressly understood and agreed that
neither Director nor any beneficiary of Director shall have any right with
respect to, or claim against, such policy or other asset except as expressly
provided by the terms of such policy or in the title to such other asset.  Such policy or asset shall not be deemed to
be held under any trust for the benefit of Director or his beneficiaries or to
be held in any way as collateral security for the fulfilling of the obligations
of the Bank under this Agreement except as may be expressly provided by the
terms of such policy or other asset.  It
shall be, and remain, a general, unpledged, unrestricted asset of the Bank.

 

14. This Agreement shall
be construed under and governed by the laws of the State of Pennsylvania.

 

15. Interpretation.  Wherever appropriate in this Agreement, words
used in the singular shall include the plural and the masculine shall include
the feminine gender.

 

16. Period of Economic
Hardship.  If, in any year, payments
made under this Agreement would, in the sole judgment of the Board of
Directors, create economic hardship for the Bank’s Depositors, the Board of
Directors has full authority to postpone such payments.

 

17. All compensation
provided by this Agreement is in addition to that which is provided under the
Director’s compensation Agreement dated January 1, 1982.

 

IN WITNESS HEREOF, the
parties have signed this Agreement the day and year above written.

 

 

	
  FARMERS & MERCHANTS
  TRUST CO. OF CHAMBERSBURG

  
	
   

  
	
  (SEAL)

  	
  By

  	
   

  	
  , President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  , Witness (SEAL)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  , Director

  
						

 

5

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