MASTER CONTRIBUTION AND SALE AGREEMENT dated as of August 10, 2006 among FOREST CITY ENTERPRISES, INC., CERTAIN ENTITIES AFFILIATED WITH FOREST CITY ENTERPRISES, INC., FOREST CITY MASTER ASSOCIATES III, LLC, CERTAIN ENTITIES AFFILIATED WITH FOREST...

EXHIBIT 10.54

MASTER CONTRIBUTION AND SALE AGREEMENT

dated as of August 10, 2006

among

FOREST CITY ENTERPRISES, INC.,

CERTAIN ENTITIES AFFILIATED WITH
FOREST CITY ENTERPRISES, INC.,

FOREST CITY MASTER ASSOCIATES III, LLC,

CERTAIN ENTITIES AFFILIATED WITH
FOREST CITY MASTER ASSOCIATES III, LLC,

CERTAIN ENTITIES AFFILIATED WITH
▇▇▇▇▇ ▇. ▇▇▇▇▇▇

and

CERTAIN INDIVIDUALS AFFILIATED WITH
▇▇▇▇▇ ▇. ▇▇▇▇▇▇

TABLE OF CONTENTS

				Page
ARTICLE I TRANSFERS OF INTERESTS; CONSENTS; LOANS; PRELIMINARY TRANSACTIONS					4
1.1		Transfers of Interests			4
1.2		Consents			5
1.3		Continuing Loans			6
1.4		No Representations			6
1.5		Release			6
1.6		Preliminary Transactions			8
1.7		Master III Operating Agreement			8
ARTICLE II CONSIDERATION					8
2.1		Funding of Master III			8
2.2		Initial Consideration			9
2.3		Stabilization of Development Properties			10
ARTICLE III TITLE AND OTHER PROPERTY RELATED MATTERS					17
3.1		Title to the Properties			17
3.2		Condemnation			20
3.3		Destruction or Damage			20
ARTICLE IV COVENANTS					21
4.1		Appointment of BCR Representative			21
4.2		Commercially Reasonable Efforts			22
4.3		Post-Closing HSR Act Filings			22
4.4		Conduct of Business			22
4.5		Registration Rights Agreement			23
4.6		Tax Protection Agreement			23
4.7		Voting Agreement			23
4.8		BCR Employment Agreement; FCRC Operations			23
4.9		Limitation on Actions by Forest City			23
4.10		Expenses			24
4.11		Intentionally Omitted			24
4.12		Tax Treatment			24
4.13		Estoppel Certificates			25
4.14		Reservation of FCEI Stock			25
4.15		Treatment of Certain Priority Payments			26
4.16		Nets Loan			26
4.17		Certain Amendments			26
4.18		Contribution of Additional FCE Interests			27
ARTICLE V CLOSING					28
5.1		Closing			28

				Page
5.2		Deferred Closing			28
5.3		Principal Closing and Deferred Closing Deliveries by BCR Entities			29
5.4		Principal Closing and Deferred Closing Deliveries by Forest City			32
5.5		Development Property Closing Deliveries by BCR Entities			34
5.6		Development Property Closing Deliveries by Forest City			36
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING					38
6.1		Conditions Precedent to Obligation of Forest City			38
6.2		Conditions Precedent to Obligations of the BCR Entities and BCR Individuals			40
ARTICLE VII REPRESENTATIONS AND WARRANTIES					41
7.1		Representations and Warranties of Forest City			41
7.2		Representations and Warranties of BCR Entities			46
7.3		Forest City’s Representations and Warranties with Respect to Development Properties			52
7.4		BCR Entities’ Representations and Warranties with Respect to Development Properties and the Nets, Atlantic Yards, Bloomfield and Metrotech Associates			52
7.5		Notice of Breach			53
ARTICLE VIII INDEMNIFICATION					53
8.1		Survival Period			53
8.2		Obligation of Forest City to Indemnify			54
8.3		Obligation of BCR Entities to Indemnify			54
8.4		Notice and Resolution of Claims			55
8.5		Limitations on Forest City’s Recovery			56
8.6		Limitation on BCR Entities’ Recovery			58
ARTICLE IX TERMINATION					60
9.1		Intentionally Omitted			60
9.2		Failure to Satisfy Certain Conditions Prior to the Principal Closing			60
9.3		Default Prior to Principal Closing			61
9.4		Default Prior to Deferred Closing			61
9.5		Default Prior to Development Property Closing			62
ARTICLE X MISCELLANEOUS					62
10.1		Further Assurances			62
10.2		Notices			63
10.3		Assignment			64
10.4		Binding Obligation			64
10.5		Waiver			64
10.6		Incorporation of Recitals and Schedules			64
10.7		Confidentiality; Press Releases			64
10.8		Merger			65
10.9		GOVERNING LAW			65
10.10		Jurisdiction			65

				Page
10.11		Captions			65
10.12		Counterparts			65
10.13		Severability			66
10.14		Prior Negotiations; Construction			66
10.15		Litigation Expenses			66
10.16		No Recordation			66
10.17		WAIVER OF TRIAL BY JURY			66

EXHIBITS
EXHIBIT A		Master III Operating Agreement
EXHIBIT B-1		Form Interest Contribution Agreement
EXHIBIT B-2		Form Interest Transfer Agreement
EXHIBIT C-1		Form Registration Rights Agreement
EXHIBIT C-2		Form Addendum to Registration Rights Agreement
EXHIBIT D-1		Form Tax Protection Agreement
EXHIBIT D-2		Form Addendum to Tax Protection Agreement
EXHIBIT E		Form Voting Agreement
EXHIBIT F		Estoppel Certificate Standards
EXHIBIT G-1		Form Amended Operating Agreement or Partnership Agreement relating to Operating Properties
EXHIBIT G-2		Form Amended Operating Agreement or Partnership Agreement relating to Development Properties
EXHIBIT H		Form Legal Opinion

SCHEDULES
SCHEDULE P-1A		FCE Entities
SCHEDULE P-1B		Master III Entities
SCHEDULE P-2A		BCR Entities
SCHEDULE P-2B		BCR Individuals
SCHEDULE P-3A		Properties
SCHEDULE P-3B		Property Owners and Organizational Charts
SCHEDULE P-3C		Development Property Owners and Organizational Charts
SCHEDULE P-3D		Nets, Atlantic Yards, Bloomfield and Metrotech Associates and Organizational Charts
SCHEDULE P-3E		Service Companies and Organizational Charts
SCHEDULE P-4		Preliminary Transactions
SCHEDULE ▇-▇▇		▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and Metrotech Associates Transfers
SCHEDULE P-5B		Service Company Transfers
SCHEDULE P-6A		BCR Contributed Interests in Operating Properties
SCHEDULE P-6B		BCR Sold Interests in Operating Properties
SCHEDULE P-6C		FCE Contributed Interests in Operating Properties
SCHEDULE P-7A		BCR Contributed Interests in Development Properties
SCHEDULE P-7B		FCE Contributed Interests in Development Properties
SCHEDULE P-7C		BCR Sold Interests in Development Properties
SCHEDULE 1.2A		Ground Lease Consents
SCHEDULE 1.2B		Development Property Consents
SCHEDULE 1.3(b)		Certain Lender and Third Party Consents
SCHEDULE 2.3(c)		Determination of Value
SCHEDULE 3.1(a)		Existing Title Policies
SCHEDULE 3.1(b)		New Title Commitments
SCHEDULE 4.13-1		Anchors
SCHEDULE 4.13-2		Ground Lessors
SCHEDULE 4.13-3		Reciprocal Easement Agreements
SCHEDULE 4.17		Amended Operating Agreements or Partnership Agreements
SCHEDULE 4.18A		“Heldback” FCE Interests
SCHEDULE 4.18B		Certain Outside Investors and Outside Interests
SCHEDULE 5.3(j)		Outside Investor Consents
SCHEDULE 5.4(j)		Non-Consolidation Opinions
SCHEDULE 6.1(d)		Required Estoppel Certificates and Required BCR Consents
SCHEDULE 7.1(a)		FCE Entities Organization
SCHEDULE 7.1(e)		Capitalization of FCEI
SCHEDULE 7.1(r)		Individuals Comprising “Knowledge of Forest City”
SCHEDULE 7.2(a)		BCR Entities Organization
SCHEDULE 7.2(c)		Consents
SCHEDULE 7.2(f)		Non-Compliance with Laws
SCHEDULE 7.2(g)		Pending Tax Claims and Audits
SCHEDULE 7.2(j)		List of Ground Leases and Anchor Tenant Leases and Defaults Under Ground Leases and Anchor Tenant Leases

SCHEDULES
SCHEDULE 7.2(k)		Unpaid Leasing Commissions, Fees and Tenant Improvement Allowances
SCHEDULE 7.2(l)		Defaults under Operating Contracts
SCHEDULE 7.2(m)		Defaults under Continuing Loans
SCHEDULE 7.2(n)		Environmental Reports
SCHEDULE 7.2(o)		Financial Information Letter
SCHEDULE 7.2(p)		FCRC Form 10-K Information
SCHEDULE 7.2(t)		Individuals Comprising “Knowledge of BCR Entities”
SCHEDULE 9.2(c)		Certain Waivers

INDEX OF DEFINED TERMS

			Page
2005 Form 10-K			44
2006 Form ▇▇-▇▇			▇▇
▇▇ ▇▇▇▇▇▇			▇▇
▇▇ DeKalb Value			18
Additional ▇▇▇▇▇			▇▇
▇▇▇▇▇▇▇▇▇			▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Leases			50
Anchors			26
Appraisal Notice			11
Atlantic Yards			2
BCR			1
BCR Contributed Interests			4
BCR Employment Agreement			24
BCR Entities			1
BCR Individuals			1
BCR Interests			3
BCR Master I Interests			1
BCR Master II Interests			1
BCR Material Adverse Change			47
BCR Release Date			7
BCR Representative			22
BCR Service Company Interest			2
BCR Sold Interests			4
BCR Transferor Party			7
BCR Transferred Interests			4
BCR ▇▇▇▇▇			▇▇
▇▇▇▇▇▇▇			▇▇
▇▇▇▇▇▇▇▇▇▇			▇
▇▇ Master			1
Claims			8
Claims Notice			56
Class A Additional Common Units			13
Class A Initial Common Units			9
Class B Initial Common Units			9
Closing			29
Closing Date			29
Code			25
Commercially Reasonable Efforts			6
Commission			44
Condemnation			20
Consideration			10

			Page
Continuing Loan			6
Contributed Interests			4
Deferred Closing			29
Deferred Closing Date			29
Development Property			1
Development Property Closing			14
Development Property Joint Venture			15
Development Property Owner			2
Encumbrance			18
Environmental Reports			51
Estoppel Certificate			26
Exchange Act			44
Exchange Rights			25
Excluded Property			29
Existing Title Policy			18
FCCH			1
FCE Contributed Interests			4
FCE Contributor Party			8
FCE Entities			1
FCE Interests			2
FCE Master I Interests			1
FCE Master II Interests			1
FCE Material Adverse Change			42
FCE Release Date			8
FCE Service Company Interest			2
FCEI			1
FCEI Stock			14
FCRC			23
FCRC Form 10-K Information			▇▇
▇▇▇▇▇			▇▇
▇▇▇▇▇▇ ▇▇▇▇			▇
▇▇▇▇▇▇ ▇▇▇▇ Indemnified Parties			55
Governmental Authority			40
▇▇▇▇▇▇▇▇▇			46
Ground Leases			50
Ground Lessor			26
Holding Entities			1
HSR Act			22
Indemnification Claim			56
Indemnified Party			56
Indemnifying Party			56
Initial Units			9
Interest Contribution Agreement			4
Interest Transfer Agreement			5
Interests			2
Liability Claim			56

			Page
Litigation Conditions			56
Loan Documents			51
Losses			55
Master I			1
Master I Interests			1
Master II			1
Master II Interests			1
Master III			1
Master III Entities			1
Master III Operating Agreement			3
Metrotech Associates			2
Nets			2
Nets Loan			27
New Title Commitment			18
Operating Contracts			50
Operating Property			1
Opinion of Counsel			25
Outside Interests			28
Outside Investor			2
Preliminary Transactions			3
Principal Closing			29
Principal Closing Date			29
Property			1
Property Owner			1
PTP			25
Registration Rights Agreement			23
Required BCR Consents			40
Required Estoppel Certificates			40
SEC Filings			45
Securities Act			44
Service Company			2
Special Committee			43
Stabilization Date			10
Stabilization Notice			11
Stabilized Closing Date			13
Stabilized Net Operating Income			10
Stabilized Value			11
Substantial Casualty			21
Substantial Condemnation			21
Tax Protection Agreement			23
Unit Transfer			25
Units			13
Voting Agreement			24

MASTER CONTRIBUTION AND SALE AGREEMENT

     THIS MASTER CONTRIBUTION AND SALE AGREEMENT (this “Agreement”) is made as of the 10^th day of August, 2006, by and among FOREST CITY ENTERPRISES, INC., an Ohio corporation (“FCEI”), the entities affiliated with FCEI that are identified on Schedule P-1A (FCE Entities) (the “FCE Entities”; FCEI and the FCE Entities are collectively referred to as “Forest City”), Forest City Master Associates III, LLC, a New York limited liability company (“Master III”), the entities affiliated with Master III or FCEI that are identified on Schedule P-1B (Master III Entities) (the “Master III Entities”), the entities affiliated with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual (“BCR”), that are identified on Schedule P-2A (BCR Entities) (the “BCR Entities”) and the individuals affiliated with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ that are identified on Schedule P-2B (BCR Individuals) (the “BCR Individuals”).

W I T N E S S E T H:

     WHEREAS, Forest City Commercial Holdings, Inc., a New York corporation (“FCCH”), and BR Master Limited Partnership, a New York limited partnership (“BR Master”), are general partners of Forest City Master Associates, a New York general partnership (“Master I”), and Master Associates II, a New York general partnership (“Master II”) (Master I, Master II and Master III are collectively referred to as the “Holding Entities”). The partnership interests of Master I owned by FCCH and BR Master are referred to as the “FCE Master I Interests” and the “BCR Master I Interests,” respectively (collectively, the “Master I Interests”). The partnership interests of Master II owned by FCCH and BR Master are referred to as the “FCE Master II Interests” and the “BCR Master II Interests,” respectively (collectively, the “Master II Interests”).

     WHEREAS, certain of the FCE Entities and certain of the BCR Entities, directly or through affiliates, own partnership or limited liability company interests in the owners of real estate identified on Schedule P-3A (Properties) (each, a “Property,” and collectively, the “Properties”).

     WHEREAS, certain Properties have been developed prior to the date hereof (each, an “Operating Property,” and collectively, the “Operating Properties”) while certain other Properties either have not stabilized or will be developed following the date hereof (each, a “Development Property,” and collectively, the “Development Properties”).

     WHEREAS, each of the Operating Properties is owned by a separate partnership or limited liability company that is identified on Schedule P-3B (Property Owners) (each, a “Property Owner,” and collectively, the “Property Owners”) and the organizational chart for each such Property Owner is included as part of Schedule P-3B (Property Owners). Each of the Development Properties is owned by a separate partnership or limited liability company that is identified on Schedule P-3C (Development Property Owners) (each, a “Development Property Owner,” and collectively, the “Development Property Owners”) and the organizational chart for each such Development Property Owner is included as part of Schedule P-3C (Development Property Owners).

     WHEREAS, certain of the BCR Entities own direct or indirect interests in Nets Sports and Entertainment, LLC, a Delaware limited liability company (the “Nets”), Atlantic Yard Development Company, LLC, a Delaware limited liability company (“Atlantic Yards”), ▇▇ ▇▇▇▇▇▇▇▇▇▇ Associates, LLC, a New Jersey limited liability company (“Bloomfield”), and Forest City Metrotech Associates Limited Partnership, a New York limited partnership (“Metrotech Associates”). The organizational chart for the Nets, Atlantic Yards, Bloomfield and Metrotech Associates is included as part of Schedule P-3D (Nets, Atlantic Yards, Bloomfield and Metrotech Associates).

     WHEREAS, in certain instances the BCR Individuals own indirect interests in the Properties.

     WHEREAS, certain non affiliated-investors (each, an “Outside Investor,” and collectively, the “Outside Investors”) also own direct or indirect interests in certain of the Property Owners, Development Property Owners, the Nets, Atlantic Yards and Metrotech Associates.

     WHEREAS, certain of the BCR Entities and BCR Individuals collectively own a fifty percent (50%) interest (each a “BCR Service Company Interest” and, collectively, the “BCR Service Company Interests”) and certain of the FCE Entities own a fifty percent (50%) interest (each a “FCE Service Company Interest” and, collectively, the “FCE Service Company Interests”) in companies that provide services to the Property Owners and Properties (each a “Service Company” and, collectively, the “Service Companies”). The organizational chart for each Service Company is included as part of Schedule P-3E (Service Companies).

     WHEREAS, the organizational charts included as part of Schedule P-3B (Property Owners), Schedule P-3C (Development Property Owners), Schedule P-3D (Nets, Atlantic Yards, Bloomfield and Metrotech Associates) and Schedule P-3E (Service Companies) identify the interests owned, directly or indirectly, by the FCE Entities, the BCR Entities, the BCR Individuals and the Outside Investors in each of the Properties, Service Companies, the Nets, Atlantic Yards, Bloomfield and Metrotech Associates (each will be referred to herein as an “Interest”, and collectively as the “Interests”). The Interest in each of the Property Owners, the Development Property Owner and the Service Companies that are owned, directly or indirectly, by the FCE Entities (including, without limitation, the FCE Master I Interests and the FCE Master II Interests) are collectively referred to as the “FCE Interests.” The Interests in each of the Property Owners, Development Property Owners, Service Companies, the Nets, Atlantic Yards, Bloomfield and Metrotech Associates that are owned, directly or indirectly, by the BCR Entities and BCR Individuals (including, without limitation, the BCR Master I Interests and the BCR Master II Interests) are referred to as the “BCR Interests.”

     WHEREAS, prior to the Principal Closing, Forest City will cause the members of Master III to amend and restate the operating agreement for Master III to be in the form set forth in Exhibit A (the “Master III Operating Agreement”).

     WHEREAS, prior to the Principal Closing, Forest City and the BCR Entities will (i) cause each of FC Harlem Center, LLC and FC Harlem Center Office, LLC to appoint an entity wholly-owned and controlled by BCR as the managing member of each such entity, provided

that the entity appointed as managing member will only have a de minimus economic interest in either FC Harlem Center, LLC or FC Harlem Center Office, LLC and (ii) perform or cause to be performed the transfers identified on Schedule P-4 (Preliminary Transactions) (items (i) and (ii) collectively being the “Preliminary Transactions”).

     WHEREAS, at the applicable Closing, (a) with respect to the Nets, Atlantic Yards, Bloomfield and Metrotech Associates, each of the BCR Entities and BCR Individuals, as identified in “Column (I)” of Schedule P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers), will sell or otherwise transfer to the entity identified in “Column (IV)” of Schedule P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers) the interest identified in “Column (II)” of Schedule P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers) owned by such BCR Entity or BCR Individual in the entity identified in “Column (III)” of Schedule P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers) and (b) with respect to the Service Companies, each of the BCR Entities, BCR Individuals and FCE Entities identified in “Column (I)” of Schedule P-5B (Service Company Transfers) will sell or otherwise transfer to Master III the Service Company Interest identified in “Column (II)” of Schedule P-5B (Service Company Transfers) owned by such BCR Entity, BCR Individual or FCE Entity in the Service Company identified in “Column (III)” of Schedule P-5B (Service Company Transfers).

     WHEREAS, at the Principal Closing, with respect to each Operating Property, (a) each of the BCR Entities and BCR Individuals, as identified in “Column (I)” of Schedule P-6A (BCR Contributed Interests in Operating Properties), will contribute to the entity identified in “Column (IV)” of Schedule P-6A (BCR Contributed Interests in Operating Properties) the interest identified in “Column (II)”of Schedule P-6A (BCR Contributed Interests in Operating Properties) owned by such BCR Entity or BCR Individual in the entity identified in “Column (III)” of Schedule P-6A (BCR Contributed Interests in Operating Properties), (b) each of the BCR Entities and BCR Individuals, as identified in “Column (I)” of Schedule P-6B (BCR Sold Interests in Operating Properties), will sell to the entity identified in “Column (IV)” of Schedule P-6B (BCR Sold Interests in Operating Properties) the interest identified in “Column (II)”of Schedule P-6B (BCR Sold Interests in Operating Properties) owned by such BCR Entity or BCR Individual in the entity identified in “Column (III)” of Schedule P-6B (BCR Sold Interests in Operating Properties) and (c) each of the FCE Entities, as identified in “Column (I)” of Schedule P-6C (FCE Contributed Interests in Operating Properties), will contribute to the entity identified in “Column (IV)” of Schedule P-6C (FCE Contributed Interests in Operating Properties) the interest identified in “Column (II)”of Schedule P-6C (FCE Contributed Interests in Operating Properties) owned by such FCE Entity in the entity identified in “Column (III)” of Schedule P-6C (FCE Contributed Interests in Operating Properties).

     WHEREAS, with respect to each Development Property, upon the occurrence of the Stabilization Date for such Development Property, the parties will determine the Stabilized Value of such Development Property and otherwise deal with such Development Property as set forth in greater detail herein.

     WHEREAS, the FCE Service Company Interests and the FCE Interests being contributed, as described on Schedules P-5B (Service Company Transfers), P-6C (FCE Contributed Interests in Operating Properties) and P-7B (FCE Contributed Interests in

Development Properties), by the FCE Entities are collectively referred to as the “FCE Contributed Interests”, the BCR Interests being contributed, as described on Schedules P-6A (BCR Contributed Interests in Operating Properties) and P-7A (BCR Contributed Interests in Development Properties), by the BCR Entities and BCR Individuals, are referred to as the “BCR Contributed Interests”, and the BCR Service Company Interests and the BCR Interests being sold or otherwise transferred, as applicable, pursuant to Schedules P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers), P-5B (Service Company Transfers), P-6B (BCR Sold Interests in Operating Properties) and P-7C (BCR Sold Interests in Development Properties) are referred to as the “BCR Sold Interests,” and together with the BCR Contributed Interests, the “BCR Transferred Interests.” The BCR Transferred Interests and the FCE Contributed Interests collectively are known as the “Contributed Interests.”

     NOW, THEREFORE, in consideration of the representations, warranties and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

TRANSFERS OF INTERESTS;
CONSENTS; LOANS; PRELIMINARY TRANSACTIONS

     1.1 Transfers of Interests. Subject to and on the terms and conditions hereinafter set forth, on the date and at the time and place provided for in Section 5.1 or Section 5.2, and, to the extent applicable, Section 2.3:

          (a) Each applicable BCR Entity and each applicable BCR Individual will contribute, transfer and assign to the entity identified on Schedule P-6A (BCR Contributed Interests in Operating Properties) all of such BCR Entity’s or BCR Individual’s BCR Contributed Interests related to the Operating Properties, as are identified on Schedule P-6A (BCR Contributed Interests in Operating Properties), in each case pursuant to an Interest Contribution Agreement in the form attached as Exhibit B-1 (each such agreement, an “Interest Contribution Agreement”).

          (b) Each applicable FCE Entity will contribute, transfer and assign to the entity identified on Schedule P-6C (FCE Contributed Interests in Operating Properties) all of such FCE Entity’s FCE Contributed Interests related to the Operating Properties, as are identified on Schedule P-6C (FCE Contributed Interests in Operating Properties), in each case pursuant to an Interest Contribution Agreement.

          (c) Each applicable BCR Entity and each applicable BCR Individual will sell, transfer and assign to the entity identified on Schedule P-6B (BCR Sold Interests in Operating Properties) all of such BCR Entity’s or BCR Individual’s BCR Sold Interests related to the Operating Properties, as are identified on Schedule P-6B (BCR Sold Interests in Operating Properties), in each case pursuant to an Interest Transfer Agreement in the form attached as Exhibit B-2 (each such agreement, an “Interest Transfer Agreement”).

          (d) Each applicable BCR Entity and each applicable BCR Individual will sell, transfer and assign to Master III all of such BCR Entity’s or BCR Individual’s BCR Service Company Interests, as are identified on Schedule P-5B (Service Company Transfers), in each case pursuant to an Interest Transfer Agreement.

          (e) Each applicable FCE Entity will contribute, transfer and assign to Master III all of such FCE Entity’s FCE Service Company Interests, as are identified on Schedule P-5B (Service Company Transfers), in each case pursuant to an Interest Contribution Agreement.

          (f) Each applicable BCR Entity and each applicable BCR Individual will sell, transfer and assign to the entity identified on Schedule P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers) all of such BCR Entity’s or BCR Individual’s BCR Sold Interests related to the Nets, Atlantic Yards, Bloomfield and/or Metrotech Associates, as are identified on Schedule P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers), in each case pursuant to an Interest Transfer Agreement.

          (g) With respect to each Development Property, to the extent Forest City has elected to pursue the option set forth in Section 2.3(g)(i), on the Stabilization Closing Date for such Development Property:

          (i) Each applicable BCR Entity and each applicable BCR Individual will contribute, transfer and assign to Master III all of such BCR Entity’s or BCR Individual’s BCR Contributed Interests related to the applicable Development Property, as are identified on Schedule P-7A (BCR Contributed Interests in Development Properties), in each case pursuant to an Interest Contribution Agreement.

          (ii) Each applicable BCR Entity and each applicable BCR Individual will sell, transfer and assign to the entity identified on Schedule P-7C (BCR Sold Interests in Development Properties) all of such BCR Entity’s and/or BCR Individual’s BCR Sold Interests related to the applicable Development Property, as are identified on Schedule P-7C (BCR Sold Interests in Development Properties), in each case pursuant to an Interest Transfer Agreement.

          (iii) Each applicable FCE Entity will contribute, transfer and assign to Master III all of such FCE Entity’s FCE Contributed Interests related to the applicable Development Property, as are identified on Schedule P-7B (FCE Contributed Interests in Development Properties), in each case pursuant to an Interest Contribution Agreement.

The parties agree to amend Schedules P-3C (Development Property Owners and Organizational Charts), P-7A (BCR Contributed Interests in Development Properties), P-7B (FCE Contributed Interests in Development Properties) and P-7C (BCR Sold Interests in Development Properties) and any other schedules hereto to the extent necessary to reflect any changes in the direct or indirect ownership of all or any portion of any Development Property and correlative changes to the description of the Contributed Interests related to such Development Property.

        1.2 Consents. From the date of this Agreement until the Principal Closing Date, the BCR Entities will use commercially reasonable efforts, subject to the terms of Sections 4.2 and 4.10 hereof with respect to the allocation of related costs, to obtain the consent of each Outside

Investor identified on Schedule 5.3(j) and each ground lessor identified on Schedule 1.2A. The BCR Entities will also use commercially reasonable efforts, subject to the terms of Sections 4.2 and 4.10 hereof with respect to the allocation of related costs, to obtain the consents related to the Development Properties set forth on Schedule 1.2B prior to the Principal Closing Date. The BCR Entities will update FCEI upon request on the status of their efforts to obtain such consents. Forest City will have the right to approach any such third party directly and to participate in any meeting or negotiation held in order to obtain such consent. If Forest City exercises its right to approach any such third party directly, it will notify the BCR Representative prior to approaching such third party and will advise the BCR Representative promptly of all actions taken by it and the results thereof. For purposes of this Agreement, but subject to the terms of Sections 4.2 and 4.10 hereof with respect to the allocation of costs and Schedule 1.3(b), “commercially reasonable efforts” does not require the initiation or settlement of litigation, disproportionate payouts to any investor, the payment of money (other than usual and customary expenses associated with negotiating and closing transactions or participation payments, consent or assumption fees, prepayment fees or other similar payments required by existing contracts) or reallocations of the consideration or any component thereof among Properties or transferors of any Contributed Interests.

     1.3 Continuing Loans.

          (a) The parties currently expect that each of the loans secured by Operating Properties will remain outstanding following the Principal Closing. Each such loan that remains outstanding after the Principal Closing is referred to as a “Continuing Loan,” and, collectively, such loans are referred to as the “Continuing Loans.”

          (b) If any lender or third party identified on Schedule 1.3(b) is unwilling to grant its consent to the transactions contemplated by this Agreement on terms that are acceptable to Forest City (subject to the obligations set forth on Schedule 1.3(b)), then, notwithstanding anything in this Agreement to the contrary, Forest City and the BCR Entities agree to the transactions set forth in Schedule 1.3(b) with respect to the relevant Operating Property.

     1.4 No Representations. EXCEPT AS SET FORTH IN THIS AGREEMENT OR IN ANY EXHIBIT OR SCHEDULE ATTACHED HERETO, OR ANY OTHER DOCUMENT REQUIRED HEREIN, THE BCR ENTITIES, BCR INDIVIDUALS AND THE FCE ENTITIES ARE TRANSFERRING THEIR RESPECTIVE INTERESTS AND, INDIRECTLY, THE PROPERTIES, SERVICE COMPANIES, THE NETS, ATLANTIC YARDS, BLOOMFIELD AND METROTECH ASSOCIATES “AS IS, WHERE IS AND WITH ALL FAULTS.” EXCEPT FOR THE REPRESENTATIONS EXPRESSLY SET FORTH HEREIN, NONE OF THE BCR ENTITIES, THE BCR INDIVIDUALS OR FOREST CITY IS RELYING ON ANY REPRESENTATIONS OR WARRANTIES, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, FROM THE OTHER PARTIES OR ANY OF THEIR AFFILIATES, ASSOCIATES, PARTNERS, MEMBERS, SHAREHOLDERS, PRINCIPALS, OFFICERS, EMPLOYEES, ATTORNEYS, AGENTS OR BROKERS, REGARDING THE INTERESTS, THE PROPERTIES, SERVICE COMPANIES, THE NETS, ATLANTIC YARDS, BLOOMFIELD OR METROTECH ASSOCIATES.

     1.5 Release

          (a) Effective as of the date on which a BCR Transferred Interest is transferred pursuant to this Agreement (each a “BCR Release Date”), Forest City, for itself, the Holding Entities, the Master III Entities, the Service Companies, the Nets, Atlantic Yards, Bloomfield, Metrotech Associates, the Property Owners, the Development Property Owners and any other entity transferred, whether directly or indirectly, by the BCR Entities or any BCR Individual pursuant to this Agreement, and any of their respective subsidiaries, successors and assigns, irrevocably waives its right to recover from, and forever releases and discharges and covenants not to file or otherwise pursue any legal action against, (i) any of the BCR Entities or any of their respective affiliates, associates, partners, members, trustees, principals, stockholders, officers, employees or agents, (ii) each of BCR, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ and their respective immediate family members and (iii) each of the ▇▇▇▇▇ ▇▇▇▇▇▇ 2000 Trust, Brooklyn One Trust, Brooklyn Two Trust and Brooklyn Three Trust (each, a “BCR Transferor Party,” and collectively, the “BCR Transferor Parties”) with respect to any Claims (as defined below) arising prior to the relevant BCR Release Date and that relate to the BCR Interests transferred, whether directly or indirectly, on the relevant BCR Release Date or the Properties or other assets to which such BCR Interests relate, including any breach of any partnership agreement, operating agreement or other constituent documents of any Property Owner, Development Property Owner, Service Company, the Nets, Atlantic Yards, Bloomfield, Metrotech Associates or other entity that is transferred, whether directly or indirectly, on the relevant BCR Release Date or any Claim arising prior to the relevant BCR Release Date to enforce any right or obligation under any such partnership agreement, operating agreement or other constituent document; except that neither Forest City nor any of the other entities granting the release contemplated by this Section 1.5(a), nor any of their successors and assigns, waives its rights to recover from, or releases, discharges or covenants not to bring any action against, (i) any BCR Transferor Party for any act of the BCR Transferor Party that constitutes fraud, (ii) any of the BCR Entities for any breach of the representations, warranties or covenants set forth in this Agreement or in any exhibit or schedule attached hereto, or in any other document required herein, subject to the limitations and conditions provided herein and therein or (iii) any of the BCR Transferor Parties for any breach of any partnership agreement, operating agreement or other constituent document of any Property Owner or other entity owning an Interest related to an Operating Property that is excluded from the transactions contemplated by this Agreement or any Claim to enforce any right or obligation under any such partnership agreement, operating agreement or other constituent document, subject to the limitations and conditions provided herein and therein. The term “Claims” means any suits, actions, proceedings, investigations, demands, liabilities, fines, penalties, liens, judgments, losses, damages or other claims, whether direct or indirect, known or unknown, contingent or otherwise, including attorneys’ fees and expenses.

          (b) Effective as of the date on which an FCE Contributed Interest is contributed pursuant to this Agreement (each an “FCE Release Date”), the BCR Contributor Parties, BCR Individuals and any of their respective subsidiaries, successors and assigns, irrevocably waive their right to recover from, and forever release and discharge and covenant not to file or otherwise pursue any legal action against, FCEI, the FCE Entities, the Holding Entities, the Master III Entities, the Service Companies, the Property Owners, the Development Property Owners, the Nets, Atlantic Yards, Bloomfield, Metrotech Associates and any other entity contributed by the FCE Entities pursuant to this Agreement, and any of their respective affiliates, associates, partners, member, shareholders, principals, officers, employees or agents (each, a “FCE Contributor Party,” and collectively, the “FCE Contributor Parties”), with respect to any

Claims arising prior to the relevant FCE Release Date and that relate to the FCE Interests contributed, whether directly or indirectly, on the relevant FCE Release Date, or the Properties or other assets to which such FCE Interests relate, including any breach of any partnership agreement, operating agreement or other constituent documents of any Property Owner, Development Property Owner, Service Company or other entity that is contributed, whether directly or indirectly, on the relevant FCE Release Date or any Claim arising prior to the relevant FCE Release Date to enforce any right or obligation under any such partnership agreement, operating agreement or other constituent documents; except that none of the BCR Entities, BCR Individuals or the other BCR Contributor Parties, nor any of their successors and assigns, waives its rights to recover from, or releases, discharges or covenants not to bring any action against, (i) any FCE Contributor Party for any act of the FCE Contributor Party that constitutes fraud, (ii) FCEI or any of the FCE Entities for any breach of the representations, warranties or covenants set forth in this Agreement or in any exhibit or schedule attached hereto, or in any other document required herein, subject to the limitations and conditions provided herein and therein or (iii) any of the FCE Contributor Parties for any breach of any partnership agreement, operating agreement or other constituent documents of any Property Owner or other entity owning an interest related to a Operating Property that is excluded from the transactions contemplated by this Agreement or any Claim to enforce any right or obligation under any such partnership agreement, operating agreement or other constituent document, subject to the limitations and conditions provided herein and therein.

          (c) In connection with this Section 1.5, Forest City and the BCR Entities, for themselves and each of the BCR Transferor Parties and FCE Contributor Parties, expressly waive the benefits of any provision or principle of federal or state law or regulation that may limit the scope or effect of the foregoing waivers and releases.

     1.6 Preliminary Transactions. Prior to the Principal Closing, Forest City, the BCR Entities and the BCR Individuals will perform, or will cause to be performed, the Preliminary Transactions.

     1.7 Master III Operating Agreement. Prior to the Principal Closing, Forest City will cause the members of Master III to amend and restate the operating agreement for Master III to be in the form of the Master III Operating Agreement.

ARTICLE II

CONSIDERATION

     2.1 Funding of Master III. On the Principal Closing Date, assuming satisfaction of the conditions set forth in Article VI (including the delivery of all items required by Sections 6.1(a) and 6.1(d)) and assuming that the BCR Representative has advised Forest City in writing that the BCR Entities are prepared to consummate the Principal Closing, Forest City will contribute to Master III an amount of cash, payable by wire transfer of immediately available funds to a bank account maintained by Master III, sufficient to pay the cash portion of the Consideration payable by Master III to the BCR Entities and BCR Individuals. Until payment of the cash to the BCR Entities and BCR Individuals, all interest earned thereon will be for the benefit of Forest City.

     2.2 Initial Consideration

          (a) On the Principal Closing Date, assuming satisfaction of the conditions set forth in Article VI and subject to adjustment as provided in this Article II, Forest City will cause the recipients of any BCR Contributed Interests or FCE Contributed Interests to:

          (i) issue to the contributors of the BCR Contributed Interests an aggregate of 3,894,232 Class A Initial Common Units of Master III (as defined in the Master III Operating Agreement);

          (ii) issue to the contributors of the FCE Contributed Interests an aggregate of 7,277,171 Class B Common Units of Master III (as defined in the Master III Operating Agreement); and

          (iii) admit the contributors of the BCR Contributed Interests and the FCE Contributed Interests to Master III as additional members of Master III.

The Class A Initial Common Units of Master III being delivered to the BCR Entities and BCR Individuals at the Principal Closing are sometimes referred to as “Class A Initial Common Units,” and the Class B Common Units of Master III being delivered to the FCE Entities at the Principal Closing are sometimes referred to as “Class B Initial Common Units”. The Class A Initial Common Units and the Class B Initial Common Units are collectively referred to as the “Initial Units.”

          (b) On the Principal Closing Date, assuming satisfaction of the conditions set forth in Article VI (including the delivery of the items required by Sections 6.1(a) and 6.1(d)) and subject to adjustment as provided in this Article II, Forest City will cause the entity or entities acquiring the BCR Sold Interests to deliver to the appropriate BCR Entities and BCR Individuals, as consideration for the BCR Sold Interests, an aggregate of Forty Six Million Three Hundred Thirty Five Thousand Five Hundred and Thirty One Dollars ($46,335,531), payable in cash by wire transfer of immediately available funds to the bank accounts designated by the BCR Entities in writing to Forest City at least three (3) days prior to the Principal Closing Date; provided, however, that a portion of the cash consideration payable to RRG ▇▇▇▇▇▇ Office, LLC in the amount of Ten Million Five Hundred Thousand Dollars ($10,500,000) will be payable on January 2, 2007.

          (c) The cash and the Units to be delivered in connection with the Principal Closing are collectively referred to as the “Consideration.” The Consideration will be issued or paid, as the case may be, among the specific BCR Contributed Interests, BCR Sold Interests and FCE Contributed Interests in accordance with Schedules P-5B (Service Company Transfers), P-6A (BCR Contributed Interests in Operating Properties), P-6B (BCR Sold Interests in Operating Properties) and P-6C (FCE Contributed Interests in Operating Properties).

          (d) If less than all of the BCR Transferred Interests and FCE Contributed Interests related to the Operating Properties or Service Companies are included in the Principal Closing, the amount of cash to be contributed to Master III by Forest City, and the Consideration to be delivered in connection with the Principal Closing, will be reduced by the sum of the amounts set forth on Schedules P-5B (Service Company Transfers), P-6A (BCR Contributed

Interests in Operating Properties), P-6B (BCR Sold Interests in Operating Properties) and P-6C (FCE Contributed Interests in Operating Properties) opposite the names of the excluded Contributed Interests or as otherwise agreed between Forest City and the BCR Entities.

     2.3 Stabilization of Development Properties.

          (a) Intentionally omitted.

          (b) As used herein, the term “Stabilization Date” means the later of (i) the first day of the February immediately following the earlier of (A) the first calendar quarter in which at least ninety percent (90%) of the leaseable area of the Development Property is rented and occupied and (B) the third (3rd) anniversary of the “grand opening” of the Development Property, (ii) the date on which each of the consents set forth on Schedule 1.2B with respect to the relevant Development Property (to the extent such consents are still required under the applicable agreement with such parties) have been obtained by the BCR Entities and (iii) the date on which the conditions precedent to Forest City’s obligation to consummate the transactions related to the Development Property set forth in Sections 6.1(e) and 6.1(f), and the conditions precedent to the BCR Entities’ and BCR Individuals’ obligations to consummate the transactions related to the Development Property set forth in Sections 6.2(f) and 6.2(g), have been satisfied.

          (c) For purposes of this Agreement, the “Stabilized Net Operating Income” of any Development Property will mean the stabilized net operating income of the Development Property calculated, to the extent practicable, on the same basis as was used in the determination of net operating income for purposes of ascertaining the amount of Consideration payable under Section 2.2, as outlined in Schedule 2.3(c), which sets forth the adjustments made and steps followed in determining net operating income and net asset value for such purposes.

          (d) Promptly (and in no event later than thirty (30) days) after the Stabilization Date of each Development Property, the BCR Representative will give FCEI written notice (the “Stabilization Notice”) that the Stabilization Date has occurred with respect to such Development Property and provide FCEI with (i) a spreadsheet showing the calculation of Stabilized Net Operating Income of the related Development Property and (ii) the BCR Representative’s computation of the stabilized value of the Development Property (the “Stabilized Value”). To the extent practicable, Stabilized Value will be determined on the same basis as was used in determining net asset value for purposes of ascertaining the amount of Consideration payable under Section 2.2, as outlined in Schedule 2.3(c).

          (e) No later than thirty (30) days after delivery of the Stabilization Notice, FCEI and the BCR Representative will meet (either telephonically or in person) to attempt in good faith to agree upon the Stabilized Value of the Development Property. The terms, supporting documentation and discussions between FCEI and the BCR Representative with respect to Stabilized Value, including the BCR Representative’s computation of Stabilized Value in the Stabilization Notice, may not be shared with any third party (other than on a confidential basis to counsel, accountants and other advisors in connection with the performance of this Section 2.3), including any arbitrator appointed pursuant to this Section 2.3(e), without the prior written consent of both FCEI and the BCR Representative, which consent may be withheld in a party’s sole discretion. If FCEI and the BCR Representative are unable, within sixty (60) days

after delivery of the Stabilization Notice, to agree upon the Stabilized Value of the Development Property, either party at any time following such sixtieth (60^th) day may notify the other party (an “Appraisal Notice”) that it desires to refer the dispute to an arbitrator for resolution. FCEI and the BCR Representative will attempt in good faith to agree upon an arbitrator for the determination of the Stabilized Value. If they are unable within ten (10) days after delivery of the Appraisal Notice to agree upon an arbitrator, FCEI and the BCR Representative will accept the appointment of an arbitrator selected by the American Arbitration Association. The arbitration proceeding will be subject to the following:

          (i) The arbitrator will be a disinterested person of recognized competence who is an MAI appraiser with at least five (5) years of experience in appraising commercial real estate properties in New York City, New York, or such other locale where the Development Property is located.

          (ii) The arbitrator will, to the extent practicable, determine Stabilized Value on the same basis as was used in determining net asset value for purposes of ascertaining the amount of Consideration payable under Section 2.2, as set forth in Schedule 2.3(c) and in accordance with the terms of this Agreement. The arbitrator may not consider any position taken by the BCR Representative in the Stabilization Notice nor by either of the parties during the negotiation period following the delivery of the Stabilization Notice unless otherwise instructed by both FCEI and the BCR Representative in writing prior to the engagement of the arbitrator.

          (iii) FCEI and the BCR Representative will each be required to submit a written statement setting forth its or his position on the issues in dispute and any information outlined in Schedule 2.3(c) that was used by the party submitting such statement to calculate Stabilized Net Operating Income. The parties will submit such statements within ten (10) days following the appointment of the arbitrator. No party will be able to review the other party’s statement until after it has submitted its own statement to the arbitrator. The arbitrator may, in his or her sole discretion, conduct a hearing at which FCEI and the BCR Representative are given an opportunity to present further evidence and answer questions. Unless otherwise agreed by FCEI and the BCR Representative, any such hearing will take place in New York, New York.

          (iv) The arbitrator must select either FCEI’s or the BCR Representative’s determination of Stabilized Value as submitted to the arbitrator in FCEI’s or the BCR Representative’s Arbitration Statement.

          (v) The arbitrator will render his or her decision as soon as practicable (and in no event later than forty-five (45) days after his or her appointment) and will deliver such decision to both FCEI and the BCR Representative.

          (vi) Forest City and the BCR Entities will each pay one half (1/2) of the fees and reimbursable expenses of the arbitrator.

          (vii) Subject to Section 2.3(f) below, the determination by the arbitrator will be final and binding on Master III, FCEI, the FCE Entities, the BCR Individuals and the BCR Entities.

          (viii) Issues other than the Stabilized Value of the Development Property will not, unless otherwise agreed by FCEI and the BCR Representatives, be submitted to the arbitrator for resolution, but will be resolved in accordance with Section 10.10.

          (f) At any time after the sixtieth (60^th) day after delivery of the Stabilization Notice but before the end of the tenth (10^th) day following delivery by the arbitrator of its decision, FCEI or the BCR Representative may, in its sole discretion, elect to solicit a bona fide third-party offer to purchase the Development Property (or, if Forest City and the BCR Entities do not have the right to cause the sale of the Development Property, the Interests of the applicable Development Property Joint Venture (as defined in Section 2.3(g)(iv)) in the relevant Development Property Owner), provided the party electing to solicit such offer delivers to the other party a written notice of such election. For the avoidance of doubt, the existence of any right of first refusal, right of first offer or “due on sale” provision in any partnership agreement or loan document affecting a Development Property will not be deemed to be an impediment to the sale of a Development Property. If either FCEI or the BCR Representative elects to solicit a bona fide third-party offer, the arbitration process contemplated by Section 2.3(e) will immediately terminate. Any such bona fide third-party offer must be received, with a copy delivered to both FCEI and the BCR Representative, within one hundred twenty (120) days after delivery of the notice of the election to solicit a bona fide third-party offer. Regardless of which party elects to solicit the bona fide offer, the BCR Representative will be the party actually pursuing the bona fide offer. Any such bona fide offer must be in a writing signed by the offeror, must set forth the price and other principal terms of the acquisition of the Development Property (or Interest of the Development Property Joint Venture in the relevant Development Property Owner), and must be supported by evidence, reasonably satisfactory to the parties, demonstrating that the third party has sufficient financing or access to financing to acquire the Development Property (or Interest of the Development Property Joint Venture in the relevant Development Property Owner). If a bona fide third-party offer meeting these criteria is not received within such one hundred twenty (120) day period, the Stabilized Value of the Development Property determined by the arbitrator will be final and binding on Master III, FCEI, the FCE Entities, the BCR Individuals and the BCR Entities; if the arbitration process had been terminated prior to delivery by the arbitrator of its decision, FCEI and the BCR Representative will recommence the arbitration process and proceed with the arbitration until a decision is delivered. If a bona fide third-party offer meeting these criteria is received within such one hundred twenty (120) day period, the price set forth in the bona fide third-party offer will be the Stabilized Value of the Development Property and will be binding on Master III, FCEI, the FCE Entities, the BCR Individuals and the BCR Entities.

          (g) Once the Stabilized Value for the relevant Development Property has been determined, Forest City will elect, at its sole discretion, one of the following options, which election (subject to subsection (ii) below) will be final and binding on Master III, FCEI, the FCE Entities, the BCR Individuals and the BCR Entities:

          (i) to cause the relevant BCR Entities, BCR Individuals and FCE Entities to proceed with the contribution of the applicable BCR Contributed Interests and FCE Contributed Interests to Master III, and, to the extent applicable, the sale of the relevant BCR Sold Interests to the appropriate entity identified on Schedule P-7C (BCR Sold Interests in Development Properties), in accordance with the terms of this Agreement and the following:

          (A) On the Stabilization Closing Date of the relevant Development Property, (i) Master III will issue (A) Class A Additional Common Units (as defined in the Master III Operating Agreement) (the “Class A Additional Common Units”) to the BCR Entity and/or BCR Individual contributing the BCR Contributed Interests related to the relevant Development Property Owner to Master III and (B) Class B Common Units (the Class B Units issued on any Stabilization Closing Date, together with the Class A Additional Common Units, the “Additional Units”) to the FCE Entity contributing the FCE Contributed Interests in the relevant Development Property Owner to Master III and (ii) Master III will cause the operating agreement or partnership agreement for the relevant Development Property Owner to be amended and restated in the form attached hereto as Exhibit G-1. The Class A Initial Common Units and the Class A Additional Common Units are collectively referred to as the “BCR Units.” The BCR Units and the Class B Common Units are collectively referred to as the “Units.” Each actual date on which Master III issues Additional Units will be deemed the “Stabilization Closing Date” for the related Development Property and the issuance of Additional Units by Master III on each Stabilization Closing Date will be the “Development Property Closing” with respect to the applicable Development Property.

          (B) The value attributable to each BCR Contributed Interest in the related Development Property will be the product of (s) the Stabilized Value multiplied by (t) the BCR Contributed Interest (expressed as a decimal to four (4) decimal places) as set forth on Schedule P-7A (BCR Contributed Interests in Development Properties), the value attributable to any BCR Sold Interest in the related Development Property will be the product of (u) the Stabilized Value multiplied by (v) each BCR Sold Interest (expressed as a decimal to four (4) decimal places) as set forth in Schedule P-7C (BCR Sold Interests in Development Properties), and the value attributable to the FCE Contributed Interest in the related Development Property will be the sum of (i) the product of (w) the Stabilized Value multiplied by (x) the FCE Contributed Interest (expressed as a decimal to four (4) places) as set forth in Schedule P-7B (FCE Contributed Interests in Development Properties) and (ii) the product of (y) the value of the applicable FCE Entity’s preferred capital in such Development Property Joint Venture multiplied by (z) such FCE Contributed Interests (expressed as a decimal to four (4) places) in the Development Property as set forth in Schedule P-7B (FCE Contributed Interests in Development Properties).

          (C) The number of Class A Additional Common Units to be delivered to the BCR Entities and BCR Individuals in connection with the

stabilization of the Development Property will equal the quotient of (i) the value attributable to the BCR Contributed Interests in the related Development Property divided by (ii) the average of the closing prices of Class A Common Stock of FCEI (“FCEI Stock”) as reported by the New York Stock Exchange for each of the twenty (20) days on which trading in such stock was reported immediately prior to the Stabilization Date (or such other price as may be agreed to in writing by the parties). The number of Class B Common Units to be delivered to the FCE Entity in connection with the stabilization of the Development Property will equal the quotient of (i) the value attributable to the FCE Contributed Interest in the related Development Property divided by (ii) such average of the closing prices of the FCEI Stock (or such other price that may be agreed to in writing by the parties).

          (ii) to cause Master III to purchase the relevant BCR Transferred Interests from the relevant BCR Entity and/or BCR Individual for an amount of cash equal to the sum of the product of the Stabilized Value of such Development Property multiplied by each BCR Transferred Interest (expressed as a decimal to four (4) decimal places) as set forth on Schedule P-7A (BCR Contributed Interests in Development Properties) and P-7C (BCR Sold Interests in Development Properties), and on other terms and conditions as are reasonably satisfactory to Forest City and the BCR Representative or, in the case that the Stabilized Value of the applicable Development Property was determined pursuant to a bona fide third-party offer, are substantially the same as those set forth in the third-party offer, and Forest City will cooperate with the relevant BCR Entity and/or BCR Individual to conduct a “like-kind” exchange of such BCR Transferred Interests in accordance with Section 1031 of the Code, or other tax efficient structure, provided there is no incremental cost to Forest City in connection with such an exchange. Notwithstanding the foregoing, to the extent a “like kind” exchange resulting in deferral income taxes to such BCR Entity and/or BCR Individual cannot be effected, in the reasonable judgment of the BCR Representative, the BCR Representative may override Forest City’s election with respect to all or any portion of such BCR Transferred Interests to pursue the option set forth in this Section 2.3(g)(ii) and instead pursue the option set forth in Section 2.3(g)(iv) with respect to all or any portion of the BCR Transferred Interests as elected by the BCR Representative in its sole discretion, except that the “Continuation Option” (as defined in the operating agreement or partnership agreement for each Development Property Joint Venture) will not be deemed to have occurred in the event the BCR Representative elects to pursue the option set forth in Section 2.3(g)(iv) in accordance with this Section 2.3(g)(ii). If the BCR Representative elects to override Forest City’s election to pursue the option set forth in this Section 2.3(g)(ii) only with respect to a portion of the relevant BCR Transferred Interests, prior to the purchase of such BCR Transferred Interests, to the extent requested by the relevant BCR Entities, members or partners of such BCR Entities will be admitted to the relevant Development Property Joint Venture as substitute partners or members for an aggregate interest equal to the portion of the BCR Transferred Interests that are acquired in accordance with this Section 2.3(g)(ii), so that such BCR Transferred Interests will be acquired directly from such substitute members or partners rather than the BCR Entities;

          (iii) in the case of a bona fide third-party offer, to cause the relevant Development Property Owner to proceed with the sale of the Development Property to the third party according to the terms contained in the bona fide third-party offer (or more favorable terms), or, if Forest City and the BCR Entities do not have the right to cause the sale of the Development Property, to cause the relevant Development Property Joint Venture to proceed with the sale of its Interests in the relevant Development Property Owner. Forest City and the relevant BCR Entity and BCR Individual will cooperate to conduct a “like-kind” exchange of such Development Property (or if applicable, Interests in a Development Property Joint Venture) in accordance with Section 1031 of the Code, or other tax efficient structure, provided there is no incremental cost to either Forest City, the relevant BCR Entity, the relevant BCR Individual or the relevant Development Property Owner in connection with such an exchange or other structure. Forest City will not be entitled to elect the option set forth in this Section 2.3(g)(iii) if the Stabilized Value of the applicable Development Property (or, if applicable, Interests in a Development Property Joint Venture) was determined by an agreement of the parties under Section 2.3(e); or

          (iv) to cause the Development Property to remain directly or indirectly owned by the relevant joint venture between the BCR Entity and/or BCR Individuals and the FCE Entity (the “Development Property Joint Venture”), subject to the terms and conditions contained in the organization documents for such Development Property Joint Venture (including, without limitation, the “buy-sell” option in favor of the BCR Entity following the fifth anniversary of the Stabilization Closing Date), and the “Continuation Option” (as defined in the operating or partnership agreement for each Development Property Joint Venture) will be deemed to have occurred.

Notwithstanding the above, if a BCR Entity elects to solicit a bona fide third-party offer to determine the Stabilized Value for the relevant Development Property pursuant to Section 2.3(f) above, the BCR Entities will be deemed to have consented to pursuing option (iii) above (the sale of the Development Property to a third party) if Forest City desires to sell such Development Property to a third party, and regardless of the ability to perform a Section 1031 of the Code “like-kind” exchange or the existence of incremental costs in connection with such exchange. Similarly, if Forest City elects to solicit a bona fide third-party offer to determine the Stabilized Value for the relevant Development Property pursuant to Section 2.3(f) above, Forest City will be deemed to have consented to pursuing option (iii) above (the sale of the Development Property to a third party) if the BCR Entities desire to sell such Development Property to a third party, and regardless of the ability to perform a Section 1031 of the Code “like-kind” exchange or the existence of incremental costs in connection with such exchange.

In the event that Forest City has not elected one of the options set forth in Sections 2.3(g)(i) through (iv) within twenty (20) days following the determination of Stabilized Value, the BCR Representative will provide written notice to Forest City of the expiration of such twenty (20) day period. In the event Forest City does not elect one of the options set forth in Sections 2.3(g)(i) through (iv) within five (5) days of receiving such notice from the BCR Representative, Forest City will be deemed to have elected the option set forth in Section 2.3(g)(iv) with respect to the relevant Development Property. The options described in Section 2.3(g)(i), Section 2.3(g)(ii) or Section 2.3(g)(iii) will occur as soon as commercially practicable after the

determination of Stabilized Value (whether pursuant to Section 2.3(e) or Section 2.3(f)), but in no event, (A) with respect to the option described in Section 2.3(g)(i) or Section 2.3(g)(ii), more than thirty (30) days following the determination of Stabilized Value and (B) with respect to the option set forth in Section 2.3(g)(iii), more than ninety (90) days following the determination of Stabilized Value.

In the event that Forest City elects the option set forth in Section 2.3(g)(i), Forest City, the BCR Entities and the BCR Individuals acknowledge that Forest City may obtain, at Forest City’s sole discretion and at its expense, an opinion from a financial advisor stating that the market price of the FCEI Stock as of the relevant Stabilization Closing Date reasonably reflects the fair market value of the FCEI Stock as of such date. Forest City will use commercially reasonable efforts to obtain such an opinion within twenty (20) days of the date on which Forest City notifies the BCR Entities of its election to pursue the option set forth in Section 2.3(g)(i). In the event that Forest City seeks, but is not able to obtain, an opinion from a financial advisor within such twenty (20) day period, Forest City will elect either the option set forth in Section 2.3(g)(ii) or the option set forth in Section 2.3(g)(iv) with respect to the relevant Development Property.

With respect to any payments of cash consideration by Master III as the result of the election of the option set forth in Section 2.3(g)(i) or Section 2.3(g)(ii), Forest City will contribute to Master III an amount of cash, payable by wire transfer of immediately available funds to a bank account maintained by Master III, sufficient to pay such cash consideration to the BCR Entities and BCR Individuals in connection with such election.

          (h) Prior to the relevant Stabilization Closing Date, and subject to Section 2.3(k), each of the Development Properties will continue to be owned by a single purpose entity and the Interests of each of the FCE Entities and BCR Entities in each Development Property will not be modified in any way except as may be agreed to by both parties.

          (i) The development project referred to as ▇▇▇▇▇▇▇ Street Residential Tower (“▇▇▇▇▇▇▇”) is owned in part by (i) certain of the FCE Entities, (ii) certain of the BCR Entities and (iii) certain affiliates of FCEI and the BCR Entities whose interests in such project are not Contributed Interests. Notwithstanding anything in this Agreement to the contrary, (y) the Stabilization Date for ▇▇▇▇▇▇▇ means the later of (A) the first day of the February immediately following the earlier of (1) the first calendar quarter in which at least ninety percent (90%) of the rental units of ▇▇▇▇▇▇▇ are rented and occupied and (2) the fourth (4^th) anniversary of the “grand opening” of the rental portion of ▇▇▇▇▇▇▇ and (B) the date on which the conditions precedent to Forest City’s obligation to consummate the transactions related to ▇▇▇▇▇▇▇ set forth in Sections 6.1(e) and 6.1(f), and the conditions precedent to the BCR Entities’ and BCR Individuals’ obligations to consummate the transactions related to ▇▇▇▇▇▇▇ set forth in Sections 6.2(f) and 6.2(g), have been satisfied, and (z) the determination of Stabilized Value for ▇▇▇▇▇▇▇ will be the Stabilized Value of the rental portion of ▇▇▇▇▇▇▇.

          (j) Notwithstanding anything in this Agreement to the contrary, with respect to any Development Property that is developed in two or more phases, (i) each phase must be capable of being financed separately and, prior to the Stabilization Date for the first phase, each phase must be owned by a separate Development Property Owner, unless otherwise agreed by Forest City and the relevant BCR Entity, with the right to cross-collateralize and cross-default, (ii) each phase will be treated as if it is a separate Development Property and have its own

Stabilization Date and Stabilized Value determined in accordance with this Section 2.3, (iii) in determining Stabilized Value for each phase, project costs allocable to multiple phases will be allocated among such phases in a manner agreed to by both Forest City and the relevant BCR Entity, (iv) each phase will be valued and treated in accordance with this Section 2.3 at such time as such phase has reached a Stabilization Date and (v) the aggregate value of the Additional Units and any additional consideration that may be payable with respect to each phase will equal the Stabilized Value for such phase.

          (k) The parties intend to separately develop a portion of the Operating Property referred to as 10 Metrotech Center (a/k/a 62▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇) abutting DeKalb Avenue (“80 DeKalb”). Accordingly, the parties have applied for the creation of a separate tax lot for 80 DeKalb. Upon satisfaction or waiver of any applicable conditions for a release of 80 DeKalb from the Continuing Loan affecting 10 Metrotech Center and upon attainment of a permanent separate tax lot for 80 Dekalb, the parties will cooperate to facilitate the treatment of 80 DeKalb as a Development Property in a tax efficient manner that is owned by a separate Development Property Owner. All costs in connection with obtaining the separate tax lot and developing 80 DeKalb will be borne by the FCE Entity that is a member of the new Development Property Owner and be credited to the capital account of such FCE Entity in such new Development Property Owner. The terms of the limited liability company operating agreement of the new Development Property Owner for 80 DeKalb will be in the form of Exhibit G-2 to this Agreement. The parties will use good faith efforts to agree upon a feasible development project for 80 DeKalb prior to the third (3^rd) anniversary of the Principal Closing Date. If, during such three (3) year period, the parties are able to agree upon a feasible development project for 80 DeKalb, the parties will proceed to complete such development, and upon the Stabilization Date for such Development Property, same will be treated in a manner similar to the other Development Properties as described in this Section 2.3. If, notwithstanding such good faith efforts, the parties are unable to agree upon a feasible development project for 80 DeKalb, the value for 80 DeKalb will be determined in accordance with the process described in Section 2.3(e) and Section 2.3(f) (the “80 DeKalb Value”). Once the 80 DeKalb Value has been determined, Forest City will elect, at its sole discretion, one of the options set forth in Section 2.3(g).

ARTICLE III

TITLE AND
OTHER PROPERTY RELATED MATTERS

     3.1 Title to the Properties.

          (a) The BCR Entities have made available to Forest City for review the title policies listed on Schedule 3.1(a) with respect to each of the Operating Properties (each, an “Existing Title Policy,” and collectively, “Existing Title Policies”).

          (b) The BCR Entities have obtained, and have made available to Forest City for review, the title commitments issued by Fidelity National Title Insurance Company and the title certifications issued by New York Land Services identified on Schedule 3.1(b) with respect to each of the Operating Properties (each, a “New Title Commitment,” and collectively, the

“New Title Commitments”). Forest City and the BCR Entities acknowledge that all of the exceptions identified in the Existing Title Policies and the New Title Commitments are acceptable to them and require no adjustment in the Consideration to be delivered under this Agreement.

          (c) If, prior to the Principal Closing, any lien, restriction, security interest or other encumbrance of record (each, an “Encumbrance”) is discovered with respect to any Operating Property (i) that is not reflected in the Existing Title Policy or New Title Commitment for such Operating Property and (ii) for which a tenant is responsible under the terms of the lease or other binding obligation of the tenant to the related Property Owner, notwithstanding the existence of such Encumbrance, the Operating Property will be included in the transactions contemplated by this Agreement without any delay in the Principal Closing, adjustment in the Consideration to be delivered pursuant to this Agreement or liability or claim post-Closing under the indemnification provisions set forth in Article VIII, provided that the tenant still occupies all or any portion of the premises covered by the lease on the Principal Closing Date. If the tenant does not occupy the premises on the Principal Closing Date, the value of the Consideration to be delivered to the BCR Entities and BCR Individuals related to such Property Owner will be decreased by the product of (A) the BCR Transferred Interests in the Operating Property (expressed as a decimal to four (4) decimal places) as indicated on Schedules P-6A (BCR Contributed Interests in Operating Properties) and P-6B (BCR Sold Interests in Operating Properties) and (B) the amount of the Encumbrance, if the Encumbrance is monetary, or the amount by which the Encumbrance diminishes the value of the Operating Property (as set forth on Schedule P-6A (BCR Contributed Interests in Operating Properties), Schedule P-6B (BCR Sold Interests in Operating Properties) and P-6C (FCE Contributed Interests in Operating Properties)), if the Encumbrance is not monetary, and the value of the Class B Common Units to be delivered to the FCE Entities related to such Property Owner will be decreased by the product of (A) the FCE Contributed Interests in the Operating Property (expressed as a decimal to four (4) decimal places) as indicated on Schedule P-6C (FCE Contributed Interests in Operating Properties) and (B) the amount of the Encumbrance, if the Encumbrance is monetary, or the amount by which the Encumbrance diminishes the value of the Operating Property (as set forth on Schedule P-6A (BCR Contributed Interests in Operating Properties), Schedule P-6B (BCR Sold Interests in Operating Properties) and P-6C (FCE Contributed Interests in Operating Properties)), if the Encumbrance is not monetary. For purposes of this Section 3.1(c), the amount by which a non-monetary Encumbrance diminishes the value of an Operating Property will be determined by an arbitrator in accordance with the arbitration process set forth in Section 2.3(e). In no case will the reduction in the value of the Consideration payable to the BCR Entities and/or BCR Individuals, on the one hand, or the FCE Entities, on the other hand, with respect to any specific Operating Property exceed the aggregate value of the BCR Transferred Interests or FCE Contributed Interests (as applicable) related to such Property as set forth on Schedules P-6A (BCR Contributed Interests in Operating Properties), P-6B (BCR Sold Interests in Operating Properties) and P-6C (FCE Contributed Interests in Operating Properties). Any reduction in Consideration payable to the BCR Entities and/or BCR Individuals pursuant to this Section 3.1(c) will be allocated between Consideration and BCR Units on a pro rata basis relative to the amount of cash and BCR Units initially scheduled to be delivered to the BCR Entities with respect to the relevant Operating Property. If, after the Principal Closing Date, the Encumbrance is removed other than at the expense of the relevant Property Owner, Master III or other relevant entity will deliver the cash Consideration and/or issue the BCR Units to the BCR

Entities and/or BCR Individuals (as applicable) and/or issue Class B Initial Common Units to the FCE Entities not delivered or issued at the Principal Closing pursuant to this Section 3.1(c), and Master III will pay the Class A Distribution Preference and the Class B Distribution Amount (as defined in the Master III Operating Agreement) that would have been payable with respect to any such Units in accordance with the terms of the Master III Operating Agreement if such Units had been issued on the Principal Closing Date. With respect to any payments of cash consideration by Master III in connection with this Section 3.1(c), Forest City will contribute to Master III an amount of cash, payable by wire transfer of immediately available funds to a bank account maintained by Master III, sufficient to pay such cash consideration to the BCR Entities and BCR Individuals pursuant to this Section 3.1(c).

          (d) If, prior to the Principal Closing, the relevant BCR Entity breaches the covenant contained in Section 4.4(c) or any Encumbrance (other than an Encumbrance subject to Section 3.1(c)) is discovered with respect to such Operating Property that is not reflected in the Existing Title Policy or New Title Commitment for such Operating Property, the value of the Consideration to be delivered to the BCR Entities and/or BCR Individuals related to such Operating Property will be decreased by the product of (A) the BCR Transferred Interests in the Operating Property (expressed as a decimal to four (4) decimal places) as indicated on Schedules P-6A (BCR Contributed Interests in Operating Properties) and P-6B (BCR Sold Interests in Operating Properties) and (B) the amount of the Encumbrance, if the Encumbrance is monetary, or the amount by which the Encumbrance diminishes the value of the Operating Property (as set forth on Schedule P-6A (BCR Contributed Interests in Operating Properties), Schedule P-6B (BCR Sold Interests in Operating Properties) and P-6C (FCE Contributed Interests in Operating Properties)), if the Encumbrance is not monetary. If, after the Principal Closing Date, such Encumbrance is removed other than at the expense of the relevant Property Owner, Master III or other relevant entity will deliver the cash Consideration and/or issue the BCR Units to the BCR Entities and/or BCR Individuals (as applicable) not delivered or issued at the Principal Closing pursuant to this Section 3.1(d), and Master III will pay the Class A Distribution Preference that would have been payable with respect to any such BCR Units in accordance with the terms of the Master III Operating Agreement if such BCR Units had been issued on the Principal Closing Date. With respect to any payments of cash consideration by Master III in connection with this Section 3.1(d), Forest City will contribute to Master III an amount of cash, payable by wire transfer of immediately available funds to a bank account maintained by Master III, sufficient to pay such cash consideration to the BCR Entities and BCR Individuals pursuant to this Section 3.1(d). In no case will the reduction in the value of the Consideration payable to the BCR Entities and/or BCR Individuals with respect to any specific Operating Property exceed the aggregate value of the BCR Transferred Interests related to such Operating Property as set forth on Schedules P-6A (BCR Contributed Interests in Operating Properties) and P-6B (BCR Sold Interests in Operating Properties). Any reduction in Consideration payable to the BCR Entities and/or BCR Individuals pursuant to this Section 3.1(d) will be allocated between Consideration and BCR Units on a pro rata basis relative to the amount of cash and BCR Units initially scheduled to be delivered to the BCR Entities with respect to the relevant Operating Property.

          (e) Forest City acknowledges that it will not be entitled to exclude any Operating Property from the Principal Closing because of the discovery of any Encumbrances not reflected in an Existing Title Policy or New Title Commitment, but that its remedies for the

discovery of any Encumbrances not reflected in an Existing Title Policy or New Title Commitment will be limited as expressly set forth in this Section 3.1.

          (f) Notwithstanding anything in this Section 3.1 to the contrary, the BCR Entities will not be responsible (in any way) for any Encumbrances caused by FCEI, the FCE Entities or any of their affiliates or by the Outside Investors with Interests related to the Operating Property known as Queenswood Apartments.

     3.2 Condemnation

          (a) In the event that any Governmental Authority commences any condemnation action or any taking by power of eminent domain (such action, a “Condemnation”) against any Operating Property or threatens in writing to do so prior to the Principal Closing, the BCR Entities will notify Forest City of such action or threatened action promptly upon obtaining knowledge thereof. If any Operating Property or portion thereof is taken in a Condemnation or a transfer in lieu thereof and the action (i) deprives the related Property Owner of 20% or more of the gross area owned or ground leased by the Property Owner at the Operating Property, (ii) deprives the affected Operating Property of access to public roads in a manner that materially and adversely affects the value of the Operating Property taken as a whole, (iii) permits any Anchor at that Operating Property to terminate its operating covenant with respect to that Operating Property under the applicable Anchor Tenant Leases, and the Anchor does not affirmatively waive its right to terminate the operating covenant, (iv) constitutes or causes an event of default under the terms of the mortgage loan then encumbering the Operating Property, and the lender does not affirmatively waive the default, or (v) deprives the Operating Property of parking area such that the Operating Property is no longer in compliance with the parking count requirements of any of the Anchor Tenant Leases in force at the Operating Property or any applicable laws (any such Condemnation, a “Substantial Condemnation”), and following such occurrence the BCR Entities and the relevant Property Owner are unwilling or unable to restore the Operating Property to substantially the same condition as existed on the date of this Agreement (or, in the case of a reduction in parking area, to substantially the same condition and number of spaces as is required by the relevant Anchor Tenant Leases and applicable law) by the Principal Closing Date, Forest City will have the right to exclude that Operating Property from the transactions contemplated by this Agreement.

          (b) If a Condemnation occurs with respect to an Operating Property and (i) the Condemnation constitutes a Substantial Condemnation but Forest City does not elect to exclude the Operating Property as permitted in Section 3.2(a) or (ii) the Condemnation does not constitute a Substantial Condemnation, then in either case this Agreement will remain in full force and effect with respect to the affected Operating Property, and the BCR Transferred Interests and the FCE Contributed Interests in the relevant Operating Property will be transferred on the terms and conditions set forth in this Agreement and the related Interest Contribution Agreement and, if applicable, Interest Transfer Agreement, and the related Property Owner will be entitled to receive all Condemnation and rent insurance proceeds. The BCR Entities and the FCE Entities, as the case may be, will promptly remit to the applicable Property Owner any such proceeds received by them.

     3.3 Destruction or Damage

          (a) If any Operating Property or portion thereof is destroyed or damaged by any casualty in a manner that: (i) deprives the related Property Owner of 20% or more of the gross area owned or ground leased by the Property Owner at the Operating Property, (ii) deprives the affected Operating Property of access to public roads in a manner that materially and adversely affects the value of the Operating Property taken as a whole, (iii) permits any Anchor at that Operating Property to terminate its operating covenant with respect to that Operating Property under the applicable Anchor Tenant Leases, and the Anchor does not affirmatively waive its right to terminate the operating covenant, (iv) constitutes or causes an event of default under the terms of the mortgage loan then encumbering the Operating Property, and the lender does not affirmatively waive the default, or (v) deprives the Operating Property of parking area such that the Operating Property is no longer in compliance with the parking count requirements of any of the Anchor Tenant Leases in force at the Operating Property or any applicable laws (any such casualty, a “Substantial Casualty”), and following such occurrence the BCR Entities and the relevant Property Owner are unwilling or unable to restore the Operating Property to substantially the same condition as existed on the date of this Agreement (or, in the case of a reduction in parking area, to substantially the same condition and the number of spaces as is required by the relevant Anchor Tenant Leases and applicable law) by the Principal Closing Date, Forest City will have the right to exclude that Operating Property from the transactions contemplated by this Agreement.

          (b) If (i) any Substantial Casualty occurs at an Operating Property and Forest City does not elect to exclude the affected Operating Property from the Principal Closing as permitted in Section 3.3(a), or (ii) damage or destruction occurs at an Operating Property that does not constitute a Substantial Casualty, then in either case this Agreement will remain in full force and effect with respect to the affected Operating Property, and the BCR Transferred Interests and the FCE Contributed Interests in the relevant Operating Property will be transferred on the terms and conditions set forth in this Agreement and the related Interest Contribution Agreement and, if applicable, Interest Transfer Agreement, and the relevant Property Owner will be entitled to receive all insurance proceeds relating to such damage or destruction. The BCR Entities and the FCE Entities, as the case may be, will promptly remit to the applicable Property Owner any such proceeds received by them.

ARTICLE IV

COVENANTS

     4.1 Appointment of BCR Representative. Each of the BCR Entities and BCR Individuals hereby appoints BR Retail Member, LLC (sometimes referred to in this Agreement as the “BCR Representative”) as its representative for all purposes of this Agreement and the transactions contemplated hereby, including signing the Master III Operating Agreement, Interest Contribution Agreements, Interest Transfer Agreements, Tax Protection Agreement, Registration Rights Agreement and other agreements and documents contemplated by this Agreement. The BCR Entities and BCR Individuals acknowledge that Forest City is entitled to rely upon the action or failure to act of the BCR Representative as fully and completely as if the action or failure to act with respect to any particular matter was the action or failure to act of the BCR Entities and BCR Individuals. Without limiting the generality of the foregoing, Forest City

may notify any or all of the BCR Entities and BCR Individuals by notice given to the BCR Representative.

     4.2 Commercially Reasonable Efforts. Forest City and the BCR Entities will use commercially reasonable efforts to take or cause to be taken all actions, and to do or cause to be done all things necessary or appropriate to consummate and make effective the transactions contemplated by this Agreement, the Interest Contribution Agreements, Interest Transfer Agreements, Tax Protection Agreement, Registration Rights Agreement and the other agreements being executed pursuant to this Agreement, including using commercially reasonable efforts to satisfy any conditions precedent to the Principal Closing as promptly as possible and to cause Master III and any other direct and indirect subsidiaries of FCEI to obtain any approvals, qualifications, licenses or permits necessary for the acceptance by Master III and such subsidiaries of FCEI of the Contributed Interests and indirectly the Properties, Service Companies, the Nets, Atlantic Yards, Bloomfield and Metrotech Associates; provided, however, that the cost of obtaining any such approvals, qualifications, licenses or permits will be paid by FCEI.

     4.3 Post-Closing HSR Act Filings. Upon exchange of any BCR Units, Forest City, Master III, the BCR Entities and the BCR Individuals will make any filings and use commercially reasonable efforts to obtain any requisite clearances that may be required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the “HSR Act”). If at any time HSR Act filings are required, Forest City, Master III, the BCR Entities and the BCR Individuals will use commercially reasonable efforts to make such filings in a timely fashion and to comply with all lawful requests of Governmental Authorities for additional information and documents pursuant to the HSR Act as expeditiously as possible. Forest City will bear all costs and expenses incurred by the BCR Entities and/or BCR Individuals in order to comply with the covenants contained in this Section 4.3.

     4.4 Conduct of Business. Between the date of this Agreement and the applicable Closing or Development Property Closing: (a) each of the Properties controlled, managed or operated by the BCR Entities as of the date hereof will be operated in a manner consistent with past practices, the terms of the organizational documents of the related Property Owner or Development Property Owner, as the case may be, and the terms of any existing management and other agreements relating to the Property, and in compliance with law; (b) each Property Owner, Development Property Owner, Service Company, the Nets, Atlantic Yards, Bloomfield, Metrotech Associates, each other entity jointly owned by the FCE Entities and the BCR Entities that holds a direct or indirect interest in a Property Owner or Development Property Owner and Forest City ▇▇▇▇▇▇ Companies, a New York general partnership (“FCRC”), will continue to make distributions and otherwise continue to operate in a manner consistent with past practices, the terms of their respective organizational documents and the terms of the existing management and other agreements; and (c) the BCR Entities will cause each of the Property Owners and each of the Development Property Owners related to Properties controlled, managed or operated by the BCR Entities as of the date hereof to refrain from taking any action that would result in the creation of any Encumbrance on any Property without the prior written consent of Forest City. BCR, the management team of FCRC and the relevant Property Owner (as applicable) will continue to dedicate a reasonable amount of time operating any Operating Property or property

jointly owned by affiliates of the BCR Entities and FCEI that is excluded from the transactions contemplated by this Agreement.

     4.5 Registration Rights Agreement. At the Principal Closing, FCEI will execute and deliver a Registration Rights Agreement in the form attached hereto as Exhibit C-1 (the “Registration Rights Agreement”) with and for the benefit of each Holder (as defined in the Registration Rights Agreement) receiving or entitled to receive any BCR Units as a result of the contributions contemplated by this Agreement. Upon each issuance of Additional Units and upon any transfer permitted by the Master III Operating Agreement, the relevant BCR Entity, BCR Individual or the permitted transferee, as applicable, will execute and deliver to Master III an addendum to the Registration Rights Agreement in the form attached hereto as Exhibit C-2.

     4.6 Tax Protection Agreement. At the Principal Closing, FCEI, Master III and certain other entities affiliated with FCEI will execute and deliver a tax protection agreement in the form attached hereto as Exhibit D-1 (the “Tax Protection Agreement”) with BCR and for the benefit of each of the Persons receiving or entitled to receive any BCR Units at the Principal Closing as a result of the contributions contemplated by this Agreement and the Interest Contribution Agreements. Upon each transfer of BCR Units that does not terminate the obligations of FCEI, Master III and certain other entities affiliated with FCEI under the Tax Protection Agreement with respect to the transferee of such BCR Units, the transferee of such BCR Units will execute and deliver an addendum to the Tax Protection Agreement in the form attached hereto as Exhibit D-2 so as to become a Protected Party (as defined in the Tax Protection Agreement).

     4.7 Voting Agreement. At the Principal Closing, FCEI, BCR and a sufficient number of Forest City Principals (as defined in the Voting Agreement) will execute and deliver a Voting Agreement in the form attached hereto as Exhibit E (the “Voting Agreement”).

     4.8 BCR Employment Agreement; FCRC Operations. At the Principal Closing, FCEI and BCR will enter into an employment agreement that is acceptable to both of them (the “BCR Employment Agreement”). Following the Principal Closing, FCRC will be a strategic business unit of FCEI and will operate in a manner that is consistent with FCEI’s corporate policies and requirements for all of FCEI’s strategic business units. To the knowledge of Forest City, FCRC, as currently operated, is operating in a manner that is consistent with FCEI’s corporate policies and requirements applicable to FCEI’s strategic business units as of the date hereof. For the avoidance of doubt, nothing in this Section 4.8 may be interpreted as prohibiting or restricting FCEI’s right to amend, modify, adopt or rescind any corporate policy or requirement applicable to FCRC or any other strategic business unit of FCEI after the Principal Closing Date.

     4.9 Limitation on Actions by Forest City. Between the date of this Agreement and the Principal Closing Date, FCEI will continue to operate its business in a manner consistent with past practices but will not engage in any transaction (other than the transactions contemplated by this Agreement) that requires approval by its shareholders without the prior written consent of the BCR Entities. During the period from the date hereof until the date on which all Interests in all Development Properties have been transferred pursuant to this Agreement, neither Forest City nor any then existing subsidiary or affiliate of FCEI will enter into any contract or take any action that would materially interfere with the BCR Entities and/or Forest City’s legal right to perform its obligations under this Agreement.

     4.10 Expenses. Each party will pay its own expenses (including the fees and expenses of its own attorneys, accountants and other advisers) in connection with its due diligence, negotiating this Agreement and any related documents or agreements and otherwise preparing for the Principal Closing, any Deferred Closing or any Development Property Closing. In addition to the expenses to be paid by FCEI pursuant to Sections 1.2 and 4.2 of this Agreement and Schedule 1.3(b), FCEI will be responsible for transfer and recording taxes, the cost of obtaining New Title Commitments and all filing fees (including any fees incurred in connection with any filings made pursuant to the HSR Act) and expenses arising in connection with the contributions contemplated by this Agreement or the exercise of the Exchange Rights (as that term is defined in the Master III Operating Agreement). FCEI will pay all fees and expenses associated with obtaining the non-consolidation opinions contemplated by Section 5.4(j), the cost of obtaining certified copies of organizational documents and good standing certificates required by this Agreement and any participation payments that may be required as a result of the transactions contemplated by this Agreement or the exercise of the Exchange Rights. The parties will cooperate with each other in connection with the preparation and filing of all transfer tax returns, affidavits and other similar instruments required in connection with the payment of the foregoing expenses.

     4.11 Intentionally Omitted.

     4.12 Tax Treatment.

          (a) Forest City and the BCR Entities will cause the initial and all subsequent tax returns of Master III to be filed to reflect that (i) the contributions of the FCE Contributed Interests and the BCR Contributed Interests are contributions of property governed by Section 721 of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) the Units are membership interests in Master III, unless FCEI determines, in its reasonable discretion, that as a result of a change of law there is not at least a “reasonable basis” for such treatment (as defined in Section 6662 of the Code and the Treasury Regulations promulgated thereunder). If FCEI makes such a determination, it will advise the BCR Representative in advance of taking such position, and any dispute regarding such position will be resolved in the manner provided in the Tax Protection Agreement.

          (b) Forest City and the BCR Entities will report the transactions contemplated by this Agreement, for federal and state income tax purposes (including the filing of federal and state income tax returns), in a manner consistent with (i) the allocation of Consideration among the BCR Entities, the BCR Individuals and the BCR Contributed Interests established pursuant to Section 2.2(c) hereof.

          (c) Forest City and the BCR Entities will use commercially reasonable efforts to ensure that (i) Master III is not treated, as a “publicly traded partnership” as that term is used in Section 7704(b) of the Code (a “PTP”), (ii) the “Exchange Rights” (as that term is defined in the Master III Operating Agreement) associated with the BCR Units will not be amended unless FCEI receives an opinion of independent tax counsel (an “Opinion of Counsel”) to the effect that exercises of the Exchange Rights will not cause Master III to be treated as a PTP, (iii) neither FCEI nor Master III will waive any restrictions with respect to the exercise of any Exchange Right unless the waiver is with respect to either (A) a transaction that qualifies as a “private

transfer” described in Treasury Regulations Section 1.7704-1(e), or (B) a transaction with respect to which FCEI and Master III have received an Opinion of Counsel concluding that the transaction will not cause Master III to be treated as a PTP, (iv) Master III will not permit a transfer of Units other than pursuant to an exercise of Exchange Rights (a “Unit Transfer”) unless either (A) the Unit Transfer qualifies as a “private transfer” described in Treasury Regulations Section 1.7704-1(e), (B) FCEI and Master III have received an Opinion of Counsel to the effect that the Unit Transfer will not cause Master III to be treated as a PTP or (C) the transfer occurs within twelve (12) months of the death of a person that held a direct or indirect interest in the units at the time of death, provided that the transferor may not make more than two transfers under this clause (C) that are not described in clause (A) during such twelve (12) month period; and (v) to the extent that an Opinion of Counsel received by FCEI and Master III in connection with the requirements of this Section 4.12(c) is based upon assumptions regarding subsequent transfers of interests in Master III, whether pursuant to Exchange Rights or otherwise, Master III will not permit transfers other than in accordance with such assumptions unless FCEI and Master III obtain a new Opinion of Counsel to the same effect as the original Opinion of Counsel, taking into account the variations from such assumptions. Notwithstanding the above, neither FCEI nor Master III will be required to receive an opinion of counsel that a Unit Transfer would not result in Master III becoming a PTP if (i) all Units in Master III have been issued in a transaction (or transactions) that did not require the registration of the Units under the Securities Act and (ii) Master III has not had more than one hundred (100) members.

     4.13 Estoppel Certificates. Commencing promptly after the date hereof, the BCR Entities agree to prepare and deliver an estoppel certificate to (i) each of the tenants listed on Schedule 4.13-1 (the “Anchors”), (ii) each landlord under a ground lease pursuant to which any Property Owner has access to space at any Operating Property that is listed on Schedule 4.13-2 (each such landlord, a “Ground Lessor”) and (iii) to the extent not covered above, each entity identified on Schedule 4.13-3 that is a party to a reciprocal easement agreement encumbering or benefiting any Operating Property. With respect to Development Properties, following the Stabilization Date for the applicable Development Property, Forest City may require that the BCR Entities prepare and deliver an estoppel certificate to each landlord under a ground lease relating to a Development Property that is listed on Schedule 4.13-2. Each such estoppel certificate will include a provision addressing each of the matters set forth on Exhibit F, and each such estoppel certificate will be completed to reflect the relevant terms of the lease, ground lease or reciprocal easement agreement to which it relates (each such estoppel certificate, an “Estoppel Certificate”). The BCR Entities agree to use commercially reasonable efforts, but without being required to incur any material expense (other than the administrative expense customarily incurred in preparing, distributing and collecting such certificates), to obtain signed Estoppel Certificates from each such Anchor, Ground Lessor and party to reciprocal easement agreement on or before the Principal Closing Date or, as applicable, the relevant Stabilization Closing Date.

     4.14 Reservation of FCEI Stock. Commencing on or prior to the Principal Closing and at all times thereafter until all of the BCR Units (including any Additional Units) have been exchanged, FCEI will reserve and keep available, free from preemptive rights, out of its authorized but unissued FCEI Stock or FCEI Stock held in treasury, solely for the purpose of issuance upon exchange of the BCR Units (including any Additional Units), the full number of shares of FCEI Stock then deliverable upon exchange of all of the BCR Units (including the Additional Units) then outstanding. Prior to the first date upon which any of the BCR Units may

be exchanged to FCEI Stock, FCEI will obtain all consents, approvals, authorizations, orders, clearances and qualifications of any Governmental Authority or stock exchange authorities for the issuance and subsequent trading of the FCEI Stock issuable upon exchange of the BCR Units (including any Additional Units) (other than the registration of the FCEI Stock with the SEC, which registration will be governed by the terms of the Registration Rights Agreement).

     4.15 Treatment of Certain Priority Payments. With respect to certain Property Owners, Development Property Owners or other entities jointly owned by certain of the FCE Entities and certain of the BCR Entities (or their respective affiliates), Forest City has funded development and other costs through capital contributions and, upon distribution of net cash flow, financing proceeds or net sales proceeds by such Property Owners, Development Property Owners or jointly owned entities and, before distributions to the members or other owners of the Property Owners, Development Property Owners or jointly owned entities in accordance with their respective percentage interests, is entitled to receive amounts consisting of these unreturned capital contributions and a return on such unreturned capital contributions (“Priority Payments”). By way of illustration, and without limiting the meaning of Priority Payments under the standard form of Property Owner Agreement prescribed by the Second Amended and Restated Partnership Agreement of FCRC, dated as of February 1, 2004, Priority Payments consist of a Section 3.01(c) Return, Unreturned Capital attributable to Section 3.01(c) Contributions and a Priority Return (as these terms are defined in the form of Property Owner Agreement). Forest City acknowledges that the consideration received under this Agreement includes consideration on account of their contributing of a portion of the right to receive Priority Payments (as set forth on Schedules P-6C (FCE Contributed Interests in Operating Properties) and P-7B (FCE Contributed Interests in Development Properties) that have accrued through January 31, 2006 and that would otherwise be payable to the relevant FCE Entities by the Property Owners, Development Property Owners or jointly owned entities. The portion not contributed will continue to be owned by Forest City, pari passu with Master III, and the relevant Property Owner, Development Property Owner or other jointly owned entity will make its distributions accordingly.

     4.16 Nets Loan. BR Basketball, LLC received a loan from Forest City Sports, LLC in order to fund BR Basketball, LLC’s capital contributions in FCR Sports, LLC (the “Nets Loan”). Forest City and the BCR Entities acknowledge that (i) as set forth in Schedule P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers), the BCR Sold Interests related to the Nets will be acquired by the entity identified on Schedule P-5A (Nets, Atlantic Yards, Bloomfield and Metrotech Associates Transfers) at the Deferred Closing (without regard to the Cure Cut-off Date) at such time that all conditions precedent to the transfer of such BCR Sold Interests have been satisfied and (ii) BR Basketball, LLC will use the consideration received for such BCR Sold Interests to repay the Nets Loan at the Deferred Closing.

     4.17 Certain Amendments. At the Principal Closing, the operating agreement or partnership agreement for each of the entities identified on Schedule 4.17 will be amended by the members or partners of each such entity. The form of partnership agreement or operating agreement for each such entity related to an Operating Property, as amended, will be substantially in the form set forth in Exhibit G-1, and the form of partnership agreement or operating agreement for each such entity related to a Development Property, as amended, will be substantially in the form set forth in Exhibit G-2.

     4.18 Contribution of Additional FCE Interests.

     (a) Except as provided in Section 4.18(b) below, in no event will Forest City or Master III have any obligation to acquire any Interests that are owned, directly or indirectly, by an Outside Investor with respect to any Property. In the event that any such Interest owned by an Outside Investor has not been acquired by Master III prior to the third anniversary of the Principal Closing Date or Stabilization Closing Date for the relevant Property, (a) the FCE Entity owning Interests in the relevant Property Owner, Development Property Owner or other entity in which such FCE Entity contributed Interests on the Principal Closing Date or Stabilization Closing Date related to such Property will promptly contribute an additional amount of Interests in such Property Owner, Development Property Owner or other entity equal to the Interests in such Property that are owned by such Outside Investor as of the date hereof and (b) Master III will issue to such FCE Entity an amount of Class B Common Units equal to the value of the Interests being contributed by such FCE Entity determined as of the day of the closing of the contribution of the other Interests related to the applicable Property. In the event that FCEI or a subsidiary thereof desires to acquire such Interest owned by an Outside Investor prior to the third anniversary of the Principal Closing Date or Stabilization Closing Date, FCEI or such subsidiary may, in its sole discretion, either (x) contribute to Master III the consideration necessary to acquire such Interest from the Outside Investor and cause Master III or its wholly-owned subsidiary to acquire such Interest or (y) acquire such Interest directly from the Outside Investor and contribute such Interest to Master III or its wholly-owned subsidiary, provided that the option selected by FCEI does not create any tax liability for the BCR Entities or the BCR Individuals. In the case of subsection (x) and subsection (y) above, Master III will issue to FCEI or such other subsidiary a number Class B Common Units that is equal to the quotient of (i) the value of the consideration or Interests (determined as of the date of such contribution) contributed to Master III pursuant to this Section 4.18 divided by (ii) the average of the closing prices of the FCEI Stock as reported by the New York Stock Exchange for each of the twenty (20) days on which trading in such stock was reported immediately prior to the date of such contribution. Schedule 4.18A contains a list of each of Interests held by any FCE Entities which are to be contributed for Class B Common Units upon the third anniversary of the Principal Closing or Development Property Closing to the extent same have not been acquired by Master III prior to such date (the “Outside Interests”).

     (b) With respect to the Outside Investors and Outside Interests identified on Schedule 4.18B, in the event that any or all of such Outside Investors desire to sell its or their entire Outside Interests to FCEI or Master III, FCEI (or its subsidiary or Master III) will acquire such Interests by electing either option (x) or (y) described in Section 4.18(a) above; provided, however, that (i) the option selected by FCEI may not create any tax liability for the BCR Entities or the BCR Individuals, (ii) in no event will FCEI or Master III, as applicable, be obligated to pay an amount for each such Outside Interest that is greater than the pro rata portion of the amount set forth on Schedule 4.18B attributable to such Outside Interest and (iii) in no event will FCEI (or its subsidiary or Master III) be obligated to acquire such Outside Interests following the date on which the BCR Transferred Interests with respect to the Property to which such Outside Interests relate have been transferred in accordance with this Agreement. Pursuant to penultimate sentence of Section 4.18(a), in connection with the acquisition of any such Outside Interests, Master III will issue to the entity acquiring such Outside Interests and

contributing same to Master III or contributing cash to Master III, as applicable, an amount of Class B Common Units calculated in accordance with such penultimate sentence of 4.18(a).

ARTICLE V

CLOSING

     5.1 Closing. Subject to the terms and conditions of this Agreement, the Principal Closing will take place at the office of ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP, 127 Public Square, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, at and as of 9:00 A.M., E.S.T. on the fifth (5^th) business day following the date on which each of the conditions stated in Article VI has been satisfied or waived, except for those conditions that may only be satisfied at the Principal Closing or on the Principal Closing Date, or at such other place, time and date as the BCR Entities and Forest City may agree. Forest City and the BCR Entities will advise each other on a regular basis of the progress in satisfying the as yet unmet conditions precedent to the Principal Closing. Notwithstanding the foregoing, in the event that the Principal Closing has not occurred by December 15, 2006 other than as a result of a default by any party to this Agreement, this Agreement will automatically terminate and none of Forest City, Master III, the Master III Entities, the BCR Entities or the BCR Individuals will have any further obligations under this Agreement other than any obligation that expressly survives any such termination. As used in this Agreement, the term “Principal Closing” means the transfers contemplated by Sections 1.1(a) through 1.1(f) with respect to the Operating Properties and the Service Companies, Atlantic Yards, Bloomfield and Metrotech Associates and the performance by each party hereto of the obligations on its part then to be performed under and in accordance with this Agreement with respect to the Operating Properties, the Service Companies, Atlantic Yards, Bloomfield and Metrotech Associates. The term “Principal Closing Date” means the date on which the Principal Closing occurs, as the same may be extended by Forest City or the BCR Entities pursuant to this Agreement. The parties will conduct a “pre-closing” commencing on the third business day preceding the Principal Closing Date, and will use commercially reasonable efforts to finalize the closing statement for the Principal Closing at least forty-eight (48) hours prior to the Principal Closing Date. As used in this Agreement, the term “Closing” means the transfer of Contributed Interests as contemplated hereby at the Principal Closing or the Deferred Closing, and the performance by each party of the obligations on its part then to be performed under and in accordance with this Agreement, and the term “Closing Date” means the date on which a Closing is to occur as the same may be extended by FCEI or the BCR Entities pursuant to this Agreement.

     5.2 Deferred Closing. Operating Properties as to which a Substantial Condemnation or Substantial Casualty has occurred that cannot be cured prior to the Principal Closing Date will be excluded from the Principal Closing (any such Operating Property excluded or removed because it is subject to a Substantial Condemnation or a Substantial Casualty, an “Excluded Property”). The parties acknowledge that the BCR Sold Interests with respect to FCR Sports, LLC will not be transferred at the Principal Closing but will be included in a subsequent Closing (the “Deferred Closing”) at such time as all conditions precedent to the sale of such BCR Sold Interests have been satisfied. The BCR Entities will use commercially reasonable efforts to satisfy any conditions precedent to (including obtaining all third party consents required to be

obtained in advance of) the transfer of the BCR Sold Interests with respect to FCR Sports, LLC pursuant to this Agreement. The Deferred Closing will be held at a date to be mutually agreed between the BCR Entities and Forest City, but not later than thirty (30) days after the date on which all conditions precedent to the transfer of the BCR Sold Interests with respect to FCR Sports, LLC have been satisfied (the “Deferred Closing Date”). The BCR Entities will advise Forest City on a regular basis of the progress in satisfying the as yet unmet conditions or circumstances to the Deferred Closing and will cooperate in scheduling the Deferred Closing Date as soon as practical after those conditions or circumstances are met. Notwithstanding the foregoing, in the event that the BCR Entities determine in good faith that they will not be able to satisfy all conditions precedent to the transfer of the BCR Sold Interests with respect to the Nets by June 30, 2007, the BCR Entities will notify Forest City in writing of such determination, this Agreement automatically will terminate with respect to the Nets, and neither Forest City nor the BCR Entities will have any further obligation hereunder in respect of the Nets, except as may expressly be provided to survive any such termination.

     5.3 Principal Closing and Deferred Closing Deliveries by BCR Entities. At the Principal Closing and at the Deferred Closing, the BCR Entities (and to the extent applicable, the BCR Individuals) transferring the BCR Transferred Interests at such Closing will execute, acknowledge where appropriate and deliver, or cause to be delivered, each of the following instruments and documents:

          (a) Operating Agreement. In the case of the Principal Closing, the Operating Agreement for Master III duly executed by the BCR Entities and BCR Individuals (or by the BCR Representative on behalf of the BCR Entities and BCR Individuals) contributing BCR Contributed Interests at the Principal Closing.

          (b) Interest Contribution Agreements and Interest Transfer Agreements. In the case of the Principal Closing, (i) an Interest Contribution Agreement providing for the contribution of the BCR Contributed Interests contributed at the Principal Closing, and all certificates, agreements and other documents required to be delivered thereunder, each duly executed by the appropriate transferee and the appropriate BCR Entity or BCR Individual (or by the BCR Representative on behalf of the BCR Entities and BCR Individuals) and (ii) an Interest Transfer Agreement providing for the transfer of the BCR Sold Interests transferred at the Principal Closing, and all certificates, agreements and other documents required to be delivered thereunder, each duly executed by the appropriate transferee and the appropriate BCR Entity or BCR Individual (or by the BCR Representative on behalf of the BCR Entities and BCR Individuals). In the case of the Deferred Closing, an Interest Transfer Agreement providing for the transfer of the BCR Sold Interests transferred at such Deferred Closing, and all certificates, agreements and other documents required to be delivered thereunder, each duly executed by the appropriate transferee and the appropriate BCR Entity or BCR Individual (or by the BCR Representative on behalf of the BCR Entities and BCR Individuals).

          (c) Tax Protection Agreement. In the case of the Principal Closing, the Tax Protection Agreement duly executed by BCR.

          (d) Registration Rights Agreement. In the case of the Principal Closing, the Registration Rights Agreement duly executed by the BCR Entities and BCR Individuals (or by

the BCR Representative on behalf of the BCR Entities and BCR Individuals) contributing BCR Contributed Interests at the Principal Closing.

              (e) BCR Employment Agreement. In the case of the Principal Closing, the BCR Employment Agreement duly executed by BCR.

              (f) Intentionally Omitted.

              (g) Certificates.

          (i) A letter, dated not earlier than thirty (30) business days prior to the relevant Closing Date, from CT Corporation confirming that (A) CT Corporation has completed a search of publicly available sources from the secretary of state of each state in which the BCR Entities transferring BCR Transferred Interests at such Closing have been organized and (B) the result of such search indicated that each such BCR Entity is in good standing under the laws of such jurisdiction.

          (ii) A duly executed certificate of each of the BCR Entities transferring BCR Transferred Interests at such Closing, dated as of such Closing Date, certifying:

          (A) that the general partner, board of directors or other similar authority of such BCR Entity has adopted resolutions approving the transactions contemplated hereunder and authorizing such BCR Entity to execute and deliver this Agreement, the Interest Contribution Agreement or Interest Transfer Agreement and each other agreement and instrument necessary for the consummation of the transactions contemplated by this Agreement and the Interest Contribution Agreement or Interest Transfer Agreement (which resolutions will be attached to or incorporated in such certificate), that such action by such general partner, board of directors or other similar authority constitutes the only authorization required for such execution, delivery and consummation by the BCR Entity, and that it has not been revoked or otherwise withdrawn and remains in full force and effect.

          (B) as to a true and complete copy of the partnership agreement and certificate of limited partnership, or operating agreement and certificate of formation, or other similar organizational documents, as the case may be, of the BCR Entity, that the same have not been amended (except as noted therein) and that they are in full force and effect as of such Closing Date, and also certifying as to the incumbency of the officers of the BCR Entity executing and delivering this Agreement, the Interest Contribution Agreement or Interest Transfer Agreement and the other documents and instruments provided herein to be executed and delivered by the BCR Entity.

          (iii) In the case of the Principal Closing, a duly executed certificate signed by or on behalf of the BCR Entities transferring BCR Transferred Interests at the Principal Closing, dated as of the Principal Closing Date, certifying that the representations and warranties made by the BCR Entities (other than those relating solely to the BCR Entities, BCR Individuals and BCR Transferred Interest and the Properties,

Development Property Owners and other jointly owned entities that are not part of the Principal Closing) are true and correct as if remade on and as of the Principal Closing Date, or, if made as of a specified date, as of that date (with all qualifications in the specific representations and warranties as to materiality disregarded), except where the failure of any such representation or warranty to be true and correct on the Principal Closing Date would not reasonably be expected to result in a BCR Material Adverse Effect (with appropriate modifications of those representations and warranties to reflect actions taken by or on behalf of the BCR Entities in accordance with the provisions of this Agreement or identifying any representation or warranty that was not or no longer is true and correct and explaining the state of facts giving rise to the change).

          (iv) In the case of the Deferred Closing, a duly executed certificate signed by or on behalf of the BCR Entities transferring BCR Transferred Interests at such Deferred Closing, dated as of the Deferred Closing Date, certifying that the representations and warranties made by the BCR Entities with respect to such BCR Entities and BCR Transferred Interests, the Nets and any other jointly owned entities that are part of the Deferred Closing are true and correct as if remade on and as of the Deferred Closing Date, or, if made as of a specified date, as of that date (with all qualifications in the specific representations and warranties as to materiality disregarded), except where the failure of any such representation or warranty to be true and correct on the Deferred Closing Date would not reasonably be expected to result in a BCR Material Adverse Effect (with appropriate modifications of those representations and warranties to reflect actions taken by or on behalf of the BCR Entities in accordance with the provisions of this Agreement or identifying any representation or warranty that was not or no longer is true and correct and explaining the state of facts giving rise to the change).

          (h) Estoppel Certificates. In the case of the Principal Closing, all executed Estoppel Certificates obtained by the BCR Entities pursuant to Section 4.13.

          (i) Lender Consents. Any lender consents obtained pursuant to Section 1.3.

          (j) Outside Investor Consents. The consent of each Outside Investor identified on Schedule 5.3(j) with respect to a Property included in such Closing whose consent, as identified on Schedule 5.3(j), is required in respect of the consummation of the transactions at such Closing, which consents will be acceptable to Forest City acting reasonably; provided, however, that all Outside Investor consents constituting Required BCR Consents will be delivered at or prior to the Principal Closing.

          (k) Ground Lease Consents. In the case of the Principal Closing, the consent of each ground lessor identified on Schedule 1.2A, which consents will be acceptable to Forest City acting reasonably.

          (l) Other Documents. All other instruments and documents, if any, required to be executed, acknowledged or delivered by the BCR Entities and BCR Individuals pursuant to and in accordance with any of the other provisions of this Agreement or the Interest Contribution Agreements and Interest Transfer Agreements, and such other documents or instruments as

Forest City may reasonably request to effect the transactions contemplated in this Agreement and the Interest Contribution Agreements and Interest Transfer Agreements.

     5.4 Principal Closing and Deferred Closing Deliveries by Forest City. At the Principal Closing and at the Deferred Closing, FCEI and/or the relevant FCE Entities transferring the FCE Contributed Interests at such Closing will execute, acknowledge where appropriate and deliver, or cause to be executed, acknowledged where appropriate and delivered, each of the following instruments, documents and payments:

          (a) Consideration. The Consideration, or portion of the Consideration allocated to the BCR Transferred Interests being transferred in connection with such Closing as provided for in Section 2.2 of this Agreement, as set forth on the closing statement for such Closing to be prepared and agreed to in writing by the BCR Entities and Forest City at least forty-eight (48) hours prior to such Closing.

          (b) Operating Agreement. In the case of the Principal Closing, the Operating Agreement for Master III duly executed by the FCE Entities contributing FCE Contributed Interests at the Principal Closing.

          (c) Interest Contribution Agreements. In the case of the Principal Closing, an Interest Contribution Agreement providing for the contribution of the FCE Contributed Interests contributed at the Principal Closing, and all certificates, agreements and other documents required to be delivered thereunder, each duly executed by the applicable transferee and the appropriate FCE Entity.

          (d) Registration Rights Agreement. In the case of the Principal Closing, the Registration Rights Agreement duly executed by FCEI.

          (e) Tax Protection Agreement. In the case of the Principal Closing, the Tax Protection Agreement duly executed by Master III, FCEI and certain other entities affiliated with FCEI.

          (f) BCR Employment Agreement. In the case of the Principal Closing, the BCR Employment Agreement duly executed by FCEI.

          (g) Voting Agreement. In the case of the Principal Closing, the Voting Agreement duly executed by FCEI and a sufficient number of the Forest City Principals.

          (h) Certificates.

          (i) In the case of the Principal Closing, a certificate, dated not earlier than thirty (30) business days prior to the Principal Closing Date, from the Secretary of State of Ohio certifying as to the good standing of FCEI and Forest City Rental Properties Corporation (“FCRPC”).

          (ii) In the case of the Principal Closing, a duly executed certificate of FCEI and each of the FCE Entities that are contributing FCE Contributed Interests at such Closing, dated as of the Principal Closing Date, certifying:

          (A) in the case of FCEI, that the board of directors of FCEI has adopted resolutions approving the transactions contemplated hereunder and authorizing FCEI to execute and deliver this Agreement and each other agreement and instrument necessary for the consummation of the transactions contemplated by this Agreement and the Interest Contribution Agreement (which resolutions will be attached to or incorporated in such certificate), that such action by the board of directors constitute the only authorization required for such execution, delivery and consummation by FCEI, and that it has not been revoked or otherwise withdrawn and remains in full force and effect.

          (B) in the case of each of the FCE Entities that are contributing FCE Contributed Interests at such Closing, that the general partner, board of directors or other similar authority of such FCE Entity has adopted resolutions approving the transactions contemplated hereunder and authorizing the FCE Entity to execute and deliver this Agreement, the Interest Contribution Agreement and each other agreement and instrument necessary for the consummation of the transactions contemplated by this Agreement and the Interest Contribution Agreement (which resolutions will be attached to or incorporated in such certificate), that such action by such general partner, board of directors or other similar authority constitutes the only authorization required for such execution, delivery and consummation by the FCE Entity, and that it has not been revoked or otherwise withdrawn and remains in full force and effect.

          (C) as to a true and complete copy of the partnership agreement and certificate of limited partnership, or operating agreement and certificate of formation, or other similar organizational documents, as the case may be, of FCEI or the FCE Entity, that the same have not been amended (except as noted therein) and that they are in full force and effect as of such Closing Date, and also certifying as to the incumbency of the officers of FCEI or the FCE Entity, as the case may be, executing and delivering this Agreement, the Interest Contribution Agreement and the other documents and instruments provided herein to be executed and delivered by FCEI or the FCE Entity.

          (iii) In the case of the Principal Closing, a duly executed certificate signed by or on behalf of FCEI and the FCE Entities transferring FCE Contributed Interests at the Principal Closing, dated as of the Principal Closing Date, certifying that the representations and warranties made by Forest City (other than those relating solely to the FCE Entities, FCE Contributed Interest, Properties, Development Property Owners and other jointly owned entities that are not part of the Principal Closing) are true and correct as if remade on and as of the Principal Closing Date, or, if made as of a specific date, as of that date (with all qualifications in the specific representations and warranties as to materiality disregarded), except where the failure of any such representation or warranty to be true and correct on the Principal Closing Date would not reasonably be expected to result in an FCE Material Adverse Effect (with appropriate modifications of those representations and warranties to reflect actions taken by or on behalf of the FCE Entities in accordance with the provisions of this Agreement or identifying any

representation or warranty that was not or no longer is true and correct and explaining the state of facts giving rise to the change).

          (i) Legal Opinion. In the case of the Principal Closing, an opinion of the General Counsel of FCEI as to the matters identified on Exhibit H attached hereto.

          (j) Non-Consolidation Opinions. In the case of the Principal Closing, a non-consolidation opinion with respect to each of the loans listed on Schedule 5.4(j).

          (k) Other Documents. All other instruments and documents, if any, required to be executed, acknowledged and/or delivered by Forest City pursuant to and in accordance with any of the other provisions of this Agreement or the Interest Contribution Agreements and such other documents or instruments as the BCR Entities may reasonably request to effect the transactions contemplated in this Agreement and the Interest Contribution Agreements.

     5.5 Development Property Closing Deliveries by BCR Entities. At each Development Property Closing, the BCR Entities and/or BCR Individuals transferring the BCR Transferred Interests at such Development Property Closing will execute, acknowledge where appropriate and deliver, or cause to be delivered, each of the following instruments and documents:

          (a) Operating Agreement. The Operating Agreement for Master III duly executed by the BCR Entities and BCR Individuals (or by the BCR Representative on behalf of the BCR Entities and BCR Individuals) contributing BCR Contributed Interests to Master III at such Development Property Closing.

          (b) Interest Contribution Agreements and Interest Transfer Agreements. An Interest Contribution Agreement providing for the contribution of the BCR Contributed Interests related to the Development Property included in such Development Property Closing, and all certificates, agreements and other documents required to be delivered thereunder, each duly executed by the appropriate transferee and the appropriate BCR Entity or BCR Individual (or by the BCR Representative on behalf of the BCR Entities and BCR Individuals), and an Interest Transfer Agreement providing for the transfer of the BCR Sold Interests transferred at such Development Property Closing, and all certificates, agreements and other documents required to be delivered thereunder, each duly executed by the appropriate transferee and the appropriate BCR Entity or BCR Individual (or by the BCR Representative on behalf of the BCR Entities and BCR Individuals).

          (c) Registration Rights Agreement. An addendum to the Registration Rights Agreement duly executed by each BCR Entity and BCR Individual (or by the BCR Representative on behalf of each such BCR Entity and BCR Individual) contributing BCR Contributed Interests to Master III at such Development Property Closing.

          (d) Certificates.

          (i) A certificate, dated not earlier than thirty (30) business days prior to such Stabilization Closing Date, from the secretary of state of each state in which the BCR Entities transferring BCR Transferred Interests at such Development Property

Closing have been organized certifying as to the good standing of each such BCR Entity under the laws of such jurisdiction.

          (ii) A duly executed certificate of each BCR Entity transferring BCR Transferred Interests at such Development Property Closing, dated as of such Stabilization Closing Date, certifying:

          (A) that the general partner, board of directors or other similar authority of such BCR Entity has adopted resolutions approving the transactions contemplated hereunder and authorizing the BCR Entity to execute and deliver this Agreement, the Interest Contribution Agreement or Interest Transfer Agreement and each other agreement and instrument necessary for the consummation of the transactions contemplated by this Agreement and the Interest Contribution Agreement or Interest Transfer Agreement (which resolutions will be attached to or incorporated in such certificate), that such action by such general partner, board of directors or other similar authority constitutes the only authorization required for such execution, delivery and consummation by the BCR Entity, and that it has not been revoked or otherwise withdrawn and remains in full force and effect.

          (B) as to a true and complete copy of the partnership agreement and certificate of limited partnership, or operating agreement and certificate of formation, or other similar organizational documents, as the case may be, of the BCR Entity, that the same have not been amended (except as noted therein) and that they are in full force and effect as of such Stabilization Closing Date, and also certifying as to the incumbency of the officers of the BCR Entity executing and delivering this Agreement, the Interest Contribution Agreement or Interest Transfer Agreement and the other documents and instruments provided herein to be executed and delivered by the BCR Entity.

          (iii) A duly executed certificate of the BCR Representative, dated as of the Stabilization Closing Date, certifying that each of the representations and warranties of the BCR Entities contemplated by Section 7.4 of this Agreement is true and correct as of such Stabilization Closing Date. For purposes of the delivery of the certificate contemplated by this Section 5.5(d)(iii), the references to the BCR Entities, BCR Transferred Interests, or Development Property Owners or other jointly owned entities in the relevant representations and warranties will be deemed to be references only to the BCR Entities, BCR Transferred Interests, and Development Property Owners and other jointly owned entities included in the Development Property Closing at hand.

              (e) Other Documents. All other instruments and documents, if any, required to be executed, acknowledged or delivered by the BCR Entities and BCR Individuals transferring BCR Transferred Interests at such Development Property Closing pursuant to and in accordance with any of the other provisions of this Agreement or the Interest Contribution Agreements or Interest Transfer Agreements, and such other documents or instruments (including any Estoppel Certificate relating to a Development Property identified on Schedule 4.13-2) as Forest City may

reasonably request to effect the transactions contemplated in this Agreement and the Interest Contribution Agreements or Interest Transfer Agreements.

          5.6 Development Property Closing Deliveries by Forest City. At each Development Property Closing, FCEI and/or the relevant FCE Entities transferring the FCE Contributed Interests at such Development Property Closing will execute, acknowledge where appropriate and deliver, or cause to be executed, acknowledged where appropriate and delivered, each of the following instruments, documents and payments:

               (a) Additional Consideration. The portion of the Additional Units allocated to the BCR Contributed Interests being contributed at such Development Property Closing as provided for in Section 2.3 of this Agreement, together with any cash consideration payable with respect to any BCR Sold Interests being transferred at such Development Property Closing, as provided for in Section 2.3 of this Agreement.

               (b) Operating Agreement. The Operating Agreement for Master III duly executed by the FCE Entities contributing FCE Contributed Interests to Master III at such Development Property Closing.

               (c) Interest Contribution Agreements. An Interest Contribution Agreement providing for the contribution of the FCE Contributed Interests in the related Development Property Owner to Master III, and each certificate, agreement and other document required to be delivered thereunder, each duly executed by Master III and the appropriate FCE Entity.

               (d) Registration Rights Agreement. An addendum to the Registration Rights Agreement duly executed by FCEI.

               (e) Certificates. With respect to each FCE Entity contributing FCE Contributed Interests at a Development Property Closing for a Development Property:

               (i) A certificate, dated not earlier than thirty (30) business days prior to such Stabilization Closing Date, from the secretary of state of each state in which FCEI, FCRPC (or, to the extent FCRPC is no longer a principal borrower under FCEI’s principal revolving credit facility, such principal borrower) and any of the FCE Entities contributing FCE Contributed Interests to Master III at such Development Property Closing have been organized certifying as to the good standing of FCEI, FCRPC (or, to the extent FCRPC is no longer a principal borrower under FCEI’s principal revolving credit facility, such principal borrower) and the FCE Entities under the laws of such jurisdiction.

               (ii) A duly executed certificate of FCEI and each FCE Entity contributing FCE Contributed Interests to Master III at such Development Property Closing, dated as of such Stabilization Closing Date, certifying:

               (A) in the case of FCEI, that the board of directors of FCEI has adopted resolutions approving the transactions contemplated hereunder and authorizing FCEI to execute and deliver this Agreement, the Interest Contribution Agreement and each other agreement and instrument necessary for the

consummation of the transactions contemplated by this Agreement and the Interest Contribution Agreement (which resolutions will be attached to or incorporated in such certificate), that such action by the board of directors constitutes the only authorization required for such execution, delivery and consummation by FCEI, and that it has not been revoked or otherwise withdrawn and remains in full force and effect.

               (B) in the case of each of the FCE Entities, that the general partner, board of directors or other similar authority of such FCE Entity has adopted resolutions approving the transactions contemplated hereunder and authorizing the FCE Entity to execute and deliver this Agreement, the Interest Contribution Agreement and each other agreement and instrument necessary for the consummation of the transactions contemplated by this Agreement and the Interest Contribution Agreement (which resolutions will be attached to or incorporated in such certificate), that such action by such general partner, board of directors or other similar authority constitutes the only authorization required for such execution, delivery and consummation by the FCE Entity, and that it has not been revoked or otherwise withdrawn and remains in full force and effect.

               (C) as to a true and complete copy of the partnership agreement and certificate of limited partnership, or operating agreement and certificate of formation, or other similar organizational documents, as the case may be, of FCEI or the FCE Entity, that the same have not been amended (except as noted therein) and that they are in full force and effect as of such Stabilization Closing Date, and also certifying as to the incumbency of the officers of FCEI or the FCE Entity, as the case may be, executing and delivering this Agreement, the Interest Contribution Agreement and the other documents and instruments provided herein to be executed and delivered by FCEI or the FCE Entity.

               (iii) A duly executed certificate of FCEI, dated as of the Stabilization Closing Date, certifying that each of the representations and warranties of Forest City referenced in Section 7.3 of this Agreement is true and correct as of such Stabilization Closing Date. For purposes of the delivery of the certificate contemplated by this Section 5.6(e)(iii), the references to the FCE Entities, FCE Contributed Interests, Development Property Owners or other jointly owned entities in the relevant representations and warranties will be deemed to be references only to the FCE Entities, FCE Contributed Interests, Development Property Owners and other jointly owned entities included in the Development Property Closing at hand.

               (f) Legal Opinion. An opinion of the General Counsel of FCEI as to the matters identified on Exhibit H attached hereto.

               (g) Other Documents. All other instruments and documents, if any, required to be executed, acknowledged and/or delivered by Forest City pursuant to and in accordance with any of the other provisions of this Agreement or the Interest Contribution Agreements and such other documents or instruments as the BCR Entities may reasonably request to effect the transactions contemplated in this Agreement and the Interest Contribution Agreements.

ARTICLE VI

CONDITIONS PRECEDENT TO CLOSING

          6.1 Conditions Precedent to Obligation of Forest City. The obligation of Forest City to consummate the transactions contemplated by this Agreement will be subject to the fulfillment on or before the Principal Closing Date, the Deferred Closing Date or any Stabilization Closing Date, as applicable, of the following conditions, any or all of which may be waived by Forest City in its sole discretion:

               (a) Preliminary Transactions; Delivery of Documents. The BCR Entities and the BCR Individuals have performed, or have caused to be performed, each of the Preliminary Transactions required to be performed, or caused to be performed, by them. Except for the delivery of the Required Estoppel Certificates and the Required BCR Consents, which is governed by Section 6.1(d) below, the BCR Entities and BCR Individuals transferring BCR Transferred Interests at such Closing or Development Property Closing have delivered all of the items required to be delivered to Forest City pursuant to Section 5.3 (other than deliveries under Sections 5.3(h), 5.3(i) and 5.3(j) and 5.3(k)) or Section 5.5 for such Closing or Development Property Closing.

               (b) Accuracy of Representations and Warranties.

               (i) In the case of the Principal Closing, the representations and warranties of the BCR Entities in Section 7.2 of this Agreement are true and correct as originally made and, if applicable, as remade on and as of the Principal Closing Date (or, if made as of a specified date, as of such date), as the same may be modified to reflect any actions taken by or on behalf of the BCR Entities as permitted herein, except where a breach of such representations and warranties would not result in a BCR Material Adverse Effect.

               (ii) In the case of the Deferred Closing, the representations and warranties of the BCR Entities in Section 7.4(b) of this Agreement are true and correct as if made as of the date of each such Deferred Closing (or, if made as of a specified date, as of such date), as the same may be modified to reflect any actions taken by or on behalf of the BCR Entities as permitted herein, except where a breach of such representations and warranties would not result in a BCR Material Adverse Effect.

               (iii) In the case of each Development Property Closing, the representations and warranties of the BCR Entities referenced in Section 7.4 of this Agreement are true and correct as of the date of each such Development Property Closing (or, if made as of a specified date, as of such date).

               (iv) For purposes of this condition precedent, (i) the references in Section 7.2 and Section 7.4 to the BCR Entities, BCR Transferred Interests, Operating Properties, Development Properties, Service Companies, Property Owners or Development Property Owners or any other jointly owned entities will be deemed to be references only to the BCR Entities, BCR Transferred Interests, Operating Properties,

Development Properties, Service Companies, Property Owners, Development Property Owners or any other jointly owned entities included in the Closing or Development Property Closing at hand and (ii) in the case of the Principal Closing and the Deferred Closing, all qualifications in the specific representations and warranties as to materiality will be disregarded and merged into the concept of a BCR Material Adverse Effect.

               (c) Observance of Covenants. The BCR Entities transferring BCR Transferred Interests at such Closing or Development Property Closing have performed and observed all covenants and agreements in this Agreement to be performed and observed by such BCR Entities as of the applicable Closing Date or Stabilization Closing Date, except where the failure to perform or observe any such covenant has not resulted in a BCR Material Adverse Effect.

               (d) Required Estoppel Certificates; Required BCR Consents. With respect to the Principal Closing, the BCR Entities have delivered to Forest City (i) Estoppel Certificates for the Anchors listed on Schedule 6.1(d) (collectively, the “Required Estoppel Certificates”) and (ii) those Outside Investor and ground lessor consents listed on Schedule 6.1(d) (collectively, the “Required BCR Consents”).

               (e) No Injunction. No action, suit or legal or administrative proceedings have been instituted by or before any agency, bureau, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign (referred to herein as “Governmental Authority”), seeking to enjoin the transactions contemplated by this Agreement and intended to occur at the related Closing or Development Property Closing, other than any such proceeding initiated by or on behalf of Forest City or any of its affiliates.

               (f) Transactions Not Prohibited. No statute, rule, regulation, temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation by the BCR Entities, BCR Individuals, Forest City or Master III of the transactions contemplated by this Agreement and the Interest Contribution Agreements and Interest Transfer Agreements to occur at the related Closing or Development Property Closing is in effect or, if applicable, has been threatened by any Governmental Authority or any third party, other than any such order or other legal restraint or prohibition or threat thereof obtained or instituted by or on behalf of Forest City or any of its affiliates.

               (g) Intentionally Omitted.

               (h) Market Price of FCEI Stock. In the case of the Principal Closing, the average of the closing prices of the FCEI Stock as reported by the New York Stock Exchange for each of the twenty (20) days on which trading in such stock was reported immediately prior to the Principal Closing Date (assuming that all others conditions precedent to the occurrence of the Principal Closing will have been satisfied or waived) is not greater than Fifty Five and 86/100 Dollars ($55.86) per share.

          6.2 Conditions Precedent to Obligations of the BCR Entities and BCR Individuals. The obligation of the BCR Entities and the BCR Individuals to consummate the transactions contemplated herein will be subject to the fulfillment on or before the Principal Closing Date, the Deferred Closing Date and any Stabilization Closing Date, as applicable, of the following conditions, any or all of which may be waived by the BCR Entities in their sole discretion:

               (a) Receipt of Consideration or Additional Units. Forest City has delivered and has caused Master III or affiliates of Master III to deliver the consideration or Additional Units for the BCR Transferred Interests included in such Closing or Development Property Closing, as adjusted pursuant to and payable in the manner provided for in this Agreement and the Interest Contribution Agreements and Interest Transfer Agreements.

               (b) Preliminary Transactions; Delivery of Documents. Forest City has performed, or has caused to be performed, each of the Preliminary Transactions required to be performed, or caused to be performed, by them. Forest City has delivered all of the items required to be delivered to the BCR Entities pursuant to Section 5.4 or Section 5.6 for such Closing or Development Property Closing.

               (c) Accuracy of Representations and Warranties.

               (i) In the case of the Principal Closing, the representations and warranties of Forest City contained in Section 7.1 of this Agreement are true and correct as originally made and as remade on and as of the Principal Closing Date (or, if made as of a specified date, as of that date) as the same may be modified to reflect any actions taken by or on behalf of Forest City as permitted herein, except where a breach of such representations and warranties would not result in an FCE Material Adverse Effect.

               (ii) In the case of each Development Property Closing, the representations and warranties of Forest City contained in Section 7.3 of this Agreement are true and correct as of the date of such Development Property Closing (or, if made as of a specified date, as of that date).

               (iii) For purposes of this condition precedent, (i) the references in Section 7.1 and Section 7.3 to the FCE Entities and FCE Contributed Interests will be deemed to be references only to the FCE Contributed Interests included in the Closing at hand and (ii) in the case of the Principal Closing, all qualifications in the specific representations and warranties as to materiality will be disregarded and merged into the concept of an FCE Material Adverse Effect.

               (d) Observance of Covenants. Forest City has performed and observed all covenants and agreements in this Agreement to be performed and observed by Forest City as of such Closing Date or Stabilization Closing Date, except where the failure to perform or observe any such covenant has not resulted in an FCE Material Adverse Effect.

               (e) Market Price of FCEI Stock. In the case of the Principal Closing, the average of the closing prices of the FCEI Stock as reported by the New York Stock Exchange for each of the twenty (20) days on which trading in such stock was reported immediately prior to the Principal Closing Date (assuming that all others conditions precedent to the occurrence of the

Principal Closing will have been satisfied or waived) is not less than Forty Five and 86/100 Dollars ($45.86) per share.

               (f) No Injunction. No action, suit or legal or administrative proceedings have been instituted by or before any court or Governmental Authority seeking to enjoin the transactions contemplated by this Agreement and intended to occur at the related Closing or Development Property Closing, other than any such proceeding initiated by or on behalf of the BCR Entities.

               (g) Transactions Not Prohibited. No statute, rule, regulation, temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation by the BCR Entities, BCR Individuals, Forest City or Master III of the transactions contemplated by this Agreement and the Interest Contribution Agreements and Interest Transfer Agreements to occur at the related Closing or Development Property Closing is in effect or, if applicable, has been threatened by any Governmental Authority or by any third party, other than any such order or other legal restraint or prohibition or threat thereof obtained or initiated by or on behalf of the BCR Entities.

               (h) Intentionally Omitted.

               (i) No Suspension of Trading of FCEI Stock. In the case of the Principal Closing, there has been no suspension in the trading of FCEI Stock on the New York Stock Exchange at any time between the date of this Agreement and the Principal Closing Date, other than a temporary suspension (no longer than one day) in order to give the market time to assimilate the announcement of material information.

               (j) FCEI Stock. In the case of the Principal Closing, the board of directors of FCEI has reserved for issuance, free from preemptive rights, out of FCEI’s authorized but unissued FCEI Stock, solely for the purpose of issuance upon exchange of the BCR Units into FCEI Stock, the full number of shares of FCEI Stock deliverable upon exchange of all of the BCR Units (including the Additional Units).

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

          7.1 Representations and Warranties of Forest City. In order to induce the BCR Entities and the BCR Individuals to carry out the transactions contemplated by this Agreement, as of the date of this Agreement, Forest City represents and warrants to, and agrees with, each of the BCR Entities and each of the BCR Individuals as follows:

               (a) Organization, Good Standing and Authority. FCEI is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. Schedule 7.1(a) sets forth a complete and correct list reflecting the full legal name, type of legal entity and the jurisdiction in which each of the FCE Entities is organized. Master III and each of the Master III Entities is either a limited liability company or a corporation, as the case may be, duly organized, validly existing and in good standing under the laws of the State of New York.

Each of the FCE Entities is duly organized, validly existing and in good standing under the laws of the jurisdiction indicated with respect to it on Schedule 7.1(a). Each of FCEI, the FCE Entities, Master III and the Master III Entities is duly qualified to do business in all jurisdictions where such qualification is necessary to carry on its business as now conducted, except where failure to do so would not result in an FCE Material Adverse Effect. Each of FCEI, the FCE Entities, Master III and Master III Entities has all necessary power to execute and deliver, and perform its obligations under, this Agreement and all documents contemplated hereunder to be executed by it. “FCE Material Adverse Effect” means any change or effect that (i) is, or is reasonably likely to be, materially adverse to the business, operations or financial condition of FCEI, the FCE Entities, Master III and the Master III Entities, taken as a whole, or (ii) materially delays or hinders, or is reasonably likely materially to delay or hinder, the completion of the transactions contemplated by this Agreement.

               (b) Authorization and Binding Effect. This Agreement has been, and all documents contemplated hereunder to be executed by Forest City, Master III and the Master III Entities when executed and delivered will be, duly authorized by all requisite action on the part of Forest City, Master III and the Master III Entities, including approval by the Special Committee of FCEI’s Board of Directors appointed to consider and act upon this Agreement and the transactions contemplated hereby (the “Special Committee”). Shareholder approval is not required for the consummation of the transactions contemplated by this Agreement, including the issuance of FCEI Stock upon exchange of the BCR Units (including any Additional Units). This Agreement and each such document is, or upon execution and delivery will be, the valid and legally binding obligation of FCEI, the FCE Entities, Master III or the Master III Entities, as the case may be, enforceable in accordance with its respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law.

               (c) No Conflicts. Neither the execution and delivery of this Agreement nor any documents contemplated hereunder to be executed by Forest City, Master III or the Master III Entities, nor the performance by Forest City, Master III or the Master III Entities of any of their respective obligations hereunder or thereunder, including the contribution of the FCE Contributed Interests and the issuance of the FCEI Stock upon exchange of the BCR Units, will (i) violate any law or regulation of any Governmental Authority that is applicable to FCEI, Master III, the Master III Entities or any of the FCE Entities or the FCE Interests, (ii) violate any order or decree of any court, arbitrator or other Governmental Authority against or binding upon FCEI, Master III, the Master III Entities or any of the FCE Entities; (iii) violate any provision of the articles of incorporation, bylaws or other organizational documents of FCEI, Master III, the Master III Entities, any of the FCE Entities or any entity that is jointly owned by Forest City and any of the BCR Entities, (iv) require Forest City, Master III or the Master III Entities to obtain any consent, approval or action of, or make any filing with or give any notice to, any Governmental Authority or any other Person, except for (A) the consents set forth on Schedule 7.2(c) attached hereto, (v) conflict with or result in a breach of, or constitute a default or accelerate any right under, any agreement or instrument to which FCEI, Master III, the Master III Entities or any of the FCE Entities is a party or by which FCEI or any of the FCE Entities or FCE Interests are bound, or (vi) result in, or require the creation or imposition of, any lien upon

or with respect to any of the FCE Interests, except in the case of clauses (i), (ii), (iv) and (v) above, for such violations, consents, approvals, notices, conflicts, breaches or defaults as could not reasonably be expected to result in an FCE Material Adverse Effect. To the knowledge of Forest City, Schedule 7.2(c) identifies all of the consents under agreements effective as of the date hereof that are required as a result of the transactions contemplated by this Agreement, except that Forest City makes no representation or warranty regarding the third-party consents identified on Schedule 7.2(c) that Forest City and the BCR Entities agree are not required in connection with the transactions contemplated by this Agreement.

               (d) FCE Contributed Interests. The organizational charts included as part of Schedule P-3B (Property Owners and Organizational Charts) and Schedule P-3E (Service Companies and Organizational Charts) are true and correct to the extent they reflect the direct or indirect ownership by FCEI or any of the FCE Entities in the Operating Properties and the Service Companies. The FCE Interests have been duly authorized and validly issued in accordance with the organizational documents of the issuer thereof and applicable law. Immediately preceding the Principal Closing, the contributors of the FCE Contributed Interests will own the FCE Contributed Interests to be contributed at such Closing free and clear of all rights, liens, claims and encumbrances other than claims or encumbrances arising pursuant to the organizational documents of the relevant issuer of such FCE Contributed Interests and claims arising pursuant to this Agreement, and subject to restrictions on transfer under federal and state securities laws. None of the FCE Entities has pledged its FCE Contributed Interests or consented to the pledge or encumbrance of any of the FCE Contributed Interests.

               (e) FCEI Stock. Schedule 7.1(e) and the 2005 Form 10-K set forth as of July 21, 2006 (i) the authorized capital stock of FCEI, (ii) the total number of shares of each class of capital stock outstanding and (iii) the total number of options and warrants to acquire such capital stock and any commitments to issue or grant any of the foregoing. All of the outstanding shares of the capital stock of FCEI are duly and validly issued, fully paid and non-assessable and not subject to any preemptive rights. When issued, the FCEI Stock issuable upon exchange of the BCR Units, including the Additional Units, will be duly authorized, validly issued, fully paid and non-assessable and not subject to any preemptive rights. The FCEI Stock issued upon exchange of the BCR Units, including the Additional Units, (a) will be free and clear of all liens and other claims other than those suffered or permitted or granted by the contributors of the BCR Contributed Interests in consideration of the BCR Units (including the potential restrictions contained in the Master III Operating Agreement and the Voting Agreement), and (b) will not require any approval or consent of any Person except any such approval or consent that will be obtained on or prior to the Principal Closing Date (other than the registration of such FCEI Stock, which will be governed by the Registration Rights Agreement).

               (f) Private Offering. Neither FCEI, any of the FCE Entities, Master III nor any Person acting on their behalf has taken or will take any action (including, without limitation, any offering of any securities of Master III or FCEI under circumstances which would require the integration of such offering with the issuance of the Units under the Securities Act of 1933, as amended (the “Securities Act”)) which might subject the Units, or the issuance of FCEI Stock upon exchange of any BCR Units, including the Additional Units, to the registration requirements of Section 5 of the Securities Act.

               (g) SEC Filings. FCEI has filed with the Securities and Exchange Commission (the “Commission”) its annual report on Form 10-K for the fiscal year ended January 31, 2006 (such annual report, and all documents incorporated by reference therein, are referred to the “2005 Form 10-K”) and since February 1, 2006, has made all material filings required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Commission promulgated thereunder. From the date of this Agreement through the Principal Closing Date, FCEI may file one or more quarterly reports on Form 10-Q (“2006 Form 10-Qs” and, together with the 2005 Form 10-K and any current reports on Form 8-K filed from January 31, 2006 through the Principal Closing Date, the “SEC Filings”). Except as provided in the final sentence of this Section 7.1(g), each of the SEC Filings, as of its filing date, (i) complied or will comply in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder and (ii) did not (or will not) contain any untrue statement of a material fact or omit (or will omit) to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, other than any misstatements or omissions in an SEC filing that were corrected in a subsequent SEC Filing filed prior to the date hereof. Notwithstanding anything in this Section 7.1(g) to the contrary, to the extent the SEC Filings relate to the Property Owners, the Operating Properties or the operations of FCRC, the representations and warranties contained in this Section 7.1(g) are limited to the knowledge of Forest City.

               (h) Forest City Financial Statements. Except as provided in the final sentence of this Section 7.1(h), the consolidated financial statements of FCEI for the fiscal year ended January 31, 2006, and the consolidated financial statements of FCEI included in the SEC Filings, (i) present or will present in all material respects the consolidated financial condition of Forest City as of the dates thereof, and their consolidated results of operations and cash flows for the periods then ended, in accordance with generally accepted accounting principles, consistently applied, and (ii) complied, or with respect to those not yet filed, will comply, as to form in all material respects with the published rules and regulations of the Commission with respect thereto in effect at the time such SEC Filings were or are filed, except in either event in the case of quarterly financial statements, for normal audit adjustments. Notwithstanding anything in this Section 7.1(h) to the contrary, to the extent such financial statements relate to the Property Owners, the Operating Properties or the operations of FCRC, the representations and warranties contained, in this Section 7.1(h) are limited to the knowledge of Forest City.

               (i) RMS Limited Partnership. RMS Limited Partnership currently controls the voting of 74.6% of the outstanding Class B Common Stock of FCEI. FCEI is not party to any voting trust, shareholders agreement or similar arrangement governing the voting of either Class A Common Stock or Class B Common Stock of FCEI.

               (j) Redemption of FCEI Stock. FCEI is not party to any material commitment or obligation to redeem or otherwise acquire any Class A Common Stock or Class B Common Stock of FCEI.

               (k) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ and NYSE Rules. FCEI is in substantial compliance with the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the listing and corporate governance rules of the NYSE.

               (l) Antitakeover. FCEI has not adopted any shareholder rights plan or other similar plan. No action by the Board of Directors or shareholders of FCEI is required in order to exempt the transactions contemplated by this Agreement, the Voting Agreement, the Master III Operating Agreement or any other document contemplated hereunder to be executed by Forest City from Chapter 1704 of the Ohio Revised Code, Section 1701.831 of the Ohio General Corporation Law or any other antitakeover statute or similar statute that is applicable to Forest City, including, without limitation, any “moratorium,” “control share,” “fair price,” “affiliate transaction” or “business combination” laws and regulations or FCEI’s Articles of Incorporation or Bylaws.

               (m) Form S-3 Eligible. FCEI is eligible to file a Form S-3 registration statement under the Securities Act, as contemplated by the Registration Rights Agreement.

               (n) Fairness Opinion. The Special Committee has received an opinion from ▇▇▇▇▇▇▇▇▇ & Co., its financial advisor (“Greenhill”), stating that the consideration paid by FCEI in connection with the transactions contemplated by this Agreement is fair to FCEI from a financial point of view.

               (o) Brokers. Except for fees and commissions owed to Greenhill and that will be paid by FCEI, no broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of FCEI or any of the FCE Entities.

               (p) Private Offering. Each of the FCE Entities acknowledges that:

               (i) The Class B Common Units will not be registered under the Securities Act and will be issued in reliance on an exemption from registration under Section 4(2) and Regulation D of the Securities Act or other applicable exemptions. The Class B Common Units cannot be resold without registration, or an exemption from registration, under the Securities Act.

               (ii) The Class B Common Units will be acquired for investment purposes only and not with a view to the resale or distribution in violation of the Securities Act. Each of the FCE Entities is an “accredited investor” (as defined in Rule 501 of Regulation D of the Securities Act). Each of the FCE Entities has the requisite knowledge and experience in tax, financial and business matters and financial resources such that it is capable of evaluating the merits and risks of acquiring the Class B Common Units and bearing all risks associated with an investment in the Class B Common Units for an indefinite period of time, including the complete loss of its investment in the Class B Common Units.

               (iii) None of the FCE Entities nor any person acting on their behalf has taken, or will prior to the Principal Closing Date, take any action that could reasonably be expected to subject the Class B Common Units issued on such Closing Date to the registration requirements of Section 5 of the Securities Act.

               (q) Jointly Owned Entities. To the knowledge of Forest City, no affiliate of FCEI (including any FCE Entity), as partner or member of any entity jointly owned with any of the BCR Entities (including, without limitation, any Service Company or Property Owner), is in breach of, or default under, the organizational documents of such jointly owned entity.

               (r) Forest City’s Knowledge. As used in this Agreement, the words “to the knowledge of Forest City” and other words of similar tenor mean the actual knowledge of the individuals listed on Schedule 7.1(r), without any further duty of inquiry.

          7.2 Representations and Warranties of BCR Entities. In order to induce Forest City to carry out the transactions contemplated by this Agreement, as of the date of this Agreement, the BCR Entities represent and warrant to and agree with Forest City as follows:

               (a) Organization, Good Standing and Authority of BCR Entities. Schedule 7.2(a) sets forth a complete and correct list reflecting the full legal name, type of legal entity and the jurisdiction in which each of the BCR Entities is organized. Each of the BCR Entities is duly organized, validly existing and in good standing under the laws of the jurisdiction indicated with respect to it on Schedule 7.2(a). Each of the BCR Entities is duly qualified to do business in all jurisdictions where such qualification is necessary to carry on its business as now conducted, except where failure to do so would not result in a BCR Material Adverse Effect. Each of the BCR Entities has all necessary power to execute and deliver, and perform its obligations under, this Agreement and all documents contemplated hereunder to be executed by it. “BCR Material Adverse Effect” means any event occuring or condition existing on or before the applicable Closing Date or Stabilization Closing Date that (i) has had, or is reasonably likely to have, a material adverse effect on the business, operations or financial condition of the Service Companies, the Property Owners, Development Property Owners, the Properties, the Nets, Atlantic Yards, Bloomfield or Metrotech Associates, whether before or after the applicable Closing Date or Stabilization Closing Date (exclusive of any rights of any Outside Investors in or to any of the foregoing), taken as a whole, assuming, however, with respect to the business, operations or financial condition of such entities or assets after the applicable Closing Date or Stabilization Closing Date, that the operations of such entities or assets from and after the applicable Closing Date or Stabilization Closing Date are identical in all material respects to the operations of such entities or assets as of the date hereof, or (ii) materially delays or hinders, or is reasonably likely materially to delay or hinder, the completion of the transactions contemplated by this Agreement.

               (b) Authorization and Binding Effect. This Agreement has been, and all documents contemplated hereunder to be executed by the BCR Entities when executed and delivered will be, duly authorized by all requisite action on the part of the BCR Entities. This Agreement and each such document is, or upon execution and delivery will be, the valid and legally binding obligation of the BCR Entities, enforceable in accordance with its respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law.

               (c) No Conflicts. Neither the execution and delivery of this Agreement or any documents contemplated hereunder to be executed by any of the BCR Entities, nor the performance by the BCR Entities of any of their obligations hereunder or thereunder, including the contribution of the BCR Contributed Interests and the transfer of the BCR Sold Interests by the BCR Entities, will (i) violate any law or regulation of any Governmental Authority that is applicable to any of the BCR Entities, BCR Interests, Service Companies, Property Owners or Operating Properties, (ii) violate any order or decree of any court, arbitrator or other Governmental Authority against or binding upon any of the BCR Entities or any of the Service Companies, Property Owners or Operating Properties; (iii) violate any provision of the organizational documents of any of the BCR Entities, Service Companies, Property Owners or any other entity that is jointly owned by the BCR Entities and any of the FCE Entities, (iv) require any of the BCR Entities or Service Companies to obtain any consent, approval or action of, or make any filing with or give any notice to, any Governmental Authority, except for those consents required to be given by any Governmental Authority in its capacity as ground lessor, tenant or lender in connection with the transactions contemplated by this Agreement, (v) conflict with or result in a breach of, or constitute a default or accelerate any right under, any agreement or instrument to which any of the BCR Entities or Service Companies is a party or by which any of the BCR Entities, BCR Interests, or Service Companies are bound, or (vi) result in, or require the creation or imposition of, any lien upon or with respect to any of the BCR Interests, Service Companies, Property Owners, or Operating Properties, except in the case of clauses (i), (ii), (iv) and (v) above for such violations, consents, approvals, notices, conflicts, breaches or defaults as would not result in a BCR Material Adverse Effect. Schedule 7.2(c) sets forth (x) each third-party consent that will be sought by the BCR Entities in connection with the transactions contemplated by this Agreement and (y) certain third-party consent that Forest City and the BCR Entities agree are not required in connection with the transactions contemplated by this Agreement. To the knowledge of the BCR Entities, Schedule 7.2(c) identifies all of the consents under agreements effective as of the date hereof that are required as a result of the transactions contemplated by this Agreement, except that the BCR Entities make no representation or warranty regarding the third-party consents referred to in clause (y) of the preceding sentence.

               (d) BCR Transferred Interests. The organizational charts included as part of Schedule P-3B (Property Owners) and Schedule P-3E (Service Company Transfers) are true and correct to the extent they reflect the direct or indirect ownership by BCR, the BCR Individuals or any of the BCR Entities in the Operating Properties and the Service Companies. The BCR Transferred Interests have been duly authorized and validly issued in accordance with the organizational documents of the issuers thereof and applicable law. Immediately preceding the Principal Closing, the transferors of the BCR Transferred Interests will own the BCR Transferred Interests to be transferred in such Closing free and clear of all rights, liens, claims and encumbrances other than claims or encumbrances arising pursuant to the organizational documents of the relevant issuer of such BCR Transferred Interests and claims arising pursuant to this Agreement, and subject to restrictions on transfer under federal and state securities laws. None of the BCR Entities has pledged its BCR Transferred Interests or consented to the pledge or encumbrance of any of the BCR Transferred Interests.

               (e) Adverse Claims, Litigation and Proceedings. There are no material actions, claims, suits, investigations, arbitrations or other proceedings pending against any of the

BCR Entities or, to the knowledge of the BCR Entities, any of the Service Companies, Property Owners or Operating Properties other than those (i) described in the letter attached hereto as Schedule 7.2(o) or (ii) as have been disclosed by FCEI to employees of the BCR Entities in periodic litigation summaries. To the knowledge of the BCR Entities, no material actions, claims, suits, investigations, arbitrations or other proceedings are threatened against any of the BCR Entities, Service Companies, Property Owners or Operating Properties other than those, if any, (x) described in the letter attached hereto as Schedule 7.2(o) or (y) as have been disclosed by FCEI to employees of the BCR Entities in periodic litigation summaries.

               (f) Compliance with Laws. None of the BCR Entities and, to the knowledge of the BCR Entities, none of the Service Companies or Property Owners is, in any material respect, in violation of any law, regulation, order or decree of any Governmental Authority or any court order, decision, ruling, order or arbitration award other than non-material departmental violations affecting the Operating Properties or Property Owners. Except as set forth on Schedule 7.2(f), the BCR Entities have not received, and to the knowledge of the BCR Entities none of the Service Companies or Property Owners has received, notice of any such material violation or claimed material violation, or of any pending regulatory proceeding, action or investigation with respect thereto, or of any threat by any Governmental Authority to take regulatory action against any of the BCR Entities, Service Companies or Operating Properties by reason of any such material violation or claimed material violation.

               (g) Taxes.

               (i) All tax returns required to be filed on or before the date hereof (including any valid extensions of time to file such tax returns) with respect to each Operating Property and by or on behalf of each Service Company, Property Owner, and each other entity relating to an Operating Property or Service Company which is being directly or indirectly transferred to Master III or a wholly-owned subsidiary thereof or of FCEI pursuant to this Agreement (other than tax returns filed by Forest City on behalf of such Service Company or Property Owner) have been timely filed in accordance with all applicable laws. Except as set forth on Schedule 7.2(g), no action, suit or proceeding is pending against any of the Service Companies, Property Owners or other such entities with respect to any such tax returns, nor has any claim for additional taxes been asserted by any Government Authority with respect to any such tax returns. All taxes due with respect to tax returns have been paid, unless such taxes are being contested in good faith and adequate reserves for the payment of such taxes have been established by the applicable Service Company, Property Owner or other such entity.

               (ii) As of the date hereof, and except as set forth on Schedule 7.2(g), there is no pending or, to the knowledge of the BCR Entities, threatened in writing tax audit of any such tax return.

               (h) Permits. To the knowledge of the BCR Entities, each of the Service Companies and Property Owners has all material permits that are necessary, in the case of the Service Companies, for the performance of all services it performs, and, in the case of the Property Owners, for the ownership, use, operation and management of its Properties (other than any permits required by any tenants in connection with their operations). The BCR Entities have

not received, and, to the knowledge of the BCR Entities, none of the Service Companies or Property Owners has received, written notice of any material violation or claimed material violation of any such permit, or of any pending regulatory proceeding, action or investigation with respect thereto, or of any threat by any Governmental Authority to revoke any such material permit or to take regulatory action against any of the Service Companies, BCR Entities, Property Owners or any of the Operating Properties by reason of any such material violation or claimed material violation.

               (i) Property Owners and Service Companies. To the knowledge of the BCR Entities, (i) none of the Service Companies or Property Owners is in breach of, or default under, the organizational documents of such Service Company or Property Owner, and (ii) no BCR Entity, as partner or member of any Service Company or Property Owner, is in breach of, or default under, the organizational documents of such Service Company or Property Owner.

               (j) Ground Leases; Anchor Tenant Leases. The BCR Entities have delivered or otherwise made available to Forest City true, correct and complete copies in all material respects of each ground lease to which a Property Owner is a party (collectively, the “Ground Leases”) and each of the leases with the anchor tenants listed on Schedule 7.2(j) (collectively, the “Anchor Tenant Leases”). To the knowledge of the BCR Entities, each of the Ground Leases and the Anchor Tenant Leases is in full force and effect. Except as set forth on Schedule 7.2(j) or with respect to any breach or default for which Forest City has received written notice prior to the date hereof, none of the Property Owners is in material breach of, or default under, any monetary obligation under any of the Ground Leases or Anchor Tenant Leases, which breach or default remains uncured on the date hereof, and, to the knowledge of the BCR Entities, none of the Property Owners, ground lessors under Ground Leases or tenants under Anchor Tenant Leases is in material breach of, or default under, any non-monetary obligation under any of the Ground Leases or Anchor Tenant Leases, which breach or default remains uncured on the date hereof. Except as set forth on Schedule 7.2(j) or with respect to any breach or default for which Forest City has received written notice prior to the date hereof, and to the knowledge of the BCR Entities none of the Property Owners has received, any written notice that the Property Owner is in material breach of, or default under, any of the Ground Leases or Anchor Tenant Leases, which breach or default remains uncured on the date hereof. For purposes of this Section 7.2(j), all Ground Lease and Anchor Tenant Lease documents that are accessible to Forest City through FCRC’s AMT document management system have been deemed to be “made available” to Forest City.

               (k) Leasing Commissions, Fees and Tenant Improvement Allowances. All leasing commissions, fees and tenant improvement allowances unconditionally payable (other than for the mere passage of time) by the Property Owners with respect to the current unexpired leases applicable to each Operating Property have been paid in full except as set forth on Schedule 7.2(k).

               (l) Operating Contracts. The BCR Entities have delivered or otherwise made available to Forest City complete and correct copies in all material respects of each management, service, operating, listing, brokerage, supply and maintenance agreement, equipment lease or other contract or agreement between any Service Company, Property Owner, or any of their respective affiliates, and any other party relating to the operation of the Operating Properties as

of the date hereof that provides for the payment or receipt of consideration in excess of $500,000 in any twelve (12) month period, has a term that extends for more than one year after the date of this Agreement and is cancelable without penalty only on 365 days’ or greater advance notice (“Operating Contracts”). To the knowledge of the BCR Entities, each of the Operating Contracts is in full force and effect. Except as set forth on Schedule 7.2(l) or with respect to any breach or default for which Forest City has received written notice prior to the date hereof, none of the Service Companies, Property Owners or other parties thereto is in material breach of, or default under, any monetary obligation under any of the Operating Contracts which breach or default remains uncured on the date hereof, and, to the knowledge of the BCR Entities, none of the Service Companies, Property Owners or other parties thereto is in material breach of, or default under, any non-monetary obligation under any of the Operating Contracts which breach or default remains uncured on the date hereof. Except as set forth on Schedule 7.2(l) or with respect to any breach or default for which Forest City has received written notice prior to the date hereof, none of the BCR Entities has received, and to the knowledge of the BCR Entities none of the Service Companies or Property Owners has received, any written notice that such Service Company or Property Owner is in material breach of, or default under, any of the Operating Contract, which breach or default remains uncured on the date hereof. For purposes of this Section 7.2(l), all Operating Contract documents that are accessible to Forest City through FCRC’s AMT document management system have been deemed to be “made available” to Forest City.

               (m) Continuing Loans. The BCR Entities have delivered or otherwise made available to Forest City complete and correct copies in all material respects of all loan agreements and other documents relating to the Continuing Loans, as amended to date (the “Loan Documents”). The applicable Property Owners are current in all payments of principal and interest due under each Continuing Loan through the most recent scheduled payment date. To the knowledge of the BCR Entities, each of the Loan Documents is in full force and effect. To the knowledge of the BCR Entities and except with respect to any breach or default for which Forest City has received written notice prior to the date hereof, none of the Property Owners or lenders is in material breach of, or default under, any of the Loan Documents, which breach or default remains uncured on the date hereof. Except as set forth on Schedule 7.2(m) or with respect to any breach or default for which Forest City has received written notice prior to the date hereof, none of the BCR Entities has received, and to the knowledge of the BCR Entities none of the Property Owners has received, any written notice that such Property Owner is in material breach of, or default under, any of the Loan Documents, which breach or default remains uncured on the date hereof. For purposes of this Section 7.2(m), all Continuing Loan documents that are accessible to Forest City through FCRC’s AMT document management system have been deemed to be “made available” to Forest City.

               (n) Environmental Reports. Schedule 7.2(n) contains a list of all environmental and hazardous waste reports relating to the Operating Properties that are dated after January 1, 2001 that are in the possession of the BCR Entities or the Property Owners (collectively, the “Environmental Reports”). A true, correct and complete copy of each Environmental Report has been delivered or made available to Forest City. Except as set forth on Schedule 7.2(n), to knowledge of the BCR Entities, (i) as of the date hereof there are no material violations of any applicable environmental law or regulation with respect to the Operating Properties and (ii) none of the BCR Entities, Property Owners or Service Companies

has received notice of any material violation of any applicable environmental laws from any Governmental Authority with respect to the Operating Properties not otherwise identified on the Environmental Reports, other than any notices which Forest City has independently received written notice of prior to the date hereof.

               (o) Financial Information. To the knowledge of the BCR Entities, the information set forth in the representation letter which is attached hereto as Schedule 7.2(o), was accurate in all material respects as of the date thereof.

               (p) Information in Form 10-K. Schedule 7.2(p) identifies each section of the Form 10-K that contains information relevant to the Property Owners, the Development Property Owners, the Operating Properties and the operations conducted by FCRC (the “FCRC Form 10-K Information”). To the knowledge of the BCR Entities, at the time the Form 10-K was filed, the FCRC Form 10-K Information did not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

               (q) Private Offering. Each of the BCR Entities acknowledges that:

               (i) The BCR Units will not be registered under the Securities Act and will be issued in reliance on an exemption from registration under Section 4(2) and Regulation D of the Securities Act or other applicable exemptions. The BCR Units, and the FCEI Stock issuable upon exchange of the BCR Units, cannot be resold without registration, or an exemption from registration, under the Securities Act.

               (ii) The BCR Units, and the FCEI Stock issuable upon exchange of the BCR Units, will not be acquired with a view to the resale or distribution in violation of the Securities Act. Each of the BCR Entities is an “accredited investor” (as defined in Rule 501 of Regulation D of the Securities Act). Each of the BCR Entities has the requisite knowledge and experience in tax, financial and business matters and financial resources such that it is capable of evaluating the merits and risks of acquiring the BCR Units, and the FCEI Stock issuable upon exchange of the BCR Units, and bearing all risks associated with an investment in the BCR Units, and the FCEI Stock issuable upon exchange of the BCR Units, for an indefinite period of time, including the complete loss of its investment in the BCR Units.

               (iii) None of the BCR Entities nor any person acting on their behalf has taken, or will prior to the Principal Closing Date take, any action that could reasonably be expected to subject the BCR Units issued on such Closing Date, or the issuance of FCEI Stock upon exchange of any BCR Units, to the registration requirements of Section 5 of the Securities Act, except as provided in the Registration Rights Agreement.

               (r) ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇. Notwithstanding any other provisions of this Agreement, all representations and warranties made in Section 7.2(c) and Sections 7.2(e) through 7.2(p) with respect to the Properties referred to as Queenswood Apartments and Worth Street and the related Property Owners of such Operating Properties are subject to the limitation that the BCR Entities have no reason to believe that such representations

and warranties are not true and correct as of the date hereof, notwithstanding the absence or presence of any qualifier limiting such representation to the knowledge of the representing party.

               (s) Brokers. No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of BCR or any of the BCR Entities.

               (t) BCR Entities’ Knowledge. As used in this Agreement, the words “to the knowledge of the BCR Entities” and other words of similar tenor mean the actual knowledge of the designees of the BCR Entities listed on Schedule 7.2(t), without any further duty of inquiry.

          7.3 Forest City’s Representations and Warranties with Respect to Development Properties. Notwithstanding anything in this Agreement to the contrary, the representations and warranties contained in Section 7.1 will be made by Forest City in connection with each Development Property Closing on and as of the applicable Stabilization Closing Date, except that, to the extent that the representations and warranties relate to Operating Properties, Property Owners, Interests in Property Owners and other jointly owned entities, such representations and warranties will be deemed to relate to the Development Properties, Development Property Owners, Interests in the Development Property Owners and other jointly owned entities through which Development Properties are owned that relate to the Development Property that is the subject of applicable Development Property Closing.

          7.4 BCR Entities’ Representations and Warranties with Respect to Development Properties and the Nets, Atlantic Yards, Bloomfield and Metrotech Associates.

               (a) Notwithstanding anything in this Agreement to the contrary, (i) none of the representations and warranties contained in Section 7.2 (except for the representations and warranties contained in Section 7.2(p)) will be made by the BCR Entities on or as of the Principal Closing Date with respect to the Development Properties, Development Property Owners or Interests in the Development Property Owners or other jointly owned entities through which Development Properties are owned, and (ii) the representations and warranties contained in Section 7.2 will be made by the BCR Entities in connection with each Development Property Closing on and as of the applicable Stabilization Closing Date, except that (A) to the extent that the representations and warranties relate to Operating Properties, Property Owners, Interests in Property Owners and other jointly owned entities, such representations and warranties will be deemed to relate to the Development Properties, Development Property Owners, Interests in the Development Property Owners and other jointly owned entities through which Development Properties are owned that relate to the Development Property that is the subject of applicable Development Property Closing and (B) all such representations and warranties that are deemed to relate to the Development Properties, Development Property Owners, Interests in the Development Property Owners and other jointly owned entities through which Development Properties are owned will be limited to the knowledge of the BCR Entities, and the BCR Entities will have no liability or other responsibility for a breach of any such representations and warranties to the extent that, at or prior to the Stabilization Closing Date, the representations and warranties were incorrect to the knowledge of Forest City.

               (b) None of the representations and warranties of the BCR Entities contained in Section 7.2 apply to the transactions contemplated by this Agreement with respect to the Nets, Atlantic Yards, Bloomfield or Metrotech Associates, except that the representations and warranties contained in Sections 7.2(a) (Organization, Good Standing and Authority), 7.2(b) (Authorization and Binding Effect), 7.2(c) (No Conflicts) and 7.2(d) (BCR Transferred Interests) will be made by the BCR Entities transferring the BCR Sold Interests with respect to the Nets, Atlantic Yards, Bloomfield and Metrotech Associates on and as of the relevant Closing Date for the Closing at which the BCR Sold Interests in the Nets, Atlantic Yards, Bloomfield or Metrotech Associates are transferred to Forest City pursuant to this Agreement.

          7.5 Notice of Breach. If, after the date of this Agreement and prior to the Principal Closing or the Deferred Closing, either Forest City or the BCR Entities becomes aware that any of their respective representations or warranties contained in this Agreement that are required to be made or remade at and as of the applicable Closing are untrue, inaccurate or incorrect in any material respect, or will be untrue, inaccurate or incorrect if required to be remade at such Closing, Forest City or the BCR Representative will provide written notice of the potential breach of such representation or warranty to the other party promptly after obtaining such knowledge. Except as expressly set forth herein to the contrary, any such notice will not constitute a waiver of the breach, whether or not the Closing occurs.

ARTICLE VIII

INDEMNIFICATION

          8.1 Survival Period. The representations, warranties and covenants made or to be made by Forest City and the BCR Entities in this Agreement, and in each of the documents contemplated hereunder to be executed by them, will survive the Principal Closing, each Deferred Closing and each Development Property Closing, although any claim for indemnification with respect to the breach of any such representations, warranties or covenants must be brought within the following periods:

               (a) With respect to any covenants, without limitation as to time, except as prescribed by the applicable statute of limitations.

               (b) With respect to the representations and warranties in the next to last sentence of Section 7.1(a) (Organization, Good Standing and Authority), (Section 7.1(b) (Authorization and Binding Effect), Section 7.1(d) (FCE Contributed Interests), Section 7.1(e) (FCEI Stock), Section 7.1(f) (Private Offering), the next to last sentence in Section 7.2(a) (Organization, Good Standing and Authority of BCR Entities), Section 7.2(b) (Authorization and Binding Effect), Section 7.2(d) (BCR Contributed Interests) and Section 7.2(q) (Private Offering) (and as such representations are modified by Section 7.3 and 7.4 with respect to any Development Property Closing, the Nets, Atlantic Yards, Bloomfield or Metrotech Associates), without limitation as to time, except as prescribed by the applicable statute of limitations.

               (c) With respect to all representations and warranties other than those specified in Section 8.1(b), within a period of twelve (12) months following the applicable Closing Date or Stabilization Closing Date.

Any claim for indemnification for which written notice is given within the applicable period described above will continue to survive until it is resolved, provided litigation is, or adjudication proceedings are, instituted within one hundred twenty (120) days following receipt of a Claims Notice delivered in accordance with Section 8.4.

          8.2 Obligation of Forest City to Indemnify. Subject to Sections 8.1 and 8.6, FCEI and the FCE Entities will jointly and severally indemnify, defend and hold harmless each of the BCR Transferor Parties from and against all costs, damages, liabilities and expenses (including, without limitation, reasonable attorneys’ fees and disbursements but excluding consequential and other indirect damages) (“Losses”) imposed upon, incurred by (whether by way of judgment, award, decree, settlement payment or otherwise) or suffered by any of them by reason of (a) any breach or inaccuracy of any representation or warranty of Forest City contained in this Agreement or in any other document contemplated herein to be executed by FCEI or any of the FCE Entities, (b) any breach of any covenant of Forest City, Master III or the Master III Entities contained herein or any other document contemplated herein to be executed by FCEI, Master III, the Master III Entities or any of the FCE Entities or (c) the conduct of the business of the Service Companies, the Property Owners, Development Property Owners and the Properties after the applicable Closing Date or Stabilization Closing Date (as applicable), except (i) to the extent the Losses are caused by BCR or the BCR Entities, (ii) for Losses arising out of any lawsuit filed by BCR, the BCR Entities or the BCR Individuals in connection with this Agreement, (iii) for Losses attributable to the recognition of any taxable income or gain, or in tax terminations under Section 708(b)(1)(B) of the Code, or other adverse tax consequences resulting from the transactions contemplated by this Agreement and (iv) for Losses incurred by directors and officers of FCEI and its subsidiaries that are governed by the indemnification provisions of FCEI’s Articles of Incorporation. Except as set forth in Section 9.3(b), the BCR Entities acknowledge that the indemnification provisions in this Section 8.2 are the sole and exclusive remedies available to them with respect to any and all claims arising from any breach by FCEI or any of the FCE Entities of any representation, warranty or covenant contained in this Agreement or in any other document contemplated herein to be executed by FCEI or any of the FCE Entities.

          8.3 Obligation of BCR Entities to Indemnify. Subject to Sections 8.1 and 8.5, the BCR Entities will jointly and severally indemnify, defend and hold harmless FCEI and the FCE Entities (the “Forest City Indemnified Parties”) from and against all Losses imposed upon, incurred by (whether by way of judgment, award, decree, settlement payment or otherwise) or suffered by the Forest City Indemnified Parties by reason of any (a) breach or inaccuracy of any representation or warranty of the BCR Entities contained in this Agreement or in any other document contemplated herein to be executed by any of the BCR Entities or (b) breach of any covenant of the BCR Entities contained herein or any other document contemplated herein to be executed by any of the BCR Entities. Except as set forth in Section 9.3(a), Forest City acknowledges that the indemnification provisions in this Section 8.3 are the sole and exclusive remedies available to it with respect to any and all claims arising from any breach by any of the BCR Entities of any representation, warranty or covenant contained in this Agreement or in any other document contemplated herein to be executed by any of the BCR Entities or BCR Individuals. In no event will the BCR Individuals have any personal liability in connection with the transactions contemplated by this Agreement. Subject to the limitations set forth in Section 8.5 below, the BCR Entities and the BCR Individuals acknowledge that the BCR Entities will be

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responsible for (i) any breach of any representation or warranty relating to any Interests being contributed or sold by any BCR Individual pursuant to this Agreement and (ii) any breach of any covenant by any of the BCR Individuals or the failure of any of the BCR Individuals to perform any their respective obligations in connection with the transactions contemplated by this Agreement.

          8.4 Notice and Resolution of Claims.

               (a) As soon as is reasonably practicable after a party entitled to indemnification pursuant to Section 8.2 or 8.3 becomes aware of any claim that it has under Section 8.2 or 8.3, as applicable, that may result in a Loss (an “Indemnification Claim”), such party (the “Indemnified Party”) will give notice thereof (a “Claims Notice”) to the party from which indemnity is sought (the “Indemnifying Party”). A Claims Notice will describe the Indemnification Claim in reasonable detail, and will indicate the amount (estimated, if necessary and to the extent feasible) of the Loss that has been or may be suffered by the Indemnified Party. No delay in or failure to give a Claims Notice by the Indemnified Party to the Indemnifying Party pursuant to this Section 8.4(a) will adversely affect any of the other rights or remedies which the Indemnified Party has under this Agreement, or alter or relieve the Indemnifying Party of its obligation to indemnify the Indemnified Party, to the extent that such delay or failure has not materially prejudiced the Indemnifying Party.

               (b) If an Indemnification Claim pursuant to Section 8.2 or 8.3 arises from any action that involves a claim involving a third party (a “Liability Claim”), the Indemnifying Party will have the right, exercisable by written notice to the Indemnified Party within thirty (30) days of receipt of the Claims Notice for such Liability Claim, to assume and conduct the defense of such Liability Claim in accordance with the limits set forth in this Agreement with counsel selected by the Indemnifying Party and reasonably acceptable to the Indemnified Party; provided that (i) the defense of such Liability Claim by the Indemnifying Party will not, in the reasonable judgment of the Indemnified Party, have a material adverse effect on the Indemnified Party; (ii) the Indemnifying Party has sufficient financial resources, in the reasonable judgment of the Indemnified Party, to satisfy the amount of any adverse monetary judgment that is reasonably likely to result from such Liability Claims; (iii) such Liability Claim solely seeks (and continues to seek) monetary damages; and (iv) the Indemnifying Party expressly agrees in writing that as between the Indemnifying Party and the Indemnified Party, the Indemnifying Party may only satisfy and discharge such Liability Claim in accordance with terms of this Agreement (the conditions set forth in clauses (i) through (iv) are, collectively, the “Litigation Conditions”). In the event that the Indemnified Party believes, after consulting with legal counsel, that use of counsel of the Indemnifying Party’s choice with respect to any Liability Claim would give rise to a conflict of interest, the Indemnified Party will retain the right to employ its own counsel and participate in the defense of such Liability Claim, and the Indemnifying Party will be liable for all reasonable costs or expenses paid or incurred in connection with the retention by the Indemnified Party of its own counsel. If the Indemnifying Party does not assume the defense of such Liability Claim in accordance with this Section 8.4(b), the Indemnified Party may continue to defend the Liability Claim. If the Indemnifying Party has assumed the defense of a Liability Claim as provided in this Section 8.4(b), the Indemnifying Party will not be liable for any legal expenses subsequently incurred by the Indemnified Party in connection with the defense thereof; except that if any of the Litigation Conditions ceases to be met or the Indemnifying Party fails to

take reasonable steps necessary to defend diligently such Liability Claim, the Indemnified Party may assume its own defense, and the Indemnifying Party will be liable for all reasonable costs or expenses paid or incurred in connection therewith. The Indemnifying Party or the Indemnified Party, as the case may be, will have the right to participate in (but not control), at its own expense, the defense of any Liability Claim which the other is defending as provided in this Agreement. The Indemnifying Party, if it has assumed the defense of any Liability Claim as provided in this Agreement, will not, without the prior written consent of the Indemnified Party, consent to a settlement of, or the entry of any judgment arising from, any such Liability Claim which (i) does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party a complete release from all liability in respect of such Liability Claim, or (ii) grants any injunctive or equitable relief, or (iii) may reasonably be expected to have a material adverse effect on the affected business of the Indemnified Party. The Indemnified Party will not settle any Liability Claim, without the prior written consent of the Indemnifying Party, which consent will not be unreasonably withheld.

          8.5 Limitations on Forest City’s Recovery.

               (a) With respect to a breach of the representations and warranties by the BCR Entities in Section 7.2(c) (to the extent they relate to the Property Owners, Service Companies or Properties) and in Sections 7.2(e) through (q) relating to any specific Property Owner, Service Company or Property (and as such representations and warranties are modified by Section 7.4 with respect to any Development Property), the amount of the Losses for which Forest City is entitled to indemnification will be limited to the product of (i) the aggregate BCR Transferred Interest (expressed as a decimal to four (4) decimal places) as set forth in Schedules P-5B (Service Company Transfers), P-6A (BCR Contributed Interests in Operating Properties), P-6B (BCR Sold Interests in Operating Properties), P-7A (BCR Contributed Interests in Development Properties) and P-7C (BCR Sold Interests in Development Properties) related to the relevant Property Owner, Development Property Owner, Property or Service Company that was transferred pursuant to Section 1.1 and (ii) the aggregate amount of the Losses attributable to the relevant Property Owner, Development Property Owner, Property or Service Company.

               (b) The Forest City Indemnified Parties will not be entitled to any indemnification pursuant to Section 8.3(a) for breach or inaccuracy of any representations or warranties (other than the representations and warranties referred to in Section 8.5(d)) unless: (i) with respect to claims for breach or inaccuracy of any representations or warranties relating to Operating Properties and Service Companies, the aggregate amount of all valid claims for indemnification of the Forest City Indemnified Parties for breach or inaccuracy of such representations and warranties exceeds One Million Dollars ($1,000,000.00); or (ii) with respect to claims for breach or inaccuracy of any representation or warranty relating to a Development Property, the aggregate amount of all valid claims for indemnification of the Forest City Indemnified Parties for breach or inaccuracy of representations and warranties relating to such Development Property exceeds an amount equal to the product of (A) a fraction, the numerator of which is the sum of the product of the Stabilized Value of such Development Property (determined in accordance with Section 2.3 hereof) multiplied by each BCR Transferred Interest (expressed as a decimal to four (4) decimal places) applicable to such Development Property as set forth on Schedule P-7A (BCR Contributed Interests in Development Properties) and P-7C (BCR Sold Interests in Development Properties), and the denominator of which is Two Hundred

Thirty Two Million Seven Hundred Thirteen Thousand Five Hundred and One Dollars ($232,713,501) and (B) One Million Dollars ($1,000,000.00). For purposes of determining whether the applicable threshold for indemnification has been met, all qualifications in specific representations and warranties as to materiality will be disregarded. Once the aggregate amount of all valid claims for indemnification of the Forest City Indemnified Parties for breach or inaccuracy of such representations and warranties exceeds the applicable threshold, the Forest City Indemnified Parties will be entitled to indemnification only for amounts in excess of the applicable threshold amount. For the avoidance of doubt, determining whether the applicable threshold for indemnification has been met with respect to each Development Property in Section 8.5(b)(ii) is independent of the amount of claims for breach or inaccuracy of any representation or warranty with respect to the Operating Properties, Service Companies or any other Development Properties. In no event will (y) any claims for breach or inaccuracy of any representations or warranties relating to an Operating Property, Service Company or any other Development Property be applied towards determining whether the applicable threshold for indemnification has been met with respect to any claims for breach or inaccuracy of any representation or warranty with respect to any Development Property and (z) any claim for breach or inaccuracy of any representation or warranty relating to a Development Property be applied towards determining whether the applicable threshold for indemnification has been met with respect to any claims for a breach or inaccuracy of any representations or warranties with respect to the Operating Properties, Service Companies or any other Development Properties.

               (c) In no event will the BCR Entities be liable under Section 8.3(a) for breach or inaccuracy of any representations or warranties (other than the representations and warranties referred to in Section 8.5(d)): (i) with respect to claims for breach or inaccuracy of representations or warranties relating to Operating Properties and Service Companies, an amount in excess of Ten Million Dollars ($10,000,000.00) in the aggregate for all such claims for indemnification of the Forest City Indemnified Parties; or (ii) with respect to claims for breach or inaccuracy of any representation or warranty relating to a Development Property, an amount in excess of the amount equal to the product of (A) a fraction, the numerator of which is the sum of the product of the Stabilized Value of such Development Property (determined in accordance with Section 2.3 hereof) multiplied by each BCR Transferred Interest (expressed as a decimal to four (4) decimal places) applicable to such Development Property as set forth on Schedule P-7A (BCR Contributed Interests in Development Properties) and P7-C (BCR Sold Interests in Development Properties), and the denominator of which is Two Hundred Thirty Two Million Seven Hundred Thirteen Thousand Five Hundred and One Dollars ($232,713,501) and (B) Ten Million Dollars ($10,000,000.00). For the avoidance of doubt, the maximum liability for breach or inaccuracy of any representation or warranty with respect to each Development Property in Section 8.5(c)(ii) is independent of the maximum liability for breach or inaccuracy of any representations or warranties with respect to the Operating Properties, Service Companies and any other Development Properties. In no event will (y) any claims for breach or inaccuracy of any representations or warranties relating to an Operating Property, Service Company or any other Development Property be subject to, or be applied towards, the maximum liability for a breach or inaccuracy of any representation or warranty with respect to each Development Property and (z) any claim for breach or inaccuracy of any representation or warranty relating to a Development Property be subject to, or be applied towards, the maximum liability for a breach or inaccuracy of any representations or warranties with respect to the Operating Properties, Service Companies or any other Development Properties.

               (d) The limitations in Section 8.5(b) and 8.5(c) do not apply to claims by the Forest City Indemnified Parties (i) for indemnification under Section 8.3(b) for breach of any covenant of the BCR Entities contained herein or any other document contemplated herein to be executed by any of the BCR Entities or (ii) for indemnification under Section 8.3(a) for beach of any of the representations and warranties contained in Section 7.2(a) (Organization, Good Standing and Authority of BCR Entities), 7.2(b) (Authorization and Binding Effect), 7.2(d) (BCR Interests) or 7.2(q) (Private Offering) (and as such representations and warranties are modified by Section 7.4 with respect to any Development Property, the Nets, Atlantic Yards, Bloomfield or Metrotech Associates).

               (e) Claims for indemnification pursuant to Section 8.3 will be reduced by the amount of any insurance proceeds actually received by the Forest City Indemnified Parties with respect to such claim, less the present value of any premium increase that results from the assertion of the insurance claim resulting in the receipt of such insurance proceeds.

               (f) The amount of any satisfied required capital contributions pursuant to Section 2.7 of the Master III Operating Agreement or the value of any eliminated Units resulting from a failure to satisfy any such required capital contribution, as such value is determined pursuant to the Master III Operating Agreement, will on a dollar-for-dollar basis be included in any determinations concerning the limitations on Forest City’s recovery set forth in this Section 8.5 and the satisfaction of any valid indemnification claim brought by any of the Forest City Indemnified Parties pursuant to this Article VIII.

          8.6 Limitation on BCR Entities’ Recovery.

               (a) The BCR Transferor Parties will not be entitled to any indemnification pursuant to Section 8.2(a) for breach or inaccuracy of any representations or warranties (other than the representations and warranties referred to in Section 8.6(c)) unless: (i) with respect to claims for breach or inaccuracy of any representations or warranties relating to Operating Properties and Services Companies, the aggregate amount of all valid claims for indemnification of the BCR Contributor Parties for breach or inaccuracy of such representations and warranties exceeds One Million Dollars ($1,000,000.00); or (ii) with respect to claims for breach or inaccuracy of any representation or warranty relating to a Development Property, the aggregate amount of all valid claims for indemnification of the BCR Transferor Parties for breach or inaccuracy of representations and warranties relating to such Development Property exceeds an amount equal to the product of (A) a fraction, the numerator of which is the sum of the product of the Stabilized Value of such Development Property (determined in accordance with Section 2.3 hereof) multiplied by each FCE Contributed Interest (expressed as a decimal to four (4) decimal places) applicable to such Development Property as set forth on Schedule P-7B (FCE Contributed Interests in Development Properties), and the denominator of which is Three Hundred Forty Eight Million Two Hundred Eighty Five Thousand Four Hundred and Four Dollars ($348,285,404) and (B) One Million Dollars ($1,000,000.00). For purposes of determining whether the applicable threshold for indemnification has been met, all qualifications in specific representations and warranties as to materiality will be disregarded. Once the aggregate amount of all valid claims for indemnification of the BCR Transferor Parties for breach or inaccuracy of such representations and warranties exceeds the applicable threshold, the BCR Transferor Parties will be entitled to indemnification only for amounts in excess of the

applicable threshold amount. For the avoidance of doubt, determining whether the applicable threshold for indemnification has been met with respect to each Development Property in Section 8.6(a)(ii) is independent of the amount of claims for breach or inaccuracy of any representation or warranty with respect to the Operating Properties, Service Companies and any other Development Properties. In no event will (y) any claims for breach or inaccuracy of any representations or warranties relating to an Operating Property, Service Company or any other Development Property be applied towards determining whether the applicable threshold for indemnification has been met with respect to any claims for breach or inaccuracy of any representation or warranty with respect to any Development Property and (z) any claim for breach or inaccuracy of any representation or warranty relating to a Development Property be applied towards determining whether the applicable threshold for indemnification has been met with respect to any claims for a breach or inaccuracy of any representations or warranties with respect to the Operating Properties, Service Companies or any other Development Properties.

               (b) In no event will Forest City be liable under Section 8.2(a) for breach or inaccuracy of any representations or warranties (other than the representations and warranties referred to in Section 8.6(c)): (i) with respect to claims for breach or inaccuracy of representations or warranties relating to Operating Properties and Service Companies, an amount in excess of Ten Million Dollars ($10,000,000.00) in the aggregate for all such claims for indemnification of the BCR Contributor Parties; or (ii) with respect to claims for breach or inaccuracy of any representation or warranty relating to a Development Property, an amount in excess of the amount equal to the product of (A) a fraction, the numerator of which is the sum of the product of the Stabilized Value of such Development Property (determined in accordance with Section 2.3 hereof) multiplied by each FCE Contributed Interest (expressed as a decimal to four (4) decimal places) applicable to such Development Property as set forth on Schedule P-7B (FCE Contributed Interests in Development Properties), and the denominator of which is Three Hundred Forty Eight Million Two Hundred Eighty Five Thousand Four Hundred and Four Dollars ($348,285,404) and (B) Ten Million Dollars ($10,000,000.00). For the avoidance of doubt, the maximum liability for breach or inaccuracy of any representations or warranties with respect to each Development Property in Section 8.6(b)(ii) is independent of the maximum liability for breach or inaccuracy of any representation or warranty with respect to the Operating Properties, Service Companies and any other Development Properties. In no event will (y) any claim for breach or inaccuracy of any representation or warranty relating to an Operating Property, Service Company or any other Development Property be subject to, or be applied towards, the maximum liability for a breach or inaccuracy of any representation or warranty with respect to each Development Property and (z) any claim for breach or inaccuracy of any representation or warranty relating to a Development Property be subject to, or be applied towards, the maximum liability for a breach or inaccuracy of any representations or warranties with respect to the Operating Properties, Service Companies or any other Development Properties.

               (c) The limitations in Section 8.6(a) and 8.6(b) do not apply to claims by the BCR Transferor Parties (i) for indemnification under Section 8.2(b) for breach of any covenant of the BCR Entities contained herein or any other document contemplated herein to be executed by any of the BCR Entities or (ii) for indemnification under Section 8.2(a) for breach of any of the representations and warranties contained in Section 7.1(a) (Organization, Good Standing and Authority of BCR Entities), 7.1(b) (Authorization and Binding Effect), 7.1(d) (FCE Interests) or

7.1(e) (FCEI Stock) or 7.1(f) (Private Offering) (and as such representations and warranties are modified by Section 7.3 with respect to any Development Property).

               (d) Claims for indemnification pursuant to Section 8.2 will be reduced by the amount of any insurance proceeds actually received by the BCR Transferor Parties with respect to such claim, less the present value of any premium increase that results from the assertion of the insurance claim resulting in the receipt of such insurance proceeds.

ARTICLE IX

TERMINATION

          9.1 Intentionally Omitted.

          9.2 Failure to Satisfy Certain Conditions Prior to the Principal Closing.

               (a) If the conditions precedent to the obligations of Forest City set forth in Section 6.1(b) or Sections 6.1(d) through (h) are not satisfied on or before December 15, 2006, and Forest City is unwilling to waive the unmet conditions, then Forest City will have the right to terminate this Agreement. In such event, none of Forest City, Master III, the Master III Entities, the BCR Entities or the BCR Individuals will have any further obligations under this Agreement.

               (b) If the conditions precedent to the obligations of the BCR Entities and the BCR Individuals set forth in Section 6.2(c), Sections 6.2(e) through (i) are not satisfied on or before December 15, 2006, and the BCR Entities and BCR Individuals are unwilling to waive the unmet conditions, then the BCR Entities will have the right to terminate this Agreement. In such event, none of Forest City, Master III, the Master III Entities, the BCR Entities or the BCR individuals will have any further obligations under this Agreement.

               (c) Notwithstanding anything in this Section 9.2 to the contrary, in the event that the BCR Entities have failed to (x) either satisfy the condition precedent set forth in Section 6.1(d) as a result of the BCR Entities delivering to Forest City one or more Required Estoppel Certificates that identify a violation, breach or default that, in the aggregate, could not reasonably be expected to result in a valid claim of Five Million Dollars ($5,000,000.00) or more or the BCR Entities not delivering to Forest City an Estoppel Certificate (other than a Required Estoppel Certificate) or (y) deliver to Forest City a waiver with respect to the matter identified in Schedule 9.2(c), and Forest City is unwilling to waive the same and elects to terminate this Agreement, Forest City will pay to the BCR Entities, as liquidated damages, reimbursement for all reasonable documented out-of-pocket costs incurred by the BCR Entities in connection with this transaction up to a maximum of Three Million Dollars ($3,000,000.00) within ten (10) days after receipt of a demand for such payment by wire transfer of immediately available funds to an account designated by the BCR Entities. Upon payment of the same, none of Forest City, the BCR Entities or the BCR Individuals will have any further obligations under this Agreement. In the event that Forest City elects to waive the satisfaction of the condition precedent set forth in Section 6.1(d), the BCR Entities acknowledge that Forest City will be entitled to be indemnified against any Losses incurred as a result of any claim that may arise from or that is related to such waiver, subject to the limitations set forth in Sections 8.1, 8.5(b) and 8.5(c).

          9.3 Default Prior to Principal Closing.

               (a) If the conditions precedent to the obligations of Forest City set forth in Sections 6.1(a) or 6.1(c) are not satisfied on or before December 15, 2006, and Forest City is unwilling to waive the unmet conditions, then Forest City will have the right either:

               (i) to terminate this Agreement and receive from the BCR Entities, as liquidated damages, reimbursement for all reasonable documented out-of-pocket costs incurred by Forest City in connection with this transaction up to a maximum of Three Million Dollars ($3,000,000.00); or

               (ii) to ▇▇▇ for specific performance of the BCR Entities’ obligations under this Agreement.

If Forest City elects the remedy in clause (i) above, the BCR Entities will pay the amount of the liquidated damages to Forest City within ten (10) days after demand therefore by wire transfer to an account designated by FCEI. Upon payment of the liquidated damages, none of Forest City, Master III, the Master III Entities, the BCR Entities or the BCR Individuals will have any further obligations under this Agreement.

               (b) If the conditions precedent to the obligations of the BCR Entities and BCR Individuals set forth in Sections 6.2(a), Section 6.2(b), Section 6.2(d) or Section 6.2(j) are not satisfied on or before December 15, 2006, and the BCR Entities and BCR Individuals are unwilling to waive the unmet conditions, then the BCR Entities will have the right to terminate this Agreement and receive from Forest City, as liquidated damages, reimbursement for all reasonable documented out-of-pocket costs incurred by the BCR Entities and BCR Individuals in connection with this transaction up to a maximum of Three Million Dollars ($3,000,000.00). If the BCR Entities elect this remedy, FCEI will pay the amount of the liquidated damages to the BCR Entities and the BCR Individuals within ten (10) days after demand therefore by wire transfer to an account designated by the BCR Entities. Upon payment of the liquidated damages, none of Forest City, the BCR Entities or the BCR Individuals will have any further obligations under this Agreement.

               (c) The parties acknowledge that: (i) the amount payable pursuant to Sections 9.2(c), 9.3(a) or 9.3(b) is a reasonable estimate of and bear a reasonable relationship to the damages that would be suffered and the costs that would be incurred as a result of the failure of the Closing to occur for the reasons specified; (ii) the actual damages suffered and costs incurred as a result of such failure to close would be extremely difficult and impractical to determine; (iii) each party seeks to limit its liability under this Agreement to the amount of such liquidated damages in the event this Agreement is terminated and the transactions contemplated by this Agreement do not close for the reasons specified; and (iv) the amount payable under Section 9.2(c), 9.3(a) or Section 9.3(b) above constitutes valid liquidated damages.

          9.4 Default Prior to Deferred Closing.

               (a) If the conditions precedent to the obligations of Forest City set forth in Section 6.1(a) or Section 6.1(c) are not satisfied on or before June 30, 2007, and Forest City is

unwilling to waive the unmet conditions, then Forest City will have the right to ▇▇▇ for specific performance of the BCR Entities’ obligations under this Agreement related to the Nets.

               (b) If the conditions precedent to the obligations of the BCR Entities and BCR Individuals set forth in Section 6.2(a), Section 6.2(b) or Section 6.2(d) are not satisfied on or before June 30, 2007, and the BCR Entities are unwilling to waive the unmet conditions, then the BCR Entities and the BCR Individuals will have the right to terminate this Agreement with respect to the Nets as the sole and exclusive remedy for Forest City’s failure to satisfy such conditions precedent.

          9.5 Default Prior to Development Property Closing.

               (a) If the conditions precedent to the obligations of Forest City set forth in Section 6.1(a) or Section 6.1(c) are not satisfied prior to the expiration of the applicable time period established in the third to final paragraph of Section 2.3(g), and Forest City is unwilling to waive the unmet conditions, then Forest City will have the right to ▇▇▇ for specific performance of the BCR Entities’ obligations under this Agreement related to the applicable Development Property.

               (b) If the conditions precedent to the obligations of the BCR Entities and BCR Individuals set forth in Section 6.2(a), Section 6.2(b) or Section 6.2(d) are not satisfied prior to the expiration of the applicable time period established in the third to final paragraph of Section 2.3(g), and the BCR Entities and the BCR Individuals are unwilling to waive the unmet conditions, then the BCR Entities and the BCR Individuals will have the right to terminate this Agreement with respect to the applicable Development Property and, as the sole and exclusive remedy for Forest City’s failure to satisfy such conditions precedent, the ownership of the applicable Development Property will remain unchanged, except that (i) the “Continuation Option,” as such term is defined in the organizational documents for the relevant Development Property Joint Venture, will be deemed to have occurred and (ii) such organizational documents will be amended to provide that the relevant BCR Entity and the BCR Individuals will be entitled to immediately exercise the “buy-sell” option and the “Put Right” with respect to the relevant Development Property Owner or other jointly owned entity pursuant to the terms of Section 5.05 and Section 8.04, respectively, of the relevant organizational document.

ARTICLE X

MISCELLANEOUS

          10.1 Further Assurances. The BCR Entities, Master III (and its subsidiaries) and Forest City will, at any time and from time to time after the Principal Closing, execute, acknowledge where appropriate and deliver such further instruments and documents and take such other action as the other party may reasonably request in order to carry out the intent and purpose of this Agreement, at the expense of the party making such request, except that, neither the BCR Entities, Master III nor Forest City will, in connection with the foregoing, be obligated to incur any liabilities or obligations other than those expressly contemplated in this Agreement.

          10.2 Notices. All notices, demands, consents, requests or other communications provided for or permitted to be given hereunder by a party hereto must be in writing, may be delivered in person, confirmed facsimile transmission, registered or certified mail, return receipt requested, or overnight courier, and will be deemed to have been properly given or served upon actual receipt (with rejection of delivery by addressee to constitute receipt) by such party as follows:

If to FCEI, Master III (or any of its affiliates) or any of the FCE Entities:

Forest City Enterprises, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

with a copy sent simultaneously to:

Forest City Enterprises, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

If to any of the BCR Entities or any of the BCR Individuals:

BR Retail Member, LLC
c/o Forest City ▇▇▇▇▇▇ Companies
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇^▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

with a copy sent simultaneously to:

BR Retail Member, LLC
c/o Forest City ▇▇▇▇▇▇ Companies
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇^▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

with a second copy sent simultaneously to:

▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

Any of the parties may change its address for the receipt of notices, demands, consents, requests and other communications by giving written notice to the other parties in the manner provided for above.

          10.3 Assignment. None of the parties to this Agreement will have the right to assign, transfer, convey or otherwise sell (or enter into any agreement to do the same), directly or indirectly, any interest it may have in or under this Agreement without first having obtained the written consent of the other parties, which consent may be withheld in the other parties’ sole discretion.

          10.4 Binding Obligation. The provisions of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns, but will not inure to the benefit of, or be enforceable by, any other Person.

          10.5 Waiver. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom the enforcement of the change, waiver, discharge or termination is sought or, in the case of a default, by the non-defaulting party or parties.

          10.6 Incorporation of Recitals and Schedules. The Recitals to this Agreement and the Exhibits and Schedules attached hereto are hereby incorporated by reference into the body of this Agreement and made a part hereof.

          10.7 Confidentiality; Press Releases. None of Forest City, Master III, the Master III Entities, the BCR Entities or the BCR Individuals will disclose the contents of this Agreement to any third parties or issue any press release with respect thereto or any Closing hereunder without the consent of the other parties, except (i) as may be required or, based on the advice of counsel, advisable to ensure compliance with any applicable laws, rules or regulations of the Commission or any Governmental Authority having jurisdiction over such party, (ii) as is expressly authorized or required by the terms of this Agreement (e.g., in connection with soliciting FCEI shareholder approval or obtaining any required third-party consents or approvals) or (iii) if and to the extent such contents have already been publicly disclosed (other than by the party seeking to disclose and in a manner not permitted by this Section 10.7). Nothing contained in this Section 10.7 will be construed as prohibiting the parties from disclosing the contents of this Agreement (A) on a confidential basis to the their counsel, accountants and other advisors, or (B) to regulatory authorities having jurisdiction over them, or (C) to Persons from which it is seeking financing. The BCR Entities and Forest City will consult with and cooperate with the other parties on the content and timing of the initial press release to be issued with respect to the

transactions contemplated by this Agreement and all subsequent press releases and other public announcements relating to the transactions contemplated by this Agreement.

          10.8 Merger. All understandings and agreements heretofore had between the parties hereto with respect to the transactions contemplated herein are merged in this Agreement and the instruments and documents referred to herein, which fully and completely express their agreements with respect to the transactions contemplated herein, and supersede all prior agreements, written or oral, with respect thereto.

          10.9 GOVERNING LAW. AS PERMITTED BY SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, THE PARTIES HERETO AGREE THAT THIS AGREEMENT WILL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          10.10 Jurisdiction. Each of the parties submits to the jurisdiction of any New York State Court or Federal Court of the United States of America sitting in the borough of Manhattan, and any appellate court from any such court, in any suit, action or proceeding arising out of or relating to this Agreement (other than issues submitted to an arbitrator for resolution under Section 2.3), or for recognition or enforcement of any judgment. All claims in respect of any such suit, action or proceeding may be brought, heard and determined in such New York State Court or, to the extent permitted by law, in such Federal Court. Final judgment in any such suit, action or proceeding will be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each of the parties waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State Court or Federal Court sitting in the borough of Manhattan. Each of the parties waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such suit, action or proceeding in any such court. Nothing contained in this Section 10.10 will be construed as preventing any of the parties from (i) objecting to the jurisdiction of any New York State Court on the ground that the matter involved exceeds the statutory jurisdiction of such court or (ii) from seeking to remove any suit, action or proceeding from a New York State Court to a Federal Court sitting in the borough of Manhattan, or vice versa.

          10.11 Captions. The captions and Article headings included in this Agreement and the table of contents are for convenience only, do not constitute part of this Agreement and will not be considered or referred to in interpreting the provisions of this Agreement.

          10.12 Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed to be an original, but all of which will constitute one and the same instrument. The submission of a signature page transmitted by facsimile, .pdf file or similar electronic transmission facility will be considered as an “original” signature page for purposes of this Agreement.

          10.13 Severability. If any provision hereof is held invalid or not enforceable to its fullest extent, such provision will be enforced to the extent permitted by law, and the validity of the remaining provisions hereof will not be affected thereby.

          10.14 Prior Negotiations; Construction. No negotiations concerning or modifications made to prior drafts of this Agreement will be construed in any manner to limit, reduce or impair the rights, remedies, duties and obligations of the parties under this Agreement or to restrict or expand the meaning of any of the provisions of this Agreement or to construe any of the provisions of this Agreement in any party’s favor. The parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party will not be employed in the interpretation of this Agreement or any amendment, Schedule or Exhibit hereto.

          10.15 Litigation Expenses. In the event that either the BCR Entities, the BCR Individuals, Master III, the Master III Entities or Forest City is required to employ an attorney because any litigation arises out of this Agreement between the parties hereto, the non-prevailing party or parties (other than the BCR Individuals) will pay the prevailing party or parties all reasonable fees and expenses, including attorneys’ fees and expenses, incurred in connection with such litigation.

          10.16 No Recordation. Neither this Agreement nor any memorandum or notice hereof will be recorded. Forest City will not file any notice of pendency or other instrument (other than a judgment or lis pendens filed by Forest City in connection with Forest City’s enforcement of its rights hereunder) against any of the Properties or any portion thereof in connection herewith.

          10.17 WAIVER OF TRIAL BY JURY. THE BCR ENTITIES, THE BCR INDIVIDUALS, MASTER III, THE MASTER III ENTITIES AND FOREST CITY HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY THE BCR ENTITIES, THE BCR INDIVIDUALS, MASTER III, THE MASTER III ENTITIES OR FOREST CITY, WHETHER IN CONTRACT, TORT OR OTHERWISE, WHICH RIGHT OR CLAIM RELATES DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, ANY DOCUMENTATION RELATED THERETO, OR ANY ACTS OR OMISSIONS IN CONNECTION WITH THIS AGREEMENT. THIS WAIVER HAS BEEN AGREED TO AFTER CONSULTATION WITH LEGAL COUNSEL SELECTED BY FOREST CITY, MASTER III, THE MASTER III ENTITIES, THE BCR ENTITIES AND THE BCR INDIVIDUALS.

[signature pages follow]

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

FOREST CITY ENTERPRISES, INC., an Ohio corporation
By:		/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President & Chief Executive Officer

FOREST CITY MASTER ASSOCIATES III, LLC, a New York limited liability company
		By:				FC Master Associates III, Inc.,
						a New York corporation and its sole member
				By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇   ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President

FCE ENTITIES

FOREST CITY B.U.G. BUILDING, INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇   ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
FOREST CITY S.I.A.C. BUILDING, INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇   ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
FOREST CITY FLATBUSH, INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇   ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
F.C. MEMBER, INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇   ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President

[signatures continued on next page]

FOREST CITY ▇▇▇▇▇▇ STREET BUILDING, INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇   ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
FOREST CITY TECH PLACE, INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇   ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
FOREST CITY PIERREPONT, INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
FOREST CITY COMMERCIAL HOLDINGS, INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
FOREST CITY BLUFFSIDE CORPORATION, an Ohio corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President

CLEVELAND/NY RESIDENTIAL, LLC, a New York limited liability company
		By:		Forest City Residential Group, Inc.,
						an Ohio corporation and its sole member
						By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President and COO

[signatures continued on next page]

FOREST CITY EQUITY SERVICES, INC., an Ohio corporation
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Executive Vice President and COO
FIRST NEW YORK MANAGEMENT COMPANY, INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
FOREST CITY N.Y., INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
FOREST CITY N.Y. GROUP, INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
FC 8 SOUTH, INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President

MASTER III ENTITIES

FC NEW FLATBUSH, LLC, a New York limited liability company

By:

Forest City Master Associates III, LLC,

a New York limited liability company and its sole member

By:

FC Master Associates III, Inc., a New York corporation and its sole member

By:

/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇   ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President

[signatures continued on next page]

FC NEW TECH, LLC, a New York limited liability company

By:

Forest City Master Associates III, LLC,

a New York limited liability company and its sole member

By:

FC Master Associates III, Inc., a New York corporation and its sole member

By:

/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇   ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President

FC NEW KERA, LLC, a New York limited liability company

By:

Forest City Master Associates III, LLC,

a New York limited liability company and its sole member

By:

FC Master Associates III, Inc., a New York corporation and its sole member

By:

/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇   ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President

MASTER III FC/BCR HOLDINGS, INC., a New York corporation
By:		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President

[signatures continued on next page]

BCR ENTITIES

Brooklyn One Trust, a New York Trust
By:		/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, solely as trustee
		of Brooklyn One Trust, and not
		individually
Brooklyn Two Trust, a New York Trust
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		▇▇▇▇▇ ▇. ▇▇▇▇▇▇, solely as trustee
		of Brooklyn Two Trust, and not
		individually
Brooklyn Three Trust, a New York Trust
By:		/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, solely as trustee
		of Brooklyn Three Trust, and not
		individually
RRG New B.U.G., LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member
RRG New S.I.A.C., LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Member

[signatures continued on next page]

RRG Flatbush Associates, L.P., a New York limited partnership
By:		RRG Flatbush, Inc.,
				a New York corporation
						By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
								President

RRG Myrtle, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member

RRG ▇▇▇▇▇▇ Associates, L.P., a Delaware limited partnership
By:		RRG ▇▇▇▇▇▇ Corp.,
				a New York corporation
						By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
								President

RRG Tech Place Associates, L.P., a New York limited partnership
By:		RRG Tech, Inc.,
				a New York corporation
				By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
						President

RRG Harlem Office, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Member

[signatures continued on next page]

RRG ▇▇▇▇▇▇ Office, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member

BR Master Limited Partnership, a New York limited partnership
By:		BR Retail Member, LLC,
				a New York limited liability company
						By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
								Managing Member

RRG Queens Place, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Member
RRG Retail Properties, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member
RRG ▇▇▇▇▇▇, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Member
RRG Gowanus Canal, Inc., a New York corporation
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		President

[signatures continued on next page]

FC Quartermaster Retail II, L.P., a New York limited partnership
By:		RRG Quartermaster Retail II, LLC,
		a Pennsylvania limited liability company
				By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
						Managing Member

RRG Quartermaster II, LLC, a Pennsylvania limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member

FC Quartermaster Retail III, L.P., a New York limited partnership
By:		RRG Quartermaster Retail II, LLC,
		a New York limited liability company
				By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
						Managing Member

RRG Quartermaster III, LLC, a Pennsylvania limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member

FC Quartermaster Retail, L.P., a New York limited partnership
By:		RRG Quartermaster Retail, LLC,
		a New York limited liability company
				By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
						Managing Member

[signatures continued on next page]

FC Quartermaster Retail IV, L.P., a Pennsylvania limited liability company
By:		RRG Quartermaster Retail IV, LLC,
		a New York limited liability company
				By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
						Managing Member

RRG New Residential Properties, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member

The ▇▇▇▇▇ ▇▇▇▇▇▇ 2000 Trust, a New York trust
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, solely as Trustee of
		The ▇▇▇▇▇ ▇▇▇▇▇▇ 2000 Trust, and not individually
By:		/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, solely as Trustee of
		The ▇▇▇▇▇ ▇▇▇▇▇▇ 2000 Trust, and not individually

FC Forest Avenue Retail, LLC, a New York limited liability company
By:		BR Retail Member, LLC,
		a New York limited liability company
				By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
						Managing Member

[signatures continued on next page]

RRG Court Street Retail, LLC,
a New York limited liability company

By:		BR Retail Member, LLC,      a New York limited liability company
				By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
						Managing member

RRG Steinway Street Retail, LLC,
a New York limited liability company

By:		BR Retail Member, LLC,      a New York limited liability company
				By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
						Title:

RRG Bloomfield, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member
BR Basketball, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member
BR Land, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member

[signatures continued on next page]

BR First New York, L.P.,
a New York limited partnership

By:		RRG First New York Corp.,      a New York corporation
				By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President

▇▇▇▇▇▇ Realty Group, Inc.,
a New York corporation

By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President

BR 42 Hotel, LLC,
a New York limited liability company

By:		BCR 42, LLC,      a New York limited liability company
				By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
						Managing Member

BR 8 South, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member
RRG East River, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member

[signatures continued on next page]

RRG Yonkers, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member
RRG 330 ▇▇▇ Office, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member
RRG Mill Basin, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member

RRG ▇▇▇▇▇▇ Associates, L.P.,
a New York limited partnership

By:		RRG ▇▇▇▇▇▇, Inc.,      a New York corporation
				By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President

RRG ▇▇▇▇▇▇, Inc., a New York corporation
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President
BR Retail Member, LLC, a New York limited liability company
By:		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
		Managing Member

[signatures continued on next page]

BCR INDIVIDUALS

/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇   ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇   ▇▇▇▇▇ ▇▇▇▇▇▇

[end of signatures]

EXHIBIT A

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

FOREST CITY MASTER ASSOCIATES III, LLC

                    , 2006

TABLE OF CONTENTS

ARTICLE I DEFINITIONS, ETC.							2
		1.1.		Definitions			2
				Act			2
				Administrative Expenses			2
				Affiliate			3
				Agreement			3
				Articles of Organization			3
				Assignee			3
				Bankruptcy			4
				BCR			4
				BCR Entities			4
				Capital Account			4
				Class A Additional Common Units			5
				Class A Common Units			5
				Class A Cumulative Distribution Shortfall			5
				Class A Distribution Preference			5
				Class A Initial Common Units			7
				Class A Member Representative			7
				Class B Common Units			7
				Class B Cumulative Distribution Shortfall			8
				Class B Distribution Amount			8
				Class B Member Representative			8
				Code			8
				Common Units			8
				Company			8
				Control			8
				Conversion Factor			9
				Current Per Share Market Price			9
				Depreciation			10
				Development Property Closing			10
				Entity			10
				ERISA			10
				Exchange Consideration			10
				Exchange Notice			10
				Exchange Right			10
				FCE Borrower			10
				FCE Entities			10
				FCEI			10
				FCEI Stock			10
				Fiscal Quarter			10
				Fiscal Year			11
				Gross Asset Value			11
				Immediate Family			12
				Indemnified Party			12

				Initial BCR Entities			12
				Initial Capital Contribution			12
				Initial FCE Entities			13
				Interest			13
				Key Management			13
				Liens			13
				Liquidating Event			13
				Loss			13
				Majority-in-Interest of the Members			13
				Managing Member			13
				Master Contribution Agreement			13
				Member Representatives			13
				Members			14
				Net Cash Flow			14
				Net Distributable Cash			14
				Net Financing Proceeds			14
				Net Income			15
				Net Loss			15
				Net Sale Proceeds			16
				Person			17
				Principal Closing			17
				Priority Return			17
				Demand Note			17
				Properties			17
				Property Owners			17
				Regulations			17
				Treasury Regulations			17
				Treas. Reg			17
				Safe Harbor Rate			17
				SEC			17
				Securities Act			18
				Service Companies			18
				Stabilized Value			18
				Subsequent BCR Entities			18
				Subsequent FCE Entities			18
				Substituted Member			18
				Tax Matters Member			18
				Trading Day			18
				Transfer			18
				Units			19
				Unreturned Capital			19
		1.2.		Exhibits, Etc.			19
ARTICLE II ORGANIZATION							19
		2.1.		Limited Liability Company			19
		2.2.		Name			19
		2.3.		Character of the Business			19

		2.4.		Location of the Principal Place of Business			20
		2.5.		Registered Agent and Registered Office			20
		2.6.		Issuance of Common Units; Member Acceptance			20
		2.7.		Class A Special Common Units			21
ARTICLE III TERM							22
ARTICLE IV CONTRIBUTIONS TO CAPITAL							23
		4.1.		Initial Capital Contributions			23
		4.2.		Capital Accounts			23
		4.3.		Liability for Deficits in Capital Accounts			23
		4.4.		Common Units Have Not Been Registered			24
		4.5.		Future Capital Contributions			24
		4.6.		No Third Party Beneficiary			25
		4.7.		No Interest; No Return			25
ARTICLE V ALLOCATIONS, DISTRIBUTIONS, AND OTHER TAX AND ACCOUNTING MATTERS							25
		5.1.		Allocations			25
		5.2.		Distributions			26
		5.3.		Redemption or Repurchase of Common Units			28
		5.4.		Books of Account			28
		5.5.		Reports			28
		5.6.		Tax Elections and Returns			29
		5.7.		Tax Matters Partner			30
		5.8.		Risk Insurance			32
ARTICLE VI RIGHTS, DUTIES AND RESTRICTIONS OF THE MANAGING MEMBER							32
		6.1.		Expenditures by the Company			32
		6.2.		Powers and Duties of Managing Member			33
		6.3.		Promissory Notes			34
		6.4.		Decisions Requiring Vote of Majority-in-Interest of Members			36
		6.5.		Reliance by Third Parties			38
		6.6.		Title Holder			38
		6.7.		Compensation of the Managing Member			38
		6.8.		Waiver and Indemnification			39
		6.9.		Member Representatives			40
		6.10.		Other Matters Concerning the Managing Member			40
		6.11.		Certain Restrictions on Property Owners and Service Companies			41
ARTICLE VII DISSOLUTION, LIQUIDATION AND WINDING-UP							42
		7.1.		Accounting			42
		7.2.		Distribution on Dissolution			42
		7.3.		Timing Requirements			42
		7.4.		Net Sale Proceeds; Sale of Properties			43
		7.5.		Distributions in Kind			43