Exhibit 1.1
SPIRIT REALTY CAPITAL, INC.
6.000% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
(LIQUIDATION PREFERENCE $25.00 PER SHARE)
UNDERWRITING AGREEMENT
September 26, 2017
September 26, 2017
MORGAN STANLEY & CO. LLC
1585 Broadway
New York, New York
10036
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
One Bryant Park
New York, New York 10036
WELLS
FARGO SECURITIES, LLC
550 South Tryon Street, 5th Floor
Charlotte, North Carolina 28202
Ladies and Gentlemen:
Spirit Realty Capital, Inc., a Maryland corporation (the “
Company
”), and Spirit Realty, L.P., a Delaware
limited partnership (the “
Operating Partnership
”), each confirms its respective agreements with Morgan Stanley & Co. LLC (“
Morgan Stanley
”), Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Wells Fargo Securities, LLC as representatives (the “
Representatives
”) of the several underwriters named in Schedule I hereto (the “
Underwriters
”)
with respect to the proposed issuance and sale of 6,000,000
shares of the Company’s 6.000% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (the “
Firm Shares
”). The Company also proposes to issue and sell to the several Underwriters not more than an additional
900,000 shares of its 6.000% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (the “
Additional Shares
”), if and to the extent that you, as Representatives of the Underwriters shall have determined to
exercise, on behalf of the Underwriters, the right to purchase such shares of 6.000% Series A Cumulative Redeemable Preferred Stock granted to the Underwriters in Section 2 hereof. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the “
Shares
.” The shares of 6.000% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share of the Company to be outstanding after giving effect to the sales contemplated hereby are
hereinafter referred to as the “
Preferred Stock
.” This underwriting agreement is herein referred to as the “
Agreement
.”
The Company has filed with the Securities and Exchange Commission (the “
Commission
”) an automatic shelf
registration statement (File
No. 333-220618),
including a prospectus, on Form
S-3ASR,
relating to the securities (the “
Shelf Securities
”),
including the Shares, to be issued from time to time by the Company. The registration statement as of its most recent effective date, including the information (if any) deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A or Rule 430B under the Securities Act of 1933, as amended (the “
Securities Act
”), is hereinafter referred to as the “
Registration Statement
,” and the related prospectus covering the
Shelf Securities and filed as part of the Registration Statement, together with any amendments or supplements thereto as of the most recent effective date of the Registration Statement, is hereinafter referred to as the “
Base
Prospectus
.” The Base Prospectus, as supplemented by the prospectus supplement specifically relating to the Shares in the form first used to confirm sales of the Shares (or in the form first made available to the Underwriters by the Company
to meet requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the “
Prospectus
,” and the term
“
preliminary prospectus
” means any preliminary form of the Prospectus. For purposes of this Agreement, “
free
writing prospectus
” has the meaning set forth
in Rule 405 under the Securities Act. “
Permitted Free Writing Prospectuses
” means any free writing prospectus identified as such on Schedule II, and “
broadly available road show
” means a
“bona fide electronic road show” as defined in Rule 433(h)(5) under the Securities Act that has been made available without restriction to any person. As used herein, the terms “
Registration Statement
,”
“
Base Prospectus
,” “
preliminary prospectus
,” “
Time of Sale Prospectus
” (as defined below), “
Prospectus
” shall include the documents, if any, incorporated by reference therein as of
the date hereof. The terms “
supplement
,” “
amendment
” and “
amend
” as used herein with respect to the Registration Statement, the Base Prospectus, the preliminary prospectus, the Time of Sale
Prospectus, or the Prospectus shall include all documents subsequently filed by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), that are deemed to be incorporated by
reference therein (the “
Incorporated Documents
”).
1.
Representations and Warranties
. Each of the Company and the Operating
Partnership, jointly and severally, represents and warrants to and agrees with each Underwriter that:
(a) The Registration Statement became effective upon filing with the Commission
pursuant to Rule 462 under the Securities Act; no stop order suspending the effectiveness of the Registration Statement is in effect; and no proceedings for such purpose are pending before or, to the knowledge of the Company or the Operating
Partnership, threatened by the Commission. The Company is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) eligible to use the Registration Statement as an automatic shelf registration statement, and the Company
has not received notice that the Commission objects to the use of the Registration Statement as an automatic shelf registration statement.
(b) (i) (A) At the respective times the Registration Statement and each
amendment thereto became effective, (B) at each deemed effective date with respect to the Underwriters pursuant to Rule 430B(f)(2) under the Securities Act, (C) at the Closing Date (as defined below) and (D) at all times during
which a prospectus is required by the Securities Act to be delivered (whether physically or through compliance with Rule 172 under the Securities Act or any similar rule) in connection with any sale of Shares (the “
Delivery
Period
”), the Registration Statement complied and will comply in all material respects with the requirements of the Securities Act and the rules and regulations under the Securities Act; (ii) the Base Prospectus complied, or will
comply, at the time it was, or will be, filed with the Commission, complies as of the date hereof (if filed with the Commission on or prior to the date hereof) and, as of the Time of Sale (as defined below) and at all times during the Delivery
Period, will comply in all material respects with the rules and regulations under the Securities Act; (iii) the Prospectus will comply, as of the date that such document is filed with the Commission, as of the Time of Sale, as of the Closing
Date and at all times during the Delivery Period, in all material respects with the rules and regulations under the Securities Act; (iv) each broadly available road show, if any, when considered together with the Time of Sale Prospectus, does
not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) the Incorporated Documents,
when they were filed with the Commission, conformed in all material respects to the
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requirements of the Exchange Act and the rules and regulations of the Commission thereunder, and any further Incorporated Documents so filed and incorporated by reference, when they are filed
with the Commission, will conform in all material respects to the requirements of the Exchange Act and the rules and regulations of the Commission thereunder. For purposes of this Agreement, the term “
Time of Sale
” means 3:30 p.m.
(New York City time) on the date hereof.
(c) (i) As of the date hereof, at
the respective times the Registration Statement and each amendment thereto became effective and at the Time of Sale, the Registration Statement did not and will not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading; (ii) as of the Time of Sale, the Time of Sale Prospectus (as defined in Schedule II hereto), did not and at the Closing Date, the Time of Sale
Prospectus, as then amended or supplemented by the Company, if applicable, will not, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (iii) as of its date, the Prospectus did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and (iv) at the Closing Date, the Prospectus (as then amended and supplemented) did not and will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
provided
,
however
, that this representation and warranty shall not apply to any statement or
omission relating to any Underwriter made in reliance upon and in conformity with information furnished in writing to the Company by such Underwriter through you expressly for use in the Registration Statement, the Time of Sale Prospectus or the
Prospectus.
(d) Any free writing prospectus that the Company is required
to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Each free
writing prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or on behalf of or used or referred to by the Company complies or will comply in all material
respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Each free writing prospectus, as of its issue date and at all subsequent times through the completion of the public offer and
sale of the Shares or until any earlier date that the Company notified or notifies the Underwriters, did not, does not and will not include any material information that conflicted, conflicts or will conflict with the information contained in the
Registration Statement or the Prospectus. Except for the free writing prospectuses, if any, identified in Schedule II hereto, and electronic road shows, if any, each furnished to you before first use, the Company has not prepared, used or
referred to, and will not, without your prior consent, prepare, use or refer to, any free writing prospectus.
(e) (i)(A) At the time of filing the Registration Statement, (B) at the
time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3) of the Securities Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the
Exchange Act or form of prospectus) and (C) at the time the Company or any person acting on its behalf (within the meaning, for this clause only, of
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Rule 163(c)) made any offer relating to the Shelf Securities in reliance on the exemption of Rule 163 under the Securities Act, the Company was not an “ineligible issuer” as
defined in Rule 405 under the Securities Act; and (ii)(A) at the time of filing of the Registration Statement, (B) at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) of the Shares and (C) at the date hereof, the Company was not and is not an “ineligible issuer” as defined in Rule 405 under the Securities Act.
(f) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Maryland, has the corporate power and authority to own, operate and lease its properties and to conduct its business as described in the Registration Statement, the Time of Sale Prospectus
and the Prospectus and to enter into and perform its obligations under this Agreement, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, including the Operating Partnership (each, a
“
Subsidiary
,” and together, the “
Subsidiaries
”), taken as a whole.
(g) Spirit General OP Holdings, LLC (the “
General Partner
”)
has the power and authority, as the sole general partner of the Operating Partnership, to cause the Operating Partnership to enter into and perform the Operating Partnership’s obligations under this Agreement.
(h) Each Subsidiary has been duly formed, is validly existing as a corporation,
limited liability company, limited partnership or other type of entity or organization, as the case may be, in good standing under the laws of the jurisdiction in which it is chartered or was organized, and has the power and authority to own,
operate and lease its properties and to conduct its business as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and the
Subsidiaries, taken as a whole. The Company is and will be the sole member of the sole general partner of the Operating Partnership. The General Partner is and will be the sole general partner of the Operating Partnership. The Operating Partnership
is the only subsidiary of the Company that meets the definition of a “significant subsidiary” (as such term is defined in
Rule 1-02
of Regulation
S-X).
(i) This Agreement has been duly authorized, executed and delivered by
each of the Company and the Operating Partnership.
(j) The shares of
capital stock of the Company outstanding prior to the issuance of the Shares have been duly authorized and are validly issued, fully paid and
non-assessable,
and the authorized capital stock of the Company
conforms in all material respects as to legal matters to the description thereof contained in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus.
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(k) The Shares have been duly
authorized and, when issued and delivered pursuant to due authorization by the Company’s board of directors (the “
Board
”) or a duly authorized committee thereof in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and
non-assessable,
and the issuance of such Shares will not be subject to any preemptive or similar rights. The articles supplementary relating to the Shares to the
Company’s Articles of Restatement dated as of July 17, 2013 (the “
Series A Articles Supplementary
”) have been duly authorized by the Company, and, at or prior to the Closing Date, the Company will have executed and filed
the Series A Articles Supplementary, with the Maryland State Department of Assessments and Taxation (the “
SDAT
”) establishing the terms of the Shares. The form of certificate representing the Shares complies with the requirements of
Maryland state law, the charter, the bylaws and the rules of the New York Stock Exchange (the “
NYSE
”). The Shares conform to all statements relating thereto contained in each of the Registration Statement, the Time of Sale
Prospectus and the Prospectus and such statements conform to the rights set forth in the Series A Articles Supplementary.
(l) The shares of capital stock of the Company issuable upon conversion of the
Shares have been duly authorized and, when issued upon conversion of the Shares in accordance with the terms of the Series A Articles Supplementary, will be validly issued, fully paid and
non-assessable,
and
the issuance of such capital stock upon such conversion will not be subject to any preemptive or similar rights. The Board has duly and validly reserved such capital stock for issuance upon conversion of the Shares. Such capital stock conforms to
all statements relating thereto contained in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus.
(m) All of the outstanding partnership interests of the Operating Partnership
have been duly authorized and validly issued, fully paid and
non-assessable,
and, except as otherwise set forth in the Registration Statement, the Time of Sale Prospectus and the Prospectus, all outstanding
partnership interests of the Operating Partnership are owned by the Company directly or indirectly, free and clear of any perfected security interest or any other security interests, claims, mortgages, pledges, liens, encumbrances or other
restrictions of any kind. Except as set forth in the Registration Statement, the Time of Sale Prospectus and the Prospectus, there are no outstanding options, warrants, or other rights to purchase, agreements or other obligations to issue, or rights
to convert any obligations into or exchange any securities or partnership interests of the Operating Partnership. The units of partnership interest in the Operating Partnership (“
OP Units
”), including without limitation, the OP
Units to be issued to the Company in connection with the Company’s issuance of the Shares, will be duly authorized for issuance by the Operating Partnership to the holders or prospective holders thereof, and at the time of their issuance will
be validly issued and fully paid. None of the OP Units will be issued in violation of the preemptive or other similar rights of any security holder of the Operating Partnership or any other person or entity. Except as set forth in the Registration
Statement, the Time of Sale Prospectus and the Prospectus, there will be no outstanding options, warrants or other rights to purchase, agreements or other obligations to issue, or rights to convert any obligations into or exchange any securities or
interests for, OP Units or other ownership interests of the Operating Partnership.
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(n) All of the outstanding shares
of capital stock or other ownership interests of each Subsidiary other than the Operating Partnership have been duly authorized and validly issued, fully paid and
non-assessable,
and, except as otherwise set
forth in the Registration Statement, the Time of Sale Prospectus and the Prospectus, all outstanding shares of capital stock or other ownership interests of the Subsidiaries other than the Operating Partnership are owned by the Company either
directly or through Subsidiaries that are wholly owned, free and clear of any perfected security interest or any other security interests, claims, mortgages, pledges, liens, encumbrances or other restrictions of any kind. Except as set forth in the
Registration Statement, the Time of Sale Prospectus and the Prospectus, there are no outstanding options, warrants, or other rights to purchase, agreements or other obligations to issue, or rights to convert any obligations into or exchange any
securities or interests for capital stock or other ownership interests of any Subsidiary other than the Operating Partnership.
(o) The First Amended and Restated Agreement of Limited Partnership of the
Operating Partnership, as amended, dated as of September 12, 2014, has been duly and validly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable in accordance with its terms.
(p) The Second Amended and Restated Agreement of Limited Partnership of the
Operating Partnership setting forth the terms of the OP Units to be issued to the Company in connection with the Company’s issuance of the Shares has been duly and validly authorized by the Company and will be duly and validly executed and
delivered.
(q) Except pursuant to the terms of the indebtedness described
in or contemplated by the Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) the Company is not currently prohibited, directly or indirectly, from making any distributions to its stockholders and (ii) no Subsidiary
is currently prohibited, directly or indirectly, from paying any dividends or distributions to the Company, from making any other distribution on such Subsidiary’s capital stock or equity interests, from repaying to the Company any loans or
advances to such Subsidiary from the Company or from transferring any of such Subsidiary’s property or assets to the Company or any other Subsidiary.
(r) Neither the Company nor any of the Subsidiaries is (i) in violation of
its articles of incorporation, declaration of trust, bylaws, certificate of limited partnership, agreement of limited partnership, certificate of formation, limited liability company agreement or other organizational document, as amended or
supplemented, (ii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of the Subsidiaries is a party or by which it or any of them may be bound or to which any of the properties of the Company or any of the Subsidiaries (the “
Properties
”) or any other assets of
the Company or any of the Subsidiaries is subject (collectively, “
Agreements and Instruments
”), or (iii) in violation of any law, statute, rule, regulation, judgment, order, writ or decree of any arbitrator, court, governmental
body, regulatory body, administrative agency or other authority, body or agency having jurisdiction over the Company or any of the Subsidiaries or the Properties or any of their respective other assets or operations, except, in the case of
clauses (ii) and (iii) of this sentence, for any such defaults or violations that would not have a material adverse effect on the Company and the Subsidiaries, taken as a whole. The execution and delivery by the Company and the Operating
Partnership of, and the performance by the Company and the Operating Partnership of their
7
respective obligations under, this Agreement will not (i) contravene any provision of applicable law or any judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any Subsidiary, (ii) result in the violation of the organizational documents of the Company or any of the Subsidiaries or (iii) result in a breach or violation of any Agreements and Instruments binding upon
the Company or any of the Subsidiaries, except, in the case of clauses (i) and (iii) of this sentence, for any such contravention, breach or violation that would not have a material adverse effect on the Company and the Subsidiaries, taken
as a whole. No consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company or the Operating Partnership of its obligations under this Agreement, except
(i) for the filing of the Series A Articles Supplementary or such as already have been obtained, (ii) such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares,
(ii) such approvals as have been obtained in connection with the approval of the Shares for listing on the NYSE, and (iii) such approvals as have been obtained under the rules and regulations of the Financial Industry Regulatory Authority,
Inc. (the “
FINRA
”). Except as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus, the execution and delivery by the Company and the Operating Partnership of, and the performance by the Company
and the Operating Partnership of their respective obligations under, this Agreement will not constitute a Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon the Properties or any
other assets of the Company or any of the Subsidiaries pursuant to, the Agreements and Instruments (except for such Repayment Events, liens, charges or encumbrances that would not have a material adverse effect on the Company and the Subsidiaries,
taken as a whole). As used herein, a “
Repayment Event
” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of the Subsidiaries.
(s) There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and the Subsidiaries, taken as a whole, from that set forth in the Time of Sale Prospectus.
(t) There are no legal or governmental proceedings pending or, to the knowledge
of the Company or the Operating Partnership threatened, to which the Company or any of the Subsidiaries is a party or to which any of the Properties is subject (i) other than proceedings accurately described in all material respects in the
Registration Statement, the Time of Sale Prospectus and the Prospectus and proceedings that would not have a material adverse effect on the Company and the Subsidiaries, taken as a whole, or a material adverse effect on the power or ability of the
Company or the Operating Partnership to perform its respective obligations under this Agreement or to consummate the transactions contemplated by the Registration Statement, the Time of Sale Prospectus and the Prospectus or (ii) that are
required to be described in the Registration Statement or the Prospectus and are not so described; and there are no statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus
or to be filed as exhibits to the Registration Statement that are not described or filed as required.
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(u) Each preliminary prospectus
filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
(v) Each of
the Company and the Operating Partnership is not, and after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Time of Sale Prospectus will not be, required to register as an
“investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(w) The Company and the Subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“
Environmental
Laws
”), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would
not, singly or in the aggregate, have a material adverse effect on the Company and the Subsidiaries, taken as a whole.
(x) There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required for
clean-up,
closure of properties or compliance with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third parties) and there are no notices of potential liability or claims pending or, to the knowledge of the Company and the Operating Partnership, threatened against the Company
or any of the Subsidiaries or any of the Properties concerning Environmental Laws, which would, singly or in the aggregate, have a material adverse effect on the Company and the Subsidiaries, taken as a whole; neither the Company nor any of the
Subsidiaries nor, to the knowledge of the Company and the Operating Partnership, any other person has contaminated or caused conditions that threaten to contaminate any of the Properties with Hazardous Materials (as defined below); none of the
Properties is included on or, to the knowledge of the Company and the Operating Partnership, is proposed for inclusion on the National Priorities List pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. §. 9601
et
seq.
, or any similar list or inventory of contaminated properties. As used herein, “
Hazardous Material
” shall mean any hazardous material, hazardous waste, hazardous
substance, hazardous constituent, toxic substance, pollutant, contaminant, asbestos, petroleum, petroleum waste, radioactive material, biohazardous material, explosive or any other material, the presence of which in the environment is prohibited,
regulated, or serves as the basis of liability, as defined, listed, or regulated by any applicable federal, state, or local environmental law, ordinance, rule, or regulation.
(y) Except as described in the Registration Statement, the Time of Sale
Prospectus and the Prospectus, there are no contracts, agreements or understandings between the Company or the Operating Partnership and any person granting such person the right to require the Company or the Operating Partnership to file a
registration statement under the Securities Act with respect to any securities of the Company or the Operating Partnership or to require the Company or the Operating Partnership to include such securities with the Shares registered pursuant to the
Registration Statement.
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(z) None of the Company, any
Subsidiary, any director or officer, or, to the Company’s and the Operating Partnership’s knowledge, any affiliate, employee, agent or representative of the Company or of any Subsidiary or the Company’s affiliates, has: (i) used
any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made or taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful
payment or benefit to any foreign or domestic government official or employee, including of any government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of
the foregoing, or any political party or party official or candidate for political office; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, or any applicable law or regulation
implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or committed an offence under the Bribery Act 2010 of the United Kingdom, or any other applicable anti-bribery or
anti-corruption law; or (iv) made, offered, agreed, requested or taken an act in furtherance of any unlawful bribe or other unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful or
improper payment or benefit. The Company and the Subsidiaries have instituted, maintain and enforce, and will continue to maintain and enforce policies and procedures designed to promote and ensure compliance with all applicable anti-bribery and
anti-corruption laws.
(aa) The operations of the Company and the Subsidiaries are and
have been conducted at all times in material compliance with all applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of jurisdictions where the Company and the Subsidiaries conduct business, the rules and
regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “
Anti-Money Laundering Laws
”), and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of the Subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company and the Operating
Partnership, threatened.
(bb) (i) None of the Company, any Subsidiary, any director,
officer, or employee thereof, or, to the Company’s and the Operating Partnership’s knowledge, any agent, affiliate or representative of the Company or any of the Subsidiaries, is an individual or entity (“
Person
”) that is,
or is owned or controlled by a Person that is:
(A) the subject or, to
the knowledge of the Company and the Operating Partnership, target of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the United Nations Security Council, the European Union,
Her Majesty’s Treasury, or any other relevant sanctions authority (collectively, “
Sanctions
”); nor
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(B) located, organized or
resident in a country or territory that is the subject of Sanctions (including, without limitation, Cuba, Crimea, Iran, North Korea, Sudan and Syria).
(ii) The Company and the Operating Partnership will not, directly or
indirectly, use the proceeds of the offering of the Shares, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person:
(A) to fund or facilitate any activities or business of or with any Person
or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or
(B) in any other manner that will result in a violation of Sanctions by
any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise).
(iii) For the past five years, the Company and the Subsidiaries have not
knowingly engaged in, are not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.
(cc) Except as described in the Registration Statement, the Time of Sale Prospectus and the
Prospectus, subsequent to the respective dates as of which information is given in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus: (i) the Company and the Subsidiaries have not incurred or agreed to incur any
material liability or obligation, direct or contingent, nor entered into any material transaction; (ii) the Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends; and (iii) there has not been any material change in the capital stock, short-term debt or long-term debt of the Company and the Subsidiaries, except in each case as
described in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus.
(dd) (i) The Company, either directly or through a Subsidiary, has good and marketable fee
or leasehold title to the Properties, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind, other than those that (A) are described in the Registration Statement
(including in descriptions of mortgages and secured indebtedness), the Time of Sale Prospectus and the Prospectus or (B) do not, singly or in the aggregate, materially affect the value of the Properties and do not materially interfere with the
use made and proposed to be made of such Property by the Company or any of the Subsidiaries; (ii) except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, neither the Company nor any of the Subsidiaries
owns any material real property other than the Properties; (iii) each of the ground leases and subleases relating to a Property, if any, material to the business of the Company and the Subsidiaries, taken as a whole, are in full force and
effect, with such exceptions as do not materially interfere with the use made or proposed to be made of such Property by the Company or any of the Subsidiaries, and (A) no default or event of default has occurred under any ground lease or
sublease with respect to such Property and neither the Company nor any of the Subsidiaries has received any notice of any
11
event which, whether with or without the passage of time or the giving of notice, or both, would constitute a default under such ground lease or sublease and (B) neither the Company nor any
of the Subsidiaries has received any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any of the Subsidiaries under any of the ground leases or subleases mentioned above, or affecting
or questioning the rights of the Company or any of the Subsidiaries to the continued possession of the leased or subleased premises under any such ground lease or sublease; and (iv) except as (A) described in the Registration Statement,
the Time of Sale Prospectus and the Prospectus or (B) as would not have a material adverse effect on the Company and the Subsidiaries, taken as a whole, to the knowledge of the Company and the Operating Partnership, no lessee of any of the
Properties is in default under any of the leases relating to the Properties and neither the Company nor any of the Subsidiaries knows of any event which, whether with or without the passage of time or the giving of notice, or both, would constitute
a default under any such lease.
(ee) Neither the Company nor any of the Subsidiaries
knows of any violation of any municipal, state or federal law, rule or regulation concerning any real property or any part thereof in which the Company has a fee or leasehold interest, as of the date of this Agreement, that would have a material
adverse effect on the Company and the Subsidiaries, taken as a whole; the Company has disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus all options and rights of first refusal to purchase all or part of any
material Property or any interest therein; each of the Properties complies with all applicable zoning laws, ordinances, regulations and deed restrictions or other covenants in all material respects and, if and to the extent there is a failure to
comply, such failure does not materially impair the value of any of the Properties and will not result in a material forfeiture or reversion of title; neither the Company nor any of the Subsidiaries has received from any governmental authority any
written notice of any condemnation of or zoning change materially adversely affecting the Properties, and neither the Company nor any of the Subsidiaries knows of any such condemnation or zoning change which is threatened, and, in each case, which
if consummated would have a material adverse effect on the Company and the Subsidiaries, taken as a whole; except as (i) are described in the Registration Statement, the Time of Sale Prospectus and the Prospectus or (ii) do not, singly or
in the aggregate, materially affect the value of such property or asset and do not interfere with the use made and proposed to be made of such property or asset by the Company or any Subsidiary, there are no liens, charges, encumbrances, claims, or
restrictions on or affecting the properties and assets (including the Properties) of the Company and any of the Subsidiaries.
(ff) Neither the Company nor any Subsidiary is party to any joint venture
agreements.
(gg) Except as disclosed in the Registration Statement, the Time of Sale
Prospectus and the Prospectus, the mortgages encumbering the Properties are not and will not be: (i) convertible (in the absence of foreclosure) into an equity interest in the entity owning such Property or in the Company or any of the
Subsidiaries; (ii) cross-defaulted to any indebtedness other than indebtedness of the Company or any of the Subsidiaries; or (iii) cross-collateralized to any property or assets not owned directly or indirectly by the Company or any of the
Subsidiaries.
12
(hh) To the knowledge of the Company, water,
stormwater, sanitary sewer, electricity and telephone service are all available at the property lines of each Property over duly dedicated streets or perpetual easements of record benefiting the applicable Property, except as would not have a
material adverse effect on the Company and the Subsidiaries, taken as a whole.
(ii) Except as (i) are described in the Registration Statement, the Time of Sale
Prospectus and the Prospectus or (ii) do not have a material adverse effect on the Company or the Operating Partnership, there are no contracts, letters of intent, term sheets, agreements, arrangements or understandings with respect to the
direct or indirect acquisition or disposition by the Company or the Operating Partnership of interests in assets or real property.
(jj) Neither the Company nor any of the Subsidiaries has sent, received or otherwise become
aware of any communication regarding termination of, or intent not to renew any of the contracts or agreements with any of the top 15 tenants (based on contractual base rent for the quarter ended June 30, 2017 multiplied by four) of the
Company, concerning a material amount of rental revenue from any such tenant, and no such termination or
non-renewal
has been threatened by the Company or any of the Subsidiaries or, to the knowledge of the
Company, any other party to any such contract or agreement.
(kk) The Company and the
Subsidiaries own or possess, or can acquire on reasonable terms, all material patents, patent rights, licenses, inventions, copyrights,
know-how
(including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names currently employed by them in connection with the business now operated by them, and neither the Company nor any of the
Subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the Company and the Subsidiaries, taken as a whole.
(ll) No
material labor dispute with the employees of the Company or any of the Subsidiaries exists, except as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus, or, to the knowledge of the Company and the Operating
Partnership, is imminent.
(mm) The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks and in such amounts, taken as a whole, as are prudent and customary in the businesses in which they are engaged; the Company and the Subsidiaries have not been refused any
insurance coverage sought or applied for; and the Company and the Subsidiaries have no reason to believe that they will not be able to renew their existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue their business at a cost that would not, taken as a whole, have a material adverse effect on the Company and the Subsidiaries, taken as a whole, except as described in the Registration Statement, the
Time of Sale Prospectus and the Prospectus.
(nn) Each of the Company and the
Subsidiaries carries or is entitled to the benefits of title insurance on the fee interests and/or leasehold interests (in the case of a ground lease interest) with respect to each Property with financially sound and reputable insurers, in an amount
not less than such entity’s cost for the real property comprising such Property, insuring that such party is vested with good and insurable fee or leasehold title, as the case may be, to each such Property.
13
(oo) The Company and the Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, except as would not have a material adverse effect on the Company and the
Subsidiaries, taken as a whole, and neither the Company nor any of the Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the Company and the Subsidiaries, taken as a whole, except as described in the Registration Statement, the Time of Sale Prospectus and the
Prospectus.
(pp) The consolidated financial statements included, incorporated by
reference or deemed to be incorporated by reference in the Registration Statement, the Time of Sale Prospectus and the Prospectus, together with the related schedules and notes, present fairly the financial position of the Company and the
Subsidiaries, or any predecessor entity thereto, as applicable, at the dates indicated, and the consolidated results of operations, comprehensive income (loss), stockholders’ equity and cash flows of the Company and the Subsidiaries, or any
predecessor entity thereto, as applicable, for the periods specified; said financial statements have been prepared on a consistent basis with the books and records of the Company and the Subsidiaries, or any predecessor entity thereto. The
supporting schedules included in the Registration Statement, the Time of Sale Prospectus and the Prospectus present fairly in accordance with U.S. GAAP the information stated therein. Any unaudited pro forma condensed consolidated
financial statements and the related notes thereto included in the Registration Statement, the Time of Sale Prospectus and the Prospectus have been prepared in accordance in all material respects with the applicable requirements of Regulation
S-X
under the Securities Act, and, in the opinion of the Company, the assumptions used in the preparation thereof are reasonable and provide a reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, and the related adjustments used therein give appropriate effect to the transactions and circumstances referred to therein and the pro forma columns therein reflect the proper
application of these adjustments to the corresponding historical financial statement amounts. Other than the historical and any pro forma financial statements (and schedules) included, incorporated by reference or deemed to be incorporated by
reference, in the Registration Statement, the Time of Sale Prospectus and the Prospectus, no other historical or pro forma financial statements (or schedules) are required by the Securities Act to be included therein. All disclosures contained
in the Registration Statement, the Time of Sale Prospectus and the Prospectus regarding
“non-GAAP
financial measures” (as such term is defined by the rules and regulations of the Commission) comply
in all material respects with Regulation G under the Exchange Act and Item 10 of Regulation
S-K
under the Securities Act, in each case to the extent applicable.
(qq) The Company and each of the Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with
14
U.S. GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (v) the interactive data in eXtensible Business Reporting Language included or
incorporated by reference in the Registration Statement is accurate in all material respects. Except as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus, since the end of the Company’s most recent audited
fiscal year, there has been (i) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Company’s internal control over financial reporting that has
materially adversely affected, or is reasonably likely to materially adversely affect, the Company’s internal control over financial reporting.
(rr) The Company maintains an effective system of “disclosure controls and
procedures” (as defined in
Rule 13a-15
and
15d-15
of the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such
information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure. The Company has carried out evaluations of the effectiveness of its disclosure controls and
procedures as required by
Rule 13a-15
and
Rule 15d-15
of the Exchange Act and such disclosure controls and procedures were effective in all material respects
as of the end of the Company’s most recently completed fiscal quarter.
(ss) Commencing with its taxable year ended December 31, 2005, the Company has been
organized and has operated in conformity with the requirements for qualification and taxation as a real estate investment trust (a “
REIT
”) under the Internal Revenue Code of 1986, as amended (the “
Code
”), and its
proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code. All statements regarding the Company’s qualification and taxation as a REIT and descriptions of the
Company’s organization and proposed method of operation (inasmuch as they relate to the Company’s qualification and taxation as a REIT) set forth in the Registration Statement, the Time of Sale Prospectus and the Prospectus are true,
complete and correct summaries of the legal or tax matters described therein in all materials respects.
(tt) The Company and each of the Subsidiaries have filed all federal, state, local and
foreign tax returns required to be filed through the date of this Agreement or have requested extensions thereof (except where the failure to file would not, individually or in the aggregate, have a material adverse effect) and have paid all taxes
required to be paid thereon (except for cases in which the failure to file or pay would not have a material adverse effect, or, except as currently being contested in good faith and for which reserves required by U.S. GAAP have been created in
the financial statements of the Company), and no tax deficiency has been determined adversely to the Company or any of the Subsidiaries which has had (nor does the Company or any of the Subsidiaries have any notice or knowledge of any tax deficiency
which could reasonably be expected to be determined adversely to the Company or the Subsidiaries and which could reasonably be expected to have) a material adverse effect.
15
(uu) The interactive data in eXtensible
Business Reporting Language included or incorporated by reference in the Registration Statement fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines
applicable thereto in all material respects.
(vv) Each of the Company and the
Operating Partnership is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder
(“
ERISA
”). No “reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which either the Company or the Operating Partnership would have any material
liability. Neither the Company nor the Operating Partnership has incurred or expects to incur material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or
(ii) Sections 412, 403, 431, 432 or 4971 of the Code. Each “pension plan” for which either the Company or the Operating Partnership would have any liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred thereunder, whether by action or by failure to act, which would cause the loss of such qualification, except where the failure to be so qualified would not have a material adverse
effect on the Company and the Subsidiaries, taken as a whole.
(ww) Any statistical and
market-related data included or incorporated by reference in the Registration Statement, the Time of Sale Prospectus or the Prospectus are based on or derived from sources that the Company believes to be reliable and accurate in all material
respects and, to the extent required, the Company has obtained the written consent to the use of such data from such sources.
(xx) The Company intends to file a listing application and all required supporting
documents with the NYSE with respect to the Shares, and the Company has received no information stating that the Shares will not be authorized for trading, subject to official notice of issuance.
(yy) The accountants who certified the financial statements and supporting schedules
included or incorporated by reference in the Registration Statement, the Time of Sale Prospectus and the Prospectus are independent public accountants as required by Securities Act and the rules and regulations under the Securities Act, the Exchange
Act and the rules and regulations under the Exchange Act and the Public Company Accounting Oversight Board.
2.
Agreements to Sell and Purchase
. The Company hereby agrees to sell to
the several Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to purchase from the Company the respective
number of Firm Shares set forth in Schedule I hereto opposite its name at $24.2125 a share (the “
Purchase Price
”).
On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the
Company agrees to sell to the Underwriters the Additional Shares, and the Underwriters shall have the right to purchase up to 900,000 Additional Shares at the Purchase Price. You may exercise this right on behalf of the Underwriters in whole or from
16
time to time in part by giving written notice not later than 30 days after the date of this Agreement. Any exercise notice shall specify the number of Additional Shares to be purchased by
the Underwriters and the date on which such shares are to be purchased. Each purchase date (an “
Option Closing Date
”) must be at least one business day after the written notice is given and may not be earlier than the Closing Date
for the Firm Shares nor later than ten business days after the date of such notice. Additional Shares may be purchased as provided in Section 4 hereof. On any Option Closing Date, each Underwriter agrees, severally and not jointly, to purchase
the number of Additional Shares (subject to such adjustments to eliminate fractional shares as you may determine) that bears the same proportion to the total number of Additional Shares to be purchased on such Option Closing Date as the number of
Firm Shares set forth in Schedule I hereto opposite the name of such Underwriter bears to the total number of Firm Shares.
3.
Terms of Public Offering
. The Company is advised by you that the
Underwriters intend to make a public offering of the Shares as soon after the effectiveness of this Agreement as in the judgment of the Representatives is advisable, and initially to offer the Shares on the terms set forth in the Prospectus. The
Company acknowledges and agrees that the Underwriters may offer and sell Shares to or through any affiliate of an Underwriter and that any such affiliate may offer and sell Shares purchased by it to or through any Underwriter.
4.
Payment and Delivery
. Payment for the Firm Shares shall be made to
the Company in federal or other funds immediately available in New York City against delivery of such Firm Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on October 3, 2017, or at such
other time on the same or such other date, not later than the fifth business day thereafter, as shall be designated in writing by you. The time and date of such payment are hereinafter referred to as the “
Closing Date
.”
Payment for any Additional Shares shall be made to the Company in federal or other funds immediately available in New York
City against delivery of such Additional Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on the date specified in the corresponding notice described in Section 2, or at such other time on
the same or on such other date as shall be agreed upon by the Representatives and the Company.
The Shares will be
delivered to the Representatives in book-entry form through the facilities of The Depository Trust Company (“
DTC
”). The Firm Shares and Additional Shares shall be registered in such names and in such denominations as you shall
request in writing not later than one full business day prior to the Closing Date or the applicable Option Closing Date, as the case may be. The Firm Shares and Additional Shares shall be delivered to you on the Closing Date or an Option Closing
Date, as the case may be, for the respective accounts of the several Underwriters. The Purchase Price payable by the Underwriters shall be reduced by (i) any transfer taxes paid by, or on behalf of, the Underwriters in connection with the
transfer of the Shares to the Underwriters duly paid and (ii) any withholding required by law.
17
5.
Conditions to the
Underwriters’ Obligations
. The obligations of the Underwriters are subject to the following conditions:
(a) The Registration Statement has become effective and, at the Closing Date,
no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the Securities Act, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has
been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Company’s knowledge, contemplated; and the Company has complied with each request (if any) from the Commission for additional information.
The Company shall have paid the required Commission filing fees relating to the Securities within the time period required by Rule 456(b)(1)(i) under the Securities Act without regard to the proviso therein and otherwise in accordance with
Rules 456(b) and 457(r) under the Securities Act and, if applicable, shall have updated the “Calculation of Registration Fee” table in accordance with Rule 456(b)(1)(ii) either in a post-effective amendment to the Registration
Statement or on the cover page of a prospectus filed pursuant to Rule 424(b).
(b) Subsequent to the execution and delivery of this Agreement and prior to the
Closing Date:
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any of the securities of the
Company or any of the Subsidiaries by any “nationally recognized statistical rating organization,” as such term is defined in Section 3(a)(62) of the Exchange Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and the Subsidiaries, taken as a whole, from the respective dates of the Registration Statement, the Time
of Sale Prospectus and the Prospectus that, in the Underwriters’ judgment, is material and adverse and that makes it, in the Underwriters’ judgment, impracticable to market the Shares on the terms and in the manner contemplated in the
Prospectus.
(c) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the Company and the Operating Partnership, to the effect set forth in Section 5(b)(i) above and to the effect that: (i) the representations and warranties of the
Company and the Operating Partnership contained in this Agreement are true and correct as of the Closing Date and that; (ii) each of the Company and the Operating Partnership has complied with all of its agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before such date; (iii) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been initiated or, to
the knowledge of the Company or the Operating Partnership, threatened by the Commission; (iv) the preliminary prospectus, the Prospectus and any Permitted Free Writing Prospectus have been timely filed with the Commission under the Securities
Act (in the case of a Permitted Free Writing Prospectus, to the extent required by Rule 433 under the Securities Act), and all requests for additional information on the part of the Commission have been complied with or otherwise satisfied;
(v) as of such date and as of the Time of Sale, the Registration Statement did not contain any untrue statement of a material fact or omit to state any
18
material fact required to be stated therein or necessary to make the statements therein not misleading; and (vi) as of such date, and as of the Time of Sale, the Time of Sale Prospectus did
not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
provided
,
however
, that such certificate shall not apply to any statements or omissions relating to any Underwriter made in reliance upon and in conformity with information furnished in writing to the Company by such Underwriter
through you expressly for use in the Time of Sale Prospectus.
The officer signing and delivering such certificate may
rely upon the best of his or her knowledge as to proceedings threatened.
(d) The Underwriters shall have received on the Closing Date an opinion of
Latham & Watkins LLP, outside counsel for the Company, dated the Closing Date, with respect to the matters identified in Exhibits
A-1
and
A-2
hereto. In giving
such opinions, such counsel may rely, as to matters of fact, to the extent it deems proper, on certificates of officers of the Company and certificates of public officials
.
(e) The Underwriters shall have received on the Closing Date, an opinion of
Ballard Spahr LLP, Maryland counsel to the Company, dated the Closing Date, with respect to the matters identified in Exhibit B hereto.
(f) The Underwriters shall have received on the Closing Date an opinion of
Richards, Layton & Finger, P.A., Delaware counsel to the Operating Partnership, dated the Closing Date, with respect to the matters identified in Exhibit C hereto.
(g) The Underwriters shall have received on the Closing Date an opinion of
Sidley Austin
LLP
, counsel for the Underwriters, dated the Closing Date, in form and substance reasonably satisfactory to the Underwriters. In giving such opinion such counsel may rely, as to all matters governed by Maryland law, upon
the opinion of Ballard Spahr LLP referred to in Section 5(e) above and, as to all matters governed by Delaware law, upon the opinion of Richards, Layton & Finger, P.A. referred to in Section 5(f) above. In giving such opinions,
such counsel may rely, as to matters of fact, to the extent it deems proper, on certificates of officers of the Company and certificates of public officials.
(h) The Underwriters shall have received, on each of the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, from Ernst & Young LLP, independent public accountants, containing statements and information of
the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in or incorporated by reference into the Registration Statement, the
Time of Sale Prospectus and the Prospectus;
provided
that the letter delivered on the Closing Date shall use a
“cut-off
date” not earlier than the date hereof.
(i) The Underwriters shall have received on the Closing Date a certificate of
the chief financial officer of the Company, dated as of the Closing Date, substantially in the form of Exhibit D hereto.
19
(j) All filings with the
Commission required by Rule 424 under the Securities Act shall have been filed within the applicable time period prescribed for such filing by Rule 424 (without reliance on Rule 424(b)(8)).
(k) Prior to the Closing Time, the Series A Articles Supplementary for the
Shares shall have been duly filed with the SDAT and shall be in full force and effect.
(l) The Company will reserve and keep available at all times the maximum number
of shares of capital stock issuable upon conversion of the Shares.
(m) The
several obligations of the Underwriters to purchase Additional Shares hereunder are subject to the delivery to you on the applicable Option Closing Date of the following:
(i) a certificate, dated the Option Closing Date and signed by
an executive officer of the Company and the Operating Partnership, confirming that the certificate delivered on the Closing Date pursuant to Section 5(c) hereof remains true and correct as of such Option Closing Date;
(ii) an opinion of Latham & Watkins LLP, outside
counsel for the Company, dated the Option Closing Date, relating to the Additional Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by Section 5(d) hereof;
(iii) an opinion of Ballard Spahr LLP, Maryland counsel to the
Company, dated the Option Closing Date, relating to the Additional Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by Section 5(e) hereof;
(iv) an opinion of Richards, Layton & Finger, P.A.,
Delaware counsel to the Operating Partnership, dated the Option Closing Date, relating to the Additional Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by Section 5(f) hereof;
(v) an opinion of Sidley Austin
LLP
, counsel for
the Underwriters, dated the Option Closing Date, relating to the Additional Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by Section 5(g) hereof;
(vi) a letter dated the Option Closing Date, in form and
substance satisfactory to the Underwriters, from Ernst & Young LLP, independent public accountants, substantially in the same form and substance as the letter furnished to the Underwriters pursuant to Section 5(h) hereof;
provided
that the letter delivered on the Option Closing Date shall use a
“cut-off
date” not earlier than three business days prior to such Option Closing Date; and
(vii) such other documents as you may reasonably request with
respect to the good standing of the Company and the Operating Partnership, the due authorization and issuance of the Additional Shares to be sold on such Option Closing Date and other matters related to the issuance of such Additional Shares.
20
6.
Covenants of the
Company
. The Company covenants with each Underwriter as follows:
(a) To furnish to the Underwriters copies of the Registration Statement
(excluding exhibits) and copies of the preliminary prospectus and the Prospectus (or the Prospectus as amended or supplemented) in such quantities as the Underwriters may from time to time reasonably request. In case an Underwriter is required to
deliver, under the Securities Act (whether physically or through compliance with Rule 172 under the Securities Act or any similar rule), a prospectus relating to the Shares after the nine-month period referred to in Section 10(a)(3) of the
Securities Act, or after the time a post-effective amendment to the Registration Statement is required pursuant to Item 512(a) of Regulation
S-K
under the Securities Act, upon the request of such
Underwriter, and at its own expense, the Company shall prepare and deliver to such Underwriter as many copies as such Underwriter may reasonably request of an amended Registration Statement or amended or supplemented prospectus complying with
Item 512(a) of Regulation
S-K
or Section 10(a)(3) of the Securities Act, as the case may be.
(b) Before amending or supplementing the Registration Statement, the Time of
Sale Prospectus or the Prospectus, to furnish to the Underwriters a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which the Underwriters reasonably object, and to file with the
Commission within the applicable period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such Rule. To furnish to the Underwriters a copy of each proposed free writing prospectus to be prepared
by or on behalf of, used by, or referred to by the Company and not to use or refer to any proposed free writing prospectus to which the Underwriters reasonably object. Not to take any action that would result in an Underwriter or the Company being
required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of such Underwriter that such Underwriter otherwise would not have been required to file thereunder.
(c) To file all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for the duration of the Delivery Period.
(d) To timely file such reports pursuant to the Exchange Act as are necessary
in order to make generally available to its security holders as soon as practicable an earning statement for the purposes of, and to provide to the Underwriters the benefit contemplated by, the last paragraph of Section 11(a) of the Securities
Act.
(e) To file any Permitted Free Writing Prospectus to the extent
required by Rule 433 under the Securities Act in connection with any offer or sale of Shares and to provide copies of the Prospectus and each Permitted Free Writing Prospectus (to the extent not previously delivered or filed on the
Commission’s Electronic Data Gathering, Analysis and Retrieval system or any successor system thereto) to each Underwriter via electronic mail in “.pdf” format
21
on such filing date to an electronic mail account designated by such Underwriter and, at such Underwriter’s request, to also furnish copies of the Prospectus to the NYSE and each other
exchange or market on which sales of the Shares were effected, in each case, as may be required by the rules or regulations of the NYSE or such other exchange or market.
(f) During the Delivery Period to advise each Underwriter, promptly after it
receives notice thereof, of the issuance of any stop order by the Commission, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or
of any request by the Commission for the amending or supplementing of the Registration Statement, the Prospectus or any Permitted Free Writing Prospectus or for additional information; and, in the event of the issuance of any such stop order or of
any order preventing or suspending the use of any prospectus relating to the Shares or suspending any such qualification, to promptly use its commercially reasonable efforts to obtain its withdrawal.
(g) If, after the date hereof and during the Delivery Period, either
(i) any event shall occur or condition exist as a result of which the Prospectus would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (ii) for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file any document in order to comply with the Securities Act or the
Exchange Act, to promptly advise the Underwriters by telephone (with confirmation in writing or electronic mail) and to promptly prepare and file, subject to Section 6(b) above, with the Commission an amendment or supplement to the Registration
Statement or the Prospectus which will correct such statement or omission or effect such compliance and to furnish to the Underwriters as many copies as the Underwriters may reasonably request of such amendment or supplement.
(h) If the Time of Sale Prospectus is being used to solicit offers to buy the
Shares at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Prospectus in order to make the statements
therein, in the light of the circumstances, not misleading, or if any event shall occur or condition exist as a result of which the Time of Sale Prospectus conflicts with the information contained in the Registration Statement then on file, or if,
in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Time of Sale Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and
to any dealer upon request, either amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale Prospectus as so amended or supplemented will not, in the light of the circumstances when the Time of Sale
Prospectus is delivered to a prospective purchaser, be misleading or so that the Time of Sale Prospectus, as amended or supplemented, will no longer conflict with the Registration Statement, or so that the Time of Sale Prospectus, as amended or
supplemented, will comply with applicable law.
(i) To endeavor to qualify
the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Underwriters shall reasonably request and to continue such qualifications in effect so long as necessary under such laws for the distribution of the
Shares.
22
(j) To continue to elect to
qualify as a REIT under the Code and to use its best efforts to meet the requirements to qualify as a REIT under the Code, unless the Board determines it is no longer in the stockholders’ best interests to do so.
(k) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including: (i) the fees, disbursements and expenses of the Company’s counsel and the
Company’s accountants in connection with the registration and delivery of the Shares under the Securities Act and all other fees or expenses in connection with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, the Prospectus, any free writing prospectus prepared by or on behalf of, used by, or referred to by the Company and amendments and supplements to any of the foregoing, including the filing fees payable to the
Commission relating to the Shares (within the time required by Rule 456(b)(1), if applicable), all printing costs associated therewith, and the mailing and delivering of copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (ii) all costs and expenses related to the transfer and delivery of the Shares to the Underwriters, including any transfer or other taxes payable thereon, (iii) the reasonable cost of printing or producing any Blue
Sky or legal investment memorandum in connection with the offer and sale of the Shares under state securities laws and all expenses in connection with the qualification of the Shares for offer and sale under state securities laws as provided in
Section 6(i) above, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky or legal investment memorandum, which shall not exceed
$10,000, (iv) all filing fees and the reasonable fees and disbursements of counsel to the Underwriters incurred in connection with any review and qualification of the offering of the Shares by FINRA, (v) all costs and expenses incident to
listing the Shares on the NYSE, (vi) the costs and charges of any transfer agent, registrar or depositary, (vii) any costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection
with the marketing of the offering of the Shares, including, without limitation, expenses associated with the preparation or dissemination of any electronic road show, expenses associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such consultants, (viii) the
document production charges and expenses associated with printing this Agreement, (ix) all expenses in connection with any offer and sale of the Shares outside of the United States, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with offers and sales outside of the United States; (x) any fees payable in connection with the rating of the Shares by the rating agencies; (xi) the fees and expenses of making
the Shares eligible for clearance, settlement and trading through the facilities of DTC; and (xii) all other costs and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in
this Section. It is understood, however, that except as provided in this Section 6, Section 8 and the last paragraph of Section 10, each Underwriter will pay all of its costs and expenses, including any advertising expenses connected
with any offers such Underwriter may make.
(l) To use its commercially
reasonable efforts to cause the Shares to be listed for trading on the NYSE and to maintain such listing.
23
(m) The Company also covenants
with each Underwriter that, without the prior written consent of the Representatives on behalf of the Underwriters, it will not, during the period ending 30 days after the date of the Prospectus (the “
Restricted Period
”), (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of
Preferred Stock or any other securities of the Company which are substantially similar to shares of Preferred Stock or any securities convertible into or exercisable or exchangeable for shares of Preferred Stock, or (2) enter into any swap or
other arrangement that transfers to another, in whole or in part, directly or indirectly, any of the economic consequences of ownership of shares of Preferred Stock, whether any such transaction described in clause 1 or 2 above is to be settled by
delivery of shares of Preferred Stock or such other securities, in cash or otherwise or (3) file any registration statement with the Commission relating to the offering of any shares of Preferred Stock or any securities convertible into or
exercisable or exchangeable for shares of Preferred Stock. The foregoing sentence shall not apply to the Shares to be sold hereunder.
(m) The Company will use its best efforts to file, prior to the Closing Date,
the Series A Articles Supplementary with the SDAT.
(n) The Company will
cooperate with the Underwriters and use its best efforts to permit the Shares to be eligible for clearance, settlement and trading through the facilities of DTC.
(o) The Company will prepare a final term sheet (the “
Final Term
Sheet
”) containing only a description of the final terms of the Shares and their offering, in a form approved by the Underwriters and attached as Schedule III hereto, and acknowledges that the Final Term Sheet is a free writing prospectus
and will comply with its related obligations set forth in Section 6(b) hereof. The Company will furnish to each Underwriter, without charge, copies of the Final Term Sheet promptly upon its completion.
7.
Covenants of the Underwriters
. Each Underwriter covenants with the
Company not to take any action that would result in the Company being required to file with the Commission a free writing prospectus prepared by or on behalf of such Underwriter pursuant to Rule 433(d) under the Securities Act that
otherwise would not be required to be filed by the Company thereunder, but for the action of such Underwriter.
8.
Indemnity and Contribution
. (a)
The Company and the
Operating Partnership, jointly and severally, agree to indemnify and hold harmless each Underwriter, their directors, their officers, each person, if any, who controls such Underwriter within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act and each affiliate of such Underwriter within the meaning of Rule 405 under the Securities Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus, the Time of Sale Prospectus or any amendment or supplement thereto, any issuer free writing prospectus as defined in Rule 433(h) under the Securities Act, any Company information that the Company
has
24
filed, or is required to file, pursuant to Rule 433(d) under the Securities Act, any “road show” as defined in Rule 433(h) under the Securities Act (a “road show”),
the Prospectus or any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(b) Each Underwriter severally, and not
jointly, agrees to indemnify and hold harmless the Company, its directors, its officers who signed the Registration Statement, the Operating Partnership and each person, if any, who controls the Company and the Operating Partnership within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company and the Operating Partnership to the Underwriters, but only with reference to information
relating to an Underwriter furnished to the Company in writing by or on behalf of such Underwriter expressly for use in the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, any free issuer writing
prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act, or any amendment or supplement thereto.
(c) In case any proceeding (including any governmental investigation) shall be
instituted involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the “
indemnified party
”) shall promptly notify the person against whom such indemnity may be sought (the
“
indemnifying party
”) in writing, and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such separate firm shall be designated in writing by the Underwriters, in the case of
parties indemnified pursuant to Section 8(a), and by the Company or the Operating Partnership, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and
third sentences of this paragraph, the indemnifying
25
party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by
such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement (i) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding and (ii) does not include any statement as to or any admission of
fault, culpability or a failure to act by or on behalf of any indemnified party.
(d) To the extent the indemnification provided for in Section 8(a) or 8(b)
is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the
Operating Partnership, on the one hand, and the Underwriters, on the other hand, from the offering of the Shares or (ii) if the allocation provided by Section 8(d)(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in Section 8(d)(i) above but also the relative fault of the Company and the Operating Partnership, on the one hand, and of the Underwriters, on the other hand, in connection with
the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Operating Partnership, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Shares (before deducting expenses) received by the Company and the
Operating Partnership and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate public offering price of the Shares. The relative
fault of the Company and the Operating Partnership, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information supplied by the Company and the Operating Partnership or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) The Company, the Operating
Partnership and each Underwriter agree that it would not be just or equitable if contribution pursuant to this Section 8 were determined by
pro
rata
allocation (even if the Underwriters were treated as one entity for
such purposes) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 8(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 8(d) shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, each Underwriter shall not be required to
26
contribute any amount in excess of the amount by which the total price at which the Shares sold by it were offered to the public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(f) The indemnity and contribution
provisions contained in this Section 8 and the representations, warranties and other statements of the Company and the Operating Partnership contained in this Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on behalf of an Underwriter, any person controlling an Underwriter or any affiliate of an Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (iii) acceptance of and payment for any of the Shares.
9.
Termination
. The Underwriters may terminate this Agreement by notice
given by the Representatives to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on, or by, as the case may be, any of the
NYSE or the NASDAQ Global Market, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any
over-the-counter
market,
(iii) a material disruption in securities settlement, payment or clearance services in the United States shall have occurred, (iv) any moratorium on commercial banking activities shall have been declared by Federal or New York State
authorities or (v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial markets or any calamity or crisis that, in your judgment, is material and adverse and which, singly or together with any other
event specified in this clause (v), makes it, in your judgment, impracticable or inadvisable to proceed with the offer, sale or delivery of the Shares on the terms and in the manner contemplated in the Registration Statement, the Time of Sale
Prospectus or the Prospectus.
10.
Effectiveness; Defaulting
Underwriters
. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.
If,
on the Closing Date or an Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Shares that it has or they have agreed to purchase hereunder on such date, and the aggregate number of Shares
which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than
one-tenth
of the aggregate number of the Shares to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Firm Shares set forth opposite their respective names in Schedule I bears to the aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date;
provided
that in no event shall the number of Shares that any Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 10 by an amount in excess of
one-ninth
of such number of Shares without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters
27
shall fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default occurs is more than
one-tenth
of
the aggregate number of Firm Shares to be purchased on such date, and arrangements satisfactory to you and the Company for the purchase of such Firm Shares are not made within 36 hours after such default, this Agreement shall terminate without
liability on the part of any
non-defaulting
Underwriter, the Company or the Operating Partnership. In any such case either you or the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the Registration Statement, in the Time of Sale Prospectus, in the Prospectus or in any other documents or arrangements may be effected. If, on an Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares and the aggregate number of Additional Shares with respect to which such default occurs is more than
one-tenth
of the aggregate
number of Additional Shares to be purchased on such Option Closing Date, the
non-defaulting
Underwriters shall have the option to (i) terminate their obligation hereunder to purchase the Additional Shares
to be sold on such Option Closing Date or (ii) purchase not less than the number of Additional Shares that such
non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of
the Company to comply with the terms or to fulfill any of the conditions of this Agreement (which, for the purposes of this Section 10, shall not include termination by the Underwriters under items (i), (iii), (iv) or (v) of
Section 9), or if for any reason the Company shall be unable to perform its obligations under this Agreement, the Company will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all
out-of-pocket
expenses (including the fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.
11.
Entire
Agreement
.
(a) This Agreement, together with any contemporaneous
written agreements and any prior written agreements (to the extent not superseded by this Agreement) that relate to the offering of the Shares, represents the entire agreement between the Company, the Operating Partnership and the Underwriters with
respect to the Registration Statement, the preliminary prospectus, the Time of Sale Prospectus, the Prospectus, the conduct of the offering, and the purchase and sale of the Shares.
(b) The Company and the Operating Partnership acknowledge that in connection
with the offering of the Shares: (i) the Underwriters have acted at arms length, are not agents of, and owe no fiduciary duties to, the Company, the Operating Partnership or any other person, (ii) the Underwriters owe the Company and the
Operating Partnership only those duties and obligations set forth in this Agreement and prior written agreements (to the extent not superseded by this Agreement), if any, and (iii) the Underwriters may have interests that differ from those of
the Company and the Operating Partnership. The Company and the Operating Partnership waive to the full extent permitted by applicable law any claims they may have against the Underwriters arising from an alleged breach of fiduciary duty in
connection with the offering of the Shares.
28
12.
Counterparts
. This
Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
13.
Applicable Law
. This Agreement and any claim, controversy or dispute
arising under or related to this Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice of law or conflicting provision or rule (whether of the State of New
York, or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of New York to be applied.
14.
Headings
. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of this Agreement.
15.
Notices
. All communications hereunder shall be in writing and
effective only upon receipt and: if to Morgan Stanley shall be delivered, mailed or sent to Morgan Stanley & Co. LLC, 1585 Broadway, 29th Floor, New York, New York 10036, Facsimile: (212)
507-8999,
Attention: Investment Banking Division; if to Merrill Lynch, Pierce, Fenner & Smith Incorporated shall be delivered, mailed or sent to Merrill Lynch, Pierce, Fenner & Smith Incorporated, 50 Rockefeller Plaza,
NY1-050-12-01,
New York, New York 10020, Facsimile: (646)
855-5958,
Attention: High Grade
Transaction Management/Legal; if to Wells Fargo Securities, LLC shall be delivered, mailed or sent to Wells Fargo Securities, LLC, 550 South Tryon Street, 5th Floor, Charlotte, North Carolina 28202, Facsimile: (704)
410-0326,
Attention: Transaction Management; and if to the Company shall be delivered, mailed or sent to Spirit Realty Capital, Inc., 2727 North Harwood Street, Suite 300, Dallas, Texas 75201, Attention:
General Counsel, with a copy to Latham & Watkins LLP, 355 South Grand Avenue, Los Angeles, California 90071, Attention: Julian T.H. Kleindorfer, Esq.
[
Signature page follows
]
29
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Very truly yours,
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Spirit Realty Capital, Inc.
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By:
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/s/Phillip D. Joseph, Jr.
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Name: Phillip D. Joseph, Jr.
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Title: Chief Financial Officer, Executive Vice
|
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President and Treasurer
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Spirit Realty, L.P.
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By:
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Spirit General OP Holdings, LLC, its
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general partner
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By:
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/s/ Phillip D. Joseph, Jr.
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Name: Phillip D. Joseph, Jr.
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Title: Chief Financial Officer, Executive
|
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Vice President and Treasurer
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Spirit - UA Signature Page
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Accepted as of the date first written above
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By:
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MORGAN STANLEY & CO. LLC
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By:
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/s/Mike Connor
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Name: Mike Connor
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Title: Vice President
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By:
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MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
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By:
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/s/Chris Porter
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Name: Chris Porter
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Title: Managing Director, Investment Banking
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By:
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WELLS FARGO SECURITIES, LLC
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By:
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/s/Carolyn Hurley
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Name: Carolyn Hurley
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Title: Director
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For themselves and as Representatives of the several
Underwriters named in Schedule I hereto
Spirit
- UA Signature Page
SCHEDULE I
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Underwriter
|
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Number of Firm Shares To
Be Purchased
|
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Morgan Stanley & Co. LLC
|
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1,599,600
|
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Merrill Lynch, Pierce, Fenner & Smith
Incorporated
|
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1,599,600
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Wells Fargo Securities, LLC
|
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1,599,600
|
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J.P. Morgan Securities LLC
|
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240,600
|
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U.S. Bancorp Investments, Inc.
|
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240,600
|
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Robert W. Baird & Co. Incorporated
|
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150,000
|
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Capital One Securities, Inc.
|
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150,000
|
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Scotia Capital (USA) Inc.
|
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150,000
|
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Deutsche Bank Securities Inc.
|
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90,000
|
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Mizuho Securities USA LLC
|
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90,000
|
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Samuel A. Ramirez & Company, Inc.
|
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90,000
|
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|
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Total
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6,000,000
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I-1
SCHEDULE II
Time of Sale Prospectus
|
1.
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The most recent preliminary prospectus related to the offering of the Shares together with the Base
Prospectus; and
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2.
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Any Permitted Free Writing Prospectus identified below.
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The foregoing, including the documents incorporated by reference therein pursuant to Item 12 of Form
S-3
under the Securities Act, considered together, the “
Time of Sale Prospectus
.”
Permitted
Free Writing Prospectus
Final Term Sheet (attached hereto as Schedule III)
II-2
SCHEDULE III
Final Term Sheet
PRICING TERM SHEET
6.000% Series A Cumulative Redeemable Preferred Stock
(Liquidation Preference $25.00 per Share)
September 26, 2017
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Issuer:
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Spirit Realty Capital, Inc.
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Security:
|
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6.000% Series A Cumulative Redeemable Preferred Stock
|
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Number of Shares:
|
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6,000,000 shares (6,900,000 shares if the underwriters’ option to purchase additional shares is exercised in full)
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Public Offering Price:
|
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$25.00 per share; $150,000,000 total (not including the underwriters’ option to purchase additional shares)
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Underwriting Discounts:
|
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$0.7875 per share; $4,725,000 total (not including the underwriters’ option to purchase additional shares)
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Maturity Date:
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Perpetual (unless redeemed by the Issuer on or after October 3, 2022 or pursuant to its special optional redemption right, or converted by a holder in connection with a change of control described below under “Change of
Control”)
|
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Trade Date:
|
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September 26, 2017
|
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Settlement Date:
|
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October 3, 2017 (T + 5)
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Liquidation Preference:
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$25.00, plus accrued and unpaid dividends
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Dividend Rate:
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6.000% per annum of the $25.00 per share liquidation preference (equivalent to $1.50 per annum per share), accruing from October 3, 2017
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Dividend Payment Dates:
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Quarterly on or about the last day of March, June, September and December of each year, beginning on December 31, 2017
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Optional Redemption:
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The Issuer may not redeem the series A preferred stock prior to October 3, 2022, except in limited circumstances to preserve its status as a real estate investment trust and pursuant to the special optional redemption provision
described below under “Special Optional Redemption.”
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On and after October 3, 2022, the Issuer may, at its option, redeem the series A preferred stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus any accrued and
unpaid dividends up to but excluding the redemption date (subject to the special optional redemption right described below).
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Special Optional Redemption:
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Upon the occurrence of a Change of Control (as defined below), the Issuer may, at its option, redeem the series A preferred stock, in whole or in part within 120 days after the first date on which such Change of Control occurred, by
paying $25.00 per share, plus any accrued and unpaid dividends to, but not including, the date of redemption. If, prior to the Change of Control Conversion Date (as defined below), the Issuer exercises any of its redemption rights relating to the
series A preferred stock (whether the optional redemption right or the special optional redemption right), the holders of series A preferred stock will not have the conversion rights described below.
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Change of Control:
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A “Change of Control” is when, after the original issuance of the series A preferred stock, the following have occurred and are continuing:
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● the acquisition by any person, including any
syndicate or group deemed to be a “person” under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or
series of purchases, mergers or other acquisition transactions of stock of the Issuer entitling that person to exercise more than 50% of the total voting power of all stock of the Issuer entitled to vote generally in the election of the
Issuer’s directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition); and
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● following the closing of any transaction referred
to in the bullet point above, neither the Issuer nor the acquiring or surviving entity has a class of common securities (or ADRs representing such securities) listed on the New York Stock Exchange, or the NYSE, the NYSE American, or the NASDAQ Stock
Market, or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE American or NASDAQ.
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Conversion Rights:
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Upon the occurrence of a Change of Control, each holder of series A preferred stock will have the right (unless, prior to the Change of Control Conversion Date, the Issuer has provided or provides notice of its election to redeem
the series A preferred stock) to convert some or all of the series A preferred stock held by such holder (the “Change of Control Conversion Right”) on the Change of Control Conversion Date into a number of shares of the Issuer’s
common stock per share of series A preferred stock to be converted equal to the lesser of:
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● the quotient obtained by dividing (i) the sum
of the $25.00 liquidation preference plus the amount of any accrued and unpaid dividends to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a record date for a series A preferred stock
dividend payment and prior to the corresponding series A preferred stock dividend payment date, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (ii) the Common Stock Price;
and
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● 5.93120 (i.e., the Share Cap), subject to certain
adjustments;
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subject, in each case, to provisions for the receipt of alternative consideration as described in the preliminary prospectus supplement.
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The Share Cap is subject to pro rata adjustments for any share splits (including those effected pursuant to a distribution of the Issuer’s common stock), subdivisions or combinations with respect to the Issuer’s common
stock as described in the preliminary prospectus supplement.
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Upon such a conversion, the holders will be limited to a maximum number of shares of the Issuer’s common stock equal to the Share Cap multiplied by the number of shares of series A preferred stock converted. If the Common Stock
Price is less than $4.215 (which is approximately 50% of the
per-share
closing sale price of the Issuer’s common stock reported on the NYSE on September 25, 2017), subject to adjustment, the holders
will receive a maximum of 5.93120 shares of the Issuer’s common stock per share of series A preferred stock, which may result in the holders receiving a value that is less than the liquidation preference of the series A preferred
stock.
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If, prior to the Change of Control Conversion Date, the Issuer has provided a redemption notice, whether pursuant to its special optional redemption right in connection with a Change of Control or its optional redemption right,
holders of series A preferred stock will not have any right to convert the series A preferred stock in connection with the Change of Control Conversion Right and any shares of series A preferred stock selected for redemption that have been tendered
for conversion will be redeemed on the related date of redemption instead of converted on the Change of Control Conversion Date.
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The “Change of Control Conversion Date” is the date the series A preferred stock is to be converted, which will be a business day that is no fewer than 20 days nor more than 35 days after the date on which the Issuer
provides the required notice of the occurrence of a Change of Control to the holders of series A preferred stock.
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The “Common Stock Price” will be (i) if the consideration to be received in the Change of Control by the holders of the Issuer’s common stock is solely cash, the amount of cash consideration per share of the
Issuer’s common stock or (ii) if the consideration to be received in the Change of Control by holders of the Issuer’s common stock is other than solely cash (x) the average of the closing sale prices per share of the
Issuer’s common stock (or, if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) for the
ten
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consecutive trading days immediately preceding, but not including, the effective date of the Change of Control as reported on the principal U.S. securities exchange on which the Issuer’s common stock is then traded, or
(y) the average of the last quoted bid prices for the Issuer’s common stock in the
over-the-counter
market as reported by Pink Sheets LLC or similar
organization for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Control, if the Issuer’s common stock is not then listed for trading on a U.S. securities exchange.
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Use of Proceeds:
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We intend to contribute the net proceeds from this offering to our operating partnership in exchange for preferred units of our operating partnership. Our operating partnership intends to use the net proceeds from this offering to
repay amounts outstanding under its revolving credit facility and for general corporate purposes.
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CUSIP/ISIN:
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84860W 201 / US84860W2017
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Joint Book-Running Managers:
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Morgan Stanley & Co. LLC
Merrill
Lynch, Pierce, Fenner & Smith
Incorporated
Wells Fargo Securities, LLC
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Co-Managers:
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J.P. Morgan Securities LLC
U.S. Bancorp
Investments, Inc.
Robert W. Baird & Co. Incorporated
Capital One Securities, Inc.
Scotia Capital (USA) Inc.
Deutsche Bank Securities Inc.
Mizuho Securities USA LLC
Samuel A. Ramirez & Company, Inc.
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Listing:
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The Issuer intends to file an application to list the series A preferred stock on the NYSE under the symbol “SRC Pr A”. If the application is approved, trading of the series A preferred stock on the NYSE is expected to
commence within 30 days after the date of initial delivery of the series A preferred stock.
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This communication is intended for the sole use of the person to whom it is provided by the sender.
A-1-5
The Issuer has filed a registration statement (including a prospectus and a prospectus
supplement) with the Securities and Exchange Commission (“SEC”) for the offering to which this communication relates. Before you invest, you should read the base prospectus and prospectus supplement in that registration statement and other
documents the Issuer has filed with the SEC for more complete information about the Issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC web site at www.sec.gov. Alternatively, the Issuer, any underwriter or
any dealer participating in the offering will arrange to send you the prospectus if you request it by contacting Morgan Stanley & Co. LLC (telephone:
1-866-718-1649),
Merrill Lynch, Pierce, Fenner & Smith Incorporated (telephone:
1-800-294-1322
or email: dg.prospectus_requests@baml.com) or Wells Fargo Securities, LLC (telephone:
1-800-645-3751
or email: wfscustomerservice@wellsfargo.com).
A-1-6
Exhibit 3.1
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SPIRIT REALTY, L.P.
a Delaware limited partnership
THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “
SECURITIES ACT
”), OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS IN THE OPINION OF COUNSEL SATISFACTORY TO THE
PARTNERSHIP THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.
dated as of October 3, 2017
TABLE OF CONTENTS
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIRIT REALTY, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF SPIRIT REALTY, L.P., dated as of October 3, 2017, is
made and entered into by and among Spirit General OP Holdings, LLC, a Delaware limited liability company, as the General Partner, Spirit Realty Capital, Inc., a Maryland corporation, as the Special Limited Partner, and the Persons whose names are
set forth on
Exhibit A
attached hereto, as Limited Partners, and any Additional Limited Partner that is admitted from time to time to the Partnership and listed on
Exhibit A
attached hereto.
WHEREAS, the General Partner and the Special Limited Partner are parties to that certain First Amended and Restated Agreement
of Limited Partnership of Spirit Realty, L.P., dated September 12, 2014 (the “
Agreement of Limited Partnership
”); and
WHEREAS, the undersigned Partners (as hereinafter defined) desire to amend and restate the Agreement of Limited Partnership in
its entirety.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms
used in this Agreement:
“
Act
” means the Delaware Revised Uniform Limited Partnership Act, as it may be
amended from time to time, and any successor to such statute.
“
Actions
” has the meaning set forth in
Section 7.7 hereof.
“
Additional Funds
” has the meaning set forth in Section 4.3.A hereof.
“
Additional Limited Partner
” means a Person who is admitted to the Partnership as a limited partner pursuant
to Section 12.2(A) hereof and listed on
Exhibit A
hereto.
“
Adjusted Capital Account
” means,
with respect to any Partner, the balance in such Partner’s Capital Account as of the end of the relevant Partnership Year or other applicable period, after giving effect to the following adjustments:
(i) increase such Capital Account by any amounts that such Partner is obligated to restore pursuant to this Agreement upon
liquidation of such Partner’s Partnership Interest or that such Person is deemed to be obligated to restore pursuant to Regulations
Section 1.704-1(b)(2)(ii)(c)
or the penultimate sentence of each of
Regulations Sections
1.704-2(g)(1)
and
1.704-2(i)(5);
and
(ii) decrease such Capital Account by the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4),
(5)
1
and (6).
The foregoing definition of “Adjusted Capital
Account” is intended to comply with the provisions of Regulations
Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
“
Adjusted Capital Account Deficit
” means, with respect to any Partner, the deficit balance, if any, in such
Partner’s Adjusted Capital Account as of the end of the relevant Partnership Year or other applicable period.
“
Adjustment Factor
” means 1.0; provided, however, that in the event that:
(i) the Special Limited Partner (a) declares or pays a dividend on its outstanding REIT Shares wholly or partly in REIT
Shares or makes a distribution to all holders of its outstanding REIT Shares wholly or partly in REIT Shares, (b) splits or subdivides its outstanding REIT Shares or (c) effects a reverse stock split or otherwise combines its outstanding
REIT Shares into a smaller number of REIT Shares, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction, (i) the numerator of which shall be the number of REIT Shares issued and
outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination (assuming for such purposes that such dividend, distribution, split, subdivision, reverse split or combination has occurred as of such
time) and (ii) the denominator of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or
combination;
(ii) the Special Limited Partner distributes any rights, options or warrants to all holders of its REIT
Shares to subscribe for or to purchase or to otherwise acquire REIT Shares, or other securities or rights convertible into, exchangeable for or exercisable for REIT Shares, at a price per share less than the Value of a REIT Share on the record date
for such distribution (other than REIT Shares issuable pursuant to a Qualified DRIP/COPP or as compensation to employees or other service providers) (each a “
Distributed Right
”), then, as of the distribution date of such Distributed
Rights or, if later, the time such Distributed Rights become exercisable, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction (a) the numerator of which shall be the number of REIT
Shares issued and outstanding on the record date (or, if later, the date such Distributed Rights become exercisable) plus the maximum number of REIT Shares purchasable under such Distributed Rights and (b) the denominator of which shall be the
number of REIT Shares issued and outstanding on the record date (or, if later, the date such Distributed Rights become exercisable) plus a fraction (1) the numerator of which is the maximum number of REIT Shares purchasable under such
Distributed Rights times the minimum purchase price per REIT Share under such Distributed Rights and (2) the denominator of which is the Value of a REIT Share as of the record date (or, if later, the date such Distributed Rights become
exercisable); provided, however, that, if any such Distributed Rights expire or become no longer exercisable, then the Adjustment Factor shall be adjusted, effective retroactive to the date of distribution of the Distributed Rights (or, if
applicable, the later time that the Distributed Rights became exercisable), to reflect a reduced maximum number of REIT Shares or any change in the minimum purchase price for the purposes of the above fraction; and
(iii) the Special Limited Partner shall, by dividend or otherwise, distribute to all holders of its REIT Shares evidences of
its indebtedness or assets (including securities, but excluding any dividend or distribution referred to in subsection (i) or (ii) above), which evidences of indebtedness or assets relate to assets not received by the Special Limited Partner
pursuant to a pro rata distribution by the Partnership, then the Adjustment Factor shall be adjusted to equal the amount determined by multiplying the Adjustment Factor in effect immediately prior to the close of business as of the record date by a
fraction (a) the numerator of which shall be such Value of a REIT Share as of the record date and (b) the denominator of which shall be the Value of a REIT Share as of the record date less the then fair market value (as determined by the
General Partner, whose determination shall be conclusive) of the portion of the evidences of indebtedness or assets so distributed applicable to one REIT Share.
Notwithstanding the foregoing, no adjustments to the Adjustment Factor will be made for any class or series of Partnership
Interests to the extent that the Partnership makes or effects any correlative distribution or
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payment to all of the Partners holding Partnership Interests of such class or series, or effects any correlative split or reverse split in respect of the Partnership Interests of such class or
series. Any adjustments to the Adjustment Factor shall become effective immediately after such event, retroactive to the record date, if any, for such event. For illustrative purposes, examples of adjustments to the Adjustment Factor are set forth
on
Exhibit B
attached hereto.
“
Affiliate
” means, with respect to any Person, any Person directly
or indirectly controlling or controlled by or under common control with such Person. For the purposes of this definition, “control” when used with respect to any Person means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.
“
Affiliated REIT
” means the Special Limited Partner and any Affiliate of the Special Limited
Partner that has elected to be taxed as a REIT under the Code.
“
Agreement
” means this Second Amended and
Restated Limited Partnership Agreement of Spirit Realty, L.P., as now or hereafter amended, restated, modified, supplemented or replaced.
“
Applicable Percentage
” has the meaning set forth in Section 15.1.B hereof.
“
Appraisal
” means, with respect to any assets, the written opinion of an independent third party experienced
in the valuation of similar assets, selected by the General Partner. Such opinion may be in the form of an opinion by such independent third party that the value for such property or asset as set by the General Partner is fair, from a financial
point of view, to the Partnership.
“
Assignee
” means a Person to whom a Partnership Interest has been
Transferred in a manner permitted under this Agreement, but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.5 hereof.
“
Business Day
” means any day except a Saturday, Sunday or other day on which commercial banks in New York
City are authorized by law to close.
“
Capital Account
” means, with respect to any Partner, the capital
account maintained by the General Partner for such Partner on the Partnership’s books and records in accordance with the following provisions:
(i) To each Partner’s Capital Account, there shall be added such Partner’s Capital Contributions, such
Partner’s distributive share of Net Income and any items in the nature of income or gain that are specially allocated pursuant to Section 6.3 or 6.4 hereof, and the amount of any Partnership liabilities assumed by such Partner or that are
secured by any property distributed to such Partner.
(ii) From each Partner’s Capital Account, there shall be
subtracted the amount of cash and the Gross Asset Value of any Partnership Property distributed to such Partner pursuant to any provision of this Agreement, such Partner’s distributive share of Net Losses and any items in the nature of expenses
or losses that are specially allocated pursuant to Section 6.3 or 6.4 hereof, and the amount of any liabilities of such Partner assumed by the Partnership or that are secured by any Property contributed by such Partner to the Partnership
(except to the extent already reflected in the amount of such Partner’s Capital Contribution).
(iii) In the event
any interest in the Partnership is Transferred in accordance with the terms of this Agreement (which Transfer does not result in the termination of the Partnership for federal income tax purposes), the transferee shall succeed to the Capital Account
of the transferor to the extent that it relates to the Transferred interest.
(iv) In determining the amount of any
liability for purposes of subsections (i) and (ii) hereof, there shall be
3
taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.
(v) The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations
promulgated under Section 704 of the Code, and shall be interpreted and applied in a manner consistent with such Regulations. If the General Partner shall determine that it is necessary or appropriate to modify the manner in which the Capital
Accounts are maintained in order to comply with such Regulations, the General Partner may make such modification, provided that such modification is not likely to have any material effect on the amounts distributable to any Partner pursuant to
Article 13 hereof upon the dissolution of the Partnership. The General Partner may, in its sole and absolute discretion, (a) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the
Partners and the amount of Partnership capital reflected on the Partnership’s balance sheet, as computed for book purposes, in accordance with Regulations
Section 1.704-1(b)(2)(iv)(q)
and
(b) make any modifications that are necessary or appropriate in the event that unanticipated events might otherwise cause this Agreement not to comply with Regulations
Section 1.704-1(b)
or
Section 1.704-2.
“
Capital Contribution
” means, with respect to
any Partner, the amount of money and the initial Gross Asset Value of any Contributed Property that such Partner contributes or is deemed to contribute to the Partnership pursuant to Article 4 hereof.
“
Capital Share
” means a share of any class or series of stock of the Special Limited Partner now or hereafter
authorized other than a REIT Share.
“
Cash Amount
” means an amount of cash equal to the product of
(i) the Value of a REIT Share and (ii) the REIT Shares Amount determined as of the applicable Valuation Date.
“
Certificate
” means the Certificate of Limited Partnership of the Partnership filed with the Secretary of
State for the State of Delaware, as amended from time to time in accordance with the terms hereof and the Act.
“
Charity
” means an entity described in Section 501(c)(3) of the Code or any trust all the beneficiaries
of which are such entities.
“
Charter
” means the charter of the Special Limited Partner, within the
meaning of
Section 1-101(e)
of the Maryland General Corporation Law.
“
Closing Price
” has the meaning set forth in the definition of “
Value
.”
“
Code
” means the Internal Revenue Code of 1986, as amended and in effect from time to time or any successor
statute thereto, as interpreted by the applicable Regulations thereunder. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.
“
Consent
” means the consent to, approval of, or vote in favor of a proposed action by a Partner given in
accordance with Article 14 hereof.
“
Consent of the General Partner
” means the Consent of the sole
General Partner, which Consent, except as otherwise specifically required by this Agreement, may be obtained prior to or after the taking of any action for which it is required by this Agreement and may be given or withheld by the General Partner in
its sole and absolute discretion.
“
Consent of the Limited Partners
” means the Consent of a Majority in
Interest of the Limited Partners, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld by each Limited Partner in
its sole and absolute discretion.
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“
Contributed Property
” means each property or other asset, in
such form as may be permitted by the Act, but excluding cash, contributed or deemed contributed to the Partnership (or deemed contributed by the Partnership to a “new” partnership pursuant to Code Section 708).
“
Controlled Entity
” means, as to any Partner, (a) any corporation more than fifty percent (50%) of the
outstanding voting stock of which is owned by such Partner or such Partner’s Family Members or Affiliates, (b) any trust, whether or not revocable, of which such Partner or such Partner’s Family Members or Affiliates are the sole
beneficiaries, (c) any partnership of which such Partner or its Affiliates are the managing partners and in which such Partner, such Partner’s Family Members or Affiliates hold partnership interests representing at least twenty-five
percent (25%) of such partnership’s capital and profits and (d) any limited liability company of which such Partner or its Affiliates are the managers and in which such Partner, such Partner’s Family Members or Affiliates hold
membership interests representing at least twenty-five percent (25%) of such limited liability company’s capital and profits.
“
Cut-Off
Date
” means the fifth (5th) Business Day after the General
Partner’s receipt of a Notice of Redemption.
“
Debt
” means, as to any Person, as of any date of
determination: (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under
letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person; (iii) all indebtedness for borrowed money or for the deferred purchase price of property or services secured
by any lien on any property owned by such Person, to the extent attributable to such Person’s interest in such property, even though such Person has not assumed or become liable for the payment thereof; and (iv) lease obligations of such
Person that, in accordance with generally accepted accounting principles, should be capitalized.
“
Delaware
Courts
” has the meaning set forth in Section 15.9.B hereof.
“
Depreciation
” means, for each
Partnership Year or other applicable period, an amount equal to the federal income tax depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis;
provided
,
however
, that if the federal income tax depreciation, amortization or other cost recovery
deduction for such year or other period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.
“
Disregarded Entity
” means, with respect to any Person, (i) any “qualified REIT subsidiary”
(within the meaning of Code Section 856(i)(2)) of such Person, (ii) any entity treated as a disregarded entity for federal income tax purposes with respect to such Person, or (iii) any grantor trust if the sole owner of the assets of
such trust for federal income tax purposes is such Person.
“
Distributed Right
” has the meaning set forth
in the definition of “
Adjustment Factor
.”
“
Distribution Payment Date
” means the dates
upon which the General Partner makes distributions in accordance with Section 5.1.
“
Distribution
Period
” means the period from the day immediately following a Distribution Payment Date through the date that is the subsequent Distribution Payment Date.
“
ERISA
” means the Employee Retirement Income Security Act of 1974, as amended.
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“Equity Plan
” means any stock or equity purchase plan,
restricted stock or equity plan or other similar equity compensation plan now or hereafter adopted by the Partnership or the General Partner, including the Plan.
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended, and any successor statute thereto, and
the rules and regulations of the SEC promulgated thereunder.
“
Family Members
” means, as to a Person that
is an individual, such Person’s spouse, ancestors, descendants (whether by blood or by adoption or step-descendants by marriage), brothers and sisters, nieces and nephews and
inter vivos
or testamentary trusts (whether revocable or
irrevocable) of which only such Person and his or her spouse, ancestors, descendants (whether by blood or by adoption or step-descendants by marriage), brothers and sisters and nieces and nephews are beneficiaries.
“
Flow-Through Partners
” has the meaning set forth in Section 11.3.A(4) hereof.
“
Flow-Through Entity
” has the meaning set forth in Section 11.3.A(4) hereof. “
Funding
Debt
” means any Debt incurred by or on behalf of the General Partner or the Special Limited Partner for the purpose of providing funds to the Partnership.
“
General Partner
” means Spirit General OP Holdings, LLC and its successors and assigns as a general partner
of the Partnership, in each case, that is admitted from time to time to the Partnership as a general partner pursuant to the Act and this Agreement and is listed as a general partner on
Exhibit A
, as such
Exhibit A
may be amended or
updated from time to time, in such Person’s capacity as a general partner of the Partnership.
“
General
Partner Interest
” means the entire Partnership Interest held by a General Partner hereof, which Partnership Interest may be expressed as a number of Partnership Common Units, Partnership Preferred Units or any other Partnership Units.
“
Gross Asset Value
” means, with respect to any asset, the asset’s adjusted basis for federal income tax
purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a Partner to the Partnership
shall be the gross fair market value of such asset on the date of contribution (subject to any adjustments required with respect to the conversion feature of the Series A Preferred Units and any other securities issued by the Special Limited Partner
that are exercisable or convertible into Partnership Common Units, as determined by the General Partner in its sole discretion), as determined by the General Partner and agreed to by the contributing Person.
(b) The Gross Asset Values of all Partnership assets immediately prior to the occurrence of any event described in clauses
(i) through (v) and clause (vii) below, and immediately after the occurrence of any event described in clause (vi) below, shall be adjusted to equal their respective gross fair market values, as determined by the General Partner using
such reasonable method of valuation as it may adopt, as of the following times:
(i) the acquisition of an additional
interest in the Partnership (other than in connection with the execution of this Agreement but including, without limitation, acquisitions pursuant to Section 4.2 hereof or contributions or deemed contributions by the General Partner pursuant
to Section 4.2 hereof) by a new or existing Partner in exchange for more than a
de minimis
Capital Contribution, if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative
economic interests of the Partners in the Partnership;
(ii) the distribution by the Partnership to a Partner of more than
a
de minimis
amount of Partnership property as consideration for an interest in the Partnership if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the
Partners in the Partnership;
(iii) the liquidation of the Partnership within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g);
6
(iv) the grant of an interest in the Partnership (other than a
de minimis
interest) as consideration for the provision of services to or for the benefit of the Partnership by an existing Partner acting in a partner capacity, or by a new Partner acting in a partner capacity or in anticipation of becoming a Partner of the
Partnership, if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership; and
(v) the issuance by the Partnership of a Noncompensatory Option which is not treated as a partnership interest pursuant to
Section 1.761-3(a)
of the Regulations;
(vi) the acquisition of an interest in the
Partnership by any new or existing Partner upon the exercise of a Noncompensatory Option in accordance with Regulations
Section 1.704-1(b)(2)(iv)(s);
and
(vii) at such other times as the General Partner shall reasonably determine necessary or advisable in order to comply with
Regulations Sections
1.704-1(b)
and
1.704-2;
provided
however
, if any Noncompensatory Options are outstanding upon the occurrence of an event described in this paragraph (b)(i) through (b)(vii), the Partnership shall adjust the Gross Asset Values of its properties in accordance with Regulations
Sections
1.704-1(b)(2)(iv)(f)(1)
and
1.704-1(b)(2)(iv)(h)(2).
(c) The Gross Asset Value of any Partnership asset distributed to a Partner shall be the gross fair market value of such asset
on the date of distribution, as determined by the distributee and the General Partner;
provided
,
however
, that if the distributee is the General Partner or if the distributee and the General Partner cannot agree on such a
determination, such gross fair market value shall be determined by Appraisal.
(d) The Gross Asset Values of Partnership
assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m);
provided
,
however
, that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to
the extent that the General Partner reasonably determines that an adjustment pursuant to subsection (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection
(d).
(e) If the Gross Asset Value of a Partnership asset has been determined or adjusted pursuant to subsection (a),
subsection (b) or subsection (d) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Losses.
“
Hart-Scott-Rodino Act
” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
“
Holder
” means either (a) a Partner or (b) an Assignee owning a Partnership Interest.
“
Incapacity
” or “
Incapacitated
” means: (i) as to any Partner who is an individual,
death, total physical disability or entry by a court of competent jurisdiction adjudicating such Partner incompetent to manage his or her person or his or her estate; (ii) as to any Partner that is a corporation or limited liability company,
the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (iii) as to any Partner that is a partnership, the dissolution and commencement of winding up of the partnership; (iv) as
to any Partner that is an estate, the distribution by the fiduciary of the estate’s entire interest in the Partnership; (v) as to any trustee of a trust that is a Partner, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For purposes of this definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences a voluntary proceeding seeking liquidation,
reorganization or other relief of or against such Partner under any bankruptcy, insolvency or other similar law now or hereafter in effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
non-appealable
order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Partner, (c) the Partner executes and
7
delivers a general assignment for the benefit of the Partner’s creditors, (d) the Partner files an answer or other pleading admitting or failing to contest the material allegations of a
petition filed against the Partner in any proceeding of the nature described in clause (b) above, (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver or Liquidator for the Partner or for all or any
substantial part of the Partner’s properties, (f) any proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within one hundred
twenty (120) days after the commencement thereof, (g) the appointment without the Partner’s consent or acquiescence of a trustee, receiver or liquidator has not been vacated or stayed within ninety (90) days of such appointment,
or (h) an appointment referred to in clause (g) above is not vacated within ninety (90) days after the expiration of any such stay.
“
Indemnitee
” means (i) any Person made, or threatened to be made, a party to a proceeding by reason of
its status as (a) the General Partner or the Special Limited Partner or (b) a member, manager or managing member of the General Partner or a director or officer of the Special Limited Partner or an employee or agent of the Partnership, the
Special Limited Partner or the General Partner and (ii) such other Persons (including Affiliates or employees of the General Partner, the Special Limited Partner or the Partnership) as the General Partner may designate from time to time
(whether before or after the event giving rise to potential liability), in its sole and absolute discretion.
“
IRS
” means the United States Internal Revenue Service.
“
Junior Units
” means Partnership Units representing any class or series of Partnership Interest ranking, as
to distributions or voluntary or involuntary liquidation, dissolution or
winding-up
of the Partnership, junior to the Series A Preferred Units.
“
Limited Partner
” means any Person that is admitted from time to time to the Partnership as a limited partner
pursuant to the Act and this Agreement and is listed as a limited partner on
Exhibit A
attached hereto, as such
Exhibit A
may be amended or updated from time to time, including the Special Limited Partner, any Substituted Limited
Partner or Additional Limited Partner, in such Person’s capacity as a limited partner of the Partnership.
“
Limited Partner Interest
” means a Partnership Interest of a Limited Partner in the Partnership representing
a fractional part of the Partnership Interests of all Limited Partners and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person
to comply with the terms and provisions of this Agreement. A Limited Partner Interest may be expressed as a number of Partnership Common Units, Partnership Preferred Units or other Partnership Units.
“
Liquidating Event
” has the meaning set forth in Section 13.1 hereof.
“
Liquidating Gains
” means any net gain realized in connection with the actual or hypothetical sale of all or
substantially all of the assets of the Partnership (including upon the occurrence of any Liquidating Event or Terminating Capital Transaction), including but not limited to net gain realized in connection with an adjustment to the Gross Asset Value
of Partnership assets under the definition of Gross Asset Value in Section 1 of this Agreement.
“
Liquidator
” has the meaning set forth in Section 13.2.A hereof.
“
Majority in Interest of the Limited Partners
” means Limited Partners holding in the aggregate Percentage
Interests that are greater than fifty percent (50%) of the aggregate Percentage Interests of all Limited Partners.
“
Majority in Interest of the Partners
” means Partners holding in the aggregate Percentage Interests that are
greater than fifty percent (50%) of the aggregate Percentage Interests of all Partners entitled to Consent to or withhold Consent from a proposed action.
8
“
Market Price
” has the meaning set forth in the definition of
“
Value
.”
“
Net Income
” or “
Net Loss
” means, for each Partnership Year
or other applicable period, an amount equal to the Partnership’s taxable income or loss for such year or other applicable period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Net
Income (or Net Loss) pursuant to this definition of “Net Income” or “Net Loss” shall be added to (or subtracted from, as the case may be) such taxable income (or loss);
(b) Any expenditure of the Partnership described in Code Section 705(a)(2)(B) or treated as a Code
Section 705(a)(2)(B) expenditure pursuant to Regulations
Section 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of
“Net Income” or “Net Loss,” shall be subtracted from (or added to, as the case may be) such taxable income (or loss);
(c) In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subsection (b) or subsection (c)
of the definition of “Gross Asset Value,” the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss;
(d) Gain or loss resulting from any disposition of a Partnership asset with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross Asset Value of the Partnership asset disposed of, notwithstanding that the adjusted tax basis of such asset differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization and other cost recovery deductions that would otherwise be taken into account in
computing such taxable income or loss, there shall be taken into account Depreciation for such Partnership Year or other applicable period;
(f) To the extent that an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b)
or Code Section 743(b) is required pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m)(4)
to be taken into account in determining Capital Accounts as a result of a distribution other than in
liquidation of a Partner’s interest in the Partnership, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; and
(g)
Notwithstanding any other provision of this definition of “Net Income” or “Net Loss,” any item that is specially allocated pursuant to Section 6.3 or 6.4 hereof shall not be taken into account in computing Net Income or Net
Loss. The amounts of the items of Partnership income, gain, loss or deduction available to be specially allocated pursuant to Section 6.3 or 6.4 hereof shall be determined by applying rules analogous to those set forth in this definition of
“Net Income” or “Net Loss.”
“
New Securities
” means (i) any rights, options,
warrants or convertible or exchangeable securities having the right to subscribe for or purchase REIT Shares or Preferred Shares, excluding grants under the Stock Option Plans, or (ii) any Debt issued by the Special Limited Partner that
provides any of the rights described in clause (i).
“
Noncompensatory Option
” means a
“noncompensatory option” within the meaning of Regulations
Sections 1.721-2(f)
and
1.761-3(b)(2).
For purposes of clarification, the Series A Preferred
Units shall be treated as Noncompensatory Options.
“
Nonrecourse Deductions
” has the meaning set forth in
Regulations
Section 1.704-2(b)(1),
and the amount of Nonrecourse Deductions for a Partnership Year shall be determined in accordance with the rules of Regulations
9
Section 1.704-2(c).
“
Nonrecourse Liability
” has the meaning set forth in Regulations Sections
1.704-2(b)(3)
and
1.752-1(a)(2).
“
Notice of Redemption
” means the Notice of Redemption substantially in the form of
Exhibit C
attached
to this Agreement.
“
Optionee
” means a Person to whom a stock option is granted under any Stock Option
Plan.
“
Ownership Limit
” means the restriction or restrictions on the ownership and transfer of stock of
the Special Limited Partner imposed under the Charter.
“
Parity Preferred Unit
” means any class or series
of Partnership Interests of the Partnership now or hereafter authorized, issued or outstanding expressly designated by the Partnership to rank on a parity with the Series A Preferred Units with respect to distributions or rights upon voluntary or
involuntary liquidation,
winding-up
or dissolution of the Partnership, or both, as the context may require.
“
Partner
” means the General Partner or a Limited Partner, and “
Partners
” means the General
Partner and the Limited Partners.
“
Partner Minimum Gain
” means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations
Section 1.704-2(i)(3).
“
Partner Nonrecourse Debt
” has the
meaning set forth in Regulations
Section 1.704-2(b)(4).
“
Partner
Nonrecourse Deductions
” has the meaning set forth in Regulations
Section 1.704-2(i)(1),
and the amount of Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(i)(2).
“
Partnership
” means the limited partnership formed and continued under the Act and pursuant to this
Agreement, and any successor thereto.
“
Partnership Common Unit
” means a fractional, undivided share of
the Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2 hereof, but does not include any Partnership Preferred Unit or any other Partnership Unit specified in a Partnership Unit Designation as being other than a Partnership
Common Unit.
“
Partnership Equivalent Units
” has the meaning set forth in Section 4.7.A hereof.
“
Partnership Interest
” means an ownership interest in the Partnership held by either a Limited Partner or a
General Partner and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this
Agreement. There may be one or more classes or series of Partnership Interests. A Partnership Interest may be expressed as a number of Partnership Common Units, Partnership Preferred Units or other Partnership Units.
“
Partnership Minimum Gain
” has the meaning set forth in Regulations
Section 1.704-2(b)(2),
and the amount of Partnership Minimum Gain, as well as any net increase or decrease in Partnership Minimum Gain, for a Partnership Year shall be determined in accordance with the
rules of Regulations
Section 1.704-2(d).
“
Partnership Preferred
Unit
” means a fractional, undivided share of the Partnership Interests that the General Partner has authorized pursuant to Sections 4.2 and 16.1 hereof that has distribution rights, or rights upon liquidation, winding up and dissolution,
that are superior or prior to the Partnership Common Units.
10
“
Partnership Record Date
” means the record date established by
the General Partner for the purpose of determining the Partners entitled to notice of or to vote at any meeting of Partners or to Consent to any matter, or to receive any distribution or the allotment of any other rights, or in order to make a
determination of Partners for any other proper purpose, which, in the case of a distribution pursuant to Section 5.1 hereof, which record date shall generally be the same as the record date established by the Special Limited Partner for a
distribution to its stockholders of some or all of its portion of such distribution.
“
Partnership Unit
”
means a Partnership Common Unit, a Partnership Preferred Unit or any other unit of the fractional, undivided share of the Partnership Interests that the General Partner has authorized pursuant to Section 4.1, Section 4.2 or
Section 4.3 hereof;
provided
,
however
, that Partnership Units comprising a General Partner Interest or a Limited Partner Interest shall have the differences in rights and privileges as specified in this Agreement.
“
Partnership Unit Designation
” shall have the meaning set forth in Section 4.2.A hereof.
“
Partnership Year
” means the fiscal year of the Partnership, which shall be the calendar year.
“
Percentage Interest
” means, with respect to each Partner, the fraction, expressed as a percentage, the
numerator of which is the aggregate number of Partnership Units of all classes and series held by such Partner and the denominator of which is the total number of Partnership Units of all classes and series held by all Partners;
provided,
however
, that, to the extent applicable in context, the term “Percentage Interest” means, with respect to a Partner, the fraction, expressed as a percentage, the numerator of which is the aggregate number of Partnership Units of a
specified class or series (or specified group of classes and/or series) held by such Partner and the denominator of which is the total number of Partnership Units of such specified class or series (or specified group of classes and/or series) held
by all Partners.
“
Permitted Transfer
” has the meaning set forth in Section 11.3.A hereof.
“
Person
” means an individual or a corporation, partnership, trust, unincorporated organization, association,
limited liability company or other entity.
“
Plan
” means the Spirit Realty Capital, Inc and Spirit
Realty, LP 2012 Incentive Award Plan.
“
Preferred Distribution Shortfall
” means, with respect to any
Partnership Interests that are entitled to any preference in distributions pursuant to this Agreement, the aggregate amount of the required distributions for such outstanding Partnership Interests for all prior Distribution Periods minus the
aggregate amount of the distributions made with respect to such outstanding Partnership Interests pursuant to this Agreement.
“
Preferred Share
” means a share of stock of the Special Limited Partner of any class or series now or
hereafter authorized or reclassified that has dividend rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the REIT Shares.
“
Properties
” means any interests in real property and personal property, including but not limited to, fee
interests, interests in ground leases, easements and rights of way, interests in joint ventures, partnerships, limited liability companies, corporations or other entities, interests in mortgages, and Debt instruments.
“
Proposed Section
83 Safe Harbor Regulation
” has the meaning set forth in
Section 10.7 hereof.
“
Qualified DRIP/COPP
” means a dividend reinvestment plan or a cash option
purchase plan of the Special Limited Partner that permits participants to acquire REIT Shares using the proceeds of dividends paid by the Special Limited Partner or cash of the participant, respectively; provided, however, that if such shares are
offered at a discount, such discount must (i) be designed to pass along to the stockholders of the Special Limited Partner the
11
savings enjoyed by the Special Limited Partner in connection with the avoidance of stock issuance costs, and (ii) not exceed 5% of the value of a REIT Share as computed under the terms of
such plan.
“
Qualified Transferee
” means an “accredited investor” as defined in Rule 501
promulgated under the Securities Act.
“
Qualifying Party
” means (a) a Limited Partner, (b) an
Assignee or (c) a Person who is the transferee of a Limited Partner Interest in a Permitted Transfer;
provided
,
however
, that a Qualifying Party shall not include the Special Limited Partner.
“
Redemption
” has the meaning set forth in Section 15.1.A hereof.
“
Regulations
” means the income tax regulations under the Code, whether such regulations are in proposed,
temporary or final form, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“
Regulatory Allocations
” has the meaning set forth in Section 6.4.A(viii) hereof.
“
REIT
” means a real estate investment trust qualifying under Code Section 856.
“
REIT Partner
” means (a) the Special Limited Partner or any Affiliate of the Special Limited Partner to
the extent such person has in place an election to qualify as a REIT and, (b) any Disregarded Entity with respect to any such Person.
“
REIT Payment
” has the meaning set forth in Section 15.12 hereof.
“
REIT Requirements
” has the meaning set forth in Section 5.1 hereof.
“
REIT Series A Preferred Share
” means a share of 6.000% Series A Cumulative Redeemable Preferred Stock, par
value $0.01 per share, liquidation preference $25 per share, of the Special Limited Partner, with such rights, priorities and preferences as shall be designated by the board of directors of the Special Limited Partner in accordance with the Charter.
“
REIT Share
” means a share of common stock of the Special Limited Partner, $0.01 par value per share,
but shall not include any class or series of the Special Limited Partner’s common stock classified after the date of this Agreement.
“
REIT Shares Amount
” means a number of REIT Shares equal to the product of (a) the number of Tendered
Units and (b) the Adjustment Factor;
provided
,
however
, that, in the event that the Special Limited Partner issues to all holders of REIT Shares as of a certain record date rights, options, warrants or convertible or exchangeable
securities entitling the Special Limited Partner’s stockholders to subscribe for or purchase REIT Shares, or any other securities or property (collectively, the “
Rights
”), with the record date for such Rights issuance falling
within the period starting on the date of the Notice of Redemption and ending on the day immediately preceding the Specified Redemption Date, which Rights will not be distributed before the relevant Specified Redemption Date, then the REIT Shares
Amount shall also include such Rights that a holder of that number of REIT Shares would be entitled to receive, expressed, where relevant hereunder, in a number of REIT Shares determined by the Special Limited Partner.
“
Related Party
” means, with respect to any Person, any other Person to whom ownership of shares of the
Special Limited Partner’s stock by the first such Person would be attributed under Code Section 544 (as modified by Code Section 856(h)(1)(B)) or Code Section 318(a) (as modified by Code Section 856(d)(5)).
12
“
Rights
” has the meaning set forth in the definition of
“
REIT Shares Amount
.”
“
Safe Harbors
” has the meaning set forth in Section 11.3.D
hereof.
“
SEC
” means the Securities and Exchange Commission.
“
Section
83 Safe Harbor
” has the meaning set forth in Section 10.7 hereof.
“
Securities Act
” means the Securities Act of 1933, as amended, and any successor statute thereto, and the
rules and regulations of the SEC promulgated thereunder.
“
Series A Articles Supplementary
” means the
Articles Supplementary of the Special Limited Partner in connection with its REIT Series A Preferred Shares, as filed with the Maryland State Department of Assessments and Taxation on October 2, 2017.
“
Series A Preferred Capital
” means a Capital Account balance equal to the product of (i) the number of
Series A Preferred Units then held by the Special Limited Partner multiplied by (ii) the sum of $25, any Preferred Distribution Shortfall per Series A Preferred Unit and any accrued and unpaid distribution per Series A Preferred Unit for
the current Distribution Period.
“
Series A Preferred Unit Distribution Payment Date
” shall have the
meaning set forth in Section 16.2.A.
“
Series A Preferred Units
” shall have the meaning set forth in
Section 16.1.
“
Series A Priority Return
” shall mean an amount equal to 6.000% per annum on the
stated value of $25 per Series A Preferred Unit (equivalent to the fixed annual amount of $1.50 per Series A Preferred Unit), commencing on the date of original issuance of the Series A Preferred Units. For any partial quarterly period, the
amount of the Series A Priority Return shall be prorated and computed on the basis of a
360-day
year consisting of twelve
30-day
months.
“
SLP Subsidiaries
” has the meaning set forth in Section 4.3.G hereof.
“
Special Limited Partner
” means Spirit Realty Capital, Inc., a Maryland corporation, and its successors and
assigns as the Special Limited Partner of the Partnership, in each case, that is admitted from time to time as a Limited Partner pursuant to the Act and this Agreement and is listed as the Special Limited Partner on
Exhibit A
, as such
Exhibit A
may be amended or updated from time to time, in such Person’s capacity as the Special Limited Partner of the Partnership.
“
Special Redemption
” has the meaning set forth in Section 15.1.A hereof.
“
Specified Redemption Date
” means the tenth (10th) Business Day after the receipt by the General Partner of a
Notice of Redemption;
provided
,
however
, that no Specified Redemption Date shall occur during the first Twelve-Month Period (except pursuant to a Special Redemption).
“
Stock Option Plans
” means any stock option plan now or hereafter adopted by the Partnership or the General
Partner or the Special Limited Partner.
“
Subsidiary
” means, with respect to any Person, any corporation
or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person; provided, however, that, with respect to the
Partnership, “Subsidiary” means solely a partnership or limited liability company (taxed, for federal income tax purposes, as a partnership or as a Disregarded Entity and not as an association or publicly traded partnership taxable as a
corporation) of which the Partnership is
13
a member or any “taxable REIT subsidiary” of the Special Limited Partner in which the Partnership owns shares of stock, unless the ownership of shares of stock of a corporation or other
entity (other than a “taxable REIT subsidiary”) will not jeopardize the Special Limited Partner’s status as a REIT or any Special Limited Partner Affiliate’s status as a “qualified REIT subsidiary” (within the meaning
of Code Section 856(i)(2)), in which event the term “Subsidiary” shall include such corporation or other entity.
“
Substituted Limited Partner
” means a Person who is admitted as a Limited Partner to the Partnership pursuant
(i) Section 11.4 hereof or (ii) pursuant to any Partnership Unit Designation.
“
Surviving
Partnership
” has the meaning set forth in Section 11.2.B(ii) hereof.
“
Tax Items
” has the
meaning set forth in Section 6.5.A hereof.
“
Tendered Units
” has the meaning set forth in
Section 15.1.A hereof.
“
Tendering Party
” has the meaning set forth in Section 15.1.A hereof.
“
Terminating Capital Transaction
” means any sale or other disposition of all or substantially all of the
assets of the Partnership or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all of the assets of the Partnership, in any case, not in the ordinary course of the
Partnership’s business.
“
Termination Transaction
” has the meaning set forth in Section 11.2.B
hereof.
“
Transfer
” means any sale, assignment, bequest, conveyance, devise, gift (outright or in trust),
encumbrance, hypothecation, mortgage, exchange, transfer or other disposition or act of alienation, whether voluntary, involuntary or by operation of law;
provided
,
however
, that when the term is used in Article 11 hereof, except as
otherwise expressly provided, “Transfer” does not include (a) any Redemption of Partnership Common Units by the Partnership, or acquisition of Tendered Units by the Special Limited Partner, pursuant to Section 15.1 or
(b) any redemption of Partnership Units pursuant to any Partnership Unit Designation. The terms “Transferred” and “Transferring” have correlative meanings.
“
Twelve-Month Period
” means as to any Qualifying Party, a period ending on the day before the first
twelve-month anniversary of such Qualifying Party’s first becoming a Holder of Partnership Common Units;
provided
,
however
, that the General Partner may, in its sole and absolute discretion, by written agreement with a Qualifying
Party, shorten or lengthen the applicable Twelve-Month Period to a period of shorter or longer than twelve (12) months with respect to a Qualifying Party.
“
Valuation Date
” means the date of receipt by the General Partner of a Notice of Redemption pursuant to
Section 15.1 herein, or such other date as specified herein, or, if such date is not a Business Day, the immediately preceding Business Day.
“
Value
” means, on any Valuation Date with respect to a REIT Share, the average of the daily Market Prices for
ten (10) consecutive trading days immediately preceding the Valuation Date (except that the Market Price for the trading day immediately preceding the date of exercise of a stock option under any Stock Option Plans shall be substituted for such
average of daily market prices for purposes of Section 4.4 hereof). The term “
Market Price
” on any date means, with respect to any class or series of outstanding REIT Shares, the Closing Price for such REIT Shares on such date.
The “
Closing Price
” on any date means the last sale price for such REIT Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such REIT Shares, in
either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if such REIT Shares are not listed or admitted to trading on the New York
Stock Exchange, as reported on the principal consolidated transaction
14
reporting system with respect to securities listed on the principal national securities exchange on which such REIT Shares are listed or admitted to trading or, if such REIT Shares are not listed
or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter
market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the
principal other automated quotation system that may then be in use or, if such REIT Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such
REIT Shares selected by the General Partner or, in the event that no trading price is available for such REIT Shares, the fair market value of the REIT Shares, as determined by the Special Limited Partner. Notwithstanding the foregoing, the Special
Limited Partner, in its reasonable discretion, may use the “Common Stock Price” as defined in the Series A Articles Supplementary (or such other price for the REIT Shares that was used to determine the number of REIT Shares issued upon the
conversion of REIT Series A Preferred Shares into REIT Shares) for purposes of making the determinations under subparagraph (b) of the definition of “Gross Asset Value” in connection with the conversion of the Series A Preferred Units
pursuant to Section 16.8.
In the event that the REIT Shares Amount includes Rights that a holder of REIT Shares
would be entitled to receive, then the Value of such Rights shall be determined by the Special Limited Partner on the basis of such quotations and other information as it considers appropriate.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1
Formation
. The Partnership is a limited partnership heretofore formed and continued pursuant to the provisions of the Act and upon the terms and subject to the conditions set forth in this Agreement. Except as
expressly provided herein to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act. The Partnership Interest of each Partner shall be personal property for all
purposes.
Section 2.2
Name
. The name of the Partnership is “Spirit Realty,
L.P.” The Partnership’s business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate thereof. The words “Limited Partnership,”
“L.P.,” “Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner in its sole and
absolute discretion may change the name of the Partnership at any time and from time to time and shall notify the Partners of such change in the next regular communication to the Partners.
Section 2.3
Registered Office and Registered Agent; Principal Executive Office
. The address of
the registered office of the Partnership in the State of Delaware is located at c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801, or such other place as the General Partner may from time to
time designate, and the registered agent of the Partnership in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801, or such other registered agent as the General Partner may from
time to time designate. The principal office of the Partnership is located at 16767 N. Perimeter Drive, Suite 210, Scottsdale, Arizona 85260, or such other place as the General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places as the General Partner deems advisable.
Section 2.4
Power of Attorney
.
A. Each Limited Partner and Assignee hereby irrevocably constitutes and appoints
the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact
of each (the “
Attorney in Fact
”), and each of those acting singly, in
each case with full power of substitution, as its true and lawful agent and
attorney-in-fact,
with full power
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and authority in its name, place and stead to:
(1) execute, swear to, seal,
acknowledge, deliver, file and record in the appropriate public offices: (a) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate and all amendments, supplements or restatements
thereof) that the Attorney in Fact deems appropriate or necessary to form, qualify or continue the existence or qualification of the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability to the
extent provided by applicable law) in the State of Delaware and in all other jurisdictions in which the Partnership may conduct business or own property; (b) all instruments that the Attorney in Fact deems appropriate or necessary to reflect
any amendment, change, modification or restatement of this Agreement duly adopted in accordance with its terms; (c) all conveyances and other instruments or documents that the Attorney in Fact deems appropriate or necessary to reflect the
dissolution and winding up of the Partnership pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (d) all conveyances and other instruments or documents that the Attorney in Fact deems
appropriate or necessary to reflect the distribution or exchange of assets of the Partnership pursuant to the terms of this Agreement; (e) all instruments relating to the admission, acceptance, withdrawal, removal or substitution of any Partner
pursuant to the terms of this Agreement or the Capital Contribution of any Partner; and (f) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges relating to Partnership
Interests; and
(2) execute, swear to, acknowledge and file all ballots, consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and absolute discretion of the Attorney in Fact, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action that is made or given by the Partners hereunder or
is consistent with the terms of this Agreement.
Nothing contained herein shall be construed as authorizing the Attorney in Fact to amend
this Agreement except in accordance with Section 14.2 hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be irrevocable and a special power coupled with an interest, in recognition of
the fact that each of the Limited Partners and Assignees will be relying upon the power of the Attorney in Fact to act as contemplated by this Agreement in any filing or other action by it on behalf of the Partnership, and it shall survive and not
be affected by the subsequent Incapacity of any Limited Partner or Assignee and the Transfer of all or any portion of such Person’s Partnership Interest and shall extend to such Person’s heirs, successors, assigns and personal
representatives. Each such Limited Partner and Assignee hereby agrees to be bound by any representation made by the Attorney in Fact, acting in good faith pursuant to such power of attorney; and, to the fullest extent permitted by law, each such
Limited Partner and Assignee hereby waives any and all defenses that may be available to contest, negate or disaffirm the action of the General Partner or the Liquidator, taken in good faith under such power of attorney. Each Limited Partner and
Assignee shall execute and deliver to the General Partner or the Liquidator, within fifteen (15) days after receipt of the General Partner’s or the Liquidator’s request therefor, such further designation, powers of attorney and other
instruments as the General Partner or the Liquidator (as the case may be) deems necessary to effectuate this Agreement and the purposes of the Partnership. Notwithstanding anything else set forth in this Section 2.4.B, no Limited Partner shall
incur any personal liability for any action of the Attorney in Fact taken under such power of attorney.
Section 2.5
Term
. The term of the Partnership shall continue indefinitely unless the
Partnership is dissolved sooner pursuant to the provisions of Article 13 hereof or as otherwise provided by law.
Section 2.6
Partnership Interests Are Securities
. All Partnership Interests in the Partnership shall constitute a “security” within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code
(including Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware, and (ii) the corresponding provisions of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially
includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February
16
14, 1995.
Section 2.7
Admission
. The General Partner has previously been admitted as the general partner of the Partnership. A Person shall be admitted as a limited partner of the Partnership on the date hereof at the time that (a) this Agreement or a
counterpart hereof is executed by or on behalf of such Person and (b) such Person is listed by the General Partner as a limited partner of the Partnership on
Exhibit A
attached hereto. The Special Limited Partner has previously been
admitted as a limited partner of the Partnership. The General Partner hereby Consents to the admission of any Person as a limited partner of the Partnership pursuant to this Section 2.7.
ARTICLE 3
PURPOSE
Section 3.1
Purpose and Business
. The purpose and nature of the Partnership is to conduct any business, enterprise or activity permitted by or under the Act, including, without limitation, (i) to conduct the business of
ownership, construction, reconstruction, development, redevelopment, alteration, improvement, maintenance, operation, sale, leasing, transfer, encumbrance, conveyance and exchange of the Properties, (ii) to acquire and invest in any securities
and/or loans relating to the Properties, (iii) to enter into any partnership, joint venture, business or statutory trust arrangement, limited liability company or other similar arrangement to engage in any business permitted by or under the
Act, or to own interests in any entity engaged in any business permitted by or under the Act, (iv) to conduct the business of providing property and asset management and brokerage services, whether directly or through one or more partnerships,
joint ventures, Subsidiaries, business trusts, limited liability companies or similar arrangements, and (v) to do anything necessary or incidental to the foregoing.
Section 3.2
Powers
. The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described herein and for the protection and benefit of the Partnership including, without limitation, full
power and authority, directly or through its ownership interest in other entities, to enter into, perform and carry out contracts of any kind, to borrow and lend money and to issue evidence of indebtedness, whether or not secured by mortgage, deed
of trust, pledge or other lien, to acquire, own, manage, improve and develop real property and lease, sell, transfer and dispose of real property. However, the Partnership may not, without the General Partner’s specific consent, which it may
give or withhold in its sole and absolute discretion, take or refrain from taking, any action that, in its judgment, in its sole and absolute discretion (i) could adversely affect the Special Limited Partner’s ability to continue to
qualify as a REIT, (ii) could subject the Special Limited Partner to any taxes under Sections 857 or 4981 of the Code or any other related or successor provision under the Code, or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the Special Limited Partner, its securities or the Partnership.
Section 3.3
Partnership Only for Purposes Specified
. The Partnership shall be a limited partnership formed pursuant to the Act to conduct its business in accordance with this Agreement, and this Agreement shall not be deemed to
create a company, venture or partnership between or among the Partners or any other Persons with respect to any activities whatsoever other than the activities within the purposes of the Partnership as specified in Section 3.1 hereof. Except as
otherwise provided in this Agreement, no Partner shall have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of the Partnership, its properties or any other Partner. No Partner, in its capacity as a Partner
under this Agreement, shall be responsible or liable for any indebtedness or obligation of another Partner, nor shall the Partnership be responsible or liable for any indebtedness or obligation of any Partner, incurred either before or after the
execution and delivery of this Agreement by such Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred pursuant to and as limited by the terms of this Agreement and the Act.
Section 3.4
Representations and Warranties by the Partners
.
17
A. Each Partner that is an individual (including, without limitation, each Additional
Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner) represents and warrants to, and covenants with, each other Partner that (i) the consummation of the
transactions contemplated by this Agreement to be performed by such Partner will not result in a breach or violation of, or a default under, any material agreement by which such Partner or any of such Partner’s property is bound, or any
statute, regulation, order or other law to which such Partner is subject, (ii) if five percent (5%) or more (by value) of the Partnership’s interests are or will be owned by such Partner within the meaning of Code Section 7704(d)(3),
such Partner does not, and for so long as it is a Partner will not, own, directly or indirectly, (a) stock of any corporation that is a tenant of (I) the Special Limited Partner or any Disregarded Entity with respect to the Special Limited
Partner, (II) the Partnership or (III) any partnership, venture or limited liability company of which the Special Limited Partner, any Disregarded Entity with respect to the Special Limited Partner, or the Partnership is a direct or
indirect member or (b) an interest in the assets or net profits of any
non-corporate
tenant of (I) the Special Limited Partner or any Disregarded Entity with respect to the Special Limited Partner,
(II) the Partnership or (III) any partnership, venture, or limited liability company of which the Special Limited Partner, any Disregarded Entity with respect to the Special Limited Partner, or the Partnership is a direct or indirect
member, (iii) such Partner has the legal capacity to enter into this Agreement and perform such Partner’s obligations hereunder, and (iv) this Agreement is binding upon, and enforceable against, such Partner in accordance with its
terms. Notwithstanding the foregoing, a Partner that is an individual shall not be subject to the ownership restrictions set forth in clause (ii) of the immediately preceding sentence to the extent such Partner obtains the written Consent of
the General Partner prior to violating any such restrictions. Each Partner that is an individual shall also represent and warrant to the Partnership that such Partner is neither a “foreign person” within the meaning of Code
Section 1445(f) nor a foreign partner within the meaning of Code Section 1446(e).
B. Each Partner that is not an
individual (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner) represents and warrants to, and covenants with,
each other Partner that (i) all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including, without limitation, that of its general partner(s), manager(s), committee(s),
trustee(s), beneficiaries, directors and/or stockholder(s) (as the case may be) as required, (ii) the consummation of such transactions shall not result in a breach or violation of, or a default under, its partnership or operating agreement,
trust agreement, charter or bylaws (as the case may be) any material agreement by which such Partner or any of such Partner’s properties or any of its partners, members, beneficiaries, trustees or stockholders (as the case may be) is or are
bound, or any statute, regulation, order or other law to which such Partner or any of its partners, members, trustees, beneficiaries or stockholders (as the case may be) is or are subject, (iii) if five percent (5%) or more (by value) of the
Partnership’s interests are or will be owned by such Partner within the meaning of Code Section 7704(d)(3), such Partner does not, and for so long as it is a Partner will not, own, directly or indirectly, (a) stock of any corporation
that is a tenant of (I) the Special Limited Partner or any Disregarded Entity with respect to the Special Limited Partner, (II) the Partnership or (III) any partnership, venture or limited liability company of which the Special
Limited Partner, any Disregarded Entity with respect to the Special Limited Partner, or the Partnership is a direct or indirect member or (b) an interest in the assets or net profits of any
non-corporate
tenant of (I) the Special Limited Partner, or any Disregarded Entity with respect to the Special Limited Partner, (II) the Partnership or (III) any partnership, venture or limited liability company for which the Special Limited
Partner, any Disregarded Entity with respect to the Special Limited Partner, or the Partnership is a direct or indirect member, and (iv) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms.
Notwithstanding the foregoing, a Partner that is not an individual shall not be subject to the ownership restrictions set forth in clause (iii) of the immediately preceding sentence to the extent such Partner obtains the written Consent of the
General Partner prior to violating any such restrictions. Each Partner that is not an individual shall also represent and warrant to the Partnership that such Partner is neither a “foreign person” within the meaning of Code
Section 1445(f) nor a foreign partner within the meaning of Code Section 1446(e).
C. Each Partner (including, without
limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or Substituted Limited Partner) represents, warrants and
18
agrees that (i) it is an “accredited investor” as defined in Rule 501 promulgated under the Securities Act, (ii) it has acquired and continues to hold its interest in the
Partnership for its own account for investment purposes only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof in violation of applicable laws, and not with a view toward selling or otherwise
distributing such interest or any part thereof at any particular time or under any predetermined circumstances in violation of applicable laws, and (iii) it is a sophisticated investor, able and accustomed to handling sophisticated financial
matters for itself, particularly real estate investments, and that it has a sufficiently high net worth that it does not anticipate a need for the funds that it has invested in the Partnership in what it understands to be a highly speculative and
illiquid investment.
D. The representations and warranties contained in Sections 3.4.A, 3.4.B and 3.4.C hereof shall survive the
execution and delivery of this Agreement by each Partner (and, in the case of an Additional Limited Partner or a Substituted Limited Partner, the admission of such Additional Limited Partner or Substituted Limited Partner as a Limited Partner in the
Partnership) and the dissolution, winding up and termination of the Partnership.
E. Each Partner (including, without limitation,
each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or Substituted Limited Partner) hereby acknowledges that no representations as to potential profit, cash flows, funds from
operations or yield, if any, in respect of the Partnership, the Special Limited Partner or the General Partner have been made by any Partner or any employee or representative or Affiliate of any Partner, and that projections and any other
information, including, without limitation, financial and descriptive information and documentation, that may have been in any manner submitted to such Partner shall not constitute any representation or warranty of any kind or nature, express or
implied.
F. Notwithstanding the foregoing, the General Partner may, in its sole and absolute discretion, permit the modification of
any of the representations and warranties contained in Sections 3.4.A, 3.4.B and 3.4.C above as applicable to any Partner (including, without limitation any Additional Limited Partner or Substituted Limited Partner or any transferee of either),
provided that such representations and warranties, as modified, shall be set forth in either (i) a Partnership Unit Designation applicable to the Partnership Units held by such Partner or (ii) a separate writing addressed to the
Partnership and the General Partner.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1
Capital Contributions of the Partners
. The Partners have heretofore made Capital Contributions to the Partnership. Each Partner owns Partnership Units in the amount set forth for such Partner on
Exhibit A
, as
the same may be amended or updated from time to time by the General Partner to the extent necessary to reflect accurately sales, exchanges or other Transfers, redemptions, Capital Contributions, the issuance of additional Partnership Units, or
similar events having an effect on a Partner’s ownership of Partnership Units; provided the updating of
Exhibit A
by the General Partner shall not require the Consent of any other Partner. Except as provided by law or in
Section 4.2, 4.3, or 10.4 hereof, the Partners shall have no obligation or, except with the prior Consent of the General Partner, right to make any additional Capital Contributions or loans to the Partnership.
Section 4.2
Issuances of Additional Partnership Interests
. Subject to the rights of any
Holder of any Partnership Interest set forth in a Partnership Unit Designation:
A.
General
. The General Partner is hereby
authorized to cause the Partnership to issue additional Partnership Interests, in the form of Partnership Units, for any Partnership purpose, at any time or from time to time, to the Partners (including the General Partner and the Special Limited
Partner) or to other Persons, and to admit such Persons as Additional Limited Partners, for such consideration and on such terms and conditions as shall be established by the General Partner in its sole and absolute discretion, all without the
approval of any Limited Partner
19
or any other Person. Without limiting the foregoing, the General Partner is expressly authorized to cause the Partnership to issue Partnership Units (i) upon the conversion, redemption or
exchange of any Debt, Partnership Units, or other securities issued by the Partnership, (ii) for less than fair market value, (iii) for no consideration, (iv) in connection with any merger or consolidation of any other Person into the
Partnership or (v) upon the contribution of assets to the Partnership. Any additional Partnership Interests may be issued in one or more classes, or one or more series of any of such classes, with such designations, preferences, conversion or
other rights, voting powers or rights, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption (including, without limitation, terms that may be senior or otherwise entitled to preference over existing
Partnership Units) as shall be determined by the General Partner, in its sole and absolute discretion and without the approval of any Limited Partner or any other Person, and set forth in a written document thereafter attached to and made an exhibit
to this Agreement, which exhibit shall be an amendment to this Agreement and shall be incorporated herein by this reference (each, a “
Partnership Unit Designation
”) without the approval of any Limited Partner or any other Person.
Without limiting the generality of the foregoing, the General Partner shall have authority to specify, in its sole and absolute discretion: (a) the allocations of items of Partnership income, gain, loss, deduction and credit to each such class
or series of Partnership Interests; (b) the right of each such class or series of Partnership Interests to share (on a
pari passu
, junior or preferred basis) in Partnership distributions; (c) the rights of each such class or series
of Partnership Interests upon dissolution and liquidation of the Partnership; (d) the voting rights, if any, of each such class or series of Partnership Interests; and (e) the conversion, redemption or exchange rights applicable to each
such class or series of Partnership Interests. Upon the issuance of any additional Partnership Interest, the General Partner shall update
Exhibit A
and the books and records of the Partnership as appropriate to reflect such issuance. The
Partnership’s issuance prior to the date of this Agreement of an aggregate 455,900,032 Partnership Units pursuant to the Agreement of the Limited Partnership of the Partnership, dated September 25, 2012, as amended, or the Agreement of
Limited Partnership, as applicable, (i) on September 25, 2012, (ii) related to the issuance of Shares pursuant to the Equity Distribution Agreement, dated April 15, 2014, by the Special Limited Partner and the Partnership, and
accepted by the sales managers party thereto, as amended by Amendment No. 1 thereto, dated as of September 15, 2014, (iii) on May 20, 2014, (iv) on April 14, 2015, (v) on April 15, 2016, and (v) related to the issuance
of Shares pursuant to the Equity Distribution Agreement, dated November 9, 2016, by the Special Limited Partner and the Partnership, and accepted by Wells Fargo Securities, LLC, RBC Capital Markets, LLC, Scotia Capital (USA) Inc. and SunTrust
Robinson Humphrey, Inc., is hereby ratified and approved in all respects.
B.
Issuances to the General Partner or Special Limited
Partner
. No additional Partnership Units shall be issued to the General Partner or the Special Limited Partner unless (i) the additional Partnership Units are issued to all Partners holding Partnership Common Units in proportion to their
respective Percentage Interests in Partnership Common Units, (ii) (a) the additional Partnership Units are (x) Partnership Common Units issued in connection with an issuance of REIT Shares, or (y) Partnership Equivalent Units (other
than Partnership Common Units) issued in connection with an issuance of Preferred Shares, New Securities or other interests in the Special Limited Partner (other than REIT Shares), with corresponding economic terms, and (b) the General Partner
or the Special Limited Partner (as the case may be) contributes directly or indirectly to the Partnership the cash proceeds or other consideration received in connection with the issuance of such REIT Shares, Preferred Shares, New Securities or
other interests in the Special Limited Partner, (iii) the additional Partnership Units are issued upon the conversion, redemption or exchange of Debt, Partnership Units or other securities issued by the Partnership or (iv) the additional
Partnership Units are issued pursuant to Section 4.3.B, Section 4.3.E, Section 4.4 or Section 4.5.
C.
No
Preemptive Rights
. Except as expressly provided in this Agreement or in any Partnership Unit Designation, no Person, including, without limitation, any Partner or Assignee, shall have any preemptive, preferential, participation or similar right
or rights to subscribe for or acquire any Partnership Interest.
Section 4.3
Additional Funds
and Capital Contributions
.
A.
General
. The General Partner may, at any time and from time to time, determine that the
Partnership requires additional funds (“
Additional Funds
”) for the acquisition or development of additional Properties, for the
20
redemption of Partnership Units or for such other purposes as the General Partner may determine, in its sole and absolute discretion. Additional Funds may be obtained by the Partnership, at the
election of the General Partner, in any manner provided in, and in accordance with, the terms of this Section 4.3 without the approval of any Limited Partner or any other Person.
B.
Additional Capital Contributions
. The General Partner, on behalf of the Partnership, may obtain any Additional Funds by
accepting Capital Contributions from any Partners or other Persons. In connection with any such Capital Contribution (of cash or property), the General Partner is hereby authorized, in its sole and absolute discretion, to cause the Partnership from
time to time to issue additional Partnership Units (as set forth in Section 4.2 above) in consideration therefor and the Percentage Interests of the General Partner and the Limited Partners shall be adjusted to reflect the issuance of such
additional Partnership Units.
C.
Loans by Third Parties
. The General Partner, in its sole and absolute discretion on behalf
of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt to any Person (other than the General Partner or the Special Limited Partner (but, for this purpose, disregarding any Debt that may be deemed incurred to
the General Partner or the Special Limited Partner by virtue of clause (iii) of the definition of Debt)) upon such terms as the General Partner determines appropriate, including making such Debt convertible, redeemable or exchangeable for
Partnership Units or REIT Shares;
provided
,
however
, that the Partnership shall not incur any such Debt if any Limited Partner would be personally liable for the repayment of such Debt (unless such Limited Partner otherwise agrees).
D.
General Partner and Special Limited Partner Loans
. The General Partner, in its sole and absolute discretion on behalf of
the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt to the General Partner and/or the Special Limited Partner if (i) such Debt is, to the extent permitted by law, on substantially the same terms and
conditions (including interest rate, repayment schedule, and conversion, redemption, repurchase and exchange rights) as Funding Debt incurred by the General Partner or the Special Limited Partner, as applicable, the net proceeds of which are loaned
to the Partnership to provide such Additional Funds, or (ii) such Debt is on terms and conditions no less favorable to the Partnership than would be available to the Partnership from any third party;
provided
,
however
, that the
Partnership shall not incur any such Debt if any Limited Partner would be personally liable for the repayment of such Debt (unless such Limited Partner otherwise agrees).
E.
Issuance of Securities by the Special Limited Partner
. The Special Limited Partner shall not issue any additional REIT Shares,
Capital Shares or New Securities unless the Special Limited Partner contributes the net proceeds (including cash and Properties) or the Properties (or interests therein) acquired with such net proceeds from the issuance of such additional REIT
Shares, Capital Shares or New Securities (as the case may be) and from the exercise of the rights contained in any such additional Capital Shares or New Securities directly or indirectly to the Partnership in exchange for (x) in the case of an
issuance of REIT Shares, Partnership Common Units, or (y) in the case of an issuance of Capital Shares or New Securities, Partnership Equivalent Units;
provided
,
however
, that notwithstanding the foregoing, the Special Limited
Partner may issue REIT Shares, Capital Shares or New Securities (a) pursuant to Section 4.4 or Section 15.1.B hereof, (b) pursuant to a dividend or distribution (including any stock split) of REIT Shares, Capital Shares or New
Securities to all of the holders of REIT Shares, Capital Shares or New Securities (as the case may be), (c) upon a conversion, redemption or exchange of Capital Shares, (d) upon a conversion, redemption, exchange or exercise of New Securities,
or (e) in connection with an acquisition of Partnership Units or a property or other asset to be owned, directly or indirectly, by the Special Limited Partner. In the event of any issuance of additional REIT Shares, Capital Shares or New
Securities by the Special Limited Partner, and the contribution to the Partnership, directly or indirectly, by the Special Limited Partner, of the net proceeds (including cash and Properties) or the Properties (or interests therein) acquired with
such net proceeds from such issuance, if any, if the cash proceeds actually received by the Special Limited Partner are less than the gross proceeds of such issuance as a result of any underwriter’s discount or other expenses paid or incurred
in connection with such issuance, then the Special Limited Partner shall be deemed to have made a Capital Contribution to the Partnership in the amount equal to the sum of the cash proceeds of such issuance plus the amount of such underwriter’s
discount and other expenses paid by the Special Limited Partner (which discount and
21
expense shall be treated as an expense for the benefit of the Partnership for purposes of Section 7.4). In the event that the Special Limited Partner issues any additional REIT Shares,
Capital Shares or New Securities and contributes, directly or indirectly, the net proceeds (including cash and Properties) or the Properties (or interests therein) acquired with such net proceeds from the issuance thereof to the Partnership, the
Partnership is expressly authorized to issue a number of Partnership Common Units or Partnership Equivalent Units to the Special Limited Partner equal to the number of REIT Shares, Capital Shares or New Securities so issued, divided by the
Adjustment Factor then in effect, in accordance with this Section 4.3.E without any further act, approval or vote of any Partner or any other Persons. The Special Limited Partner may hold the net proceeds from the issuance of additional REIT
Shares, Capital Shares or New Securities, as the case may be, taking into account the intended use of such proceeds, so long as the Special Limited Partner makes a Capital Contribution of such net proceeds, or Properties (or interests therein)
acquired with such net proceeds, as soon as reasonably practicable but not later than six (6) months following such issuance, except no such contribution shall be required to the extent the Properties acquired by the Special Limited Partner are
direct or indirect interests in Partnership Interests or to the extent such net proceeds are used by the Special Limited Partner to make distributions to its stockholders.
F. Notwithstanding any other provision of this Agreement, including, without limitation, any other provision of this Section 4.3,
the Special Limited Partner is fully authorized to issue Funding Debt, in any form it determines to do so, including, without limitation, Funding Debt that is convertible into REIT Shares and/or redeemable for cash or other property, and, in
connection therewith, the Partnership, and the General Partner on behalf of the Partnership, is fully authorized to issue Debt to the Special Limited Partner on substantially the same terms and conditions as the Funding Debt issued by the Special
Limited Partner, including, without limitation, Debt that is convertible into Partnership Units and/or redeemable for cash or other property, without any further act, approval or vote of any Partner or any other Person. In furtherance of and not in
limitation of the foregoing, in connection with any Funding Debt convertible into REIT Shares issued by the Special Limited Partner that is subsequently converted into REIT Shares, the Partnership, and the General Partner on behalf of the
Partnership, is fully authorized to convert a corresponding amount of the Debt issued by the Partnership into the Special Limited Partner to a number of Partnership Common Units equal to the number of REIT Shares, if any, that the Special Limited
Partner is required to deliver to settle the conversion of such Funding Debt, divided by the Adjustment Factor then in effect, without any further act, approval or vote of any Partner or any other Person.
G. Notwithstanding any other provision of this Agreement, including, without limitation, any other provision of Articles 4 and 11 of this
Agreement, in connection with any Partnership Common Units owned by the Special Limited Partner, the Special Limited Partner is fully authorized, but shall not be obligated, to transfer, contribute or otherwise assign such Partnership Common Units
to one or more wholly-owned Subsidiaries of the Special Limited Partner (the “
SLP Subsidiaries
”). Without the need for any action or consent by any Person, including any Partner or any SLP Subsidiary, effective simultaneously with
such transfer, contribution or assignment, each of such SLP Subsidiaries shall automatically be admitted to the Partnership as a limited partner of the Partnership. Such SLP Subsidiaries shall be “Limited Partners” as such term is used in
this Agreement but shall not be a “Special Limited Partner” as such term is used in this Agreement. The General Partner shall amend or update Exhibit A to reflect such transfer, contribution or assignment, and such admission. In
furtherance of and not in limitation of the foregoing, the other provisions of Article 4 and Article 11 of this Agreement shall have no application to the transactions contemplated by this Section 4.3.G, including, without limitation, matters
relating to transfer and admission.
Section 4.4
Stock Option Plans and Equity Plans
.
A.
Future Stock Incentive Plans
. Nothing in this Agreement shall be construed or applied to preclude or restrain the General
Partner or the Special Limited Partner from adopting, modifying or terminating stock incentive plans for the benefit of employees, directors or other business associates of the General Partner, the Special Limited Partner, the Partnership or any of
their Affiliates or from issuing REIT Shares, Capital Shares or New Securities pursuant to any such plans. The General Partner may implement such plans and any actions taken under such plans (such as the grant or exercise of options to acquire REIT
Shares, or the issuance of restricted REIT Shares), whether taken with respect to or by an employee or other service provider of the Special Limited Partner, the Partnership or its
22
Subsidiaries, in a manner reasonably determined by the General Partner, which may be set forth in plan implementation guidelines that the General Partner may establish or amend from time to time.
The Partners acknowledge and agree that, in the event that any such plan is adopted, modified or terminated by the General Partner or the Special Limited Partner, amendments to this Agreement may become necessary or advisable and that any such
amendments requested by the General Partner or the Special Limited Partner shall not require any Consent or approval by the Limited Partners.
B.
Issuance of Partnership Common Units
. The Partnership is expressly authorized to issue Partnership Common Units (i) in
accordance with the terms of any such stock incentive plans, or (ii) in an amount equal to the number of REIT Shares, Capital Shares or New Securities issued pursuant to any such stock incentive plans without any further act, approval or vote
of any Partner or any other Persons.
Section 4.5
Dividend Reinvestment Plan, Cash Option
Purchase Plan, Stock Incentive Plan or Other Plan
. Except as may otherwise be provided in this Article 4, all amounts received or deemed received by the Special Limited Partner in respect of any dividend reinvestment plan, cash option purchase
plan, stock incentive or other stock or subscription plan or agreement, either (a) shall be utilized by the Special Limited Partner to effect open market purchases of REIT Shares, or (b) if the Special Limited Partner elects instead to
issue new REIT Shares with respect to such amounts, shall be contributed by the Special Limited Partner to the Partnership in exchange for additional Partnership Common Units. Upon such contribution, the Partnership will issue to the Special Limited
Partner a number of Partnership Common Units equal to the quotient of (i) the new REIT Shares so issued, divided by (ii) the Adjustment Factor then in effect. The Partnership is expressly authorized to issue Partnership Common Units as
contemplated by this Section
4.5 without any further act, approval or vote of any Partner or any other Persons.
Section
4.6
No Interest; No Return
. No Partner shall be entitled to interest on its Capital Contribution or on such Partner’s Capital Account. Except as provided herein or by law, no Partner shall have any right to demand or receive the
return of its Capital Contribution from the Partnership.
Section 4.7
Conversion or
Redemption of REIT Shares and Capital Shares
.
A.
Conversion of Capital Shares
. If, at any time, any of the Capital Shares
are converted into REIT Shares, in whole or in part, then a number of Partnership Units with preferences, conversion and other rights, restrictions (other than restrictions on transfer), rights and limitations as to dividends and other distributions
and qualifications that are substantially the same as the preferences, conversion and other rights, restrictions (other than restrictions on transfer), rights and limitations as to distributions and qualifications of such Capital Shares
(“
Partnership Equivalent Units
”) (for the avoidance of doubt, Partnership Equivalent Units need not have voting rights, redemption rights or restrictions on transfer that are substantially equivalent to such Capital Shares) equal to
the number of Capital Shares so converted shall automatically be converted into a number of Partnership Common Units equal to the quotient of (i) the number of REIT Shares issued upon such conversion divided by (ii) the Adjustment Factor
then in effect, and the Percentage Interests of the General Partner and the Limited Partners shall be adjusted to reflect such conversion.
B.
Redemption or Repurchase of Capital Shares or REIT Shares
. Except as otherwise provided in Section 7.4.C., if, at any
time, any Capital Shares are redeemed or otherwise repurchased (whether by exercise of a put or call, automatically or by means of another arrangement) by the Special Limited Partner for cash, the Partnership shall, immediately prior to such
redemption or repurchase of Capital Shares, redeem or repurchase an equal number of the corresponding Partnership Equivalent Units held by the Special Limited Partner upon the same terms and for the same price per Partnership Equivalent Unit as such
Capital Shares are redeemed or repurchased. If, at any time, any REIT Shares are forfeited or redeemed or otherwise repurchased or reacquired by the Special Limited Partner, the Partnership shall, immediately prior to such forfeiture, redemption,
repurchase or reacquisition of REIT Shares, forfeit, redeem, repurchase or reacquire a number of Partnership Common Units held by the Special Limited Partner equal to the quotient of (i) the REIT Shares so forfeited, redeemed, repurchased or
reacquired, divided by (ii) the Adjustment Factor then in effect, such forfeiture, redemption, repurchase or reacquisition to be upon the same terms
23
and for the same price per Partnership Common Unit (after giving effect to application of the Adjustment Factor) as such REIT Shares are forfeited, redeemed, repurchased or otherwise reacquired.
Section 4.8
Other Contribution Provisions
. In the event that any Partner is admitted to
the Partnership and is given a Capital Account in exchange for services rendered to the Partnership, such transaction shall be treated by the Partnership and the affected Partner as if the Partnership had compensated such partner in cash and such
Partner had contributed the cash that the Partner would have received to the capital of the Partnership. In addition, with the Consent of the General Partner, one or more Partners (including the Special Limited Partner) may enter into contribution
agreements with the Partnership which have the effect of providing a guarantee of certain obligations of the Partnership (and/or a wholly-owned Subsidiary of the Partnership).
ARTICLE 5
DISTRIBUTIONS
Section 5.1
Requirement and Characterization of Distributions
. Subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, the General Partner may cause the Partnership to
distribute such amounts, at such times, as the General Partner may, in its sole and absolute discretion, determine to the Holders as of any Partnership Record Date: (i) first, with respect to any Partnership Units that are entitled to any
preference in distribution, in accordance with the rights of Holders of such class(es) of Partnership Units (and, within each such class, among the Holders of each such class, pro rata in proportion to their respective Percentage Interests of such
class on such Partnership Record Date); and (ii) second, with respect to any Partnership Units that are not entitled to any preference in distribution, in accordance with the rights of Holders of such class(es) of Partnership Units, as
applicable (and, within each such class, among the Holders of each such class, pro rata in proportion to their respective Percentage Interests of such class on such Partnership Record Date). Distributions payable with respect to any Partnership
Units, other than any Partnership Units issued to the General Partner or the Special Limited Partner in connection with the issuance of REIT Shares by the Special Limited Partner, that were not outstanding during the entire quarterly period in
respect of which any distribution is made shall be prorated based on the portion of the period that such Partnership Units were outstanding. The General Partner shall make such reasonable efforts, as determined by it in its sole and absolute
discretion and consistent with the Special Limited Partner’s qualification as a REIT, to cause the Partnership to distribute sufficient amounts to enable the Special Limited Partner, for so long as the Special Limited Partner has determined to
qualify as a REIT, to pay stockholder dividends that will (a) satisfy the requirements for qualifying as a REIT under the Code and Regulations (the “
REIT Requirements
”) and (b) except to the extent otherwise determined by
the Special Limited Partner, eliminate any federal income or excise tax liability of the Special Limited Partner.
Section 5.2
Distributions in Kind
. Except as expressly provided herein, no right is given to any Holder to demand and receive property other than cash as provided in this Agreement. The General Partner may determine, in its sole
and absolute discretion, to make a distribution in kind of Partnership assets to the Holders, and such assets shall be distributed in such a fashion as to ensure that the fair market value is distributed and allocated in accordance with Articles 5,
6 and 13 hereof;
provided
,
however
, that the General Partner shall not make a distribution in kind to any Holder unless the Holder has been given 90 days prior written notice of such distribution.
Section 5.3
Amounts Withheld
. All amounts withheld pursuant to the Code or any provisions of
any state, local or
non-United
States tax law and Section 10.4 hereof with respect to any allocation, payment or distribution to any Holder shall be treated as amounts paid or distributed to such Holder
pursuant to Section 5.1 hereof for all purposes under this Agreement.
Section 5.4
Distributions upon Liquidation
. Notwithstanding the other provisions of this
Article 5, net proceeds from a Terminating Capital Transaction, and any other amounts distributed after the occurrence of a Liquidating
24
Event, shall be distributed to the Holders in accordance with Section 13.2 hereof.
Section 5.5
Distributions to Reflect Additional Partnership Units
. In the event that the
Partnership issues additional Partnership Units pursuant to the provisions of Article 4 hereof, subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, the General Partner is hereby authorized to
amend this Article 5 and Articles 6, 11 and 12 hereof as it determines, in its sole an absolute discretion, are necessary or desirable to reflect the issuance of such additional Partnership Units, including, without limitation, making preferential
distributions to Holders of certain classes of Partnership Units all without the consent or approval of any other Person.
Section 5.6
Restricted Distributions
. Notwithstanding any provision to the contrary contained in this Agreement, neither the Partnership nor the General Partner, on behalf of the Partnership, shall make a distribution to any
Holder if such distribution would violate the Act or other applicable law.
ARTICLE 6
ALLOCATIONS
Section 6.1
Timing and Amount of Allocations of Net Income and Net Loss
. Net Income and Net Loss of the Partnership shall be determined and allocated with respect to each Partnership Year as of the end of each such year,
provided that the General Partner may, in its sole and absolute discretion, allocate Net Income and Net Loss for a shorter period as of the end of such period (and, for purposes of this Article 6, references to the term “Partnership Year”
may include such shorter periods). Except as otherwise provided in this Article 6, and subject to Section 11.6.C hereof, an allocation to a Holder of a share of Net Income or Net Loss shall be treated as an allocation of the same share of each
item of income, gain, loss or deduction that is taken into account in computing Net Income or Net Loss.
Section 6.2
General Allocations
. Except as otherwise provided in this Article 6 and
Section 11.6.C hereof, Net Income and Net Loss for any Partnership Year shall be allocated to each of the Holders as follows:
A. Net Income.
(i) First, 100% to the General Partner in an amount equal to the remainder, if any, of the cumulative Net Losses
allocated to the General Partner pursuant to clause (iii) in Section 6.2.B for all prior Partnership Years minus the cumulative Net Income allocated to the General Partner pursuant to this clause (i) for all prior Partnership Years;
(ii) Second, 100% to each Holder in an amount equal to the remainder, if any, of the cumulative Net Losses allocated
to each such Holder pursuant to clause (ii) in Section 6.2.B for all prior Partnership Years minus the cumulative Net Income allocated to such Holder pursuant to this clause (ii) for all prior Partnership Years;
(iii) Third, 100% to the Special Limited Partner in an amount equal to the excess of the cumulative Series A Priority Return
on the Series A Preferred Units to the last day of the current Partnership Year or to the date of redemption or conversion of the Series A Preferred Units, to the extent such Series A Preferred Units are redeemed or converted during such year over
the cumulative Net Income allocated to the Special Limited Partner pursuant to this Section 6.2.A(iii) for all prior Partnership Years;
provided however
that notwithstanding this Section 6.2.A(iii), in connection with any conversion
of any such Partnership Units, the General Partner shall be permitted to make allocations of income or loss with respect to such Partnership Units and the Partnership Common Units issued upon such conversion that are consistent with the
distributions payable with respect to such Partnership Units and Partnership Common Units; and
(iv) Fourth, 100% to
the Holders of Partnership Common Units in accordance with their respective Percentage Interests in the Partnership Common Units.
25
To the extent the allocations of Net Income set forth above in any paragraph of
this Section 6.2.A are not sufficient to entirely satisfy the allocation set forth in such paragraph, such allocation shall be made in proportion to the total amount that would have been allocated pursuant to such paragraph without regard to
such shortfall.
B. Net Losses.
(i) First, 100% to the Holders of Partnership Common Units in accordance with their respective Percentage Interests in
the Partnership Common Units (to the extent consistent with this clause (i)) until the Adjusted Capital Account (ignoring for this purpose any amounts a Holder is obligated to contribute to the capital of the Partnership or is deemed obligated to
restore pursuant to Regulations
Section 1.704-1(b)(2)(ii)(c)(2)
and ignoring the Special Limited Partner’s Series A Preferred Capital) of all such Holders is zero;
(ii) Second, 100% to the Holders (other than the General Partner) to the extent of, and in proportion to, the positive
balance (if any) in their Adjusted Capital Accounts; and
(iii) Third, 100% to the General Partner.
C. Allocations to Reflect Issuance of Additional Partnership Interests. In the event that the Partnership issues additional Partnership
Interests to the General Partner, the Special Limited Partner or any Additional Limited Partner pursuant to Section 4.2 or 4.3, the General Partner shall amend this Section 6.2 or Sections 12.2.C or 13.2.A as it determines, in its sole and
absolute discretion, are necessary to reflect the terms of the issuance of such additional Partnership Interests, including making preferential allocations to certain classes of Partnership Interests, subject to the terms of any Partnership Unit
Designation with respect to Partnership Interests then outstanding.
Section 6.3
Additional
Allocation Provisions
.
A.
Special Allocations Upon Liquidation
. Notwithstanding any provision in this Article 6 to the
contrary other than Section 6.4, in the event that the Partnership disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Partnership pursuant to Article 13 hereof, then any Net Income or Net
Loss realized in connection with such transaction and thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be specially allocated for such Partnership Year (and to the extent permitted by Section 761(c) of
the Code, for the immediately preceding Partnership Year) among the Holders as required so as to cause liquidating distributions pursuant to Section 13.2.A(4) hereof to be made in the same amounts and proportions as would have resulted had such
distributions instead been made pursuant to Article 5 hereof. In addition, if there is an adjustment to the Gross Asset Value of the assets of the Partnership pursuant to paragraph (b) of the definition of Gross Asset Value, allocations of Net
Income or Net Loss arising from such adjustment shall be allocated in the same manner as described in the prior sentence.
B.
Offsetting Allocations
. Notwithstanding the provisions of Sections 6.1, 6.2.A and 6.2.B, but subject to Sections 6.3.A and 6.4,
in the event Net Income or items thereof are being allocated to a Partner to offset prior Net Loss or items thereof which have been allocated to such Partner, the General Partner shall attempt to allocate such offsetting Net Income or items thereof
which are of the same or similar character (including without limitation Section 704(b) book items versus tax items) to the original allocations with respect to such Partner.
Section 6.4
Regulatory Allocation Provisions
. Notwithstanding the foregoing provisions of
this Article 6:
A. Regulatory Allocations.
(i)
Minimum Gain Chargeback
. Except as otherwise provided in Regulations
Section 1.704-2(f),
notwithstanding the provisions of Section 6.2 hereof, or any other provision of this Article 6, if there is a net decrease in Partnership Minimum Gain during any Partnership Year,
each Holder shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such
26
Holder’s share of the net decrease in Partnership Minimum Gain, as determined under Regulations
Section 1.704-2(g).
Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be allocated shall be determined in accordance with Regulations Sections
1.704-2(f)(6)
and
1.704-2(j)(2).
This Section 6.4.A(i) is intended to qualify as a “minimum gain chargeback” within the meaning of Regulations
Section 1.704-2(f)
and shall be interpreted consistently therewith.
(ii)
Partner Minimum Gain Chargeback
. Except as otherwise provided in Regulations
Section 1.704-2(i)(4)
or in Section 6.4.A(i) hereof, if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership Year, each Holder who has a
share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5),
shall be specially allocated items of Partnership income
and gain for such year (and, if necessary, subsequent years) in an amount equal to such Holder’s share of the net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be so allocated
shall be determined in accordance with Regulations Sections
1.704-2(i)(4)
and
1.704-2(j)(2).
This Section 6.4.A(ii) is intended to qualify as a “chargeback of
partner nonrecourse debt minimum gain” within the meaning of Regulations
Section 1.704-2(i)
and shall be interpreted consistently therewith.
(iii)
Nonrecourse Deductions and Partner Nonrecourse Deductions
. Any Nonrecourse Deductions for any Partnership
Year shall be specially allocated to the Holders in accordance with their respective Percentage Interests. Any Partner Nonrecourse Deductions for any Partnership Year shall be specially allocated to the Holder(s) who bears the economic risk of loss
with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable, in accordance with Regulations
Section 1.704-2(i).
(iv)
Qualified Income Offset
. If any Holder unexpectedly receives an adjustment, allocation or distribution
described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6), items of Partnership income and gain shall be specially allocated, in accordance with Regulations
Section 1.704-1(b)(2)(ii)(d),
to such Holder in an amount and manner sufficient to eliminate, to the extent required by such Regulations, the Adjusted Capital Account Deficit of such Holder as quickly as
possible, provided that an allocation pursuant to this Section 6.4.A(iv) shall be made if and only to the extent that such Holder would have an Adjusted Capital Account Deficit after all other allocations provided in this Article 6 have been
tentatively made as if this Section 6.4.A(iv) were not in the Agreement. It is intended that this Section 6.4.A(iv) qualify and be construed as a “qualified income offset” within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
(v)
Gross Income Allocation
. In the event that any Holder has a deficit Capital Account at the end of any
Partnership Year that is in excess of the sum of (1) the amount (if any) that such Holder is obligated to restore to the Partnership upon complete liquidation of such Holder’s Partnership Interest (including, the Holder’s interest in
outstanding Partnership Preferred Units and other Partnership Units) and (2) the amount that such Holder is deemed to be obligated to restore pursuant to Regulations
Section 1.704-1(b)(2)(ii)(c)
or
the penultimate sentences of Regulations Sections
1.704-2(g)(1)
and
1.704-2(i)(5),
each such Holder shall be specially allocated items of Partnership income and gain in
the amount of such excess to eliminate such deficit as quickly as possible, provided that an allocation pursuant to this Section 6.4.A(v) shall be made if and only to the extent that such Holder would have a deficit Capital Account in excess of
such sum after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.4.A(v) and Section 6.4.A(iv) hereof were not in the Agreement.
(vi)
Limitation on Allocation of Net Loss
. To the extent that any allocation of Net Loss would cause or increase
an Adjusted Capital Account Deficit as to any Holder, such allocation of Net Loss shall be reallocated (x) first, among the other Holders of Partnership Common Units in accordance with their respective Percentage Interests with respect to
Partnership Common Units and (y) thereafter, among the Holders of other classes of Partnership Units as determined by the General Partner, subject to the limitations of this Section 6.4.A(vi).
27
(vii)
Section 754 Adjustment
. To the extent that an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m)(2)
or Regulations
Section 1.704-1(b)(2)(iv)(m)(4),
to be taken into account in determining Capital Accounts as the result of a distribution to a Holder in complete liquidation of its interest in the Partnership, the amount of
such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Holders in
accordance with their respective Percentage Interests in the event that Regulations
Section 1.704-1(b)(2)(iv)(m)(2)
applies, or to the Holder(s) to whom such distribution was made in the event that
Regulations
Section 1.704-1(b)(2)(iv)(m)(4)
applies.
(vii)
Noncompensatory Options
. If, as a result of an exercise of a Noncompensatory Option to acquire an interest
in the Partnership, a Capital Account reallocation is required under Regulations
Section 1.704-1(b)(2)(iv)(s)(3),
the Partnership shall make corrective allocations pursuant to Regulations
Section 1.704-1(b)(4)(x).
(ix)
Curative Allocations
. The allocations
set forth in Sections 6.4.A(i), (ii), (iii), (iv), (v), (vi) and (vii) hereof (the “
Regulatory Allocations
”) are intended to comply with certain regulatory requirements, including the requirements of Regulations Sections
1.704-1(b)
and
1.704-2.
Notwithstanding the provisions of Sections 6.1 and 6.2 hereof, the Regulatory Allocations shall be taken into account in allocating other items of
income, gain, loss and deduction among the Holders so that to the extent possible without violating the requirements giving rise to the Regulatory Allocations, the net amount of such allocations of other items and the Regulatory Allocations to each
Holder shall be equal to the net amount that would have been allocated to each such Holder if the Regulatory Allocations had not occurred.
B. Allocation of Excess Nonrecourse Liabilities. For purposes of determining a Holder’s proportional share of the “excess
nonrecourse liabilities” of the Partnership within the meaning of Regulations
Section 1.752-3(a)(3),
each Holder’s respective interest in Partnership profits shall be equal to such Holder’s
Percentage Interest with respect to Partnership Common Units, except as otherwise determined by the General Partner
.
Section 6.5
Tax Allocations
.
A. In General. Except as otherwise provided in this Section 6.5, for income
tax purposes under the Code and the Regulations, each Partnership item of income, gain, loss and deduction (collectively, “
Tax Items
”) shall be allocated among the Holders in the same manner as its correlative item of
“book” income, gain, loss or deduction is allocated pursuant to Sections 6.2, 6.3 and 6.4 hereof.
B. Section 704(c)
Allocations. Notwithstanding Section 6.5.A hereof, Tax Items with respect to Property that is contributed to the Partnership with an initial Gross Asset Value that varies from its basis in the hands of the contributing Partner immediately
preceding the date of contribution shall be allocated among the Holders for income tax purposes pursuant to Regulations promulgated under Code Section 704(c) so as to take into account such variation. The Partnership shall account for such
variation under any method approved under Code Section 704(c) and the applicable Regulations as chosen by the General Partner. In the event that the Gross Asset Value of any Partnership asset is adjusted pursuant to subsection (b) of the
definition of “Gross Asset Value” (provided in Article 1 hereof), subsequent allocations of Tax Items with respect to such asset shall take account of the variation, if any, between the adjusted basis of such asset and its Gross Asset
Value in a manner consistent with Code Section 704(c) and the applicable Regulations and using the method chosen by the General Partner. Allocations pursuant to this Section 6.5.B are solely for purposes of federal, state and local income
taxes and shall not affect, or in any way be taken into account in computing, any Partner’s Capital Account or share of Net Income, Net Loss, or any other items or distributions pursuant to any provision of this Agreement.
ARTICLE 7
28
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1
Management
.
A. Except as otherwise expressly provided in this Agreement, including any Partnership Unit Designation, all management powers over the
business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner, in its capacity as a Limited Partner, shall have any right to participate in or exercise control or management power over the
business and affairs of the Partnership (provided, however, that the Special Limited Partner, in its capacity as the sole member of the General Partner and not in its capacity as a limited partner of the Partnership, may have the power to direct the
actions of the General Partner with respect to the Partnership). No General Partner may be removed by the Partners, with or without cause, except with the Consent of the General Partner, which it may give or withhold at its sole and absolute
discretion. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to
the other provisions hereof including, without limitation, Section 3.2 and Section 7.3, and the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, shall have full and exclusive power and
authority, in its sole and absolute discretion, without the consent or approval of any Limited Partner, to do or authorize all things deemed necessary or desirable by it to conduct the business and affairs of the Partnership and the General Partner,
to exercise or direct the exercise of all of the powers of the Partnership under the Act and this Agreement and to effectuate the purposes of the Partnership including, without limitation:
(1) the making of any expenditures, the lending or borrowing of money or selling of assets (including, without limitation, making
prepayments on loans and borrowing money to permit the Partnership to make distributions to the Holders in such amounts as will permit the Special Limited Partner (so long as the Special Limited Partner qualifies as a REIT) (a) to prevent the
imposition of any federal income tax on the Special Limited Partner (including, for this purpose, any excise tax pursuant to Code Section 4981), and (b) to make distributions to its stockholders and payments to any taxing authority
sufficient to permit the Special Limited Partner to maintain REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of
indebtedness (including the securing of same by deed to secure debt, mortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any obligations that the General Partner deems necessary for the conduct
of the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or rendering of periodic or other reports
to governmental or other agencies having jurisdiction over the business or assets of the Partnership;
(3) the taking of any and all
acts to ensure that the Partnership will not be classified as a “publicly traded partnership” under Code Section 7704;
(4) subject to Section 11.2 hereof, the acquisition, sale, transfer, exchange or other disposition of any, all or substantially all
of the assets (including the goodwill) of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by
the Partnership) or the merger, consolidation, reorganization or other combination of the Partnership with or into another entity;
(5) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the assignment of any assets of the Partnership
in trust for creditors or on the promise of the assignee to pay the debts of the Partnership, the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on
any terms that the General Partner sees fit, including, without limitation, the financing of the operations and activities of the General Partner, the Partnership or any of the Partnership’s Subsidiaries, the lending of funds to other Persons
(including, without limitation, the General Partner and/or the Partnership’s Subsidiaries) and the repayment of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership has an equity investment, and the
making of capital contributions to and equity
29
investments in the Partnership’s Subsidiaries;
(6) the management,
operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any Property;
(7) the negotiation,
execution and performance of any contracts, including leases (including ground leases), easements, management agreements, rights of way and other property-related agreements, conveyances or other instruments that the General Partner considers useful
or necessary to the conduct of the Partnership’s operations or the implementation of the General Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, governmental authorities, accountants,
legal counsel, other professional advisors and other agents and the payment of their expenses and compensation, as applicable, out of the Partnership’s assets;
(8) the distribution of Partnership cash or other Partnership assets in accordance with this Agreement, the holding, management,
investment and reinvestment of cash and other assets of the Partnership, and the collection and receipt of revenues, rents and income of the Partnership;
(9) the selection and dismissal of employees of the Partnership (if any) or the General Partner (if any) (including, without limitation,
employees having titles or offices such as “president,” “vice president,” “secretary” and “treasurer”), and agents, outside attorneys, accountants, consultants and contractors of the Partnership or the General
Partner and the determination of their compensation and other terms of employment or hiring;
(10) the maintenance of such insurance
(including, without limitation, directors and officers insurance) for the benefit of the Partnership and the Partners (including, without limitation, the Special Limited Partner) as the General Partner deems necessary or appropriate;
(11) the formation of, or acquisition of an interest in, and the contribution of property to, any further limited or general
partnerships, limited liability companies, joint ventures or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to, any Subsidiary and any other Person in
which the General Partner has an equity investment from time to time);
provided
,
however
, that, as long as the Special Limited Partner has determined to continue to qualify as a REIT, the Partnership will not engage in any such
formation, acquisition or contribution that would cause the Special Limited Partner to fail to qualify as a REIT;
(12) the control
of any matters affecting the rights and obligations of the Partnership, including the settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or
damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and the representation of the Partnership in all suits or legal
proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurring of legal expense, and the indemnification of any Person against liabilities and contingencies to the extent permitted by law;
(13) the undertaking of any action in connection with the Partnership’s direct or indirect investment in any Subsidiary or any other
Person (including, without limitation, the contribution or loan of funds by the Partnership to such Persons);
(14) the determination
of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner may adopt;
provided
,
however
, that such methods are otherwise consistent with the requirements of
this Agreement;
(15) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and
indemnities relating to such Partner’s contribution of property or assets to the Partnership;
30
(16) the exercise, directly or indirectly, through any
attorney-in-fact
acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership;
(17) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any
Subsidiary of the Partnership or any other Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person;
(18) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the
Partnership does not have an interest, pursuant to contractual or other arrangements with such Person;
(19) the making, execution
and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases, confessions of judgment or any other legal
instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement;
(20) the issuance of additional Partnership Units in connection with Capital Contributions by Additional Limited Partners and additional
Capital Contributions by Partners pursuant to Article 4 hereof;
(21) an election to dissolve the Partnership pursuant to
Section 13.1.B hereof;
(22) the distribution of cash to acquire Partnership Common Units held by a Limited Partner in
connection with a Redemption under Section 15.1 hereof;
(23) an election to require the Special Limited Partner to acquire
Tendered Units in exchange for REIT Shares;
(24) Any update to
Exhibit A
hereto to reflect accurately at all times the
Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional
Limited Partner or any Substituted Limited Partner or otherwise, which update, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment to this Agreement, as long as the matter or event being reflected in
Exhibit A
hereto otherwise is authorized by this Agreement; and
(25) the registration of any class of securities of the
Partnership under the Securities Act or the Exchange Act, and the listing of any debt securities of the Partnership on any exchange.
B. Each of the Limited Partners agrees that, except as provided in Section 7.3 hereof and subject to the rights of any Holder of any
Partnership Interest set forth in a Partnership Unit Designation, the General Partner, in its sole and absolute discretion, is authorized to execute, deliver and perform the above-mentioned agreements and transactions on behalf of the Partnership,
and otherwise to exercise any power of the General Partner under this Agreement and the Act, without any further act, approval or vote of the Partners or any other Persons, notwithstanding any other provision of the Act or any applicable law, rule
or regulation, and, for so long as the Special Limited Partner is the sole member of the General Partner and in the absence of any specific corporate action on the part of the Special Limited Partner, or any specific limited liability company action
of the General Partner, to the contrary, the taking of any such action or the execution of any such document or writing by an officer of the Special Limited Partner, in the name and on behalf of the Special Limited Partner, in the Special Limited
Partner’s capacity as the sole member of the General Partner, in the General Partner’s capacity as the general partner of the Partnership, shall conclusively evidence (1) the approval thereof by the General Partner, in its capacity as
the general partner of the Partnership, (2) the General Partner’s determination that such action, document or writing is necessary or desirable to conduct the business and affairs of the Partnership, exercise the powers of the Partnership
under this Agreement and the Act or effectuate the purposes of the Partnership, or any other determination by the General Partner required by this Agreement in connection with the taking of such action or execution of such document or writing,
(3) the authority
31
of such officer with respect thereto, and (4) the authorization of such document or writing under this Agreement. The Partnership is hereby authorized to execute, deliver and perform, and
the General Partner on behalf of the Partnership is hereby authorized to execute and deliver, an Underwriting Agreement relating to the issuance and sale of common stock of the Special Limited Partner and all documents, agreements or certificates
contemplated thereby or related thereto, all without any further act, vote or approval of any other Person notwithstanding any other provision of this Agreement. The foregoing authorization shall not be deemed a restriction on the powers of the
General Partner to enter into other agreements on behalf of the Partnership.
C. At all times from and after the date hereof, the
General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder.
D. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital
and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to (except as otherwise
provided by this Agreement with respect to the qualification of the Special Limited Partner as a REIT), take into account the tax consequences to any Partner of any action taken (or not taken) by it. The General Partner, the Special Limited Partner
and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of any income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its
authority under this Agreement.
F. The determination as to any of the following matters, made by or at the direction of the General
Partner consistent with the this Agreement and the Act, shall be final and conclusive and shall be binding upon the Partnership and every Limited Partner and shall not constitute a breach of this Agreement, of any agreement contemplated herein or
therein, or of any duty existing at law, in equity or otherwise, including any fiduciary duty: the amount of assets at any time available for distribution or the redemption of Partnership Common Units; the amount and timing of any distribution; the
amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall
have been paid or discharged); the amount of any Partner’s Capital Account, Adjusted Capital Account or Adjusted Capital Account Deficit; the amount of Net Income, Net Loss or Depreciation for any period; any special allocations of Net Income
or Net Loss pursuant to Sections 6.2.C, 6.3, 6.4 or 6.5; the Gross Asset Value of any Partnership asset; the Value of any REIT Share; the timing and amount of any adjustment to the Adjustment Factor; the timing, number and redemption or repurchase
price of the redemption or repurchase of any Partnership Units pursuant to Section 4.7.B; any interpretation of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or
distributions, qualifications or terms or conditions of redemption of any class or series of Partnership Interest; the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the
Partnership or of any Partnership Interest; the number of authorized or outstanding Units of any class or series; any matter relating to the acquisition, holding and disposition of any assets by the Partnership; or any other matter relating to the
business and affairs of the Partnership or required or permitted by applicable law, this Agreement or otherwise to be determined by the General Partner.
Section 7.2
Certificate of Limited Partnership
. To the extent that such action is determined
by the General Partner to be reasonable and necessary or appropriate, the General Partner shall file amendments to and restatements of the Certificate and do all the things to maintain the Partnership as a limited partnership (or a partnership in
which the limited partners have limited liability) under the laws of the State of Delaware and each other state, the District of Columbia or any other jurisdiction, in which the Partnership may elect to do business or own property. Subject to the
terms of Section 8.5.A hereof, the General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate or any amendment thereto to any Limited Partner. The General Partner shall use all reasonable efforts
to cause to be filed such other certificates or documents as may be reasonable and necessary or appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership in
32
which the limited partners have limited liability to the extent provided by applicable law) in the State of Delaware and any other state, or the District of Columbia or other jurisdiction, in
which the Partnership may elect to do business or own property.
Section 7.3
Restrictions on
General Partner’s Authority
.
A. The General Partner may not take any action in contravention of an express prohibition or
limitation of this Agreement without the Consent of the Limited Partners, and may not, without limitation:
(1) take any action that
would make it impossible to carry on the ordinary business of the Partnership, except as otherwise provided in this Agreement; or
(2) perform any act that would subject a Limited Partner to liability as a general partner in any jurisdiction or any other liability
except as provided herein or under the Act.
B. Except as provided in Section 7.3.C hereof, the General Partner shall not,
without the prior Consent of the Limited Partners, amend, modify or terminate this Agreement.
C. Notwithstanding Section 7.3.B
and 14.2 hereof but subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, the General Partner shall have the power, without the Consent of the Limited Partners, to amend this Agreement as may be
required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or surrender
any right or power granted to the General Partner or any Affiliate of the General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution or withdrawal of Partners, a Transfer or any other redemption, conversion or purchase of any
Partnership Interest, the termination of the Partnership in accordance with this Agreement and to update
Exhibit A
in connection with such admission, substitution, withdrawal, Transfer, adjustment or other event;
(3) to reflect a change that is of an inconsequential nature or does not adversely affect the Limited Partners in any material respect,
or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with law or
with the provisions of this Agreement;
(4) to set forth or amend the designations, preferences, conversion or other rights, voting
powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of the Holders of any additional Partnership Interests issued pursuant to Article 4, including as contemplated by Section 4.2.A and
Section 5.5;
(5) to satisfy any requirements, conditions or guidelines contained in any order, directive, opinion, ruling or
regulation of a federal or state agency or contained in federal or state law;
(6) (a) to reflect such changes as are reasonably
necessary for the Special Limited Partner to maintain its status as a REIT or to satisfy the REIT Requirements, or (b) to reflect the Transfer of all or any part of a Partnership Interest among the Special Limited Partner and any Disregarded
Entity with respect to the Special Limited Partner;
(7) to modify either or both of the manner in which items of Net Income or Net
Loss are allocated pursuant to Article 6 or the manner in which Capital Accounts are adjusted, computed, or maintained (but in each case only to the extent otherwise provided in this Agreement and as may be permitted under applicable law);
(8) to reflect the issuance of additional Partnership Interests in accordance with Section 4.2;
33
(9) to reflect any modification to this Agreement permitted by Section 4.4.A or any
other provision of this Agreement that authorizes the General Partner to make amendments without the consent of any other Person; and
(10) to reflect any other modification to this Agreement as is reasonably necessary for the business or operations of the Partnership or
the Special Limited Partner and which does not violate Section 7.3.D.
D. Notwithstanding Sections 7.3.B, 7.3.C and 14.2 hereof,
this Agreement shall not be amended without the Consent of each Partner materially adversely affected thereby, if such amendment would (i) convert a Limited Partner Interest in the Partnership into a General Partner Interest (except as a result
of the General Partner acquiring such Partnership Interest), (ii) adversely modify the limited liability of a Limited Partner, (iii) alter the rights of any Partner to receive the distributions to which such Partner is entitled pursuant to
Article 5 or Section 13.2.A(4) hereof, or alter the allocations specified in Article 6 hereof (except, in any case, as permitted pursuant to Sections 4.2, 5.5, 7.3.C and Article 6 hereof), (iv) alter or modify the Redemption rights, Cash
Amount or REIT Shares Amount as set forth in Section 15.1 hereof, or amend or modify any related definitions, (v) subject to Section 7.9.D, remove, alter or amend the powers and restrictions related to REIT Requirements or permitting
the Special Limited Partner to avoid paying tax under Code Sections 857 or 4981 contained in Sections 3.2, 7.1 and 7.3, or (vi) amend this Section 7.3.D. Any such amendment or action consented to by any Partner shall be effective as
to that Partner, notwithstanding the absence of such consent by any other Partner.
Section 7.4
Reimbursement of the General Partner and the Special Limited Partner
.
A. Neither the General Partner nor the Special Limited Partner shall be compensated for its services as general partner or limited
partner of the Partnership except as provided in this Agreement (including the provisions of Articles 5 and 6 hereof regarding distributions, payments and allocations to which the General Partner or Special Limited Partner may be entitled in
its capacity as the General Partner or the Special Limited Partner, as applicable).
B. Subject to Sections 7.4.D and 15.12 hereof,
the Partnership shall be responsible for and shall pay all expenses relating to the Partnership’s, the Special Limited Partner’s and the General Partner’s organization and the ownership of each of their assets and operations. The
General Partner is hereby authorized to cause the Partnership to pay compensation for accounting, administrative, legal, technical, management and other services rendered to the Partnership. The Partnership shall be liable for, and shall reimburse
the General Partner or the Special Limited Partner, as applicable, on a monthly basis, or such other basis as the General Partner may determine in its sole and absolute discretion, for all sums expended in connection with the Partnership’s
business, including, without limitation, (i) expenses relating to the ownership of interests in and management and operation of the Partnership, (ii) compensation of officers and employees, including, without limitation, payments under
future compensation plans, of the Special Limited Partner, the General Partner, or the Partnership that may provide for stock units, or phantom stock, pursuant to which employees of the Special Limited Partner, the General Partner, or the
Partnership will receive payments based upon dividends on or the value of REIT Shares, (iii) director fees and expenses of the Special Limited Partner or its Affiliates, (iv) any expenses (other than the purchase price) incurred by the
Special Limited Partner in connection with the redemption or other repurchase of REIT Shares or Capital Shares, (v) all costs and expenses of the Special Limited Partner being a public company, including, without limitation, costs of filings
with the SEC, reports and other distributions to its stockholders, and (vi) all costs and expenses of the Special Limited Partner in connection with its operation as a REIT;
provided
,
however
, that the amount of any reimbursement
shall be reduced by any interest earned by the General Partner or the Special Limited Partner with respect to bank accounts or other instruments or accounts held by it on behalf of the Partnership as permitted pursuant to Section 7.5 hereof.
The Partners acknowledge that all such expenses of the General Partner and the Special Limited Partner are deemed to be for the benefit of the Partnership. Such reimbursements shall be in addition to any reimbursement of the General Partner and the
Special Limited Partner as a result of indemnification pursuant to Section 7.7 hereof.
C. If the Special Limited Partner shall
elect to purchase from its stockholders REIT Shares or Capital Shares for the purpose of delivering such REIT Shares or Capital Shares to satisfy an obligation under any dividend reinvestment
34
program adopted by the Special Limited Partner, any employee stock purchase plan adopted by the Special Limited Partner or any similar obligation or arrangement undertaken by the Special Limited
Partner in the future, in lieu of the treatment specified in Section 4.7.B., the purchase price paid by the Special Limited Partner for such REIT Shares or Capital Shares shall be considered expenses of the Partnership and shall be advanced to
the Special Limited Partner or reimbursed to the Special Limited Partner, subject to the condition that: (1) if such REIT Shares subsequently are sold by the Special Limited Partner, the Special Limited Partner shall pay or cause to be paid to
the Partnership any proceeds received by the Special Limited Partner for such REIT Shares (which sales proceeds shall include the amount of dividends reinvested under any dividend reinvestment or similar program; provided, that a transfer of REIT
Shares for Partnership Common Units pursuant to Section 15.1 would not be considered a sale for such purposes); and (2) if such REIT Shares are not retransferred by the Special Limited Partner within 30 days after the purchase thereof, or
the Special Limited Partner otherwise determines not to retransfer such REIT Shares, the Partnership shall redeem from the Special Limited Partner a number of Partnership Common Units determined in accordance with Section 4.7.B, as adjusted, to
the extent the General Partner determines is necessary or advisable in its sole and absolute discretion, (x) pursuant to Section 7.5 (in the event the Special Limited Partner acquires material assets, other than on behalf of the
Partnership) and (y) for stock dividends and distributions, stock splits and subdivisions, reverse stock splits and combinations, distributions of rights, warrants or options, and distributions of evidences of indebtedness or assets relating to
assets not received by the Special Limited Partner pursuant to a pro rata distribution by the Partnership (in which case such advancement or reimbursement of expenses shall be treated as having been made as a distribution in redemption of such
number of Partnership Units held by the Special Limited Partner).
D. To the extent practicable, Partnership expenses shall be billed
directly to and paid by the Partnership and, subject to Section 15.12 hereof, if and to the extent any reimbursements to the General Partner, the Special Limited Partner or any of its Affiliates by the Partnership pursuant to this
Section 7.4 constitute gross income to such Person (as opposed to the repayment of advances made by such Person on behalf of the Partnership), such amounts shall be treated as “guaranteed payments” within the meaning of Code
Section
707(c) and shall not be treated as distributions for purposes of computing the Partners’ Capital Accounts.
Section 7.5
Outside Activities of the General Partner and the Special Limited Partner
.
A. Neither the General
Partner nor the Special Limited Partner shall directly or indirectly enter into or conduct any business, other than in connection with, (a) the ownership, acquisition and disposition of Partnership Interests, (b) with respect to the
General Partner, the management of the business and affairs of the Partnership, (c) with respect to the Special Limited Partner, the operation of the Special Limited Partner as a reporting company with a class (or classes) of securities
registered under the Exchange Act, (d) with respect to the Special Limited Partner, its operations as a REIT, (e) with respect to the Special Limited Partner, the offering, sale, syndication, private placement or public offering of stock,
bonds, securities or other interests, (f) financing or refinancing of any type related to the Partnership or its assets or activities, and (g) such activities as are incidental thereto;
provided
,
however
, that, except as
otherwise provided herein, any funds raised by the Special Limited Partner pursuant to the preceding clauses (e) and (f) shall be made available to the Partnership, whether as Capital Contributions, loans or otherwise, as appropriate, and,
provided
,
further
that each of the General Partner and the Special Limited Partner may, in its sole and absolute discretion, from time to time hold or acquire Properties in its own name or otherwise other than through the Partnership
so long as the General Partner or the Special Limited Partner, as applicable, takes commercially reasonable measures to ensure that the economic benefits and burdens of such Property are otherwise vested in the Partnership, through assignment,
mortgage loan or otherwise or, if it is not commercially reasonable to vest such economic interests in the Partnership, the Partners shall negotiate in good faith to amend this Agreement, including, without limitation, the definition of
“Adjustment Factor,” to reflect such activities and the direct ownership of assets by the General Partner or the Special Limited Partner, as applicable. Nothing contained herein shall be deemed to prohibit the General Partner from
executing guarantees of Partnership Debt. Notwithstanding the foregoing, the General Partner or the Special Limited Partner may acquire Properties in exchange for REIT Shares, other shares of capital stock or New Securities, or cash, in each case
solely to the extent such Properties (or interests therein) are contributed by the General Partner or the Special Limited Partner, as applicable, to the Partnership,
35
pursuant to the terms described in Section 4.3, except no such contribution shall be required to the extent the Properties acquired by the General Partner or the Special Limited Partner, as
applicable, are direct or indirect interests in Partnership Interests. Any Limited Partner Interests directly or indirectly acquired by the General Partner, whether pursuant to exercise by a Limited Partner of its right of Redemption, or otherwise,
shall be automatically converted into a General Partner Interest comprised of an identical number of Partnership Units with the same rights, priorities and preferences as the class or series so acquired. If, at any time, the General Partner or the
Special Limited Partner acquires material assets (other than on behalf of the Partnership), to the extent reasonably determined by the General Partner to be necessary, the definition of “Adjustment Factor” shall be adjusted, as reasonably
agreed to by the General Partner and the other Limited Partners, to reflect such acquisition of material assets by the General Partner or the Special Limited Partner, as applicable. The General Partner’s General Partner Interest in the
Partnership, the Special Limited Partner’s Limited Partner Interest in the Partnership, a minority interest in any Subsidiary of the Partnership that the General Partner or the Special Limited Partner holds in order to maintain such
Subsidiary’s status as a partnership for federal income tax purposes or otherwise, Properties which meet the requirements of this Section 7.5.A (and prior to their contribution to the Partnership pursuant to Section 4.3), interests in
such short-term liquid investments, bank accounts or similar instruments as the General Partner deems necessary to carry out the General Partner’s and the Special Limited Partner’s responsibilities contemplated under this Agreement and the
Charter, and interests in Disregarded Entities with respect to the General Partner or the Special Limited Partner which hold any of the foregoing, are interests which the General Partner and the Special Limited Partner are permitted to acquire and
hold for purposes of this Section 7.5.A.
B. In the event the Special Limited Partner exercises its rights under the Charter to
purchase REIT Shares or Preferred Shares, then the General Partner shall cause the Partnership to redeem from the Special Limited Partner a number of Partnership Units of the appropriate class as determined based on, in the case of REIT Shares the
REIT Shares Amount equal to the number of REIT Shares so purchased, or in the case of Preferred Shares an equal number of Partnership Preferred Units of the class or series which correspond to the class or series, as the case may be, of the
Preferred Shares so purchased, in each case on the same terms that the Special Limited Partner purchased such REIT Shares or Preferred Shares (as applicable). For the avoidance of doubt, nothing contained herein shall restrict or prohibit the
General Partner from causing the Partnership to redeem a Partnership Interest held by the Special Limited Partner for cash.
Section 7.6
Transactions with Affiliates
.
A. The Partnership may lend or contribute funds to, and borrow funds
from, Persons in which the Partnership has an equity investment, and such Persons may borrow funds from, and lend or contribute funds to, the Partnership, on terms and conditions established in the sole and absolute discretion of the General
Partner. The foregoing authority shall not create any right or benefit in favor of any Person.
B. Except as provided in
Section 7.5 hereof, the Partnership may transfer assets to joint ventures, limited liability companies, partnerships, corporations, business trusts, statutory trusts or other business entities in which it is or thereby becomes a participant
upon such terms and subject to such conditions consistent with this Agreement and applicable law.
C. The General Partner, the
Special Limited Partner and their respective Affiliates may sell, transfer or convey any Property to, or purchase any Property from, the Partnership, directly or indirectly, on terms and conditions established by the General Partner in its sole and
absolute discretion.
D. The General Partner or the Special Limited Partner, in their respective sole and absolute discretion and
without the approval of the Partners or any of them or any other Persons, may propose and adopt (on behalf of the Partnership) employee benefit plans funded by the Partnership for the benefit of employees of the General Partner, the Special Limited
Partner, the Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in respect of services performed, directly or indirectly, for the benefit of the General Partner, the Special Limited Partner, the Partnership or any of the
Partnership’s Subsidiaries.
36
Section 7.7
Indemnification
.
A. To the fullest extent permitted by applicable law, the Partnership shall indemnify each Indemnitee from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including, without limitation, reasonable attorney’s fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims,
demands, actions, suits or proceedings, civil, criminal, administrative or investigative, whether by or in the right of the Partnership or otherwise (subject to (y) below) that relate to the operations of the Partnership
(“
Actions
”) as set forth in this Agreement in which such Indemnitee may be involved, or is threatened to be involved, as a party or otherwise;
provided
,
however
, that the Partnership shall not indemnify an Indemnitee
(i) if the act or omission of the Indemnitee was material to the matter giving rise to the Action and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) in the case of any criminal proceeding, if
the Indemnitee had reasonable cause to believe that the act or omission was unlawful; or (iii) for any loss resulting from any transaction for which such Indemnitee actually received an improper personal benefit in money, property or services
or otherwise in violation or breach of any provision of this Agreement; and
provided
,
further
, that no payments pursuant to this Agreement shall be made by the Partnership (x) to indemnify or advance expenses to any Indemnitee
with respect to any Action initiated or brought voluntarily by such Indemnitee (and not by way of defense) unless (I) approved or authorized by the General Partner or (II) incurred to establish or enforce such Indemnitee’s right to
indemnification under this Agreement, (y) to advance expenses in connection with one or more Actions or claims brought by or in the right of the Partnership or (z) to indemnify an Indemnitee in connection with one or more Actions involving
such Indemnitee if such Indemnitee is found liable to the Partnership with respect to such claim or Action. If Indemnitee is entitled to indemnification hereunder with respect to one or more but less than all claims, issues or matters in any Action,
the Partnership shall provide indemnification hereunder in connection with each such claim, issue or matter, allocated on a reasonable and proportionate basis.
Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or
otherwise, for any indebtedness of the Partnership or any Subsidiary of the Partnership (including, without limitation, any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken subject to), and the General
Partner is hereby authorized and empowered, in its sole and absolute discretion on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or
potentially having liability for any such indebtedness. It is the intention of this Section 7.7.A that the Partnership indemnify each Indemnitee to the fullest extent permitted by law and this Agreement. The termination of any proceeding by
judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.7.A. The termination of any proceeding by conviction of an Indemnitee or upon a plea of
nolo contendere
or its equivalent by an Indemnitee, or an entry of an order of probation against an Indemnitee prior to judgment, does not create a presumption that such Indemnitee acted in a manner contrary to that specified in this
Section 7.7.A with respect to the subject matter of such proceeding. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Partnership, and neither the General Partner nor any other Holder shall have
any obligation to pay or otherwise satisfy such indemnification obligation or to contribute to the capital of the Partnership or otherwise provide funds to enable the Partnership to fund its obligations under this Section 7.7.
B. To the fullest extent permitted by law, expenses incurred by an Indemnitee who is a party to a proceeding or otherwise subject to or
the focus of or is involved in any Action shall be paid or reimbursed by the Partnership as incurred by the Indemnitee in advance of the final disposition of the Action upon receipt by the Partnership of (i) a written affirmation by the
Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized in Section 7.7.A has been met, and (ii) a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.
C. The
indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and
shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the
37
benefit of the heirs, successors, assigns and administrators of the Indemnitee unless otherwise provided in a written agreement with such Indemnitee or in the writing pursuant to which such
Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to, purchase and maintain insurance, on behalf of any
of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnership’s activities, regardless of
whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.
E. Any liabilities which an Indemnitee incurs as a result of acting on behalf of the Partnership, the General Partner or the Special
Limited Partner (whether as a fiduciary or otherwise) in connection with the operation, administration or maintenance of an employee benefit plan or any related trust or funding mechanism (whether such liabilities are in the form of excise taxes
assessed by the IRS, penalties assessed by the U.S. Department of Labor, restitutions to such a plan or trust or other funding mechanism or to a participant or beneficiary of such plan, trust or other funding mechanism, or otherwise) shall be
treated as liabilities or judgments or fines under this Section 7.7, unless such liabilities arise as a result of (i) an act or omission of such Indemnitee that was material to the matter giving rise to the Action and either was committed
in bad faith or was the result of active and deliberate dishonesty; (ii) in the case of any criminal proceeding, an act or omission that such Indemnitee had reasonable cause to believe was unlawful, or (iii) any transaction in which such
Indemnitee actually received an improper personal benefit in violation or breach of any provision of this Agreement.
F. In no event
may an Indemnitee subject any of the Holders to personal liability by reason of the indemnification provisions set forth in this Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an
interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any way affect the limitations on
the Partnership’s liability to any Indemnitee under this Section 7.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.
I. Any obligation or liability
whatsoever of the General Partner which may arise at any time under this Agreement or any other instrument, transaction, or undertaking contemplated hereby shall be satisfied, if at all, out of the assets of the General Partner or the Partnership
only. No such obligation or liability shall be personally binding upon, nor shall resort for the enforcement thereof be had to, any of the General Partner’s directors, stockholders, officers, employees, or agents, regardless of whether such
obligation or liability is in the nature of contract, tort or otherwise.
J. It is the intent of the parties that any amounts paid by
the Partnership to the General Partner or the Special Limited Partner pursuant to this Section 7.7 shall be treated as “guaranteed payments” within the meaning of Code Section 707(c) and shall not be treated as distributions for
purposes of computing the Partners’ Capital Accounts.
Section 7.8
Liability of the
General Partner and the Special Limited Partner
.
A. To the fullest extent permitted by law: (i) The General Partner (and
the Special Limited Partner, as the sole member of the General Partner) is acting for the benefit of not only the Partnership and the Partners, but also the Special Limited Partner’s stockholders collectively; (ii) in the event of a
conflict between the interests of the Partnership or any Partner, on the one hand, and the separate interests of the Special Limited Partner or its
38
stockholders, on the other hand, the General Partner and the Special Limited Partner, as the sole member of the General Partner, are under no obligation not to give priority to the separate
interests of the Special Limited Partner or the stockholders of the Special Limited Partner and may give priority to the separate interests of the Special Limited Partner and its stockholders (including, without limitation, with respect to tax
consequences to Limited Partners, Assignees or the Special Limited Partner’s stockholders) in a manner that is adverse to the Partnership and its Partners, and any action or failure to act on the part of the Special Limited Partner or its
directors that gives priority to the separate interests of the Special Limited Partner or its stockholders does not violate the duty of loyalty otherwise owed by the General Partner or the Special Limited Partner, as the sole member of the General
Partner, to the Partnership and/or the Partners or any other Person bound by this Agreement; and (iii) neither the General Partner nor the Special Limited Partner shall be liable to the Partnership or to any Partner or any other Person bound by
this Agreement for monetary damages for losses sustained, liabilities incurred or benefits not derived by the Partnership or any Partner in connection with such decisions, except for liability for the General Partner’s or the Special Limited
Partner’s intentional harm or gross negligence. In furtherance and not in limitation of the foregoing, to the fullest extent permitted by law and notwithstanding any other provision of this Agreement or any other agreement contemplated herein
or applicable provisions of law or equity or otherwise, whenever a conflict arises between the interests of stockholders of the Special Limited Partner, on one hand, and any other Limited Partner, on the other hand, the General Partner will endeavor
in good faith to resolve the conflict in a manner not adverse to either the stockholders of the Special Limited Partner or any other Limited Partner; provided, however, that for so long as the Special Limited Partner owns a controlling interest in
the Partnership, any conflict that cannot be resolved in a manner not adverse to either the stockholders of the Special Limited Partner or any other Limited Partner shall be resolved in favor of the stockholders of the Special Limited Partner, and
any action taken by the General Partner in connection with any such conflict of interests shall not constitute a breach of this Agreement or any duty in law, at equity or otherwise.
B. Subject to its obligations and duties as General Partner set forth in this Agreement and applicable law, the General Partner may
exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its employees or agents (subject to the supervision and control of the General Partner). The General
Partner shall not be liable to the Partnership or any Partner for any misconduct or negligence on the part of any such employee or agent appointed by it in good faith.
C. Any obligation or liability whatsoever of the General Partner or the Partnership which may arise at any time under this Agreement or
any other instrument, transaction, or undertaking contemplated hereby shall be satisfied, if at all, out of the assets of the General Partner or the Partnership only. To the fullest extent permitted by law, no such obligation or liability shall be
personally binding upon, nor shall resort for the enforcement thereof be had to, any of the General Partner’s members, managers or agents, or the directors, officers, stockholders, employees or agents of the General Partner’s members or
managers, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise. Notwithstanding anything to the contrary set forth in this Agreement, none of the members, managers or agents of the General Partner, and
none of the directors, officers, stockholders, employees or agents of the General Partner’s members or managers, shall be liable or accountable in damages or otherwise to the Partnership, any Partners, or any other Person bound by this
Agreement for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or law or of any act or omission, except for liability for such Person’s intentional harm or gross negligence.
D. Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in
any way affect the limitations on the liability of the General Partner or the members, managers or agents of the General Partner, the Special Limited Partner, or of the directors, officers, stockholders, employees or agents of the Special Limited
Partner, or the Indemnitiees, to the Partnership, the Partners or any other Person bound by this Agreement under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.
E. Notwithstanding anything herein to the contrary, except for liability for intentional harm or gross negligence on
39
the part of such Partner or pursuant to any express indemnities given to the Partnership by any Partner pursuant to any other written instrument to the fullest extent permitted by law, no Partner
shall have any personal liability whatsoever, to the Partnership or to the other Partners or to any other Person bound by this Agreement, including any damages arising out of the breach of any such Partner’s fiduciary duties as such duties may
have been modified by this Agreement. Without limitation of the foregoing, no property or assets of such Partner, other than its interest in the Partnership, shall be subject to levy, execution or other enforcement procedures for the satisfaction of
any judgment (or other judicial process) in favor of any other Partner(s) or any other Person bound by this Agreement and arising out of, or in connection with, this Agreement. This Agreement is executed by the officers of the Special Limited
Partner, in the name and on behalf of the Special Limited Partner, in its capacity as managing member of the General Partner, solely as officers of the Special Limited Partner, and not in their own individual capacities.
F. To the extent that, at law or in equity, the General Partner or the Special Limited Partner, as the managing member of the General
Partner or in its capacity as a Limited Partner, has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or the Limited Partners, neither the General Partner nor the Special Limited Partner, as the managing member
of the General Partner or in its capacity as a Limited Partner, shall be liable to the Partnership or to any other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they
restrict or eliminate the duties and liabilities of the General Partner, the Special Limited Partner or any other Person under the Act or otherwise existing at law or in equity, are agreed by the Partners to replace such other duties and liabilities
of the General Partner and the Special Limited Partner.
G. To the fullest extent permitted by law and notwithstanding any other
provision of this Agreement or any other agreement contemplated herein or applicable provisions of law or equity or otherwise, whenever in this Agreement any Person is permitted or required to make a decision (i) in its “sole and absolute
discretion,” “sole discretion”, “discretion”, “at its election” or under a grant of similar authority or latitude, such Person shall be entitled to consider only such interests and factors as it desires, including
its own interests, shall have no duty or obligation to give any consideration to any interest or factors affecting the Partnership, the Partners, or any other Person bound by this Agreement, and shall be entitled to act in a manner adverse to the
interests of the Partnership, the Partners or any other Person bound by this Agreement, or (ii) in its “good faith” or under another expressed standard, such Person shall act under such express standard and shall not be subject to any
other or different standards imposed by this Agreement or any other agreement contemplated herein or by relevant provisions of law or in equity or otherwise. If any question should arise with respect to the operation of the Partnership, which is not
otherwise specifically provided for in this Agreement or the Act, or with respect to the interpretation of this Agreement, the General Partner is hereby authorized to make a final determination with respect to any such question and to interpret this
Agreement in such a manner as it shall deem, in its sole discretion, to be fair and equitable, and its determination and interpretations so made shall be final and binding on all parties and shall not constitute a breach of this Agreement, of any
agreement contemplated herein or therein, or of any duty existing at law, in equity or otherwise, including any fiduciary duty.
H. To the fullest extent permitted by applicable law, no Indemnitee shall be liable to the Partnership, any Partner or any other Person
bound by this Agreement for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnitee in good faith on behalf of the Partnership and in a manner reasonably believed to be within the scope of the
authority conferred on such Indemnitee by this Agreement, except that an Indemnitee shall be liable for any such loss, damage or claim incurred by reason of such Indemnitee’s intentional harm or gross negligence.
Section 7.9
Other Matters Concerning the General Partner and the Special Limited Partner
.
A. The General Partner may rely and shall be protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties.
40
B. The General Partner may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers, architects, engineers, environmental consultants and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon the opinion of such Persons as to matters that the General
Partner reasonably believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion.
C. The General Partner shall have the right, in respect of any of its powers or obligations hereunder, to act through any duly authorized
agents or a duly appointed attorney or
attorneys-in-fact
(including, without limitation, the Special Limited Partner). Each such agent or attorney shall, to the extent
authorized by the General Partner, have full power and authority to do and perform all and every act and duty that is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provision of this Agreement or the Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of the Special Limited
Partner to continue to qualify as a REIT, (ii) for the Special Limited Partner otherwise to satisfy the REIT Requirements, (iii) for the Special Limited Partner to avoid incurring any taxes under Code Section 857 or Code
Section 4981, or (iv) for any Special Limited Partner Affiliate to continue to qualify as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)) or “taxable REIT subsidiary” (within the
meaning of Code Section 856(l)), is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners and shall not constitute a breach of this Agreement, of any agreement contemplated herein or therein, or of any
duty existing at law, in equity or otherwise, including any fiduciary duty.
E. To the extent the Special Limited Partner, or its
officers or directors, take any action in the name or on behalf of the General Partner, in the General Partner’s capacity as the sole general partner of the Partnership, the Special Limited Partner and its officers and directors shall be
entitled to the same protection as the General Partner and its members, managers and agents.
Section 7.10
Title to Partnership Assets
. Title to Partnership assets, whether real, personal
or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively with other Partners or Persons, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner, or one or more nominees, as the General Partner may determine, including Affiliates of the General Partner or the
Special Limited Partner. The General Partner hereby declares and warrants that any Partnership assets for which legal title is held in the name of the General Partner, or any nominee or Affiliate of the General Partner or the Special Limited Partner
shall be held by the General Partner or such nominee or Affiliate for the use and benefit of the Partnership in accordance with the provisions of this Agreement. All Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such Partnership assets is held.
Section 7.11
Reliance by Third Parties
. Notwithstanding anything to the contrary in this
Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner has full power and authority, without the consent or approval of any other Partner or Person, to encumber, sell or otherwise use in any manner
any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and take any and all actions on behalf of the Partnership, and such Person shall be entitled to deal with the General Partner as if it were the
Partnership’s sole party in interest, both legally and beneficially. To the fullest extent permitted by law, each Limited Partner hereby waives any and all defenses or other remedies that may be available against such Person to contest, negate
or disaffirm any action of the General Partner in connection with any such dealing. In no event shall any Person dealing with the General Partner or its representatives be obligated to ascertain that the terms of this Agreement have been complied
with or to inquire into the necessity or expediency of any act or action of the General Partner or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and
41
every Person relying thereon or claiming thereunder that (i) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and
effect, (ii) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (iii) such certificate, document or instrument was duly executed
and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1
Limitation of Liability
. No Limited Partner, including the Special Limited
Partner, acting in its capacity as such, shall have any liability under this Agreement except for intentional harm or gross negligence on the part of such Limited Partner or as expressly provided in this Agreement (including, without limitation,
Section 10.4 hereof) or under the Act.
Section 8.2
Management of Business
. No
Limited Partner or Assignee (other than the General Partner, any of its Affiliates or any member, manager, employee, partner or agent of the General Partner or the Partnership, in their capacity as such, including the Special Limited Partner, in its
capacity as the sole member of the General Partner) shall take part in the operations, management or control (within the meaning of the Act) of the Partnership’s business, transact any business in the Partnership’s name or have the power
to sign documents for or otherwise bind the Partnership. The transaction of any such business by the General Partner, or any member, manager or agent of the General Partner, in their capacity as such, shall not affect, impair or eliminate the
limitations on the liability of the Limited Partners or Assignees under this Agreement.
Section 8.3
Outside Activities of Limited Partners
. To the fullest extent permitted by law
and notwithstanding any other provision of this Agreement or any other agreement contemplated herein or applicable provisions of law or equity or otherwise, subject to any agreements entered into pursuant to Section 7.6 hereof and any other
agreements entered into by a Limited Partner or any of its Affiliates with the General Partner, the Partnership or a Subsidiary (including, without limitation, any employment agreement), any Limited Partner (including, subject to Section 7.5
hereof, the Special Limited Partner) and any Assignee, officer, director, employee, agent, trustee, Affiliate, member or stockholder of any Limited Partner shall be entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests and activities that are in direct or indirect competition with the Partnership or that are enhanced by the activities of the Partnership. To the fullest extent permitted by
law and notwithstanding any other provision of this Agreement or any other agreement contemplated herein or applicable provisions of law or equity or otherwise, neither the Partnership nor any Partner shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee. Subject to such agreements, none of the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby
in any business ventures of any other Person (other than the General Partner or the Special Limited Partner, to the extent expressly provided herein), and such Person shall have no obligation pursuant to this Agreement, subject to Section 7.6
hereof and any other agreements entered into by a Limited Partner or its Affiliates with the General Partner, the Partnership or a Subsidiary, to offer any interest in any such business ventures to the Partnership, any Limited Partner, or any such
other Person, even if such opportunity is of a character that, if presented to the Partnership, any Limited Partner or such other Person, could be taken by such Person. Notwithstanding any other provision of this Agreement, or any other agreement
contemplated herein or applicable provisions of law or equity or otherwise, to the fullest extent permitted by law, including without limitation Section 7.1.A and Section 7.5, one or more Affiliates of the Special Limited Partner may own
membership interests or similar equity interests in one or more Subsidiaries, provided that the aggregate amount of such interests owned by the Affiliates of the Special Limited Partner in any one Subsidiary shall not exceed 5% of such
Subsidiary’s outstanding membership or similar equity interests.
Section 8.4
Return of
Capital
. Except pursuant to the rights of Redemption set forth in Section 15.1 hereof or in any Partnership Unit Designation, no Limited Partner shall be entitled to the withdrawal or return of its Capital
42
Contribution, except to the extent of distributions made pursuant to this Agreement or upon termination of the Partnership as provided herein. Except to the extent provided in Article 5 and
Article 6 hereof or otherwise expressly provided in this Agreement or in any Partnership Unit Designation, no Limited Partner or Assignee shall have priority over any other Limited Partner or Assignee either as to the return of Capital Contributions
or as to profits, losses or distributions.
Section 8.5
Rights of Limited Partners Relating
to the Partnership
.
A. Except as limited by Section 8.5.C hereof, the General Partner shall deliver to each Limited Partner
a copy of any information mailed or electronically delivered to all of the common stockholders of the Special Limited Partner as soon as practicable after such mailing.
B. The Partnership shall notify any Limited Partner that is a Qualifying Party, on request, of the then current Adjustment Factor and any
change made to the Adjustment Factor shall be set forth in the quarterly report required by Section 9.3.B hereof immediately following the date such change becomes effective.
C. Notwithstanding any other provision of this Section 8.5, the General Partner may keep confidential from the Limited Partners (or
any of them), for such period of time as the General Partner determines in its sole and absolute discretion to be reasonable, any information that (i) the General Partner believes to be in the nature of trade secrets or other information the
disclosure of which the General Partner in good faith believes is not in the best interests of the Partnership or the General Partner or (ii) the Partnership or the General Partner is required by law or by agreement to keep confidential.
D. Upon written request by any Limited Partner, the General Partner shall cause the ownership of Partnership Units by such Limited
Partner to be evidenced by a certificate for units in such form as the General Partner may determine with respect to any class of Partnership Units issued from time to time under this Agreement. Any officer of the General Partner may direct a new
certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Partnership alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming
the certificate to be lost, destroyed, stolen or mutilated. Unless otherwise determined by an officer of the General Partner, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative,
shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Partnership a bond in such sums as the General Partner may direct as indemnity against any claim that may be made against the Partnership.
Section 8.6
Partnership Right to Call Limited Partner Interests
.
Notwithstanding any other provision of this Agreement, on and after the date on which the aggregate Percentage Interests of
the Limited Partners (other than the Special Limited Partner) are less than one percent (1%), the Partnership shall have the right, but not the obligation, from time to time and at any time to redeem any and all outstanding Limited Partner Interests
(other than the Special Limited Partner’s Limited Partner Interests) by treating any Limited Partner as a Tendering Party who has delivered a Notice of Redemption pursuant to Section 15.1 hereof for the amount of Partnership Common Units
to be specified by the General Partner, in its sole and absolute discretion, by notice to such Limited Partner that the Partnership has elected to exercise its rights under this Section 8.6. Such notice given by the General Partner to a Limited
Partner pursuant to this Section 8.6 shall be treated as if it were a Notice of Redemption delivered to the General Partner by such Limited Partner. For purposes of this Section 8.6, (a) any Limited Partner (whether or not otherwise a
Qualifying Party) may, in the General Partner’s sole and absolute discretion, be treated as a Qualifying Party that is a Tendering Party and (b) the provisions of Sections 15.1.F(2) and 15.1.F(3) hereof shall not apply, but the remainder
of Section 15.1 hereof shall apply, mutatis mutandis.
ARTICLE 9
43
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1
Records and Accounting
.
A. The General Partner shall keep or cause to be kept at the principal place of business of the Partnership those records and documents,
if any, required to be maintained by the Act and any other books and records deemed by the General Partner to be appropriate with respect to the Partnership’s business, including, without limitation, all books and records necessary to provide
to the Limited Partners any information, lists and copies of documents required to be provided pursuant to Section 8.5.A, Section 9.3 or Article 13 hereof. Any records maintained by or on behalf of the Partnership in the regular course of
its business may be kept on any information storage device, provided that the records so maintained are convertible into clearly legible written form within a reasonable period of time.
B. The books of the Partnership shall be maintained, for financial and tax reporting purposes, on an accrual basis in accordance with
generally accepted accounting principles, or on such other basis as the General Partner determines to be necessary or appropriate. To the extent permitted by sound accounting practices and principles, the Partnership and the General Partner may
operate with integrated or consolidated accounting records, operations and principles.
Section 9.2
Partnership Year
. For purposes of this Agreement, “Partnership Year”
means the fiscal year of the Partnership, which shall be the same as the tax year of the Partnership. The tax year shall be the calendar year unless otherwise required by the Code.
Section 9.3
Reports
.
A. As soon as practicable, but in no event later than one hundred five (105) days after the close of each Partnership Year, the
General Partner shall cause to be mailed to each Limited Partner of record as of the close of the Partnership Year, financial statements of the Partnership, or of the Special Limited Partner if such statements are prepared solely on a consolidated
basis with the Special Limited Partner, for such Partnership Year, presented in accordance with generally accepted accounting principles, such statements to be audited by a nationally recognized firm of independent public accountants selected by the
General Partner.
B. As soon as practicable, but in no event later than sixty (60) days after the close of each calendar quarter
(except the last calendar quarter of each year), the General Partner shall cause to be mailed to each Limited Partner of record as of the last day of the calendar quarter, a report containing unaudited financial statements of the Partnership for
such calendar quarter, or of the Special Limited Partner if such statements are prepared solely on a consolidated basis with the Special Limited Partner, and such other information as may be required by applicable law or regulation or as the General
Partner determines to be appropriate.
C. The General Partner shall have satisfied its obligations under Section 9.3.A and
Section 9.3.B by posting or making available the reports required by this Section 9.3 on the website maintained from time to time by the Partnership or the Special Limited Partner, provided that such reports are able to be printed or
downloaded from such website.
D. At the request of any Limited Partner, for any purpose reasonably related to such Limited
Partner’s interest in the Partnership, the General Partner shall, subject to
Section 17-305(b)
of the Act, provide access to the books, records and workpapers upon which the reports required by this
Section 9.3 are based, to the extent required by the Act.
ARTICLE 10
TAX MATTERS
Section 10.1
Preparation of Tax Returns
. The General Partner shall arrange for the preparation and timely filing of all returns with respect to Partnership income, gains, deductions, losses and other items required of the
Partnership
44
for federal and state income tax purposes and shall use all reasonable efforts to furnish, (i) within ninety (90) days of the close of each taxable year or as soon as reasonably
practicable thereafter, a Schedule
K-1
form to each Limited Partner, and (ii) within ninety (90) days of the close of each taxable year or as soon as reasonably practicable thereafter, other tax
information reasonably required by Limited Partners for federal and state income tax and any other tax reporting purposes. The Limited Partners shall promptly provide the General Partner with such information relating to the Contributed Properties
as is readily available to the Limited Partners, including tax basis and other relevant information, as may be reasonably requested by the General Partner from time to time.
Section 10.2
Tax Elections
. Except as otherwise provided herein, the General Partner shall,
in its sole and absolute discretion, determine whether to make any available election pursuant to the Code, including, but not limited to, the election under Code Section 754. The General Partner shall have the right to seek to revoke any such
election (including, without limitation, any election under Code Section 754) upon the General Partner’s determination in its sole and absolute discretion that such revocation is in the best interests of the Partners.
Section 10.3
Tax Matters Partner
.
A. The General Partner shall be the “tax matters partner” of the Partnership for federal income tax purposes. The tax matters
partner shall receive no compensation for its services. All third-party costs and expenses incurred by the tax matters partner in performing its duties as such (including legal and accounting fees and expenses) shall be borne by the Partnership in
addition to any reimbursement pursuant to Section 7.4 hereof. Nothing herein shall be construed to restrict the Partnership from engaging an accounting firm to assist the tax matters partner in discharging its duties hereunder.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner for income tax purposes (such administrative proceedings being referred to as a “tax audit” and such judicial proceedings being referred to as “judicial review”),
and in the settlement agreement the tax matters partner may expressly state that such agreement shall bind all Partners, except that such settlement agreement shall not bind any Partner (i) who (within the time prescribed pursuant to the Code
and Regulations) files a statement with the IRS providing that the tax matters partner shall not have the authority to enter into a settlement agreement on behalf of such Partner (as the case may be) or (ii) who is a “notice partner”
(as defined in Code Section 6231) or a member of a “notice group” (as defined in Code Section 6223(b)(2));
(2) in the event that a notice of a final administrative adjustment at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a “
Final Adjustment
”) is mailed to the tax matters partner, to seek judicial review of such Final Adjustment, including the filing of a petition for readjustment with the United States Tax
Court or the United States Claims Court, or the filing of a complaint for refund with the District Court of the United States for the district in which the Partnership’s principal place of business is located;
(3) to intervene in any action brought by any other Partner for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the IRS at any time and, if any part of such request is not allowed by the
IRS, to file an appropriate pleading (petition or complaint) for judicial review with respect to such request;
(5) to enter into an
agreement with the IRS to extend the period for assessing any tax that is attributable to any item required to be taken into account by a Partner for tax purposes, or an item affected by such item; and
(6) to take any other action on behalf of the Partners or any of them in connection with any tax audit or judicial review proceeding to
the extent permitted by applicable law or regulations.
45
The taking of any action and the incurring of any expense by the tax matters partner in
connection with any such proceeding, except to the extent required by law, is a matter in the sole and absolute discretion of the tax matters partner and the provisions relating to indemnification of the General Partner set forth in Section 7.7
hereof shall be fully applicable to the tax matters partner in its capacity as such.
Section 10.4
Withholding
. Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of federal, state, local or foreign taxes that the General Partner determines, in its sole and absolute discretion, the Partnership is required to withhold or pay with
respect to any amount distributable or allocable to such Limited Partner pursuant to this Agreement, including, without limitation, any taxes required to be withheld or paid by the Partnership pursuant to Code Section 1441, Code
Section 1442, Code Section 1445 or Code Section 1446. Any amount withheld with respect to a Limited Partner pursuant to this Section 10.4 shall be treated as paid or distributed, as applicable, to such Limited Partner for all
purposes under this Agreement. Any amount paid on behalf of or with respect to a Limited Partner, in excess of any such withheld amount, shall constitute a loan by the Partnership to such Limited Partner, which loan shall be repaid by such Limited
Partner within thirty (30) days after the affected Limited Partner receives written notice from the General Partner that such payment must be made, provided that the Limited Partner shall not be required to repay such deemed loan if either
(i) the Partnership withholds such payment from a distribution that would otherwise be made to the Limited Partner or (ii) the General Partner determines, in its sole and absolute discretion, that such payment may be satisfied out of the
funds of the Partnership that would, but for such payment, be distributed to the Limited Partner. Any amounts payable by a Limited Partner hereunder shall bear interest at the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in the Wall Street Journal (but not higher than the maximum lawful rate) from the date such amount is due (i.e., thirty (30) days after the Limited Partner receives written notice of such amount)
until such amount is paid in full.
Section 10.5
Organizational Expenses
. The General
Partner may cause the Partnership to elect to deduct expenses, if any, incurred by it in organizing the Partnership ratably over a
180-month
period as provided in Section 709 of the Code.
Section 10.6
Treatment of Partnership as Disregarded Entity
. Notwithstanding anything to the
contrary in this Agreement, if the Partnership is treated as a Disregarded Entity with respect to the Special Limited Partner during any period, then the other provisions of this Agreement shall be applied (or not applied) in a manner consistent
with such treatment with respect to such period, as determined by the General Partner in its sole and absolute discretion. In the event of any conflict between this Section 10.6 and any other provision of this Agreement, this Section 10.6
shall control.
Section 10.7
Section
83 Safe Harbor
. Each Partner authorizes the General Partner to elect
to apply the safe harbor (the “
Section
83 Safe Harbor
”) set forth in proposed Regulations
Section 1.83-3(l)
and proposed IRS Revenue Procedure published in Notice
2005-43
(together, the “
Proposed Section
83 Safe Harbor Regulation
”) (under which the fair market value of a Partnership Interest that is Transferred in connection with the
performance of services is treated as being equal to the liquidation value of the interest) if such Proposed Section 83 Safe Harbor Regulation or similar Regulations are promulgated as a final or temporary Regulations. If the General Partner
determines that the Partnership should make such election, the General Partner is hereby authorized to amend this Agreement without the consent of any other Partner to provide that (i) the Partnership is authorized and directed to elect the
Section 83 Safe Harbor, (ii) the Partnership and each of its Partners (including any Person to whom a Partnership Interest is Transferred in connection with the performance of services) will comply with all requirements of the
Section 83 Safe Harbor with respect to all Partnership Interests Transferred in connection with the performance of services while such election remains in effect and (iii) the Partnership and each of its Partners will take all actions
necessary, including providing the Partnership with any required information, to permit the Partnership to comply with the requirements set forth or referred to in the applicable Regulations for such election to be effective until such time (if any)
as the General Partner determines, in its sole discretion, that the Partnership should terminate such election. The General Partner is further authorized to amend this Agreement to modify Article 6 to the extent the General Partner determines in its
discretion that such modification is necessary or desirable as a result of the issuance of any
46
applicable law, Regulations, notice or ruling relating to the tax treatment of the transfer of a Partnership Interests in connection with the performance of services. Notwithstanding anything to
the contrary in this Agreement, each Partner expressly confirms that it will be legally bound by any such amendment.
ARTICLE 11
PARTNER TRANSFERS AND WITHDRAWALS
Section 11.1
Transfer
.
A. To the fullest extent permitted by law, no part of the interest of a Partner shall be subject to the claims of any creditor, to any
spouse for alimony or support, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in this Agreement.
B. No Partnership Interest shall be Transferred, in whole or in part, except in accordance with the terms and conditions set forth in
this Article 11. To the fullest extent permitted by law, any Transfer or purported Transfer of a Partnership Interest not made in accordance with this Article 11 shall be null and void
ab initio
.
C. No Transfer of any Partnership Interest may be made to a lender to the Partnership or any Person who is related (within the meaning of
Section 1.752-4(b)
of the Regulations) to any lender to the Partnership whose loan constitutes a Nonrecourse Liability, without the Consent of the General Partner;
provided
,
however
, that,
as a condition to such Consent, the lender may be required to enter into an arrangement with the Partnership and the General Partner to redeem or exchange for the REIT Shares Amount any Partnership Units in which a security interest is held by such
lender simultaneously with the time at which such lender would be deemed to be a partner in the Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code (provided that, for purpose of calculating the REIT
Shares Amount in this Section 11.1.C, “
Tendered Units
” shall mean all such Partnership Units in which a security interest is held by such lender).
Section 11.2
Transfer of General Partner’s Partnership Interest
.
A. Subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation and subject to
Section 11.2.B, the General Partner may not Transfer all or any portion of its Partnership Interest (whether by sale, disposition, statutory merger or consolidation, liquidation or otherwise) without the Consent of the Limited Partners (but may
do so with the Consent of the Limited Partners). It is a condition to any Transfer of a Partnership Interest of a General Partner otherwise permitted hereunder that: (i) coincident with such Transfer, the transferee is admitted as a General
Partner pursuant to Section 12.1 hereof; (ii) the transferee assumes, by operation of law or express agreement, all of the obligations of the transferor General Partner under this Agreement with respect to such Transferred Partnership
Interest; and (iii) the transferee has executed such instruments as may be necessary to effectuate such admission and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to the
Partnership Interest so acquired and the admission of such transferee as a General Partner.
B.
Certain Transactions of the
General Partner
. Subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, the General Partner may, without the Consent of the Limited Partners, Transfer all of its Partnership Interest in
connection with (a) a merger, consolidation or other combination of its, the Special Limited Partner’s or the Partnership’s assets with another entity, (b) a sale of all or substantially all of its, the Special Limited
Partner’s or the Partnership’s assets not in the ordinary course of the Partnership’s business or (c) a reclassification, recapitalization or change of any outstanding shares of the General Partner’s or the Special Limited
Partner’s stock or other outstanding equity interests (each, a “
Termination Transaction
”) if:
(1) in
connection with such Termination Transaction, all of the Limited Partners will receive, or will have the right to elect to receive, for each Partnership Common Unit an amount of cash, securities or other property equal to the
47
product of the Adjustment Factor and the greatest amount of cash, securities or other property paid to a holder of one REIT Share in consideration of one REIT Share pursuant to the terms of such
Termination Transaction; provided, that if, in connection with such Termination Transaction, a purchase, tender or exchange offer shall have been made to and accepted by the holders of the outstanding REIT Shares, each holder of Partnership Common
Units shall receive, or shall have the right to elect to receive, the greatest amount of cash, securities or other property which such holder of Partnership Common Units would have received had it exercised its right to Redemption pursuant to
Article 15 hereof and received REIT Shares in exchange for its Partnership Common Units immediately prior to the expiration of such purchase, tender or exchange offer and had thereupon accepted such purchase, tender or exchange offer and then such
Termination Transaction shall have been consummated; or
(2) all of the following conditions are met: (w) substantially all of
the assets directly or indirectly owned by the surviving entity are owned directly or indirectly by the Partnership or another limited partnership or limited liability company which is the survivor of a merger, consolidation or combination of assets
with the Partnership (in each case, the “
Surviving Partnership
”); (x) the Limited Partners that held Partnership Common Units immediately prior to the consummation of such Termination Transaction own a percentage interest of the
Surviving Partnership based on the relative fair market value of the net assets of the Partnership and the other net assets of the Surviving Partnership immediately prior to the consummation of such transaction; (y) the rights, preferences and
privileges in the Surviving Partnership of such Limited Partners are substantially similar to those in effect with respect to the Partnership Common Units immediately prior to the consummation of such transaction and as those applicable to any other
limited partners or
non-managing
members of the Surviving Partnership; and (z) the rights of such Limited Partners include at least one of the following: (a) the right to redeem their interests in
the Surviving Partnership for the consideration available to such persons pursuant to Section 11.2.B(1) or (b) the right to redeem their interests in the Surviving Partnership for cash on terms substantially equivalent to those in effect
with respect to their Partnership Common Units immediately prior to the consummation of such transaction, or, if the ultimate controlling person of the Surviving Partnership has publicly traded common equity securities, such common equity
securities, with an exchange ratio based on the determination of relative fair market value of such securities and the REIT Shares.
C. Notwithstanding the other provisions of this Article 11 (other than Section 11.6.D hereof), the General Partner may Transfer all
of its Partnership Interests at any time to any Person that is, at the time of such Transfer an Affiliate of the General Partner, including any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), without the
Consent of any Limited Partners. The provisions of Section 11.2.B, 11.3, 11.4.A and 11.5 hereof shall not apply to any Transfer permitted by this Section 11.2.C.
D. Except in connection with Transfers permitted in this Article 11 and as otherwise provided in Section 12.1 in connection with the
Transfer of the General Partner’s entire Partnership Interest, the General Partner may not voluntarily withdraw as a general partner of the Partnership without the Consent of the Limited Partners.
Section 11.3
Limited Partners’ Rights to Transfer
.
A.
General
. Prior to the end of the first Twelve-Month Period and except as provided in Section 11.1.C hereof, no Limited
Partner shall Transfer all or any portion of its Partnership Interest to any transferee without the Consent of the General Partner, which may be given or withheld in its sole and absolute discretion;
provided
,
however
, that any Limited
Partner may, at any time, without the consent or approval of the General Partner, Transfer all of its Partnership Interest to any Family Member (including a Transfer by a Family Member that is an inter vivos or testamentary trust (whether revocable
or irrevocable) to a Family Member that is a beneficiary of such trust), any Charity, any Controlled Entity or any Affiliate (any Transfer permitted by this proviso is hereinafter referred to as a “
Permitted Transfer
”). After such
first Twelve-Month Period, each Limited Partner, and each transferee of Partnership Units or Assignee pursuant to a Permitted Transfer, shall have the right to Transfer all its Partnership Interest to any Person, without the Consent of the General
Partner but subject to the provisions of Section 11.4 hereof and to satisfaction of each of the following conditions:
48
(1)
Special Limited Partner Right of First Refusal
. The transferor Limited Partner
(or the Partner’s estate in the event of the Partner’s death) shall give written notice of the proposed Transfer to the General Partner and the Special Limited Partner, which notice shall state (i) the identity and address of the
proposed transferee and (ii) the amount and type of consideration proposed to be received for the Transferred Partnership Units. The Special Limited Partner shall have ten (10) Business Days upon which to give the transferor Limited Partner
notice of its election to acquire the Partnership Units on the terms set forth in such notice. If it so elects, it shall purchase the Partnership Units on such terms within ten (10) Business Days after giving notice of such election;
provided
,
however
, that in the event that the proposed terms involve a purchase for cash, the Special Limited Partner may at its election deliver in lieu of all or any portion of such cash a note from the Special Limited Partner
payable to the transferor Limited Partner at a date as soon as reasonably practicable, but in no event later than one hundred eighty (180) days after such purchase, and bearing interest at an annual rate equal to the total dividends declared
with respect to one (1) REIT Share for the four (4) preceding fiscal quarters of the Special Limited Partner, divided by the Value as of the closing of such purchase; and
provided
,
further
, that such closing may be deferred
to the extent necessary to effect compliance with the Hart-Scott-Rodino Act, if applicable, and any other applicable requirements of law. If it does not so elect, the transferor Limited Partner may Transfer such Partnership Units to a third party,
on terms no more favorable to the transferee than the proposed terms, subject to the other conditions of this Section 11.3.
(2)
Qualified Transferee
. Any Transfer of a Partnership Interest shall be made only to a single Qualified Transferee;
provided
,
however
, that, for such purposes, all Qualified Transferees that are Affiliates, or that comprise investment accounts or funds managed by a single Qualified Transferee and its Affiliates, shall be considered together to be a
single Qualified Transferee; and
provided
,
further
, that each Transfer meeting the minimum Transfer restriction of Section 11.3.A(4) hereof may be to a separate Qualified Transferee.
(3)
Opinion of Counsel
. The transferor Limited Partner shall deliver or cause to be delivered to the General Partner an opinion of
counsel reasonably satisfactory to it to the effect that the proposed Transfer may be effected without registration under the Securities Act and will not otherwise violate the registration provisions of the Securities Act and the regulations
promulgated thereunder or violate any state securities laws or regulations applicable to the Partnership or the Partnership Interests Transferred;
provided
,
however
, that the General Partner may, in its sole and absolute discretion,
waive this condition upon the request of the transferor Limited Partner. If, in the opinion of such counsel, such Transfer would require the filing of a registration statement under the Securities Act or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership Units, the General Partner may prohibit any Transfer otherwise permitted under this Section 11.3 by a Limited Partner of Partnership Interests.
(4)
Transfer Restriction
. Any Transferring Partner may not Transfer less than all of the Partnership Units owned by such
Transferring Partner to a single transferee without the Consent of the General Partner, which may be given or withheld in its sole and absolute discretion;
provided
,
however
, that, for purposes of determining compliance with the
foregoing restriction, all Partnership Units owned by Affiliates of a Limited Partner shall be considered to be owned by such Limited Partner. Without the Consent of the General Partner, no Transferring Partner shall take any action that would cause
(a) the Partnership at any time to have more than 100 partners, including as partners those persons (“
Flow-Through Partners
”) indirectly owning an interest in the Partnership through an entity treated as a partnership,
Disregarded Entity, S corporation or grantor trust (each such entity, a “
Flow-Through Entity
”), but only if substantially all of the value of such person’s interest in the Flow-Through Entity is attributable to the Flow-Through
Entity’s interest (direct or indirect) in the Partnership; or (b) the Partnership Interest initially issued to such Partner or its predecessors to be held by more than one partner, including as partners any Flow-Through Partners.
(5)
Exception for Permitted Transfers
. The conditions of Sections 11.3.A(1) through 11.3.A(3) hereof shall not apply in the case
of a Permitted Transfer.
It is a condition to any Transfer otherwise permitted hereunder (whether or not such Transfer is effected during
or after the first Twelve-Month Period) that the transferee assumes by operation of law or express agreement all of the
49
obligations of the transferor Limited Partner under this Agreement with respect to such Transferred Partnership Interest, and no such Transfer (other than pursuant to a statutory merger or
consolidation wherein all obligations and liabilities of the transferor Partner are assumed by a successor corporation by operation of law) shall relieve the transferor Partner of its obligations under this Agreement without the Consent of the
General Partner. Notwithstanding the foregoing, any transferee of any Transferred Partnership Interest shall be subject to any restrictions on ownership and transfer of stock of the Special Limited Partner contained in the Charter that may limit or
restrict such transferee’s ability to exercise its Redemption rights, including, without limitation, the Ownership Limit. Any transferee, whether or not admitted as a Substituted Limited Partner, shall take subject to the obligations of the
transferor hereunder. Unless admitted as a Substituted Limited Partner, no transferee, whether by a voluntary Transfer, by operation of law or otherwise, shall have any rights hereunder, other than the rights of an Assignee as provided in
Section 11.5 hereof.
B.
Certain Transactions of the Special Limited Partner
. Notwithstanding anything to the contrary in
this Agreement, the Special Limited Partner may Transfer its interest in the Partnership in connection with a Termination Transaction with the Consent of the Limited Partners or without the Consent of the Limited Partners if:
(1) In connection with such Termination Transaction, all of the Limited Partners (other than the Special Limited Partner) will receive,
or will have the right to elect to receive, for each Partnership Common Unit an amount of cash, securities or other property equal to the product of the Adjustment Factor and the greatest amount of cash, securities or other property paid to a holder
of one REIT Share in consideration of one REIT Share pursuant to the terms of such Terminating Transaction;
provided
, that if, in connection with such Termination Transaction, a purchase, tender or exchange offer shall have been made to and
accepted by the holders of the outstanding REIT Shares, each holder of Partnership Common Units (other than the Special Limited Partner) shall receive, or shall have the right to elect to receive, the greatest amount of cash, securities or other
property which such holder of Partnership Common Units would have received had it exercised its right to Redemption pursuant to Article 15 hereof and received REIT Shares in exchange for its Partnership Common Units immediately prior to the
expiration of such purchase, tender or exchange offer and had thereupon accepted such purchase, tender or exchange offer and then such Termination Transaction shall have been consummated; or
(2) the following conditions are met: (w) substantially all of the assets directly or indirectly owned by the surviving entity are
owned directly or indirectly by the Surviving Partnership; (x) the Limited Partners that held Partnership Common Units immediately prior to the consummation of such Termination Transaction own a percentage interest of the Surviving Partnership
based on the relative fair market value of the net assets of the Partnership and the other net assets of the Surviving Partnership immediately prior to the consummation of such transaction; (y) the rights, preferences and privileges of such
Limited Partners in the Surviving Partnership are substantially similar to those in effect with respect to Partnership Common Units immediately prior to the consummation of such transaction and as those applicable to any other limited partners or
non-managing
members of the Surviving Partnership; and (z) the rights of such Limited Partners include at least one of the following: (a) the right to redeem their Partnership Units for the consideration
available to such persons pursuant to Section 11.3.B(1) or cash on terms equivalent to those in effect with respect to their Partnership Common Units immediately prior to the consummation of such transaction, or, if the ultimate controlling
person of the Surviving Partnership has publicly traded common equity securities, such common equity securities, with an exchange ratio based on the determination of relative fair market value of such securities and the REIT Shares.
C.
Incapacity
. If a Limited Partner is subject to Incapacity, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner’s estate shall have all the rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for the purpose of settling or managing the estate, and such power as the
Incapacitated Limited Partner possessed to Transfer all or any part of its interest in the Partnership. The Incapacity of a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.
D.
Adverse Tax Consequences
. Notwithstanding anything to the contrary in this Agreement, the General Partner shall have the
authority (but shall not be required) to take any steps it determines are necessary or appropriate in its
50
sole and absolute discretion to prevent the Partnership from being taxable as a corporation for federal income tax purposes. In furtherance of the foregoing, except with the Consent of the
General Partner, no Transfer by a Limited Partner of its Partnership Interests (including any Redemption, any other acquisition of Partnership Units by the Special Limited Partner or the General Partner or any acquisition of Partnership Units by the
Partnership) may be made to or by any Person if such Transfer could (i) result in the Partnership being treated as an association taxable as a corporation; (ii) result in a termination of the Partnership under Code Section 708; (iii)
be treated as effectuated through an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Code Section 7704 and the Regulations promulgated thereunder,
(iv) result in the Partnership being unable to qualify for one or more of the “safe harbors” set forth in Regulations
Section 1.7704-1
(or such other guidance subsequently published by the
IRS setting forth safe harbors under which interests will not be treated as “readily tradable on a secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code) (the “
Safe
Harbors
”) or (v) in the General Partner’s judgment in its sole and absolute discretion, adversely affect the ability of the Special Limited Partner to continue to qualify as a REIT or subject the Special Limited Partner to any
additional taxes under Code Section 857 or Code Section 4981.
Section 11.4
Admission of Substituted Limited Partners
.
A. No Limited Partner shall have the right to substitute a transferee (including any transferees pursuant to Transfers permitted by
Section 11.3 hereof) as a Limited Partner in its place. A transferee of a Limited Partner Interest may be admitted as a Substituted Limited Partner only with the Consent of the General Partner, which may be given or withheld in its sole and
absolute discretion. The failure or refusal by the General Partner to permit a transferee of any such interests to become a Substituted Limited Partner shall not give rise to any cause of action against the Partnership or the General Partner.
Subject to the foregoing, an Assignee shall not be admitted as a Substituted Limited Partner until and unless it furnishes to the General Partner (i) evidence of acceptance, in form and substance satisfactory to the General Partner, of all the
terms, conditions and applicable obligations of this Agreement, (ii) a counterpart signature page to this Agreement executed by such Assignee and (iii) such other documents and instruments as may be required or advisable, in the sole and
absolute discretion of the General Partner, to effect such Assignee’s admission as a Substituted Limited Partner.
B. Concurrently with, and as evidence of, the admission of a Substituted Limited Partner, the General Partner shall update
Exhibit A
and the books and records of the Partnership to reflect the name, address and number and class and/or series of Partnership Units of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name, address
and number of Partnership Units of the predecessor of such Substituted Limited Partner.
C. A transferee who has been admitted as a
Substituted Limited Partner in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Limited Partner under this Agreement.
Section 11.5
Assignees
. If the General Partner does not Consent to the admission of any
permitted transferee under Section 11.3 hereof as a Substituted Limited Partner, as described in Section 11.4 hereof, or in the event that any Partnership Interest is deemed to have been Transferred notwithstanding the restrictions set
forth in this Article 11, such transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be entitled to all the rights of an assignee of a limited partnership interest under the Act, including the right to receive
distributions from the Partnership and the share of Net Income, Net Losses and other items of income, gain, loss, deduction and credit of the Partnership attributable to the Partnership Interest assigned to such transferee and the rights to Transfer
the Partnership Interest provided in this Article 11, but shall not be deemed to be a holder of a Partnership Interest for any other purpose under this Agreement (other than as expressly provided in Section 15.1 hereof with respect to a
Qualifying Party that becomes a Tendering Party), and shall not be entitled to effect a Consent or vote with respect to such Partnership Interest on any matter presented to the Partners for approval (such right to Consent or vote, to the extent
provided in this Agreement or under the Act, fully remaining with the transferor Limited Partner). In the event that any such transferee desires to make a further Transfer of any such Partnership Interest, such transferee shall be subject to all the
provisions of this Article 11 to the same extent and in the same manner as any Limited
51
Partner desiring to make a Transfer of a Limited Partner Interest.
Section 11.6
General Provisions
.
A. No Limited Partner may withdraw from the Partnership other than as a result
of: (i) a permitted Transfer of all of such Limited Partner’s Partnership Units in accordance with this Article 11 with respect to which the transferee becomes a Substituted Limited Partner; (ii) pursuant to a redemption (or
acquisition by the Special Limited Partner) of all of its Partnership Units pursuant to a Redemption under Section 15.1 hereof and/or pursuant to any Partnership Unit Designation or (iii) the acquisition by the General Partner or the
Special Limited Partner of all of such Limited Partner’s Partnership Interest, whether or not pursuant to Section 15.1.B hereof.
B. Any Limited Partner who shall Transfer all of its Partnership Units in a Transfer (i) permitted pursuant to this Article 11 where
such transferee was admitted as a Substituted Limited Partner, (ii) pursuant to the exercise of its rights to effect a redemption of all of its Partnership Units pursuant to a Redemption under Section 15.1 hereof and/or pursuant to any
Partnership Unit Designation or (iii) to the General Partner or the Special Limited Partner, whether or not pursuant to Section 15.1.B hereof, shall cease to be a Limited Partner.
C. If any Partnership Unit is Transferred in compliance with the provisions of this Article 11, or is redeemed by the Partnership,
acquired by the Special Limited Partner pursuant to Section 15.1 hereof or redeemed or converted pursuant to Sections 16.4 or 16.8, on any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and
all other items of income, gain, loss, deduction and credit attributable to such Partnership Unit for such Partnership Year shall be allocated to the transferor Partner or the Tendering Party (as the case may be) and, in the case of a Transfer other
than a Redemption, to the transferee Partner, by taking into account their varying interests during the Partnership Year in accordance with Code Section 706(d), using the “interim closing of the books” method or another permissible
method selected by the General Partner in its sole and absolute discretion. Solely for purposes of making such allocations, unless the General Partner decides in its sole and absolute discretion to use another method permitted under the Code, each
of such items for the calendar month in which a Transfer occurs shall be allocated to the transferee Partner and none of such items for the calendar month in which a Transfer or a Redemption occurs shall be allocated to the transferor Partner, or
the Tendering Party (as the case may be) if such Transfer occurs on or before the fifteenth (15th) day of the month, otherwise such items shall be allocated to the transferor. All distributions of funds attributable to such Partnership Unit with
respect to which the Partnership Record Date is before the date of such Transfer, assignment or Redemption shall be made to the transferor Partner or the Tendering Party (as the case may be) and, in the case of a Transfer other than a Redemption,
all distributions of funds thereafter attributable to such Partnership Unit shall be made to the transferee Partner. The General Partner’s selection of such an allocation method shall be set forth in a dated, written statement maintained with
the Partnership’s books and records. The Partners hereby agree that any such selection by the General Partner is made by “agreement of the partners” within the meaning of
Section 1.706-4(f)
of the Regulations.
D. In addition to any other restrictions on Transfer herein contained, in no event may any Transfer of a
Partnership Interest by any Partner (including any Redemption, any acquisition of Partnership Units by the Special Limited Partner or any other acquisition of Partnership Units by the Partnership) be made: (i) to any person or entity who lacks
the legal right, power or capacity to own a Partnership Interest; (ii) in violation of applicable law; (iii) except with the Consent of the General Partner, which may be given or withheld in its sole and absolute discretion, of any
component portion of a Partnership Interest, such as the Capital Account, or rights to distributions, separate and apart from all other components of a Partnership Interest; (iv) in the event that such Transfer could cause either the Special
Limited Partner or any Special Limited Partner Affiliate to cease to comply with the REIT Requirements or to cease to qualify as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)); (v) except with the Consent
of the General Partner, which may be given or withheld in its sole and absolute discretion, if such Transfer could, based on the advice of counsel to the Partnership or the General Partner, cause a termination of the Partnership for federal or state
income tax purposes (except as a result of the Redemption (or acquisition by the Special Limited Partner) of all Partnership Common Units held by all Limited Partners (other than the Special Limited Partner)); (vi) if such Transfer could, based on
the advice of legal counsel to the Partnership or the General
52
Partner, cause the Partnership to cease to be classified as a partnership for federal income tax purposes (except as a result of the Redemption (or acquisition by the Special Limited Partner) of
all Partnership Common Units held by all Limited Partners (other than the Special Limited Partner)); (vii) if such Transfer would cause the Partnership to become, with respect to any employee benefit plan subject to Title I of ERISA, a
“party-in-interest”
(as defined in ERISA Section 3(14)) or a “disqualified person” (as defined in Code Section 4975(c)); (viii) if such Transfer
could, based on the advice of legal counsel to the Partnership or the General Partner, cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to Department of Labor Regulations
Section 2510.3-101;
(ix) if such Transfer requires the registration of such Partnership Interest pursuant to any applicable federal or state securities laws; (x) except with the Consent of the General
Partner, which may be given or withheld in its sole and absolute discretion, if such Transfer could (1) be treated as effectuated through an “established securities market” or a “secondary market” (or the substantial
equivalent thereof) within the meaning of Section 7704 of the Code and the Regulations promulgated thereunder, (2) cause the Partnership to become a “publicly traded partnership,” as such term is defined in Sections 469(k)(2) or
7704(b) of the Code, (3) could be in violation of Section 11.3.A(4), or (4) could cause the Partnership to fail one or more of the Safe Harbors; (xi) if such Transfer causes the Partnership (as opposed to the Special Limited
Partner) to become a reporting company under the Exchange Act; or (xii) if such Transfer subjects the Partnership to regulation under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or ERISA, each as amended. The General
Partner shall, in its sole and absolute discretion, be permitted to take all action necessary to prevent the Partnership from being classified as a “publicly traded partnership” under Code Section 7704.
E. Transfers pursuant to this Article 11 may only be made on the first day of a fiscal quarter of the Partnership, unless the
General Partner, in its sole and absolute discretion, otherwise Consents.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1
Admission of Successor General Partner
. A successor to all of the General Partner’s General Partner Interest pursuant to a Transfer permitted by Section 11.2 hereof who is proposed to be admitted as a
successor General Partner shall be admitted to the Partnership as the General Partner, effective immediately upon such Transfer. Upon any such Transfer and the admission of any such transferee as a successor General Partner in accordance with this
Section 12.1, the transferor General Partner shall be relieved of its obligations under this Agreement and shall cease to be a general partner of the Partnership without any separate Consent of the Limited Partners or the consent or approval of
any other Partners. Any such successor General Partner shall carry on the business and affairs of the Partnership without dissolution. In each case, the admission shall be subject to the successor General Partner executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission of such Person as a General Partner. Upon any such Transfer, the transferee shall
become the successor General Partner for all purposes herein, and shall be vested with the powers and rights of the transferor General Partner, and shall be liable for all obligations and responsible for all duties of the General Partner.
Concurrently with, and as evidence of, the admission of a successor General Partner, the General Partner shall update
Exhibit A
and the books and records of the Partnership to reflect the name, address and number and classes and/or series of
Partnership Units of such successor General Partner.
Section 12.2
Admission of Additional
Limited Partners
.
A. A Person (other than an existing Partner) who makes a Capital Contribution to the Partnership in exchange
for Partnership Units and in accordance with this Agreement shall be admitted to the Partnership as an Additional Limited Partner only upon furnishing to the General Partner (i) evidence of acceptance, in form and substance satisfactory to the
General Partner, of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 2.4 hereof, (ii) a counterpart signature page to this Agreement executed by such Person and
(iii) such other documents or instruments as may be required in the sole and absolute
53
discretion of the General Partner in order to effect such Person’s admission as an Additional Limited Partner. Concurrently with, and as evidence of, the admission of an Additional Limited
Partner, the General Partner shall update
Exhibit A
and the books and records of the Partnership to reflect the name, address and number and classes and/or series of Partnership Units of such Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted as an Additional Limited Partner
without the Consent of the General Partner, which may be given or withheld in its sole and absolute discretion. The admission of any Person as an Additional Limited Partner shall become effective on the date upon which the name of such Person is
recorded on
Exhibit A
and the books and records of the Partnership, following the Consent of the General Partner to such admission and the satisfaction of all the conditions set forth in Section 12.2.A.
C. If any Additional Limited Partner is admitted to the Partnership on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items of income, gain, loss, deduction and credit allocable among Holders for such Partnership Year shall be allocated among such Additional Limited Partner and all other Holders by taking into
account their varying interests during the Partnership Year in accordance with Code Section 706(d), using the “interim closing of the books” method or another permissible method selected by the General Partner, in its sole and
absolute discretion. Solely for purposes of making such allocations, each of such items for the calendar month in which an admission of any Additional Limited Partner occurs shall be allocated among all the Holders including such Additional Limited
Partner, in accordance with the principles described in Section 11.6.C hereof. All distributions of funds with respect to which the Partnership Record Date is before the date of such admission shall be made solely to Partners and Assignees
other than the Additional Limited Partner, and all distributions of funds thereafter shall be made to all the Partners and Assignees including such Additional Limited Partner.
D. Any Additional Limited Partner admitted to the Partnership that is an Affiliate of the Special Limited Partner shall be deemed to be a
“Special Limited Partner Affiliate” hereunder and shall be reflected as such on
Exhibit A
and the books and records of the Partnership.
Section 12.3
Amendment of Agreement and Certificate of Limited Partnership
. For the admission
to the Partnership of any Partner, the General Partner shall take all steps necessary and appropriate under the Act to update the records of the Partnership and, if necessary, to prepare as soon as practical an amendment of this Agreement (and to
update
Exhibit A
) and, if required by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to Section 2.4 hereof.
Section 12.4
Limit on Number of Partners
. Unless otherwise permitted by the General Partner
in its sole and absolute discretion, no Person shall be admitted to the Partnership as an Additional Limited Partner if the effect of such admission would be to cause the Partnership to have a number of Partners that would cause the Partnership to
become a reporting company under the Exchange Act.
Section 12.5
Admission
. A Person
shall be admitted to the Partnership as a limited partner of the Partnership or a general partner of the Partnership only upon strict compliance, and not upon substantial compliance, with the requirements set forth in this Agreement for admission to
the Partnership as a Limited Partner or a General Partner.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1
Dissolution
. The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General Partner shall continue
the business and affairs of the Partnership without dissolution. However, the Partnership shall dissolve, and its affairs shall be
54
wound up, upon the first to occur of any of the following (each a “
Liquidating Event
”):
A. an event of withdrawal, as defined in
Section 17-402
of the Act (including, without
limitation, bankruptcy), or the withdrawal in violation of this Agreement, of the last remaining General Partner unless, within ninety (90) days after the withdrawal, a Majority in Interest of the Partners remaining agree in writing, in their
sole and absolute discretion, to continue the business of the Partnership and to the appointment, effective as of the date of such withdrawal, of a successor General Partner;
B. an election to dissolve the Partnership made by the General Partner in its sole and absolute discretion, with or without the Consent
of the Limited Partners;
C. entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act;
D. any sale or other disposition of (other than the attachment of a lien or security interest in) all or substantially all of the assets
of the Partnership outside the ordinary course of the Partnership’s business or a related series of transactions that, taken together, result in the sale or other disposition of (other than the attachment of a lien or security interest in) all
or substantially all of the assets of the Partnership outside the ordinary course of the Partnership’s business; and
E. at any
time that there are no limited partners of the Partnership unless the business of the Partnership is continued in accordance with the Act.
Section 13.2
Winding Up
.
A. Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets and satisfying the claims of its creditors and the Holders. After the occurrence of a Liquidating Event, no Holder shall take any action that is inconsistent with, or not necessary to or appropriate for, the
winding up of the Partnership’s business and affairs. The General Partner (or, in the event that there is no remaining General Partner or the General Partner has dissolved, become bankrupt within the meaning of the Act or ceased to operate, any
Person elected by a Majority in Interest of the Partners (the General Partner or such other Person being referred to herein as the “
Liquidator
”)) shall be responsible for overseeing the winding up and termination of the Partnership
and shall take full account of the Partnership’s liabilities and property, and the Partnership property shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent
determined by the General Partner, include shares of stock in the Special Limited Partner) shall be applied and distributed in the following order:
(1) First, to the satisfaction of all of the Partnership’s debts and liabilities to creditors other than the Holders (whether by
payment or the making of reasonable provision for payment thereof);
(2) Second, to the satisfaction of all of the Partnership’s
debts and liabilities to the General Partner and the Special Limited Partner (whether by payment or the making of reasonable provision for payment thereof), including, but not limited to, amounts due as reimbursements under Section 7.4 hereof;
(3) Third, to the satisfaction of all of the Partnership’s debts and liabilities to the other Holders (whether by payment or
the making of reasonable provision for payment thereof); and
(4) Fourth, to the Partners in accordance with their positive Capital
Account balances, determined after taking into account all Capital Account adjustments for all prior periods and the Partnership taxable year during which the liquidation occurs (other than those made as a result of the liquidating distribution set
forth in this Section 13.2.A(4)).
The General Partner shall not receive any additional compensation for any services performed
pursuant to this
55
Article 13 other than reimbursement of its expenses as set forth in Section 7.4.
B. Notwithstanding the provisions of Section 13.2.A hereof that require liquidation of the assets of the Partnership, but subject to
the order of priorities set forth therein, if prior to the termination of the Partnership, the Liquidator determines that an immediate sale of part or all of the Partnership’s assets would be impractical or would cause undue loss to the
Holders, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Partnership (including to those Holders as creditors) and/or distribute
to the Holders, in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2.A hereof, undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation. Any such distributions in
kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best interest of the Holders, and shall be subject to such conditions relating to the disposition and management of such properties as
the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of
valuation as it may adopt.
C. If any Holder has a deficit balance in its Capital Account (after giving effect to all contributions,
distributions and allocations for all taxable years, including the year during which such liquidation occurs), except as otherwise agreed to by such Holder, such Holder shall have no obligation to make any contribution to the capital of the
Partnership with respect to such deficit, and such deficit shall not be considered a debt owed to the Partnership or to any other Person for any purpose whatsoever.
D. In the sole and absolute discretion of the Liquidator, a pro rata portion of the distributions that would otherwise be applied and
distributed in the order of priority set forth in Section 13.2A may be:
(1) distributed to a trust established for the
Partnership for the purpose of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent, conditional or unmatured liabilities or obligations of the Partnership or of the General Partner arising out of or
in connection with the Partnership and/or Partnership activities. The assets of any such trust shall be applied and distributed, from time to time, in the sole and absolute discretion of the Liquidator, in the same proportions and amounts as would
otherwise have been applied and distributed as set forth in Section 13.2A; or
(2) withheld or escrowed to provide a reasonable
reserve for Partnership liabilities (contingent, conditional or unmatured) and to reflect the unrealized portion of any installment obligations owed to the Partnership, provided that such withheld or escrowed amounts shall be applied and distributed
in the manner and order of priority set forth in Section 13.2.A hereof as soon as practicable.
Section 13.3
Deemed Contribution and Distribution
. Notwithstanding any other provision of
this Article 13, in the event that the Partnership is liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g),
but no Liquidating Event has occurred, the Partnership’s Property
shall not be liquidated, the Partnership’s liabilities shall not be paid or discharged and the Partnership’s affairs shall not be wound up. Instead, for federal income tax purposes the Partnership shall be deemed to have contributed all of
its assets and liabilities to a new partnership in exchange for an interest in the new partnership; and immediately thereafter, distributed Partnership Units to the Partners in the new partnership in accordance with their respective Capital Accounts
in liquidation of the Partnership, and the new partnership is deemed to continue the business of the Partnership.
Nothing in this
Section 13.3 shall be deemed to have constituted a Transfer to an Assignee as a Substituted Limited Partner without compliance with the provisions of Section 11.4 or Section 13.3 hereof.
Section 13.4
Rights of Holders
. Except as otherwise provided in this Agreement and subject to
the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, (a) each Holder shall look solely to the assets of the Partnership for the return of its Capital Contribution, (b) no Holder shall have the
right or power to demand or receive property other than cash from the Partnership and (c) no Holder shall have priority over any other
56
Holder as to the return of its Capital Contributions, distributions or allocations.
Section 13.5
Notice of Dissolution
. In the event that a Liquidating Event occurs, the General
Partner shall, within thirty (30) days thereafter, provide written notice thereof to each Holder and, in the General Partner’s sole and absolute discretion or as required by the Act, to all other parties with whom the Partnership regularly
conducts business (as determined in the sole and absolute discretion of the General Partner), and the General Partner may publish notice thereof in a newspaper of general circulation in each place in which the Partnership regularly conducts business
(as determined in the sole and absolute discretion of the General Partner).
Section 13.6
Cancellation of Certificate of Limited Partnership
. Upon the completion of the
winding up of the Partnership the Certificate shall be canceled in the manner required by the Act.
Section 13.7
Reasonable Time for
Winding-Up
. A
reasonable time shall be allowed for the orderly
winding-up
of the business and affairs of the Partnership and the liquidation of its assets pursuant to Section 13.2 hereof, in order to minimize any
losses otherwise attendant upon such
winding-up,
and the provisions of this Agreement shall remain in effect between and among the Partners during the period of winding up; provided, however, reasonable
efforts shall be made to complete such
winding-up
within twenty-four (24) months after the adoption of a plan of liquidation of the General Partner, as provided in Section 562(b)(1)(B) of the Code,
if necessary, in the sole and absolute discretion of the General Partner.
ARTICLE 14
PROCEDURES FOR ACTIONS AND CONSENTS
OF PARTNERS; AMENDMENTS; MEETINGS
Section 14.1
Procedures for Actions and Consents of Partners
. The actions requiring Consent
of any Partner or Partners pursuant to this Agreement, including Section 7.3 hereof, or otherwise pursuant to applicable law, are subject to the procedures set forth in this Article 14.
Section 14.2
Amendments
. Amendments to this Agreement may be proposed by the General Partner
or by Limited Partners holding twenty-five percent (25%) or more of the Partnership Interests held by Limited Partners and, except as set forth in Section 7.3.D and Section 7.3.C, and subject to Section 7.3.D and the rights of any
Holder of any Partnership Interest set forth in a Partnership Unit Designation, shall be approved by the Consent of the Partners. Following such proposal, the General Partner shall submit to the Partners entitled to vote thereon any proposed
amendment that, pursuant to the terms of this Agreement, requires the consent, approval or vote of such Partners. The General Partner shall seek the consent, approval or vote of the Partners entitled to vote thereon on any such proposed amendment in
accordance with Section 14.3 hereof. Upon obtaining any such required Consent, or any other Consent required by this Agreement, and without any further action or execution by any other Person, including any Limited Partner, (i) any
amendment may be implemented and reflected in writing executed solely by the General Partner and (ii) the Limited Partners shall be deemed a party to and bound by such amendment to this Agreement.
Section 14.3
Actions and Consents of the Partners
.
A. Meetings of the Partners may be called only by the General Partner to transact any business that the General Partner determines. The
call shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Partners entitled to act at the meeting not less than seven (7) days nor more than sixty (60) days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Unless approval by a different number or proportion of the Partners is required by this Agreement, the Consent of the General Partner and the Consent of the Limited Partners shall be
required to approve such proposal at a meeting of the Partners. Whenever the Consent of Partners is permitted or required under this Agreement, such Consent may be given at a meeting of Partners or in accordance with the procedure prescribed in
Section 14.3.B hereof.
57
B. Any action requiring the Consent of any Partner or group of Partners pursuant to this
Agreement or that is required or permitted to be taken at a meeting of the Partners may be taken without a meeting if a Consent in writing or by electronic transmission (as defined in
Section 17-405(d)
of
the Act) setting forth the action so taken or consented to is given by Partners whose Consent would be sufficient to approve such action at a meeting of the Partners. Such Consent may be in one instrument or in several instruments, and shall have
the same force and effect as the affirmative vote of such Partners at a meeting of the Partners. Such Consent shall be filed with the General Partner. An action so taken shall be deemed to have been taken at a meeting held on the effective date so
certified. For purposes of obtaining a Consent in writing or by electronic transmission, the General Partner may require a response within a reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time period
shall constitute a Consent that is consistent with the General Partner’s recommendation with respect to the proposal;
provided
,
however
, that an action shall become effective at such time as requisite Consents are received even if
prior to such specified time.
C. Each Partner entitled to act at a meeting of the Partners may authorize any Person or Persons to
act for it by proxy on all matters in which a Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed by the Partner or its
attorney-in-fact.
No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy (or there is receipt of a proxy authorizing a later date).
Every proxy shall be revocable at the pleasure of the Partner executing it, such revocation to be effective upon the Partnership’s receipt of written notice of such revocation from the Partner executing such proxy, unless such proxy states that
it is irrevocable and is coupled with an interest.
D. The General Partner may set, in advance, a record date for the purpose of
determining the Partners (i) entitled to Consent to any action, (ii) entitled to receive notice of any meeting of the Partners or (iii) in order to make a determination of Partners for any other proper purpose. Such date, in any case,
shall not be prior to the close of business on the day the record date is fixed and shall be not more than ninety (90) days and, in the case of a meeting of the Partners, not less than five (5) days, before the date on which the meeting is to be
held. If no record date is fixed, the record date for the determination of Partners entitled to notice of a meeting of the Partners shall be at the close of business on the day on which the notice of the meeting is sent, and the record date for any
other determination of Partners shall be the effective date of such Partner action, distribution or other event. When a determination of the Partners entitled to Consent at any meeting of the Partners has been made as provided in this section, such
determination shall apply to any adjournment thereof.
E. Each meeting of Partners shall be conducted by the General Partner or such
other Person as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the General Partner or such other Person deems appropriate in its sole and absolute discretion. Without limitation, meetings of Partners may be
conducted in the same manner as meetings of the Special Limited Partner’s stockholders and may be held at the same time as, and as part of, the meetings of the Special Limited Partner’s stockholders.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1
Redemption Rights of Qualifying Parties
.
A. After the applicable Twelve-Month Period, a Qualifying
Party shall have the right (subject to the terms and conditions set forth herein) to require the Partnership to redeem all or a portion of the Partnership Common Units held by such Tendering Party (Partnership Common Units that have in fact been
tendered for redemption being hereafter referred to as “
Tendered Units”)
in exchange (a “
Redemption
”) for the Cash Amount payable on the Specified Redemption Date;
provided
,
however
, that a Qualifying
Party may not effect a Redemption pursuant to this Section 15.1 (i) more than twice in any Partnership Year or (ii) during the period commencing the forth (4th) Monday of November of each Partnership Year and ending the fifteenth (15th)
Business Day following January 1 of the succeeding Partnership Year, without, in each case, the Consent of the General Partner, which may be given or
58
withheld in its sole and absolute discretion. The Partnership may, in the General Partner’s sole and absolute discretion, redeem Tendered Units at the request of the Holder thereof prior to
the end of the applicable Twelve-Month Period (subject to the terms and conditions set forth herein) (a “
Special Redemption
”);
provided
,
however
, that the General Partner first receives a legal opinion to the same
effect as the legal opinion described in Section 15.1.G(4) of this Agreement. Any Redemption shall be exercised pursuant to a Notice of Redemption delivered to the General Partner and the Special Limited Partner by the Qualifying Party when
exercising the Redemption right (the “
Tendering Party
”). The Partnership’s obligation to effect a Redemption, however, shall not arise or be binding against the Partnership until the earlier of (i) the date the General
Partner notifies the Tendering Party that the General Partner has declined to elect to require the Special Limited Partner to acquire some or all of the Tendered Units under Section 15.1.B hereof following receipt of a Notice of Redemption and
(ii) the Business Day following the
Cut-Off
Date. In the event of a Redemption, the Cash Amount shall be delivered as a certified or bank check payable to the Tendering Party or, in the General
Partner’s sole and absolute discretion, in immediately available funds, in each case, on or before the tenth (10th) Business Day following the date on which the Partnership’s obligation to effect a Redemption arises and becomes binding
pursuant to this Section 15.1.A.
B. Notwithstanding the provisions of Section 15.1.A hereof, on or before the close of
business on the
Cut-Off
Date, the General Partner may, in the General Partner’s sole and absolute discretion but subject to the Ownership Limit, elect to require the Special Limited Partner to acquire
some or all (such percentage being referred to as the “
Applicable Percentage
”) of the Tendered Units from the Tendering Party in exchange for REIT Shares. If the General Partner elects to require the Special Limited Partner to
acquire some or all of the Tendered Units pursuant to this Section 15.1.B, the General Partner shall give written notice thereof to the Tendering Party on or before the close of business on the
Cut-Off
Date. If the General Partner elects to require the Special Limited Partner to acquire any of the Tendered Units for REIT Shares, the Special Limited Partner shall issue and deliver such REIT Shares to the Tendering Party pursuant to the terms of
this Section 15.1.B, in which case (1) the Special Limited Partner shall assume directly the obligation with respect thereto and shall satisfy the Tendering Party’s exercise of its Redemption right with respect to such Tendered Units
and (2) such transaction shall be treated, for federal income tax purposes, as a transfer by the Tendering Party of such Tendered Units to the Special Limited Partner in exchange for the REIT Shares Amount. If the General Partner so elects, on
the Specified Redemption Date, the Tendering Party shall sell such number of the Tendered Units to the Special Limited Partner in exchange for a number of REIT Shares equal to the product of the REIT Shares Amount and the Applicable Percentage. The
Tendering Party shall submit (i) such information, certification or affidavit as the Special Limited Partner may reasonably require in connection with the application of the Ownership Limit to any such acquisition and (ii) such written
representations, investment letters, legal opinions or other instruments necessary, in the Special Limited Partner’s view, to effect compliance with the Securities Act. In the event of an election by the General Partner to require the Special
Limited Partner to purchase the Tendered Units pursuant to this Section 15.1.B, the Tendering Party shall no longer have the right to cause the Partnership to effect a Redemption of such Tendered Units and, upon notice to the Tendering Party by
the General Partner given on or before the close of business on the
Cut-Off
Date that the General Partner has elected to require the Special Limited Partner to acquire some or all of the Tendered Units
pursuant to this Section 15.1.B, the obligation of the Partnership to effect a Redemption of the Tendered Units as to which the General Partner’s notice relates shall not accrue or arise. A number of REIT Shares equal to the product of the
Applicable Percentage and the REIT Shares Amount, if applicable, shall be delivered by the Special Limited Partner as duly authorized, validly issued, fully paid and
non-assessable
REIT Shares and, if
applicable, Rights, free of any pledge, lien, encumbrance or restriction, other than the Ownership Limit, the Securities Act and relevant state securities or “blue sky” laws. Neither any Tendering Party whose Tendered Units are acquired by
the Special Limited Partner pursuant to this Section 15.1.B, any Partner, any Assignee nor any other interested Person shall have any right to require or cause the Special Limited Partner to register, qualify or list any REIT Shares owned or
held by such Person, whether or not such REIT Shares are issued pursuant to this Section 15.1.B, with the SEC, with any state securities commissioner, department or agency, under the Securities Act or the Exchange Act or with any stock
exchange;
provided
,
however
, that this limitation shall not be in derogation of any registration or similar rights granted pursuant to any other written agreement between the Special Limited Partner and any such Person. REIT Shares
issued upon an acquisition of the Tendered Units by the Special Limited Partner pursuant to this Section 15.1.B may contain such legends regarding restrictions under the Securities Act and applicable state securities laws
59
as the Special Limited Partner in good faith determines to be necessary or advisable in order to ensure compliance with such laws.
Notwithstanding anything herein to the contrary, with respect to any Redemption or acquisition of Tendered Units pursuant to
Section 15.1.A or Section 15.1.B, the Tendering Party shall continue to own all Tendered Units subject to any Redemption (and be treated as a Limited Partner, an Assignee or a Person who is the transferee of a Limited Partner Interest in a
Permitted Transfer, as the case may be, with respect to such Tendered Units for all purposes of this Agreement) until such Tendered Units are Transferred to the Partnership or the Special Limited Partner, as the case may be, and such Tendering Party
has received the Cash Amount or REIT Share Amount, as the case may be, in exchange for such Tendered Units. Unless and until the Tendering Party has received the REIT Share Amount in exchange for such Tendered Units pursuant to this
Section 15.1.B, the Tendering Party shall have no rights as a stockholder of the Special Limited Partner with respect to the REIT Shares issuable in connection with such Redemption (including, without limitation, rights to vote or consent,
receive dividends and exercise other rights).
C. Notwithstanding the provisions of Section 15.1.A and 15.1.B hereof, the
Tendering Parties shall have no rights under this Agreement that would otherwise be prohibited by the Charter and shall have no rights to require the Partnership to redeem Tendered Units or require the Special Limited Partner to acquire Tendered
Units if such a redemption or the acquisition of such Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof would cause any Person to violate the Ownership Limit. To the extent that any attempted Redemption or
acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof would be in violation of this Section 15.1.C, to the fullest extent permitted by law, it shall be null and void
ab initio
, and the
Tendering Party shall not acquire any rights or economic interests in REIT Shares otherwise issuable by the Special Limited Partner under Section 15.1.B hereof or cash otherwise payable under Section 15.1.A hereof.
D. If the General Partner does not elect to require the Special Limited Partner to acquire the Tendered Units pursuant to
Section 15.1.B hereof:
(1) The Partnership may elect to raise funds for the payment of the Cash Amount either (a) by
requiring that the Special Limited Partner contribute to the Partnership funds from the proceeds of a registered public offering by the Special Limited Partner of REIT Shares sufficient to purchase the Tendered Units or (b) from any other
sources (including, but not limited to, the sale of any Property and the incurrence of additional Debt) available to the Partnership. The Special Limited Partner shall make a Capital Contribution of any such amounts to the Partnership in exchange
for additional Partnership Units, and the Partnership is hereby authorized from time to time to issue such additional Partnership Units in consideration therefor without any further act, approval or vote of any Partner or other Persons. Any such
contribution shall entitle the Special Limited Partner to an equitable Percentage Interest adjustment.
(2) If the Cash Amount is not
paid on or before the Specified Redemption Date, interest shall accrue with respect to the Cash Amount from the day after the Specified Redemption Date to and including the date on which the Cash Amount is paid at a rate equal to the base rate on
corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal (but not higher than the maximum lawful rate).
E. Notwithstanding the provisions of Section 15.1.B hereof, the Special Limited Partner shall not acquire any Tendered Units in
exchange for REIT Shares if such exchange would be prohibited under the Charter.
F. Notwithstanding anything herein to the contrary
(but subject to Section 15.1.C hereof), with respect to any Redemption (or any tender of Partnership Common Units for Redemption if the Tendered Units are acquired by the Special Limited Partner pursuant to Section 15.1.B hereof) pursuant
to this Section 15.1:
(1) All Partnership Common Units acquired by the Special Limited Partner pursuant to Section 15.1.B
hereof shall automatically, and without further action required, be converted into and deemed to be a Special Limited Partner’s
60
Partnership Interest comprised of the same number of Partnership Common Units.
(2) Subject to the Ownership Limit, no Tendering Party may effect a Redemption for less than one thousand (1,000) Partnership Common
Units or, if such Tendering Party holds (as a Limited Partner or, economically, as an Assignee) less than one thousand (1,000) Partnership Common Units, all of the Partnership Common Units held by such Tendering Party, without, in each case, the
Consent of the General Partner, which may be given or withheld in its sole and absolute discretion.
(3) If (i) a Tendering
Party surrenders its Tendered Units during the period after the Partnership Record Date with respect to a distribution and before the record date established by the Special Limited Partner for a distribution to its stockholders of some or all of its
portion of such Partnership distribution, and (ii) the General Partner elects to require the Special Limited Partner to acquire any of such Tendered Units in exchange for REIT Shares pursuant to Section 15.1.B, such Tendering Party shall
pay to the Special Limited Partner on the Specified Redemption Date an amount in cash equal to the portion of the Partnership distribution in respect of the Tendered Units exchanged for REIT Shares, insofar as such distribution relates to the same
period for which such Tendering Party would receive a distribution in respect of such REIT Shares.
(4) The consummation of such
Redemption (or an acquisition of Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof, as the case may be) shall be subject to the expiration or termination of the applicable waiting period, if any, under the
Hart-Scott-Rodino Act.
(5) The Tendering Party shall continue to own (subject, in the case of an Assignee, to the provisions of
Section 11.5 hereof) all Partnership Common Units subject to any Redemption, and be treated as a Limited Partner or an Assignee, as applicable, with respect to such Partnership Common Units for all purposes of this Agreement, until such
Partnership Common Units are either paid for by the Partnership pursuant to Section 15.1.A hereof or transferred to the Special Limited Partner and paid for, by the issuance of the REIT Shares, pursuant to Section 15.1.B hereof on the
Specified Redemption Date. Until a Specified Redemption Date and an acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof, the Tendering Party shall have no rights as a stockholder of the Special
Limited Partner with respect to the REIT Shares issuable in connection with such acquisition.
G. In connection with an exercise of
Redemption rights pursuant to this Section 15.1, except as otherwise Consented to by the General Partner, in its sole and absolute discretion, the Tendering Party shall submit the following to the General Partner, in addition to the Notice of
Redemption:
(1) A written affidavit, dated the same date as the Notice of Redemption, (a) disclosing the actual and
constructive ownership, as determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT Shares by (i) such Tendering Party and (ii) to the best of their knowledge any Related Party and (b) representing that, after giving
effect to the Redemption or an acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof, neither the Tendering Party nor to the best of their knowledge any Related Party will own REIT Shares in
violation of the Ownership Limit;
(2) A written representation that neither the Tendering Party nor to the best of their knowledge
any Related Party has any intention to acquire any additional REIT Shares prior to the closing of the Redemption or an acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof on the Specified
Redemption Date;
(3) An undertaking to certify, at and as a condition to the closing of (i) the Redemption or (ii) the
acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof on the Specified Redemption Date, that either (a) the actual and constructive ownership of REIT Shares by the Tendering Party and to the
best of their knowledge any Related Party remain unchanged from that disclosed in the affidavit required by Section 15.1.G(1) or (b) after giving effect to the Redemption or an acquisition of the Tendered Units by the Special Limited
61
Partner pursuant to Section 15.1.B hereof, neither the Tendering Party nor to the best of their knowledge any Related Party shall own REIT Shares in violation of the Ownership Limit; and
(4) In connection with any Special Redemption, the Special Limited Partner shall have the right to receive an opinion of counsel
reasonably satisfactory to it to the effect that the proposed Special Redemption will not cause the Partnership, the General Partner or the Special Limited Partner to violate any federal or state securities laws or regulations applicable to the
Special Redemption, the issuance and sale of the Tendered Units to the Tendering Party or the issuance and sale of REIT Shares to the Tendering Party pursuant to the Section 15.1.B of this Agreement.
H. In connection with the exercise of Redemption rights pursuant to this Section 15.1, the Tendering Party shall reimburse the
Partnership or the Special Limited Partners, as applicable, for all
out-of-pocket
costs and expenses (including, without limitation, reasonable attorney’s fees and
other legal fees and expenses) incurred by the Partnership or the Special Limited Partner, as applicable.
Section 15.2
Addresses and Notice
. Any notice, demand, request or report required or
permitted to be given or made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class United States mail or by other means of written or electronic
communication (including by telecopy, facsimile, electronic mail or commercial courier service) to the Partner, or Assignee at the address set forth in
Exhibit A
or such other address of which the Partner shall notify the General Partner in
accordance with this Section 15.2.
Section 15.3
Titles and Captions
. All article or
section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided
otherwise, references to “Articles” or “Sections” are to Articles and Sections of this Agreement.
Section 15.4
Pronouns and Plurals
. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
Section 15.5
Further Action
. The parties shall
execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.
Section 15.6
Binding Effect
. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.
Section 15.7
Waiver
.
A. To the fullest extent permitted by law, no failure by any party to insist upon the
strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.
B. The restrictions, conditions and other limitations on the rights and benefits of the Limited Partners contained in this
Agreement, and the duties, covenants and other requirements of performance or notice by the Limited Partners, are for the benefit of the Partnership and, except for an obligation to pay money to the Partnership, may be waived or relinquished by the
General Partner, in its sole and absolute discretion, on behalf of the Partnership in one or more instances from time to time and at any time;
provided
,
however
, that any such waiver or relinquishment may not be made if it would have
the effect of (i) creating liability for any other Limited Partner, (ii) causing the Partnership to cease to qualify as a limited partnership, (iii) reducing the amount of cash otherwise distributable to the Limited Partners (other
than any such reduction that affects all of the Limited Partners holding the same class or series of Partnership Units on a uniform or pro rata basis, if approved by a Majority in Interest of the Limited Partners
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holding such class or series of Partnership Units), (iv) resulting in the classification of the Partnership as an association or publicly traded partnership taxable as a corporation for federal
income tax purposes or (v) violating the Securities Act, the Exchange Act or any state “blue sky” or other securities laws; and
provided
,
further
, that any waiver relating to compliance with the Ownership Limit or other
restrictions in the Charter shall be made and shall be effective only as provided in the Charter.
Section 15.8
Counterparts
. This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing
its signature hereto.
Section 15.9
Applicable Law; Consent to Jurisdiction; Waiver of Jury
Trial
.
A. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Delaware,
without regard to the principles of conflicts of law. In the event of a conflict between any provision of this Agreement and any
non-mandatory
provision of the Act, the provisions of this Agreement shall
control and take precedence.
B. Each Partner hereby (i) submits to the
non-exclusive
jurisdiction of any state or federal court sitting in the State of Delaware (collectively, the “
Delaware Courts
”), with respect to any dispute arising out of this Agreement or any transaction contemplated hereby to the extent such
courts would have subject matter jurisdiction with respect to such dispute, (ii) to the fullest extent permitted by law, irrevocably waives, and agrees not to assert by way of motion, defense, or otherwise, in any such action, any claim that it
is not subject personally to the jurisdiction of any of the Delaware Courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, or that the venue of the action is improper,
(iii) to the fullest extent permitted by law, agrees that notice or the service of process in any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby shall be properly served or
delivered if delivered to such Partner at such Partner’s last known address as set forth in the Partnership’s books and records, and (iv) to the fullest extent permitted by law, irrevocably waives any and all right to trial by jury in
any legal proceeding arising out of or related to this Agreement or the transactions contemplated hereby.
Section 15.10
Entire Agreement
. This Agreement contains all of the understandings and
agreements between and among the Partners with respect to the subject matter of this Agreement and the rights, interests and obligations of the Partners with respect to the Partnership. Notwithstanding anything to the contrary in this Agreement, the
Partners hereby acknowledge and agree that the General Partner, on its own behalf and/or on behalf of the Partnership, without the approval of any Limited Partner, may enter into side letters or similar written agreements with Limited Partners that
are not Affiliates of the General Partner, executed contemporaneously with the admission of such Limited Partner to the Partnership, which have the effect of establishing rights under, or altering or supplementing, the terms hereof, as negotiated
with such Limited Partner and which the General Partner in its sole discretion deems necessary, desirable or appropriate. The parties hereto agree that any terms, conditions or provisions contained in such side letters or similar written agreements
with a Limited Partner shall govern with respect to such Limited Partner notwithstanding the provisions of this Agreement.
Section 15.11
Invalidity of Provisions
. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein
shall not be affected thereby.
Section 15.12
Limitation to Preserve REIT Status
.
Notwithstanding anything else in this Agreement, to the extent that the amount to be paid, credited, distributed or reimbursed by the Partnership to any REIT Partner or its officers, directors, employees or agents, whether as a reimbursement, fee,
expense or indemnity (a “
REIT Payment
”), would constitute gross income to the REIT Partner for purposes of Code Section 856(c)(2) or Code Section 856(c)(3), then, notwithstanding any other provision of this Agreement, the
amount of such REIT Payments, as selected by the
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General Partner in its sole and absolute discretion from among items of potential distribution, reimbursement, fees, expenses and indemnities, shall be reduced for any Partnership Year so that
the REIT Payments, as so reduced, for or with respect to such REIT Partner shall not exceed the lesser of:
(i) an
amount equal to the excess, if any, of (a) four and nine-tenths percent (4.9%) of the REIT Partner’s total gross income (but excluding the amount of any REIT Payments and amounts excluded from gross income pursuant
to Section 856(c) of the Code) for the Partnership Year that is described in subsections (A) through (I) of Code Section 856(c)(2) over (b) the amount of gross income (within the meaning of Code Section 856(c)(2))
derived by the REIT Partner from sources other than those described in subsections (A) through (I) of Code Section 856(c)(2) (but not including the amount of any REIT Payments and amounts excluded from gross income pursuant to
Section 856(c) of the Code); or
(ii) an amount equal to the excess, if any, of (a) twenty-four percent
(24%) of the REIT Partner’s total gross income (but excluding the amount of any REIT Payments and amounts excluded from gross income pursuant to Section 856(c) of the Code) for the Partnership Year that is described in subsections
(A) through (I) of Code Section 856(c)(3) over (b) the amount of gross income (within the meaning of Code Section 856(c)(3)) derived by the REIT Partner from sources other than those described in subsections (A) through (I)
of Code Section 856(c)(3) (but not including the amount of any REIT Payments and amounts excluded from gross income pursuant to Section 856(c) of the Code);
provided, however
, that REIT Payments in excess of the amounts set forth in clauses (i) and (ii) above may be made if the General
Partner, as a condition precedent, obtains an opinion of tax counsel that the receipt of such excess amounts should not adversely affect the REIT Partner’s ability to qualify as a REIT. To the extent that REIT Payments may not be made in a
Partnership Year as a consequence of the limitations set forth in this Section 15.12, such REIT Payments shall carry over and shall be treated as arising in the following Partnership Year if such carry over does not adversely affect the REIT
Partner’s ability to qualify as a REIT, provided, however, that any such REIT Payment shall not be carried over more than three Partnership Years, and any such remaining payments shall no longer be due and payable. The purpose of the
limitations contained in this Section 15.12 is to prevent any REIT Partner from failing to qualify as a REIT under the Code by reason of such REIT Partner’s share of items, including distributions, reimbursements, fees, expenses or
indemnities, receivable directly or indirectly from the Partnership, and this Section 15.12 shall be interpreted and applied to effectuate such purpose.
Section 15.13
No Partition
. No Partner nor any
successor-in-interest
to a Partner shall have the right while this Agreement remains in effect to have any property of the Partnership partitioned, or to file a complaint or institute any proceeding at law or
in equity to have such property of the Partnership partitioned, and each Partner, on behalf of itself and its successors and assigns hereby waives any such right. It is the intention of the Partners that the rights of the parties hereto and their
successors-in-interest
to Partnership property, as among themselves, shall be governed by the terms of this Agreement, and that the rights of the Partners and their respective
successors-in-interest
shall be subject to the limitations and restrictions as set forth in this Agreement.
Section 15.14
No Third-Party Rights Created Hereby
. The provisions of this Agreement are
solely for the purpose of defining the interests of the Holders, inter se; and no other person, firm or entity (i.e., a party who is not a signatory hereto or a permitted successor to such signatory hereto) shall have any right, power, title or
interest by way of subrogation or otherwise, in and to the rights, powers, title and provisions of this Agreement. No creditor or other third party having dealings with the Partnership shall have the right to enforce the right or obligation of any
Partner to make Capital Contributions or loans to the Partnership or to pursue any other right or remedy hereunder or at law or in equity. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to
the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may any such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership
to secure any debt or other obligation of the Partnership or any of the Partners.
Section 15.15
No Rights as Stockholders
. Nothing contained in this Agreement shall be
construed as conferring
64
upon the Holders of Partnership Units any rights whatsoever as stockholders of the Special Limited Partner, including without limitation any right to receive dividends or other distributions made
to stockholders of the Special Limited Partner or to vote or to consent or receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the Special Limited Partner or any other matter.
ARTICLE 16
SERIES A
PREFERRED UNITS
Section 16.1
Designation and Number
. A series of Partnership Units in the Partnership designated as
the “6.000% Series A Cumulative Redeemable Preferred Units” (the “
Series A Preferred Units
”) is hereby established, with the rights, priorities and preferences set forth herein. The number of Series A Preferred Units
shall be 6,900,000. Notwithstanding anything to the contrary set forth in this Agreement and without the need for any additional action or consent of any Person, the Partnership, and the General Partner on behalf of the Partnership, is hereby fully
authorized to issue to the Special Limited Partner (i) 6,000,000 Series A Preferred Units in connection with the issuance of the Firm Shares (as defined in the Underwriting Agreement, dated September 26, 2017 (the “
Underwriting
Agreement
”)), and (ii) up to an additional 900,000 Series A Preferred Units in connection with the issuance of an identical number of Additional Shares (as defined in the Underwriting Agreement).
Section 16.2
Distributions
.
A.
Payment of Distributions
. Subject to the rights of Holders of Parity Preferred Units as to the payment of distributions,
pursuant to Section 5.1, the Special Limited Partner, as holder of the Series A Preferred Units, will be entitled to receive, when, as and if declared by the Partnership acting through the General Partner, cumulative preferential cash
distributions in an amount equal to the Series A Priority Return. Such distributions shall be cumulative, shall accrue from the original date of issuance and will be payable (i) quarterly (such quarterly periods for purposes of payment and
accrual will be the quarterly periods ending on the dates specified in this sentence and not calendar quarters) in arrears, on the last calendar day of March, June, September and December, of each year commencing on December 29, 2017, and,
(ii), in the event of a redemption of Series A Preferred Units, on the redemption date (each a “
Series A Preferred Unit Distribution Payment Date
”). If any date on which distributions are to be made on the Series A Preferred Units
is not a Business Day, then payment of the distribution to be made on such date will be made, at the General Partner’s option, on either the immediately preceding Business Day or next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as
if made on such date.
B.
Distributions Cumulative
. Notwithstanding the foregoing, distributions on the Series A Preferred Units
will accrue whether or not the terms and provisions set forth in Section 16.2.C at any time prohibit the current payment of distributions, whether or not the Partnership has earnings, whether or not there are funds legally available for the
payment of such distributions and whether or not such distributions are authorized.
C.
Priority as to Distributions
.
(1) Except as provided in Section 16.2.C(2) below, no distributions shall be declared and paid or declared and set apart for payment and
no other distribution of cash or other property may be declared and made on or with respect to any Parity Preferred Unit or Junior Unit as to distributions (other than a distribution paid in Junior Units as to distributions and upon liquidation) for
any period, nor shall any Junior Units or Parity Preferred Units as to distributions or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (and no funds shall be paid or made available for a sinking fund for the
redemption of such units) and no other distribution of cash or other property may be made, directly or indirectly, on or with respect thereto by the Partnership (except by conversion into or exchange for Junior Units as to distributions and upon
liquidation, and except for the redemption of Partnership Interests corresponding to any REIT Series A Preferred Shares or any other REIT shares of any other
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class or series of capital stock ranking, as to dividends or upon liquidation, on parity with or junior to the REIT Series A Preferred Shares to be purchased by the Special Limited Partner
pursuant to the Charter to the extent necessary to preserve the Special Limited Partner’s status as a REIT, provided that such redemption shall be upon the same terms as the corresponding stock purchase pursuant to the Charter), unless full
cumulative distributions on the Series A Preferred Units for all past periods shall have been or contemporaneously are (i) declared and paid in cash or (ii) declared and a sum sufficient for the payment thereof in cash is set apart for
such payment.
(2) When distributions are not paid in full (and a sum sufficient for such full payment is not so set apart) upon the
Series A Preferred Units and any other Parity Preferred Units as to distributions, all distributions declared upon the Series A Preferred Units and such other classes or series of Parity Preferred Units as to the payment of distributions shall
be declared pro rata so that the amount of distributions declared per Series A Preferred Unit and each such other class or series of Parity Preferred Units shall in all cases bear to each other the same ratio that accrued distributions per
Series A Preferred Unit and such other class or series of Parity Preferred Units (which shall not include any accrual in respect of unpaid distributions on such other class or series of Parity Preferred Units for prior distribution periods if
such other class or series of Parity Preferred Unit does not have a cumulative distribution) bear to each other. No interest, or sum of money in lieu of interest, shall be payable in respect of any distribution payment or payments on the Series A
Preferred Units which may be in arrears.
D.
No Further Rights
. The Special Limited Partner, as holder of the Series A Preferred
Units, shall not be entitled to any distributions, whether payable in cash, other property or otherwise, in excess of the full cumulative distributions described herein. Any distribution payment made on the Series A Preferred Units shall first be
credited against the earliest accrued but unpaid distribution due with respect to such Series A Preferred Units which remains payable. Accrued but unpaid distributions on the Series A Preferred Units will accumulate as of the Series A Preferred Unit
Distribution Payment Date on which they first become payable.
Section 16.3
Liquidating Proceeds
.
A.
Distributions
. Upon any voluntary or involuntary liquidation, dissolution or
winding-up
of the Partnership, distributions on the Series A Preferred Units shall be made in accordance with Article 13.
B.
Notice
. Written
notice of any such voluntary or involuntary liquidation, dissolution or
winding-up
of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such
circumstances shall be payable, shall be given by the General Partner pursuant to Section 13.5.
C.
No Further Rights
. After
payment of the full amount of the liquidating distributions to which it is entitled, the Special Limited Partner, as holder of the Series A Preferred Units, will have no right or claim to any of the remaining assets of the Partnership.
D.
Consolidation, Merger or Certain Other Transactions
. The voluntary sale, conveyance, lease, exchange or transfer (for cash, shares
of stock, securities or other consideration) of all or substantially all of the property or assets of the Partnership to, or the consolidation or merger or other business combination of the Partnership with or into, any corporation, trust or other
entity (or of any corporation, trust or other entity with or into the Partnership) shall not be deemed to constitute a liquidation, dissolution or
winding-up
of the Partnership.
Section 16.4
Redemption
.
A.
Redemption
. If the Special Limited Partner elects to redeem any of the REIT Series A Preferred Shares in accordance with the
terms of the Series A Articles Supplementary, the Partnership shall, on the date set for redemption of such REIT Series A Preferred Shares, redeem the number of Series A Preferred Units equal to the number of REIT Series A Preferred Shares for which
the Special Limited Partner has given notice of redemption pursuant to Section 5 or Section 6, as applicable, of Article THIRD of the Series A Articles Supplementary, at a redemption price, payable in cash, equal to the product of
(i) the number of Series A Preferred Units being
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redeemed, and (ii) an amount equal to the sum of $25, any Preferred Distribution Shortfall per Series A Preferred Unit, and any accrued and unpaid distribution per Series A Preferred Unit
for the current distribution period.
B.
Procedures for Redemption
. The following provisions set forth the procedures for
redemption:
(1) Notice of redemption will be given by the Special Limited Partner to the Partnership concurrently with the notice of the
Special Limited Partner sent to the holders of its REIT Series A Preferred Shares in connection with such redemption. Such notice shall state: (A) the redemption date; (B) the redemption price; (C) the number of Series A Preferred
Units to be redeemed; (D) the place or places where the Series A Preferred Units are to be surrendered for payment of the redemption price; and (E) that distributions on the Series A Preferred Units to be redeemed will cease to accumulate
on such redemption date. If less than all of the Series A Preferred Units are to be redeemed, the notice shall also specify the number of Series A Preferred Units to be redeemed.
(2) On or after the redemption date, the Special Limited Partner shall present and surrender the certificates, if any, representing the Series
A Preferred Units to the Partnership at the place designated in the notice of redemption and thereupon the redemption price of such Partnership Units (including all accumulated and unpaid distributions up to but excluding the redemption date) shall
be paid to the Special Limited Partner and each surrendered Partnership Unit certificate, if any, shall be canceled. If fewer than all the Partnership Units represented by any such certificate representing Series A Preferred Units are to be
redeemed, a new certificate shall be issued representing the unredeemed Partnership Units.
(3) From and after the redemption date (unless
the Partnership defaults in payment of the redemption price), all distributions on the Series A Preferred Units designated for redemption in such notice shall cease to accumulate and all rights of the Special Limited Partner, except the right to
receive the redemption price thereof (including all accumulated and unpaid distributions up to but excluding the redemption date), shall cease and terminate, and such Series A Preferred Units shall not be deemed to be outstanding for any purpose
whatsoever. At its election, the Partnership, prior to a redemption date, may irrevocably deposit the redemption price (including accumulated and unpaid distributions to but not including the redemption date) of the Series A Preferred Units so
called for redemption in trust for the Special Limited Partner with a bank or trust company, in which case the redemption notice to the Special Limited Partner shall (A) state the date of such deposit, (B) specify the office of such bank
or trust company as the place of payment of the redemption price and (C) require the Special Limited Partner to surrender the certificates, if any, representing such Series A Preferred Units at such place on or about the date fixed in such
redemption notice (which may not be later than the redemption date) against payment of the redemption price (including all accumulated and unpaid distributions to the redemption date). Any monies so deposited which remain unclaimed by the Special
Limited Partner at the end of two years after the redemption date shall be returned by such bank or trust company to the Partnership.
Section 16.5
Ranking
. The Series A Preferred Units shall, with respect to distribution rights and rights upon voluntary or
involuntary liquidation,
winding-up
or dissolution of the Partnership, rank (i) senior to the Partnership Common Units and to all other Partnership Units the terms of which provide that such Partnership
Units shall rank junior to the Series A Preferred Units; (ii) on a parity with all Parity Preferred Units; and (iii) junior to all Partnership Units the terms of which provide that such Partnership Units shall rank senior to the Series A
Preferred Units.
Section 16.6
Voting Rights
. The Special Limited Partner shall not have any voting or consent rights in
respect of its partnership interest represented by the Series A Preferred Units.
Section 16.7
Transfer Restrictions
. The
Series A Preferred Units shall not be transferable except in accordance with Article 11.
Section 16.8
Conversion
. In the
event of a conversion of REIT Series A Preferred Shares into REIT Shares at the option of the holders of REIT Series A Preferred Shares pursuant to the terms of the Series A Articles
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Supplementary, then, upon conversion of such REIT Series A Preferred Shares, the Special Limited Partner shall convert an equal whole number of Series A Preferred Units into Partnership Common
Units as such REIT Series A Preferred Shares are converted into REIT Shares, as adjusted to take into account any changes to the REIT Shares Amount pursuant to subparagraph (y) of the definition of REIT Shares Amount. In the event of a
conversion of REIT Series A Preferred Shares into REIT Shares, (a) to the extent the General Partner is required to pay cash in lieu of fractional REIT Shares pursuant to the Series A Articles Supplementary in connection with such conversion,
the Partnership shall distribute an equal amount of cash to the Special Limited Partner; and (b) to the extent the Special Limited Partner receives cash proceeds in addition to the REIT Series A Preferred Shares tendered for conversion, the
Special Limited Partner shall contribute such proceeds to the Partnership.
Section 16.9
No Sinking Fund
. No sinking fund
shall be established for the retirement or redemption of Series A Preferred Units.
[Remainder of Page Left Blank Intentionally]
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first written
above.
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GENERAL PARTNER:
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SPIRIT GENERAL OP HOLDINGS, LLC
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/s/ Phillip D. Joseph, Jr.
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Name:
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Phillip D. Joseph
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Title:
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Executive Vice President, Chief Financial Officer and Treasurer
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SPECIAL LIMITED PARTNER:
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SPIRIT REALTY CAPITAL, INC.
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By:
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/s/ Phillip D. Joseph, Jr.
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Phillip D. Joseph
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Executive Vice President, Chief Financial Officer and Treasurer
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LIMITED PARTNER:
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SPIRIT NOTES PARTNER, LLC
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/s/ Phillip D. Joseph, Jr.
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Name:
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Phillip D. Joseph, Jr.
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Title:
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Executive Vice President, Chief Financial Officer and Treasurer
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EXHIBIT A
PARTNERS AND PARTNERSHIP UNITS
Name and Address of Partners Partnership Units (Type and Amount)
General Partner:
Spirit General OP Holdings, LLC
3,988,218 Partnership Common Units
Special Limited Partner:
Spirit Realty Capital,
Inc.
451,811,814 Partnership Common Units
6,900,000 Series
A Preferred Units
Limited Partners:
Spirit Notes Partner, LLC
100,000 Partnership Common Units
Address is 2727 N. Harwood Street, Suite 300, Dallas, TX, 75201
EXHIBIT B
EXAMPLES REGARDING ADJUSTMENT FACTOR
For purposes of the following examples, it is assumed that (a) the Adjustment Factor in effect on ________ is 1.0
and (b) on _______ (the “
Partnership Record Date
” for purposes of these examples), prior to the events described in the examples, there are 100 REIT Shares issued and outstanding.
Example 1
On the Partnership Record
Date, the Special Limited Partner declares a dividend on its outstanding REIT Shares in REIT Shares. The amount of the dividend is one REIT Share paid in respect of each REIT Share owned. Pursuant to Paragraph (i) of the definition of
“Adjustment Factor,” the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after the stock dividend is declared, as follows:
1.0 * 200/100 = 2.0
Accordingly, the Adjustment Factor after the stock dividend is declared is 2.0.
Example 2
On the Partnership Record
Date, the Special Limited Partner distributes options to purchase REIT Shares to all holders of its REIT Shares. The amount of the distribution is one option to acquire one REIT Share in respect of each REIT Share owned. The strike price is $4.00 a
share. The Value of a REIT Share on the Partnership Record Date is $5.00 per share. Pursuant to Paragraph (ii) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Partnership Record Date, effective
immediately after the options are distributed, as follows:
1.0 * (100 + 100)/(100 + [100 * $4.00/$5.00]) = 1.1111
Accordingly, the Adjustment Factor after the options are distributed is 1.1111. If the options expire or become no longer exercisable, then the
retroactive adjustment specified in Paragraph (ii) of the definition of “Adjustment Factor” shall apply.
Example 3
On the Partnership Record Date, the Special Limited Partner distributes assets to all holders of its REIT Shares. The amount of the
distribution is one asset with a fair market value (as determined by the Special Limited Partner) of $1.00 in respect of each REIT Share owned. It is also assumed that the assets do not relate to assets received by the Special Limited Partner
pursuant to a pro rata distribution by the Partnership. The Value of a REIT Share on the Partnership Record Date is $5.00 a share. Pursuant to Paragraph (iii) of the definition of “Adjustment Factor,” the Adjustment Factor shall be
adjusted on the Partnership Record Date, effective immediately after the assets are distributed, as follows:
1.0 *
$5.00/($5.00 - $1.00) = 1.25
Accordingly, the Adjustment Factor after the assets are distributed is 1.25.
EXHIBIT C
NOTICE OF REDEMPTION
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To:
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[_________]
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[_________]
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[_________]
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The undersigned Limited Partner or Assignee hereby irrevocably tenders for Redemption
Partnership Common Units in Spirit Realty, L.P. in accordance with the terms of the Agreement of Limited Partnership of Spirit Realty, L.P., dated as of [________], as amended (the “
Agreement
”), and the Redemption rights referred to
therein. The undersigned Limited Partner or Assignee:
(a) undertakes (i) to surrender such Partnership Common
Units and any certificate therefor at the closing of the Redemption and (ii) to furnish to the General Partner, prior to the Specified Redemption Date, the documentation, instruments and information required under Section 15.1.G of the
Agreement;
(b) directs that the certified check
representing the Cash Amount, or the REIT Shares Amount, as applicable, deliverable upon the closing of such Redemption be delivered to the address specified below;
(c) represents, warrants, certifies and agrees that:
(i) the undersigned Limited Partner or Assignee is
a Qualifying Party,
(ii) the undersigned Limited
Partner or Assignee has, and at the closing of the Redemption will have, good, marketable and unencumbered title to such Partnership Common Units, free and clear of the rights or interests of any other person or entity,
(iii) the undersigned Limited Partner or Assignee has, and at
the closing of the Redemption will have, the full right, power and authority to tender and surrender such Partnership Common Units as provided herein, and
(iv) the undersigned Limited Partner or Assignee has obtained
the consent or approval of all persons and entities, if any, having the right to consent to or approve such tender and surrender; and
(d) acknowledges that he will continue to own such Partnership
Common Units until and unless either (1) such Partnership Common Units are acquired by the Special Limited Partner pursuant to Section 15.1.B of the Agreement or (2) such redemption transaction closes.
All capitalized terms used herein and not otherwise defined shall have the same meaning ascribed to them respectively in the
Agreement.
C-1
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Dated: ___________
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Name of Limited Partner or Assignee:
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(Signature of Limited Partner or Assignee)
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(Street Address)
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(City)
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(State)
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(Zip Code)
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Signature Medallion Guaranteed by:
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Issue Check Payable to:
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Please insert social security
or identifying
number:
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C-2
