falseQ30001393818--12-31Following the Conversion, Blackstone also has one share outstanding of each of Class B and Class C common stock, with par value of each less than one cent. After initial issuance, there have been no changes to the amounts related to Class B and Class C common stock during the period presented. Fair value is determined by broker quote and these notes would be classified as Level II within the fair value hierarchy. Weighted-Average Remaining Maturity in Years for Senior Secured Notes includes consideration of pre-payment options.The split of clawback between Blackstone Holdings and Current and Former Personnel is based on the performance of individual investments held by a fund rather than on a fund by fund basis. This adjustment removes Unrealized Performance Revenues on a segment basis.This adjustment removes Unrealized Principal Investment Income (Loss) on a segment basis.This adjustment removes Interest and Dividend Revenue on a segment basis.This adjustment removes Other Revenue on a segment basis. For the three months ended September 30, 2020 and 2019, Other Revenue on a GAAP basis was $(192.2) million and $93.3 million, and included $(193.5) million and $91.9 million of foreign exchange gains (losses), respectively. For the nine months ended September 30, 2020 and 2019, Other Revenue on a GAAP basis was $(109.6) million and $86.4 million, and included $(113.2) million and $83.7 million of foreign exchange gains (losses), respectively.This adjustment reverses the effect of consolidating Blackstone Funds, which are excluded from Blackstone’s segment presentation. This adjustment includes the elimination of Blackstone’s interest in these funds, the removal of revenue from the reimbursement of certain expenses by the Blackstone Funds, which are presented gross under GAAP but netted against Management and Advisory Fees, Net in the Total Segment measures, and the removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by non-controlling interests.This adjustment removes the amortization of transaction-related intangibles, which are excluded from Blackstone’s segment presentation. This amount includes amortization of intangibles associated with Blackstone’s investment in Pátria, which is accounted for under the equity method.This adjustment removes Transaction-Related Charges, which are excluded from Blackstone’s segment presentation. Transaction-Related Charges arise from corporate actions including acquisitions, divestitures, and Blackstone’s initial public offering. They consist primarily of equity-based compensation charges, gains and losses on contingent consideration arrangements, changes in the balance of the Tax Receivable Agreement resulting from a change in tax law or similar event, transaction costs and any gains or losses associated with these corporate actions.Total Segment Revenues is comprised of the following:This adjustment removes Unrealized Performance Allocations Compensation.This adjustment removes Equity-Based Compensation on a segment basis.This adjustment removes Interest Expense, excluding interest expense related to the Tax Receivable Agreement.Total Segment Expenses is comprised of the following:The Subordinated Notes do not have contractual interest rates but instead receive distributions from the excess cash flows of the CLO vehicles.Represents (1) the add back of net management fees earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of revenue from the reimbursement of certain expenses by the Blackstone Funds, which are presented gross under GAAP but netted against Management and Advisory Fees, Net in the Total Segment measures.Represents the add back of Performance Revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation.Represents the removal of Transaction-Related Charges that are not recorded in the Total Segment measures.Represents the removal of (1) the amortization of transaction-related intangibles, and (2) certain expenses reimbursed by the Blackstone Funds, which are presented gross under GAAP but netted against Management and Advisory Fees, Net in the Total Segment measures. Beginning in the three months ended September 30, 2020, includes a reduction equal to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units which is accounted for as a capital contribution under GAAP, but is reflected as a reduction of Other Operating Expenses in Blackstone’s segment presentation.Represents (1) the add back of Principal Investment Income, including general partner income, earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by non-controlling interests.This adjustment adds an amount equal to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units. 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SECURITIES AND EXCHANGE COMMISSION
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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
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Commission File Number: 001-33551
The Blackstone Group Inc.
(Exact name of Registrant as specified in its charter)
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(State or other jurisdiction of
incorporation or organization)
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(Address of principal executive offices)(Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Name of each exchange on which registered
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Class A Common Stock
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BX
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New York Stock Exchange
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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒
No
☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
☒
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Accelerated filer
☐
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Smaller reporting company
☐
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Emerging growth company
☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐
No
☒
As of October 30, 2020, there were 674,005,898 shares of Class A common stock, 1 share of Class B common stock and 1 share of Class C common stock of the registrant outstanding.
Forward-Looking Statements
This report may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect our current views with respect to, among other things, our operations, taxes, earnings and financial performance, share repurchases and dividends. You can identify these forward-looking statements by the use of words such as “outlook,” “indicator,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to the impact of the novel coronavirus
(“COVID-19”),
as well as those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as such factors may be updated from time to time in our periodic filings with the United States Securities and Exchange Commission (“SEC”), which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report and in our other periodic filings. The forward-looking statements speak only as of the date of this report, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
Website and Social Media Disclosure
We use our website (www.blackstone.com), Facebook page (www.facebook.com/blackstone), Twitter (www.twitter.com/blackstone), LinkedIn (www.linkedin.com/company/blackstonegroup), Instagram (www.instagram.com/blackstone), SoundCloud (www.soundcloud.com/blackstone-300250613), PodBean (www.blackstone.podbean.com), Spotify (https://spoti.fi/2LJ1tHG), YouTube (www.youtube.com/user/blackstonegroup) and Apple Podcast (https://apple.co/31Pe1Gg) accounts as channels of distribution of company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about Blackstone when you enroll your email address by visiting the “Contact Us/Email Alerts” section of our website at http://ir.blackstone.com. The contents of our website, any alerts and social media channels are not, however, a part of this report.
Effective July 1, 2019, The Blackstone Group L.P. (the “Partnership”) converted from a Delaware limited partnership to a Delaware corporation, The Blackstone Group Inc. (the “Conversion”). This report includes the results for the Partnership prior to the Conversion and The Blackstone Group Inc. following the Conversion. In this report, references to “Blackstone,” the “Company,” “we,” “us” or “our” refer to (a) The Blackstone Group Inc. and its consolidated subsidiaries following the Conversion and (b) the Partnership and its consolidated subsidiaries prior to the Conversion. All references to shares or per share amounts prior to the Conversion refer to units or per unit amounts. Unless otherwise noted, all references to shares or per share amounts following the Conversion refer to shares or per share amounts of Class A common stock. All references to dividends prior to the Conversion refer to distributions. See “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Organizational Structure.”
“Class C Shareholder” refers to Blackstone Group Management L.L.C., the holder of the sole outstanding share of our Class C common stock.
“Blackstone Funds,” “our funds” and “our investment funds” refer to the funds and other vehicles that are managed by Blackstone. “Our carry funds” refers to funds managed by Blackstone that have commitment-based multi-year drawdown structures that pay carry on the realization of an investment.
We refer to our flagship corporate private equity funds as Blackstone Capital Partners (“BCP”) funds, our energy-focused private equity funds as Blackstone Energy Partners (“BEP”) funds, our core private equity funds as Blackstone Core Equity Partners (“BCEP”), our opportunistic investment platform that invests globally across asset classes, industries and geographies as Blackstone Tactical Opportunities (“Tactical Opportunities”), our secondary fund of funds business as Strategic Partners Fund Solutions (“Strategic Partners”), our infrastructure-focused funds as Blackstone Infrastructure Partners (“BIP”), our life sciences private investment platform, Blackstone Life Sciences (“BXLS”), our growth equity investment platform, Blackstone Growth (“BXG”), our multi-asset investment program for eligible high net worth investors offering exposure to certain of our key illiquid investment strategies through a single commitment as Blackstone Total Alternatives Solution (“BTAS”) and our capital markets services business as Blackstone Capital Markets (“BXCM”).
We refer to our real estate opportunistic funds as Blackstone Real Estate Partners (“BREP”) funds and our real estate debt investment funds as Blackstone Real Estate Debt Strategies (“BREDS”) funds. We refer to our real estate investment trusts as “REITs”, to Blackstone Mortgage Trust, Inc., our NYSE-listed REIT, as “BXMT”, and to Blackstone Real Estate Income Trust, Inc., our non-exchange traded REIT, as “BREIT”. We refer to our real estate funds which target substantially stabilized assets in prime markets, as Blackstone Property Partners (“BPP”) funds. We refer to BPP and BREIT collectively as our core+ real estate strategies.
“Our hedge funds” refers to our funds of hedge funds, hedge funds, certain of our real estate debt investment funds, including a registered investment company, and certain other credit-focused funds which are managed by Blackstone. “BIS” refers to Blackstone Insurance Solutions, which partners with insurers to deliver bespoke, capital-efficient investments tailored to each insurer’s needs and risk profile.
Effective January 1, 2020, the Credit segment was renamed Credit & Insurance. There was no change to the composition of the segment or historical results.
“Assets Under Management” refers to the assets we manage. Our Assets Under Management equals the sum of:
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(a)
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the fair value of the investments held by our carry funds and our side-by-side and co-investment entities managed by us, plus (1) the capital that we are entitled to call from investors in those funds and entities pursuant to the terms of their respective capital commitments, including capital commitments to funds that have yet to commence their investment periods, or (2) for certain credit-focused funds the amounts available to be borrowed under asset based credit facilities,
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(b)
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the net asset value of (1) our hedge funds, real estate debt carry funds, secondary funds of funds, BPP, certain co-investments managed by us, certain credit-focused funds, and our Hedge Fund Solutions drawdown funds (plus, in each case, the capital that we are entitled to call from investors in those funds, including commitments yet to commence their investment periods), and (2) our funds of hedge funds, our Hedge Fund Solutions registered investment companies, and BREIT,
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(c)
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the invested capital, fair value or net asset value of assets we manage pursuant to separately managed accounts,
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(d)
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the amount of debt and equity outstanding for our collateralized loan obligations (“CLO”) during the reinvestment period,
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(e)
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the aggregate par amount of collateral assets, including principal cash, for our CLOs after the reinvestment period,
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(f)
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the gross or net amount of assets (including leverage where applicable) for our credit-focused registered investment companies, and
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(g)
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the fair value of common stock, preferred stock, convertible debt, or similar instruments issued by BXMT.
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Our carry funds are commitment-based drawdown structured funds that do not permit investors to redeem their interests at their election. Our funds of hedge funds, hedge funds, funds structured like hedge funds and other open-ended funds in our Real Estate, Hedge Fund Solutions and Credit & Insurance segments generally have structures that afford an investor the right to withdraw or redeem their interests on a periodic basis (for example, annually or quarterly), typically with 30 to 95 days’ notice, depending on the fund and the liquidity profile of the underlying assets. Investment advisory agreements related to certain separately managed accounts in our Hedge Fund Solutions and Credit & Insurance segments, excluding our BIS separately managed accounts, may generally be terminated by an investor on 30 to 90 days’ notice.
“Fee-Earning Assets Under Management” refers to the assets we manage on which we derive management fees and/or performance revenues. Our Fee-Earning Assets Under Management equals the sum of:
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(a)
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for our Private Equity segment funds and Real Estate segment carry funds, including certain BREDS and Hedge Fund Solutions funds, the amount of capital commitments, remaining invested capital, fair value, net asset value or par value of assets held, depending on the fee terms of the fund,
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(b)
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for our credit-focused carry funds, the amount of remaining invested capital (which may include leverage) or net asset value, depending on the fee terms of the fund,
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(c)
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the remaining invested capital or fair value of assets held in co-investment vehicles managed by us on which we receive fees,
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(d)
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the net asset value of our funds of hedge funds, hedge funds, BPP, certain co-investments managed by us, certain registered investment companies, BREIT, and certain of our Hedge Fund Solutions drawdown funds,
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(e)
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the invested capital, fair value of assets or the net asset value we manage pursuant to separately managed accounts,
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(f)
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the net proceeds received from equity offerings and accumulated core earnings of BXMT, subject to certain adjustments,
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(g)
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the aggregate par amount of collateral assets, including principal cash, of our CLOs, and
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(h)
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the gross amount of assets (including leverage) or the net assets (plus leverage where applicable) for certain of our credit-focused registered investment companies.
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Each of our segments may include certain Fee-Earning Assets Under Management on which we earn performance revenues but not management fees.
Our calculations of assets under management and fee-earning assets under management may differ from the calculations of other asset managers, and as a result this measure may not be comparable to similar measures presented by other asset managers. In addition, our calculation of assets under management includes commitments to, and the fair value of, invested capital in our funds from Blackstone and our personnel, regardless of whether such commitments or invested capital are subject to fees. Our definitions of assets under management and fee-earning assets under management are not based on any definition of assets under management and fee-earning assets under management that is set forth in the agreements governing the investment funds that we manage.
For our carry funds, total assets under management includes the fair value of the investments held and uncalled capital commitments, whereas fee-earning assets under management includes the total amount of capital commitments or the remaining amount of invested capital at cost depending on whether the investment period has expired or as specified by the fee terms of the fund. As such, fee-earning assets under management may be greater than total assets under management when the aggregate fair value of the remaining investments is less than the cost of those investments.
“Perpetual Capital” refers to the component of assets under management with an indefinite term, that is not in liquidation, and for which there is no requirement to return capital to investors through redemption requests in the ordinary course of business, except where funded by new capital inflows. Perpetual Capital includes co-investment capital with an investor right to convert into Perpetual Capital.
This report does not constitute an offer of any Blackstone Fund.
Part I. Financial Information
The Blackstone Group Inc.
Condensed Consolidated Statements of Financial Condition (Unaudited)
(Dollars in Thousands, Except Share Data)
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Cash and Cash Equivalents
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$
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2,628,895
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$
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2,172,441
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Cash Held by Blackstone Funds and Other
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85,218
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|
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351,210
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|
Investments (including assets pledged of $116,638 and $196,094 at September 30, 2020 and December 31, 2019, respectively)
|
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14,423,456
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|
|
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22,281,682
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|
|
|
|
|
477,601
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|
|
|
975,075
|
|
|
|
|
|
2,817,304
|
|
|
|
2,594,873
|
|
|
|
|
|
344,258
|
|
|
|
397,508
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|
|
|
|
|
1,869,860
|
|
|
|
1,869,860
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|
|
|
|
|
544,905
|
|
|
|
382,493
|
|
|
|
|
|
544,361
|
|
|
|
471,059
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|
|
|
|
|
1,305,707
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|
|
|
1,089,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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25,041,565
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32,585,506
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|
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|
|
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|
|
|
|
|
|
|
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|
|
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$
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5,570,888
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$
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11,080,723
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1,064,336
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|
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1,026,871
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Accrued Compensation and Benefits
|
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3,349,418
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3,796,044
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Securities Sold, Not Yet Purchased
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51,231
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75,545
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80,597
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154,118
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Operating Lease Liabilities
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621,408
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542,994
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Accounts Payable, Accrued Expenses and Other Liabilities
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804,009
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|
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806,159
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|
|
|
|
|
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|
|
|
|
|
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11,541,887
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17,482,454
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Commitments and Contingencies
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Redeemable Non-Controlling Interests in Consolidated Entities
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63,384
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87,651
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Stockholders’ Equity of The Blackstone Group Inc.
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Class A Common Stock, $0.00001 par value, 90 billion shares authorized, (680,680,748 shares issued and outstanding as of September 30, 2020; 671,157,692 shares issued and outstanding as of December 31, 2019)
|
|
|
7
|
|
|
|
7
|
|
Class B Common Stock, $0.00001 par value, 999,999,000 shares authorized, (1 share issued and outstanding as of September 30, 2020 and December 31, 2019)
|
|
|
—
|
|
|
|
—
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|
Class C Common Stock, $0.00001 par value, 1,000 shares authorized, (1 share issued and outstanding as of September 30, 2020 and December 31, 2019)
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|
|
—
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|
|
|
—
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Additional Paid-in-Capital
|
|
|
6,243,722
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|
|
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6,428,647
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|
Retained Earnings (Deficit)
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|
|
(36,432
|
)
|
|
|
609,625
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|
Accumulated Other Comprehensive Loss
|
|
|
(27,407
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)
|
|
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(28,495
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)
|
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|
|
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|
|
|
|
Total Stockholders’ Equity of The Blackstone Group Inc.
|
|
|
6,179,890
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|
|
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7,009,784
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Non-Controlling Interests in Consolidated Entities
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|
|
3,946,190
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4,186,069
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Non-Controlling Interests in Blackstone Holdings
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3,310,214
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3,819,548
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|
|
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|
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|
|
|
|
|
|
|
|
13,436,294
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|
|
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15,015,401
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|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
$
|
25,041,565
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$
|
32,585,506
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|
|
|
|
|
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|
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|
See notes to condensed consolidated financial statements.
The Blackstone Group Inc.
Condensed Consolidated Statements of Financial Condition (Unaudited)
The following presents the asset and liability portion of the consolidated balances presented in the Condensed Consolidated Statements of Financial Condition attributable to consolidated Blackstone Funds which are variable interest entities. The following assets may only be used to settle obligations of these consolidated Blackstone Funds and these liabilities are only the obligations of these consolidated Blackstone Funds and they do not have recourse to the general credit of Blackstone.
During the three months ended September 30, 2020, Blackstone deconsolidated nine CLO vehicles. See Note 9. “Variable Interest Entities” for additional details.
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|
|
|
|
|
|
|
|
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|
|
Cash Held by Blackstone Funds and Other
|
|
$
|
85,218
|
|
|
$
|
351,210
|
|
|
|
|
|
1,483,501
|
|
|
|
8,371,899
|
|
|
|
|
|
115,064
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|
|
|
220,372
|
|
|
|
|
|
7,003
|
|
|
|
7,856
|
|
|
|
|
|
490
|
|
|
|
1,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,691,276
|
|
|
$
|
8,952,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
99
|
|
|
$
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6,479,867
|
|
|
|
|
|
73,711
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|
|
|
142,546
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|
Securities Sold, Not Yet Purchased
|
|
|
41,862
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|
|
|
55,289
|
|
|
|
|
|
80,597
|
|
|
|
154,118
|
|
Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
44,117
|
|
|
|
301,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
240,386
|
|
|
$
|
7,133,175
|
|
|
|
|
|
|
|
|
|
|
|
See notes to condensed consolidated financial statements.
The Blackstone Group Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in Thousands, Except Share and Per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
1,053,851
|
|
|
|
878,151
|
|
|
|
2,958,411
|
|
|
$
|
2,528,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,498
|
|
|
|
8,254
|
|
|
|
40,959
|
|
|
|
42,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
371,406
|
|
|
|
446,550
|
|
|
|
640,846
|
|
|
|
1,021,445
|
|
|
|
|
|
1,403,480
|
|
|
|
176,370
|
|
|
|
(981,678
|
)
|
|
|
998,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,017
|
|
|
|
74,642
|
|
|
|
170,814
|
|
|
|
292,943
|
|
|
|
|
|
295,308
|
|
|
|
15,391
|
|
|
|
(332,295
|
)
|
|
|
147,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Income (Loss)
|
|
|
2,131,211
|
|
|
|
712,953
|
|
|
|
(502,313
|
)
|
|
|
2,459,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and Dividend Revenue
|
|
|
26,497
|
|
|
|
42,482
|
|
|
|
85,505
|
|
|
|
130,252
|
|
|
|
|
|
(192,159
|
)
|
|
|
93,273
|
|
|
|
(109,559
|
)
|
|
|
86,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,032,898
|
|
|
|
1,735,113
|
|
|
|
2,473,003
|
|
|
|
5,246,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
460,983
|
|
|
|
462,766
|
|
|
|
1,395,983
|
|
|
|
1,372,684
|
|
Incentive Fee Compensation
|
|
|
7,385
|
|
|
|
5,419
|
|
|
|
22,339
|
|
|
|
19,711
|
|
Performance Allocations Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
142,149
|
|
|
|
155,663
|
|
|
|
253,141
|
|
|
|
367,883
|
|
|
|
|
|
509,474
|
|
|
|
94,907
|
|
|
|
(433,091
|
)
|
|
|
446,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation and Benefits
|
|
|
1,119,991
|
|
|
|
718,755
|
|
|
|
1,238,372
|
|
|
|
2,206,718
|
|
General, Administrative and Other
|
|
|
171,041
|
|
|
|
171,067
|
|
|
|
497,658
|
|
|
|
492,437
|
|
|
|
|
|
39,540
|
|
|
|
53,362
|
|
|
|
120,460
|
|
|
|
138,960
|
|
|
|
|
|
2,274
|
|
|
|
4,036
|
|
|
|
10,962
|
|
|
|
12,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,332,846
|
|
|
|
947,220
|
|
|
|
1,867,452
|
|
|
|
2,850,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Tax Receivable Agreement Liability
|
|
|
(7,693
|
)
|
|
|
174,606
|
|
|
|
(8,212
|
)
|
|
|
174,606
|
|
Net Gains (Losses) from Fund Investment Activities
|
|
|
108,752
|
|
|
|
48,450
|
|
|
|
(60,325
|
)
|
|
|
239,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income (Loss)
|
|
|
101,059
|
|
|
|
223,056
|
|
|
|
(68,537
|
)
|
|
|
414,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Provision (Benefit) for Taxes
|
|
|
1,801,111
|
|
|
|
1,010,949
|
|
|
|
537,014
|
|
|
|
2,810,678
|
|
Provision (Benefit) for Taxes
|
|
|
100,960
|
|
|
|
(156,786
|
)
|
|
|
89,672
|
|
|
|
(76,895
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,700,151
|
|
|
|
1,167,735
|
|
|
|
447,342
|
|
|
|
2,887,573
|
|
Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
|
|
|
6,868
|
|
|
|
(8
|
)
|
|
|
(12,027
|
)
|
|
|
3,567
|
|
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
|
|
|
259,761
|
|
|
|
88,406
|
|
|
|
(90,938
|
)
|
|
|
355,983
|
|
Net Income Attributable to Non-Controlling Interests in Blackstone Holdings
|
|
|
638,803
|
|
|
|
299,900
|
|
|
|
253,814
|
|
|
|
961,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to The Blackstone Group Inc.
|
|
$
|
794,719
|
|
|
$
|
779,437
|
|
|
$
|
296,493
|
|
|
$
|
1,566,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share of Class A Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.14
|
|
|
$
|
1.15
|
|
|
$
|
0.43
|
|
|
$
|
2.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.13
|
|
|
$
|
1.15
|
|
|
$
|
0.43
|
|
|
$
|
2.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Shares of Class A Common Stock Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700,184,580
|
|
|
|
675,963,129
|
|
|
|
695,049,997
|
|
|
|
674,714,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700,527,966
|
|
|
|
676,219,758
|
|
|
|
695,337,575
|
|
|
|
674,979,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to condensed consolidated financial statements.
The Blackstone Group Inc.
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,700,151
|
|
|
$
|
1,167,735
|
|
|
$
|
447,342
|
|
|
$
|
2,887,573
|
|
Other Comprehensive Income (Loss), Currency Translation Adjustment
|
|
|
14,791
|
|
|
|
(13,507
|
)
|
|
|
2,888
|
|
|
|
2,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,714,942
|
|
|
|
1,154,228
|
|
|
|
450,230
|
|
|
|
2,890,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
|
|
|
6,868
|
|
|
|
(8
|
)
|
|
|
(12,027
|
)
|
|
|
3,567
|
|
Comprehensive Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
|
|
|
259,761
|
|
|
|
88,406
|
|
|
|
(90,938
|
)
|
|
|
355,983
|
|
Comprehensive Income Attributable to Non-Controlling Interests in Blackstone Holdings
|
|
|
644,243
|
|
|
|
294,024
|
|
|
|
255,614
|
|
|
|
962,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income Attributable to Non-Controlling Interests
|
|
|
910,872
|
|
|
|
382,422
|
|
|
|
152,649
|
|
|
|
1,322,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income Attributable to The Blackstone Group Inc.
|
|
$
|
804,070
|
|
|
$
|
771,806
|
|
|
$
|
297,581
|
|
|
$
|
1,567,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to condensed consolidated financial statements.
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
The Blackstone
Group Inc. (a)
|
|
The Blackstone Group Inc. (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
676,874,583
|
|
|
$
|
7
|
|
|
$
|
6,272,040
|
|
|
$
|
(574,295
|
)
|
|
$
|
(36,758
|
)
|
|
$
|
5,660,994
|
|
|
$
|
3,900,429
|
|
|
$
|
2,866,043
|
|
|
$
|
12,427,466
|
|
|
$
|
68,564
|
|
Transfer Out Due to Deconsolidation of Fund Entities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(216,339
|
)
|
|
|
—
|
|
|
|
(216,339
|
)
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
794,719
|
|
|
|
—
|
|
|
|
794,719
|
|
|
|
259,761
|
|
|
|
638,803
|
|
|
|
1,693,283
|
|
|
|
6,868
|
|
Currency Translation Adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,351
|
|
|
|
9,351
|
|
|
|
—
|
|
|
|
5,440
|
|
|
|
14,791
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
74,762
|
|
|
|
2,719
|
|
|
|
77,481
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(256,856
|
)
|
|
|
—
|
|
|
|
(256,856
|
)
|
|
|
(69,761
|
)
|
|
|
(217,337
|
)
|
|
|
(543,954
|
)
|
|
|
(12,048
|
)
|
Transfer of Non-Controlling Interests in Consolidated Entities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,662
|
)
|
|
|
—
|
|
|
|
(2,662
|
)
|
|
|
—
|
|
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
|
|
|
—
|
|
|
|
—
|
|
|
|
4,392
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,392
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,392
|
|
|
|
—
|
|
Equity-Based Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
57,098
|
|
|
|
—
|
|
|
|
—
|
|
|
|
57,098
|
|
|
|
—
|
|
|
|
42,812
|
|
|
|
99,910
|
|
|
|
—
|
|
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Class A Common Stock
|
|
|
1,002,685
|
|
|
|
—
|
|
|
|
(12,430
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,430
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,430
|
)
|
|
|
—
|
|
Repurchase of Shares of Class A Common Stock and Blackstone Holdings Partnership Units
|
|
|
(2,000,000
|
)
|
|
|
—
|
|
|
|
(105,644
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(105,644
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(105,644
|
)
|
|
|
—
|
|
Change in The Blackstone Group Inc.’s Ownership Interest
|
|
|
—
|
|
|
|
—
|
|
|
|
862
|
|
|
|
—
|
|
|
|
—
|
|
|
|
862
|
|
|
|
—
|
|
|
|
(862
|
)
|
|
|
—
|
|
|
|
—
|
|
Conversion of Blackstone Holdings Partnership Units to Shares of Class A Common Stock
|
|
|
4,803,480
|
|
|
|
—
|
|
|
|
27,404
|
|
|
|
—
|
|
|
|
—
|
|
|
|
27,404
|
|
|
|
—
|
|
|
|
(27,404
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2020
|
|
|
680,680,748
|
|
|
$
|
7
|
|
|
$
|
6,243,722
|
|
|
$
|
(36,432
|
)
|
|
$
|
(27,407
|
)
|
|
$
|
6,179,890
|
|
|
$
|
3,946,190
|
|
|
$
|
3,310,214
|
|
|
$
|
13,436,294
|
|
|
$
|
63,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Following the Conversion, Blackstone also has one share outstanding of each of Class B and Class C common stock, with par value of each less than one cent. After initial issuance, there have been no changes to the amounts related to Class B and Class C common stock during the period presented.
|
See notes to condensed consolidated financial statements.
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc. (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassifications Resulting from Conversion to a Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfer of Non-Controlling Interests in Consolidated Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity-Based Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Class A Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of Shares of Class A Common Stock and Blackstone Holdings Partnership Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in The Blackstone Group Inc.’s Ownership Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Blackstone Holdings Partnership Units to Shares of Class A Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Following the conversion to a corporation, Blackstone also has one share outstanding of each of Class B and Class C common stock, with par value of each less than one cent. After initial issuance, there have been no changes to the amounts related to Class B and Class C common stock during the period presented.
|
See notes to condensed consolidated financial statements.
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
The Blackstone
Group Inc. (a)
|
|
The Blackstone Group Inc. (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019
|
|
|
671,157,692
|
|
|
$
|
7
|
|
|
$
|
6,428,647
|
|
|
$
|
609,625
|
|
|
$
|
(28,495
|
)
|
|
$
|
7,009,784
|
|
|
$
|
4,186,069
|
|
|
$
|
3,819,548
|
|
|
$
|
15,015,401
|
|
|
$
|
87,651
|
|
Transfer Out Due to Deconsolidation of Fund Entities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(216,339
|
)
|
|
|
—
|
|
|
|
(216,339
|
)
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
296,493
|
|
|
|
—
|
|
|
|
296,493
|
|
|
|
(90,938
|
)
|
|
|
253,814
|
|
|
|
459,369
|
|
|
|
(12,027
|
)
|
Currency Translation Adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,088
|
|
|
|
1,088
|
|
|
|
—
|
|
|
|
1,800
|
|
|
|
2,888
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
447,723
|
|
|
|
2,719
|
|
|
|
450,442
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(942,550
|
)
|
|
|
—
|
|
|
|
(942,550
|
)
|
|
|
(375,558
|
)
|
|
|
(786,392
|
)
|
|
|
(2,104,500
|
)
|
|
|
(12,240
|
)
|
Transfer of Non-Controlling Interests in Consolidated Entities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,767
|
)
|
|
|
—
|
|
|
|
(4,767
|
)
|
|
|
—
|
|
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
|
|
|
—
|
|
|
|
—
|
|
|
|
19,592
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,592
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,592
|
|
|
|
—
|
|
Equity-Based Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
181,377
|
|
|
|
—
|
|
|
|
—
|
|
|
|
181,377
|
|
|
|
—
|
|
|
|
136,912
|
|
|
|
318,289
|
|
|
|
—
|
|
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Class A Common Stock
|
|
|
2,742,841
|
|
|
|
—
|
|
|
|
(30,069
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(30,069
|
)
|
|
|
—
|
|
|
|
(7
|
)
|
|
|
(30,076
|
)
|
|
|
—
|
|
Repurchase of Shares of Class A Common Stock and Blackstone Holdings Partnership Units
|
|
|
(8,969,237
|
)
|
|
|
—
|
|
|
|
(474,005
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(474,005
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(474,005
|
)
|
|
|
—
|
|
Change in The Blackstone Group Inc.’s Ownership Interest
|
|
|
—
|
|
|
|
—
|
|
|
|
14,647
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,647
|
|
|
|
—
|
|
|
|
(14,647
|
)
|
|
|
—
|
|
|
|
—
|
|
Conversion of Blackstone Holdings Partnership Units to Shares of Class A Common Stock
|
|
|
15,749,452
|
|
|
|
—
|
|
|
|
103,533
|
|
|
|
—
|
|
|
|
—
|
|
|
|
103,533
|
|
|
|
—
|
|
|
|
(103,533
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2020
|
|
|
680,680,748
|
|
|
$
|
7
|
|
|
$
|
6,243,722
|
|
|
$
|
(36,432
|
)
|
|
$
|
(27,407
|
)
|
|
$
|
6,179,890
|
|
|
$
|
3,946,190
|
|
|
$
|
3,310,214
|
|
|
$
|
13,436,294
|
|
|
$
|
63,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Following the Conversion, Blackstone also has one share outstanding of each of Class B and Class C common stock, with par value of each less than one cent. After initial issuance, there have been no changes to the amounts related to Class B and Class C common stock during the period presented.
|
See notes to condensed consolidated financial statements.
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
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Shares of The Blackstone
Group Inc. (a)
|
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The Blackstone Group Inc. (a)
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Balance at December 31, 2018
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Currency Translation Adjustment
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|
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Transfer of Non-Controlling Interests in Consolidated Entities
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|
|
|
|
|
|
|
|
|
|
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
Equity-Based Compensation
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Class A Common Stock
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of Shares of Class A Common Stock and Blackstone Holdings Partnership Units
|
|
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|
|
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|
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|
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|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Change in The Blackstone Group Inc.’s Ownership Interest
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Blackstone Holdings Partnership Units to Shares of Class A Common Stock
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
Reclassifications Resulting from Conversion to a Corporation
|
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|
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2019
|
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|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(a)
|
Following the conversion to a corporation, Blackstone also has one share outstanding of each of Class B and Class C common stock, with par value of each less than one cent. After initial issuance, there have been no changes to the amounts related to Class B and Class C common stock during the period presented.
|
See notes to condensed consolidated financial statements.
The Blackstone Group Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
447,342
|
|
|
$
|
2,887,573
|
|
Adjustments to Reconcile Net Income
to
Net Cash Provided by Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Realized Gains on Investments
|
|
|
(696,453
|
)
|
|
|
(1,340,914
|
)
|
Changes in Unrealized (Gains) Losses on Investments
|
|
|
351,987
|
|
|
|
(257,207
|
)
|
Non-Cash Performance Allocations
|
|
|
981,678
|
|
|
|
(998,101
|
)
|
Non-Cash Performance Allocations and Incentive Fee Compensation
|
|
|
(168,571
|
)
|
|
|
826,701
|
|
Equity-Based Compensation Expense
|
|
|
349,472
|
|
|
|
331,826
|
|
Amortization of Intangibles
|
|
|
53,250
|
|
|
|
53,250
|
|
Other Non-Cash Amounts Included in Net Income
|
|
|
(77,813
|
)
|
|
|
(451,894
|
)
|
Cash Flows Due to Changes in Operating Assets and Liabilities
|
|
|
|
|
|
|
|
|
Cash Relinquished with Deconsolidation of Fund Entities
|
|
|
(257,544
|
)
|
|
|
—
|
|
|
|
|
|
464,997
|
|
|
|
(8,973
|
)
|
|
|
|
|
(177,850
|
)
|
|
|
(448,962
|
)
|
|
|
|
|
(125,442
|
)
|
|
|
(85,412
|
)
|
Accrued Compensation and Benefits
|
|
|
(309,237
|
)
|
|
|
(153,980
|
)
|
Securities Sold, Not Yet Purchased
|
|
|
(26,840
|
)
|
|
|
(61,406
|
)
|
Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
98,983
|
|
|
|
(89,159
|
)
|
|
|
|
|
(73,522
|
)
|
|
|
(59,144
|
)
|
|
|
|
|
9,207
|
|
|
|
26,809
|
|
|
|
|
|
(4,947,832
|
)
|
|
|
(6,468,249
|
)
|
Cash Proceeds from Sale of Investments
|
|
|
5,730,106
|
|
|
|
7,670,471
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
1,625,918
|
|
|
|
1,373,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of Furniture, Equipment and Leasehold Improvements
|
|
|
(70,896
|
)
|
|
|
(49,141
|
)
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities
|
|
|
(70,896
|
)
|
|
|
(49,141
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Non-Controlling Interest Holders in Consolidated Entities
|
|
|
(387,798
|
)
|
|
|
(545,383
|
)
|
Contributions from Non-Controlling Interest Holders in Consolidated Entities
|
|
|
431,874
|
|
|
|
520,040
|
|
Payments Under Tax Receivable Agreement
|
|
|
(73,881
|
)
|
|
|
(84,640
|
)
|
Net Settlement of Vested Class A Common Stock and Repurchase of Class A Common Stock and Blackstone Holdings Partnership Units
|
|
|
(504,081
|
)
|
|
|
(498,217
|
)
|
Proceeds from Loans Payable
|
|
|
890,159
|
|
|
|
1,551,410
|
|
See notes to condensed consolidated financial statements.
The Blackstone Group Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
Financing Activities (Continued)
|
|
|
|
|
|
|
|
|
Repayment and Repurchase of Loans Payable
|
|
$
|
(1,890
|
)
|
|
$
|
(177,610
|
)
|
Dividends/Distributions to Shareholders and Unitholders
|
|
|
(1,726,223
|
)
|
|
|
(1,793,871
|
)
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Financing Activities
|
|
|
(1,371,840
|
)
|
|
|
(1,028,271
|
)
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other
|
|
|
7,280
|
|
|
|
3,566
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
190,462
|
|
|
|
299,383
|
|
|
|
|
|
2,523,651
|
|
|
|
2,545,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,714,113
|
|
|
$
|
2,844,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flows Information
|
|
|
|
|
|
|
|
|
|
|
|
$
|
137,031
|
|
|
$
|
124,437
|
|
|
|
|
|
|
|
|
|
|
|
Payments for Income Taxes
|
|
$
|
115,859
|
|
|
$
|
67,867
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Non-Cash Investing and Financing Activities
|
|
|
|
|
|
|
|
|
Non-Cash Contributions from Non-Controlling Interest Holders
|
|
$
|
14,557
|
|
|
$
|
4,496
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Distributions to Non-Controlling Interest Holders
|
|
$
|
—
|
|
|
$
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,750
|
|
|
$
|
12,159
|
|
|
|
|
|
|
|
|
|
|
|
Transfer of Interests to Non-Controlling Interest Holders
|
|
$
|
(4,767
|
)
|
|
$
|
(2,429
|
)
|
|
|
|
|
|
|
|
|
|
|
Change in The Blackstone Group Inc.’s Ownership Interest
|
|
$
|
14,647
|
|
|
$
|
(11,294
|
)
|
|
|
|
|
|
|
|
|
|
|
Net Settlement of Vested Class A Common Stock
|
|
$
|
113,368
|
|
|
$
|
99,079
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Blackstone Holdings Units to Class A Common Stock
|
|
$
|
103,533
|
|
|
$
|
82,685
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of Ownership Interests from Non-Controlling Interest Holders
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(201,188
|
)
|
|
$
|
(41,005
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
181,596
|
|
|
$
|
66,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
19,592
|
|
|
$
|
(25,039
|
)
|
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other reported within the Condensed Consolidated Statements of Financial Condition:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
2,628,895
|
|
|
$
|
2,172,441
|
|
Cash Held by Blackstone Funds and Other
|
|
|
85,218
|
|
|
|
351,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,714,113
|
|
|
$
|
2,523,651
|
|
|
|
|
|
|
|
|
|
|
|
See notes to condensed consolidated financial statements.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Effective July 1, 2019, The Blackstone Group L.P. (the “Partnership”) converted from a Delaware limited partnership to a Delaware corporation, The Blackstone Group Inc. (the “Conversion”). This report includes the results for the Partnership prior to the Conversion and The Blackstone Group Inc. following the Conversion. In this report, references to “Blackstone” or the “Company” refer to (a) The Blackstone Group Inc. and its consolidated subsidiaries following the Conversion and (b) the Partnership and its consolidated subsidiaries prior to the Conversion. All references to shares or per share amounts prior to the Conversion refer to units or per unit amounts. Unless otherwise noted, all references to shares or per share amounts following the Conversion refer to shares or per share amounts of Class A common stock. All references to dividends prior to the Conversion refer to distributions.
As a result of the Conversion, the financial impact to the condensed consolidated financial statements contained herein consist of (a) a partial step-up in the tax basis of certain assets resulting in the recognition of a net income tax benefit and (b) reclassification from partnership equity accounts to equity accounts appropriate for a corporation. See Note 13. “Income Taxes” for additional information and Note 14. “Earnings Per Share and Stockholder’s Equity”.
Blackstone, together with its subsidiaries, is one of the world’s leading investment firms. Blackstone’s asset management business includes investment vehicles focused on real estate, private equity, public debt and equity, growth equity, life sciences, opportunistic, non-investment grade credit, real assets and secondary funds, all on a global basis. “Blackstone Funds” refers to the funds and other vehicles that are managed by Blackstone. Blackstone’s business is organized into four segments: Real Estate, Private Equity, Hedge Fund Solutions and Credit & Insurance.
Effective January 1, 2020, the Credit segment was renamed Credit & Insurance. There was no change to the composition of the segment or historical results.
Blackstone was formed on March 12, 2007, and, until the Conversion, was managed and operated by Blackstone Group Management L.L.C., which is in turn wholly owned by Blackstone’s senior managing directors and controlled by one of Blackstone’s founders, Stephen A. Schwarzman (the “Founder”). Following the Conversion, the Company’s equity consists of shares of Class A, B and C common stock. Blackstone Partners L.L.C. is the sole holder of the single share of Class B common stock outstanding and Blackstone Group Management L.L.C. is the sole holder of the single share of Class C common stock outstanding. See Note 14. “Earnings Per Share and Stockholder’s Equity”.
The activities of Blackstone are conducted through its holding partnerships: Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P. and Blackstone Holdings IV L.P. (collectively, “Blackstone Holdings”, “Blackstone Holdings Partnerships” or the “Holding Partnerships”). Blackstone, through its wholly owned subsidiaries, is the sole general partner in each of these Holding Partnerships. Generally, holders of the limited partner interests in the Holding Partnerships may, four times each year, exchange their limited partnership interests (“Partnership Units”) for Blackstone Class A common stock, on a one-to-one basis, exchanging one Partnership Unit from each of the Holding Partnerships for one share of Blackstone Class A common stock.
2. Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements of Blackstone have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in audited financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) so that the
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in Blackstone’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission.
The condensed consolidated financial statements include the accounts of Blackstone, its wholly owned or majority owned subsidiaries, the consolidated entities which are considered to be variable interest entities and for which Blackstone is considered the primary beneficiary, and certain partnerships or similar entities which are not considered variable interest entities but in which the general partner is determined to have control.
All intercompany balances and transactions have been eliminated in consolidation.
Restructurings within consolidated collateralized loan obligations (“CLOs”) are treated as investment purchases or sales, as applicable, in the Condensed Consolidated Statements of Cash Flows.
COVID-19
and Global Economic and Market Conditions
The ongoing novel coronavirus (“COVID-19”) pandemic and restrictions on non-essential businesses have caused disruption in the U.S. and global economies. Despite significant market rebounds across many asset classes, the continued rapid development of this situation and uncertainty regarding potential economic recovery precludes any prediction as to the ultimate adverse impact of
COVID-19
on financial market and economic conditions. The estimates and assumptions underlying these condensed consolidated financial statements are based on the information available as of September 30, 2020, including judgments about the financial market and economic conditions which may change over time.
Blackstone consolidates all entities that it controls through a majority voting interest or otherwise, including those Blackstone Funds in which the general partner has a controlling financial interest. Blackstone has a controlling financial interest in Blackstone Holdings because the limited partners do not have the right to dissolve the partnerships or have substantive kick-out rights or participating rights that would overcome the control held by Blackstone. Accordingly, Blackstone consolidates Blackstone Holdings and records non-controlling interests to reflect the economic interests of the limited partners of Blackstone Holdings.
In addition, Blackstone consolidates all variable interest entities (“VIE”)
for
which it is the primary beneficiary. An enterprise is determined to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which Blackstone holds a variable interest is a VIE and (b) whether Blackstone’s involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests, would give it a controlling financial interest. Performance of that analysis requires the exercise of judgment.
Blackstone determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interest entity and continuously reconsiders that conclusion. In determining whether Blackstone is the primary beneficiary, Blackstone evaluates its control rights as well as economic interests in the entity held either directly or indirectly by Blackstone. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that Blackstone is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by Blackstone, affiliates of Blackstone or third parties) or amendments to the governing documents of the respective Blackstone Funds could affect an entity’s status as a VIE or the determination of the primary beneficiary. At each reporting date, Blackstone assesses whether it is the primary beneficiary and will consolidate or deconsolidate accordingly.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Assets of consolidated VIEs that can only be used to settle obligations of the consolidated VIE and liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of Blackstone are presented in a separate section in the Condensed Consolidated Statements of Financial Condition.
Blackstone’s other disclosures regarding VIEs are discussed in Note 9. “Variable Interest Entities”.
Revenues primarily consist of management and advisory fees, incentive fees, investment income, interest and dividend revenue and other.
Management and advisory fees and incentive fees are accounted for as contracts with customers. Under the guidance for contracts with customers, an entity is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. See Note 18. “Segment Reporting” for a disaggregated presentation of revenues from contracts with customers.
Management and Advisory Fees, Net
— Management and Advisory Fees, Net are comprised of management fees, including base management fees, transaction and other fees and advisory fees net of management fee reductions and offsets.
Blackstone earns base management fees from limited partners of funds in each of its managed funds, at a fixed percentage of assets under management, net asset value, total assets, committed capital or invested capital. These customer contracts require Blackstone to provide investment management services, which represents a performance obligation that Blackstone satisfies over time. Management fees are a form of variable consideration because the fees Blackstone is entitled to vary based on fluctuations in the basis for the management fee. The amount recorded as revenue is generally determined at the end of the period because these management fees are payable on a regular basis (typically quarterly) and are not subject to clawback once paid.
Transaction, advisory and other fees are principally fees charged to the limited partners of funds indirectly through the managed funds and portfolio companies. The investment advisory agreements generally require that the investment adviser reduce the amount of management fees payable by the limited partners to Blackstone (“management fee reductions”) by an amount equal to a portion of the transaction and other fees paid to Blackstone by the portfolio companies. The amount of the reduction varies by fund, the type of fee paid by the portfolio company and the previously incurred expenses of the fund. These fees and associated management fee reductions are a component of the transaction price for Blackstone’s performance obligation to provide investment management services to the limited partners of funds and are recognized as changes to the transaction price in the period in which they are charged and the services are performed.
Management fee offsets are reductions to management fees payable by the limited partners of the Blackstone Funds, which are based on the amount such limited partners reimburse the Blackstone Funds or Blackstone primarily for placement fees. Providing investment management services requires Blackstone to arrange for services on behalf of its customers. In those situations where Blackstone is acting as an agent on behalf of the limited partners of funds, it presents the cost of services as net against management fee revenue. In all other situations, Blackstone is primarily responsible for fulfilling the services and is therefore acting as a principal for those arrangements. As a result, the cost of those services is presented as Compensation or General, Administrative and Other expense, as appropriate, with any reimbursement from the limited partners of the funds recorded as Management and Advisory Fees, Net. In cases where the limited partners of the funds are determined
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
to be the customer in an arrangement, placement fees may be capitalized as a cost to acquire a customer contract. Capitalized placement fees are amortized over the life of the customer contract, are recorded within Other Assets in the Consolidated Statements of Financial Condition and amortization is recorded within General, Administrative and Other within the Consolidated Statements of Operations.
Accrued but unpaid Management and Advisory Fees, net of management fee reductions and management fee offsets, as of the reporting date are included in Accounts Receivable or Due from Affiliates in the Condensed Consolidated Statements of Financial Condition.
— Contractual fees earned based on the performance of Blackstone Funds (“Incentive Fees”) are a form of variable consideration in Blackstone’s contracts with customers to provide investment management services. Incentive Fees are earned based on fund performance during the period, subject to the achievement of minimum return levels, or high water marks, in accordance with the respective terms set out in each fund’s governing agreements. Incentive Fees will not be recognized as revenue until (a) it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, or (b) the uncertainty associated with the variable consideration is subsequently resolved. Incentive Fees are typically recognized as revenue when realized at the end of the measurement period. Once realized, such fees are not subject to clawback or reversal. Accrued but unpaid Incentive Fees charged directly to investors in Blackstone Funds as of the reporting date are recorded within Due from Affiliates in the Condensed Consolidated Statements of Financial Condition.
— Investment Income (Loss) represents the unrealized and realized gains and losses on Blackstone’s Performance Allocations and Principal Investments.
In carry fund structures, Blackstone, through its subsidiaries, invests alongside its limited partners in a partnership and is entitled to its pro-rata share of the results of the fund (a “pro-rata allocation”). In addition to a pro-rata allocation, and assuming certain investment returns are achieved, Blackstone is entitled to a disproportionate allocation of the income otherwise allocable to the limited partners, commonly referred to as carried interest (“Performance Allocations”).
Performance Allocations are made to the general partner based on cumulative fund performance to date, subject to a preferred return to limited partners. At the end of each reporting period, Blackstone calculates the balance of accrued Performance Allocations (“Accrued Performance Allocations”) that would be due to Blackstone for each fund, pursuant to the fund agreements, as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as Accrued Performance Allocations to reflect either (a) positive performance resulting in an increase in the Accrued Performance Allocation to the general partner or (b) negative performance that would cause the amount due to Blackstone to be less than the amount previously recognized as revenue, resulting in a negative adjustment to the Accrued Performance Allocation to the general partner. In each scenario, it is necessary to calculate the Accrued Performance Allocation on cumulative results compared to the Accrued Performance Allocation recorded to date and make the required positive or negative adjustments. Blackstone ceases to record negative Performance Allocations once previously Accrued Performance Allocations for such fund have been fully reversed. Blackstone is not obligated to pay guaranteed returns or hurdles, and therefore, cannot have negative Performance Allocations over the life of a fund. Accrued Performance Allocations as of the reporting date are reflected in Investments in the Condensed Consolidated Statements of Financial Condition.
Performance Allocations are realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the preferred return or, in limited instances, after certain thresholds for return of capital are met. Performance Allocations are subject to clawback to the extent that the Performance Allocation received to date exceeds the amount due to Blackstone based on cumulative results. As such, the accrual for potential repayment of previously received Performance Allocations, which is a component of Due to Affiliates, represents all amounts previously distributed to Blackstone Holdings and non-controlling interest holders that would need to be repaid to the Blackstone carry funds if the Blackstone carry funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual clawback liability, however, generally does not become realized until the end of a fund’s life except for certain funds, including certain Blackstone real estate funds, multi-asset class investment funds and credit-focused funds, which may have an interim clawback liability.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Principal Investments include the unrealized and realized gains and losses on Blackstone’s principal investments, including its investments in Blackstone Funds that are not consolidated and receive pro-rata allocations, its equity method investments, and other principal investments. Income (Loss) on Principal Investments is realized when Blackstone redeems all or a portion of its investment or when Blackstone receives cash income, such as dividends or distributions. Unrealized Income (Loss) on Principal Investments results from changes in the fair value of the underlying investment as well as the reversal of unrealized gain (loss) at the time an investment is realized.
Interest and Dividend Revenue
— Interest and Dividend Revenue comprises primarily interest and dividend income earned on principal investments not accounted for under the equity method held by Blackstone.
— Other Revenue consists of miscellaneous income and foreign exchange gains and losses arising on transactions denominated in currencies other than U.S. dollars.
Fair Value of Financial Instruments
GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of fair values, as follows:
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Level I – Quoted prices are available in active markets for identical financial instruments as of the reporting date. The types of financial instruments in Level I include listed equities, listed derivatives and mutual funds with quoted prices. Blackstone does not adjust the quoted price for these investments, even in situations where Blackstone holds a large position and a sale could reasonably impact the quoted price.
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Level II – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Financial instruments which are generally included in this category include corporate bonds and loans, including corporate bonds and loans held within CLO vehicles, government and agency securities, less liquid and restricted equity securities, and certain over-the-counter derivatives where the fair value is based on observable inputs. Senior and subordinated notes issued by CLO vehicles are classified within Level II of the fair value hierarchy.
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Level III – Pricing inputs are unobservable for the financial instruments and includes situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category generally include general and limited partnership interests in private equity and real estate funds, credit-focused funds, distressed debt and non-investment grade residual interests in securitizations, certain corporate bonds and loans held within CLO vehicles, unfunded loan commitments and certain over-the-counter derivatives where the fair value is based on unobservable inputs.
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement. Blackstone’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
Level II Valuation Techniques
Financial instruments classified within Level II of the fair value hierarchy comprise debt instruments, including certain corporate loans and bonds held by Blackstone’s consolidated CLO vehicles and debt securities sold, not yet purchased. Certain equity securities and derivative instruments valued using observable inputs are also classified as Level II.
The valuation techniques used to value financial instruments classified within Level II of the fair value hierarchy are as follows:
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Debt Instruments and Equity Securities are valued on the basis of prices from an orderly transaction between market participants provided by reputable dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices and market transactions in comparable investments and various relationships between investments. The valuation of certain equity securities is based on an observable price for an identical security adjusted for the effect of a restriction.
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Freestanding Derivatives are valued using contractual cash flows and observable inputs comprising yield curves, foreign currency rates and credit spreads.
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Senior and subordinate notes issued by CLO vehicles are classified based on the more observable fair value of CLO assets less (a) the fair value of any beneficial interests held by Blackstone, and (b) the carrying value of any beneficial interests that represent compensation for services.
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Level III Valuation Techniques
In the absence of observable market prices, Blackstone values its investments using valuation methodologies applied on a consistent basis. For some investments little market activity may exist; management’s determination of fair value is then based on the best information available in the circumstances, and may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration a combination of internal and external factors, including the appropriate risk adjustments for non-performance and liquidity risks. Investments for which market prices are not observable include private investments in the equity of operating companies, real estate properties, certain funds of hedge funds and credit-focused investments.
Real Estate Investments –
The fair values of real estate investments are determined by considering projected operating cash flows, sales of comparable assets, if any, and replacement costs, among other measures. The methods used to estimate the fair value of real estate investments include the discounted cash flow method and/or capitalization rates (“cap rates”) analysis. Valuations may be derived by reference to observable valuation measures for comparable companies or assets (for example, multiplying a key performance metric of the investee company or asset, such as EBITDA, by a relevant valuation multiple observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option pricing models or other similar methods. Where a discounted cash flow method is used, a terminal value is derived by reference to an exit EBITDA multiple or capitalization rate. Additionally, where applicable, projected distributable cash flow-through debt maturity will be considered in support of the investment’s fair value.
Private Equity Investments –
The fair values of private equity investments are determined by reference to projected net earnings, earnings before interest, taxes, depreciation and amortization (“EBITDA”), the discounted cash flow method, public market or private transactions, valuations for comparable companies and other measures which, in many cases, are based on unaudited information at the time received. Valuations may be
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
derived by reference to observable valuation measures for comparable companies or transactions (for example, multiplying a key performance metric of the investee company, such as EBITDA, by a relevant valuation multiple observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option pricing models or other similar methods. Where a discounted cash flow method is used, a terminal value is derived by reference to EBITDA or price/earnings exit multiples.
Credit-Focused Investments
– The fair values of credit-focused investments are generally determined on the basis of prices between market participants provided by reputable dealers or pricing services. For credit-focused investments that are not publicly traded or whose market prices are not readily available, Blackstone may utilize other valuation techniques, including the discounted cash flow method or a market approach. The discounted cash flow method projects the expected cash flows of the debt instrument based on contractual terms, and discounts such cash flows back to the valuation date using a market-based yield. The market-based yield is estimated using yields of publicly traded debt instruments issued by companies operating in similar industries as the subject investment, with similar leverage statistics and time to maturity.
The market approach is generally used to determine the enterprise value of the issuer of a credit investment, and considers valuation multiples of comparable companies or transactions. The resulting enterprise value will dictate whether or not such credit investment has adequate enterprise value coverage. In cases of distressed credit instruments, the market approach may be used to estimate a recovery value in the event of a restructuring.
Investments, at Fair Value
The Blackstone Funds are accounted for as investment companies under the American Institute of Certified Public Accountants Accounting and Auditing Guide,
, and in accordance with the GAAP guidance on investment companies and reflect their investments, including majority owned and controlled investments (the “Portfolio Companies”), at fair value. Such consolidated funds’ investments are reflected in Investments on the Condensed Consolidated Statements of Financial Condition at fair value, with unrealized gains and losses resulting from changes in fair value reflected as a component of Net Gains from Fund Investment Activities in the Condensed Consolidated Statements of Operations. Fair value is the amount that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date, at current market conditions (i.e., the exit price).
Blackstone’s principal investments are presented at fair value with unrealized appreciation or depreciation and realized gains and losses recognized in the Condensed Consolidated Statements of Operations within Investment Income (Loss).
For certain instruments, Blackstone has elected the fair value option. Such election is irrevocable and is applied on an investment by investment basis at initial recognition. Blackstone has applied the fair value option for certain loans and receivables, unfunded loan commitments and certain investments in private debt securities that otherwise would not have been carried at fair value with gains and losses recorded in net income. The methodology for measuring the fair value of such investments is consistent with the methodology applied to private equity, real estate, credit-focused and funds of hedge funds investments. Changes in the fair value of such instruments are recognized in Investment Income (Loss) in the Condensed Consolidated Statements of Operations. Interest income on interest bearing loans and receivables and debt securities on which the fair value option has been elected is based on stated coupon rates adjusted for the accretion of purchase discounts and the amortization of purchase premiums. This interest income is recorded within Interest and Dividend Revenue.
Blackstone has elected the fair value option for the assets of consolidated CLO vehicles. As permitted under GAAP, Blackstone measures the liabilities of consolidated CLO vehicles as (a) the sum of the fair value of the consolidated CLO assets and the carrying value of any non-financial assets held temporarily, less (b) the sum of the fair value of any beneficial interests retained by Blackstone (other than those that represent compensation for services) and Blackstone’s carrying value of any beneficial interests that represent compensation for services. As a
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
result of this measurement alternative, there is no attribution of amounts to Non-Controlling Interests for consolidated CLO vehicles. Assets of the consolidated CLOs are presented within Investments within the Condensed Consolidated Statements of Financial Condition and Liabilities within Loans Payable for the amounts due to unaffiliated third parties and Due to Affiliates for the amounts held by non-consolidated affiliates. Changes in the fair value of consolidated CLO assets and liabilities and related interest, dividend and other income are presented within Net Gains from Fund Investment Activities. Expenses of consolidated CLO vehicles are presented in Fund Expenses.
Blackstone has elected the fair value option for certain proprietary investments that would otherwise have been accounted for using the equity method of accounting. The fair value of such investments is based on quoted prices in an active market or using the discounted cash flow method. Changes in fair value are recognized in Investment Income (Loss) in the Condensed Consolidated Statements of Operations.
Further disclosure on instruments for which the fair value option has been elected is presented in Note 7. “Fair Value Option”.
The investments of consolidated Blackstone Funds in funds of hedge funds (“Investee Funds”) are valued at net asset value (“NAV”) per share of the Investee Fund. In limited circumstances, Blackstone may determine, based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, Blackstone will estimate the fair value in good faith and in a manner that it reasonably chooses, in accordance with the requirements of GAAP.
Certain investments of Blackstone and of the consolidated Blackstone funds of hedge funds and credit-focused funds measure their investments in underlying funds at fair value using NAV per share without adjustment. The terms of the investee’s investment generally provide for minimum holding periods or lock-ups, the institution of gates on redemptions or the suspension of redemptions or an ability to side-pocket investments, at the discretion of the investee’s fund manager, and as a result, investments may not be redeemable at, or within three months of, the reporting date. A side-pocket is used by hedge funds and funds of hedge funds to separate investments that may lack a readily ascertainable value, are illiquid or are subject to liquidity restriction. Redemptions are generally not permitted until the investments within a side-pocket are liquidated or it is deemed that the conditions existing at the time that required the investment to be included in the side-pocket no longer exist. As the timing of either of these events is uncertain, the timing at which Blackstone may redeem an investment held in a side-pocket cannot be estimated. Further disclosure on instruments for which fair value is measured using NAV per share is presented in Note 5. “Net Asset Value as Fair Value”.
Security and loan transactions are recorded on a trade date basis.
Equity Method Investments
Investments in which Blackstone is deemed to exert significant influence, but not control, are accounted for using the equity method of accounting except in cases where the fair value option has been elected. Blackstone has significant influence over all Blackstone Funds in which it invests but does not consolidate. Therefore, its investments in such Blackstone Funds, which include both a proportionate and disproportionate allocation of the profits and losses (as is the case with carry funds that include a Performance Allocation), are accounted for under the equity method. Under the equity method of accounting, Blackstone’s share of earnings (losses) from equity method investments is included in Investment Income (Loss) in the Condensed Consolidated Statements of Operations.
In cases where Blackstone’s equity method investments provide for a disproportionate allocation of the profits and losses (as is the case with carry funds that include a Performance Allocation), Blackstone’s share of earnings (losses) from equity method investments is determined using a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, at the end of each reporting period, Blackstone calculates the Accrued Performance Allocations that would be due to Blackstone for each fund pursuant to the fund agreements as if the fair value of the underlying investments were realized as of such date,
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as Accrued Performance Allocations to reflect either (a) positive performance resulting in an increase in the Accrued Performance Allocation to the general partner, or (b) negative performance that would cause the amount due to Blackstone to be less than the amount previously recognized as revenue, resulting in a negative adjustment to the Accrued Performance Allocation to the general partner. In each scenario, it is necessary to calculate the Accrued Performance Allocation on cumulative results compared to the Accrued Performance Allocation recorded to date and make the required positive or negative adjustments. Blackstone ceases to record negative Performance Allocations once previously Accrued Performance Allocations for such fund have been fully reversed. Blackstone is not obligated to pay guaranteed returns or hurdles, and therefore, cannot have negative Performance Allocations over the life of a fund. The carrying amounts of equity method investments are reflected in Investments in the Condensed Consolidated Statements of Financial Condition.
Results for Strategic Partners are reported on a three month lag from the fund financial statements, which generally report based on a three month lag from the underlying fund investments unless information is available on a more timely basis. Therefore, results presented herein do not include the impact of economic and market activity in the quarter in which such events occur. Economic and market activity for the periods presented is expected to affect reported results in upcoming periods.
Compensation and Benefits
Compensation and Benefits
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— Compensation consists of (a) salary and bonus, and benefits paid and payable to employees and senior managing directors and (b) equity-based compensation associated with the grants of equity-based awards to employees and senior managing directors. Compensation cost relating to the issuance of equity-based awards to senior managing directors and employees is measured at fair value at the grant date, and expensed over the vesting period on a straight-line basis, taking into consideration expected forfeitures, except in the case of (a) equity-based awards that do not require future service, which are expensed immediately, and (b) certain awards to recipients that meet criteria making them eligible for retirement (allowing such recipient to keep a percentage of those awards upon departure from Blackstone after becoming eligible for retirement), for which the expense for the portion of the award that would be retained in the event of retirement is either expensed immediately or amortized to the retirement date. Cash settled equity-based awards are classified as liabilities and are remeasured at the end of each reporting period.
Compensation and Benefits — Incentive Fee Compensation —
Incentive Fee Compensation consists of compensation paid based on Incentive Fees.
Compensation and Benefits — Performance Allocations Compensation —
Performance Allocation Compensation consists of compensation paid based on Performance Allocations (which may be distributed in cash or in-kind). Such compensation expense is subject to both positive and negative adjustments. Unlike Performance Allocations, compensation expense is based on the performance of individual investments held by a fund rather than on a fund by fund basis. These amounts may also include allocations of investment income from Blackstone’s principal investments, to senior managing directors and employees participating in certain profit sharing initiatives.
Non-Controlling Interests in Consolidated Entities
Non-Controlling Interests in Consolidated Entities represent the component of Equity in consolidated Blackstone Funds held by third party investors and employees. The percentage interests held by third parties and employees are adjusted for general partner allocations and by subscriptions and redemptions in funds of hedge funds and certain credit-focused funds which occur during the reporting period. In addition, all non-controlling interests in consolidated Blackstone Funds are attributed a share of income (loss) arising from the respective funds and a share of other comprehensive income, if applicable. Income (Loss) is allocated to non-controlling interests in consolidated entities based on the relative ownership interests of third party investors and employees after considering any contractual arrangements that govern the allocation of income (loss) such as fees allocable to The Blackstone Group Inc.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Redeemable Non-Controlling Interests in Consolidated Entities
Non-controlling interests related to funds of hedge funds are subject to annual, semi-annual or quarterly redemption by investors in these funds following the expiration of a specified period of time, or may be withdrawn subject to a redemption fee during the period when capital may not be withdrawn. As limited partners in these types of funds have been granted redemption rights, amounts relating to third party interests in such consolidated funds are presented as Redeemable Non-Controlling Interests in Consolidated Entities within the Consolidated Statements of Financial Condition. When redeemable amounts become legally payable to investors, they are classified as a liability and included in Accounts Payable, Accrued Expenses and Other Liabilities in the Consolidated Statements of Financial Condition. For all consolidated funds in which redemption rights have not been granted, non-controlling interests are presented within Equity in the Consolidated Statements of Financial Condition as Non-Controlling Interests in Consolidated Entities.
Non-Controlling Interests in Blackstone Holdings
Non-Controlling Interests in Blackstone Holdings represent the component of Equity in the consolidated Blackstone Holdings Partnerships held by Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships.
Certain costs and expenses are borne directly by the Holdings Partnerships. Income (Loss), excluding those costs directly borne by and attributable to the Holdings Partnerships, is attributable to Non-Controlling Interests in Blackstone Holdings. This residual attribution is based on the year to date average percentage of Blackstone Holdings Partnership Units and unvested participating Holdings Partnership Units held by Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships. Unvested participating Holdings Partnership Units are excluded from the attribution in periods of loss as they are not contractually obligated to share in losses of the Holdings Partnerships.
Net Income (Loss) Per Share of Class A Common Stock
Basic Income (Loss) Per Share of Class A Common Stock is calculated by dividing Net Income (Loss) Attributable to The Blackstone Group Inc. by the weighted-average number of Class A common stock, unvested participating shares of Class A common stock outstanding for the period and vested deferred restricted shares of Class A common stock that have been earned for which issuance of the related shares of Class A common stock is deferred until future periods. Diluted Income (Loss) Per Share of Class A Common Stock reflects the impact of all dilutive securities. Unvested participating shares of Class A common stock are excluded from the computation in periods of loss as they are not contractually obligated to share in losses.
Blackstone applies the treasury stock method to determine the dilutive weighted-average common units outstanding for certain equity-based compensation awards. Blackstone applies the “if-converted” method to the Blackstone Holdings Partnership Units to determine the dilutive impact, if any, of the exchange right included in the Blackstone Holdings Partnership Units.
Reverse Repurchase and Repurchase Agreements
Securities purchased under agreements to resell (“reverse repurchase agreements”) and securities sold under agreements to repurchase (“repurchase agreements”), comprised primarily of U.S. and non-U.S. government and agency securities, asset-backed securities and corporate debt, represent collateralized financing transactions. Such transactions are recorded in the Condensed Consolidated Statements of Financial Condition at their contractual amounts and include accrued interest. The carrying value of reverse repurchase and repurchase agreements approximates fair value.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Blackstone manages credit exposure arising from reverse repurchase agreements and repurchase agreements by, in appropriate circumstances, entering into master netting agreements and collateral arrangements with counterparties that provide Blackstone, in the event of a counterparty default, the right to liquidate collateral and the right to offset a counterparty’s rights and obligations.
Blackstone takes possession of securities purchased under reverse repurchase agreements and is permitted to repledge, deliver or otherwise use such securities. Blackstone also pledges its financial instruments to counterparties to collateralize repurchase agreements. Financial instruments pledged that can be repledged, delivered or otherwise used by the counterparty are recorded in Investments in the Condensed Consolidated Statements of Financial Condition. Additional disclosures relating to repurchase agreements are discussed in Note 10. “Repurchase Agreements”.
Blackstone does not offset assets and liabilities relating to reverse repurchase agreements and repurchase agreements in its Condensed Consolidated Statements of Financial Condition. Additional disclosures relating to offsetting are discussed in Note 11. “Offsetting of Assets and Liabilities”.
Securities Sold, Not Yet Purchased
Securities Sold, Not Yet Purchased consist of equity and debt securities that Blackstone has borrowed and sold. Blackstone is required to “cover” its short sale in the future by purchasing the security at prevailing market prices and delivering it to the counterparty from which it borrowed the security. Blackstone is exposed to loss in the event that the price at which a security may have to be purchased to cover a short sale exceeds the price at which the borrowed security was sold short.
Securities Sold, Not Yet Purchased are recorded at fair value in the Condensed Consolidated Statements of Financial Condition.
Blackstone recognizes all derivatives as assets or liabilities on its Condensed Consolidated Statements of Financial Condition at fair value. On the date Blackstone enters into a derivative contract, it designates and documents each derivative contract as one of the following: (a) a hedge of a recognized asset or liability (“fair value hedge”), (b) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), (c) a hedge of a net investment in a foreign operation, or (d) a derivative instrument not designated as a hedging instrument (“freestanding derivative”). Gains or losses on a derivative instrument that is designated as, and is effective as, an economic hedge of a net investment in a foreign operation are reported in the cumulative translation adjustment section of other comprehensive income to the extent it is effective as a hedge. The ineffective portion of a net investment hedge is recognized in current period earnings.
Blackstone formally documents at inception its hedge relationships, including identification of the hedging instruments and the hedged items, its risk management objectives, strategy for undertaking the hedge transaction and Blackstone’s evaluation of effectiveness of its hedged transaction. At least monthly, Blackstone also formally assesses whether the derivative it designated in each hedging relationship is expected to be, and has been, highly effective in offsetting changes in estimated fair values or cash flows of the hedged items using either the regression analysis or the dollar offset method. For net investment hedges, Blackstone uses a method based on changes in spot rates to measure effectiveness. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued. The fair values of hedging derivative instruments are reflected within Other Assets in the Condensed Consolidated Statements of Financial Condition.
For freestanding derivative contracts, Blackstone presents changes in fair value in current period earnings. Changes in the fair value of derivative instruments held by consolidated Blackstone Funds are reflected in Net Gains from Fund Investment Activities or, where derivative instruments are held by Blackstone, within Investment Income (Loss) in the Condensed Consolidated Statements of Operations. The fair value of freestanding derivative
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
assets of the consolidated Blackstone Funds are recorded within Investments, the fair value of freestanding derivative assets that are not part of the consolidated Blackstone Funds are recorded within Other Assets and the fair value of freestanding derivative liabilities are recorded within Accounts Payable, Accrued Expenses and Other Liabilities in the Condensed Consolidated Statements of Financial Condition.
Blackstone has elected to not offset derivative assets and liabilities or financial assets in its Condensed Consolidated Statements of Financial Condition, including cash, that may be received or paid as part of collateral arrangements, even when an enforceable master netting agreement is in place that provides Blackstone, in the event of counterparty default, the right to liquidate collateral and the right to offset a counterparty’s rights and obligations.
Blackstone’s other disclosures regarding derivative financial instruments are discussed in Note 6. “Derivative Financial Instruments”.
Blackstone’s disclosures regarding offsetting are discussed in Note 11. “Offsetting of Assets and Liabilities”.
Blackstone considers its Founder, senior managing directors, employees, the Blackstone Funds and the Portfolio Companies to be affiliates.
Dividends are reflected in the condensed consolidated financial statements when declared.
Recent Accounting Developments
In June 2016, the FASB issued amended guidance on how to measure credit losses for most financial assets. The guidance was effective for Blackstone on January 1, 2020 and was adopted on a modified retrospective basis. The guidance requires entities to recognize their estimate of lifetime expected credit losses based on reasonable and supportable forecasts, current conditions, and historical experience. Adoption did not have a material impact on Blackstone’s condensed consolidated financial statements.
Intangible Assets, Net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finite-Lived Intangible Assets/Contractual Rights
|
|
$
|
1,712,576
|
|
|
$
|
1,712,576
|
|
|
|
|
|
(1,368,318)
|
|
|
|
(1,315,068)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
344,258
|
|
|
$
|
397,508
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense associated with Blackstone’s intangible assets was $17.7 million and $53.2 million for the three and nine month periods ended September 30, 2020, respectively, and $17.7 million and $53.2 million for the three and nine month periods ended September 30, 2019, respectively.
Amortization of Intangible Assets held at September 30, 2020 is expected to be $71.0 million, $71.0 million, $63.3 million, $34.3 million, and $26.9 million for each of the years ending December 31, 2020, 2021, 2022, 2023 and 2024, respectively. Blackstone’s intangible assets as of September 30, 2020 are expected to amortize over a weighted-average period of 7.5 years.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Investments consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments of Consolidated Blackstone Funds
|
|
$
|
1,500,398
|
|
|
$
|
8,380,698
|
|
Equity Method Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
4,144,249
|
|
|
|
4,035,675
|
|
Accrued Performance Allocations
|
|
|
6,112,904
|
|
|
|
7,180,449
|
|
Corporate Treasury Investments
|
|
|
2,390,982
|
|
|
|
2,419,587
|
|
|
|
|
|
274,923
|
|
|
|
265,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
14,423,456
|
|
|
$
|
22,281,682
|
|
|
|
|
|
|
|
|
|
|
|
During the three months ended September 30, 2020, Blackstone deconsolidated nine CLO vehicles. See Note 9. “Variable Interest Entities” for additional details. Blackstone’s share of Investments of Consolidated Blackstone Funds
totaled $234.8 million and $347.4
million at September 30, 2020 and December 31, 2019, respectively.
Where appropriate, the accounting for Blackstone’s investments incorporates the changes in fair value of those investments as determined under GAAP. The significant inputs and assumptions required to determine the change in fair value of the investments of Consolidated Blackstone Funds, Corporate Treasury Investments and Other Investments are discussed in more detail in Note 8. “Fair Value Measurements of Financial Instruments”. The decrease in Accrued Performance Allocations for the period ended September 30, 2020 was primarily from the unrealized depreciation in the fair value of underlying fund investments driven by the impact of
COVID-19.
See Note 2. “Summary of Significant Accounting Policies —
COVID-19
and Global Economic and Market Conditions”.
Investments of Consolidated Blackstone Funds
The following table presents the Realized and Net Change in Unrealized Gains (Losses) on investments held by the consolidated Blackstone Funds and a reconciliation to Other Income (Loss) – Net Gains (Losses) from Fund Investment Activities in the Condensed Consolidated Statements of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,946
|
|
|
$
|
9,620
|
|
|
$
|
(131,026
|
)
|
|
$
|
11,906
|
|
Net Change in Unrealized Gains (Losses)
|
|
|
97,097
|
|
|
|
(2,143
|
)
|
|
|
(19,693
|
)
|
|
|
110,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized and Net Change in Unrealized Gains (Losses) from Consolidated Blackstone Funds
|
|
|
101,043
|
|
|
|
7,477
|
|
|
|
(150,719
|
)
|
|
|
122,023
|
|
Interest and Dividend Revenue Attributable to Consolidated Blackstone Funds
|
|
|
7,709
|
|
|
|
40,973
|
|
|
|
90,394
|
|
|
|
117,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Loss) – Net Gains (Losses) from Fund Investment Activities
|
|
$
|
108,752
|
|
|
$
|
48,450
|
|
|
$
|
(60,325
|
)
|
|
$
|
239,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Method Investments
Blackstone’s equity method investments include Partnership Investments, which represent the pro-rata investments, and any associated Accrued Performance Allocations, in private equity funds, real estate funds, funds of hedge funds and credit-focused funds. Partnership Investments also includes the 40% non-controlling interest in Pátria Investments Limited and Pátria Investimentos Ltda. (collectively, “Pátria”).
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Blackstone evaluates each of its equity method investments, excluding Accrued Performance Allocations, to determine if any were significant as defined by guidance from the United States Securities and Exchange Commission. As of and for the nine months ended September 30, 2020 and 2019, no individual equity method investment held by Blackstone met the significance criteria. As such, Blackstone is not required to present separate financial statements for any of its equity method investments.
Blackstone recognized net gains related to its Partnership Investments accounted for under the equity method of $305.2 million and $82.0 million for the three months ended September 30, 2020 and 2019, respectively. Blackstone recognized net gains (losses) related to its equity method investments of $(13.5) million and $309.7 million for the nine months ended September 30, 2020 and 2019, respectively.
Accrued Performance Allocations
Accrued Performance Allocations to Blackstone were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Performance Allocations, December 31, 2019
|
|
$
|
3,639,855
|
|
|
$
|
3,063,149
|
|
|
$
|
23,951
|
|
|
$
|
453,494
|
|
|
$
|
7,180,449
|
|
Performance Allocations as a Result of Changes in Fund Fair Values
|
|
|
(330,139
|
)
|
|
|
104,365
|
|
|
|
67,456
|
|
|
|
(204,227
|
)
|
|
|
(362,545
|
)
|
|
|
|
|
26,614
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
26,614
|
|
|
|
|
|
(258,125
|
)
|
|
|
(442,884
|
)
|
|
|
(12,520
|
)
|
|
|
(18,085
|
)
|
|
|
(731,614
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Performance Allocations, September 30, 2020
|
|
$
|
3,078,205
|
|
|
$
|
2,724,630
|
|
|
$
|
78,887
|
|
|
$
|
231,182
|
|
|
$
|
6,112,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Treasury Investments
The portion of corporate treasury investments included in Investments represents Blackstone’s investments into primarily fixed income securities, mutual fund interests, and other fund interests. These strategies are managed by a combination of Blackstone personnel and third party advisors. The following table presents the Realized and Net Change in Unrealized Gains (Losses) on these investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,431
|
)
|
|
$
|
2,644
|
|
|
$
|
(3,187
|
)
|
|
$
|
25,944
|
|
Net Change in Unrealized Gains (Losses)
|
|
|
48,480
|
|
|
|
6,142
|
|
|
|
(94,917
|
)
|
|
|
55,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47,049
|
|
|
$
|
8,786
|
|
|
$
|
(98,104
|
)
|
|
$
|
81,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Other Investments consist primarily of proprietary investment securities held by Blackstone, including subordinated notes in non-consolidated CLO vehicles. Other Investments include equity investments without readily determinable fair values which have a carrying value of $78.3 million as of September 30, 2020. The following table presents Blackstone’s Realized and Net Change in Unrealized Gains (Losses) in Other Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,830
|
|
|
$
|
1
|
|
|
$
|
17,163
|
|
|
$
|
45,728
|
|
Net Change in Unrealized Gains (Losses)
|
|
|
7,268
|
|
|
|
278
|
|
|
|
(66,096
|
)
|
|
|
7,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,098
|
|
|
$
|
279
|
|
|
$
|
(48,933
|
)
|
|
$
|
52,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5. Net Asset Value as Fair Value
A summary of fair value by strategy type and ability to redeem such investments as of September 30, 2020 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
226,349
|
|
|
(b)
|
|
(b)
|
|
|
|
|
68,472
|
|
|
(c)
|
|
(c)
|
|
|
|
|
1,049
|
|
|
(d)
|
|
(d)
|
|
|
|
|
931
|
|
|
(e)
|
|
(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
296,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
As of September 30, 2020 Blackstone had no unfunded commitments.
|
|
(b)
|
Diversified Instruments include investments in funds that invest across multiple strategies. Investments representing 2% of the fair value of the investments in this category may not be redeemed at, or within three months of, the reporting date. The remaining 98% of investments in this category are redeemable as of the reporting date.
|
|
(c)
|
The Credit Driven category includes investments in hedge funds that invest primarily in domestic and international bonds. Investments representing 20% of the fair value of the investments in this category are in liquidation. The remaining 80% of investments in this category are redeemable as of the reporting date.
|
|
(d)
|
The Equity category includes investments in hedge funds that invest primarily in domestic and international equity securities. Investments representing 100% of the fair value of the investments in this category are in liquidation. As of the reporting date, the investee fund manager had elected to side-pocket 74% of Blackstone’s investments in the category.
|
|
(e)
|
The Commodities category includes investments in commodities-focused funds that primarily invest in futures and physical-based commodity driven strategies. Investments representing 100% of the fair value of the investments in this category may not be redeemed at, or within three months of, the reporting date.
|
6. Derivative Financial Instruments
Blackstone and the consolidated Blackstone Funds enter into derivative contracts in the normal course of business to achieve certain risk management objectives and for general investment purposes. Blackstone may enter into derivative contracts in order to hedge its interest rate risk exposure against the effects of interest rate changes. Additionally, Blackstone may also enter into derivative contracts in order to hedge its foreign currency risk exposure against the effects of a portion of its non-U.S. dollar denominated currency net investments. As a
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
result of the use of derivative contracts, Blackstone and the consolidated Blackstone Funds are exposed to the risk that counterparties will fail to fulfill their contractual obligations. To mitigate such counterparty risk, Blackstone and the consolidated Blackstone Funds enter into contracts with certain major financial institutions, all of which have investment grade ratings. Counterparty credit risk is evaluated in determining the fair value of derivative instruments.
Freestanding derivatives are instruments that Blackstone and certain of the consolidated Blackstone Funds have entered into as part of their overall risk management and investment strategies. These derivative contracts are not designated as hedging instruments for accounting purposes. Such contracts may include interest rate swaps, foreign exchange contracts, equity swaps, options, futures and other derivative contracts.
The table below summarizes the aggregate notional amount and fair value of the derivative financial instruments. The notional amount represents the absolute value amount of all outstanding derivative contracts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,003,769
|
|
|
$
|
145,714
|
|
|
$
|
534,475
|
|
|
$
|
146,053
|
|
|
$
|
1,256,287
|
|
|
$
|
53,129
|
|
|
$
|
165,852
|
|
|
$
|
4,895
|
|
Foreign Currency Contracts
|
|
|
228,978
|
|
|
|
772
|
|
|
|
190,361
|
|
|
|
2,413
|
|
|
|
344,422
|
|
|
|
1,231
|
|
|
|
97,626
|
|
|
|
802
|
|
|
|
|
|
2,706
|
|
|
|
704
|
|
|
|
9,158
|
|
|
|
2,519
|
|
|
|
7,617
|
|
|
|
36
|
|
|
|
16,697
|
|
|
|
197
|
|
|
|
|
|
5,000
|
|
|
|
5,196
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Investments of Consolidated Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
|
65,757
|
|
|
|
632
|
|
|
|
34,487
|
|
|
|
1,722
|
|
|
|
106,906
|
|
|
|
307
|
|
|
|
40,110
|
|
|
|
1,167
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,000
|
|
|
|
1,934
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33,000
|
|
|
|
1,728
|
|
|
|
|
|
13,722
|
|
|
|
1,904
|
|
|
|
35,850
|
|
|
|
2,486
|
|
|
|
5,108
|
|
|
|
58
|
|
|
|
47,405
|
|
|
|
960
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,189
|
|
|
|
3,686
|
|
|
|
4,558
|
|
|
|
21
|
|
|
|
27,334
|
|
|
|
464
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
4
|
|
|
|
1
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,319,932
|
|
|
$
|
154,922
|
|
|
$
|
846,520
|
|
|
$
|
160,813
|
|
|
$
|
1,724,899
|
|
|
$
|
54,786
|
|
|
$
|
428,025
|
|
|
$
|
10,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
The table below summarizes the impact to the Condensed Consolidated Statements of Operations from derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(221
|
)
|
|
$
|
(1,784
|
)
|
|
$
|
(8,135
|
)
|
|
$
|
(4,448
|
)
|
Foreign Currency Contracts
|
|
|
6,889
|
|
|
|
(815
|
)
|
|
|
1,749
|
|
|
|
(669
|
)
|
|
|
|
|
(8
|
)
|
|
|
455
|
|
|
|
(120
|
)
|
|
|
2,446
|
|
|
|
|
|
(113
|
)
|
|
|
(207
|
)
|
|
|
(1,644
|
)
|
|
|
(602
|
)
|
|
|
|
|
26
|
|
|
|
(61
|
)
|
|
|
(12
|
)
|
|
|
(193
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,573
|
|
|
$
|
(2,412
|
)
|
|
$
|
(8,162
|
)
|
|
$
|
(3,466
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Unrealized Gains (Losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(124,934
|
)
|
|
$
|
20,804
|
|
|
$
|
(44,599
|
)
|
|
$
|
9,649
|
|
Foreign Currency Contracts
|
|
|
(5,887
|
)
|
|
|
2,676
|
|
|
|
(2,300
|
)
|
|
|
2,885
|
|
|
|
|
|
(732
|
)
|
|
|
(6
|
)
|
|
|
(2,103
|
)
|
|
|
3,641
|
|
|
|
|
|
856
|
|
|
|
(64
|
)
|
|
|
(3,243
|
)
|
|
|
1,307
|
|
|
|
|
|
(4
|
)
|
|
|
(46
|
)
|
|
|
32
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(130,701
|
)
|
|
$
|
23,364
|
|
|
$
|
(52,213
|
)
|
|
$
|
17,501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2020 and December 31, 2019, Blackstone had not designated any derivatives as cash flow hedges.
The following table summarizes the financial instruments for which the fair value option has been elected:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
200,040
|
|
|
$
|
500,751
|
|
Equity and Preferred Securities
|
|
|
471,717
|
|
|
|
432,472
|
|
|
|
|
|
521,464
|
|
|
|
506,924
|
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
6,801,691
|
|
|
|
|
|
—
|
|
|
|
770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,193,221
|
|
|
$
|
8,242,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
6,455,016
|
|
|
|
|
|
—
|
|
|
|
57,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
24,738
|
|
|
|
|
|
—
|
|
|
|
20,535
|
|
Corporate Treasury Commitments
|
|
|
915
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
915
|
|
|
$
|
6,558,006
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
During the three months ended September 30, 2020, Blackstone deconsolidated nine CLO vehicles. See Note 9. “Variable Interest Entities” for additional details.
The following tables present the Realized and Net Change in Unrealized Gains (Losses) on financial instruments on which the fair value option was elected:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(2,443
|
)
|
|
$
|
3,681
|
|
|
$
|
(918
|
)
|
|
$
|
1,540
|
|
Equity and Preferred Securities
|
|
|
—
|
|
|
|
(11,207
|
)
|
|
|
—
|
|
|
|
(1,759
|
)
|
|
|
|
|
(2,807
|
)
|
|
|
23,901
|
|
|
|
472
|
|
|
|
(7,426
|
)
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,406
|
)
|
|
|
(33,427
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(5,250
|
)
|
|
$
|
16,375
|
|
|
$
|
(2,852
|
)
|
|
$
|
(41,072
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
|
|
|
$
|
—
|
|
|
$
|
12,749
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
23,024
|
|
Corporate Treasury Commitments
|
|
|
—
|
|
|
|
1,325
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
1,325
|
|
|
$
|
—
|
|
|
$
|
35,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(8,213
|
)
|
|
$
|
3,413
|
|
|
$
|
(2,749
|
)
|
|
$
|
(1,117
|
)
|
Equity and Preferred Securities
|
|
|
(342
|
)
|
|
|
(114,954
|
)
|
|
|
9,908
|
|
|
|
20,539
|
|
|
|
|
|
(23,909
|
)
|
|
|
14,772
|
|
|
|
(2,888
|
)
|
|
|
9,323
|
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(96,194
|
)
|
|
|
(226,542
|
)
|
|
|
(16,806
|
)
|
|
|
128,350
|
|
|
|
|
|
—
|
|
|
|
(325
|
)
|
|
|
—
|
|
|
|
350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(128,658
|
)
|
|
$
|
(323,636
|
)
|
|
$
|
(12,535
|
)
|
|
$
|
157,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
199,445
|
|
|
$
|
—
|
|
|
$
|
(32,144
|
)
|
|
|
|
|
—
|
|
|
|
30,046
|
|
|
|
—
|
|
|
|
(27,957
|
)
|
Corporate Treasury Commitments
|
|
|
—
|
|
|
|
(705
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
228,786
|
|
|
$
|
—
|
|
|
$
|
(60,101
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
The following table presents information for those financial instruments for which the fair value option was elected:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(2,591
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3,875
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
(46,266
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(14,667
|
)
|
|
|
—
|
|
|
|
—
|
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(234,430
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
133
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(48,857
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(252,839
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Corporate Loans within CLO assets are classified as past due if contractual payments are more than one day past due.
|
As of September 30, 2020 and December 31, 2019, no Loans and Receivables for which the fair value option was elected were past due or in non-accrual status. As of December 31, 2019, no Corporate Bonds included within the Assets of Consolidated CLO Vehicles for which the fair value option was elected were past due or in non-accrual status.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
8. Fair Value Measurements of Financial Instruments
The following tables summarize the valuation of Blackstone’s financial assets and liabilities by the fair value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
1,178,329
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,178,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments of Consolidated Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,000
|
|
|
|
15,000
|
|
Equity Securities, Partnerships and LLC Interests
|
|
|
50,811
|
|
|
|
51,570
|
|
|
|
735,359
|
|
|
|
—
|
|
|
|
837,740
|
|
|
|
|
|
—
|
|
|
|
574,182
|
|
|
|
70,940
|
|
|
|
—
|
|
|
|
645,122
|
|
|
|
|
|
—
|
|
|
|
2,536
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments of Consolidated Blackstone Funds
|
|
|
50,811
|
|
|
|
628,288
|
|
|
|
806,299
|
|
|
|
15,000
|
|
|
|
1,500,398
|
|
Corporate Treasury Investments
|
|
|
576,489
|
|
|
|
1,504,024
|
|
|
|
33,092
|
|
|
|
277,377
|
|
|
|
2,390,982
|
|
|
|
|
|
146,506
|
|
|
|
—
|
|
|
|
45,727
|
|
|
|
4,424
|
|
|
|
196,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
773,806
|
|
|
|
2,132,312
|
|
|
|
885,118
|
|
|
|
296,801
|
|
|
|
4,088,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Receivable - Loans and Receivables
|
|
|
—
|
|
|
|
—
|
|
|
|
200,040
|
|
|
|
—
|
|
|
|
200,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets - Freestanding Derivatives
|
|
|
73
|
|
|
|
152,313
|
|
|
|
—
|
|
|
|
—
|
|
|
|
152,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,952,208
|
|
|
$
|
2,284,625
|
|
|
$
|
1,085,158
|
|
|
$
|
296,801
|
|
|
$
|
5,618,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Sold, Not Yet Purchased
|
|
$
|
9,369
|
|
|
$
|
41,862
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
51,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Blackstone Funds - Freestanding Derivatives
|
|
|
—
|
|
|
|
9,828
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,828
|
|
|
|
|
|
219
|
|
|
|
150,766
|
|
|
|
—
|
|
|
|
—
|
|
|
|
150,985
|
|
Corporate Treasury Commitments (a)
|
|
|
—
|
|
|
|
—
|
|
|
|
915
|
|
|
|
—
|
|
|
|
915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
219
|
|
|
|
160,594
|
|
|
|
915
|
|
|
|
—
|
|
|
|
161,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
9,588
|
|
|
$
|
202,456
|
|
|
$
|
915
|
|
|
$
|
—
|
|
|
$
|
212,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
456,784
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
456,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments of Consolidated Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,647
|
|
|
|
23,647
|
|
Equity Securities, Partnerships and LLC Interests
|
|
|
31,812
|
|
|
|
53,611
|
|
|
|
674,150
|
|
|
|
—
|
|
|
|
759,573
|
|
|
|
|
|
—
|
|
|
|
715,246
|
|
|
|
79,381
|
|
|
|
—
|
|
|
|
794,627
|
|
|
|
|
|
—
|
|
|
|
390
|
|
|
|
—
|
|
|
|
—
|
|
|
|
390
|
|
Assets of Consolidated CLO
Vehicles (b)
|
|
|
—
|
|
|
|
6,505,720
|
|
|
|
296,741
|
|
|
|
—
|
|
|
|
6,802,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments of Consolidated Blackstone Funds
|
|
|
31,812
|
|
|
|
7,274,967
|
|
|
|
1,050,272
|
|
|
|
23,647
|
|
|
|
8,380,698
|
|
Corporate Treasury Investments
|
|
|
726,638
|
|
|
|
1,385,582
|
|
|
|
29,289
|
|
|
|
278,078
|
|
|
|
2,419,587
|
|
|
|
|
|
200,478
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,126
|
|
|
|
207,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
958,928
|
|
|
|
8,660,549
|
|
|
|
1,079,561
|
|
|
|
308,851
|
|
|
|
11,007,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Receivable - Loans and Receivables
|
|
|
—
|
|
|
|
—
|
|
|
|
500,751
|
|
|
|
—
|
|
|
|
500,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets - Freestanding Derivatives
|
|
|
502
|
|
|
|
53,894
|
|
|
|
—
|
|
|
|
—
|
|
|
|
54,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,416,214
|
|
|
$
|
8,714,443
|
|
|
$
|
1,580,312
|
|
|
$
|
308,851
|
|
|
$
|
12,019,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Payable - Liabilities of Consolidated CLO Vehicles (b)
|
|
$
|
—
|
|
|
$
|
6,479,754
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,479,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to Affiliates - Liabilities of Consolidated CLO Vehicles (b)
|
|
|
—
|
|
|
|
78,252
|
|
|
|
—
|
|
|
|
—
|
|
|
|
78,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Sold, Not Yet Purchased
|
|
|
19,977
|
|
|
|
55,569
|
|
|
|
—
|
|
|
|
—
|
|
|
|
75,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Blackstone Funds - Freestanding Derivatives
|
|
|
—
|
|
|
|
4,321
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,321
|
|
|
|
|
|
150
|
|
|
|
5,744
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
150
|
|
|
|
10,065
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,127
|
|
|
$
|
6,623,640
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,643,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LLC Limited Liability Company.
|
(a)
|
Corporate Treasury Commitments are measured using third party pricing.
|
|
|
During the three months ended September 30, 2020, Blackstone deconsolidated nine CLO vehicles. See Note 9. “Variable Interest Entities” for additional details.
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
The following table summarizes the quantitative inputs and assumptions used for items categorized in Level III of the fair value hierarchy as of September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact to
Valuation
from an
Increase
in Input
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments of Consolidated Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities, Partnership and LLC Interests
|
|
$
|
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
11.0%
|
|
|
|
Lower
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.5x - 20.0x
|
|
|
|
12.4x
|
|
|
|
Higher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exit Capitalization Rate
|
|
|
|
|
|
|
|
5.3%
|
|
|
|
Lower
|
|
|
|
|
|
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Price
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,940
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
10.0%
|
|
|
|
Lower
|
|
|
|
|
|
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Price
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments of Consolidated Blackstone Funds
|
|
|
806,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Treasury Investments
|
|
|
33,092
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
7.0%
|
|
|
|
Lower
|
|
|
|
|
|
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,040
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
8.5%
|
|
|
|
Lower
|
|
|
|
|
|
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,727
|
|
|
|
Transaction Price
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,085,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
The following table summarizes the quantitative inputs and assumptions used for items categorized in Level III of the fair value hierarchy as of December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact to
Valuation
from an
Increase
in Input
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments of Consolidated Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities, Partnership and LLC Interests
|
|
$
|
674,150
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
10.6%
|
|
|
|
Lower
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.7x
|
|
|
|
Higher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exit Capitalization Rate
|
|
|
|
|
|
|
|
5.9%
|
|
|
|
Lower
|
|
|
|
|
|
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Price
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,381
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
12.1%
|
|
|
|
Lower
|
|
|
|
|
|
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Price
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets of Consolidated CLO Vehicles
|
|
|
296,741
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments of Consolidated Blackstone Funds
|
|
|
1,050,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Treasury Investments
|
|
|
29,289
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
5.7%
|
|
|
|
Lower
|
|
|
|
|
|
|
|
|
|
Market Comparable
Companies
|
|
|
|
EBITDA Multiple
|
|
|
|
6.2x - 8.8x
|
|
|
|
8.1x
|
|
|
|
Higher
|
|
|
|
|
|
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,751
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
7.7%
|
|
|
|
Lower
|
|
|
|
|
|
|
|
|
|
Transaction Price
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,580,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
Not applicable.
|
|
EBITDA
|
|
Earnings before interest, taxes, depreciation and amortization.
|
|
Exit Multiple
|
|
Ranges include the last twelve months EBITDA and forward EBITDA multiples.
|
|
Third Party Pricing
|
|
Third Party Pricing is generally determined on the basis of unadjusted prices between market participants provided by reputable dealers or pricing services.
|
|
Transaction Price
|
|
Includes recent acquisitions or transactions.
|
|
(a)
|
|
Unobservable inputs were weighted based on the fair value of the investments included in the range.
|
Since December 31, 2019, there have been no changes in valuation techniques within Level II and Level III that have had a material impact on the valuation of financial instruments.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
The following tables summarize the changes in financial assets and liabilities measured at fair value for which Blackstone has used Level III inputs to determine fair value and does not include gains or losses that were reported in Level III in prior years or for instruments that were transferred out of Level III prior to the end of the respective reporting period. These tables also exclude financial assets and liabilities measured at fair value on a non-recurring basis. Total realized and unrealized gains and losses recorded for Level III investments are reported in either Investment Income (Loss) or Net Gains from Fund Investment Activities in the Condensed Consolidated Statements of Operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level III Financial Assets at Fair Value
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, Beginning of Period
|
|
$
|
1,215,374
|
|
|
$
|
162,368
|
|
|
$
|
33,697
|
|
|
$
|
1,411,439
|
|
|
$
|
1,140,096
|
|
|
$
|
187,831
|
|
|
$
|
49,052
|
|
|
$
|
1,376,979
|
|
Transfer In (Out) Due to Deconsolidation
|
|
|
(471,591
|
)
|
|
|
—
|
|
|
|
39,875
|
|
|
|
(431,716
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Transfer Into Level III (b)
|
|
|
26,710
|
|
|
|
—
|
|
|
|
3,172
|
|
|
|
29,882
|
|
|
|
216,782
|
|
|
|
—
|
|
|
|
—
|
|
|
|
216,782
|
|
Transfer Out of Level III (b)
|
|
|
(8,444
|
)
|
|
|
—
|
|
|
|
(8,845
|
)
|
|
|
(17,289
|
)
|
|
|
(173,495
|
)
|
|
|
—
|
|
|
|
(8,193
|
)
|
|
|
(181,688
|
)
|
|
|
|
|
21,542
|
|
|
|
79,061
|
|
|
|
3,861
|
|
|
|
104,464
|
|
|
|
136,384
|
|
|
|
283,492
|
|
|
|
3,022
|
|
|
|
422,898
|
|
|
|
|
|
(36,592
|
)
|
|
|
(59,929
|
)
|
|
|
(6,436
|
)
|
|
|
(102,957
|
)
|
|
|
(151,958
|
)
|
|
|
(182,584
|
)
|
|
|
(2,522
|
)
|
|
|
(337,064
|
)
|
|
|
|
|
—
|
|
|
|
36,171
|
|
|
|
—
|
|
|
|
36,171
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
(20,705
|
)
|
|
|
—
|
|
|
|
(20,705
|
)
|
|
|
—
|
|
|
|
(2,042
|
)
|
|
|
—
|
|
|
|
(2,042
|
)
|
Changes in Gains (Losses) Included in Earnings
|
|
|
59,300
|
|
|
|
3,074
|
|
|
|
5,656
|
|
|
|
68,030
|
|
|
|
6,774
|
|
|
|
3,439
|
|
|
|
(1,196
|
)
|
|
|
9,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
806,299
|
|
|
$
|
200,040
|
|
|
$
|
70,980
|
|
|
$
|
1,077,319
|
|
|
$
|
1,174,583
|
|
|
$
|
290,136
|
|
|
$
|
40,163
|
|
|
$
|
1,504,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in Unrealized Gains (Losses) Included in Earnings Related to Financial Assets Still Held at the Reporting Date
|
|
$
|
59,693
|
|
|
$
|
3,681
|
|
|
$
|
7,027
|
|
|
$
|
70,401
|
|
|
$
|
3,020
|
|
|
$
|
1,540
|
|
|
$
|
(230
|
)
|
|
$
|
4,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level III Financial Assets at Fair Value
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, Beginning of Period
|
|
$
|
1,050,272
|
|
|
$
|
500,751
|
|
|
$
|
29,289
|
|
|
$
|
1,580,312
|
|
|
$
|
1,364,016
|
|
|
$
|
304,173
|
|
|
$
|
56,185
|
|
|
$
|
1,724,374
|
|
Transfer In (Out) Due to Deconsolidation
|
|
|
(296,741
|
)
|
|
|
—
|
|
|
|
39,875
|
|
|
|
(256,866
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Transfer Into Level III (b)
|
|
|
26,176
|
|
|
|
—
|
|
|
|
23,293
|
|
|
|
49,469
|
|
|
|
168,479
|
|
|
|
—
|
|
|
|
12,935
|
|
|
|
181,414
|
|
Transfer Out of Level III (b)
|
|
|
(27,022
|
)
|
|
|
—
|
|
|
|
(23,791
|
)
|
|
|
(50,813
|
)
|
|
|
(405,498
|
)
|
|
|
—
|
|
|
|
(35,363
|
)
|
|
|
(440,861
|
)
|
|
|
|
|
142,455
|
|
|
|
249,960
|
|
|
|
9,632
|
|
|
|
402,047
|
|
|
|
323,449
|
|
|
|
554,264
|
|
|
|
15,842
|
|
|
|
893,555
|
|
|
|
|
|
(80,197
|
)
|
|
|
(566,810
|
)
|
|
|
(11,797
|
)
|
|
|
(658,804
|
)
|
|
|
(321,574
|
)
|
|
|
(566,400
|
)
|
|
|
(8,663
|
)
|
|
|
(896,637
|
)
|
|
|
|
|
—
|
|
|
|
36,171
|
|
|
|
—
|
|
|
|
36,171
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
(24,355
|
)
|
|
|
—
|
|
|
|
(24,355
|
)
|
|
|
—
|
|
|
|
(12,231
|
)
|
|
|
—
|
|
|
|
(12,231
|
)
|
Changes in Gains (Losses) Included in Earnings
|
|
|
(8,644
|
)
|
|
|
4,323
|
|
|
|
4,479
|
|
|
|
158
|
|
|
|
45,711
|
|
|
|
10,330
|
|
|
|
(773
|
)
|
|
|
55,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
806,299
|
|
|
$
|
200,040
|
|
|
$
|
70,980
|
|
|
$
|
1,077,319
|
|
|
$
|
1,174,583
|
|
|
$
|
290,136
|
|
|
$
|
40,163
|
|
|
$
|
1,504,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in Unrealized Gains (Losses) Included in Earnings Related to Financial Assets Still Held at the Reporting Date
|
|
$
|
(26,821
|
)
|
|
$
|
4,824
|
|
|
$
|
5,363
|
|
|
$
|
(16,634
|
)
|
|
$
|
32,415
|
|
|
$
|
(1,117
|
)
|
|
$
|
(29
|
)
|
|
$
|
31,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Represents corporate treasury investments and Other Investments.
|
|
(b)
|
Transfers in and out of Level III financial assets and liabilities were due to changes in the observability of inputs used in the valuation of such assets and liabilities.
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
9. Variable Interest Entities
Pursuant to GAAP consolidation guidance, Blackstone consolidates certain VIEs for which it is the primary beneficiary either directly or indirectly, through a consolidated entity or affiliate. VIEs include certain private equity, real estate, credit-focused or funds of hedge funds entities and CLO vehicles. The purpose of such VIEs is to provide strategy specific investment opportunities for investors in exchange for management and performance-based fees. The investment strategies of the Blackstone Funds differ by product; however, the fundamental risks of the Blackstone Funds are similar, including loss of invested capital and loss of management fees and performance-based fees. In Blackstone’s role as general partner, collateral manager or investment adviser, it generally considers itself the sponsor of the applicable Blackstone Fund. Blackstone does not provide performance guarantees and has no other financial obligation to provide funding to consolidated VIEs other than its own capital commitments.
The assets of consolidated variable interest entities may only be used to settle obligations of these entities. In addition, there is no recourse to Blackstone for the consolidated VIEs’ liabilities.
During the three months ended September 30, 2020, Blackstone determined that it was no longer the primary beneficiary and deconsolidated nine CLO vehicles as a result of an ownership reorganization and the ongoing decline in our economic exposure to these vehicles. Following the ownership reorganization, there are no remaining consolidated CLO vehicles. As of the date of deconsolidation, Blackstone’s Total Assets, Total Liabilities and Non-Controlling Interests in Consolidated Entities were reduced
$6.8 billion, $6.6 billion and $216.3 million, respectively. Blackstone will continue to receive management fees and Performance Allocations from these vehicles following the dilution of its ownership interests.
Blackstone holds variable interests in certain VIEs which are not consolidated as it is determined that Blackstone is not the primary beneficiary. Blackstone’s involvement with such entities is in the form of direct and indirect equity interests and fee arrangements. The maximum exposure to loss represents the loss of assets recognized by Blackstone relating to non-consolidated VIEs and any clawback obligation relating to previously distributed Performance Allocations. Blackstone’s maximum exposure to loss relating to non-consolidated VIEs were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,135,204
|
|
|
$
|
1,216,932
|
|
|
|
|
|
149,880
|
|
|
|
143,949
|
|
Potential Clawback Obligation
|
|
|
38,876
|
|
|
|
109,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,323,960
|
|
|
$
|
1,470,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Due to Non-Consolidated VIEs
|
|
$
|
321
|
|
|
$
|
231
|
|
|
|
|
|
|
|
|
|
|
|
10. Repurchase Agreements
At September 30, 2020 and December 31, 2019, Blackstone pledged securities with a carrying value of $116.6 million and $196.1 million, respectively, and cash to collateralize its repurchase agreements. Such securities can be repledged, delivered or otherwise used by the counterparty.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
The following tables provide information regarding Blackstone’s Repurchase Agreements obligation by type of collateral pledged:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining Contractual Maturity of the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
7,188
|
|
|
$
|
67,168
|
|
|
$
|
6,241
|
|
|
$
|
80,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount of Recognized Liabilities for Repurchase Agreements in Note 11. “Offsetting of Assets and Liabilities”
|
|
|
$
|
80,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Related to Agreements Not Included in Offsetting Disclosure in Note 11. “Offsetting of Assets and Liabilities”
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining Contractual Maturity of the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
42,459
|
|
|
$
|
88,868
|
|
|
$
|
22,791
|
|
|
$
|
154,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount of Recognized Liabilities for Repurchase Agreements in Note 11. “Offsetting of Assets and Liabilities”
|
|
|
$
|
154,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Related to Agreements Not Included in Offsetting Disclosure in Note 11. “Offsetting of Assets and Liabilities”
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11. Offsetting of Assets and Liabilities
The following tables present the offsetting of assets and liabilities as of September 30, 2020 and December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
154,341
|
|
|
$
|
139,946
|
|
|
$
|
13,432
|
|
|
$
|
963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
160,813
|
|
|
$
|
139,946
|
|
|
$
|
18,318
|
|
|
$
|
2,549
|
|
|
|
|
|
80,597
|
|
|
|
80,597
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
241,410
|
|
|
$
|
220,543
|
|
|
$
|
18,318
|
|
|
$
|
2,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
54,479
|
|
|
$
|
380
|
|
|
$
|
—
|
|
|
$
|
54,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,215
|
|
|
$
|
380
|
|
|
$
|
9,198
|
|
|
$
|
637
|
|
|
|
|
|
154,118
|
|
|
|
154,118
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
164,333
|
|
|
$
|
154,498
|
|
|
$
|
9,198
|
|
|
$
|
637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Amounts presented are inclusive of both legally enforceable master netting agreements, and financial instruments received or pledged as collateral. Financial instruments received or pledged as collateral offset derivative counterparty risk exposure, but do not reduce net balance sheet exposure.
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Repurchase Agreements are presented separately on the Condensed Consolidated Statements of Financial Condition. Freestanding Derivative assets are included in Other Assets in the Condensed Consolidated Statements of Financial Condition. The following table presents the components of Other Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture, Equipment and Leasehold Improvements, Net
|
|
$
|
200,492
|
|
|
$
|
154,482
|
|
|
|
|
|
177,860
|
|
|
|
159,333
|
|
|
|
|
|
152,386
|
|
|
|
54,396
|
|
|
|
|
|
14,167
|
|
|
|
14,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
544,905
|
|
|
$
|
382,493
|
|
|
|
|
|
|
|
|
|
|
|
Freestanding Derivative liabilities are included in Accounts Payable, Accrued Expenses and Other Liabilities in the Condensed Consolidated Statements of Financial Condition and are not a significant component thereof.
Notional Pooling Arrangement
Blackstone has a notional cash pooling arrangement with a financial institution for cash management purposes. This arrangement allows for cash withdrawals based upon aggregate cash balances on deposit at the same financial institution. Cash withdrawals cannot exceed aggregate cash balances on deposit. The net balance of cash on deposit and overdrafts is used as a basis for calculating net interest expense or income. As of September 30, 2020, the aggregate cash balance on deposit relating to the cash pooling arrangement was $1.2 billion, which was offset with an accompanying overdraft of $1.2 billion.
On September 29, 2020, Blackstone, through its indirect subsidiary Blackstone Holdings Finance Co. L.L.C. (the “Issuer”), issued $500 million aggregate principal amount of senior notes due March 30, 2031 (the “2031 Notes”) and $400 million aggregate principal amount of senior notes due September 30, 2050 (the “2050 Notes”). The 2031 Notes have an interest rate of 1.600% per annum and the 2050 Notes have an interest rate of 2.800% per annum, in each case accruing from September 29, 2020. Interest on the 2031 Notes and the 2050 Notes is payable semi-annually in arrears on March 30 and September 30 of each year commencing on March 30, 2021.
The 2031 Notes and 2050 Notes are unsecured and unsubordinated obligations of the Issuer that are fully and unconditionally guaranteed by The Blackstone Group Inc. and its indirect subsidiaries, Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P. and Blackstone Holdings IV L.P. (the “Guarantors”), consistent with all of Blackstone’s senior notes. The guarantees are unsecured and unsubordinated obligations of the Guarantors. Transaction costs related to the issuance of the 2031 Notes and 2050 Notes have been capitalized and are being amortized over the life of the 2031 Notes and 2050 Notes.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
The following table presents the general characteristics of each of our notes, as well as their carrying value and fair value. The notes are included in Loans Payable within the Condensed Consolidated Statements of Financial Condition. All of the notes were issued at a discount. All of the notes accrue interest from the issue date thereof and all pay interest in arrears on a semi-annual basis or annual basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
397,095
|
|
|
$
|
437,360
|
|
|
$
|
396,247
|
|
|
$
|
429,280
|
|
|
|
|
|
347,971
|
|
|
|
378,495
|
|
|
|
332,393
|
|
|
|
365,521
|
|
|
|
|
|
695,182
|
|
|
|
726,749
|
|
|
|
664,229
|
|
|
|
691,012
|
|
|
|
|
|
297,300
|
|
|
|
330,240
|
|
|
|
297,046
|
|
|
|
309,540
|
|
|
|
|
|
698,229
|
|
|
|
759,661
|
|
|
|
667,425
|
|
|
|
708,841
|
|
|
|
|
|
490,485
|
|
|
|
536,850
|
|
|
|
489,841
|
|
|
|
493,500
|
|
|
|
|
|
495,835
|
|
|
|
494,350
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
238,609
|
|
|
|
366,650
|
|
|
|
238,437
|
|
|
|
338,200
|
|
|
|
|
|
489,142
|
|
|
|
658,500
|
|
|
|
488,968
|
|
|
|
606,700
|
|
|
|
|
|
344,250
|
|
|
|
434,700
|
|
|
|
344,157
|
|
|
|
396,235
|
|
|
|
|
|
290,485
|
|
|
|
351,480
|
|
|
|
290,344
|
|
|
|
321,780
|
|
|
|
|
|
391,882
|
|
|
|
435,560
|
|
|
|
391,769
|
|
|
|
399,961
|
|
|
|
|
|
394,324
|
|
|
|
395,120
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,570,789
|
|
|
$
|
6,305,715
|
|
|
$
|
4,600,856
|
|
|
$
|
5,060,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Fair value is determined by broker quote and these notes would be classified as Level II within the fair value hierarchy.
|
Included within Loans Payable and Due to Affiliates within the Condensed Consolidated Statements of Financial Condition are amounts due to holders of debt securities issued by Blackstone’s consolidated CLO vehicles. During the three months ended September 30, 2020, Blackstone deconsolidated nine CLO vehicles. See Note 9. “Variable Interest Entities” for additional details. Borrowings through the consolidated CLO vehicles consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
—
|
|
—
|
|
$
|
6,527,800
|
|
|
|
3.55%
|
|
|
|
3.5
|
|
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
331,735
|
|
|
|
(b)
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
6,859,535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Weighted-Average Remaining Maturity in Years for Senior Secured Notes includes consideration of
pre-payment
options.
|
|
(b)
|
The Subordinated Notes do not have contractual interest rates but instead receive distributions from the excess cash flows of the CLO vehicles.
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Senior Secured Notes and Subordinated Notes comprise the following amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,512,733
|
|
|
$
|
57,750
|
|
|
$
|
57,717
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
45,273
|
|
|
|
44,734
|
|
|
|
20,535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,558,006
|
|
|
$
|
102,484
|
|
|
$
|
78,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Loans Payable of the consolidated CLO vehicles are collateralized by assets held by each respective CLO vehicle and assets of one vehicle may not be used to satisfy the liabilities of another. This collateral consisted of Cash, Corporate Loans, Corporate Bonds and other securities. As of December 31, 2019, the fair value of the consolidated CLO assets was $7.2 billion.
Scheduled principal payments for borrowings as of September 30, 2020 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
99
|
|
|
$
|
99
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
400,000
|
|
|
|
—
|
|
|
|
400,000
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5,258,150
|
|
|
|
—
|
|
|
|
5,258,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,658,150
|
|
|
$
|
99
|
|
|
$
|
5,658,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior to the Conversion, Blackstone and certain of its subsidiaries operated in the U.S. as partnerships for income tax purposes (partnerships generally are not subject to federal income taxes) and generally as corporate entities in non-U.S. jurisdictions. Subsequent to the Conversion, all income attributable to Blackstone is subject to U.S. corporate income taxes.
The Conversion resulted in a step-up in the tax basis of certain assets that will be recovered as those assets are sold or the basis is amortized. During the three months ended September 30, 2020, the basis in Blackstone’s subsidiaries at July 1, 2019 was updated and an adjustment to the step-up in tax basis at
the
Conversion was calculated resulting in a tax expense of
$36.4
million, including an increase in the valuation allowance
of $21.0
million, that was recorded during the quarter.
Blackstone’s effective tax rate was 5.6% and -15.5% for the three months ended September 30, 2020 and 2019, respectively, and 16.7% and -2.7% for the nine months ended September 30, 2020 and 2019, respectively. Blackstone’s income tax provision (benefit) was $101.0 million and $(156.8) million for the three months ended September 30, 2020 and 2019, respectively, and $89.7 million and $(76.9) million for the nine months ended September 30, 2020 and 2019, respectively. For the three and nine months ended September 30, 2020, the effective tax rate differs from the statutory rate primarily because:
(a) a portion of the reported net income (loss) before taxes is attributable to non-controlling interest holders and (b) there is a net change to the valuation allowance primarily resulting from the utilization of tax benefit on asset dispositions. For the three and nine months ended September 30, 2019, the effective tax rate differs from the statutory rate primarily because (a) Blackstone received the benefit of a portion of the step-up in tax basis resulting from the Conversion, (b) a portion of the net income (loss) before taxes is attributable to non-controlling interest holders and (c) a portion of the reported net income (loss) before taxes is attributable to the period prior to the Conversion.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
|
|
Earnings Per Share and Stockholder’s Equity
|
Basic and diluted net income per share of Class A common stock for the three and nine months ended September 30, 2020 and 2019 was calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
Net Income for Per Share of Class A Common Stock Calculations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to The Blackstone Group Inc., Basic and Diluted
|
|
$
|
794,719
|
|
|
$
|
779,437
|
|
|
$
|
296,493
|
|
|
$
|
1,566,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Shares of Class A Common Stock Outstanding, Basic
|
|
|
700,184,580
|
|
|
|
675,963,129
|
|
|
|
695,049,997
|
|
|
|
674,714,040
|
|
Weighted-Average Shares of Unvested Deferred Restricted Class A Common Stock
|
|
|
343,386
|
|
|
|
256,629
|
|
|
|
287,578
|
|
|
|
265,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Shares of Class A Common Stock Outstanding, Diluted
|
|
|
700,527,966
|
|
|
|
676,219,758
|
|
|
|
695,337,575
|
|
|
|
674,979,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share of Class A Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.14
|
|
|
$
|
1.15
|
|
|
$
|
0.43
|
|
|
$
|
2.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.13
|
|
|
$
|
1.15
|
|
|
$
|
0.43
|
|
|
$
|
2.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Declared Per Share of Class A Common Stock (a)
|
|
$
|
0.37
|
|
|
$
|
0.48
|
|
|
$
|
1.37
|
|
|
$
|
1.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Dividends declared reflects the calendar date of the declaration for each dividend.
|
In computing the dilutive effect that the exchange of Blackstone Holdings Partnership Units would have on Net Income Per Share of Class A Common Stock, Blackstone considered that net income available to holders of shares of Class A common stock would increase due to the elimination of non-controlling interests in Blackstone Holdings, inclusive of any tax impact. The hypothetical conversion may be dilutive to the extent there is activity at The Blackstone Group Inc. level that has not previously been attributed to the non-controlling interests or if there is a change in tax rate as a result of a hypothetical conversion.
The following table summarizes the anti-dilutive securities for the three and nine months ended September 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Blackstone Holdings Partnership Units
|
|
|
501,898,454
|
|
|
|
524,859,672
|
|
|
|
506,274,987
|
|
|
|
525,779,901
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
In connection with the Conversion, effective July 1, 2019, each common unit of the Partnership outstanding immediately prior to the Conversion converted into one issued and outstanding, fully paid and nonassessable share of Class A common stock, $0.00001 par value per share, of the Company. The special voting unit of the Partnership outstanding immediately prior to the Conversion converted into one issued and outstanding, fully paid and nonassessable share of Class B common stock, $0.00001 par value per share, of the Company. The general partner units of the Partnership outstanding immediately prior to the Conversion converted into one issued and outstanding, fully paid and nonassessable share of Class C common stock, $0.00001 par value per share, of the Company.
The Class A and Class B common stock generally are non-voting. The Class B common stock generally will vote together with the Class A common stock as a single class on those few matters that may be submitted for a vote of the Class A common stock. The Class C common stock is the only class of the Company’s common stock entitled to vote at a meeting of shareholders (or take similar action by written consent) in the election of directors and generally with respect to all other matters submitted to a vote of shareholders. Shareholders of Class B and Class C common stock are not entitled to dividends from the Company, or receipt of any of the Company’s assets in the event of any dissolution, liquidation or winding up. Blackstone Partners L.L.C. is the sole holder of the Class B common stock and Blackstone Group Management L.L.C. is the sole holder of the Class C common stock.
In connection with the Conversion, the Company authorized 9 billion shares of preferred stock with a par value of $0.00001. There were no shares of preferred stock issued and outstanding as of September 30, 2020.
On July 16, 2019, Blackstone’s board of directors authorized the repurchase of up to $1.0 billion of Class A common stock and Blackstone Holdings Partnership Units. Under the repurchase program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual numbers repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date.
During the three and nine months ended September 30, 2020, Blackstone repurchased 2.0 million and 9.0 million shares, respectively, of Blackstone Class A common stock at a total cost of $105.6 million and $474.0 million, respectively. During the three and nine months ended September 30, 2019, Blackstone repurchased 2.8 million and 11.3 million shares, respectively, of Blackstone Class A common stock at a total cost of $136.0 million and $479.1 million, respectively. As of September 30, 2020, the amount remaining available for repurchases under the repurchase program was $307.2 million. Class A common stock repurchased in the three months ended September 30, 2019 excludes shares for which trades were executed during the three months ended June 30, 2019 and settlement occurred in July 2019.
Shares Eligible for Dividends and Distributions
As of September 30, 2020, the total shares of Class A common stock and Blackstone Holdings Partnership Units entitled to participate in dividends and distributions were as follows:
|
|
|
|
|
|
|
|
|
|
|
Class A Common Stock Outstanding
|
|
|
680,680,748
|
|
Unvested Participating Common Stock
|
|
|
19,968,387
|
|
|
|
|
|
|
|
Total Participating Common Stock
|
|
|
700,649,135
|
|
Participating Blackstone Holdings Partnership Units
|
|
|
500,054,874
|
|
|
|
|
|
|
|
|
|
|
|
1,200,704,009
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
|
|
Equity-Based Compensation
|
Blackstone has granted equity-based compensation awards to Blackstone’s senior managing directors, non-partner professionals, non-professionals and selected external advisers under Blackstone’s Amended and Restated 2007 Equity Incentive Plan (the “Equity Plan”). The Equity Plan allows for the granting of options, share appreciation rights or other share-based awards (shares, restricted shares, restricted shares of Class A common stock, deferred restricted shares of Class A common stock, phantom restricted shares of Class A common stock or other share-based awards based in whole or in part on the fair market value of shares of Blackstone Class A common stock or Blackstone Holdings Partnership Units) which may contain certain service or performance requirements. As of January 1, 2020, Blackstone had the ability to grant 171,085,619 shares under the Equity Plan.
For the three and nine months ended September 30, 2020, Blackstone recorded compensation expense of $110.8 million and $349.5 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $12.5 million and $40.9 million, respectively. For the three and nine months ended September 30, 2019, Blackstone recorded compensation expense of $107.8 million and $331.8 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $3.4 million and $38.0 million, respectively.
As of September 30, 2020, there was $1.1 billion of estimated unrecognized compensation expense related to unvested awards. This cost is expected to be recognized over a weighted-average period of 3.5 years.
Total vested and unvested outstanding shares, including Blackstone Class A common stock, Blackstone Holdings Partnership Units and deferred restricted shares of Class A common stock, were 1,200,963,378 as of September 30, 2020. Total outstanding phantom shares were 69,666 as of September 30, 2020.
A summary of the status of Blackstone’s unvested equity-based awards as of September 30, 2020 and of changes during the period January 1, 2020 through September 30, 2020 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
|
|
32,159,218
|
|
|
$
|
36.25
|
|
|
|
8,969,736
|
|
|
$
|
35.26
|
|
|
|
51,341
|
|
|
$
|
52.85
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,274,268
|
|
|
|
45.37
|
|
|
|
21,189
|
|
|
|
56.95
|
|
|
|
|
|
(7,785,703
|
)
|
|
|
38.82
|
|
|
|
(3,250,111
|
)
|
|
|
34.88
|
|
|
|
(8,842
|
)
|
|
|
53.57
|
|
|
|
|
|
(107,945
|
)
|
|
|
36.72
|
|
|
|
(506,810
|
)
|
|
|
37.75
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2020
|
|
|
24,265,570
|
|
|
$
|
36.41
|
|
|
|
19,487,083
|
|
|
$
|
42.29
|
|
|
|
63,688
|
|
|
$
|
53.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Shares/Units Expected to Vest
The following unvested shares and units, after expected forfeitures, as of September 30, 2020, are expected to vest:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackstone Holdings Partnership Units
|
|
|
23,539,139
|
|
|
3.1
|
Deferred Restricted Shares of Class A Common Stock
|
|
|
19,217,872
|
|
|
3.6
|
|
|
|
|
|
|
|
|
Total Equity-Based Awards
|
|
|
42,757,011
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
60,562
|
|
|
3.2
|
|
|
|
|
|
|
|
|
|
|
Related Party Transactions
|
Affiliate Receivables and Payables
Due from Affiliates and Due to Affiliates consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management Fees, Performance Revenues, Reimbursable Expenses and Other Receivables from Non-Consolidated Entities and Portfolio Companies
|
|
$
|
2,287,691
|
|
|
$
|
1,999,568
|
|
Due from Certain Non-Controlling Interest Holders and Blackstone Employees
|
|
|
496,149
|
|
|
|
573,679
|
|
Accrual for Potential Clawback of Previously Distributed Performance Allocations
|
|
|
33,464
|
|
|
|
21,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,817,304
|
|
|
$
|
2,594,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to Certain Non-Controlling Interest Holders in Connection with the Tax Receivable Agreements
|
|
$
|
792,621
|
|
|
$
|
672,981
|
|
Due to Non-Consolidated Entities
|
|
|
108,390
|
|
|
|
100,286
|
|
Due to Note-Holders of Consolidated CLO Vehicles
|
|
|
—
|
|
|
|
78,252
|
|
Due to Certain Non-Controlling Interest Holders and Blackstone Employees
|
|
|
37,622
|
|
|
|
48,433
|
|
Accrual for Potential Repayment of Previously Received Performance Allocations
|
|
|
125,703
|
|
|
|
126,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,064,336
|
|
|
$
|
1,026,871
|
|
|
|
|
|
|
|
|
|
|
|
Interests of the Founder, Senior Managing Directors, Employees and Other Related Parties
The Founder, senior managing directors, employees and certain other related parties invest on a discretionary basis in the consolidated Blackstone Funds both directly and through consolidated entities. These investments generally are subject to preferential management fee and performance allocation or incentive fee arrangements. As of September 30, 2020 and December 31, 2019, such investments aggregated $1.0 billion and $969.3 million, respectively. Their share of the Net Income Attributable to Redeemable Non-Controlling and
Non-Controlling
Interests in Consolidated Entities aggregated $94.5 million and $6.2 million for the three months ended September 30, 2020 and 2019, respectively, and $(19.8) million and $54.8 million for the nine months ended September 30, 2020 and 2019, respectively.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Loans to affiliates consist of interest bearing advances to certain Blackstone individuals to finance their investments in certain Blackstone Funds. These loans earn interest at Blackstone’s cost of borrowing and such interest totaled $0.7 million and $1.1 million for the three months ended September 30, 2020 and 2019, respectively, and $4.7 million and $5.3 million for the nine months ended September 30, 2020 and 2019, respectively.
Contingent Repayment Guarantee
Blackstone and its personnel who have received Performance Allocation distributions have guaranteed payment on a several basis (subject to a cap) to the carry funds of any clawback obligation with respect to the excess Performance Allocation allocated to the general partners of such funds and indirectly received thereby to the extent that either Blackstone or its personnel fails to fulfill its clawback obligation, if any. The Accrual for Potential Repayment of Previously Received Performance Allocations represents amounts previously paid to Blackstone Holdings and non-controlling interest holders that would need to be repaid to the Blackstone Funds if the carry funds were to be liquidated based on the fair value of their underlying investments as of September 30, 2020. See Note 17. “Commitments and Contingencies — Contingencies — Contingent Obligations (Clawback)”.
Aircraft and Other Services
In the normal course of business, Blackstone makes use of aircraft owned by Stephen A. Schwarzman; aircraft owned by Jonathan D. Gray; and aircraft owned jointly by Joseph P. Baratta and two other individuals (each such aircraft, “Personal Aircraft”). Each of Messrs. Schwarzman, Gray and Baratta paid for his respective ownership interest in his Personal Aircraft himself and bears his respective share of all operating, personnel and maintenance costs associated with the operation of such Personal Aircraft. The payments Blackstone makes for the use of the Personal Aircraft are based on current market rates.
In addition, on occasion, certain of Blackstone’s executive officers and employee directors and their families may make personal use of aircraft in which Blackstone owns a fractional interest, as well as other assets of Blackstone. Any such personal use of Blackstone assets is charged to the executive officer or employee director based on market rates and usage. Personal use of Blackstone resources is also reimbursed to Blackstone based on market rates.
The transactions described herein are not material to the Condensed Consolidated Financial Statements.
Tax Receivable Agreements
Blackstone used a portion of the proceeds from the IPO and other sales of shares to purchase interests in the predecessor businesses from the predecessor owners. In addition, holders of Blackstone Holdings Partnership Units may exchange their Blackstone Holdings Partnership Units for shares of Blackstone Class A common stock on a one-for-one basis. The purchase and subsequent exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of Blackstone Holdings and therefore reduce the amount of tax that Blackstone would otherwise be required to pay in the future.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Blackstone has entered into tax receivable agreements with each of the predecessor owners and additional tax receivable agreements have been executed, and will continue to be executed, with newly-admitted senior managing directors and others who acquire Blackstone Holdings Partnership Units. The agreements provide for the payment by the corporate taxpayer to such owners of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that the corporate taxpayers actually realize as a result of the aforementioned increases in tax basis and of certain other tax benefits related to entering into these tax receivable agreements. For purposes of the tax receivable agreements, cash savings in income tax will be computed by comparing the actual income tax liability of the corporate taxpayers to the amount of such taxes that the corporate taxpayers would have been required to pay had there been no increase to the tax basis of the tangible and intangible assets of Blackstone Holdings as a result of the exchanges and had the corporate taxpayers not entered into the tax receivable agreements.
Assuming no future material changes in the relevant tax law and that the corporate taxpayers earn sufficient taxable income to realize the full tax benefit of the increased amortization of the assets, the expected future payments under the tax receivable agreements (which are taxable to the recipients) will aggregate $792.6 million over the next 15 years. The after-tax net present value of these estimated payments totals $228.0 million assuming a 15% discount rate and using Blackstone’s most recent projections relating to the estimated timing of the benefit to be received. Future payments under the tax receivable agreements in respect of subsequent exchanges would be in addition to these amounts. The payments under the tax receivable agreements are not conditioned upon continued ownership of Blackstone equity interests by the pre-IPO owners and the others mentioned above.
Amounts related to the deferred tax asset resulting from the increase in tax basis from the exchange of Blackstone Holdings Partnership Units to shares of Blackstone Class A common stock, the resulting remeasurement of net deferred tax assets at the Blackstone ownership percentage at the balance sheet date, the due to affiliates for the future payments resulting from the tax receivable agreements and resulting adjustment to partners’ capital are included as Acquisition of Ownership Interests from Non-Controlling Interest Holders in the Supplemental Disclosure of Non-Cash Investing and Financing Activities in the Condensed Consolidated Statements of Cash Flows.
Blackstone does business with and on behalf of some of its Portfolio Companies; all such arrangements are on a negotiated basis.
Additionally, please see Note 17. “Commitments and Contingencies — Contingencies — Guarantees” for information regarding guarantees provided to a lending institution for certain loans held by employees.
17. Commitments and Contingencies
Blackstone had $4.2 billion of investment commitments as of September 30, 2020 representing general partner capital funding commitments to the Blackstone Funds, limited partner capital funding to other funds and Blackstone principal investment commitments, including loan commitments. The consolidated Blackstone Funds had signed investment commitments of $176.3 million as of September 30, 2020, which includes $116.2 million of signed investment commitments for portfolio company acquisitions in the process of closing.
Certain of Blackstone’s consolidated real estate funds guarantee payments to third parties in connection with the ongoing business activities and/or acquisitions of their Portfolio Companies. There is no direct recourse to Blackstone to fulfill such obligations. To the extent that underlying funds are required to fulfill guarantee obligations, Blackstone’s invested capital in such funds is at risk. Total investments at risk in respect of guarantees extended by consolidated real estate funds was $21.8 million as of September 30, 2020.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
The Blackstone Holdings Partnerships provided guarantees to a lending institution for certain loans held by employees either for investment in Blackstone Funds or for members’ capital contributions to The Blackstone Group International Partners LLP. The amount guaranteed as of September 30, 2020 was $221.9 million.
Blackstone may from time to time be involved in litigation and claims incidental to the conduct of its business. Blackstone’s businesses are also subject to extensive regulation, which may result in regulatory proceedings against Blackstone.
Blackstone accrues a liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. Although there can be no assurance of the outcome of such legal actions, based on information known by management, Blackstone does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial position or cash flows.
In December 2017, a purported derivative suit (Mayberry v. KKR & Co., L.P., et al.) was filed in the Commonwealth of Kentucky Franklin County Circuit Court on behalf of the Kentucky Retirement System (“KRS”) by eight of its members and beneficiaries alleging various breaches of fiduciary duty and other violations of Kentucky state law in connection with KRS’s investment in three hedge funds of funds, including a fund managed by Blackstone Alternative Asset Management L.P. (“BAAM L.P.”). The suit names more than 30 defendants, including The Blackstone Group L.P.; BAAM L.P.; Stephen A. Schwarzman, as Chairman and CEO of Blackstone; and J. Tomilson Hill, as then-President and CEO of the Hedge Fund Solutions Group, Vice Chairman of Blackstone and CEO of BAAM L.P. (collectively, the “Blackstone Defendants”). Aside from the Blackstone Defendants, the action also names current and former KRS trustees and former KRS officers and various other service providers to KRS and their related persons.
The plaintiffs filed an amended complaint in January 2018. In November 2018, the Circuit Court granted one defendant’s motion to dismiss and denied all other defendants’ motions to dismiss, including those of the Blackstone Defendants. In January 2019, certain of the KRS trustee and officer defendants noticed appeals from the denial of the motions to dismiss to the Kentucky Court of Appeals, and also filed a motion to stay the Mayberry proceedings in Circuit Court pending the outcome of those appeals. In addition, several defendants, including Blackstone and BAAM L.P., filed petitions in the Kentucky Court of Appeals for a writ of prohibition against the ongoing Mayberry proceedings on the ground that the plaintiffs lack standing. In April 2019, the KRS trustee and officer defendants’ appeals were transferred to the Kentucky Supreme Court.
On April 23, 2019, the Kentucky Court of Appeals granted the Blackstone Defendants’ petition for a writ of prohibition and vacated the Circuit Court’s November 30, 2018 Opinion and Order denying the motion to dismiss for lack of standing. On April 24, 2019, the Mayberry Plaintiffs filed a notice of appeal of that order to the Kentucky Supreme Court. The Kentucky Supreme Court heard oral argument on the appeal on October 24, 2019.
On July 9, 2020, the Kentucky Supreme Court unanimously held that the plaintiffs lack constitutional standing to bring their claims and remanded the case to the Circuit Court with direction to dismiss the complaint. On July 20, 2020, the Kentucky Attorney General filed a motion to intervene and a proposed intervening complaint in the Mayberry action on behalf of the Commonwealth of Kentucky. The Blackstone Defendants filed their objection to that motion on July 30, 2020 and a decision on the motion to intervene is pending. On July 21, 2020, the Kentucky Attorney General also filed a separate action in Franklin County Circuit Court that is nearly identical to its proposed intervening complaint. In addition, on July 29, 2020, counsel for certain of the Mayberry Plaintiffs filed a motion for leave to amend their complaint, purporting to remedy the standing defects identified by the Kentucky Supreme Court. The Blackstone Defendants intend to oppose the pending motion to amend.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Blackstone continues to believe that these suits are totally without merit and intends to defend them vigorously.
Contingent Obligations (Clawback)
Performance Allocations are subject to clawback to the extent that the Performance Allocations received to date with respect to a fund exceeds the amount due to Blackstone based on cumulative results of that fund. The actual clawback liability, however, generally does not become realized until the end of a fund’s life except for certain Blackstone real estate funds, multi-asset class investment funds and credit-focused funds, which may have an interim clawback liability. The lives of the carry funds, including available contemplated extensions, for which a liability for potential clawback obligations has been recorded for financial reporting purposes, are currently anticipated to expire at various points through 2029. Further extensions of such terms may be implemented under given circumstances.
For financial reporting purposes, when applicable, the general partners record a liability for potential clawback obligations to the limited partners of some of the carry funds due to changes in the unrealized value of a fund’s remaining investments and where the fund’s general partner has previously received Performance Allocation distributions with respect to such fund’s realized investments.
The following table presents the clawback obligations by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
25,684
|
|
|
$
|
13,785
|
|
|
$
|
39,469
|
|
|
$
|
16,151
|
|
|
$
|
10,597
|
|
|
$
|
26,748
|
|
|
|
|
|
61,098
|
|
|
|
(5,047
|
)
|
|
|
56,051
|
|
|
|
82,276
|
|
|
|
2,860
|
|
|
|
85,136
|
|
|
|
|
|
14,012
|
|
|
|
16,171
|
|
|
|
30,183
|
|
|
|
6,866
|
|
|
|
8,169
|
|
|
|
15,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
100,794
|
|
|
$
|
24,909
|
|
|
$
|
125,703
|
|
|
$
|
105,293
|
|
|
$
|
21,626
|
|
|
$
|
126,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The split of clawback between Blackstone Holdings and Current and Former Personnel is based on the performance of individual investments held by a fund rather than on a fund by fund basis.
|
For Private Equity, Real Estate, and certain Credit & Insurance Funds, a portion of the Performance Allocations paid to current and former Blackstone personnel is held in segregated accounts in the event of a cash clawback obligation. These segregated accounts are not included in the Condensed Consolidated Financial Statements of Blackstone, except to the extent a portion of the assets held in the segregated accounts may be allocated to a consolidated Blackstone fund of hedge funds. At September 30, 2020, $758.0 million was held in segregated accounts for the purpose of meeting any clawback obligations of current and former personnel if such payments are required.
In the Credit & Insurance segment, payment of Performance Allocations to Blackstone by the majority of the stressed/distressed, mezzanine and credit alpha strategies funds are substantially deferred under the terms of the partnership agreements. This deferral mitigates the need to hold funds in segregated accounts in the event of a cash clawback obligation.
If, at September 30, 2020, all of the investments held by our carry funds were deemed worthless, a possibility that management views as remote, the amount of Performance Allocations subject to potential clawback would be $3.6 billion, on an
after-tax
basis where applicable, of which Blackstone Holdings is potentially liable for $3.1 billion if current and former Blackstone personnel default on their share of the liability, a possibility that management also views as remote.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Blackstone transacts its primary business in the United States and substantially all of its revenues are generated domestically.
Blackstone conducts its alternative asset management businesses through four segments:
|
|
•
|
|
Real Estate – Blackstone’s Real Estate segment primarily comprises its management of global, Europe and Asia-focused opportunistic real estate funds, high-yield and high-grade real estate debt funds, liquid real estate debt funds, core+ real estate funds which also include a non-exchange traded REIT and a NYSE-listed REIT.
|
|
|
•
|
|
Private Equity – Blackstone’s Private Equity segment includes its management of flagship corporate private equity funds, sector and geographically-focused corporate private equity funds, including energy and Asia-focused funds, core private equity funds, an opportunistic investment platform, a secondary fund of funds business, infrastructure-focused funds, a life sciences private investment platform, a growth equity investment platform, a multi-asset investment program for eligible high net worth investors and a capital markets services business.
|
|
|
•
|
|
Hedge Fund Solutions – The largest component of Blackstone’s Hedge Fund Solutions segment is Blackstone Alternative Asset Management, which manages a broad range of commingled and customized hedge fund of fund solutions. The segment also includes investment platforms that seed new hedge fund businesses, purchase minority interests in more established general partners and management companies of funds, invest in special situation opportunities, create alternative solutions in the form of daily liquidity products and invest directly.
|
|
|
•
|
|
Credit & Insurance – Blackstone’s Credit & Insurance segment consists principally of GSO Capital Partners LP, which is organized into three overarching strategies: performing credit strategies (which include mezzanine lending funds, middle market direct lending funds, including our business development company, our secured lending fund, our structured products group and other performing credit strategy funds), distressed strategies (which include credit alpha strategies, stressed/distressed funds and energy strategies) and long only strategies (which consist of CLOs, closed-ended funds, open-ended funds and separately managed accounts). In addition, the segment includes a publicly traded master limited partnership investment platform, Harvest, and our insurer-focused platform, Blackstone Insurance Solutions.
|
These business segments are differentiated by their various investment strategies. The Real Estate, Private Equity, Hedge Fund Solutions and Credit & Insurance segments primarily earn their income from management fees and investment returns on assets under management.
Segment Distributable Earnings is Blackstone’s segment profitability measure used to make operating decisions and assess performance across Blackstone’s four segments. Blackstone’s segments are presented on a basis that deconsolidates Blackstone Funds, eliminates non-controlling ownership interests in Blackstone’s consolidated operating partnerships, removes the amortization of intangible assets and removes Transaction-Related Charges. Transaction-Related Charges arise from corporate actions including acquisitions, divestitures and Blackstone’s initial public offering. They consist primarily of equity-based compensation charges, gains and losses on contingent consideration arrangements, changes in the balance of the Tax Receivable Agreement resulting from a change in tax law or similar event, transaction costs and any gains or losses associated with these corporate actions.
For segment reporting purposes, Segment Distributable Earnings is presented along with its major components, Fee Related Earnings and Net Realizations. Fee Related Earnings is used to assess Blackstone’s ability to generate profits from revenues that are measured and received on a recurring basis and not subject to future realization events. Net Realizations is the sum of Realized Principal Investment Income and Realized Performance Revenues less Realized Performance Compensation. Performance Allocations and Incentive Fees are presented together and referred to collectively as Performance Revenues or Performance Compensation.
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
The following tables present the financial data for Blackstone’s four segments for the three months ended September 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
392,785
|
|
|
$
|
352,866
|
|
|
$
|
146,082
|
|
|
$
|
152,037
|
|
|
$
|
1,043,770
|
|
Transaction, Advisory and Other Fees, Net
|
|
|
17,464
|
|
|
|
11,571
|
|
|
|
1,255
|
|
|
|
3,338
|
|
|
|
33,628
|
|
|
|
|
|
(1,039
|
)
|
|
|
(16,264
|
)
|
|
|
(22
|
)
|
|
|
(2,233
|
)
|
|
|
(19,558
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management and Advisory Fees, Net
|
|
|
409,210
|
|
|
|
348,173
|
|
|
|
147,315
|
|
|
|
153,142
|
|
|
|
1,057,840
|
|
Fee Related Performance Revenues
|
|
|
55,327
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,623
|
|
|
|
64,950
|
|
|
|
|
|
(138,342
|
)
|
|
|
(119,301
|
)
|
|
|
(41,405
|
)
|
|
|
(61,585
|
)
|
|
|
(360,633
|
)
|
|
|
|
|
(42,566
|
)
|
|
|
(45,702
|
)
|
|
|
(19,652
|
)
|
|
|
(43,293
|
)
|
|
|
(151,213
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
283,629
|
|
|
|
183,170
|
|
|
|
86,258
|
|
|
|
57,887
|
|
|
|
610,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Performance Revenues
|
|
|
18,872
|
|
|
|
295,239
|
|
|
|
5,618
|
|
|
|
225
|
|
|
|
319,954
|
|
Realized Performance Compensation
|
|
|
(7,343
|
)
|
|
|
(112,713
|
)
|
|
|
(1,257
|
)
|
|
|
(417
|
)
|
|
|
(121,730
|
)
|
Realized Principal Investment Income (Loss)
|
|
|
4,946
|
|
|
|
10,248
|
|
|
|
(150
|
)
|
|
|
840
|
|
|
|
15,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,475
|
|
|
|
192,774
|
|
|
|
4,211
|
|
|
|
648
|
|
|
|
214,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Distributable Earnings
|
|
$
|
300,104
|
|
|
$
|
375,944
|
|
|
$
|
90,469
|
|
|
$
|
58,535
|
|
|
$
|
825,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
266,779
|
|
|
$
|
252,510
|
|
|
$
|
140,694
|
|
|
$
|
149,746
|
|
|
$
|
809,729
|
|
Transaction, Advisory and Other Fees, Net
|
|
|
73,385
|
|
|
|
14,657
|
|
|
|
691
|
|
|
|
3,969
|
|
|
|
92,702
|
|
|
|
|
|
(7,635
|
)
|
|
|
(11,889
|
)
|
|
|
(18
|
)
|
|
|
(2,544
|
)
|
|
|
(22,086
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management and Advisory Fees, Net
|
|
|
332,529
|
|
|
|
255,278
|
|
|
|
141,367
|
|
|
|
151,171
|
|
|
|
880,345
|
|
Fee Related Performance Revenues
|
|
|
30,600
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,625
|
|
|
|
34,225
|
|
|
|
|
|
(132,183
|
)
|
|
|
(105,773
|
)
|
|
|
(38,898
|
)
|
|
|
(52,980
|
)
|
|
|
(329,834
|
)
|
|
|
|
|
(43,897
|
)
|
|
|
(38,235
|
)
|
|
|
(20,495
|
)
|
|
|
(41,724
|
)
|
|
|
(144,351
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187,049
|
|
|
|
111,270
|
|
|
|
81,974
|
|
|
|
60,092
|
|
|
|
440,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Performance Revenues
|
|
|
282,379
|
|
|
|
124,231
|
|
|
|
1,848
|
|
|
|
12,382
|
|
|
|
420,840
|
|
Realized Performance Compensation
|
|
|
(85,544
|
)
|
|
|
(52,034
|
)
|
|
|
(1,000
|
)
|
|
|
(5,292
|
)
|
|
|
(143,870
|
)
|
Realized Principal Investment Income
|
|
|
17,968
|
|
|
|
11,977
|
|
|
|
1,480
|
|
|
|
4,723
|
|
|
|
36,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
214,803
|
|
|
|
84,174
|
|
|
|
2,328
|
|
|
|
11,813
|
|
|
|
313,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Distributable Earnings
|
|
$
|
401,852
|
|
|
$
|
195,444
|
|
|
$
|
84,302
|
|
|
$
|
71,905
|
|
|
$
|
753,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables present the financial data for Blackstone’s four segments as of September 30, 2020 and for the nine months ended September 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 and the Nine Months Then Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,146,927
|
|
|
$
|
874,910
|
|
|
$
|
431,193
|
|
|
$
|
442,930
|
|
|
$
|
2,895,960
|
|
Transaction, Advisory and Other Fees, Net
|
|
|
72,527
|
|
|
|
42,505
|
|
|
|
2,872
|
|
|
|
14,681
|
|
|
|
132,585
|
|
|
|
|
|
(11,816
|
)
|
|
|
(33,510
|
)
|
|
|
(60
|
)
|
|
|
(8,019
|
)
|
|
|
(53,405
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management and Advisory Fees, Net
|
|
|
1,207,638
|
|
|
|
883,905
|
|
|
|
434,005
|
|
|
|
449,592
|
|
|
|
2,975,140
|
|
Fee Related Performance Revenues
|
|
|
66,383
|
|
|
|
—
|
|
|
|
—
|
|
|
|
26,066
|
|
|
|
92,449
|
|
|
|
|
|
(375,278
|
)
|
|
|
(322,494
|
)
|
|
|
(127,949
|
)
|
|
|
(188,080
|
)
|
|
|
(1,013,801
|
)
|
|
|
|
|
(127,567
|
)
|
|
|
(131,530
|
)
|
|
|
(56,126
|
)
|
|
|
(118,458
|
)
|
|
|
(433,681
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
771,176
|
|
|
|
429,881
|
|
|
|
249,930
|
|
|
|
169,120
|
|
|
|
1,620,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Performance Revenues
|
|
|
96,801
|
|
|
|
471,828
|
|
|
|
8,867
|
|
|
|
11,868
|
|
|
|
589,364
|
|
Realized Performance Compensation
|
|
|
(33,282
|
)
|
|
|
(192,372
|
)
|
|
|
(2,202
|
)
|
|
|
(2,963
|
)
|
|
|
(230,819
|
)
|
Realized Principal Investment Income (Loss)
|
|
|
13,819
|
|
|
|
38,011
|
|
|
|
(1,090
|
)
|
|
|
4,372
|
|
|
|
55,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,338
|
|
|
|
317,467
|
|
|
|
5,575
|
|
|
|
13,277
|
|
|
|
413,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Distributable Earnings
|
|
$
|
848,514
|
|
|
$
|
747,348
|
|
|
$
|
255,505
|
|
|
$
|
182,397
|
|
|
$
|
2,033,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,402,852
|
|
|
$
|
9,399,314
|
|
|
$
|
2,338,539
|
|
|
$
|
3,486,097
|
|
|
$
|
23,626,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
782,660
|
|
|
$
|
737,066
|
|
|
$
|
415,012
|
|
|
$
|
437,824
|
|
|
$
|
2,372,562
|
|
Transaction, Advisory and Other Fees, Net
|
|
|
121,286
|
|
|
|
83,474
|
|
|
|
1,732
|
|
|
|
12,855
|
|
|
|
219,347
|
|
|
|
|
|
(9,601
|
)
|
|
|
(34,563
|
)
|
|
|
(18
|
)
|
|
|
(9,164
|
)
|
|
|
(53,346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management and Advisory Fees, Net
|
|
|
894,345
|
|
|
|
785,977
|
|
|
|
416,726
|
|
|
|
441,515
|
|
|
|
2,538,563
|
|
Fee Related Performance Revenues
|
|
|
48,348
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,280
|
|
|
|
55,628
|
|
|
|
|
|
(344,794
|
)
|
|
|
(318,467
|
)
|
|
|
(118,474
|
)
|
|
|
(165,964
|
)
|
|
|
(947,699
|
)
|
|
|
|
|
(122,997
|
)
|
|
|
(112,865
|
)
|
|
|
(59,492
|
)
|
|
|
(114,429
|
)
|
|
|
(409,783
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
474,902
|
|
|
|
354,645
|
|
|
|
238,760
|
|
|
|
168,402
|
|
|
|
1,236,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Performance Revenues
|
|
|
558,134
|
|
|
|
403,737
|
|
|
|
17,899
|
|
|
|
29,225
|
|
|
|
1,008,995
|
|
Realized Performance Compensation
|
|
|
(183,186
|
)
|
|
|
(154,671
|
)
|
|
|
(4,588
|
)
|
|
|
(12,131
|
)
|
|
|
(354,576
|
)
|
Realized Principal Investment Income
|
|
|
63,257
|
|
|
|
80,022
|
|
|
|
13,503
|
|
|
|
28,831
|
|
|
|
185,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
438,205
|
|
|
|
329,088
|
|
|
|
26,814
|
|
|
|
45,925
|
|
|
|
840,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Distributable Earnings
|
|
$
|
913,107
|
|
|
$
|
683,733
|
|
|
$
|
265,574
|
|
|
$
|
214,327
|
|
|
$
|
2,076,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations of Total Segment Amounts
The following tables reconcile the Total Segment Revenues, Expenses and Distributable Earnings to their equivalent GAAP measure for the three and nine months ended September 30, 2020 and 2019 along with Total Assets as of September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,032,898
|
|
|
$
|
1,735,113
|
|
|
$
|
2,473,003
|
|
|
$
|
5,246,790
|
|
Less: Unrealized Performance Revenues (a)
|
|
|
(1,403,480
|
)
|
|
|
(176,604
|
)
|
|
|
982,043
|
|
|
|
(998,335
|
)
|
Less: Unrealized Principal Investment (Income)
Loss (b)
|
|
|
(177,125
|
)
|
|
|
5,219
|
|
|
|
216,169
|
|
|
|
(78,353
|
)
|
Less: Interest and Dividend Revenue (c)
|
|
|
(26,497
|
)
|
|
|
(45,048
|
)
|
|
|
(90,386
|
)
|
|
|
(137,738
|
)
|
|
|
|
|
192,623
|
|
|
|
(92,843
|
)
|
|
|
110,078
|
|
|
|
(85,882
|
)
|
Impact of Consolidation (e)
|
|
|
(167,654
|
)
|
|
|
120,214
|
|
|
|
11,865
|
|
|
|
15,246
|
|
Amortization of Intangibles (f)
|
|
|
387
|
|
|
|
387
|
|
|
|
1,161
|
|
|
|
1,161
|
|
Transaction-Related Charges (g)
|
|
|
6,084
|
|
|
|
(176,623
|
)
|
|
|
3,944
|
|
|
|
(179,329
|
)
|
Intersegment Eliminations
|
|
|
1,392
|
|
|
|
1,743
|
|
|
|
4,188
|
|
|
|
5,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Revenue (h)
|
|
$
|
1,458,628
|
|
|
$
|
1,371,558
|
|
|
$
|
3,712,065
|
|
|
$
|
3,788,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,332,846
|
|
|
$
|
947,220
|
|
|
$
|
1,867,452
|
|
|
$
|
2,850,624
|
|
Less: Unrealized Performance Allocations Compensation (i)
|
|
|
(509,474
|
)
|
|
|
(94,907
|
)
|
|
|
433,091
|
|
|
|
(446,440
|
)
|
Less: Equity-Based Compensation (j)
|
|
|
(89,862
|
)
|
|
|
(58,570
|
)
|
|
|
(266,675
|
)
|
|
|
(178,451
|
)
|
Less: Interest Expense (k)
|
|
|
(39,228
|
)
|
|
|
(52,815
|
)
|
|
|
(119,692
|
)
|
|
|
(137,683
|
)
|
Impact of Consolidation (e)
|
|
|
(2,084
|
)
|
|
|
(14,444
|
)
|
|
|
(22,563
|
)
|
|
|
(39,716
|
)
|
Amortization of Intangibles (f)
|
|
|
(16,096
|
)
|
|
|
(16,096
|
)
|
|
|
(48,288
|
)
|
|
|
(48,288
|
)
|
Transaction-Related Charges (g)
|
|
|
(41,199
|
)
|
|
|
(94,076
|
)
|
|
|
(166,493
|
)
|
|
|
(293,227
|
)
|
Administrative Fee Adjustment (l)
|
|
|
(2,719
|
)
|
|
|
—
|
|
|
|
(2,719
|
)
|
|
|
—
|
|
Intersegment Eliminations
|
|
|
1,392
|
|
|
|
1,743
|
|
|
|
4,188
|
|
|
|
5,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Expenses (m)
|
|
$
|
633,576
|
|
|
$
|
618,055
|
|
|
$
|
1,678,301
|
|
|
$
|
1,712,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
101,059
|
|
|
$
|
223,056
|
|
|
$
|
(68,537
|
)
|
|
$
|
414,512
|
|
Impact of Consolidation (e)
|
|
|
(101,059
|
)
|
|
|
(223,056
|
)
|
|
|
68,537
|
|
|
|
(414,512
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Other Income
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Provision (Benefit) for Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total GAAP Income Before Provision (Benefit) for Taxes
|
|
$
|
1,801,111
|
|
|
$
|
1,010,949
|
|
|
$
|
537,014
|
|
|
$
|
2,810,678
|
|
Less: Unrealized Performance Revenues (a)
|
|
|
(1,403,480
|
)
|
|
|
(176,604
|
)
|
|
|
982,043
|
|
|
|
(998,335
|
)
|
Less: Unrealized Principal Investment (Income) Loss (b)
|
|
|
(177,125
|
)
|
|
|
5,219
|
|
|
|
216,169
|
|
|
|
(78,353
|
)
|
Less: Interest and Dividend Revenue (c)
|
|
|
(26,497
|
)
|
|
|
(45,048
|
)
|
|
|
(90,386
|
)
|
|
|
(137,738
|
)
|
|
|
|
|
192,623
|
|
|
|
(92,843
|
)
|
|
|
110,078
|
|
|
|
(85,882
|
)
|
Plus: Unrealized Performance Allocations Compensation (i)
|
|
|
509,474
|
|
|
|
94,907
|
|
|
|
(433,091
|
)
|
|
|
446,440
|
|
Plus: Equity-Based Compensation (j)
|
|
|
89,862
|
|
|
|
58,570
|
|
|
|
266,675
|
|
|
|
178,451
|
|
Plus: Interest Expense (k)
|
|
|
39,228
|
|
|
|
52,815
|
|
|
|
119,692
|
|
|
|
137,683
|
|
Impact of Consolidation (e)
|
|
|
(266,629
|
)
|
|
|
(88,398
|
)
|
|
|
102,965
|
|
|
|
(359,550
|
)
|
Amortization of Intangibles (f)
|
|
|
16,483
|
|
|
|
16,483
|
|
|
|
49,449
|
|
|
|
49,449
|
|
Transaction-Related Charges (g)
|
|
|
47,283
|
|
|
|
(82,547
|
)
|
|
|
170,437
|
|
|
|
113,898
|
|
Administrative Fee Adjustment (l)
|
|
|
2,719
|
|
|
|
—
|
|
|
|
2,719
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Distributable Earnings
|
|
$
|
825,052
|
|
|
$
|
753,503
|
|
|
$
|
2,033,764
|
|
|
$
|
2,076,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
25,041,565
|
|
Impact of Consolidation (e)
|
|
|
(1,414,763
|
)
|
|
|
|
|
|
|
|
|
|
$
|
23,626,802
|
|
|
|
|
|
|
|
Segment basis presents revenues and expenses on a basis that deconsolidates the investment funds Blackstone manages and excludes the amortization of intangibles and Transaction-Related Charges.
|
(a)
|
This adjustment removes Unrealized Performance Revenues on a segment basis.
|
|
(b)
|
This adjustment removes Unrealized Principal Investment Income (Loss) on a segment basis.
|
|
(c)
|
This adjustment removes Interest and Dividend Revenue on a segment basis.
|
|
(d)
|
This adjustment removes Other Revenue on a segment basis. For the three months ended September 30, 2020 and 2019, Other Revenue on a GAAP basis was $(192.2) million and $93.3 million, and included $(193.5) million and $91.9 million of foreign exchange gains (losses), respectively. For the nine months ended September 30, 2020 and 2019, Other Revenue on a GAAP basis was $(109.6) million and $86.4 million, and included $(113.2) million and $83.7 million of foreign exchange gains (losses), respectively.
|
|
(e)
|
This adjustment reverses the effect of consolidating Blackstone Funds, which are excluded from Blackstone’s segment presentation. This adjustment includes the elimination of Blackstone’s interest in these funds, the removal of revenue from the reimbursement of certain expenses by the Blackstone Funds, which are presented gross under GAAP but netted against Management and Advisory Fees, Net in the Total Segment measures, and the removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by non-controlling interests.
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
|
(f)
|
This adjustment removes the amortization of transaction-related intangibles, which are excluded from Blackstone’s segment presentation. This amount includes amortization of intangibles associated with Blackstone’s investment in Pátria, which is accounted for under the equity method.
|
|
(g)
|
This adjustment removes Transaction-Related Charges, which are excluded from Blackstone’s segment presentation. Transaction-Related Charges arise from corporate actions including acquisitions, divestitures, and Blackstone’s initial public offering. They consist primarily of equity-based compensation charges, gains and losses on contingent consideration arrangements, changes in the balance of the Tax Receivable Agreement resulting from a change in tax law or similar event, transaction costs and any gains or losses associated with these corporate actions.
|
|
(h)
|
Total Segment Revenues is comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Management and Advisory Fees, Net
|
|
$
|
1,057,840
|
|
|
$
|
880,345
|
|
|
$
|
2,975,140
|
|
|
$
|
2,538,563
|
|
Total Segment Fee Related Performance Revenues
|
|
|
64,950
|
|
|
|
34,225
|
|
|
|
92,449
|
|
|
|
55,628
|
|
Total Segment Realized Performance Revenues
|
|
|
319,954
|
|
|
|
420,840
|
|
|
|
589,364
|
|
|
|
1,008,995
|
|
Total Segment Realized Principal Investment Income
|
|
|
15,884
|
|
|
|
36,148
|
|
|
|
55,112
|
|
|
|
185,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,458,628
|
|
|
$
|
1,371,558
|
|
|
$
|
3,712,065
|
|
|
$
|
3,788,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
This adjustment removes Unrealized Performance Allocations Compensation.
|
|
(j)
|
This adjustment removes Equity-Based Compensation on a segment basis.
|
|
(k)
|
This adjustment removes Interest Expense, excluding interest expense related to the Tax Receivable Agreement.
|
|
(l)
|
This adjustment adds an amount equal to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units. The administrative fee is accounted for as a capital contribution under GAAP, but is reflected as a reduction of Other Operating Expenses in Blackstone’s segment presentation.
|
|
(m)
|
Total Segment Expenses is comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Fee Related Compensation
|
|
$
|
360,633
|
|
|
$
|
329,834
|
|
|
$
|
1,013,801
|
|
|
$
|
947,699
|
|
Total Segment Realized Performance Compensation
|
|
|
121,730
|
|
|
|
143,870
|
|
|
|
230,819
|
|
|
|
354,576
|
|
Total Segment Other Operating Expenses
|
|
|
151,213
|
|
|
|
144,351
|
|
|
|
433,681
|
|
|
|
409,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
633,576
|
|
|
$
|
618,055
|
|
|
$
|
1,678,301
|
|
|
$
|
1,712,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Reconciliations of Total Segment Components
The following tables reconcile the components of Total Segments to their equivalent GAAP measures, reported on the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,053,851
|
|
|
$
|
878,151
|
|
|
$
|
2,958,411
|
|
|
$
|
2,528,255
|
|
|
|
|
|
3,989
|
|
|
|
2,194
|
|
|
|
16,729
|
|
|
|
10,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,057,840
|
|
|
$
|
880,345
|
|
|
$
|
2,975,140
|
|
|
$
|
2,538,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Realized Performance Revenues to Total Segment Fee Related Performance Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,498
|
|
|
$
|
8,254
|
|
|
$
|
40,959
|
|
|
$
|
42,301
|
|
Investment Income - Realized Performance Allocations
|
|
|
371,406
|
|
|
|
446,550
|
|
|
|
640,846
|
|
|
|
1,021,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
384,904
|
|
|
|
454,804
|
|
|
|
681,805
|
|
|
|
1,063,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Realized Performance Revenues
|
|
|
(319,954
|
)
|
|
|
(420,840
|
)
|
|
|
(589,364
|
)
|
|
|
(1,008,995
|
)
|
|
|
|
|
—
|
|
|
|
261
|
|
|
|
8
|
|
|
|
877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
64,950
|
|
|
$
|
34,225
|
|
|
$
|
92,449
|
|
|
$
|
55,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Compensation to Total Segment Fee Related Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
460,983
|
|
|
$
|
462,766
|
|
|
$
|
1,395,983
|
|
|
$
|
1,372,684
|
|
Incentive Fee Compensation
|
|
|
7,385
|
|
|
|
5,419
|
|
|
|
22,339
|
|
|
|
19,711
|
|
Realized Performance Allocations Compensation
|
|
|
142,149
|
|
|
|
155,663
|
|
|
|
253,141
|
|
|
|
367,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
610,517
|
|
|
|
623,848
|
|
|
|
1,671,463
|
|
|
|
1,760,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Realized Performance Compensation
|
|
|
(121,730
|
)
|
|
|
(143,870
|
)
|
|
|
(230,819
|
)
|
|
|
(354,576
|
)
|
Less: Equity-Based Compensation - Operating Compensation
|
|
|
(88,180
|
)
|
|
|
(56,139
|
)
|
|
|
(260,719
|
)
|
|
|
(170,072
|
)
|
Less: Equity-Based Compensation - Performance Compensation
|
|
|
(1,682
|
)
|
|
|
(2,431
|
)
|
|
|
(5,956
|
)
|
|
|
(8,379
|
)
|
|
|
|
|
(38,292
|
)
|
|
|
(91,574
|
)
|
|
|
(160,168
|
)
|
|
|
(279,552
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
360,633
|
|
|
$
|
329,834
|
|
|
$
|
1,013,801
|
|
|
$
|
947,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP General, Administrative and Other to Total Segment Other Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
171,041
|
|
|
$
|
171,067
|
|
|
$
|
497,658
|
|
|
$
|
492,437
|
|
|
|
|
|
(19,828
|
)
|
|
|
(26,716
|
)
|
|
|
(63,977
|
)
|
|
|
(82,654
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
151,213
|
|
|
$
|
144,351
|
|
|
$
|
433,681
|
|
|
$
|
409,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Performance Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,498
|
|
|
$
|
8,254
|
|
|
$
|
40,959
|
|
|
$
|
42,301
|
|
Investment Income - Realized Performance Allocations
|
|
|
371,406
|
|
|
|
446,550
|
|
|
|
640,846
|
|
|
|
1,021,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
384,904
|
|
|
|
454,804
|
|
|
|
681,805
|
|
|
|
1,063,746
|
|
|
Total Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Fee Related Performance Revenues
|
|
|
(64,950
|
)
|
|
|
(34,225
|
)
|
|
|
(92,449
|
)
|
|
|
(55,628
|
)
|
|
|
|
|
—
|
|
|
|
261
|
|
|
|
8
|
|
|
|
877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
319,954
|
|
|
$
|
420,840
|
|
|
$
|
589,364
|
|
|
$
|
1,008,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Performance Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Fee Compensation
|
|
$
|
7,385
|
|
|
$
|
5,419
|
|
|
$
|
22,339
|
|
|
$
|
19,711
|
|
Realized Performance Allocation Compensation
|
|
|
142,149
|
|
|
|
155,663
|
|
|
|
253,141
|
|
|
|
367,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
149,534
|
|
|
|
161,082
|
|
|
|
275,480
|
|
|
|
387,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Fee Related Performance Compensation
|
|
|
(26,122
|
)
|
|
|
(14,781
|
)
|
|
|
(38,705
|
)
|
|
|
(24,639
|
)
|
Less: Equity-Based Compensation - Performance Compensation
|
|
|
(1,682
|
)
|
|
|
(2,431
|
)
|
|
|
(5,956
|
)
|
|
|
(8,379
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
121,730
|
|
|
$
|
143,870
|
|
|
$
|
230,819
|
|
|
$
|
354,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Principal Investment Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
61,017
|
|
|
$
|
74,642
|
|
|
$
|
170,814
|
|
|
$
|
292,943
|
|
|
|
|
|
(45,133
|
)
|
|
|
(38,494
|
)
|
|
|
(115,702
|
)
|
|
|
(107,330
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,884
|
|
|
$
|
36,148
|
|
|
$
|
55,112
|
|
|
$
|
185,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment basis presents revenues and expenses on a basis that deconsolidates the investment funds Blackstone manages and excludes the amortization of intangibles, the expense of equity-based awards and Transaction-Related Charges.
|
(a)
|
Represents (1) the add back of net management fees earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of revenue from the reimbursement of certain expenses by the Blackstone Funds, which are presented gross under GAAP but netted against Management and Advisory Fees, Net in the Total Segment measures.
|
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
|
(b)
|
Represents the add back of Performance Revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation.
|
|
(c)
|
Represents the removal of Transaction-Related Charges that are not recorded in the Total Segment measures.
|
|
(d)
|
Represents the removal of (1) the amortization of transaction-related intangibles, and (2) certain expenses reimbursed by the Blackstone Funds, which are presented gross under GAAP but netted against Management and Advisory Fees, Net in the Total Segment measures. Beginning in the three months ended September 30, 2020, includes a reduction equal to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units which is accounted for as a capital contribution under GAAP, but is reflected as a reduction of Other Operating Expenses in Blackstone’s segment presentation.
|
|
(e)
|
Represents (1) the add back of Principal Investment Income, including general partner income, earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by non-controlling interests.
|
There have been no events since September 30, 2020 that require recognition or disclosure in the Condensed Consolidated Financial Statements.
Item 1A. Unaudited Supplemental Presentation of Statements of Financial Condition
The Blackstone Group Inc.
Unaudited Consolidating Statements of Financial Condition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
2,628,895
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,628,895
|
|
Cash Held by Blackstone Funds and Other
|
|
|
—
|
|
|
|
85,218
|
|
|
|
—
|
|
|
|
85,218
|
|
|
|
|
|
13,203,192
|
|
|
|
1,500,398
|
|
|
|
(280,134
|
)
|
|
|
14,423,456
|
|
|
|
|
|
362,537
|
|
|
|
115,064
|
|
|
|
—
|
|
|
|
477,601
|
|
|
|
|
|
2,823,577
|
|
|
|
8,337
|
|
|
|
(14,610
|
)
|
|
|
2,817,304
|
|
|
|
|
|
344,258
|
|
|
|
—
|
|
|
|
—
|
|
|
|
344,258
|
|
|
|
|
|
1,869,860
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,869,860
|
|
|
|
|
|
544,415
|
|
|
|
490
|
|
|
|
—
|
|
|
|
544,905
|
|
|
|
|
|
544,361
|
|
|
|
—
|
|
|
|
—
|
|
|
|
544,361
|
|
|
|
|
|
1,305,707
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,305,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
23,626,802
|
|
|
$
|
1,709,507
|
|
|
$
|
(294,744
|
)
|
|
$
|
25,041,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,570,789
|
|
|
$
|
99
|
|
|
$
|
—
|
|
|
$
|
5,570,888
|
|
|
|
|
|
991,970
|
|
|
|
86,975
|
|
|
|
(14,609
|
)
|
|
|
1,064,336
|
|
Accrued Compensation and Benefits
|
|
|
3,349,418
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,349,418
|
|
Securities Sold, Not Yet Purchased
|
|
|
9,369
|
|
|
|
41,862
|
|
|
|
—
|
|
|
|
51,231
|
|
|
|
|
|
—
|
|
|
|
80,597
|
|
|
|
—
|
|
|
|
80,597
|
|
Operating Lease Liabilities
|
|
|
621,408
|
|
|
|
—
|
|
|
|
—
|
|
|
|
621,408
|
|
Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
759,892
|
|
|
|
44,117
|
|
|
|
—
|
|
|
|
804,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,302,846
|
|
|
|
253,650
|
|
|
|
(14,609
|
)
|
|
|
11,541,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Non-Controlling Interests in Consolidated Entities
|
|
|
21,999
|
|
|
|
41,385
|
|
|
|
—
|
|
|
|
63,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Additional Paid-in-Capital
|
|
|
6,243,722
|
|
|
|
298,395
|
|
|
|
(298,395
|
)
|
|
|
6,243,722
|
|
Retained Earnings (Deficit)
|
|
|
(36,432
|
)
|
|
|
(18,260
|
)
|
|
|
18,260
|
|
|
|
(36,432
|
)
|
Accumulated Other Comprehensive Loss
|
|
|
(27,407
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(27,407
|
)
|
Non-Controlling Interests in Consolidated Entities
|
|
|
2,811,853
|
|
|
|
1,134,337
|
|
|
|
—
|
|
|
|
3,946,190
|
|
Non-Controlling Interests in Blackstone Holdings
|
|
|
3,310,214
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,310,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,301,957
|
|
|
|
1,414,472
|
|
|
|
(280,135
|
)
|
|
|
13,436,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
$
|
23,626,802
|
|
|
$
|
1,709,507
|
|
|
$
|
(294,744
|
)
|
|
$
|
25,041,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Blackstone Group Inc.
Unaudited Consolidating Statements of Financial Condition - Continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
2,172,441
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,172,441
|
|
Cash Held by Blackstone Funds and Other
|
|
|
—
|
|
|
|
351,210
|
|
|
|
—
|
|
|
|
351,210
|
|
|
|
|
|
14,535,685
|
|
|
|
8,380,698
|
|
|
|
(634,701
|
)
|
|
|
22,281,682
|
|
|
|
|
|
754,703
|
|
|
|
220,372
|
|
|
|
—
|
|
|
|
975,075
|
|
|
|
|
|
2,606,563
|
|
|
|
8,818
|
|
|
|
(20,508
|
)
|
|
|
2,594,873
|
|
|
|
|
|
397,508
|
|
|
|
—
|
|
|
|
—
|
|
|
|
397,508
|
|
|
|
|
|
1,869,860
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,869,860
|
|
|
|
|
|
381,289
|
|
|
|
1,204
|
|
|
|
—
|
|
|
|
382,493
|
|
|
|
|
|
471,059
|
|
|
|
—
|
|
|
|
—
|
|
|
|
471,059
|
|
|
|
|
|
1,089,305
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,089,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
24,278,413
|
|
|
$
|
8,962,302
|
|
|
$
|
(655,209
|
)
|
|
$
|
32,585,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,600,856
|
|
|
$
|
6,479,867
|
|
|
$
|
—
|
|
|
$
|
11,080,723
|
|
|
|
|
|
885,655
|
|
|
|
509,681
|
|
|
|
(368,465
|
)
|
|
|
1,026,871
|
|
Accrued Compensation and Benefits
|
|
|
3,796,044
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,796,044
|
|
Securities Sold, Not Yet Purchased
|
|
|
20,256
|
|
|
|
55,289
|
|
|
|
—
|
|
|
|
75,545
|
|
|
|
|
|
—
|
|
|
|
154,118
|
|
|
|
—
|
|
|
|
154,118
|
|
Operating Lease Liabilities
|
|
|
542,994
|
|
|
|
—
|
|
|
|
—
|
|
|
|
542,994
|
|
Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
504,804
|
|
|
|
301,355
|
|
|
|
—
|
|
|
|
806,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,350,609
|
|
|
|
7,500,310
|
|
|
|
(368,465
|
)
|
|
|
17,482,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Non-Controlling Interests in Consolidated Entities
|
|
|
22,002
|
|
|
|
65,649
|
|
|
|
—
|
|
|
|
87,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Additional Paid-in-Capital
|
|
|
6,428,647
|
|
|
|
283,339
|
|
|
|
(283,339
|
)
|
|
|
6,428,647
|
|
|
|
|
|
609,625
|
|
|
|
3,405
|
|
|
|
(3,405
|
)
|
|
|
609,625
|
|
Accumulated Other Comprehensive Loss
|
|
|
(28,495
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(28,495
|
)
|
Non-Controlling Interests in Consolidated Entities
|
|
|
3,076,470
|
|
|
|
1,109,599
|
|
|
|
—
|
|
|
|
4,186,069
|
|
Non-Controlling Interests in Blackstone Holdings
|
|
|
3,819,548
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,819,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,905,802
|
|
|
|
1,396,343
|
|
|
|
(286,744
|
)
|
|
|
15,015,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
$
|
24,278,413
|
|
|
$
|
8,962,302
|
|
|
$
|
(655,209
|
)
|
|
$
|
32,585,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The Consolidated Blackstone Funds consisted of the following:
|
Blackstone / GSO Global Dynamic Credit Feeder Fund (Cayman) LP
Blackstone / GSO Global Dynamic Credit Funding Designated Activity Company
Blackstone / GSO Global Dynamic Credit Master Fund
Blackstone / GSO Global Dynamic Credit USD Feeder Fund (Ireland)
Blackstone Real Estate Special Situations Holdings L.P.
Blackstone Strategic Alliance Fund L.P.
Collateralized loan obligation vehicles*
Mezzanine side-by-side investment vehicles
Private equity side-by-side investment vehicles
Real estate side-by-side investment vehicles
Hedge Fund Solutions side-by-side investment vehicles.
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|
*
|
Consolidated as of December 31, 2019 only.
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with The Blackstone Group Inc.’s condensed consolidated financial statements and the related notes included within this Quarterly Report on
Form 10-Q.
Effective July 1, 2019, The Blackstone Group L.P. (the “Partnership”) converted from a Delaware limited partnership to a Delaware corporation, The Blackstone Group Inc. (the “Conversion”). This report includes the results for the Partnership prior to the Conversion and The Blackstone Group Inc. following the Conversion. In this report, references to “Blackstone,” the “Company,” “we,” “us” or “our” refer to (a) The Blackstone Group Inc. and its consolidated subsidiaries following the Conversion and (b) the Partnership and its consolidated subsidiaries prior to the Conversion. All references to shares or per share amounts prior to the Conversion refer to units or per unit amounts. Unless otherwise noted, all references to shares or per share amounts following the Conversion refer to shares or per share amounts of Class A common stock. All references to dividends prior to the Conversion refer to distributions. See “– Organizational Structure.”
Effective January 1, 2020, the Credit segment was renamed Credit & Insurance. There was no change to the composition of the segment or historical results.
Blackstone is one of the world’s leading investment firms. Our business is organized into four segments:
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•
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Our real estate business is a global leader in real estate investing. Our Real Estate segment operates as one globally integrated business, with investments in North America, Europe, Asia and Latin America. Our real estate investment teams seek to utilize our global expertise and presence to generate attractive risk-adjusted returns for our investors and to make a positive impact on the communities in which we invest.
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Our Blackstone Real Estate Partners (“BREP”) funds are geographically diversified and target a broad range of “opportunistic” real estate and real estate-related investments. The BREP funds include global funds as well as funds focused specifically on Europe or Asia investments. BREP seeks to invest thematically in high quality assets, focusing where we see outsized growth potential driven by global economic and demographic trends. BREP has made significant investments in logistics, office, rental housing, hospitality and retail properties around the world, as well as a variety of real estate operating companies.
Our Blackstone Real Estate Debt Strategies (“BREDS”) vehicles primarily target real estate-related debt investment opportunities. BREDS’ scale and investment mandates enable it to provide a variety of lending and investment options including mezzanine loans, senior loans and liquid securities. The BREDS platform includes a number of high-yield real estate debt funds, liquid real estate debt funds and BXMT, a NYSE-listed real estate investment trust (“REIT”).
Our core+ real estate business includes Blackstone Property Partners (“BPP”) and a non-exchange traded REIT (“BREIT”). BPP has assembled a global portfolio of high quality investments across North America, Europe and Asia, which target substantially stabilized assets in prime markets with a focus on industrial, multifamily, office and retail assets. BREIT invests primarily in stabilized income-oriented commercial real estate in the U.S. and to a lesser extent in real estate-related securities.
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|
•
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|
Our Private Equity segment includes our corporate private equity business, which consists of (a) our flagship private equity funds (Blackstone Capital Partners (“BCP”) funds), (b) our sector-focused private equity funds, including our energy-focused funds (Blackstone Energy Partners (“BEP”) funds), (c) our Asia-focused fund (Blackstone Capital Partners Asia (“BCP Asia”) fund) and (d) our core private equity funds, Blackstone Core Equity Partners (“BCEP”). In addition, our Private Equity segment includes (a) our opportunistic investment platform that invests globally across asset classes, industries and geographies, Blackstone Tactical Opportunities (“Tactical Opportunities”), (b) our secondary fund of funds business, Strategic Partners Fund Solutions (“Strategic Partners”), (c) our infrastructure-focused funds, Blackstone Infrastructure Partners (“BIP”), (d) our life sciences private investment platform, Blackstone Life Sciences (“BXLS”), (e) our growth equity investment platform, Blackstone Growth (“BXG”), (f) a multi-asset investment program for eligible high net worth investors offering exposure to certain of Blackstone’s key illiquid investment strategies through a single commitment, Blackstone Total Alternatives Solution (“BTAS”) and (g) our capital markets services business, Blackstone Capital Markets (“BXCM”).
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We are a world leader in private equity investing. Our corporate private equity business, established in 1987, pursues transactions across industries in both established and growth-oriented businesses across the globe. It strives to create value by investing in great businesses where our capital, strategic insight, global relationships and operational support can drive transformation. Our core private equity funds target control-oriented investments in high quality companies with durable businesses and seek to offer a lower level of risk and a longer hold period than traditional private equity.
Tactical Opportunities invests globally across asset classes, industries and geographies, seeking to identify and execute on attractive, differentiated investment opportunities, leveraging the intellectual capital across our various businesses while continuously optimizing its approach in the face of ever-changing market conditions. Strategic Partners is a total fund solutions provider that acquires interests in high quality private funds from original holders seeking liquidity, makes primary investments and co-investments with financial sponsors and provides investment advisory services to clients investing in primary and secondary investments in private funds and co-investments. BIP focuses on investment across all infrastructure sectors, including energy, transportation, water and waste and communications. BXLS is our private investment platform with capabilities to invest across the life cycle of companies and products within the life sciences sector. BXG seeks to deliver attractive risk-adjusted returns by investing in dynamic, growth-stage businesses, with a focus on the consumer, enterprise solutions, financial services and healthcare sectors.
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•
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The principal component of our Hedge Fund Solutions segment is Blackstone Alternative Asset Management (“BAAM”). BAAM is the world’s largest discretionary allocator to hedge funds, managing a broad range of commingled and customized fund solutions since its inception in 1990. The Hedge Fund Solutions segment also includes investment platforms that seed new hedge fund businesses, purchase minority interests in more established general partners and management companies of funds, invest in special situation opportunities, create alternative solutions in the form of daily liquidity products and invest directly.
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•
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The principal component of our Credit & Insurance segment is GSO Capital Partners LP (“GSO”). GSO is one of the largest credit-oriented managers in the world and is the largest manager of collateralized loan obligations (“CLOs”) globally. The investment portfolios of the funds GSO manages or sub-advises predominantly consist of loans and securities of non-investment grade companies spread across the capital structure including senior debt, subordinated debt, preferred stock and common equity.
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GSO is organized into three overarching strategies: performing credit, distressed and long only. Performing credit strategies include mezzanine lending funds, middle market direct lending funds, including our business development company (“BDC”), Blackstone / GSO Secured Lending (“BGSL”), our structured products group and other performing credit strategy funds. Distressed strategies include credit alpha strategies, stressed/distressed funds and energy strategies. Long only strategies consist of CLOs, closed-ended funds, open-ended funds and separately managed accounts.
In addition, our Credit & Insurance segment includes our publicly traded master limited partnership (“MLP”) investment platform, which is managed by Harvest. Harvest primarily invests capital raised from institutional investors in separately managed accounts and pooled vehicles, investing in publicly traded MLPs holding primarily midstream energy assets in the U.S.
Our insurer-focused platform, BIS, also a part of our Credit & Insurance segment, partners with insurers to deliver customized and diversified portfolios of Blackstone products across asset classes, including the option for full management of insurance companies’ investment portfolios.
We generate revenue from fees earned pursuant to contractual arrangements with funds, fund investors and fund portfolio companies (including management, transaction and monitoring fees), and from capital markets services. We also invest in the funds we manage and we are entitled to a pro-rata share of the results of the fund (a “pro-rata allocation”). In addition to a pro-rata allocation, and assuming certain investment returns are achieved, we are entitled to a disproportionate allocation of the income otherwise allocable to the limited partners, commonly referred to as carried interest (“Performance Allocations”). In certain structures, we receive a contractual incentive fee from an investment fund in the event that specified cumulative investment returns are achieved (an “Incentive Fee”, and together with Performance Allocations, “Performance Revenues”). The composition of our revenues will vary based on market conditions and the cyclicality of the different businesses in which we operate. Net investment gains and investment income generated by the Blackstone Funds are driven by value created by our operating and strategic initiatives as well as overall market conditions. Fair values are affected by changes in the fundamentals of our portfolio company and other investments, the industries in which they operate, the overall economy and other market conditions.
As the global response to novel coronavirus (“COVID-19”) continues to evolve, our primary focus has been the safety and wellbeing of our employees and their families, as well as the seamless functioning of the firm in serving our limited partner investors who have entrusted us with their capital, and our shareholders. In accordance with local government guidance and social distancing recommendations, the majority of our employees globally have been working remotely. Our technology infrastructure has proven to be robust and capable of supporting this model. We have implemented rigorous protocols for remote work across the firm, including increased cadence of group calls and updates, and frequent communication across leadership and working levels. We are leveraging technology to ensure our teams stay connected and productive, and that our culture remains strong even in these unusual circumstances. While we are generally not meeting with our clients in person, we continue to actively communicate with our clients through videoconference, teleconference and email. Investment committees continue to convene as needed, and the firm continues to operate across investment, asset management and corporate support functions.
As previously disclosed, in mid-July, our U.S. and European offices began a phased reopening, consistent with local government guidelines, on a voluntary basis with social distancing and other safety protocols in place. We continue to closely monitor applicable public health and government guidance.
Blackstone’s businesses are materially affected by conditions in the financial markets and economic conditions in the U.S., Europe, Asia and, to a lesser extent, elsewhere in the world.
The third quarter of 2020 was characterized by continued recovery in global equity and credit markets as previously implemented fiscal and monetary stimulus continued to provide support to markets despite the ongoing economic impacts of the
COVID-19
pandemic. Although the global economy has begun reopening, economic recovery is likely to continue to be gradual, uneven and characterized by meaningful dispersion across sectors and regions, with uncertainty regarding its ultimate length and trajectory.
All major U.S. equity market sectors except for energy posted positive returns in the third quarter. S&P 500 consumer discretionary stocks showed the strongest outperformance, ending the quarter up 15%, while the S&P 500 ended the quarter up 9%. S&P 500 energy stocks ended the quarter meaningfully lower, down 20% for the quarter and down 48% year-to-date. The price of West Texas Intermediate crude oil rose 2% in the third quarter to $40 per barrel, but was still down significantly from the 2019 year end price of $61. The Henry Hub Natural Gas spot price fell 0.6% in the third quarter to $1.63. Spot prices for other commodities increased and the Bloomberg Commodity Index rose 9% in the third quarter.
U.S. leveraged loan and high yield bond prices continued their recovery, increasing 4% and 5%, respectively, for the third quarter. High yield spreads compressed 117 basis points in the third quarter, while issuance increased 57% year-over-year. The Federal Reserve maintained the federal funds target range at 0.0%-0.25% due to the effects of the COVID-19 pandemic weighing on economic activity in the near term. In addition, the Federal Reserve has expanded its balance sheet since mid-March by nearly $3 trillion to support new credit and liquidity facilities and expects to maintain the current pace of purchasing of such instruments in the coming months. Three-month LIBOR declined 0.07% in the third quarter to 0.23%, remaining near historical lows.
Volatility decreased in the third quarter with the CBOE Volatility index declining 13% to 26.4. Global equity issuance declined 25% compared to the second quarter, but increased 55% relative to the third quarter of 2019. Merger and acquisition activity improved in the third quarter, with deal announcements up 49% compared to the second quarter and up 4% compared to the third quarter of 2019.
The industrial sector continued to show mixed signals, as industrial production declined 7.3% in the third quarter from the year-ago period. However, the Institute for Supply Management Purchasing Managers’ Index increased from last quarter, rising to 55.4 from 52.6 at the end of the second quarter, signaling moderate further expansion in the U.S. manufacturing sector.
The U.S. unemployment rate decreased meaningfully from 11.1% at the end of June, when it reached one of the highest levels since January 2013, to 7.9% at the end of September, but continues to be at historically elevated levels. Wages grew, with average hourly earnings increasing 4.7% year-over-year based on the three month average for production and nonsupervisory employees. In addition, U.S. retail sales in the third quarter reported a 3.6% increase year-over-year, and new orders for durable goods in September increased for the fifth consecutive month.
Countries around the globe continue to grapple with the economic impacts of the
COVID-19
pandemic. Although economic recovery is partially underway, it continues to be gradual, uneven, and characterized by meaningful dispersion across sectors and regions, and could be hindered by persistent or resurgent infection rates. Commercial activity in a number of industries, including travel, hospitality, and in-person entertainment, remains challenged. The continued uncertainty regarding the length of economic recovery precludes any prediction as to the ultimate adverse impact of
COVID-19
on economic and market conditions.
Although the result of the recent Presidential election in the United States has not been finalized, a change in administration could lead to significant changes in the legal, regulatory and tax landscapes. The potential for governmental policy and regulatory reforms in a variety of areas as a result of such a change creates uncertainty for our business and investment strategies and may adversely affect the profitability of certain of our funds’ portfolio companies. For example, assuming Vice President Biden prevails in the election, his administration may pursue tax policies seeking to increase the corporate tax rate, limit further the deductibility of interest or subject carried interest to more onerous taxation. Especially if the U.S. Senate were no longer Republican controlled, this could materially increase the amount of taxes we, our portfolio companies, our investors or our employees and other key personnel would be required to pay. In that connection, if there were a Democratic sweep of the Executive and Legislative branches of government, this could materially increase the risk of legislative reforms that would adversely affect our business and the profitability of our funds’ portfolio companies.
Further, any reforms that may be undertaken as a result of a change in administration with respect to the regulation of asset management firms, or the U.S. financial services industry more generally, may affect the manner in which we conduct our business. A change in administration would likely result in leadership changes at a number of U.S. federal regulatory agencies with oversight over the U.S. financial services industry. This could pose uncertainty with respect to such agencies’ policy priorities and may lead to increased regulatory enforcement activity in the financial services industry. Leadership and policy changes could also affect various industries in which our portfolio companies operate, including healthcare, energy and consumer finance.
We believe the eventual conclusion of the U.S. Presidential and Congressional elections will increase the likelihood that the U.S. Congress will authorize additional fiscal stimulus to provide support to markets in response to the continued impacts of the COVID-19 pandemic. Moreover, certain governmental policy changes outlined by Vice President Biden during his campaign, including government investment in infrastructure, create potential opportunities for certain of our funds. However, the prospect of litigation with respect to the results of the Presidential election and substantial lack of clarity regarding the likelihood, timing and details of these and other changes could exacerbate existing risks relating to capital deployment, realization and fundraising activity. See “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019.
On September 29, 2020, Blackstone issued $500 million aggregate principal amount of 1.600% senior notes due March 30, 2031 (the “2031 Notes”) and $400 million aggregate principal amount of 2.800% senior notes due September 30, 2050 (the “2050 Notes”). For additional information see Note 12. “Borrowings” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements”.
Effective July 1, 2019, The Blackstone Group L.P. converted from a Delaware limited partnership to a Delaware corporation, The Blackstone Group Inc.
The simplified diagram below depicts our current organizational structure. The diagram does not depict all of our subsidiaries, including intermediate holding companies through which certain of the subsidiaries depicted are held.
Key Financial Measures and Indicators
We manage our business using certain financial measures and key operating metrics since we believe these metrics measure the productivity of our investment activities. We prepare our Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See Note 2. “Summary of Significant Accounting Policies” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” and “— Critical Accounting Policies.” Our key non-GAAP financial measures and operating indicators and metrics are discussed below.
Distributable Earnings is derived from Blackstone’s segment reported results. Distributable Earnings is used to assess performance and amounts available for dividends to Blackstone shareholders, including Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships. Distributable Earnings is the sum of Segment Distributable Earnings plus Net Interest Income (Loss) less Taxes and Related Payables. Distributable Earnings excludes unrealized activity and is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “— Non-GAAP Financial Measures” for our reconciliation of Distributable Earnings.
Net Interest Income (Loss) is presented on a segment basis and is equal to Interest and Dividend Revenue less Interest Expense, adjusted for the impact of consolidation of Blackstone Funds, and interest expense associated with the Tax Receivable Agreement.
Taxes and Related Payables represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss) Before Provision (Benefit) for Taxes and including the Payable under the Tax Receivable Agreement. Further, the current tax provision utilized when calculating Taxes and Related Payables and Distributable Earnings reflects the benefit of deductions available to the company on certain expense items that are excluded from the underlying calculation of Segment Distributable Earnings and Total Segment Distributable Earnings, such as equity-based compensation charges and certain Transaction-Related Charges where there is a current tax provision or benefit. The economic assumptions and methodologies that impact the implied income tax provision are the same as those methodologies and assumptions used in calculating the current income tax provision for Blackstone’s consolidated statements of operations under GAAP, excluding the impact of divestitures and accrued tax contingencies and refunds which are reflected when paid or received. Management believes that including the amount payable under the tax receivable agreement and utilizing the current income tax provision adjusted as described above when calculating Distributable Earnings is meaningful as it increases comparability between periods and more accurately reflects earnings that are available for distribution to shareholders.
Segment Distributable Earnings
Segment Distributable Earnings is Blackstone’s segment profitability measure used to make operating decisions and assess performance across Blackstone’s four segments. Segment Distributable Earnings represents the net realized earnings of Blackstone’s segments and is the sum of Fee Related Earnings and Net Realizations for each segment. Blackstone’s segments are presented on a basis that deconsolidates Blackstone Funds, eliminates non-controlling ownership interests in Blackstone’s consolidated operating partnerships, removes the amortization of intangible assets and removes Transaction-Related Charges. Transaction-Related Charges arise from corporate actions including acquisitions, divestitures and Blackstone’s initial public offering. They consist primarily of equity-based compensation charges, gains and losses on contingent consideration arrangements, changes in the balance of the Tax Receivable Agreement resulting from a change in tax law or similar event, transaction costs and any gains or losses associated with these corporate actions. Segment Distributable Earnings excludes unrealized activity and is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “— Non-GAAP Financial Measures” for our reconciliation of Segment Distributable Earnings.
Net Realizations is presented on a segment basis and is the sum of Realized Principal Investment Income and Realized Performance Revenues (which refers to Realized Performance Revenues excluding Fee Related Performance Revenues), less Realized Performance Compensation (which refers to Realized Performance Compensation excluding Fee Related Performance Compensation and Equity-Based Performance Compensation).
Fee Related Earnings is a performance measure used to assess Blackstone’s ability to generate profits from revenues that are measured and received on a recurring basis and not subject to future realization events. Fee Related Earnings equals management and advisory fees (net of management fee reductions and offsets) plus Fee Related Performance Revenues, less (a) Fee Related Compensation on a segment basis, and (b) Other Operating Expenses. Fee Related Earnings is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “— Non-GAAP Financial Measures” for our reconciliation of Fee Related Earnings.
Fee Related Compensation is presented on a segment basis and refers to the compensation expense, excluding Equity-Based Compensation, directly related to (a) Management and Advisory Fees, Net and (b) Fee Related Performance Revenues, referred to as Fee Related Performance Compensation.
Fee Related Performance Revenues refers to the realized portion of Performance Revenues from Perpetual Capital that are (a) measured and received on a recurring basis, and (b) not dependent on realization events from the underlying investments.
Other Operating Expenses is presented on a segment basis and is equal to General, Administrative and Other Expenses, adjusted to (a) remove the amortization of transaction-related intangibles, (b) remove certain expenses reimbursed by the Blackstone Funds which are netted against Management and Advisory Fees, Net in Blackstone’s segment presentation, and (c) give effect to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units. The administrative fee is accounted for as a capital contribution under GAAP, but is reflected as a reduction of Other Operating Expenses in Blackstone’s segment presentation.
Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization
Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization (“Adjusted EBITDA”), is a supplemental measure used to assess performance derived from Blackstone’s segment results and may be used to assess its ability to service its borrowings. Adjusted EBITDA represents Distributable Earnings plus the addition of (a) Interest Expense on a segment basis, (b) Taxes and Related Payables, and (c) Depreciation and Amortization. Adjusted EBITDA is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “— Non-GAAP Financial Measures” for our reconciliation of Adjusted EBITDA.
The alternative asset management business is primarily based on managing third party capital and does not require substantial capital investment to support rapid growth. Since our inception, we have developed and used various key operating metrics to assess and monitor the operating performance of our various alternative asset management businesses in order to monitor the effectiveness of our value creating strategies.
Assets Under Management refers to the assets we manage. Our Assets Under Management equals the sum of:
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(a)
|
the fair value of the investments held by our carry funds and our side-by-side and co-investment entities managed by us, plus (1) the capital that we are entitled to call from investors in those funds and entities pursuant to the terms of their respective capital commitments, including capital commitments to funds that have yet to commence their investment periods, or (2) for certain credit-focused funds the amounts available to be borrowed under asset based credit facilities,
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|
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(b)
|
the net asset value of (1) our hedge funds, real estate debt carry funds, secondary funds of funds, BPP, certain co-investments managed by us, certain credit-focused funds, and our Hedge Fund Solutions drawdown funds (plus, in each case, the capital that we are entitled to call from investors in those funds, including commitments yet to commence their investment periods), and (2) our funds of hedge funds, our Hedge Fund Solutions registered investment companies, and BREIT,
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|
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(c)
|
the invested capital, fair value or net asset value of assets we manage pursuant to separately managed accounts,
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(d)
|
the amount of debt and equity outstanding for our CLOs during the reinvestment period,
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(e)
|
the aggregate par amount of collateral assets, including principal cash, for our CLOs after the reinvestment period,
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(f)
|
the gross or net amount of assets (including leverage where applicable) for our credit-focused registered investment companies, and
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(g)
|
the fair value of common stock, preferred stock, convertible debt, or similar instruments issued by BXMT.
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Our carry funds are commitment-based drawdown structured funds that do not permit investors to redeem their interests at their election. Our funds of hedge funds, hedge funds, funds structured like hedge funds and other open-ended funds in our Real Estate, Hedge Fund Solutions and Credit & Insurance segments generally have structures that afford an investor the right to withdraw or redeem their interests on a periodic basis (for example, annually or quarterly), typically with 30 to 95 days’ notice, depending on the fund and the liquidity profile of the underlying assets. Investment advisory agreements related to certain separately managed accounts in our Hedge Fund Solutions and Credit & Insurance segments, excluding our BIS separately managed accounts, may generally be terminated by an investor on 30 to 90 days’ notice.
Fee-Earning Assets Under Management
. Fee-Earning Assets Under Management refers to the assets we manage on which we derive management fees and/or performance revenues. Our Fee-Earning Assets Under Management equals the sum of:
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|
(a)
|
for our Private Equity segment funds and Real Estate segment carry funds, including certain BREDS and Hedge Fund Solutions funds, the amount of capital commitments, remaining invested capital, fair value, net asset value or par value of assets held, depending on the fee terms of the fund,
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(b)
|
for our credit-focused carry funds, the amount of remaining invested capital (which may include leverage) or net asset value, depending on the fee terms of the fund,
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(c)
|
the remaining invested capital or fair value of assets held in co-investment vehicles managed by us on which we receive fees,
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(d)
|
the net asset value of our funds of hedge funds, hedge funds, BPP, certain co-investments managed by us, certain registered investment companies, BREIT, and certain of our Hedge Fund Solutions drawdown funds,
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(e)
|
the invested capital, fair value of assets or the net asset value we manage pursuant to separately managed accounts,
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(f)
|
the net proceeds received from equity offerings and accumulated core earnings of BXMT, subject to certain adjustments,
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|
|
(g)
|
the aggregate par amount of collateral assets, including principal cash, of our CLOs, and
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|
(h)
|
the gross amount of assets (including leverage) or the net assets (plus leverage where applicable) for certain of our credit-focused registered investment companies.
|
Each of our segments may include certain Fee-Earning Assets Under Management on which we earn performance revenues but not management fees.
Our calculations of assets under management and fee-earning assets under management may differ from the calculations of other asset managers, and as a result this measure may not be comparable to similar measures presented by other asset managers. In addition, our calculation of assets under management includes commitments to, and the fair value of, invested capital in our funds from Blackstone and our personnel, regardless of whether such commitments or invested capital are subject to fees. Our definitions of assets under management and fee-earning assets under management are not based on any definition of assets under management and fee-earning assets under management that is set forth in the agreements governing the investment funds that we manage.
For our carry funds, total assets under management includes the fair value of the investments held and uncalled capital commitments, whereas fee-earning assets under management includes the total amount of capital commitments or the remaining amount of invested capital at cost depending on whether the investment period has expired or as specified by the fee terms of the fund. As such, fee-earning assets under management may be greater than total assets under management when the aggregate fair value of the remaining investments is less than the cost of those investments.
. Perpetual Capital refers to the component of assets under management with an indefinite term, that is not in liquidation, and for which there is no requirement to return capital to investors through redemption requests in the ordinary course of business, except where funded by new capital inflows. Perpetual Capital includes co-investment capital with an investor right to convert into Perpetual Capital.
. Dry Powder represents the amount of capital available for investment or reinvestment, including general partner and employee capital, and is an indicator of the capital we have available for future investments.
Performance Eligible Assets Under Management
. Performance Eligible Assets Under Management represents invested and to be invested capital at fair value, including capital closed for funds whose investment period has not yet commenced, on which performance revenues could be earned if certain hurdles are met.
Income Tax Current Developments
Prior to the Conversion, certain of our share of investment income and carried interest was not subject to U.S. corporate income taxes. Subsequent to the Conversion, all income earned by us is subject to U.S. corporate income taxes, which we believe will result in an overall higher income tax expense (or benefit) over time when compared to periods prior to the Conversion.
Consolidated Results of Operations
Following is a discussion of our consolidated results of operations for the three and nine months ended September 30, 2020 and 2019. For a more detailed discussion of the factors that affected the results of our four business segments (which are presented on a basis that deconsolidates the investment funds we manage) in these periods, see “— Segment Analysis” below.
The following table sets forth information regarding our consolidated results of operations and certain key operating metrics for the three and nine months ended September 30, 2020 and 2019:
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|
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|
|
Management and Advisory Fees, Net
|
|
$
|
1,053,851
|
|
|
$
|
878,151
|
|
|
$
|
175,700
|
|
|
|
20
|
%
|
|
$
|
2,958,411
|
|
|
$
|
2,528,255
|
|
|
$
|
430,156
|
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,498
|
|
|
|
8,254
|
|
|
|
5,244
|
|
|
|
64
|
%
|
|
|
40,959
|
|
|
|
42,301
|
|
|
|
(1,342
|
)
|
|
|
-3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
371,406
|
|
|
|
446,550
|
|
|
|
(75,144
|
)
|
|
|
-17
|
%
|
|
|
640,846
|
|
|
|
1,021,445
|
|
|
|
(380,599
|
)
|
|
|
-37
|
%
|
|
|
|
|
1,403,480
|
|
|
|
176,370
|
|
|
|
1,227,110
|
|
|
|
696
|
%
|
|
|
(981,678
|
)
|
|
|
998,101
|
|
|
|
(1,979,779
|
)
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,017
|
|
|
|
74,642
|
|
|
|
(13,625
|
)
|
|
|
-18
|
%
|
|
|
170,814
|
|
|
|
292,943
|
|
|
|
(122,129
|
)
|
|
|
-42
|
%
|
|
|
|
|
295,308
|
|
|
|
15,391
|
|
|
|
279,917
|
|
|
|
N/M
|
|
|
|
(332,295
|
)
|
|
|
147,090
|
|
|
|
(479,385
|
)
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Income (Loss)
|
|
|
2,131,211
|
|
|
|
712,953
|
|
|
|
1,418,258
|
|
|
|
199
|
%
|
|
|
(502,313
|
)
|
|
|
2,459,579
|
|
|
|
(2,961,892
|
)
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and Dividend Revenue
|
|
|
26,497
|
|
|
|
42,482
|
|
|
|
(15,985
|
)
|
|
|
-38
|
%
|
|
|
85,505
|
|
|
|
130,252
|
|
|
|
(44,747
|
)
|
|
|
-34
|
%
|
|
|
|
|
(192,159
|
)
|
|
|
93,273
|
|
|
|
(285,432
|
)
|
|
|
N/M
|
|
|
|
(109,559
|
)
|
|
|
86,403
|
|
|
|
(195,962
|
)
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,032,898
|
|
|
|
1,735,113
|
|
|
|
1,297,785
|
|
|
|
75
|
%
|
|
|
2,473,003
|
|
|
|
5,246,790
|
|
|
|
(2,773,787
|
)
|
|
|
-53
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
460,983
|
|
|
|
462,766
|
|
|
|
(1,783
|
)
|
|
|
—
|
|
|
|
1,395,983
|
|
|
|
1,372,684
|
|
|
|
23,299
|
|
|
|
2
|
%
|
Incentive Fee Compensation
|
|
|
7,385
|
|
|
|
5,419
|
|
|
|
1,966
|
|
|
|
36
|
%
|
|
|
22,339
|
|
|
|
19,711
|
|
|
|
2,628
|
|
|
|
13
|
%
|
Performance Allocations Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
142,149
|
|
|
|
155,663
|
|
|
|
(13,514
|
)
|
|
|
-9
|
%
|
|
|
253,141
|
|
|
|
367,883
|
|
|
|
(114,742
|
)
|
|
|
-31
|
%
|
|
|
|
|
509,474
|
|
|
|
94,907
|
|
|
|
414,567
|
|
|
|
437
|
%
|
|
|
(433,091
|
)
|
|
|
446,440
|
|
|
|
(879,531
|
)
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation and Benefits
|
|
|
1,119,991
|
|
|
|
718,755
|
|
|
|
401,236
|
|
|
|
56
|
%
|
|
|
1,238,372
|
|
|
|
2,206,718
|
|
|
|
(968,346
|
)
|
|
|
-44
|
%
|
General, Administrative and Other
|
|
|
171,041
|
|
|
|
171,067
|
|
|
|
(26
|
)
|
|
|
—
|
|
|
|
497,658
|
|
|
|
492,437
|
|
|
|
5,221
|
|
|
|
1
|
%
|
|
|
|
|
39,540
|
|
|
|
53,362
|
|
|
|
(13,822
|
)
|
|
|
-26
|
%
|
|
|
120,460
|
|
|
|
138,960
|
|
|
|
(18,500
|
)
|
|
|
-13
|
%
|
|
|
|
|
2,274
|
|
|
|
4,036
|
|
|
|
(1,762
|
)
|
|
|
-44
|
%
|
|
|
10,962
|
|
|
|
12,509
|
|
|
|
(1,547
|
)
|
|
|
-12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,332,846
|
|
|
|
947,220
|
|
|
|
385,626
|
|
|
|
41
|
%
|
|
|
1,867,452
|
|
|
|
2,850,624
|
|
|
|
(983,172
|
)
|
|
|
-34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Tax Receivable Agreement Liability
|
|
|
(7,693
|
)
|
|
|
174,606
|
|
|
|
(182,299
|
)
|
|
|
N/M
|
|
|
|
(8,212
|
)
|
|
|
174,606
|
|
|
|
(182,818
|
)
|
|
|
N/M
|
|
Net Gains (Losses) from Fund Investment Activities
|
|
|
108,752
|
|
|
|
48,450
|
|
|
|
60,302
|
|
|
|
124
|
%
|
|
|
(60,325
|
)
|
|
|
239,906
|
|
|
|
(300,231
|
)
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income (Loss)
|
|
|
101,059
|
|
|
|
223,056
|
|
|
|
(121,997
|
)
|
|
|
-55
|
%
|
|
|
(68,537
|
)
|
|
|
414,512
|
|
|
|
(483,049
|
)
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Provision (Benefit) for Taxes
|
|
|
1,801,111
|
|
|
|
1,010,949
|
|
|
|
790,162
|
|
|
|
78
|
%
|
|
|
537,014
|
|
|
|
2,810,678
|
|
|
|
(2,273,664
|
)
|
|
|
-81
|
%
|
Provision (Benefit) for Taxes
|
|
|
100,960
|
|
|
|
(156,786
|
)
|
|
|
257,746
|
|
|
|
N/M
|
|
|
|
89,672
|
|
|
|
(76,895
|
)
|
|
|
166,567
|
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,700,151
|
|
|
|
1,167,735
|
|
|
|
532,416
|
|
|
|
46
|
%
|
|
|
447,342
|
|
|
|
2,887,573
|
|
|
|
(2,440,231
|
)
|
|
|
-85
|
%
|
Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
|
|
|
6,868
|
|
|
|
(8
|
)
|
|
|
6,876
|
|
|
|
N/M
|
|
|
|
(12,027
|
)
|
|
|
3,567
|
|
|
|
(15,594
|
)
|
|
|
N/M
|
|
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
|
|
|
259,761
|
|
|
|
88,406
|
|
|
|
171,355
|
|
|
|
194
|
%
|
|
|
(90,938
|
)
|
|
|
355,983
|
|
|
|
(446,921
|
)
|
|
|
N/M
|
|
Net Income Attributable to Non-Controlling Interests in Blackstone Holdings
|
|
|
638,803
|
|
|
|
299,900
|
|
|
|
338,903
|
|
|
|
113
|
%
|
|
|
253,814
|
|
|
|
961,490
|
|
|
|
(707,676
|
)
|
|
|
-74
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to The Blackstone Group Inc.
|
|
$
|
794,719
|
|
|
$
|
779,437
|
|
|
$
|
15,282
|
|
|
|
2
|
%
|
|
$
|
296,493
|
|
|
$
|
1,566,533
|
|
|
$
|
(1,270,040
|
)
|
|
|
-81
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019
Revenues were $3.0 billion for the three months ended September 30, 2020, an increase of $1.3 billion, compared to $1.7 billion for the three months ended September 30, 2019. The increase in Revenues was primarily attributable to increases of $1.4 billion in Investment Income (Loss) and $175.7 million in Management and Advisory Fees, Net, partially offset by a decrease of $285.4 million in Other Revenue.
The increase in Investment Income (Loss) was primarily attributable to increases in our Private Equity, Real Estate and Credit & Insurance segments of $792.9 million, $284.1 million and $172.6 million, respectively. The increase in our Private Equity segment was primarily attributable to higher net unrealized appreciation of investment holdings in corporate private equity and Tactical Opportunities in the current quarter relative to the prior quarter. Corporate private equity carrying value increased 12.2% in the three months ended September 30, 2020 compared to 2.7% in the three months ended September 30, 2019. Tactical Opportunities carrying value increased 10.7% in the three months ended September 30, 2020 compared to 1.0% in the three months ended September 30, 2019. The increase in our Real Estate segment was primarily attributable to higher unrealized appreciation of investment holdings in BREP opportunistic funds in the current quarter relative to the prior quarter. BREP opportunistic funds’ carrying value increased 6.4% in the three months ended September 30, 2020 compared to 3.8% in the three months ended September 30, 2019. The increase in our Credit & Insurance segment was primarily attributable to net unrealized appreciation of investments in our performing credit and distressed strategies in the three months ended September 30, 2020 compared to net unrealized depreciation in the three months ended September 30, 2019.
The increase in Management and Advisory Fees, Net was primarily due to increases in our Private Equity and Real Estate segments of $92.9 million and $76.7 million, respectively. The increase in our Private Equity segment was primarily due to the end of BCP VIII, BEP III and BXLS V’s fee holidays during the three months ended September 30, 2020. The increase in our Real Estate segment was primarily due to the end of BREP IX’s fee holiday in 2019, the commencement of BREP Europe VI’s investment period in the fourth quarter of 2019 along with the end of its fee holiday in the first quarter of 2020 and Fee-Earning Assets Under Management growth in core+ real estate.
The decrease in Other Revenue was primarily due to foreign exchange losses on our euro denominated bonds and cross-currency swaps.
Expenses were $1.3 billion for the three months ended September 30, 2020, an increase of $385.6 million, compared to $947.2 million for the three months ended September 30, 2019. The increase was primarily attributable to an increase of $401.2 million in Total Compensation and Benefits, which was primarily due to an increase of $401.1 million in Performance Allocations Compensation. The increase in Performance Allocations Compensation was primarily due to the increase in Investment Income (Loss) – Performance Allocations, on which the compensation is based.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Revenues were $2.5 billion for the nine months ended September 30, 2020, a decrease of $2.8 billion, compared to $5.2 billion for the nine months ended September 30, 2019. The decrease in Revenues was primarily attributable to decreases of $3.0 billion in Investment Income (Loss) and $196.0 million in Other Revenue, partially offset by an increase of $430.2 million in Management and Advisory Fees, Net.
The decrease in Investment Income (Loss) was primarily net unrealized depreciation of investment holdings driven by the impacts of
COVID-19.
Investment Income (Loss) in our Real Estate, Private Equity and Credit & Insurance segments decreased $1.8 billion, $518.6 million and $390.5 million, respectively. The decrease in our Real Estate segment was primarily attributable to net unrealized depreciation of investment holdings in BREP opportunistic funds and lower realized gains in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. BREP opportunistic funds’ carrying value decreased 1.1% in the nine months ended September 30, 2020 compared to an increase of 12.9% in the nine months ended September 30, 2019. The decrease in our Private Equity segment was primarily attributable to lower net unrealized appreciation of investment holdings in corporate private equity and net unrealized depreciation of investment holdings in Strategic Partners. Corporate private equity carrying value increased 0.4% in the nine months ended September 30, 2020 compared to 8.5% in the nine months ended September 30, 2019. Strategic Partners carrying value decreased 8.0% in the nine months ended September 30, 2020, which reflects a reporting lag of its underlying funds, compared to an increase of 11.5% in the nine months ended September 30, 2019. The decrease in our Credit & Insurance segment was primarily attributable to net unrealized depreciation of investments in our performing credit and distressed strategies in the nine months ended September 30, 2020 compared to net unrealized appreciation in the nine months ended September 30, 2019.
The decrease in Other Revenue was primarily due to foreign exchange losses on our euro denominated bonds and cross-currency swaps.
The increase in Management and Advisory Fees, Net was primarily due to increases in our Real Estate and Private Equity segments of $313.3 million and $97.9 million, respectively. The increase in our Real Estate segment was primarily due to the end of BREP IX’s fee holiday in 2019, the commencement of BREP Europe VI’s investment period in the fourth quarter of 2019 along with the end of its fee holiday in the first quarter of 2020 and Fee-Earning Assets Under Management growth in core+ real estate. The increase in our Private Equity segment was primarily due to the end of BCP VIII, BEP III and BXLS V’s fee holiday during the three months ended September 30, 2020 and a full nine months of Base Management Fees from Strategic Partners VIII, partially offset by a decrease in Transaction, Advisory and Other Fees, Net in BIP and BXCM.
Expenses were $1.9 billion for the nine months ended September 30, 2020, a decrease of $983.2 million, compared to $2.9 billion for the nine months ended September 30, 2019. The decrease was primarily attributable to a decrease of $968.3 million in Total Compensation and Benefits, which was primarily due to a decrease of $994.3 million in Performance Allocations Compensation. The decrease in Performance Allocations Compensation was primarily due to the decrease in Investment Income (Loss) – Performance Allocations, on which the compensation is based.
Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019
Other Income (Loss) was $101.1 million for the three months ended September 30, 2020, a decrease of $122.0 million, compared to $223.1 million for the three months ended September 30, 2019. The decrease in Other Income (Loss) was due to a decrease of $182.3 million in Change in Tax Receivable Agreement Liability, partially offset by an increase of $60.3 million in Net Gains (Losses) from Fund Investment Activities.
The decrease in Change in Tax Receivable Agreement Liability was primarily due to the reduction of the estimated cash savings to be realized by Blackstone recorded in relation to the Conversion during the three months ended September 30, 2019.
The increase in Other Income (Loss) – Net Gain (Losses) from Fund Investment Activities was primarily due to increases of $41.1 million in our Private Equity segment and $21.2 million in our Real Estate segment. The increase in our Private Equity segment was primarily due to appreciation of investments in our consolidated Private Equity segment funds. The increase in our Real Estate segment was primarily driven by appreciation of investments in our consolidated Real Estate segment funds.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Other Income (Loss) was $(68.5) million for the nine months ended September 30, 2020, a decrease of $483.0 million, compared to $414.5 million for the nine months ended September 30, 2019. The decrease in Other Income (Loss) was due to decreases of $300.2 million in Net Gains (Losses) from Fund Investment Activities and $182.8 million in Change in Tax Receivable Agreement Liability.
The decrease in Other Income (Loss) – Net Gain (Losses) from Fund Investment Activities was primarily due to decreases of $187.6 million in our Credit & Insurance segment, $92.3 million in our Real Estate segment and $22.1 million in our Private Equity segment. The decrease in our Credit & Insurance segment was primarily driven by depreciation of consolidated CLOs and other vehicles during the first six months of 2020 and the deconsolidation of nine CLO vehicles during the three months ended September 30, 2020. See Note 9. “Variable Interest Entities” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing. The decrease in our Real Estate segment was primarily driven by depreciation of investments in our consolidated Real Estate segment funds. The decrease in our Private Equity segment was primarily due to depreciation of investments in our consolidated Private Equity segment funds.
The decrease in Change in Tax Receivable Agreement Liability was primarily due to the reduction of the estimated cash savings to be realized by Blackstone recorded in relation to the Conversion during the nine months ended September 30, 2019.
Provision (Benefit) for Taxes
The following table summarizes Blackstone’s tax position:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Provision (Benefit) for Taxes
|
|
$
|
1,801,111
|
|
|
$
|
1,010,949
|
|
|
$
|
537,014
|
|
|
$
|
2,810,678
|
|
Provision (Benefit) for Taxes
|
|
$
|
100,960
|
|
|
$
|
(156,786)
|
|
|
$
|
89,672
|
|
|
$
|
(76,895)
|
|
Effective Income Tax Rate
|
|
|
5.6%
|
|
|
|
-15.5%
|
|
|
|
16.7%
|
|
|
|
-2.7%
|
|
The following table reconciles the effective income tax rate to the U.S. federal statutory tax rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory U.S. Federal Income Tax Rate
|
|
|
21.0
|
%
|
|
|
21.0
|
%
|
|
|
—
|
|
|
|
21.0
|
%
|
|
|
21.0
|
%
|
|
|
—
|
|
Income Passed Through to Common Unitholders and Non-Controlling Interest Holders (a)
|
|
|
-11.0
|
%
|
|
|
-8.7
|
%
|
|
|
-2.3
|
%
|
|
|
2.0
|
%
|
|
|
-13.8
|
%
|
|
|
15.8
|
%
|
State and Local Income Taxes
|
|
|
1.7
|
%
|
|
|
2.5
|
%
|
|
|
-0.8
|
%
|
|
|
5.0
|
%
|
|
|
1.6
|
%
|
|
|
3.4
|
%
|
Change to a Taxable Corporation
|
|
|
2.0
|
%
|
|
|
-22.9
|
%
|
|
|
24.9
|
%
|
|
|
6.8
|
%
|
|
|
-8.2
|
%
|
|
|
15.0
|
%
|
Change in Valuation Allowance
|
|
|
-7.4
|
%
|
|
|
-3.0
|
%
|
|
|
-4.4
|
%
|
|
|
-13.1
|
%
|
|
|
-1.1
|
%
|
|
|
-12.0
|
%
|
|
|
|
|
-0.7
|
%
|
|
|
-4.4
|
%
|
|
|
3.7
|
%
|
|
|
-5.0
|
%
|
|
|
-2.2
|
%
|
|
|
-2.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Income Tax Rate
|
|
|
5.6
|
%
|
|
|
-15.5
|
%
|
|
|
21.1
|
%
|
|
|
16.7
|
%
|
|
|
-2.7
|
%
|
|
|
19.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes income that was not taxable to Blackstone and its subsidiaries. Such income was directly taxable to shareholders of Blackstone’s Class A common stock for the period prior to the Conversion and remains taxable to Blackstone’s non-controlling interest holders.
|
Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019
Blackstone’s Provision (Benefit) for Taxes for the three months ended September 30, 2020 and 2019 was $101.0 million and $(156.8) million, respectively. This resulted in an effective tax rate of 5.6% and -15.5%, respectively, based on our Income Before Provision (Benefit) for Taxes of $1.8 billion and $1.0 billion, respectively.
The increase in Blackstone’s effective tax rate for the three months ended September 30, 2020 compared to the three months ended September 30, 2019, was primarily due to a tax benefit recorded on the date of the Conversion in the three months ended September 30, 2019 while an adjustment to the tax basis at the date of the Conversion resulted in a change to the step-up amounts resulting in an increase to the effective tax rate for the three months ended September 30, 2020.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Blackstone’s Provision (Benefit) for Taxes for the nine months ended September 30, 2020 and 2019 was $89.7 million and $(76.9) million, respectively. This resulted in an effective tax rate of 16.7% and -2.7%, respectively, based on our Income Before Provision (Benefit) for Taxes of $537.0 million and $2.8 billion, respectively.
The increase in Blackstone’s effective tax rate for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, resulted primarily from the Conversion. For the nine months ended September 30, 2020, Blackstone was a corporation subject to federal and state corporate income taxes while for the first six months of the nine months ended September 30, 2019, The Blackstone Group L.P. was a publicly traded partnership with income directly taxable to common unitholders. The tax benefit recorded on the date of the Conversion was reflected in the nine months ended September 30, 2019 while an adjustment to the tax basis at the date of the Conversion resulted in a change to the step-up amounts resulting in an increase to the effective tax rate for the period ended September 30, 2020. In addition, the decrease in the comparative effective tax rates attributable to the valuation allowance resulted from a greater utilization of tax benefit on asset dispositions in the nine months ended September 30, 2020 compared with the nine months ended September 30, 2019.
Additional information regarding our income taxes can be found in Note 13. “Income Taxes” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing.
Non-Controlling Interests in Consolidated Entities
The Net Income Attributable to Redeemable Non-Controlling Interests in Consolidated Entities and Net Income Attributable to Non-Controlling Interests in Consolidated Entities is attributable to the consolidated Blackstone Funds. The amounts of these items vary directly with the performance of the consolidated Blackstone Funds and largely eliminate the amount of Other Income (Loss) – Net Gains (Losses) from Fund Investment Activities from the Net Income (Loss) Attributable to The Blackstone Group Inc.
Net Income Attributable to Non-Controlling Interests in Blackstone Holdings is derived from the Income Before Provision (Benefit) for Taxes at the Blackstone Holdings level, excluding the Net Gains from Fund Investment Activities and the percentage allocation of the income between Blackstone personnel and others who are limited partners of Blackstone Holdings and Blackstone after considering any contractual arrangements that govern the allocation of income such as fees allocable to Blackstone.
For the three months ended September 30, 2020 and 2019, the Net Income Before Taxes allocated to Blackstone Holdings was 42.5% and 43.9%, respectively. For the nine months ended September 30, 2020 and 2019, the Net Income Before Taxes allocated to Blackstone Holdings was 42.8% and 44.0%, respectively. The decrease of 1.4% was primarily due to conversions of Blackstone Holdings Partnership Units to shares of Class A common stock and the vesting of shares of Class A common stock. The decrease of 1.2% was primarily due to conversions of Blackstone Holdings Partnership Units to shares of Class A common stock and the vesting of shares of Class A common stock.
The Other Income (Loss) — Reduction of Tax Receivable Agreement Liability was entirely allocated to The Blackstone Group Inc.
The following graphs and tables summarize the Fee-Earning Assets Under Management and Total Assets Under Management by Segment, followed by a rollforward of activity for the three and nine months ended September 30, 2020 and 2019. For a description of how Assets Under Management and Fee-Earning Assets Under Management are determined, please see “— Key Financial Measures and Indicators — Operating Metrics — Assets Under Management and Fee-Earning Assets Under Management”:
Note: Totals may not add due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee-Earning Assets Under Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, Beginning of Period
|
|
$
|
134,260,348
|
|
|
$
|
129,284,112
|
|
|
$
|
70,200,141
|
|
|
$
|
102,081,334
|
|
|
$
|
435,825,935
|
|
|
$
|
112,287,094
|
|
|
$
|
96,467,272
|
|
|
$
|
74,653,420
|
|
|
$
|
104,456,856
|
|
|
$
|
387,864,642
|
|
|
|
|
|
2,699,443
|
|
|
|
3,484,762
|
|
|
|
1,212,210
|
|
|
|
4,395,110
|
|
|
|
11,791,525
|
|
|
|
7,452,469
|
|
|
|
3,192,294
|
|
|
|
2,933,919
|
|
|
|
4,394,501
|
|
|
|
17,973,183
|
|
|
|
|
|
(598,167
|
)
|
|
|
(348,264
|
)
|
|
|
(1,597,334
|
)
|
|
|
(2,225,960
|
)
|
|
|
(4,769,725
|
)
|
|
|
(552,062
|
)
|
|
|
(107,764
|
)
|
|
|
(2,411,329
|
)
|
|
|
(1,845,621
|
)
|
|
|
(4,916,776
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,101,276
|
|
|
|
3,136,498
|
|
|
|
(385,124
|
)
|
|
|
2,169,150
|
|
|
|
7,021,800
|
|
|
|
6,900,407
|
|
|
|
3,084,530
|
|
|
|
522,590
|
|
|
|
2,548,880
|
|
|
|
13,056,407
|
|
|
|
|
|
(1,434,732
|
)
|
|
|
(1,599,451
|
)
|
|
|
(191,067
|
)
|
|
|
(868,061
|
)
|
|
|
(4,093,311
|
)
|
|
|
(2,897,640
|
)
|
|
|
(1,734,713
|
)
|
|
|
(264,575
|
)
|
|
|
(1,648,338
|
)
|
|
|
(6,545,266
|
)
|
|
|
|
|
2,950,748
|
|
|
|
(1,119,411
|
)
|
|
|
2,075,843
|
|
|
|
1,849,474
|
|
|
|
5,756,654
|
|
|
|
459,444
|
|
|
|
119,782
|
|
|
|
(33,459
|
)
|
|
|
(783,107
|
)
|
|
|
(237,340
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, End of Period (e)
|
|
$
|
137,877,640
|
|
|
$
|
129,701,748
|
|
|
$
|
71,699,793
|
|
|
$
|
105,231,897
|
|
|
$
|
444,511,078
|
|
|
$
|
116,749,305
|
|
|
$
|
97,936,871
|
|
|
$
|
74,877,976
|
|
|
$
|
104,574,291
|
|
|
$
|
394,138,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,617,292
|
|
|
$
|
417,636
|
|
|
$
|
1,499,652
|
|
|
$
|
3,150,563
|
|
|
$
|
8,685,143
|
|
|
$
|
4,462,211
|
|
|
$
|
1,469,599
|
|
|
$
|
224,556
|
|
|
$
|
117,435
|
|
|
$
|
6,273,801
|
|
|
|
|
|
3
|
%
|
|
|
—
|
|
|
|
2
|
%
|
|
|
3
|
%
|
|
|
2
|
%
|
|
|
4
|
%
|
|
|
2
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee-Earning Assets Under Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, Beginning of Period
|
|
$
|
128,214,137
|
|
|
$
|
97,773,964
|
|
|
$
|
75,636,004
|
|
|
$
|
106,450,747
|
|
|
$
|
408,074,852
|
|
|
$
|
93,252,724
|
|
|
$
|
80,008,166
|
|
|
$
|
72,280,606
|
|
|
$
|
96,986,011
|
|
|
$
|
342,527,507
|
|
|
|
|
|
15,700,961
|
|
|
|
42,791,555
|
|
|
|
7,059,855
|
|
|
|
12,583,218
|
|
|
|
78,135,589
|
|
|
|
35,316,594
|
|
|
|
25,578,739
|
|
|
|
8,146,690
|
|
|
|
15,808,592
|
|
|
|
84,850,615
|
|
|
|
|
|
(2,339,240
|
)
|
|
|
(5,906,383
|
)
|
|
|
(8,797,597
|
)
|
|
|
(7,047,417
|
)
|
|
|
(24,090,637
|
)
|
|
|
(6,388,317
|
)
|
|
|
(1,280,707
|
)
|
|
|
(8,422,705
|
)
|
|
|
(7,319,669
|
)
|
|
|
(23,411,398
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,361,721
|
|
|
|
36,885,172
|
|
|
|
(1,737,742
|
)
|
|
|
5,535,801
|
|
|
|
54,044,952
|
|
|
|
28,928,277
|
|
|
|
24,298,032
|
|
|
|
(276,015
|
)
|
|
|
8,488,923
|
|
|
|
61,439,217
|
|
|
|
|
|
(5,130,844
|
)
|
|
|
(3,642,967
|
)
|
|
|
(838,012
|
)
|
|
|
(3,376,479
|
)
|
|
|
(12,988,302
|
)
|
|
|
(7,486,830
|
)
|
|
|
(6,399,686
|
)
|
|
|
(705,027
|
)
|
|
|
(3,816,607
|
)
|
|
|
(18,408,150
|
)
|
|
|
|
|
1,432,626
|
|
|
|
(1,314,421
|
)
|
|
|
(1,360,457
|
)
|
|
|
(3,378,172
|
)
|
|
|
(4,620,424
|
)
|
|
|
2,055,134
|
|
|
|
30,359
|
|
|
|
3,578,412
|
|
|
|
2,915,964
|
|
|
|
8,579,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, End of Period (e)
|
|
$
|
137,877,640
|
|
|
$
|
129,701,748
|
|
|
$
|
71,699,793
|
|
|
$
|
105,231,897
|
|
|
$
|
444,511,078
|
|
|
$
|
116,749,305
|
|
|
$
|
97,936,871
|
|
|
$
|
74,877,976
|
|
|
$
|
104,574,291
|
|
|
$
|
394,138,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
9,663,503
|
|
|
$
|
31,927,784
|
|
|
$
|
(3,936,211
|
)
|
|
$
|
(1,218,850
|
)
|
|
$
|
36,436,226
|
|
|
$
|
23,496,581
|
|
|
$
|
17,928,705
|
|
|
$
|
2,597,370
|
|
|
$
|
7,588,280
|
|
|
$
|
51,610,936
|
|
|
|
|
|
8
|
%
|
|
|
33
|
%
|
|
|
-5
|
%
|
|
|
-1
|
%
|
|
|
9
|
%
|
|
|
25
|
%
|
|
|
22
|
%
|
|
|
4
|
%
|
|
|
8
|
%
|
|
|
15
|
%
|
Annualized Base Management Fee
Rate (f)
|
|
|
1.15
|
%
|
|
|
0.96
|
%
|
|
|
0.80
|
%
|
|
|
0.58
|
%
|
|
|
0.90
|
%
|
|
|
1.00
|
%
|
|
|
1.09
|
%
|
|
|
0.75
|
%
|
|
|
0.58
|
%
|
|
|
0.86
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets Under Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, Beginning of Period
|
|
$
|
166,723,844
|
|
|
$
|
184,118,135
|
|
|
$
|
75,668,139
|
|
|
$
|
137,819,970
|
|
|
$
|
564,330,088
|
|
|
$
|
153,604,820
|
|
|
$
|
171,171,687
|
|
|
$
|
81,435,680
|
|
|
$
|
139,270,150
|
|
|
$
|
545,482,337
|
|
|
|
|
|
3,872,574
|
|
|
|
3,942,139
|
|
|
|
1,717,874
|
|
|
|
5,605,092
|
|
|
|
15,137,679
|
|
|
|
6,745,847
|
|
|
|
3,254,530
|
|
|
|
3,164,093
|
|
|
|
7,226,533
|
|
|
|
20,391,003
|
|
|
|
|
|
(1,655,318
|
)
|
|
|
(545,896
|
)
|
|
|
(1,664,698
|
)
|
|
|
(1,678,614
|
)
|
|
|
(5,544,526
|
)
|
|
|
(565,777
|
)
|
|
|
(349,478
|
)
|
|
|
(3,069,993
|
)
|
|
|
(2,023,018
|
)
|
|
|
(6,008,266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,217,256
|
|
|
|
3,396,243
|
|
|
|
53,176
|
|
|
|
3,926,478
|
|
|
|
9,593,153
|
|
|
|
6,180,070
|
|
|
|
2,905,052
|
|
|
|
94,100
|
|
|
|
5,203,515
|
|
|
|
14,382,737
|
|
|
|
|
|
(1,854,440
|
)
|
|
|
(4,665,183
|
)
|
|
|
(192,729
|
)
|
|
|
(1,225,152
|
)
|
|
|
(7,937,504
|
)
|
|
|
(4,575,981
|
)
|
|
|
(2,812,162
|
)
|
|
|
(305,905
|
)
|
|
|
(2,053,920
|
)
|
|
|
(9,747,968
|
)
|
|
|
|
|
6,709,934
|
|
|
|
6,304,621
|
|
|
|
2,260,127
|
|
|
|
3,115,794
|
|
|
|
18,390,476
|
|
|
|
1,867,364
|
|
|
|
2,593,823
|
|
|
|
(69,485
|
)
|
|
|
(486,465
|
)
|
|
|
3,905,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, End of Period (e)
|
|
$
|
173,796,594
|
|
|
$
|
189,153,816
|
|
|
$
|
77,788,713
|
|
|
$
|
143,637,090
|
|
|
$
|
584,376,213
|
|
|
$
|
157,076,273
|
|
|
$
|
173,858,400
|
|
|
$
|
81,154,390
|
|
|
$
|
141,933,280
|
|
|
$
|
554,022,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,072,750
|
|
|
$
|
5,035,681
|
|
|
$
|
2,120,574
|
|
|
$
|
5,817,120
|
|
|
$
|
20,046,125
|
|
|
$
|
3,471,453
|
|
|
$
|
2,686,713
|
|
|
$
|
(281,290
|
)
|
|
$
|
2,663,130
|
|
|
$
|
8,540,006
|
|
|
|
|
|
4
|
%
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
4
|
%
|
|
|
4
|
%
|
|
|
2
|
%
|
|
|
2
|
%
|
|
|
—
|
|
|
|
2
|
%
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets Under Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, Beginning of Period
|
|
$
|
163,156,064
|
|
|
$
|
182,886,109
|
|
|
$
|
80,738,112
|
|
|
$
|
144,342,178
|
|
|
$
|
571,122,463
|
|
|
$
|
136,247,229
|
|
|
$
|
130,665,286
|
|
|
$
|
77,814,516
|
|
|
$
|
127,515,286
|
|
|
$
|
472,242,317
|
|
|
|
|
|
21,410,378
|
|
|
|
18,013,698
|
|
|
|
8,288,396
|
|
|
|
15,006,778
|
|
|
|
62,719,250
|
|
|
|
26,144,532
|
|
|
|
48,532,796
|
|
|
|
9,545,687
|
|
|
|
24,186,221
|
|
|
|
108,409,236
|
|
|
|
|
|
(3,162,867
|
)
|
|
|
(1,613,171
|
)
|
|
|
(9,164,596
|
)
|
|
|
(6,866,875
|
)
|
|
|
(20,807,509
|
)
|
|
|
(2,315,886
|
)
|
|
|
(771,379
|
)
|
|
|
(9,292,182
|
)
|
|
|
(8,919,680
|
)
|
|
|
(21,299,127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,247,511
|
|
|
|
16,400,527
|
|
|
|
(876,200
|
)
|
|
|
8,139,903
|
|
|
|
41,911,741
|
|
|
|
23,828,646
|
|
|
|
47,761,417
|
|
|
|
253,505
|
|
|
|
15,266,541
|
|
|
|
87,110,109
|
|
|
|
|
|
(6,637,440
|
)
|
|
|
(9,686,514
|
)
|
|
|
(848,559
|
)
|
|
|
(4,504,487
|
)
|
|
|
(21,677,000
|
)
|
|
|
(11,623,877
|
)
|
|
|
(11,233,505
|
)
|
|
|
(788,589
|
)
|
|
|
(4,956,581
|
)
|
|
|
(28,602,552
|
)
|
|
|
|
|
(969,541
|
)
|
|
|
(446,306
|
)
|
|
|
(1,224,640
|
)
|
|
|
(4,340,504
|
)
|
|
|
(6,980,991
|
)
|
|
|
8,624,275
|
|
|
|
6,665,202
|
|
|
|
3,874,958
|
|
|
|
4,108,034
|
|
|
|
23,272,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, End of Period (e)
|
|
$
|
173,796,594
|
|
|
$
|
189,153,816
|
|
|
$
|
77,788,713
|
|
|
$
|
143,637,090
|
|
|
$
|
584,376,213
|
|
|
$
|
157,076,273
|
|
|
$
|
173,858,400
|
|
|
$
|
81,154,390
|
|
|
$
|
141,933,280
|
|
|
$
|
554,022,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,640,530
|
|
|
$
|
6,267,707
|
|
|
$
|
(2,949,399
|
)
|
|
$
|
(705,088
|
)
|
|
$
|
13,253,750
|
|
|
$
|
20,829,044
|
|
|
$
|
43,193,114
|
|
|
$
|
3,339,874
|
|
|
$
|
14,417,994
|
|
|
$
|
81,780,026
|
|
|
|
|
|
7
|
%
|
|
|
3
|
%
|
|
|
-4
|
%
|
|
|
—
|
|
|
|
2
|
%
|
|
|
15
|
%
|
|
|
33
|
%
|
|
|
4
|
%
|
|
|
11
|
%
|
|
|
17
|
%
|
|
(a)
|
Inflows represent contributions, capital raised, other increases in available capital (recallable capital, increased side-by-side commitments), purchases, inter-segment allocations and acquisitions.
|
|
(b)
|
Outflows represent redemptions, client withdrawals and decreases in available capital (expired capital, expense drawdowns and decreased side-by-side commitments).
|
|
(c)
|
Realizations represent realizations from the disposition of assets or capital returned to investors from CLOs.
|
|
(d)
|
Market activity includes realized and unrealized gains (losses) on portfolio investments and the impact of foreign exchange rate fluctuations.
|
|
(e)
|
Assets Under Management are reported in the segment where the assets are managed.
|
|
(f)
|
Effective January 1, 2020, Blackstone updated its calculation methodology as follows: annualized year to date Base Management Fee divided by the average of the beginning of year and each quarter end’s Fee-Earning Assets Under Management in the reporting period. Prior periods have been recast for this update.
|
|
(g)
|
For the three months ended September 30, 2020, the impact to Fee-Earning Assets Under Management due to foreign exchange rate fluctuations was $1.2 billion, $932.6 million and $2.1 billion for the Real Estate, Credit & Insurance and Total segments, respectively. For the three months ended September 30, 2019, such impact was $(709.0) million, $(416.1) million and $(1.1) billion for the Real Estate, Credit & Insurance and Total segments, respectively.
|
|
(h)
|
For the nine months ended September 30, 2020, the impact to Fee-Earning Assets Under Management due to foreign exchange rate fluctuations was $983.1 million, $918.3 million and $1.9 billion for the Real Estate, Credit & Insurance and Total segments, respectively. For the nine months ended September 30, 2019, such impact was $(791.1) million, $(688.1) million and $(1.5) billion for the Real Estate, Credit & Insurance and Total segments, respectively.
|
|
(i)
|
For the three months ended September 30, 2020, the impact to Total Assets Under Management due to foreign exchange rate fluctuations was $2.1 billion, $432.8 million, $1.1 billion and $3.6 billion for the Real Estate, Private Equity, Credit & Insurance and Total segments, respectively. For the three months ended September 30, 2019, such impact was $(2.1) billion, $(411.8) million, $(434.2) million and $(2.9) billion for the Real Estate, Private Equity, Credit & Insurance and Total segments, respectively.
|
|
(j)
|
For the nine months ended September 30, 2020, the impact to Total Assets Under Management due to foreign exchange rate fluctuations was $1.6 billion, $(131.8) million, $1.0 billion and $2.5 billion for the Real Estate, Private Equity, Credit & Insurance and Total segments, respectively. For the nine months ended September 30, 2019, such impact was $(2.4) billion, $(304.5) million, $(731.1) million and $(3.4) billion for the Real Estate, Private Equity, Credit & Insurance and Total segments, respectively.
|
Fee-Earning Assets Under Management
Fee-Earning Assets Under Management were $444.5 billion at September 30, 2020, an increase of $8.7 billion, compared to $435.8 billion at June 30, 2020. The net increase was due to:
|
|
•
|
|
Inflows of $11.8 billion primarily attributable to:
|
|
|
o
|
$4.4 billion in our Credit & Insurance segment driven by $1.5 billion from certain long only and MLP strategies, $1.1 billion of capital raised from CLOs, $1.1 billion from direct lending and $636.3 million from BIS,
|
|
|
o
|
$3.5 billion in our Private Equity segment driven by $2.3 billion from BXG, $673.1 million from Tactical Opportunities and $539.9 million from Strategic Partners,
|
|
|
o
|
$2.7 billion in our Real Estate segment driven by $1.3 billion from BREIT, $1.0 billion from BREDS and $388.6 million from BPP and co-investment, and
|
|
|
o
|
$1.2 billion in our Hedge Fund Solutions segment driven by $1.0 billion from individual investor and specialized solutions.
|
|
|
•
|
|
Market activity of $5.8 billion primarily attributable to:
|
|
|
o
|
$3.0 billion of market appreciation in our Real Estate segment driven by $2.2 billion from core+ real estate (including $1.2 billion from foreign exchange appreciation), $513.2 million of foreign exchange appreciation from BREP opportunistic funds and co-investment and $268.8 million from BREDS,
|
|
|
o
|
$2.1 billion of market appreciation in our Hedge Fund Solutions segment driven by returns from BAAM’s Principal Solutions Composite of 3.0% gross and 2.8% net,
|
|
|
o
|
$1.8 billion of market appreciation in our Credit & Insurance segment driven by $617.1 million from CLOs, $588.6 million from certain long only and MLP strategies, $320.7 million from direct lending and $164.2 million from distressed strategies, which included $932.6 million of foreign exchange appreciation across the segment, and
|
|
|
o
|
$1.1 billion of market depreciation in our Private Equity segment driven by Strategic Partners, which reflects a reporting lag of its underlying funds.
|
Offsetting these increases were:
|
|
•
|
|
Outflows of $4.8 billion primarily attributable to:
|
|
|
o
|
$2.2 billion in our Credit & Insurance segment driven by $1.1 billion from certain long only and MLP strategies and $995.9 million from direct lending, and
|
|
|
o
|
$1.6 billion in our Hedge Fund Solutions segment driven by $898.5 million from individual investor and specialized solutions and $695.4 million from customized solutions.
|
|
|
•
|
|
Realizations of $4.1 billion primarily attributable to:
|
|
|
o
|
$1.6 billion in our Private Equity segment driven by $575.2 million from Tactical Opportunities, $542.9 million from Strategic Partners and $480.3 million from corporate private equity,
|
|
|
o
|
$1.4 billion in our Real Estate segment driven by $685.0 million from BREDS, $506.8 million from core+ real estate and $242.9 million from BREP opportunistic and co-investment, and
|
|
|
o
|
$868.1 million in our Credit & Insurance segment driven by $365.4 million from distressed strategies, $219.5 million from CLOs, $140.3 million from certain long only and MLP strategies and $116.1 million from direct lending.
|
Fee-Earning Assets Under Management were $444.5 billion at September 30, 2020, an increase of $36.4 billion, compared to $408.1 billion at December 31, 2019. The net increase was due to:
|
|
•
|
|
Inflows of $78.1 billion primarily attributable to:
|
|
|
o
|
$42.8 billion in our Private Equity segment driven by $28.5 billion from corporate private equity, primarily related to the commencement of BCP VIII and BEP III’s investment periods, $4.9 billion from BXLS, related to the commencement of BXLS V’s investment period, $4.5 billion from Strategic Partners, $2.3 billion from BXG, $1.9 billion from Tactical Opportunities and $721.8 million from multi-asset products,
|
|
|
o
|
$15.7 billion in our Real Estate segment driven by $7.5 billion from BREIT, $4.0 billion from BREDS, $1.8 billion from BREP opportunistic funds and co-investment, $1.1 billion from BPP Asia and co-investment, $757.0 million from BPP U.S. and co-investment and $483.9 million from BPP Europe and co-investment,
|
|
|
o
|
$12.6 billion in our Credit & Insurance segment driven by $4.2 billion from certain long only and MLP strategies, $3.3 billion of capital raised from CLOs, $3.3 billion from our structured products group, $3.1 billion from direct lending, $1.5 billion from BIS, $911.0 million from mezzanine funds and $894.6 million from distressed strategies, all partially offset by $5.2 billion of allocations to various strategies and other segments, and
|
|
|
o
|
$7.1 billion in our Hedge Fund Solutions segment driven by $4.7 billion from individual investor and specialized solutions, $1.4 billion from customized solutions and $952.8 million from commingled products.
|
Offsetting these increases were:
|
|
•
|
|
Outflows of $24.1 billion primarily attributable to:
|
|
|
o
|
$8.8 billion in our Hedge Fund Solutions segment driven by $4.6 billion from individual investor and specialized solutions, $3.3 billion from customized solutions and $911.4 million from commingled products,
|
|
|
o
|
$7.0 billion in our Credit & Insurance segment driven by $5.3 billion from certain long only and MLP strategies, $1.1 billion from direct lending and $284.7 million from distressed strategies,
|
|
|
o
|
$5.9 billion in our Private Equity segment driven by $4.6 billion from corporate private equity primarily due to the end of BCP VII and BEP II’s investment periods, $707.0 million from Strategic Partners, $498.0 million from BXLS due to the end of Clarus IV’s investment period and $105.4 million from multi-asset products, and
|
|
|
o
|
$2.3 billion in our Real Estate segment driven by $1.2 billion from BREIT, $690.7 million from BREDS, $256.0 million from BPP U.S. and co-investment and $145.5 million from BPP Europe.
|
|
|
•
|
|
Realizations of $13.0 billion primarily attributable to:
|
|
|
o
|
$5.1 billion in our Real Estate segment driven by $2.2 billion from BREDS, $2.2 billion from core+ real estate and $773.7 million from BREP opportunistic funds and co-investment,
|
|
|
o
|
$3.6 billion in our Private Equity segment driven by $1.5 billion from Tactical Opportunities, $1.1 billion from Strategic Partners and $1.1 billion from corporate private equity, and
|
|
|
o
|
$3.4 billion in our Credit & Insurance segment driven by $1.1 billion from distressed strategies, $714.0 million from CLOs, $597.4 million from mezzanine funds, $532.4 million from direct lending and $440.5 million from certain long only and MLP strategies.
|
|
|
•
|
|
Market depreciation of $4.6 billion driven in large part by the market impacts of COVID-19 on the fair value components of Fee-Earning Assets Under Management unless otherwise stated:
|
|
|
o
|
$3.4 billion of market depreciation in our Credit & Insurance segment driven by depreciation of $3.5 billion from certain long only and MLP strategies and $448.0 million from distressed strategies, partially offset by $568.6 million of market appreciation from CLOs, all of which included $918.3 million of foreign exchange appreciation across the segment,
|
|
|
o
|
$1.4 billion of market depreciation in our Hedge Fund Solutions segment driven by returns from BAAM’s Principal Solutions Composite of -0.1% gross and -0.7% net,
|
|
|
o
|
$1.3 billion of market depreciation in our Private Equity segment driven by Strategic Partners, which reflects a reporting lag of its underlying funds, and
|
|
|
o
|
$1.4 billion of market appreciation in our Real Estate segment driven by $1.3 billion from core+ real estate (including $432.2 million from foreign exchange depreciation), $550.6 million from BREP opportunistic and co-investment and $384.4 million from BREDS.
|
Total Assets Under Management
Total Assets Under Management were $584.4 billion at September 30, 2020, an increase of $20.0 billion, compared to $564.3 billion at June 30, 2020. The net increase was due to:
|
|
•
|
|
Market activity of $18.4 billion primarily attributable to:
|
|
|
o
|
$6.7 billion of market appreciation in our Real Estate segment driven by carrying value increases in opportunistic and core+ real estate of 6.4% and 3.5%, respectively, which includes $2.1 billion of foreign exchange appreciation across the segment,
|
|
|
o
|
$6.3 billion of market appreciation in our Private Equity segment driven by carrying value increases in corporate private equity and Tactical Opportunities of 12.2% and 10.7%, respectively, which included $432.8 million of foreign exchange appreciation across the segment,
|
|
|
o
|
$3.1 billion of market appreciation in our Credit & Insurance segment driven by $686.1 million from direct lending, $678.9 million from certain long only and MLP strategies, $583.9 million from CLOs, $569.9 million from distressed strategies and $439.6 million from mezzanine funds, which included $1.1 billion of foreign exchange appreciation across the segment, and
|
|
|
o
|
$2.3 billion of market appreciation in our Hedge Fund Solutions segment driven by reasons noted above in Fee-Earning Assets Under Management.
|
Total Assets Under Management market activity in our Real Estate and Private Equity segments generally represents the change in fair value of the investments held and typically exceeds the Fee-Earning Assets Under Management market activity.
|
|
•
|
|
Inflows of $15.1 billion primarily attributable to:
|
|
|
o
|
$5.6 billion in our Credit & Insurance segment driven by $1.7 billion from mezzanine funds, $1.6 billion from certain long only and MLP strategies, $1.1 billion of capital raised from CLOs, $636.3 million from BIS and $585.0 million from direct lending,
|
|
|
o
|
$3.9 billion in our Private Equity segment driven by $2.5 billion from BXG, $290.4 million from corporate private equity, $263.1 million from Tactical Opportunities, $149.8 million from Strategic Partners and $139.6 million from multi-asset products,
|
|
|
o
|
$3.9 billion in our Real Estate segment driven by $1.3 billion from BREDS, $1.3 billion from BREIT, $494.1 million from BPP Europe and co-investment, $320.6 million from BPP U.S. and co-investment, $259.0 million from BREP opportunistic funds and co-investment and $229.4 million from BPP Asia, and
|
|
|
o
|
$1.7 billion in our Hedge Fund Solutions segment driven by $1.0 billion from individual investor and specialized solutions, $371.2 million from commingled products and $314.8 million from customized solutions.
|
Offsetting these increases were:
|
|
•
|
|
Realizations of $7.9 billion primarily attributable to:
|
|
|
o
|
$4.7 billion in our Private Equity segment driven by $3.2 billion from corporate private equity, $744.5 million from Tactical Opportunities and $696.2 million from Strategic Partners,
|
|
|
o
|
$1.9 billion in our Real Estate segment driven by $758.3 million from BREDS, $578.8 million from BREP opportunistic and co-investment and $517.3 million from core+ real estate, and
|
|
|
o
|
$1.2 billion in our Credit & Insurance segment driven by $483.9 million from distressed strategies, $280.0 million from direct lending, $219.5 million from CLOs and $156.3 million from certain long only and MLP strategies.
|
Total Assets Under Management realizations in our Real Estate and Private Equity segments generally represents the total proceeds and typically exceeds the Fee-Earning Assets Under Management realizations which generally represents only the invested capital.
|
|
•
|
|
Outflows of $5.5 billion primarily attributable to:
|
|
|
o
|
$1.7 billion in our Credit & Insurance segment driven by $1.1 billion from certain long only and MLP strategies and $356.6 million from direct lending,
|
|
|
o
|
$1.7 billion in our Hedge Fund Solutions segment driven by $942.5 million from individual investor and specialized solutions and $710.4 million from customized solutions, and
|
|
|
o
|
$1.7 billion in our Real Estate segment driven by redemptions from BREIT, BREDS liquid funds, BPP U.S. and BPP Europe.
|
Total Assets Under Management were $584.4 billion at September 30, 2020, an increase of $13.3 billion, compared to $571.1 billion at December 31, 2019. The net increase was due to:
|
|
•
|
|
Inflows of $62.7 billion primarily attributable to:
|
|
|
o
|
$21.4 billion in our Real Estate segment driven by $8.5 billion from BREDS, $7.5 billion from BREIT, $2.1 billion from BREP opportunistic funds and co-investment, $1.4 billion from BPP Asia and co-investment, $975.7 million from BPP U.S. and co-investment and $907.3 million from BPP Europe and co-investment,
|
|
|
o
|
$18.0 billion in our Private Equity segment driven by $7.1 billion from corporate private equity, $4.0 billion from Strategic Partners, $2.5 billion from BXG, $2.0 billion from BXLS, $1.6 billion from Tactical Opportunities and $888.0 million from BIP,
|
|
|
o
|
$15.0 billion in our Credit & Insurance segment driven by $6.6 billion from our structured products group, $4.9 billion from certain long only and MLP strategies, $3.4 billion from direct lending, $3.3 billion of capital raised from CLOs, $2.9 billion from mezzanine funds, $1.5 billion from BIS and $210.3 million from distressed strategies, all partially offset by $8.4 billion of allocations to various strategies and other segments, and
|
|
|
o
|
$8.3 billion in our Hedge Fund Solutions segment driven by $5.0 billion from individual investor and specialized solutions, $2.1 billion from customized solutions and $1.2 billion from commingled products.
|
Offsetting these increases were:
|
|
•
|
|
Realizations of $21.7 billion primarily attributable to:
|
|
|
o
|
$9.7 billion in our Private Equity segment driven by $5.2 billion from corporate private equity, $2.3 billion from Tactical Opportunities, $1.8 billion from Strategic Partners and $437.2 million from BXLS,
|
|
|
o
|
$6.6 billion in our Real Estate segment driven by $2.8 billion from BREP opportunistic and co-investment, $2.2 billion from core+ real estate and $1.6 billion from BREDS, and
|
|
|
o
|
$4.5 billion in our Credit & Insurance segment driven by $1.2 billion from distressed strategies, $1.1 billion from mezzanine funds, $1.0 billion from direct lending, $714.0 million from CLOs and $490.6 million from certain long only and MLP strategies.
|
|
|
•
|
|
Outflows of $20.8 billion primarily attributable to:
|
|
|
o
|
$9.2 billion in our Hedge Fund Solutions segment driven by $4.7 billion from individual investor and specialized solutions, $3.4 billion from customized solutions and $1.1 billion from commingled products,
|
|
|
o
|
$6.9 billion in our Credit & Insurance segment driven by $5.7 billion from certain long only and MLP strategies, $483.2 million from direct lending and $391.4 million from CLOs,
|
|
|
o
|
$3.2 billion in our Real Estate segment driven by $1.7 billion from core+ real estate, $1.1 billion from BREP opportunistic funds and co-investment and $323.3 million from BREDS, and
|
|
|
o
|
$1.6 billion in our Private Equity segment driven by $574.8 million from multi-asset products, $405.4 million from corporate private equity, $290.3 million from Tactical Opportunities, $191.6 million from Strategic Partners and $151.1 million from BXLS.
|
|
|
•
|
|
Market depreciation of $7.0 billion driven in large part by the market impacts of COVID-19 on the fair value components of Total Assets Under Management unless otherwise noted:
|
|
|
o
|
$4.3 billion of market depreciation in our Credit & Insurance segment driven by depreciation of $3.7 billion from certain long only and MLP strategies and $1.2 billion from distressed strategies, partially offset by market appreciation of $559.8 million from CLOs, all of which included $1.0 billion of foreign exchange depreciation across the segment,
|
|
|
o
|
$1.2 billion of market depreciation in our Hedge Fund Solutions segment driven by reasons noted above in Fee-Earning Assets Under Management, and
|
|
|
o
|
$969.5 million of market depreciation in our Real Estate segment driven by $2.9 billion from BREDS, partially offset by $1.4 billion of market appreciation from core+ real estate (including $449.0 million of foreign exchange appreciation) and $480.7 million of market appreciation from BREP opportunistic funds and co-investment (including $1.2 billion of foreign exchange appreciation and $674.3 million of market depreciation).
|
The following presents our Dry Powder as of quarter end of each period:
|
Note:
|
Totals may not add due to rounding.
|
|
(a)
|
Represents illiquid drawdown funds, a component of Perpetual Capital and fee-paying co-investments; includes fee-paying third party capital as well as general partner and employee capital that does not earn fees. Amounts are reduced by outstanding capital commitments, for which capital has not yet been invested.
|
Net Accrued Performance Revenues
Effective January 1, 2020, Net Accrued Performance Revenues has been redefined to exclude Performance Revenues realized but not yet distributed as of the reporting date. This update aligns the presentation of Distributable Earnings and Net Accrued Performance Revenues. Prior periods have been recast to reflect this definition.
The following table presents the Accrued Performance Revenues, net of performance compensation, of the Blackstone Funds as of September 30, 2020 and 2019. Net Accrued Performance Revenues presented do not include clawback amounts, if any, which are disclosed in Note 17. “Commitments and Contingencies — Contingencies — Contingent Obligations (Clawback)” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing. See “— Non-GAAP Financial Measures” for our reconciliation of Net Accrued Performance Revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8
|
|
|
$
|
11
|
|
|
|
|
|
7
|
|
|
|
16
|
|
|
|
|
|
46
|
|
|
|
75
|
|
|
|
|
|
238
|
|
|
|
501
|
|
|
|
|
|
782
|
|
|
|
597
|
|
|
|
|
|
90
|
|
|
|
—
|
|
|
|
|
|
104
|
|
|
|
221
|
|
|
|
|
|
179
|
|
|
|
171
|
|
|
|
|
|
102
|
|
|
|
162
|
|
|
|
|
|
227
|
|
|
|
257
|
|
|
|
|
|
—
|
|
|
|
59
|
|
|
|
|
|
6
|
|
|
|
28
|
|
|
|
|
|
42
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,831
|
|
|
|
2,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
|
24
|
|
|
|
|
|
668
|
|
|
|
723
|
|
|
|
|
|
458
|
|
|
|
382
|
|
|
|
|
|
40
|
|
|
|
7
|
|
|
|
|
|
23
|
|
|
|
133
|
|
|
|
|
|
—
|
|
|
|
8
|
|
|
|
|
|
85
|
|
|
|
36
|
|
Tactical Opportunities (b)
|
|
|
148
|
|
|
|
106
|
|
|
|
|
|
76
|
|
|
|
133
|
|
|
|
|
|
7
|
|
|
|
4
|
|
|
|
|
|
20
|
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,544
|
|
|
|
1,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121
|
|
|
|
235
|
|
|
|
|
|
|
|
|
|
|
|
Total Blackstone Net Accrued Performance Revenues
|
|
$
|
3,550
|
|
|
$
|
4,042
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
Totals may not add due to rounding.
|
|
(a)
|
Real Estate and Private Equity include Co-Investments, as applicable.
|
|
(b)
|
Tactical Opportunities includes Blackstone Growth.
|
For the twelve months ended September 30, 2020, Net Accrued Performance Revenues receivable declined due to Net Accrued Performance Revenues of $439.5 million and net realized distributions of $932.4 million.
Invested Performance Eligible Assets Under Management
The following presents our Invested Performance Eligible Assets Under Management as of quarter end for each period:
|
Note:
|
Totals may not add due to rounding.
|
The following presents our Perpetual Capital assets under management as of quarter end for each period:
|
Note:
|
Totals may not add due to rounding.
|
Fund returns information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
The following table presents the investment record of our significant drawdown funds from inception through September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Date / Ending Date) (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars/Euros in Thousands, Except Where Noted)
|
|
|
|
|
|
|
|
|
$ 140,714
|
|
$ —
|
|
$ —
|
|
|
N/A
|
|
|
|
—
|
|
|
$ 345,190
|
|
|
2.5x
|
|
|
$ 345,190
|
|
|
2.5x
|
|
|
|
33
|
%
|
|
|
33
|
%
|
BREP I (Sep 1994 / Oct 1996)
|
|
380,708
|
|
—
|
|
—
|
|
|
N/A
|
|
|
|
—
|
|
|
1,327,708
|
|
|
2.8x
|
|
|
1,327,708
|
|
|
2.8x
|
|
|
|
40
|
%
|
|
|
40
|
%
|
BREP II (Oct 1996 / Mar 1999)
|
|
1,198,339
|
|
—
|
|
—
|
|
|
N/A
|
|
|
|
—
|
|
|
2,531,614
|
|
|
2.1x
|
|
|
2,531,614
|
|
|
2.1x
|
|
|
|
19
|
%
|
|
|
19
|
%
|
BREP III (Apr 1999 / Apr 2003)
|
|
1,522,708
|
|
—
|
|
—
|
|
|
N/A
|
|
|
|
—
|
|
|
3,330,406
|
|
|
2.4x
|
|
|
3,330,406
|
|
|
2.4x
|
|
|
|
21
|
%
|
|
|
21
|
%
|
BREP IV (Apr 2003 / Dec 2005)
|
|
2,198,694
|
|
—
|
|
33,534
|
|
|
0.1x
|
|
|
|
56
|
%
|
|
4,544,926
|
|
|
2.2x
|
|
|
4,578,460
|
|
|
1.7x
|
|
|
|
28
|
%
|
|
|
12
|
%
|
BREP V (Dec 2005 / Feb 2007)
|
|
5,539,418
|
|
—
|
|
170,327
|
|
|
0.7x
|
|
|
|
45
|
%
|
|
13,070,382
|
|
|
2.4x
|
|
|
13,240,709
|
|
|
2.3x
|
|
|
|
12
|
%
|
|
|
11
|
%
|
BREP VI (Feb 2007 / Aug 2011)
|
|
11,060,444
|
|
—
|
|
566,600
|
|
|
2.3x
|
|
|
|
77
|
%
|
|
27,181,375
|
|
|
2.5x
|
|
|
27,747,975
|
|
|
2.5x
|
|
|
|
13
|
%
|
|
|
13
|
%
|
BREP VII (Aug 2011 / Apr 2015)
|
|
13,496,823
|
|
1,711,538
|
|
5,559,666
|
|
|
1.2x
|
|
|
|
7
|
%
|
|
22,853,427
|
|
|
2.1x
|
|
|
28,413,093
|
|
|
1.9x
|
|
|
|
22
|
%
|
|
|
14
|
%
|
BREP VIII (Apr 2015 / Jun 2019)
|
|
16,567,256
|
|
2,737,862
|
|
18,983,652
|
|
|
1.5x
|
|
|
|
—
|
|
|
7,274,206
|
|
|
1.7x
|
|
|
26,257,858
|
|
|
1.5x
|
|
|
|
26
|
%
|
|
|
14
|
%
|
*BREP IX (Jun 2019 / Dec 2024)
|
|
20,891,658
|
|
14,629,333
|
|
7,094,976
|
|
|
1.1x
|
|
|
|
7
|
%
|
|
1,001,040
|
|
|
1.4x
|
|
|
8,096,016
|
|
|
1.2x
|
|
|
|
N/
|
M
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 72,996,762
|
|
$ 19,078,733
|
|
$ 32,408,755
|
|
|
1.3x
|
|
|
|
4
|
%
|
|
$ 83,460,274
|
|
|
2.2x
|
|
|
$115,869,029
|
|
|
1.9x
|
|
|
|
18
|
%
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BREP Int’l (Jan 2001 / Sep 2005)
|
|
€
824,172
|
|
€
—
|
|
€
—
|
|
|
N/A
|
|
|
|
—
|
|
|
€
1,373,170
|
|
|
2.1x
|
|
|
€
1,373,170
|
|
|
2.1x
|
|
|
|
23
|
%
|
|
|
23
|
%
|
BREP Int’l II (Sep 2005 / Jun 2008) (e)
|
|
1,629,748
|
|
—
|
|
—
|
|
|
N/A
|
|
|
|
—
|
|
|
2,576,670
|
|
|
1.8x
|
|
|
2,576,670
|
|
|
1.8x
|
|
|
|
8
|
%
|
|
|
8
|
%
|
BREP Europe III (Jun 2008 / Sep 2013)
|
|
3,205,167
|
|
—
|
|
380,890
|
|
|
0.6x
|
|
|
|
—
|
|
|
5,738,120
|
|
|
2.5x
|
|
|
6,119,010
|
|
|
2.1x
|
|
|
|
20
|
%
|
|
|
14
|
%
|
BREP Europe IV (Sep 2013 / Dec 2016)
|
|
6,710,146
|
|
1,337,217
|
|
2,555,556
|
|
|
1.3x
|
|
|
|
—
|
|
|
8,999,310
|
|
|
2.0x
|
|
|
11,554,866
|
|
|
1.8x
|
|
|
|
22
|
%
|
|
|
15
|
%
|
BREP Europe V (Dec 2016 / Oct 2019)
|
|
7,949,959
|
|
1,602,716
|
|
7,876,826
|
|
|
1.3x
|
|
|
|
—
|
|
|
778,365
|
|
|
2.6x
|
|
|
8,655,191
|
|
|
1.3x
|
|
|
|
50
|
%
|
|
|
10
|
%
|
*BREP Europe VI (Oct 2019 / Apr 2025)
|
|
9,786,439
|
|
7,287,480
|
|
2,380,731
|
|
|
1.0x
|
|
|
|
9
|
%
|
|
—
|
|
|
N/A
|
|
|
2,380,731
|
|
|
1.0x
|
|
|
|
N/
|
A
|
|
|
-12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
€
30,105,631
|
|
€
10,227,413
|
|
€
13,194,003
|
|
|
1.2x
|
|
|
|
2
|
%
|
|
€
19,465,635
|
|
|
2.1x
|
|
|
€
32,659,638
|
|
|
1.6x
|
|
|
|
16
|
%
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Date / Ending Date) (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars/Euros in Thousands, Except Where Noted)
|
|
|
|
|
|
BREP Asia I (Jun 2013 / Dec 2017)
|
|
$ 4,598,089
|
|
$ 1,281,985
|
|
$ 3,132,457
|
|
|
1.4x
|
|
|
|
15
|
%
|
|
$
4,295,614
|
|
|
1.9x
|
|
|
$ 7,428,071
|
|
|
1.6x
|
|
|
|
20
|
%
|
|
|
12
|
%
|
*BREP Asia II (Dec 2017 / Jun 2023)
|
|
7,302,307
|
|
4,160,393
|
|
3,402,501
|
|
|
1.1x
|
|
|
|
12
|
%
|
|
228,667
|
|
|
1.6x
|
|
|
3,631,168
|
|
|
1.1x
|
|
|
|
44
|
%
|
|
|
2
|
%
|
|
|
|
7,055,974
|
|
154,831
|
|
1,977,271
|
|
|
2.7x
|
|
|
|
—
|
|
|
13,309,647
|
|
|
2.1x
|
|
|
15,286,918
|
|
|
2.2x
|
|
|
|
15
|
%
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 127,797,844
|
|
$ 36,663,494
|
|
$ 56,042,120
|
|
|
1.3x
|
|
|
|
5
|
%
|
|
$
125,828,531
|
|
|
2.2x
|
|
|
$ 181,870,651
|
|
|
1.8x
|
|
|
|
17
|
%
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ N/A
|
|
$ N/A
|
|
$ 34,168,173
|
|
|
N/A
|
|
|
|
—
|
|
|
$ 7,275,374
|
|
|
N/A
|
|
|
$ 41,443,547
|
|
|
N/A
|
|
|
|
N/
|
M
|
|
|
8
|
%
|
*Core+ BREIT (Various) (h)
|
|
N/A
|
|
N/A
|
|
18,967,371
|
|
|
N/A
|
|
|
|
—
|
|
|
581,771
|
|
|
N/A
|
|
|
19,549,142
|
|
|
N/A
|
|
|
|
N
|
/A
|
|
|
8
|
%
|
*BREDS High-Yield (Various) (i)
|
|
19,993,148
|
|
10,225,525
|
|
2,641,559
|
|
|
1.0x
|
|
|
|
—
|
|
|
13,095,502
|
|
|
1.3x
|
|
|
15,737,061
|
|
|
1.2x
|
|
|
|
11
|
%
|
|
|
10
|
%
|
|
|
|
|
|
|
BCP I (Oct 1987 / Oct 1993)
|
|
$
859,081
|
|
$
—
|
|
$
—
|
|
|
N/A
|
|
|
|
—
|
|
|
$ 1,741,738
|
|
|
2.6x
|
|
|
$ 1,741,738
|
|
|
2.6x
|
|
|
|
19
|
%
|
|
|
19
|
%
|
BCP II (Oct 1993 / Aug 1997)
|
|
1,361,100
|
|
—
|
|
—
|
|
|
N/A
|
|
|
|
—
|
|
|
3,256,819
|
|
|
2.5x
|
|
|
3,256,819
|
|
|
2.5x
|
|
|
|
32
|
%
|
|
|
32
|
%
|
BCP III (Aug 1997 / Nov 2002)
|
|
3,967,422
|
|
—
|
|
—
|
|
|
N/A
|
|
|
|
—
|
|
|
9,184,688
|
|
|
2.3x
|
|
|
9,184,688
|
|
|
2.3x
|
|
|
|
14
|
%
|
|
|
14
|
%
|
BCOM (Jun 2000 / Jun 2006)
|
|
2,137,330
|
|
24,575
|
|
12,368
|
|
|
N/A
|
|
|
|
—
|
|
|
2,953,649
|
|
|
1.4x
|
|
|
2,966,017
|
|
|
1.4x
|
|
|
|
6
|
%
|
|
|
6
|
%
|
BCP IV (Nov 2002 / Dec 2005)
|
|
6,773,182
|
|
189,764
|
|
164,991
|
|
|
2.1x
|
|
|
|
—
|
|
|
21,417,821
|
|
|
2.9x
|
|
|
21,582,812
|
|
|
2.9x
|
|
|
|
36
|
%
|
|
|
36
|
%
|
BCP V (Dec 2005 / Jan 2011)
|
|
21,009,112
|
|
1,035,259
|
|
739,282
|
|
|
1.5x
|
|
|
|
45
|
%
|
|
37,212,862
|
|
|
1.9x
|
|
|
37,952,144
|
|
|
1.9x
|
|
|
|
8
|
%
|
|
|
8
|
%
|
BCP VI (Jan 2011 / May 2016)
|
|
15,202,400
|
|
1,164,970
|
|
10,954,940
|
|
|
1.7x
|
|
|
|
52
|
%
|
|
17,663,965
|
|
|
2.1x
|
|
|
28,618,905
|
|
|
1.9x
|
|
|
|
18
|
%
|
|
|
12
|
%
|
BCP VII (May 2016 / Feb 2020)
|
|
18,808,535
|
|
2,514,185
|
|
21,067,624
|
|
|
1.3x
|
|
|
|
2
|
%
|
|
1,763,411
|
|
|
1.8x
|
|
|
22,831,035
|
|
|
1.4x
|
|
|
|
48
|
%
|
|
|
12
|
%
|
*BCP VIII (Feb 2020 / Feb 2026)
|
|
24,839,835
|
|
24,799,808
|
|
(739)
|
|
|
N/A
|
|
|
|
100
|
%
|
|
—
|
|
|
N/A
|
|
|
(739)
|
|
|
N/A
|
|
|
|
N/
|
A
|
|
|
N/
|
A
|
Energy I (Aug 2011 / Feb 2015)
|
|
2,441,558
|
|
142,138
|
|
646,099
|
|
|
0.9x
|
|
|
|
20
|
%
|
|
3,328,596
|
|
|
1.9x
|
|
|
3,974,695
|
|
|
1.7x
|
|
|
|
15
|
%
|
|
|
10
|
%
|
Energy II (Feb 2015 / Feb 2020)
|
|
4,913,595
|
|
280,193
|
|
3,595,443
|
|
|
0.8x
|
|
|
|
7
|
%
|
|
350,161
|
|
|
2.1x
|
|
|
3,945,604
|
|
|
0.9x
|
|
|
|
58
|
%
|
|
|
-12
|
%
|
*Energy III (Feb 2020 / Feb 2026)
|
|
4,213,068
|
|
3,653,144
|
|
494,356
|
|
|
1.0x
|
|
|
|
80
|
%
|
|
—
|
|
|
N/A
|
|
|
494,356
|
|
|
1.0x
|
|
|
|
N/
|
A
|
|
|
N/
|
M
|
*BCP Asia (Dec 2017 / Dec 2023)
|
|
2,417,554
|
|
1,319,702
|
|
1,575,821
|
|
|
1.5x
|
|
|
|
12
|
%
|
|
160,023
|
|
|
2.2x
|
|
|
1,735,844
|
|
|
1.5x
|
|
|
|
159
|
%
|
|
|
28
|
%
|
*Core Private Equity (Jan 2017 / Jan 2021) (j)
|
|
4,756,127
|
|
1,429,242
|
|
5,022,859
|
|
|
1.5x
|
|
|
|
—
|
|
|
468,926
|
|
|
1.8x
|
|
|
5,491,785
|
|
|
1.5x
|
|
|
|
36
|
%
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Corporate Private Equity
|
|
$
113,699,899
|
|
$ 36,552,980
|
|
$ 44,273,044
|
|
|
1.3x
|
|
|
|
17
|
%
|
|
$
99,502,659
|
|
|
2.1x
|
|
|
$ 143,775,703
|
|
|
1.8x
|
|
|
|
16
|
%
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Date / Ending Date) (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars/Euros in Thousands, Except Where Noted)
|
Private Equity (continued)
|
|
|
|
|
*Tactical Opportunities (Various)
|
|
$ 22,722,239
|
|
$ 8,056,105
|
|
$
11,386,499
|
|
|
1.1x
|
|
|
|
7
|
%
|
|
$ 10,532,523
|
|
|
1.7x
|
|
|
$21,919,022
|
|
|
1.4x
|
|
|
|
17
|
%
|
|
|
9
|
%
|
*Tactical Opportunities Co-Investment and Other (Various)
|
|
8,868,691
|
|
1,894,773
|
|
5,592,365
|
|
|
1.4x
|
|
|
|
2
|
%
|
|
2,575,630
|
|
|
1.5x
|
|
|
8,167,995
|
|
|
1.4x
|
|
|
|
19
|
%
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Tactical Opportunities
|
|
$ 31,590,930
|
|
$ 9,950,878
|
|
$
16,978,864
|
|
|
1.2x
|
|
|
|
5
|
%
|
|
$ 13,108,153
|
|
|
1.7x
|
|
|
$30,087,017
|
|
|
1.4x
|
|
|
|
18
|
%
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Blackstone Growth (Jul 2020 / Jul 2025)
|
|
$
2,458,155
|
|
$ 2,162,576
|
|
$ 241,414
|
|
|
N/M
|
|
|
|
—
|
|
|
$
—
|
|
|
N/A
|
|
|
241,414
|
|
|
N/M
|
|
|
|
N/
|
A
|
|
|
N/
|
M
|
Strategic Partners (Secondaries)
|
|
Strategic Partners I-V (Various) (k)
|
|
$
11,865,053
|
|
$ 1,673,692
|
|
$ 770,700
|
|
|
N/M
|
|
|
|
—
|
|
|
$
16,943,163
|
|
|
N/M
|
|
|
$17,713,863
|
|
|
1.5x
|
|
|
|
N/
|
A
|
|
|
13
|
%
|
Strategic Partners VI (Apr 2014 / Apr 2016) (k)
|
|
4,362,750
|
|
1,188,738
|
|
1,130,603
|
|
|
N/M
|
|
|
|
—
|
|
|
3,353,270
|
|
|
N/M
|
|
|
4,483,873
|
|
|
1.4x
|
|
|
|
N/
|
A
|
|
|
13
|
%
|
Strategic Partners VII (May 2016 / Mar 2019) (k)
|
|
7,489,970
|
|
2,410,875
|
|
4,415,089
|
|
|
N/M
|
|
|
|
—
|
|
|
2,083,051
|
|
|
N/M
|
|
|
6,498,140
|
|
|
1.3x
|
|
|
|
N/
|
A
|
|
|
12
|
%
|
Strategic Partners Real Assets II (May 2017 / Jun 2020) (k)
|
|
1,749,807
|
|
325,923
|
|
1,114,593
|
|
|
N/M
|
|
|
|
—
|
|
|
426,661
|
|
|
N/M
|
|
|
1,541,254
|
|
|
1.2x
|
|
|
|
N/
|
A
|
|
|
13
|
%
|
*Strategic Partners VIII (Mar 2019 / Jul 2023) (k)
|
|
10,763,600
|
|
5,241,049
|
|
2,719,357
|
|
|
N/M
|
|
|
|
—
|
|
|
295,999
|
|
|
N/M
|
|
|
3,015,356
|
|
|
1.2x
|
|
|
|
N/
|
A
|
|
|
17
|
%
|
*Strategic Partners Real Estate, SMA and Other (Various) (k)
|
|
7,678,402
|
|
2,828,096
|
|
2,436,489
|
|
|
N/M
|
|
|
|
—
|
|
|
1,438,476
|
|
|
N/M
|
|
|
3,874,965
|
|
|
1.2x
|
|
|
|
N/
|
A
|
|
|
11
|
%
|
*Strategic Partners Infra III (Jun 2020 / Jul 2024) (k)
|
|
3,250,100
|
|
2,942,929
|
|
96,155
|
|
|
N/M
|
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
96,155
|
|
|
2.0x
|
|
|
|
N/
|
A
|
|
|
N/
|
M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Strategic Partners (Secondaries)
|
|
$ 47,159,682
|
|
$16,611,302
|
|
$
12,682,986
|
|
|
N/M
|
|
|
|
—
|
|
|
$ 24,540,620
|
|
|
N/M
|
|
|
$37,223,606
|
|
|
1.4x
|
|
|
|
N/
|
A
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Infrastructure (Various)
|
|
$ 13,658,063
|
|
$10,643,283
|
|
$
2,878,931
|
|
|
1.0x
|
|
|
|
12
|
%
|
|
—
|
|
|
N/A
|
|
|
$ 2,878,931
|
|
|
1.0x
|
|
|
|
N/
|
A
|
|
|
-10
|
%
|
|
|
|
Clarus IV (Jan 2018 / Jan 2020)
|
|
910,000
|
|
406,941
|
|
596,134
|
|
|
1.4x
|
|
|
|
3
|
%
|
|
22,327
|
|
|
1.3x
|
|
|
618,461
|
|
|
1.4x
|
|
|
|
13
|
%
|
|
|
14
|
%
|
*BXLS V (Jan 2020 / Jan 2025)
|
|
4,679,227
|
|
4,477,028
|
|
242,132
|
|
|
1.2x
|
|
|
|
3
|
%
|
|
—
|
|
|
N/A
|
|
|
242,132
|
|
|
1.2x
|
|
|
|
N/
|
A
|
|
|
N/
|
M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Date / Ending Date) (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars/Euros in Thousands, Except Where Noted)
|
|
|
|
Mezzanine / Opportunistic I (Jul 2007 / Oct 2011)
|
|
$ 2,000,000
|
|
$
97,114
|
|
$ 17,566
|
|
|
0.9x
|
|
|
|
—
|
|
|
$
4,774,711
|
|
|
1.6x
|
|
|
$
4,792,277
|
|
|
1.6x
|
|
|
|
N/A
|
|
|
|
17
|
%
|
Mezzanine / Opportunistic II (Nov 2011 / Nov 2016)
|
|
4,120,000
|
|
1,033,255
|
|
933,246
|
|
|
0.7x
|
|
|
|
—
|
|
|
5,519,086
|
|
|
1.6x
|
|
|
6,452,332
|
|
|
1.3x
|
|
|
|
N/A
|
|
|
|
9
|
%
|
*Mezzanine / Opportunistic III (Sep 2016 / Sep 2021)
|
|
6,639,133
|
|
2,248,377
|
|
4,648,184
|
|
|
1.1x
|
|
|
|
1
|
%
|
|
2,249,490
|
|
|
1.6x
|
|
|
6,897,674
|
|
|
1.2x
|
|
|
|
N/A
|
|
|
|
9
|
%
|
Stressed / Distressed I (Sep 2009 / May 2013)
|
|
3,253,143
|
|
76,000
|
|
1,305
|
|
|
—
|
|
|
|
—
|
|
|
5,774,236
|
|
|
1.6x
|
|
|
5,775,541
|
|
|
1.3x
|
|
|
|
N/A
|
|
|
|
9
|
%
|
Stressed / Distressed II (Jun 2013 / Jun 2018)
|
|
5,125,000
|
|
551,437
|
|
951,873
|
|
|
0.7x
|
|
|
|
1
|
%
|
|
4,395,666
|
|
|
1.2x
|
|
|
5,347,539
|
|
|
1.0x
|
|
|
|
N/A
|
|
|
|
-2
|
%
|
*Stressed / Distressed III (Dec 2017 / Dec 2022)
|
|
7,356,380
|
|
4,313,296
|
|
1,704,234
|
|
|
0.9x
|
|
|
|
1
|
%
|
|
1,466,071
|
|
|
1.3x
|
|
|
3,170,305
|
|
|
1.0x
|
|
|
|
N/A
|
|
|
|
-2
|
%
|
Energy I (Nov 2015 / Nov 2018)
|
|
2,856,867
|
|
1,063,343
|
|
1,451,567
|
|
|
0.9x
|
|
|
|
—
|
|
|
1,080,273
|
|
|
1.8x
|
|
|
2,531,840
|
|
|
1.1x
|
|
|
|
N/A
|
|
|
|
3
|
%
|
*Energy II (Feb 2019 / Feb 2024)
|
|
3,616,081
|
|
2,980,268
|
|
680,742
|
|
|
1.1x
|
|
|
|
—
|
|
|
192,782
|
|
|
1.5x
|
|
|
873,524
|
|
|
1.1x
|
|
|
|
N/A
|
|
|
|
18
|
%
|
European Senior Debt I (Feb 2015 / Feb 2019)
|
|
€
1,964,689
|
|
€
285,535
|
|
€
1,676,028
|
|
|
1.0x
|
|
|
|
2
|
%
|
|
€
1,399,136
|
|
|
1.5x
|
|
|
€
3,075,164
|
|
|
1.1x
|
|
|
|
N/A
|
|
|
|
4
|
%
|
*European Senior Debt II (Jun 2019 / Jun 2024)
|
|
€
4,088,344
|
|
€
3,416,289
|
|
€
662,325
|
|
|
1.0x
|
|
|
|
—
|
|
|
€
123,072
|
|
|
1.8x
|
|
|
€
785,397
|
|
|
1.1x
|
|
|
|
N/A
|
|
|
|
N/
|
M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Credit Drawdown Funds (l)
|
|
$
41,872,262
|
|
$ 16,704,048
|
|
$ 13,130,787
|
|
|
0.9x
|
|
|
|
1
|
%
|
|
$
27,165,985
|
|
|
1.5x
|
|
|
$
40,296,772
|
|
|
1.2x
|
|
|
|
N/A
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Direct Lending BDC BGSL (Various) (m)
|
|
$ 3,770,397
|
|
$ 1,243,928
|
|
$ 2,540,903
|
|
|
N/A
|
|
|
|
—
|
|
|
$ 186,679
|
|
|
N/A
|
|
|
$
2,727,582
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
8
|
%
|
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
|
N/M
|
Not meaningful generally due to the limited time since initial investment.
|
|
*
|
Represents funds that are currently in their investment period and open-ended funds.
|
|
(a)
|
Excludes investment vehicles where Blackstone does not earn fees.
|
|
(b)
|
Available Capital represents total investable capital commitments, including side-by-side, adjusted for certain expenses and expired or recallable capital and may include leverage, less invested capital. This amount is not reduced by outstanding commitments to investments.
|
|
(c)
|
Multiple of Invested Capital (“MOIC”) represents carrying value, before management fees, expenses and Performance Revenues, divided by invested capital.
|
|
(d)
|
Unless otherwise indicated, Net Internal Rate of Return (“IRR”) represents the annualized inception to September 30, 2020 IRR on total invested capital based on realized proceeds and unrealized value, as applicable, after management fees, expenses and Performance Revenues. IRRs are calculated using actual timing of limited partner cash flows. Initial inception date of cash flows may differ from the Investment Period Beginning Date.
|
|
(e)
|
The 8% Realized Net IRR and 8% Total Net IRR exclude investors that opted out of the Hilton investment opportunity. Overall BREP International II performance reflects a 7% Realized Net IRR and a 7% Total Net IRR.
|
|
(f)
|
BREP Co-Investment represents co-investment capital raised for various BREP investments. The Net IRR reflected is calculated by aggregating each co-investment’s realized proceeds and unrealized value, as applicable, after management fees, expenses and Performance Revenues.
|
|
(g)
|
BPP represents the core+ real estate funds which invest with a more modest risk profile and lower leverage. Committed Capital and Available Capital are not regularly reported to investors in our core+ strategy and are not applicable in the context of these funds.
|
|
(h)
|
Unrealized Investment Value reflects BREIT’s net asset value as of September 30, 2020. Realized Investment Value represents BREIT’s cash distributions, net of servicing fees. The BREIT net return reflects a per share blended return, assuming BREIT had a single share class, reinvestment of all dividends received during the period, and no upfront selling commission, net of all fees and expenses incurred by BREIT. These returns are not representative of the returns experienced by any particular investor or share class. Inception to date net returns are presented on an annualized basis and are from January 1, 2017. Committed Capital and Available Capital are not regularly reported to investors in our core+ strategy and are not applicable in the context of this vehicle.
|
|
(i)
|
BREDS High-Yield represents the flagship real estate debt drawdown funds only and excludes BREDS High-Grade.
|
|
(j)
|
Blackstone Core Equity Partners is a core private equity fund which invests with a more modest risk profile and longer hold period than traditional private equity.
|
|
(k)
|
Realizations are treated as return of capital until fully recovered and therefore unrealized and realized MOICs are not meaningful. If information is not available on a timely basis, returns are calculated from results that are reported on a three month lag and therefore do not include the impact of economic and market activities in the quarter in which such events occur.
|
|
(l)
|
Funds presented represent the flagship credit drawdown funds only. The Total Credit Net IRR is the combined IRR of the credit drawdown funds presented.
|
|
(m)
|
Unrealized Investment Value reflects BGSL’s net asset value as of September 30, 2020. Realized Investment Value represents BGSL’s cash distributions. BGSL’s net return is annualized and calculated since inception starting on November 20, 2018, as the change in NAV per share during the period, plus distributions per share (assuming dividends and distributions are reinvested in accordance with the Company’s dividend reinvestment plan) divided by the beginning NAV per share.
|
Discussed below is our Segment Distributable Earnings for each of our segments. This information is reflected in the manner utilized by our senior management to make operating decisions, assess performance and allocate resources. References to “our” sectors or investments may also refer to portfolio companies and investments of the underlying funds that we manage.
The following table presents the results of operations for our Real Estate segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
392,785
|
|
|
$
|
266,779
|
|
|
$
|
126,006
|
|
|
|
47
|
%
|
|
$
|
1,146,927
|
|
|
$
|
782,660
|
|
|
$
|
364,267
|
|
|
|
47
|
%
|
Transaction and Other Fees, Net
|
|
|
17,464
|
|
|
|
73,385
|
|
|
|
(55,921
|
)
|
|
|
-76
|
%
|
|
|
72,527
|
|
|
|
121,286
|
|
|
|
(48,759
|
)
|
|
|
-40
|
%
|
|
|
|
|
(1,039
|
)
|
|
|
(7,635
|
)
|
|
|
6,596
|
|
|
|
-86
|
%
|
|
|
(11,816
|
)
|
|
|
(9,601
|
)
|
|
|
(2,215
|
)
|
|
|
23
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management Fees, Net
|
|
|
409,210
|
|
|
|
332,529
|
|
|
|
76,681
|
|
|
|
23
|
%
|
|
|
1,207,638
|
|
|
|
894,345
|
|
|
|
313,293
|
|
|
|
35
|
%
|
Fee Related Performance Revenues
|
|
|
55,327
|
|
|
|
30,600
|
|
|
|
24,727
|
|
|
|
81
|
%
|
|
|
66,383
|
|
|
|
48,348
|
|
|
|
18,035
|
|
|
|
37
|
%
|
|
|
|
|
(138,342
|
)
|
|
|
(132,183
|
)
|
|
|
(6,159
|
)
|
|
|
5
|
%
|
|
|
(375,278
|
)
|
|
|
(344,794
|
)
|
|
|
(30,484
|
)
|
|
|
9
|
%
|
|
|
|
|
(42,566
|
)
|
|
|
(43,897
|
)
|
|
|
1,331
|
|
|
|
-3
|
%
|
|
|
(127,567
|
)
|
|
|
(122,997
|
)
|
|
|
(4,570
|
)
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
283,629
|
|
|
|
187,049
|
|
|
|
96,580
|
|
|
|
52
|
%
|
|
|
771,176
|
|
|
|
474,902
|
|
|
|
296,274
|
|
|
|
62
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Performance Revenues
|
|
|
18,872
|
|
|
|
282,379
|
|
|
|
(263,507
|
)
|
|
|
-93
|
%
|
|
|
96,801
|
|
|
|
558,134
|
|
|
|
(461,333
|
)
|
|
|
-83
|
%
|
Realized Performance Compensation
|
|
|
(7,343
|
)
|
|
|
(85,544
|
)
|
|
|
78,201
|
|
|
|
-91
|
%
|
|
|
(33,282
|
)
|
|
|
(183,186
|
)
|
|
|
149,904
|
|
|
|
-82
|
%
|
Realized Principal Investment Income
|
|
|
4,946
|
|
|
|
17,968
|
|
|
|
(13,022
|
)
|
|
|
-72
|
%
|
|
|
13,819
|
|
|
|
63,257
|
|
|
|
(49,438
|
)
|
|
|
-78
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,475
|
|
|
|
214,803
|
|
|
|
(198,328
|
)
|
|
|
-92
|
%
|
|
|
77,338
|
|
|
|
438,205
|
|
|
|
(360,867
|
)
|
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Distributable Earnings
|
|
$
|
300,104
|
|
|
$
|
401,852
|
|
|
$
|
(101,748)
|
|
|
|
|
%
|
|
$
|
848,514
|
|
|
$
|
913,107
|
|
|
$
|
(64,593
|
)
|
|
|
-7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019
Segment Distributable Earnings were $300.1 million for the three months ended September 30, 2020, a decrease of $101.7 million, compared to $401.9 million for the three months ended September 30, 2019. The decrease in Segment Distributable Earnings was primarily attributable to a decrease of $198.3 million in Net Realizations, partially offset by an increase of $96.6 million in Fee Related Earnings.
Segment Distributable Earnings in our Real Estate segment in the third quarter of 2020 were lower compared to the third quarter of 2019. This was primarily driven by decreased Net Realizations, partially offset by increased Fee Related Earnings due to the end of BREP IX’s fee holiday in 2019, the commencement of BREP Europe VI’s investment period in the fourth quarter of 2019 along with the end of its fee holiday in the first quarter of 2020 and growth in Fee-Earning Assets Under Management in core+ real estate. The third quarter of 2020 was characterized by continued market rebounds across many asset classes. However, the ongoing COVID-19 pandemic and related shutdowns or limitations in the operations of certain non-essential businesses have continued to cause disruption in the U.S. and global economies, and certain investments in our real estate portfolio, such as those in the hospitality and retail sectors and in certain geographies in the office and residential sectors, have been materially challenged and could continue to be adversely impacted. Following a more muted period since the onset of the COVID-19 pandemic, the continuing market recovery in the third quarter of 2020 has contributed to renewed momentum in capital deployment, realization and fundraising activity, although the resurgence in COVID-19 infection levels in certain geographies and a potential resulting market downturn may pose material risks. These risks potentially create additional pressure for certain of our portfolio companies’ and investments’ liquidity needs and their ability to meet financial obligations, including by adversely impacting rent collection and operational performance. In addition, to the extent the rate of global growth in certain sectors further decelerates, this would contribute to a more challenging
operating environment. We have not, however, experienced a period of significant dislocation since the first quarter of 2020, during which the liquidity of certain assets traded in the credit markets was limited. Nonetheless, another period of such dislocation would impact the value of certain assets held by our funds, such funds’ ability to sell assets at attractive prices or in a timely manner in order to avoid losses and the likelihood of margin calls from credit providers. Furthermore, the economic recovery is likely to continue to be gradual, uneven and characterized by meaningful dispersion across sectors and regions, with uncertainty regarding its ultimate length and trajectory. For example, the recovery to date has been more pronounced in the U.S. than in the European Union.
We have also seen an increasing focus toward rent regulation as a means to address residential affordability caused by undersupply of housing in certain markets in the U.S. and Europe, as well as an increasing focus on the institution of eviction limitations in response to the COVID-19 pandemic in the U.S. Such conditions (which may be across industries, sectors or geographies) may contribute to adverse operating performance, including by moderating rent growth in certain markets in our residential portfolio. See “Part II. Item 1A. Risk Factors — The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and is adversely impacting, and may continue to adversely impact, our performance and results of operations.” in our Quarterly Report on Form
10-Q
for the quarter ended March 31, 2020 and the market and economic conditions risk factors in our Annual Report on Form
10-K
for the year ended December 31, 2019.
Fee Related Earnings were $283.6 million for the three months ended September 30, 2020, an increase of $96.6 million, or 52%, compared to $187.0 million for the three months ended September 30, 2019. The increase in Fee Related Earnings was primarily attributable to increases of $76.7 million in Management Fees, Net and $24.7 million in Fee Related Performance Revenues.
Management Fees, Net were $409.2 million for the three months ended September 30, 2020, an increase of $76.7 million, compared to $332.5 million for the three months ended September 30, 2019, primarily driven by an increase in Base Management Fees. Base Management Fees increased $126.0 million primarily due to the end of BREP IX’s fee holiday in 2019, the commencement of BREP Europe VI’s investment period in the fourth quarter of 2019 along with the end of its fee holiday in the first quarter of 2020 and
Fee-Earning
Assets Under Management growth in core+ real estate.
Fee Related Performance Revenues were $55.3 million for the three months ended September 30, 2020, an increase of $24.7 million, compared to $30.6 million for the three months ended September 30, 2019. The increase was primarily due to a crystallization event in BPP Europe.
Net Realizations were $16.5 million for the three months ended September 30, 2020, a decrease of $198.3 million, compared to $214.8 million for the three months ended September 30, 2019. The decrease in Net Realizations was primarily attributable to a decrease of $263.5 million in Realized Performance Revenues, partially offset by a decrease of $78.2 million in Realized Performance Compensation.
Realized Performance Revenues were $18.9 million for the three months ended September 30, 2020, a decrease of $263.5 million, compared to $282.4 million for the three months ended September 30, 2019. The decrease was due to lower realization activity as a result of market impacts of
COVID-19
in the three months ended September 30, 2020 compared to the three months ended September 30, 2019.
Realized Performance Compensation was $7.3 million for the three months ended September 30, 2020, a decrease of $78.2 million, compared to $85.5 million for the three months ended September 30, 2019. The decrease was primarily due to the decrease in Realized Performance Revenues.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Segment Distributable Earnings were $848.5 million for the nine months ended September 30, 2020, a decrease of $64.6 million, compared to $913.1 million for the nine months ended September 30, 2019. The decrease in Segment Distributable Earnings was primarily attributable to a decrease of $360.9 million in Net Realizations, partially offset by an increase of $296.3 million in Fee Related Earnings.
Fee Related Earnings were $771.2 million for the nine months ended September 30, 2020, an increase of $296.3 million, or 62%, compared to $474.9 million for the nine months ended September 30, 2019. The increase in Fee Related Earnings was primarily attributable to increases of $313.3 million in Management Fees, Net and $18.0 million in Fee Related Performance Revenues, partially offset by an increase of $30.5 million in Fee Related Compensation.
Management Fees, Net were $1.2 billion for the nine months ended September 30, 2020, an increase of $313.3 million, compared to $894.3 million for the nine months ended September 30, 2019, primarily driven by an increase in Base Management Fees. Base Management Fees increased $364.3 million primarily due to the end of BREP IX’s fee holiday in 2019, the commencement of BREP Europe VI’s investment period in the fourth quarter of 2019 along with the end of its fee holiday in the first quarter of 2020 and
Fee-Earning
Assets Under Management growth in core+ real estate.
The annualized Base Management Fee Rate increased from 1.00% at September 30, 2019 to 1.15% at September 30, 2020. The increase was principally due to BREP IX, the majority of which were under a Base Management Fee holiday in 2019, and BREP Europe VI, which commenced its investment period in the fourth quarter of 2019 and came out of its fee holiday in the first quarter of 2020.
Fee Related Performance Revenues were $66.4 million for the nine months ended September 30, 2020, an increase of $18.0 million, compared to $48.3 million for the nine months ended September 30, 2019. The increase was primarily due to a crystallization event in BPP Europe.
Fee Related Compensation was $375.3 million for the nine months ended September 30, 2020, an increase of $30.5 million, compared to $344.8 million for the nine months ended September 30, 2019. The increase was primarily due to an increase in Management Fees, Net on which a portion of Fee Related Compensation is based.
Net Realizations were $77.3 million for the nine months ended September 30, 2020, a decrease of $360.9 million, compared to $438.2 million for the nine months ended September 30, 2019. The decrease in Net Realizations was primarily attributable to decreases of $461.3 million in Realized Performance Revenues and $49.4 million in Realized Principal Investment Income, partially offset by a decrease of $149.9 million in Realized Performance Compensation.
Realized Performance Revenues were $96.8 million for the nine months ended September 30, 2020, a decrease of $461.3 million, compared to $558.1 million for the nine months ended September 30, 2019. The decrease was due to lower realization activity as a result of market impacts of
COVID-19
in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.
Realized Principal Investment Income was $13.8 million for the nine months ended September 30, 2020, a decrease of $49.4 million, compared to $63.3 million for the nine months ended September 30, 2019. The decrease was primarily due to firm redemptions from Real Estate funds in 2019.
Realized Performance Compensation was $33.3 million for the nine months ended September 30, 2020, a decrease of $149.9 million, compared to $183.2 million for the nine months ended September 30, 2019. The decrease was primarily due to the decrease in Realized Performance Revenues.
Fund return information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
The following table presents the internal rates of return, except where noted, of our significant real estate funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16%
|
|
|
|
19%
|
|
|
|
14%
|
|
|
|
12%
|
|
|
|
-30%
|
|
|
|
-27%
|
|
|
|
65%
|
|
|
|
43%
|
|
|
|
48%
|
|
|
|
28%
|
|
|
|
22%
|
|
|
|
12%
|
|
|
|
|
|
22%
|
|
|
|
16%
|
|
|
|
-7%
|
|
|
|
-6%
|
|
|
|
-27%
|
|
|
|
-21%
|
|
|
|
9%
|
|
|
|
6%
|
|
|
|
15%
|
|
|
|
12%
|
|
|
|
14%
|
|
|
|
11%
|
|
|
|
|
|
11%
|
|
|
|
9%
|
|
|
|
9%
|
|
|
|
8%
|
|
|
|
-14%
|
|
|
|
-12%
|
|
|
|
24%
|
|
|
|
21%
|
|
|
|
18%
|
|
|
|
13%
|
|
|
|
17%
|
|
|
|
13%
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2%
|
|
|
|
2%
|
|
|
|
-22%
|
|
|
|
-20%
|
|
|
|
13%
|
|
|
|
10%
|
|
|
|
30%
|
|
|
|
22%
|
|
|
|
21%
|
|
|
|
14%
|
|
|
|
|
|
9%
|
|
|
|
7%
|
|
|
|
5%
|
|
|
|
4%
|
|
|
|
5%
|
|
|
|
4%
|
|
|
|
12%
|
|
|
|
9%
|
|
|
|
36%
|
|
|
|
26%
|
|
|
|
20%
|
|
|
|
14%
|
|
|
|
|
|
12%
|
|
|
|
8%
|
|
|
|
N/M
|
|
|
|
N/M
|
|
|
|
22%
|
|
|
|
12%
|
|
|
|
N/M
|
|
|
|
N/M
|
|
|
|
N/M
|
|
|
|
N/M
|
|
|
|
31%
|
|
|
|
16%
|
|
|
|
|
|
-7%
|
|
|
|
-6%
|
|
|
|
-3%
|
|
|
|
-3%
|
|
|
|
-9%
|
|
|
|
-8%
|
|
|
|
-2%
|
|
|
|
-3%
|
|
|
|
30%
|
|
|
|
20%
|
|
|
|
22%
|
|
|
|
14%
|
|
|
|
|
|
-1%
|
|
|
|
-1%
|
|
|
|
5%
|
|
|
|
4%
|
|
|
|
-15%
|
|
|
|
-13%
|
|
|
|
10%
|
|
|
|
8%
|
|
|
|
31%
|
|
|
|
22%
|
|
|
|
21%
|
|
|
|
15%
|
|
|
|
|
|
7%
|
|
|
|
5%
|
|
|
|
5%
|
|
|
|
3%
|
|
|
|
-1%
|
|
|
|
-2%
|
|
|
|
15%
|
|
|
|
11%
|
|
|
|
66%
|
|
|
|
50%
|
|
|
|
15%
|
|
|
|
10%
|
|
|
|
|
|
3%
|
|
|
|
-
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
1%
|
|
|
|
-11%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
1%
|
|
|
|
-12%
|
|
|
|
|
|
5%
|
|
|
|
4%
|
|
|
|
4%
|
|
|
|
3%
|
|
|
|
-11%
|
|
|
|
-10%
|
|
|
|
14%
|
|
|
|
11%
|
|
|
|
28%
|
|
|
|
20%
|
|
|
|
18%
|
|
|
|
12%
|
|
|
|
|
|
4%
|
|
|
|
2%
|
|
|
|
4%
|
|
|
|
2%
|
|
|
|
-1%
|
|
|
|
-4%
|
|
|
|
17%
|
|
|
|
10%
|
|
|
|
68%
|
|
|
|
44%
|
|
|
|
10%
|
|
|
|
2%
|
|
|
|
|
|
12%
|
|
|
|
12%
|
|
|
|
6%
|
|
|
|
5%
|
|
|
|
27%
|
|
|
|
26%
|
|
|
|
35%
|
|
|
|
31%
|
|
|
|
17%
|
|
|
|
15%
|
|
|
|
18%
|
|
|
|
16%
|
|
|
|
|
|
2%
|
|
|
|
2%
|
|
|
|
2%
|
|
|
|
2%
|
|
|
|
2%
|
|
|
|
1%
|
|
|
|
6%
|
|
|
|
5%
|
|
|
|
N/M
|
|
|
|
N/M
|
|
|
|
10%
|
|
|
|
8%
|
|
|
|
|
|
6%
|
|
|
|
4%
|
|
|
|
4%
|
|
|
|
3%
|
|
|
|
-2%
|
|
|
|
-4%
|
|
|
|
12%
|
|
|
|
9%
|
|
|
|
15%
|
|
|
|
11%
|
|
|
|
14%
|
|
|
|
10%
|
|
|
|
|
|
3%
|
|
|
|
2%
|
|
|
|
2%
|
|
|
|
2%
|
|
|
|
-
|
|
|
|
-1%
|
|
|
|
6%
|
|
|
|
5%
|
|
|
|
8%
|
|
|
|
6%
|
|
|
|
5%
|
|
|
|
4%
|
|
|
|
|
|
5%
|
|
|
|
5%
|
|
|
|
2%
|
|
|
|
2%
|
|
|
|
-15%
|
|
|
|
-15%
|
|
|
|
11%
|
|
|
|
9%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
9%
|
|
|
|
6%
|
|
|
|
|
|
N/A
|
|
|
|
-6%
|
|
|
|
N/A
|
|
|
|
3%
|
|
|
|
N/A
|
|
|
|
-36%
|
|
|
|
N/A
|
|
|
|
19%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
6%
|
|
|
|
|
|
N/A
|
|
|
|
6%
|
|
|
|
N/A
|
|
|
|
4%
|
|
|
|
N/A
|
|
|
|
2%
|
|
|
|
N/A
|
|
|
|
10%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
8%
|
|
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
|
N/M
|
Not meaningful generally due to the limited time since initial investment.
|
|
(a)
|
Net returns are based on the change in carrying value (realized and unrealized) after management fees, expenses and Performance Revenues.
|
|
(b)
|
Euro-based internal rates of return.
|
|
(c)
|
BREP Co-Investment represents co-investment capital raised for various BREP investments. The Net IRR reflected is calculated by aggregating each co-investment’s realized proceeds and unrealized value, as applicable, after management fees, expenses and Performance Revenues.
|
|
(d)
|
BPP represents the core+ real estate funds which invest with a more modest risk profile and lower leverage.
|
|
(e)
|
BREDS High-Yield represents the flagship real estate debt drawdown funds and excludes the BREDS High-Grade drawdown fund, which has a different risk-return profile. Inception to date returns are from July 1, 2009 and July 1, 2017 for BREDS High-Yield and BREDS High-Grade, respectively.
|
|
(f)
|
BREDS Liquid represents BREDS funds that invest in liquid real estate debt securities, except funds in liquidation and insurance mandates with specific investment objectives. The returns presented represent summarized asset-weighted gross and net rates of return from August 1, 2008. Inception to Date returns are presented on an annualized basis.
|
|
(g)
|
Reflects annualized return of a shareholder invested in BXMT as of the beginning of each period presented, assuming reinvestment of all dividends received during the period, and net of all fees and expenses incurred by BXMT. Return incorporates the closing NYSE stock price as of each period end. Inception to date returns are from May 22, 2013.
|
|
(h)
|
Effective September 30, 2019, the BREIT return reflects a per share blended return for each respective period, assuming BREIT had a single share class, reinvestment of all dividends received during the period, and no upfront selling commission, net of all fees and expenses incurred by BREIT. These returns are not representative of the returns experienced by any particular investor or share class. Inception to date returns are presented on an annualized basis and are from January 1, 2017. Prior periods have been updated to reflect BREIT’s per share blended return. The BREIT returns presented in filings prior to September 30, 2019 were for BREIT’s Class S investors.
|
Funds With Closed Investment Periods
Real Estate segment has eleven funds with closed investment periods as of September 30, 2020: BREP VIII, BREP VII, BREP VI, BREP V, BREP IV, BREP Europe V, BREP Europe IV, BREP Europe Ill, BREP Asia, BREDS Ill and BREDS II. As of September 30, 2020, BREP VII, BREP VI, BREP V, BREP IV, BREP Europe IV, BREP Europe Ill and BREDS II were above their carried interest thresholds and would still be above their carried interest thresholds even if all remaining investments were valued at zero. BREP VIII, BREP Europe V, BREP Asia and BREDS III are currently above their carried interest thresholds.
The following table presents the results of operations for our Private Equity segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
352,866
|
|
|
$
|
252,510
|
|
|
$
|
100,356
|
|
|
|
40
|
%
|
|
$
|
874,910
|
|
|
$
|
737,066
|
|
|
$
|
137,844
|
|
|
|
19
|
%
|
Transaction, Advisory and Other Fees, Net
|
|
|
11,571
|
|
|
|
14,657
|
|
|
|
(3,086
|
)
|
|
|
-21
|
%
|
|
|
42,505
|
|
|
|
83,474
|
|
|
|
(40,969
|
)
|
|
|
-49
|
%
|
|
|
|
|
(16,264
|
)
|
|
|
(11,889
|
)
|
|
|
(4,375
|
)
|
|
|
37
|
%
|
|
|
(33,510
|
)
|
|
|
(34,563
|
)
|
|
|
1,053
|
|
|
|
-3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management and Advisory Fees, Net
|
|
|
348,173
|
|
|
|
255,278
|
|
|
|
92,895
|
|
|
|
36
|
%
|
|
|
883,905
|
|
|
|
785,977
|
|
|
|
97,928
|
|
|
|
12
|
%
|
|
|
|
|
(119,301
|
)
|
|
|
(105,773
|
)
|
|
|
(13,528
|
)
|
|
|
13
|
%
|
|
|
(322,494
|
)
|
|
|
(318,467
|
)
|
|
|
(4,027
|
)
|
|
|
1
|
%
|
|
|
|
|
(45,702
|
)
|
|
|
(38,235
|
)
|
|
|
(7,467
|
)
|
|
|
20
|
%
|
|
|
(131,530
|
)
|
|
|
(112,865
|
)
|
|
|
(18,665
|
)
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,170
|
|
|
|
111,270
|
|
|
|
71,900
|
|
|
|
65
|
%
|
|
|
429,881
|
|
|
|
354,645
|
|
|
|
75,236
|
|
|
|
21
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Performance Revenues
|
|
|
295,239
|
|
|
|
124,231
|
|
|
|
171,008
|
|
|
|
138
|
%
|
|
|
471,828
|
|
|
|
403,737
|
|
|
|
68,091
|
|
|
|
17
|
%
|
Realized Performance Compensation
|
|
|
(112,713
|
)
|
|
|
(52,034
|
)
|
|
|
(60,679
|
)
|
|
|
117
|
%
|
|
|
(192,372
|
)
|
|
|
(154,671
|
)
|
|
|
(37,701
|
)
|
|
|
24
|
%
|
Realized Principal Investment Income
|
|
|
10,248
|
|
|
|
11,977
|
|
|
|
(1,729
|
)
|
|
|
-14
|
%
|
|
|
38,011
|
|
|
|
80,022
|
|
|
|
(42,011
|
)
|
|
|
-52
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
192,774
|
|
|
|
84,174
|
|
|
|
108,600
|
|
|
|
129
|
%
|
|
|
317,467
|
|
|
|
329,088
|
|
|
|
(11,621
|
)
|
|
|
-4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Distributable Earnings
|
|
$
|
375,944
|
|
|
$
|
195,444
|
|
|
$
|
180,500
|
|
|
|
92
|
%
|
|
$
|
747,348
|
|
|
$
|
683,733
|
|
|
$
|
63,615
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019
Segment Distributable Earnings were $375.9 million for the three months ended September 30, 2020, an increase of $180.5 million, compared to $195.4 million for the three months ended September 30, 2019. The increase in Segment Distributable Earnings was primarily attributable to increases of $71.9 million in Fee Related Earnings and $108.6 million in Net Realizations.
Segment Distributable Earnings in our Private Equity segment in the third quarter of 2020 were higher compared to the third quarter of 2019. This was primarily driven by an increase in Net Realizations due to higher Realized Performance Revenue, partially offset by an increase in Realized Performance Compensation. The third quarter of 2020 was characterized by continued market rebounds across many asset classes. However, the ongoing COVID-19 pandemic and related shutdowns or limitations in the operations of certain non-essential businesses have continued to cause disruption in the U.S. and global economies, and certain investments in our private equity portfolio, such as those in the travel, leisure and events sectors, have experienced material reductions in value and could continue to be adversely impacted. Following a more muted period since the onset of the COVID-19 pandemic, the continuing market recovery in the third quarter of 2020 has contributed to renewed momentum in capital deployment, realization and fundraising activity, although the resurgence in COVID-19 infection levels in certain geographies and a potential resulting market downturn may pose material risks. These risks potentially create additional pressure for certain of our portfolio companies’ liquidity needs and their ability to meet financial obligations. In addition, to the extent the rate of global growth in certain sectors further decelerates, this may contribute to a more challenging operating environment for our portfolio companies. Furthermore, the economic recovery is likely to continue to be gradual, uneven and characterized by meaningful dispersion across sectors and regions, with uncertainty regarding its ultimate length and trajectory. For example, the recovery to date has been more pronounced in the U.S. than in the European Union.
In energy, oil prices have stabilized since the significant declines experienced in the first quarter of 2020. Nonetheless, weakened market fundamentals continue to pose challenges, particularly in upstream energy, which represents 3% of the Private Equity segment’s investment portfolio and less than 2% of Blackstone’s aggregate investment portfolio. An increased focus on energy sustainability, including potential alternatives to fossil fuels, has also exacerbated the impact of such weakened market fundamentals. The persistence of these weakened market fundamentals would further negatively impact the performance of certain investments in our energy and corporate private equity funds. In addition, factors such as the imposition of tariffs and overall uncertainty regarding trade policy, create challenges to increasing or maintaining profit margins for U.S. companies, particularly in the industrials and retail sectors. In that connection, adverse trade developments put pressure on our ability to increase profit margins at our U.S. portfolio companies through operational initiatives. See “Part II. Item 1A. Risk Factors — The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and is adversely impacting, and may continue to adversely impact, our performance and results of operations.” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and the market and economic conditions risk factors in our Annual Report on Form 10-K for the year ended December 31, 2019.
Fee Related Earnings were $183.2 million for the three months ended September 30, 2020, an increase of $71.9 million, or 65%, compared to $111.3 million for the three months ended September 30, 2019. The increase in Fee Related Earnings was primarily attributable to an increase of $92.9 million in Management and Advisory Fees, Net, partially offset by increases of $13.5 million in Fee Related Compensation and $7.5 million in Other Operating Expenses.
Management and Advisory Fees, Net were $348.2 million for the three months ended September 30, 2020, an increase of $92.9 million, compared to $255.3 million for the three months ended September 30, 2019, primarily driven by an increase in Base Management Fees. Base Management Fees increased $100.4 million primarily due to the end of BCP VIII, BEP III and BXLS V’s fee holidays during the three months ended September 30, 2020.
Fee Related Compensation was $119.3 million for the three months ended September 30, 2020, an increase of $13.5 million, compared to $105.8 million for the three months ended September 30, 2019. The increase was primarily due to an increase in Management and Advisory Fees, Net on which a portion of Fee Related Compensation is based.
Other Operating Expenses were $45.7 million for the three months ended September 30, 2020, an increase of $7.5 million, compared to $38.2 million for the three months ended September 30, 2019. The increase was primarily due to growth in our BIP, Tactical Opportunities and BXLS businesses, partially offset by less travel and entertainment expenses in the three months ended September 30, 2020 due to COVID-19.
Net Realizations were $192.8 million for the three months ended September 30, 2020, an increase of $108.6 million, or 129%, compared to $84.2 million for the three months ended September 30, 2019. The increase in Net Realizations was primarily attributable to increases of $171.0 million in Realized Performance Revenues, partially offset by an increase of $60.7 million in Realized Performance Compensation.
Realized Performance Revenues were $295.2 million for the three months ended September 30, 2020, an increase of $171.0 million, compared to $124.2 million for the three months ended September 30, 2019. The increase was primarily due to higher Realized Performance Revenues in corporate private equity.
Realized Performance Compensation was $112.7 million for the three months ended September 30, 2020, an increase of $60.7 million, compared to $52.0 million for the three months ended September 30, 2019. The increase was primarily due to the increase in Realized Performance Revenues.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Segment Distributable Earnings were $747.3 million for the nine months ended September 30, 2020, an increase of $63.6 million, compared to $683.7 million for the nine months ended September 30, 2019. The increase in Segment Distributable Earnings was primarily attributable to an increase of $75.2 million in Fee Related Earnings, partially offset by a decrease of $11.6 million in Net Realizations.
Fee Related Earnings were $429.9 million for the nine months ended September 30, 2020, an increase of $75.2 million, or 21%, compared to $354.6 million for the nine months ended September 30, 2019. The increase in Fee Related Earnings was primarily attributable to an increase of $97.9 million in Management and Advisory Fees, Net, partially offset by increases of $18.7 million in Other Operating Expenses and $4.0 million in Fee Related Compensation.
Management and Advisory Fees, Net were $883.9 million for the nine months ended September 30, 2020, an increase of $97.9 million, compared to $786.0 million for the nine months ended September 30, 2019, primarily driven by an increase in Base Management Fees, offset by a decrease in Transaction, Advisory and Other Fees, Net. Base Management Fees increased $137.8 million primarily due to the end of BCP VIII, BEP III and BXLS V’s fee holidays during the three months ended September 30, 2020 and a full nine months of Base Management Fees from Strategic Partners VIII. Transaction, Advisory and Other Fees, Net decreased $41.0 million primarily due to decreases in BIP and BXCM.
The annualized Base Management Fee Rate decreased from 1.09% at September 30, 2019 to 0.96% at September 30, 2020. The decrease was principally due to BCP VIII, BEP III and BXLS V, each of which commenced its investment period in the first quarter of 2020 and had a fee holiday during the first six months of 2020.
Other Operating Expenses were $131.5 million for the nine months ended September 30, 2020, an increase of $18.7 million, compared to $112.9 million for the nine months ended September 30, 2019. The increase was primarily due to growth in our BIP, Tactical Opportunities and BXLS businesses, partially offset by less travel and entertainment expenses in the three months ended September 30, 2020 due to COVID-19.
Fee Related Compensation was $322.5 million for the nine months ended September 30, 2020, an increase of $4.0 million, compared to $318.5 million for the nine months ended September 30, 2019. The increase was primarily due to higher fee related compensation in Tactical Opportunities, BXLS and BIP.
Net Realizations were $317.5 million for the nine months ended September 30, 2020, a decrease of $11.6 million, compared to $329.1 million for the nine months ended September 30, 2019. The decrease in Net Realizations was primarily attributable to a decrease of $42.0 million in Realized Principal Investment Income and an increase of $37.7 million in Realized Performance Compensation, partially offset by an increase of $68.1 million in Realized Performance Revenues.
Realized Principal Investment Income was $38.0 million for the nine months ended September 30, 2020, a decrease of $42.0 million, compared to $80.0 million for the nine months ended September 30, 2019. The decrease was primarily due to a decrease of Realized Principal Investment Income in corporate private equity.
Realized Performance Compensation was $192.4 million for the nine months ended September 30, 2020, an increase of $37.7 million, compared to $154.7 million for the nine months ended September 30, 2019. The increase was primarily due to the increase in Realized Performance Revenues.
Realized Performance Revenues were $471.8 million for the nine months ended September 30, 2020, an increase of $68.1 million, compared to $403.7 million for the nine months ended September 30, 2019. The increase was primarily due to higher Realized Performance Revenues in corporate private equity.
Fund returns information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
The following table presents the internal rates of return of our significant private equity funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-1%
|
|
|
|
-2%
|
|
|
|
1%
|
|
|
|
1%
|
|
|
|
-12%
|
|
|
|
-13%
|
|
|
|
56%
|
|
|
|
42%
|
|
|
|
50%
|
|
|
|
36%
|
|
|
|
50%
|
|
|
|
36%
|
|
|
|
|
|
26%
|
|
|
|
10%
|
|
|
|
-2%
|
|
|
|
-1%
|
|
|
|
7%
|
|
|
|
2%
|
|
|
|
-9%
|
|
|
|
-2%
|
|
|
|
10%
|
|
|
|
8%
|
|
|
|
10%
|
|
|
|
8%
|
|
|
|
|
|
22%
|
|
|
|
19%
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9%
|
|
|
|
7%
|
|
|
|
4%
|
|
|
|
3%
|
|
|
|
23%
|
|
|
|
18%
|
|
|
|
17%
|
|
|
|
12%
|
|
|
|
|
|
7%
|
|
|
|
6%
|
|
|
|
7%
|
|
|
|
6%
|
|
|
|
-
|
|
|
|
-1%
|
|
|
|
18%
|
|
|
|
13%
|
|
|
|
67%
|
|
|
|
48%
|
|
|
|
20%
|
|
|
|
12%
|
|
|
|
|
|
25%
|
|
|
|
19%
|
|
|
|
5%
|
|
|
|
2%
|
|
|
|
30%
|
|
|
|
22%
|
|
|
|
30%
|
|
|
|
15%
|
|
|
|
283%
|
|
|
|
159%
|
|
|
|
49%
|
|
|
|
28%
|
|
|
|
|
|
2%
|
|
|
|
1%
|
|
|
|
-1%
|
|
|
|
-1%
|
|
|
|
-22%
|
|
|
|
-19%
|
|
|
|
13%
|
|
|
|
11%
|
|
|
|
19%
|
|
|
|
15%
|
|
|
|
13%
|
|
|
|
10%
|
|
|
|
|
|
5%
|
|
|
|
4%
|
|
|
|
-2%
|
|
|
|
-
|
|
|
|
-33%
|
|
|
|
-34%
|
|
|
|
-4%
|
|
|
|
-3%
|
|
|
|
81%
|
|
|
|
58%
|
|
|
|
-7%
|
|
|
|
-12%
|
|
|
|
|
|
4%
|
|
|
|
4%
|
|
|
|
-4%
|
|
|
|
-5%
|
|
|
|
-8%
|
|
|
|
-9%
|
|
|
|
-24%
|
|
|
|
-24%
|
|
|
|
13%
|
|
|
|
6%
|
|
|
|
13%
|
|
|
|
6%
|
|
|
|
|
|
19%
|
|
|
|
17%
|
|
|
|
4%
|
|
|
|
3%
|
|
|
|
17%
|
|
|
|
15%
|
|
|
|
17%
|
|
|
|
15%
|
|
|
|
48%
|
|
|
|
36%
|
|
|
|
20%
|
|
|
|
17%
|
|
|
|
|
|
1%
|
|
|
|
-2%
|
|
|
|
N/M
|
|
|
|
N/M
|
|
|
|
-8%
|
|
|
|
-11%
|
|
|
|
N/M
|
|
|
|
N/M
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
-5%
|
|
|
|
-10%
|
|
|
|
|
|
-
|
|
|
|
-1%
|
|
|
|
15%
|
|
|
|
10%
|
|
|
|
2%
|
|
|
|
-
|
|
|
|
45%
|
|
|
|
29%
|
|
|
|
25%
|
|
|
|
13%
|
|
|
|
28%
|
|
|
|
14%
|
|
|
|
|
|
13%
|
|
|
|
12%
|
|
|
|
1%
|
|
|
|
-
|
|
|
|
3%
|
|
|
|
1%
|
|
|
|
6%
|
|
|
|
2%
|
|
|
|
22%
|
|
|
|
17%
|
|
|
|
13%
|
|
|
|
9%
|
|
Tactical Opportunities Co-Investment and Other
|
|
|
7%
|
|
|
|
6%
|
|
|
|
1%
|
|
|
|
1%
|
|
|
|
6%
|
|
|
|
2%
|
|
|
|
5%
|
|
|
|
5%
|
|
|
|
23%
|
|
|
|
19%
|
|
|
|
17%
|
|
|
|
15%
|
|
Strategic Partners I-V (c)
|
|
|
-11%
|
|
|
|
-12%
|
|
|
|
6%
|
|
|
|
5%
|
|
|
|
-8%
|
|
|
|
-9%
|
|
|
|
-1%
|
|
|
|
-2%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
16%
|
|
|
|
13%
|
|
Strategic Partners VI (c)
|
|
|
-13%
|
|
|
|
-13%
|
|
|
|
2%
|
|
|
|
1%
|
|
|
|
-14%
|
|
|
|
-14%
|
|
|
|
-2%
|
|
|
|
-3%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
18%
|
|
|
|
13%
|
|
Strategic Partners VII (c)
|
|
|
-16%
|
|
|
|
-15%
|
|
|
|
6%
|
|
|
|
5%
|
|
|
|
-13%
|
|
|
|
-13%
|
|
|
|
9%
|
|
|
|
7%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
17%
|
|
|
|
12%
|
|
Strategic Partners RA II (c)
|
|
|
-2%
|
|
|
|
-2%
|
|
|
|
7%
|
|
|
|
6%
|
|
|
|
5%
|
|
|
|
4%
|
|
|
|
18%
|
|
|
|
16%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
18%
|
|
|
|
13%
|
|
Strategic Partners VIII (c)
|
|
|
-17%
|
|
|
|
-17%
|
|
|
|
N/M
|
|
|
|
N/M
|
|
|
|
-7%
|
|
|
|
-10%
|
|
|
|
N/M
|
|
|
|
N/M
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
30%
|
|
|
|
17%
|
|
Strategic Partners RE, SMA and Other (c)
|
|
|
-9%
|
|
|
|
-11%
|
|
|
|
8%
|
|
|
|
8%
|
|
|
|
-2%
|
|
|
|
-5%
|
|
|
|
14%
|
|
|
|
14%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
15%
|
|
|
|
11%
|
|
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
|
N/M
|
Not meaningful generally due to the limited time since initial investment.
|
|
(a)
|
Net returns are based on the change in carrying value (realized and unrealized) after management fees, expenses and Performance Revenues.
|
|
(b)
|
BCEP is a core private equity fund which invests with a more modest risk profile and longer hold period than traditional private equity.
|
|
(c)
|
Realizations are treated as return of capital until fully recovered and therefore inception to date realized returns are not applicable. If information is not available on a timely basis, returns are calculated from results that are reported on a three month lag and therefore do not include the impact of economic and market activities in the quarter in which such events occur.
|
Funds With Closed Investment Periods
The corporate private equity funds within the Private Equity segment have seven funds with closed investment periods: BCP IV, BCP V, BCP VI, BCP VII, BCOM, BEP I and BEP II. As of September 30, 2020, BCP IV was above its carried interest threshold (i.e., the preferred return payable to its limited partners before the general partner is eligible to receive carried interest) and would still be above its carried interest threshold even if all remaining investments were valued at zero. BCP V is comprised of two fund classes based on the timings of fund closings, the BCP V “main fund” and BCP V-AC fund. Within these fund classes, the general partner is subject to equalization such that (a) the general partner accrues carried interest when the respective carried interest for either fund class is positive and (b) the general partner realizes carried interest so long as clawback obligations, if
any, for either of the respective fund classes are fully satisfied. During the quarter, BCP V is currently below its carried interest threshold, while BCP V-AC is above its carried interest threshold. BCP VI, BCP VII, BCOM and BEP I are currently above their respective carried interest thresholds. We are entitled to retain previously realized carried interest up to 20% of BCOM’s net gains. As a result, Performance Revenues are recognized from BCOM on current period gains and losses. BEP II is currently below its carried interest threshold.
The following table presents the results of operations for our Hedge Fund Solutions segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
146,082
|
|
|
$
|
140,694
|
|
|
$
|
5,388
|
|
|
|
4%
|
|
|
$
|
431,193
|
|
|
$
|
415,012
|
|
|
$
|
16,181
|
|
|
|
4%
|
|
Transaction and Other Fees, Net
|
|
|
1,255
|
|
|
|
691
|
|
|
|
564
|
|
|
|
82%
|
|
|
|
2,872
|
|
|
|
1,732
|
|
|
|
1,140
|
|
|
|
66%
|
|
|
|
|
|
(22
|
)
|
|
|
(18
|
)
|
|
|
(4
|
)
|
|
|
22%
|
|
|
|
(60
|
)
|
|
|
(18
|
)
|
|
|
(42
|
)
|
|
|
233%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management Fees, Net
|
|
|
147,315
|
|
|
|
141,367
|
|
|
|
5,948
|
|
|
|
4%
|
|
|
|
434,005
|
|
|
|
416,726
|
|
|
|
17,279
|
|
|
|
4%
|
|
|
|
|
|
(41,405
|
)
|
|
|
(38,898
|
)
|
|
|
(2,507
|
)
|
|
|
6%
|
|
|
|
(127,949
|
)
|
|
|
(118,474
|
)
|
|
|
(9,475
|
)
|
|
|
8%
|
|
|
|
|
|
(19,652
|
)
|
|
|
(20,495
|
)
|
|
|
843
|
|
|
|
-4%
|
|
|
|
(56,126
|
)
|
|
|
(59,492
|
)
|
|
|
3,366
|
|
|
|
-6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,258
|
|
|
|
81,974
|
|
|
|
4,284
|
|
|
|
5%
|
|
|
|
249,930
|
|
|
|
238,760
|
|
|
|
11,170
|
|
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Performance Revenues
|
|
|
5,618
|
|
|
|
1,848
|
|
|
|
3,770
|
|
|
|
204%
|
|
|
|
8,867
|
|
|
|
17,899
|
|
|
|
(9,032
|
)
|
|
|
-50%
|
|
Realized Performance Compensation
|
|
|
(1,257
|
)
|
|
|
(1,000
|
)
|
|
|
(257
|
)
|
|
|
26%
|
|
|
|
(2,202
|
)
|
|
|
(4,588
|
)
|
|
|
2,386
|
|
|
|
-52%
|
|
Realized Principal Investment Income (Loss)
|
|
|
(150
|
)
|
|
|
1,480
|
|
|
|
(1,630
|
)
|
|
|
N/M
|
|
|
|
(1,090
|
)
|
|
|
13,503
|
|
|
|
(14,593
|
)
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,211
|
|
|
|
2,328
|
|
|
|
1,883
|
|
|
|
81%
|
|
|
|
5,575
|
|
|
|
26,814
|
|
|
|
(21,239
|
)
|
|
|
-79%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Distributable Earnings
|
|
$
|
90,469
|
|
|
$
|
84,302
|
|
|
$
|
6,167
|
|
|
|
7%
|
|
|
$
|
255,505
|
|
|
$
|
265,574
|
|
|
$
|
(10,069
|
)
|
|
|
-4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019
Segment Distributable Earnings were $90.5 million for the three months ended September 30, 2020, an increase of $6.2 million, compared to $84.3 million for the three months ended September 30, 2019. The increase in Segment Distributable Earnings was primarily attributable to increases of $4.3 million in Fee Related Earnings and of $1.9 million in Net Realizations.
Segment Distributable Earnings in our Hedge Fund Solutions segment in the third quarter of 2020 were higher compared to the third quarter of 2019. This increase was primarily driven by increased Net Realizations due to increases in Fee Related Earnings and Net Realizations. Notwithstanding that the ongoing COVID-19 pandemic and related shutdowns or limitations in the operations of certain non-essential businesses have continued to cause disruption in the U.S. and global economies, the third quarter of 2020 was characterized by continued market rebounds across many asset classes, and our Hedge Fund Solutions segment has largely recovered from the losses in composite returns experienced in the first quarter of 2020. The resurgence in COVID-19 infection levels in certain geographies and a potential resulting market downturn, however, may pose material risks to our Hedge Fund Solutions segment, including by potentially causing investors to seek liquidity in the form of redemptions from our funds and adversely impacting Incentive Fees. We have not, however, experienced a period of significant dislocation since the first quarter of 2020, during which the liquidity of certain assets traded in the credit markets was limited. Nonetheless, another period of such dislocation would impact the value of certain assets held by our funds, such funds’ ability to sell such assets at attractive prices or in a timely manner in order to avoid losses and the likelihood of margin calls from credit providers. In addition, given continuing market uncertainty, we expect fundraising in our Hedge Fund Solutions segment in the near term to continue, but at a slower pace, which may result in a delay in management fees. Furthermore, the economic recovery is likely to continue to be gradual, uneven and characterized by
meaningful dispersion across sectors and regions, with uncertainty regarding its ultimate length and trajectory. A continuing market recovery, however, could contribute to increased momentum in the longer term.
In an equity market environment that generally has been characterized by relatively low volatility, investors may choose to reallocate capital away from traditional hedge fund strategies. Our Hedge Fund Solutions segment operates multiple business lines, manages strategies that are both long and short asset classes and generates a majority of its revenue through management fees. In that regard, the segment’s revenues will depend in part on our ability to successfully grow such existing diverse business lines and strategies, and identify new ones to meet evolving investor appetites. Over time we expect an increasing change in the mix of our product offerings to products whose performance-based fees represent a more significant proportion of the fees than has historically been the case for such products. See “Part II. Item 1A. Risk Factors — The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and is adversely impacting, and may continue to adversely impact, our performance and results of operations.” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and “Part I. Item 1A. Risk Factors — Risks Related to Our Business — Hedge fund investments are subject to numerous additional risks.” and the market and economic conditions risk factors in our Annual Report on Form 10-K for the year ended December 31, 2019.
Fee Related Earnings were $86.3 million for the three months ended September 30, 2020, an increase of $4.3 million, compared to $82.0 million for the three months ended September 30, 2019. The increase in Fee Related Earnings was primarily attributable to an increase of $5.9 million in Management Fees, Net, partially offset by an increase of $2.5 million in Fee Related Compensation.
Management Fees, Net were $147.3 million for the three months ended September 30, 2020, an increase of $5.9 million, compared to $141.4 million for the three months ended September 30, 2019, primarily driven by an increase in Base Management Fees. Base Management Fees increased $5.4 million primarily driven by Fee-Earning Assets Under Management growth in our individual investor and specialized solutions platform.
Fee Related Compensation was $41.4 million for the three months ended September 30, 2020, an increase of $2.5 million, compared to $38.9 million for the three months ended September 30, 2019. The increase was primarily due to an increase in Management Fees, Net, on which a portion of Fee Related Compensation is based.
Net Realizations were $4.2 million for the three months ended September 30, 2020, an increase of $1.9 million, or 81%, compared to $2.3 million for the three months ended September 30, 2019. The increase in Net Realizations was primarily attributable to an increase of $3.8 million in Realized Performance Revenues, partially offset by a decrease of $1.6 million in Realized Principal Investment Income (Loss).
Realized Performance Revenues were $5.6 million for the three months ended September 30, 2020, an increase of $3.8 million, compared to $1.8 million for the three months ended September 30, 2019. The increase was primarily driven by incentive crystallization in our individual investor and specialized solutions platform.
Realized Principal Investment Income (Loss) was $(0.2) million for the three months ended September 30, 2020, a decrease of $1.6 million, compared to $1.5 million for the three months ended September 30, 2019. The decrease was primarily due to the realized losses on our corporate treasury investments allocated to the segment.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Segment Distributable Earnings were $255.5 million for the nine months ended September 30, 2020, a decrease of $10.1 million, compared to $265.6 million for the nine months ended September 30, 2019. The decrease in Segment Distributable Earnings was primarily attributable to a decrease of $21.2 million in Net Realizations, partially offset by an increase of $11.2 million in Fee Related Earnings.
Fee Related Earnings were $249.9 million for the nine months ended September 30, 2020, an increase of $11.2 million, compared to $238.8 million for the nine months ended September 30, 2019. The increase in Fee Related Earnings was primarily attributable to an increase of $17.3 million in Management Fees, Net, partially offset by an increase of $9.5 million in Fee Related Compensation.
Management Fees, Net were $434.0 million for the nine months ended September 30, 2020, an increase of $17.3 million, compared to $416.7 million for the nine months ended September 30, 2019, primarily driven by an increase in Base Management Fees. Base Management Fees increased $16.2 million primarily driven by Fee-Earning Assets Under Management growth in our individual investor and specialized solutions platform.
Fee Related Compensation was $127.9 million for the nine months ended September 30, 2020, an increase of $9.5 million, compared to $118.5 million for the nine months ended September 30, 2019. The increase was primarily due to an increase in Management Fees, Net, on which a portion of Fee Related Compensation is based.
Net Realizations were $5.6 million for the nine months ended September 30, 2020, a decrease of $21.2 million, compared to $26.8 million for the nine months ended September 30, 2019. The decrease in Net Realizations was primarily attributable to decreases of $14.6 million in Realized Principal Investment Income (Loss) and $9.0 million in Realized Performance Revenues.
Realized Principal Investment Income (Loss) was $(1.1) million for the nine months ended September 30, 2020, a decrease of $14.6 million, compared to $13.5 million for the nine months ended September 30, 2019. The decrease was primarily due to the realized losses on our corporate treasury investments allocated to the segment.
Realized Performance Revenues were $8.9 million for the nine months ended September 30, 2020, a decrease of $9.0 million, compared to $17.9 million for the nine months ended September 30, 2019. The decrease was primarily driven by lower returns in customized solutions compared to the nine months ended September 30, 2019.
The following table presents information regarding our Invested Performance Eligible Assets Under Management:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge Fund Solutions Managed Funds (b)
|
|
$
|
45,664,704
|
|
|
$
|
43,901,366
|
|
|
|
38
|
%
|
|
|
75
|
%
|
|
(a)
|
Estimated % Above High Water Mark/Benchmark represents the percentage of Invested Performance Eligible Assets Under Management that as of the dates presented would earn performance fees when the applicable Hedge Fund Solutions managed fund has positive investment performance relative to a benchmark, where applicable. Incremental positive performance in the applicable Blackstone Funds may cause additional assets to reach their respective High Water Mark or clear a benchmark return, thereby resulting in an increase in Estimated % Above High Water Mark/Benchmark.
|
|
(b)
|
For the Hedge Fund Solutions managed funds, at September 30, 2020, the incremental appreciation needed for the 62% of Invested Performance Eligible Assets Under Management below their respective High Water Marks/Benchmarks to reach their respective High Water Marks/Benchmarks was $1.4 billion, an increase of $915.8 million, compared to $439.3 million at September 30, 2019. Of the Invested Performance Eligible Assets Under Management below their respective High Water Marks/Benchmarks as of September 30, 2020, 61% were within 5% of reaching their respective High Water Mark.
|
Composite returns information is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The composite returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future results of any particular fund or composite. An investment in Blackstone is not an investment in any of our funds or composites. There can be no assurance that any of our funds or composites or our other existing and future funds or composites will achieve similar returns.
The following table presents the return information of the BAAM Principal Solutions Composite:
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|
|
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|
Average Annual Returns (a)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
BAAM Principal Solutions Composite (b)
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-1
|
%
|
|
|
6
|
%
|
|
|
5
|
%
|
|
|
2
|
%
|
|
|
1
|
%
|
|
|
4
|
%
|
|
|
3
|
%
|
|
|
4
|
%
|
|
|
4
|
%
|
|
|
7
|
%
|
|
|
6
|
%
|
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
|
(a)
|
Composite returns present a summarized asset-weighted return measure to evaluate the overall performance of the applicable class of Blackstone Funds.
|
|
(b)
|
BAAM’s Principal Solutions (“BPS”) Composite covers the period from January 2000 to present, although BAAM’s inception date is September 1990. The BPS Composite includes only BAAM-managed commingled and customized multi-manager funds and accounts. None of the other platforms/strategies managed through the Blackstone Hedge Fund Solutions Group are included in the composite (except for investments by BPS funds/accounts directly into those platforms/strategies). BAAM-managed funds in liquidation and non-fee-paying assets (in the case of net returns) are excluded from the composite. The funds/accounts that comprise the BPS Composite are not managed within a single fund or account and are managed with different mandates. There is no guarantee that BAAM would have made the same mix of investments in a standalone fund/account. The BPS Composite is not an investible product and, as such, the performance of the BPS Composite does not represent the performance of an actual fund or account. The historical return is from January 1, 2000.
|
The following table presents the results of operations for our Credit & Insurance segment:
|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
|
|
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|
|
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|
|
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|
|
|
|
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|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
152,037
|
|
|
$
|
149,746
|
|
|
$
|
2,291
|
|
|
|
2
|
%
|
|
$
|
442,930
|
|
|
$
|
437,824
|
|
|
$
|
5,106
|
|
|
|
1
|
%
|
Transaction and Other Fees, Net
|
|
|
3,338
|
|
|
|
3,969
|
|
|
|
(631
|
)
|
|
|
-16
|
%
|
|
|
14,681
|
|
|
|
12,855
|
|
|
|
1,826
|
|
|
|
14
|
%
|
|
|
|
|
(2,233
|
)
|
|
|
(2,544
|
)
|
|
|
311
|
|
|
|
-12
|
%
|
|
|
(8,019
|
)
|
|
|
(9,164
|
)
|
|
|
1,145
|
|
|
|
-12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management Fees, Net
|
|
|
153,142
|
|
|
|
151,171
|
|
|
|
1,971
|
|
|
|
1
|
%
|
|
|
449,592
|
|
|
|
441,515
|
|
|
|
8,077
|
|
|
|
2
|
%
|
Fee Related Performance Revenues
|
|
|
9,623
|
|
|
|
3,625
|
|
|
|
5,998
|
|
|
|
165
|
%
|
|
|
26,066
|
|
|
|
7,280
|
|
|
|
18,786
|
|
|
|
258
|
%
|
|
|
|
|
(61,585
|
)
|
|
|
(52,980
|
)
|
|
|
(8,605
|
)
|
|
|
16
|
%
|
|
|
(188,080
|
)
|
|
|
(165,964
|
)
|
|
|
(22,116
|
)
|
|
|
13
|
%
|
|
|
|
|
(43,293
|
)
|
|
|
(41,724
|
)
|
|
|
(1,569
|
)
|
|
|
4
|
%
|
|
|
(118,458
|
)
|
|
|
(114,429
|
)
|
|
|
(4,029
|
)
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,887
|
|
|
|
60,092
|
|
|
|
(2,205
|
)
|
|
|
-4
|
%
|
|
|
169,120
|
|
|
|
168,402
|
|
|
|
718
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Performance Revenues
|
|
|
225
|
|
|
|
12,382
|
|
|
|
(12,157
|
)
|
|
|
-98
|
%
|
|
|
11,868
|
|
|
|
29,225
|
|
|
|
(17,357
|
)
|
|
|
-59
|
%
|
Realized Performance Compensation
|
|
|
(417
|
)
|
|
|
(5,292
|
)
|
|
|
4,875
|
|
|
|
-92
|
%
|
|
|
(2,963
|
)
|
|
|
(12,131
|
)
|
|
|
9,168
|
|
|
|
-76
|
%
|
Realized Principal Investment Income
|
|
|
840
|
|
|
|
4,723
|
|
|
|
(3,883
|
)
|
|
|
-82
|
%
|
|
|
4,372
|
|
|
|
28,831
|
|
|
|
(24,459
|
)
|
|
|
-85
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
648
|
|
|
|
11,813
|
|
|
|
(11,165
|
)
|
|
|
-95
|
%
|
|
|
13,277
|
|
|
|
45,925
|
|
|
|
(32,648
|
)
|
|
|
-71
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Distributable Earnings
|
|
$
|
58,535
|
|
|
$
|
71,905
|
|
|
$
|
(13,370
|
)
|
|
|
|
%
|
|
$
|
182,397
|
|
|
$
|
214,327
|
|
|
$
|
(31,930
|
)
|
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019
Segment Distributable Earnings were $58.5 million for the three months ended September 30, 2020, a decrease of $13.4 million, compared to $71.9 million for the three months ended September 30, 2019. The decrease in Segment Distributable Earnings was primarily attributable to decreases of $2.2 million in Fee Related Earnings and $11.2 million in Net Realizations.
Segment Distributable Earnings in our Credit & Insurance segment in the third quarter of 2020 were lower compared to the third quarter of 2019, driven by lower Net Realizations due to lower Realized Performance Revenues and Realized Principal Investment Income. The third quarter of 2020 was characterized by continued market rebounds across many asset classes, and our Credit & Insurance segment has largely recovered from the losses in composite returns experienced in the first quarter of 2020. However, the ongoing COVID-19 pandemic and related shutdowns or limitations in the operations of certain non-essential businesses have continued to cause disruption in the U.S. and global economies, and the COVID-19 pandemic has adversely impacted and could continue to adversely impact the performance of our Credit & Insurance segment. Following a more muted period since the onset of the COVID-19 pandemic, the continuing market recovery in the third quarter of 2020 has contributed to renewed momentum in capital deployment, realization and fundraising activity, although the resurgence in COVID-19 infection levels in certain geographies and a potential resulting market downturn may pose material risks. These risks potentially create additional pressure for borrowers with respect to their ability to meet their debt payment obligations or increase their focus on deleveraging. Our Credit & Insurance funds have, however, continued to actively manage their portfolios in order to limit downside and protect capital. Further, we have not experienced a period of significant dislocation since the first quarter of 2020, during which the liquidity of certain assets traded in the credit markets was limited. Nonetheless, another period of such dislocation would impact the value of certain assets held by our funds and such funds’ ability to sell such assets at attractive prices or in a timely manner, each of which would adversely impact performance revenues in our Credit & Insurance segment. Furthermore, the economic recovery is likely to continue to be gradual, uneven and characterized by meaningful dispersion across sectors and regions, with uncertainty regarding its ultimate length and trajectory. For example, the recovery to date has been more pronounced in the U.S. than in the European Union.
In energy, oil prices have stabilized since the significant declines experienced in the first quarter of 2020. Nonetheless, weakened market fundamentals continue to pose challenges, particularly in upstream energy, which represents 3% of the Credit & Insurance segment’s investment portfolio and less than 2% of Blackstone’s aggregate investment portfolio. An increased focus on energy sustainability, including potential alternatives to fossil fuels, has also exacerbated the impact of such weakened market fundamentals. The persistence of these weakened market fundamentals in the energy sector or in the credit markets more broadly would further negatively impact the performance of certain investments in our credit funds. See “Part II. Item 1A. Risk Factors — The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and is adversely impacting, and may continue to adversely impact, our performance and results of operations.” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and the market and economic conditions risk factors in our Annual Report on Form 10-K for the year ended December 31, 2019.
Fee Related Earnings were $57.9 million for the three months ended September 30, 2020, a decrease of $2.2 million, compared to $60.1 million for the three months ended September 30, 2019. The decrease in Fee Related Earnings was primarily attributable to an increase of $8.6 million in Fee Related Compensation, partially offset by an increase of $6.0 million in Fee Related Performance Revenues.
Fee Related Compensation was $61.6 million for the three months ended September 30, 2020, an increase of $8.6 million, compared to $53.0 million for the three months ended September 30, 2019. The increase was primarily due to increases in Fee Related Performance Revenues and Management Fees, Net, on which a portion of Fee Related Compensation is based as well as changes in compensation accruals.
Fee Related Performance Revenues were $9.6 million for the three months ended September 30, 2020, an increase of $6.0 million, compared to $3.6 million for the three months ended September 30, 2019. The increase was primarily due to performance and growth in assets in our BDC.
Net Realizations were $0.6 million for the three months ended September 30, 2020, a decrease of $11.2 million, compared to $11.8 million for the three months ended September 30, 2019. The decrease in Net Realizations was primarily attributable to decreases of $12.2 million in Realized Performance Revenues and $3.9 million in Realized Principal Investment Income, partially offset by a decrease of $4.9 million in Realized Performance Compensation.
Realized Performance Revenues were $0.2 million for the three months ended September 30, 2020, a decrease of $12.2 million, compared to $12.4 million for the three months ended September 30, 2019. The decrease was primarily attributable to a decrease in realized carry compared to the three months ended September 30, 2019.
Realized Principal Investment Income was $0.8 million for the three months ended September 30, 2020, a decrease of $3.9 million, compared to $4.7 million for the three months ended September 30, 2019. The decrease was primarily due to higher realized gains in our corporate treasury investments in the three months ended September 30, 2019 compared to the three months ended September 30, 2020.
Realized Performance Compensation was $0.4 million for the three months ended September 30, 2020, a decrease of $4.9 million, compared to $5.3 million for the three months ended September 30, 2019. The decrease was primarily due to the decrease in Realized Performance Revenues.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Segment Distributable Earnings were $182.4 million for the nine months ended September 30, 2020, a decrease of $31.9 million, compared to $214.3 million for the nine months ended September 30, 2019. The decrease in Segment Distributable Earnings was primarily attributable to a decrease of $32.6 million in Net Realizations, partially offset by an increase of $0.7 million in Fee Related Earnings.
Fee Related Earnings were $169.1 million for the nine months ended September 30, 2020, an increase of $0.7 million, compared to $168.4 million for the nine months ended September 30, 2019. The increase in Fee Related Earnings was primarily attributable to increases of $18.8 million in Fee Related Performance Revenues and $8.1 million in Management Fees, Net, partially offset by increases of $22.1 million in Fee Related Compensation and $4.0 million in Other Operating Expenses.
Fee Related Performance Revenues were $26.1 million for the nine months ended September 30, 2020, an increase of $18.8 million, compared to $7.3 million for the nine months ended September 30, 2019. The increase was primarily due to performance and growth in assets in our BDC.
Management Fees, Net were $449.6 million for the nine months ended September 30, 2020, an increase of $8.1 million, compared to $441.5 million for the nine months ended September 30, 2019, primarily driven by an increase in Base Management Fees. Base Management Fees increased $5.1 million primarily due to increased capital deployed in our most recently launched credit funds and vehicles, including our BDC, and inflows in our long only business, partially offset by a decrease in Harvest.
Fee Related Compensation was $188.1 million for the nine months ended September 30, 2020, an increase of $22.1 million, compared to $166.0 million for the nine months ended September 30, 2019. The increase was primarily due to increases in Management Fees, Net and Fee Related Performance Revenues, on which a portion of Fee Related Compensation is based.
Net Realizations were $13.3 million for the nine months ended September 30, 2020, a decrease of $32.6 million, compared to $45.9 million for the nine months ended September 30, 2019. The decrease in Net Realizations was primarily attributable to decreases of $24.5 million in Realized Principal Investment Income and $17.4 million in Realized Performance Revenues, partially offset by a decrease of $9.2 million in Realized Performance Compensation.
Realized Principal Investment Income was $4.4 million for the nine months ended September 30, 2020, a decrease of $24.5 million, compared to $28.8 million for the nine months ended September 30, 2019. The decrease was primarily due to higher realized gains in our corporate treasury investments in the nine months ended September 30, 2019 compared to the nine months ended September 30, 2020.
Realized Performance Revenues were $11.9 million for the nine months ended September 30, 2020, a decrease of $17.4 million, compared to $29.2 million for the nine months ended September 30, 2019. The decrease was primarily attributable to a decrease in realized carry compared to the nine months ended September 30, 2019.
Realized Performance Compensation was $3.0 million for the nine months ended September 30, 2020, a decrease of $9.2 million, compared to $12.1 million for the nine months ended September 30, 2019. The decrease was primarily due to the decrease in Realized Performance Revenues.
Composite returns information is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The composite returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future results of any particular fund or composite. An investment in Blackstone is not an investment in any of our funds or composites. There can be no assurance that any of our funds or composites or our other existing and future funds or composites will achieve similar returns.
The following table presents the return information for the Credit Composite:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
%
|
|
|
4
|
%
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
-1
|
%
|
|
|
-1
|
%
|
|
|
7
|
%
|
|
|
7
|
%
|
|
|
8
|
%
|
|
|
6
|
%
|
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
|
(a)
|
Net returns are based on the change in carrying value (realized and unrealized) after management fees, expenses and Performance Allocations, net of tax advances.
|
|
(b)
|
Effective January 1, 2020, Credit returns have been redefined to present a composite return instead of separate returns for performing credit strategies and distressed strategies. The Credit Composite now also includes the long only strategy. The Credit Composite return is a weighted-average of (a) the return based on the combined quarterly cash flows of performing credit and distressed fee-earning funds and (b) the weighted-average quarterly return of all long only strategy fee-earning funds. Only fee-earning funds exceeding $100 million of fair value at the beginning of each respective quarter end are included and funds in liquidation are excluded. Credit returns exclude Blackstone Funds that were contributed to GSO as part of Blackstone’s acquisition of GSO in March 2008 and the pre-acquisition date performance for funds and vehicles acquired by GSO subsequent to March 2008. The inception to date returns are from December 31, 2005. Prior periods have been updated to reflect this presentation.
|
The following table presents information regarding our Invested Performance Eligible Assets Under Management:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
26,800,781
|
|
|
$
|
25,191,778
|
|
|
|
59
|
%
|
|
|
69
|
%
|
Non-GAAP Financial Measures
These non-GAAP financial measures are presented without the consolidation of any Blackstone Funds that are consolidated into the Condensed Consolidated Financial Statements. Consequently, all non-GAAP financial measures exclude the assets, liabilities and operating results related to the Blackstone Funds. See “— Key Financial Measures and Indicators” for our definitions of Distributable Earnings, Segment Distributable Earnings, Fee Related Earnings and Adjusted EBITDA.
The following table is a reconciliation of Net Income Attributable to The Blackstone Group Inc. to Distributable Earnings, Total Segment Distributable Earnings, Fee Related Earnings and Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to The Blackstone Group Inc.
|
|
$
|
794,719
|
|
|
$
|
779,437
|
|
|
$
|
296,493
|
|
|
$
|
1,566,533
|
|
Net Income Attributable to Non-Controlling Interests in Blackstone Holdings
|
|
|
638,803
|
|
|
|
299,900
|
|
|
|
253,814
|
|
|
|
961,490
|
|
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
|
|
|
259,761
|
|
|
|
88,406
|
|
|
|
(90,938
|
)
|
|
|
355,983
|
|
Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
|
|
|
6,868
|
|
|
|
(8
|
)
|
|
|
(12,027
|
)
|
|
|
3,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,700,151
|
|
|
|
1,167,735
|
|
|
|
447,342
|
|
|
|
2,887,573
|
|
Provision (Benefit) for Taxes
|
|
|
100,960
|
|
|
|
(156,786
|
)
|
|
|
89,672
|
|
|
|
(76,895
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Before Provision (Benefit) for Taxes
|
|
|
1,801,111
|
|
|
|
1,010,949
|
|
|
|
537,014
|
|
|
|
2,810,678
|
|
Transaction-Related Charges (a)
|
|
|
47,283
|
|
|
|
(82,547
|
)
|
|
|
170,437
|
|
|
|
113,898
|
|
Amortization of Intangibles (b)
|
|
|
16,483
|
|
|
|
16,483
|
|
|
|
49,449
|
|
|
|
49,449
|
|
Impact of Consolidation (c)
|
|
|
(266,629
|
)
|
|
|
(88,398
|
)
|
|
|
102,965
|
|
|
|
(359,550
|
)
|
Unrealized Performance Revenues (d)
|
|
|
(1,403,480
|
)
|
|
|
(176,604
|
)
|
|
|
982,043
|
|
|
|
(998,335
|
)
|
Unrealized Performance Allocations Compensation (e)
|
|
|
509,474
|
|
|
|
94,907
|
|
|
|
(433,091
|
)
|
|
|
446,440
|
|
Unrealized Principal Investment (Income) Loss (f)
|
|
|
(177,125
|
)
|
|
|
5,219
|
|
|
|
216,169
|
|
|
|
(78,353
|
)
|
|
|
|
|
192,623
|
|
|
|
(92,843
|
)
|
|
|
110,078
|
|
|
|
(85,882
|
)
|
Equity-Based Compensation (h)
|
|
|
89,862
|
|
|
|
58,570
|
|
|
|
266,675
|
|
|
|
178,451
|
|
Administrative Fee Adjustment (i)
|
|
|
2,719
|
|
|
|
—
|
|
|
|
2,719
|
|
|
|
—
|
|
Taxes and Related Payables (j)
|
|
|
(40,225
|
)
|
|
|
(35,815
|
)
|
|
|
(127,268
|
)
|
|
|
(120,055
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
772,096
|
|
|
|
709,921
|
|
|
|
1,877,190
|
|
|
|
1,956,741
|
|
Taxes and Related Payables (j)
|
|
|
40,225
|
|
|
|
35,815
|
|
|
|
127,268
|
|
|
|
120,055
|
|
Net Interest (Income) Loss (k)
|
|
|
12,731
|
|
|
|
7,767
|
|
|
|
29,306
|
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Distributable Earnings
|
|
|
825,052
|
|
|
|
753,503
|
|
|
|
2,033,764
|
|
|
|
2,076,741
|
|
Realized Performance Revenues (l)
|
|
|
(319,954
|
)
|
|
|
(420,840
|
)
|
|
|
(589,364
|
)
|
|
|
(1,008,995
|
)
|
Realized Performance Compensation (m)
|
|
|
121,730
|
|
|
|
143,870
|
|
|
|
230,819
|
|
|
|
354,576
|
|
Realized Principal Investment Income (n)
|
|
|
(15,884
|
)
|
|
|
(36,148
|
)
|
|
|
(55,112
|
)
|
|
|
(185,613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
610,944
|
|
|
$
|
440,385
|
|
|
$
|
1,620,107
|
|
|
$
|
1,236,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
772,096
|
|
|
$
|
709,921
|
|
|
$
|
1,877,190
|
|
|
$
|
1,956,741
|
|
|
|
|
|
39,228
|
|
|
|
52,815
|
|
|
|
119,692
|
|
|
|
137,683
|
|
Taxes and Related Payables (j)
|
|
|
40,225
|
|
|
|
35,815
|
|
|
|
127,268
|
|
|
|
120,055
|
|
Depreciation and Amortization
|
|
|
9,568
|
|
|
|
6,895
|
|
|
|
25,190
|
|
|
|
18,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
861,117
|
|
|
$
|
805,446
|
|
|
$
|
2,149,340
|
|
|
$
|
2,233,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
This adjustment removes Transaction-Related Charges, which are excluded from Blackstone’s segment presentation. Transaction-Related Charges arise from corporate actions including acquisitions, divestitures, and Blackstone’s initial public offering. They consist primarily of equity-based compensation charges, gains and losses on contingent consideration arrangements, changes in the balance of the Tax Receivable Agreement resulting from a change in tax law or similar event, transaction costs and any gains or losses associated with these corporate actions.
|
|
(b)
|
This adjustment removes the amortization of transaction-related intangibles, which are excluded from Blackstone’s segment presentation. This amount includes amortization of intangibles associated with Blackstone’s investment in Pátria, which is accounted for under the equity method.
|
|
(c)
|
This adjustment reverses the effect of consolidating Blackstone Funds, which are excluded from Blackstone’s segment presentation. This adjustment includes the elimination of Blackstone’s interest in these funds and the removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by non-controlling interests.
|
|
(d)
|
This adjustment removes Unrealized Performance Revenues on a segment basis. The Segment Adjustment represents the add back of performance revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Unrealized Performance Allocations
|
|
$
|
1,403,480
|
|
|
$
|
176,370
|
|
|
$
|
(981,678
|
)
|
|
$
|
998,101
|
|
|
|
|
|
—
|
|
|
|
234
|
|
|
|
(365
|
)
|
|
|
234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized Performance Revenues
|
|
$
|
1,403,480
|
|
|
$
|
176,604
|
|
|
$
|
(982,043
|
)
|
|
$
|
998,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
This adjustment removes Unrealized Performance Allocations Compensation.
|
|
(f)
|
This adjustment removes Unrealized Principal Investment Income (Loss) on a segment basis. The Segment Adjustment represents (1) the add back of Principal Investment Income, including general partner income, earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by non-controlling interests.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Unrealized Principal Investment Income (Loss)
|
|
$
|
295,308
|
|
|
$
|
15,391
|
|
|
$
|
(332,295
|
)
|
|
$
|
147,090
|
|
|
|
|
|
(118,183
|
)
|
|
|
(20,610
|
)
|
|
|
116,126
|
|
|
|
(68,737
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized Principal Investment Income (Loss)
|
|
$
|
177,125
|
|
|
$
|
(5,219
|
)
|
|
$
|
(216,169
|
)
|
|
$
|
78,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g)
|
This adjustment removes Other Revenues on a segment basis. The Segment Adjustment represents (1) the add back of Other Revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of certain Transaction-Related Charges.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(192,159
|
)
|
|
$
|
93,273
|
|
|
$
|
(109,559
|
)
|
|
$
|
86,403
|
|
|
|
|
|
(464
|
)
|
|
|
(430
|
)
|
|
|
(519
|
)
|
|
|
(521
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(192,623
|
)
|
|
$
|
92,843
|
|
|
$
|
(110,078
|
)
|
|
$
|
85,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(h)
|
This adjustment removes Equity-Based Compensation on a segment basis.
|
|
(i)
|
This adjustment adds an amount equal to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units. The administrative fee is accounted for as a capital contribution under GAAP, but is reflected as a reduction of Other Operating Expenses in Blackstone’s segment presentation.
|
|
(j)
|
Taxes represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss) Before Provision (Benefit) for Taxes and adjusted to exclude the tax impact of any divestitures. Related Payables represent tax-related payables including the amount payable under the Tax Receivable Agreement. See “— Key Financial Measures and Indicators — Distributable Earnings” for the full definition of Taxes and Related Payables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
32,518
|
|
|
$
|
26,933
|
|
|
$
|
97,254
|
|
|
$
|
76,486
|
|
|
|
|
|
7,707
|
|
|
|
8,882
|
|
|
|
30,014
|
|
|
|
43,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes and Related Payables
|
|
$
|
40,225
|
|
|
$
|
35,815
|
|
|
$
|
127,268
|
|
|
$
|
120,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(k)
|
This adjustment removes Interest and Dividend Revenue less Interest Expense on a segment basis. The Segment Adjustment represents (1) the add back of Interest and Dividend Revenue earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of interest expense associated with the Tax Receivable Agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Interest and Dividend Revenue
|
|
$
|
26,497
|
|
|
$
|
42,482
|
|
|
$
|
85,505
|
|
|
$
|
130,252
|
|
|
|
|
|
—
|
|
|
|
2,566
|
|
|
|
4,881
|
|
|
|
7,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and Dividend Revenue
|
|
|
26,497
|
|
|
|
45,048
|
|
|
|
90,386
|
|
|
|
137,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,540
|
|
|
|
53,362
|
|
|
|
120,460
|
|
|
|
138,960
|
|
|
|
|
|
(312
|
)
|
|
|
(547
|
)
|
|
|
(768
|
)
|
|
|
(1,277
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,228
|
|
|
|
52,815
|
|
|
|
119,692
|
|
|
|
137,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income (Loss)
|
|
$
|
(12,731
|
)
|
|
$
|
(7,767
|
)
|
|
$
|
(29,306
|
)
|
|
$
|
55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(l)
|
This adjustment removes the total segment amount of Realized Performance Revenues.
|
|
(m)
|
This adjustment removes the total segment amount of Realized Performance Compensation.
|
|
(n)
|
This adjustment removes the total segment amount of Realized Principal Investment Income.
|
|
(o)
|
This adjustment adds back Interest Expense on a segment basis.
|
The following tables are a reconciliation of Total GAAP Investments to Net Accrued Performance Revenues. Total GAAP Investments and Net Accrued Performance Revenues consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments of Consolidated Blackstone Funds
|
|
$
|
1,500,398
|
|
|
$
|
8,481,233
|
|
Equity Method Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
4,144,249
|
|
|
|
3,864,453
|
|
Accrued Performance Allocations
|
|
|
6,112,904
|
|
|
|
7,003,889
|
|
Corporate Treasury Investments
|
|
|
2,390,982
|
|
|
|
2,588,529
|
|
|
|
|
|
274,923
|
|
|
|
266,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
14,423,456
|
|
|
$
|
22,204,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Performance Allocations - GAAP
|
|
$
|
6,112,904
|
|
|
$
|
7,003,889
|
|
Impact of Consolidation (a)
|
|
|
1
|
|
|
|
237
|
|
Due from Affiliates - GAAP (b)
|
|
|
21,499
|
|
|
|
18,955
|
|
Less: Net Realized Performance Revenues (c)
|
|
|
(75,328
|
)
|
|
|
(129,129
|
)
|
Less: Accrued Performance Compensation - GAAP (d)
|
|
|
(2,509,357
|
)
|
|
|
(2,851,817
|
)
|
|
|
|
|
|
|
|
|
|
|
Net Accrued Performance Revenues
|
|
$
|
3,549,719
|
|
|
$
|
4,042,135
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
This adjustment adds back investments in consolidated Blackstone Funds which have been eliminated in consolidation.
|
|
(b)
|
Represents GAAP accrued performance revenue recorded within Due from Affiliates.
|
|
(c)
|
Represents Performance Revenues realized but not yet distributed as of the reporting date and are included in Distributable Earnings in the period they are realized.
|
|
(d)
|
Represents GAAP accrued performance compensation associated with Accrued Performance Allocations and is recorded within Accrued Compensation and Benefits and Due to Affiliates.
|
Liquidity and Capital Resources
Blackstone’s business model derives revenue primarily from third party assets under management. Blackstone is not a capital or balance sheet intensive business and targets operating expense levels such that total management and advisory fees exceed total operating expenses each period. As a result, we require limited capital resources to support the working capital or operating needs of our businesses. We draw primarily on the long-term committed capital of our limited partner investors to fund the investment requirements of the Blackstone Funds and use our own realizations and cash flows to invest in growth initiatives, make commitments to our own funds, where our minimum general partner commitments are generally less than 5% of the limited partner commitments of a fund, and pay dividends to shareholders.
Fluctuations in our statement of financial condition result primarily from activities of the Blackstone Funds that are consolidated as well as business transactions, such as the issuance of senior notes described below. The majority economic ownership interests of the Blackstone Funds are reflected as Redeemable Non-Controlling Interests in Consolidated Entities and Non-Controlling Interests in Consolidated Entities in the Condensed Consolidated Financial Statements. The consolidation of these Blackstone Funds has no net effect on Blackstone’s Net Income or Partners’ Capital. Additionally, fluctuations in our statement of financial condition also include appreciation or depreciation in Blackstone investments in the Blackstone Funds, additional investments and redemptions of such interests in the Blackstone Funds and the collection of receivables related to management and advisory fees.
During the three months ended September 30, 2020, Blackstone deconsolidated nine CLO vehicles. See Note 9. “Variable Interest Entities” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing for additional details.
Total assets were $25.0 billion as of September 30, 2020, a decrease of $7.5 billion, from December 31, 2019. The decrease in total assets was principally due to a decrease of $7.3 billion in total assets attributable to the consolidated Blackstone funds. The decrease in total assets attributable to the consolidated Blackstone funds was primarily due to a decrease of $6.9 billion in Investments which was primarily due to the deconsolidation of nine CLO vehicles. The other net variances of the assets attributable to the consolidated operating partnerships were relatively unchanged.
Total liabilities were $11.5 billion as of September 30, 2020, a decrease of $5.9 billion, from December 31, 2019. The decrease in total liabilities was principally due to a decrease of $7.2 billion in total liabilities attributable to the consolidated Blackstone funds, partially offset by an increase of $952.2 million in total liabilities attributable to consolidated operating partnerships. The decrease in total liabilities attributable to consolidated Blackstone funds was primarily due to a decrease of $6.5 billion in Loans Payable. The decrease in Loans Payable was primarily due to the deconsolidation of nine CLO vehicles. The increase in total liabilities attributable to the consolidated operating partnerships was primarily due to an increase of $969.9 million in Loans Payable. The increase in Loans Payable was primarily due to the issuance of $900 million of notes on September 29, 2020. The other net variances of the liabilities attributable to the consolidated operating partnerships were relatively unchanged.
We have multiple sources of liquidity to meet our capital needs as described in “— Sources and Uses of Liquidity”. While our liquidity has not been materially impacted by the
COVID-19
pandemic to date, we continue to closely monitor developments in the impact of the
COVID-19
pandemic and actively evaluate our sources and uses of liquidity in light of such developments.
Sources and Uses of Liquidity
We have multiple sources of liquidity to meet our capital needs, including annual cash flows, accumulated earnings in our businesses, the proceeds from our issuances of senior notes, liquid investments we hold on our balance sheet and access to our $1.6 billion committed revolving credit facility. As of September 30, 2020, Blackstone had $2.6 billion in cash and cash equivalents and $2.4 billion invested in corporate treasury investments, against $5.7 billion in borrowings from our bond issuances, and no borrowings outstanding under our revolving credit facility.
On September 29, 2020, Blackstone issued $500 million aggregate principal amount of 1.600% senior notes due March 30, 2031 and $400 million aggregate principal amount of 2.800% senior notes due September 30, 2050. Blackstone intends to use the net proceeds from the sale of the notes for general corporate purposes. For additional information see Note 12. “Borrowings” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing.
In addition to the cash we received from our notes offerings and availability under our revolving credit facility, we expect to receive (a) cash generated from operating activities, (b) Performance Allocations and Incentive Fee realizations, and (c) realizations on the fund investments that we make. The amounts received from these three sources in particular may vary substantially from year to year and quarter to quarter depending on the frequency and size of realization events or net returns experienced by our investment funds. Our available capital could be adversely affected if there are prolonged periods of few substantial realizations from our investment funds accompanied by substantial capital calls for new investments from those investment funds. Therefore, Blackstone’s commitments to our funds are taken into consideration when managing our overall liquidity and cash position.
We expect that our primary liquidity needs will be cash to (a) provide capital to facilitate the growth of our existing businesses which principally includes funding our general partner and co-investment commitments to our funds, (b) provide capital to facilitate our expansion into new businesses, (c) pay operating expenses, including cash compensation to our employees and other obligations as they arise, (d) fund modest capital expenditures, (e) repay borrowings and related interest costs, (f) pay income taxes, (g) repurchase shares of our common stock and Blackstone Holdings Partnership Units pursuant to our repurchase program, and (h) pay dividends to our shareholders and distributions to the holders of Blackstone Holdings Partnership Units.
Our own capital commitments to our funds, the funds we invest in and our investment strategies as of September 30, 2020 consisted of the following:
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|
Senior Managing Directors
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
300,000
|
|
|
$
|
37,725
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|
|
$
|
100,000
|
|
|
$
|
12,575
|
|
|
|
|
|
300,000
|
|
|
|
51,350
|
|
|
|
100,000
|
|
|
|
17,117
|
|
|
|
|
|
300,000
|
|
|
|
212,044
|
|
|
|
100,000
|
|
|
|
70,681
|
|
|
|
|
|
130,000
|
|
|
|
24,074
|
|
|
|
43,333
|
|
|
|
8,025
|
|
|
|
|
|
150,000
|
|
|
|
33,700
|
|
|
|
43,333
|
|
|
|
9,736
|
|
|
|
|
|
130,000
|
|
|
|
99,164
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|
|
|
43,333
|
|
|
|
33,055
|
|
|
|
|
|
45,000
|
|
|
|
10,335
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|
|
|
15,000
|
|
|
|
3,445
|
|
|
|
|
|
70,707
|
|
|
|
40,706
|
|
|
|
23,569
|
|
|
|
13,569
|
|
|
|
|
|
50,000
|
|
|
|
6,227
|
|
|
|
16,667
|
|
|
|
2,076
|
|
|
|
|
|
50,000
|
|
|
|
17,659
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|
|
|
16,667
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|
|
|
5,886
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|
|
|
|
|
50,000
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|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
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|
|
|
|
|
75,834
|
|
|
|
5,532
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|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
23,200
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|
|
|
16,045
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|
|
|
—
|
|
|
|
—
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|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
|
|
|
|
1,674,741
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|
|
|
604,561
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|
|
|
501,902
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|
|
|
176,165
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|
|
|
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|
|
|
|
|
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|
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|
|
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|
|
|
|
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|
|
|
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|
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|
|
|
|
|
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629,356
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|
|
|
30,642
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|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
719,718
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|
|
|
82,829
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|
|
|
250,000
|
|
|
|
28,771
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|
|
|
|
|
500,000
|
|
|
|
69,084
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|
|
|
225,000
|
|
|
|
31,088
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|
|
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
225,000
|
|
|
|
225,000
|
|
|
|
|
|
50,000
|
|
|
|
4,728
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|
|
|
—
|
|
|
|
—
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|
|
|
|
|
80,000
|
|
|
|
5,215
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|
|
|
26,667
|
|
|
|
1,738
|
|
|
|
|
|
80,000
|
|
|
|
69,798
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|
|
|
26,667
|
|
|
|
23,266
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|
|
|
|
|
120,000
|
|
|
|
36,450
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|
|
|
18,992
|
|
|
|
5,769
|
|
|
|
|
|
113,680
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|
|
|
113,680
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|
|
|
23,191
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|
|
|
23,191
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|
|
|
|
|
40,000
|
|
|
|
21,962
|
|
|
|
13,333
|
|
|
|
7,321
|
|
|
|
|
|
408,211
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|
|
|
179,662
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|
|
|
136,070
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|
|
|
59,887
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|
|
|
|
|
770,742
|
|
|
|
485,734
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|
|
|
118,907
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|
|
|
73,071
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|
|
|
|
|
168,632
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|
|
|
114,998
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|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
110,000
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|
|
|
91,422
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|
|
|
26,667
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|
|
|
25,477
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|
|
|
|
|
46,473
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|
|
|
43,908
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|
|
|
15,491
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|
|
|
14,636
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|
|
|
|
|
274,734
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|
|
|
32,635
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|
|
—
|
|
|
|
—
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|
|
|
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|
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|
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|
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|
|
|
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|
4,611,546
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|
|
1,882,747
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|
|
1,105,985
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|
|
|
519,215
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|
|
|
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|
Senior Managing Directors
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
50,000
|
|
|
$
|
2,033
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
50,000
|
|
|
|
1,482
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|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
22,000
|
|
|
|
4,235
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
154,610
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|
|
|
62,710
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|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
50,000
|
|
|
|
47,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
17,741
|
|
|
|
11,698
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|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Hedge Fund Solutions
|
|
|
344,351
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|
|
|
129,658
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|
|
|
—
|
|
|
|
—
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|
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|
|
|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Mezzanine / Opportunistic II
|
|
|
120,000
|
|
|
|
30,218
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|
|
|
110,101
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|
|
|
27,726
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|
Mezzanine / Opportunistic III
|
|
|
130,783
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|
|
|
61,841
|
|
|
|
31,054
|
|
|
|
14,684
|
|
Mezzanine / Opportunistic IV
|
|
|
122,000
|
|
|
|
122,000
|
|
|
|
33,333
|
|
|
|
33,333
|
|
|
|
|
|
63,000
|
|
|
|
16,547
|
|
|
|
56,955
|
|
|
|
14,959
|
|
|
|
|
|
93,026
|
|
|
|
80,704
|
|
|
|
24,142
|
|
|
|
20,793
|
|
|
|
|
|
50,000
|
|
|
|
4,869
|
|
|
|
27,666
|
|
|
|
2,694
|
|
|
|
|
|
125,000
|
|
|
|
51,695
|
|
|
|
121,050
|
|
|
|
50,061
|
|
Stressed / Distressed III
|
|
|
151,000
|
|
|
|
113,042
|
|
|
|
31,805
|
|
|
|
23,810
|
|
|
|
|
|
80,000
|
|
|
|
38,026
|
|
|
|
75,555
|
|
|
|
35,913
|
|
|
|
|
|
150,000
|
|
|
|
139,722
|
|
|
|
25,423
|
|
|
|
23,681
|
|
|
|
|
|
52,102
|
|
|
|
7,465
|
|
|
|
50,624
|
|
|
|
7,254
|
|
|
|
|
|
25,500
|
|
|
|
14,921
|
|
|
|
6,034
|
|
|
|
3,531
|
|
Blackstone / GSO Secured Lending
|
|
|
74,500
|
|
|
|
19,370
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
168,812
|
|
|
|
44,674
|
|
|
|
21,605
|
|
|
|
3,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,405,723
|
|
|
|
745,094
|
|
|
|
615,347
|
|
|
|
262,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
843,512
|
|
|
|
825,408
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,879,873
|
|
|
$
|
4,187,468
|
|
|
$
|
2,223,234
|
|
|
$
|
957,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
For some of the general partner commitments shown in the table above, we require our senior managing directors and certain other professionals to fund a portion of the commitment even though the ultimate obligation to fund the aggregate commitment is ours pursuant to the governing agreements of the respective funds. The amounts of the aggregate applicable general partner original and remaining commitment are shown in the table above. In addition, certain senior managing directors and other professionals may be required to fund a de minimis amount of the commitment in certain carry funds. We expect our commitments to be drawn down over time and to be funded by available cash and cash generated from operations and realizations. Taking into account prevailing market conditions and both the liquidity and cash or liquid investment balances, we believe that the sources of liquidity described above will be more than sufficient to fund our working capital requirements.
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|
(b)
|
Represents capital commitments to a number of other funds in each respective segment.
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|
(c)
|
Represents loan origination commitments, revolver commitments and capital market commitments.
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As of September 30, 2020, Blackstone Holdings Finance Co. L.L.C. (the “Issuer”), an indirect subsidiary of Blackstone, had issued and outstanding the following senior notes (collectively the “Notes”):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
400,000
|
|
|
|
|
|
300,000
|
|
|
|
|
|
600,000
|
|
|
|
|
$
|
300,000
|
|
|
|
|
|
600,000
|
|
|
|
|
$
|
500,000
|
|
|
|
|
$
|
500,000
|
|
|
|
|
$
|
250,000
|
|
|
|
|
$
|
500,000
|
|
|
|
|
$
|
350,000
|
|
|
|
|
$
|
300,000
|
|
|
|
|
$
|
400,000
|
|
|
|
|
$
|
400,000
|
|
|
|
|
|
|
|
|
|
|
$
|
5,658,150
|
|
|
|
|
|
|
|
|
(a)
|
The Notes are unsecured and unsubordinated obligations of the Issuer and are fully and unconditionally guaranteed, jointly and severally, by The Blackstone Group Inc. and each of the Blackstone Holdings Partnerships. The Notes contain customary covenants and financial restrictions that, among other things, limit the Issuer and the guarantors’ ability, subject to certain exceptions, to incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiaries or merge, consolidate or sell, transfer or lease assets. The Notes also contain customary events of default. All or a portion of the Notes may be redeemed at our option, in whole or in part, at any time and from time to time, prior to their stated maturity, at the make-whole redemption price set forth in the Notes. If a change of control repurchase event occurs, the Notes are subject to repurchase at the repurchase price as set forth in the Notes.
|
Blackstone, through its indirect subsidiary Blackstone Holdings Finance Co. L.L.C., has a $1.6 billion unsecured revolving credit facility (the “Credit Facility”) with Citibank, N.A., as administrative agent with a maturity date of September 21, 2023. Borrowings may also be made in U.K. sterling, euros, Swiss francs, Japanese yen or Canadian dollars, in each case subject to certain sub-limits. The Credit Facility contains customary representations, covenants and events of default. Financial covenants consist of a maximum net leverage ratio and a requirement to keep a minimum amount of fee-earning assets under management, each tested quarterly.
On July 16, 2019, our board of directors authorized the repurchase of up to $1.0 billion of Class A common stock and Blackstone Holdings Partnership Units. Under the repurchase program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual number repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date.
During the three and nine months ended September 30, 2020, we repurchased 2.0 million and 9.0 million shares, respectively, of Blackstone Class A common stock as part of the repurchase program at a total cost of $105.6 million and $474.0 million, respectively. As of September 30, 2020, the amount remaining available for repurchases under the repurchase program was $307.2 million.
Our intention is to pay to holders of Class A common stock a quarterly dividend representing approximately 85% of The Blackstone Group Inc.’s share of Distributable Earnings, subject to adjustment by amounts determined by our board of directors to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash requirements such as tax-related payments, clawback obligations and dividends to shareholders for any ensuing quarter. The dividend amount could also be adjusted upward in any one quarter.
For Blackstone’s definition of Distributable Earnings, see “— Key Financial Measures and Indicators”.
All of the foregoing is subject to the qualification that the declaration and payment of any dividends are at the sole discretion of our board of directors and our board of directors may change our dividend policy at any time, including, without limitation, to reduce such quarterly dividends or even to eliminate such dividends entirely.
Because the publicly traded entity and/or its wholly owned subsidiaries must pay taxes and make payments under the tax receivable agreements, the amounts ultimately paid as dividends by The Blackstone Group Inc. to common shareholders in respect of each fiscal year are generally expected to be less, on a per share or per unit basis, than the amounts distributed by the Blackstone Holdings Partnerships to the Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships in respect of their Blackstone Holdings Partnership Units. Following the Conversion, we expect to pay more corporate income taxes than we would have as a limited partnership, which will increase this difference in the dividend and/or distribution amounts on a per share or per unit basis.
Dividends are treated as qualified dividends to the extent of Blackstone’s current and accumulated earnings and profits, with any excess dividends treated as a return of capital to the extent of the shareholder’s basis.
The following graph shows fiscal quarterly and annual per common shareholder dividends for 2019 and 2020. Dividends are declared and paid in the quarter subsequent to the quarter in which they are earned.
With respect to the third quarter of fiscal year 2020, we paid to shareholders of our Class A common stock a dividend of $0.54 per share, aggregating to $1.30 per share of Class A common stock in respect of the nine months ended September 30, 2020. With respect to fiscal year 2019, we paid shareholders of our Class A common stock aggregate dividends of $1.95 per share.
We may under certain circumstances use leverage opportunistically and over time to create the most efficient capital structure for Blackstone and our shareholders. In addition to the borrowings from our note issuances and our revolving credit facility, we may use reverse repurchase agreements, repurchase agreements and securities sold, not yet purchased. All of these positions are held in a separately managed portfolio. Reverse repurchase agreements are entered into primarily to take advantage of opportunistic yields otherwise absent in the overnight markets and also to use the collateral received to cover securities sold, not yet purchased. Repurchase agreements are entered into primarily to opportunistically yield higher spreads on purchased securities. The balances held in these financial instruments fluctuate based on Blackstone’s liquidity needs, market conditions and investment risk profiles.
The following table presents information regarding these financial instruments in our Condensed Consolidated Statements of Financial Condition:
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Balance, September 30, 2020
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$
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80.6
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|
|
$
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51.2
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Balance, December 31, 2019
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$
|
154.1
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|
|
$
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75.5
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|
Nine Months Ended September 30, 2020
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$
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100.6
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|
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$
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57.8
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|
|
|
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$
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152.8
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|
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$
|
75.7
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|
Contractual Obligations, Commitments and Contingencies
The following table sets forth information relating to our contractual obligations as of September 30, 2020 on a consolidated basis and on a basis deconsolidating the Blackstone Funds:
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Operating Lease Obligations (a)
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$
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10,339
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$
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194,288
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|
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$
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187,555
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|
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$
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274,055
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|
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$
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666,237
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|
|
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18,266
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|
|
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51,954
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|
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6,266
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|
|
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—
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|
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76,486
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Blackstone Issued Notes and Revolving Credit Facility (b)
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—
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—
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400,000
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5,258,150
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5,658,150
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Interest on Blackstone Issued Notes and Revolving Credit Facility (c)
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30,258
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333,928
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305,428
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2,235,967
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2,905,581
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Blackstone Funds Debt Obligations Payable
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99
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—
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—
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—
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99
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Blackstone Funds Capital Commitments to Investee Funds (d)
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176,344
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—
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—
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—
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176,344
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Due to Certain Non-Controlling Interest Holders in Connection with Tax Receivable Agreements (e)
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—
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104,201
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83,668
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612,537
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800,406
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Unrecognized Tax Benefits, Including Interest and Penalties (f)
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—
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1,034
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—
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—
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1,034
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Blackstone Operating Entities Capital Commitments to Blackstone Funds and Other (g)
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4,187,468
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—
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|
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—
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—
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4,187,468
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Consolidated Contractual Obligations
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4,422,774
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685,405
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982,917
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|
|
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8,380,709
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|
|
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14,471,805
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Blackstone Funds Debt Obligations Payable
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|
|
(99
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)
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|
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—
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|
|
|
—
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|
|
|
—
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|
|
|
(99
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)
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Blackstone Funds Capital Commitments to Investee Funds (d)
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(176,344
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)
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—
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|
|
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—
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—
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(176,344
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)
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Blackstone Operating Entities Contractual Obligations
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$
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4,246,331
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|
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$
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685,405
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|
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$
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982,917
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|
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$
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8,380,709
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|
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$
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14,295,362
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(a)
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We lease our primary office space and certain office equipment under agreements that expire through 2030. Occupancy lease agreements, in addition to contractual rent payments, generally include additional payments for certain costs incurred by the landlord, such as building expenses, and utilities. To the extent these are fixed or determinable they are included in the table above. The table above includes operating leases that are recognized as Operating Lease Liabilities, short-term leases that are not recorded as Operating Lease Liabilities and leases that have been signed but not yet commenced which are not recorded as Operating Lease Liabilities. The amounts in this table are presented net of contractual sublease commitments.
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(b)
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Represents the principal amount due on the senior notes we issued. As of September 30, 2020, we had no outstanding borrowings under our revolver.
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(c)
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Represents interest to be paid over the maturity of our senior notes and borrowings under our revolving credit facility which has been calculated assuming no pre-payments are made and debt is held until its final maturity date. These amounts exclude commitment fees for unutilized borrowings under our revolver.
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(d)
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These obligations represent commitments of the consolidated Blackstone Funds to make capital contributions to investee funds and portfolio companies. These amounts are generally due on demand and are therefore presented in the less than one year category.
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(e)
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Represents obligations by Blackstone’s corporate subsidiary to make payments under the Tax Receivable Agreements to certain non-controlling interest holders for the tax savings realized from the taxable purchases of their interests in connection with the reorganization at the time of Blackstone’s IPO in 2007 and subsequent purchases. The obligation represents the amount of the payments currently expected to be made, which are dependent on the tax savings actually realized as determined annually without discounting for the timing of the payments. As required by GAAP, the amount of the obligation included in the Condensed Consolidated Financial Statements and shown in Note 16. “Related Party Transactions” (see “Part I. Item 1 Financial Statements”) differs to reflect the net present value of the payments due to certain non-controlling interest holders.
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(f)
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The total represents gross unrecognized tax benefits of $0.5 million and interest and penalties of $0.5 million. In addition, Blackstone is not able to make a reasonably reliable estimate of the timing of payments in individual years in connection with gross unrecognized benefits of $31.1 million and interest of $3.2 million; therefore, such amounts are not included in the above contractual obligations table.
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(g)
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These obligations represent commitments by us to provide general partner capital funding to the Blackstone Funds, limited partner capital funding to other funds and Blackstone principal investment commitments. These amounts are generally due on demand and are therefore presented in the less than one year category; however, a substantial amount of the capital commitments are expected to be called over the next three years. We expect to continue to make these general partner capital commitments as we raise additional amounts for our investment funds over time.
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Blackstone and certain of its consolidated funds provide financial guarantees. The amounts and nature of these guarantees are described in Note 17. “Commitments and Contingencies – Contingencies – Guarantees” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing.
In many of its service contracts, Blackstone agrees to indemnify the third party service provider under certain circumstances. The terms of the indemnities vary from contract to contract and the amount of indemnification liability, if any, cannot be determined and has not been included in the table above or recorded in our Condensed Consolidated Financial Statements as of September 30, 2020.
Performance Allocations are subject to clawback to the extent that the Performance Allocations received to date with respect to a fund exceeds the amount due to Blackstone based on cumulative results of that fund. The actual clawback liability, however, generally does not become realized until the end of a fund’s life except for certain Blackstone real estate funds, multi-asset class investment funds and credit-focused funds, which may have an interim clawback liability. The lives of the carry funds, including available contemplated extensions, for which a liability for potential clawback obligations has been recorded for financial reporting purposes, are currently anticipated to expire at various points through 2029. Further extensions of such terms may be implemented under given circumstances.
For financial reporting purposes, when applicable, the general partners record a liability for potential clawback obligations to the limited partners of some of the carry funds due to changes in the unrealized value of a fund’s remaining investments and where the fund’s general partner has previously received Performance Allocation distributions with respect to such fund’s realized investments.
As of September 30, 2020, the total clawback obligations were $125.7 million, of which $100.8 million was related to Blackstone Holdings and $24.9 million was related to current and former Blackstone personnel. The split of clawback between Blackstone Holdings and current and former personnel is based on the performance of individual investments held by a fund rather than on a fund by fund basis.
If, at September 30, 2020, all of the investments held by our carry funds were deemed worthless, a possibility that management views as remote, the amount of Performance Allocations subject to potential clawback would be $3.6 billion, on an
after-tax
basis where applicable, of which Blackstone Holdings is potentially liable for $3.1 billion if current and former Blackstone personnel default on their share of the liability, a possibility that management also views as remote. See Note 16. “Related Party Transactions” and Note 17. “Commitments and Contingencies” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing.
Critical Accounting Policies
We prepare our Condensed Consolidated Financial Statements in accordance with GAAP. In applying many of these accounting principles, we need to make assumptions, estimates and/or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our Condensed Consolidated Financial Statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates and/or judgments, however, are often subjective. Actual results may be affected negatively based on changing circumstances. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. We believe the following critical accounting policies could potentially produce materially different results if we were to change underlying assumptions, estimates and/or judgments. For a description of our accounting policies, see Note 2. “Summary of Significant Accounting Policies” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing.
Principles of Consolidation
For a description of our accounting policy on consolidation, see Note 2. “Summary of Significant Accounting Policies — Consolidation” and Note 9. “Variable Interest Entities” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing for detailed information on Blackstone’s involvement with VIEs. The following discussion is intended to provide supplemental information about how the application of consolidation principles impact our financial results, and management’s process for implementing those principles including areas of significant judgment.
The determination that Blackstone holds a controlling financial interest in a Blackstone Fund or investment vehicle significantly changes the presentation of our Condensed Consolidated Financial Statements. In our Condensed Consolidated Statements of Financial Position included in this filing, we present 100% of the assets and liabilities of consolidated VIEs along with a non-controlling interest which represents the portion of the consolidated vehicle’s interests held by third parties. However, assets of our consolidated VIEs can only be used to settle obligations of the consolidated VIE and are not available for general use by Blackstone. Further, the liabilities of our consolidated VIEs do not have recourse to the general credit of Blackstone. In the Condensed Consolidated Statements of Operations, we eliminate any management fees, Incentive Fees, or Performance Allocations received or accrued from consolidated VIEs as they are considered intercompany transactions. We recognize 100% of the consolidated VIE’s investment income (loss) and allocate the portion of that income (loss) attributable to third party ownership to non-controlling interests in arriving at Net Income Attributable to The Blackstone Group Inc.
The assessment of whether we consolidate a Blackstone Fund or investment vehicle we manage requires the application of significant judgment. These judgments are applied both at the time we become involved with the VIE and on an ongoing basis and include, but are not limited to:
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|
•
|
|
Determining whether our management fees, Incentive Fees or Performance Allocations represent variable interests – We make judgments as to whether the fees we earn are commensurate with the level of effort required for those fees and at market rates. In making this judgment, we consider, among other things, the extent of third party investment in the entity and the terms of any other interests we hold in the VIE.
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|
•
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|
Determining whether kick-out rights are substantive – We make judgments as to whether the third party investors in a partnership entity have the ability to remove the general partner, the investment manager or its equivalent, or to dissolve (liquidate) the partnership entity, through a simple majority vote. This includes an evaluation of whether barriers to exercise these rights exist.
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•
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|
Concluding whether Blackstone has an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE – As there is no explicit threshold in GAAP to define “potentially significant,” management must apply judgment and evaluate both quantitative and qualitative factors to conclude whether this threshold is met.
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For a description of our accounting policy on revenue recognition, see Note 2. “Summary of Significant Accounting Policies — Revenue Recognition” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements”. For additional description of the nature of our revenue arrangements, including how management fees, Incentive Fees, and Performance Allocations are generated, please refer to “Part I. Item 1. Business — Fee Structure/Incentive Arrangements” in our Annual Report on Form 10-K for the year ended December 31, 2019. The following discussion is intended to provide supplemental information about how the application of revenue recognition principles impact our financial results, and management’s process for implementing those principles including areas of significant judgment.
Management and Advisory Fees, Net
— Blackstone earns base management fees from the investors in its managed funds and investment vehicles, at a fixed percentage of a calculation base, which is typically assets under management, net asset value, total assets, committed capital or invested capital. The range of management fee rates and the calculation base from which they are earned, generally, are as follows:
On private equity, real estate, and certain of our hedge fund solutions and credit-focused funds:
|
|
•
|
|
0.25% to 1.75% of committed capital or invested capital during the investment period,
|
|
|
•
|
|
0.25% to 1.50% of invested capital, committed capital or investment fair value subsequent to the investment period for private equity and real estate funds, and
|
|
|
•
|
|
0.75% to 1.50% of invested capital or net asset value subsequent to the investment period for certain of our hedge fund solutions and
credit-focused
funds.
|
On real estate, credit and MLP-focused funds structured like hedge funds:
|
|
•
|
|
0.24% to 1.50% of net asset value.
|
On credit and MLP-focused separately managed accounts:
|
|
•
|
|
0.24% to 1.50% of net asset value or total assets.
|
On real estate separately managed accounts:
|
|
•
|
|
0.65% to 2.00% of invested capital, net operating income or net asset value.
|
On funds of hedge funds, certain hedge funds and separately managed accounts invested in hedge funds:
|
|
•
|
|
0.25% to 1.50% of net asset value.
|
|
|
•
|
|
0.40% to 0.65% of the aggregate par amount of collateral assets, including principal cash.
|
On credit-focused registered and non-registered investment companies:
|
|
•
|
|
0.35% to 1.20% of total assets or net asset value.
|
The investment adviser of BXMT receives annual management fees based on 1.50% of BXMT’s net proceeds received from equity offerings and accumulated “core earnings” (which is generally equal to its GAAP net income excluding certain non-cash and other items), subject to certain adjustments. The investment adviser of BREIT receives a management fee of 1.25% per annum of net asset value, payable monthly.
Management fee calculations based on committed capital or invested capital are mechanical in nature and therefore do not require the use of significant estimates or judgments. Management fee calculations based on net asset value, total assets, or investment fair value depend on the fair value of the underlying investments within the funds. Estimates and assumptions are made when determining the fair value of the underlying investments within the funds and could vary depending on the valuation methodology that is used as well as economic conditions. See “— Fair Value” below for further discussion of the judgment required for determining the fair value of the underlying investments.
— Performance Allocations are made to the general partner based on cumulative fund performance to date, subject to a preferred return to limited partners. Blackstone has concluded that investments made alongside its limited partners in a partnership which entitle Blackstone to a Performance Allocation represent equity method investments that are not in the scope of the GAAP guidance on accounting for revenues from contracts with customers. Blackstone accounts for these arrangements under the equity method of accounting. Under the equity method, Blackstone’s share of earnings (losses) from equity method investments is determined using a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, at the end of each reporting period Blackstone calculates the accrued Performance Allocations that would be due to Blackstone for each fund pursuant to the fund agreements as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. Performance Allocations are subject to clawback to the extent that the Performance Allocation received to date exceeds the amount due to Blackstone based on cumulative results.
The change in the fair value of the investments held by certain Blackstone Funds is a significant input into the accrued Performance Allocation calculation and accrual for potential repayment of previously received Performance Allocations. Estimates and assumptions are made when determining the fair value of the underlying investments within the funds. See “— Fair Value” below for further discussion related to significant estimates and assumptions used for determining fair value of the underlying investments.
Blackstone uses fair value throughout the reporting process. For a description of our accounting policies related to valuation, see Note 2. “Summary of Significant Accounting Policies —
COVID-19
and Global Economic Conditions”, “Summary of Significant Accounting Policies — Fair Value of Financial Instruments” and “Summary of Significant Accounting Policies — Investments, at Fair Value” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing. The following discussion is intended to provide supplemental information about how the application of fair value principles impact our financial results, and management’s process for implementing those principles including areas of significant judgment.
The fair value of the investments held by Blackstone Funds is the primary input to the calculation of certain of our management fees, Incentive Fees, Performance Allocations and the related Compensation we recognize. The Blackstone Funds are accounted for as investment companies under the American Institute of Certified Public Accountants Accounting and Auditing Guide,
, and in accordance with the GAAP guidance on investment companies and reflect their investments, including majority owned and controlled investments (the “Portfolio Companies”), at fair value. In the absence of observable market prices, we utilize valuation methodologies applied on a consistent basis and assumptions that we believe market participants would use to determine the fair value of the investments. For investments where little market activity exists management’s determination of fair value is based on the best information available in the circumstances, which may incorporate management’s own assumptions and involves a significant degree of judgment, and the consideration of a combination of internal and external factors, including the appropriate risk adjustments for non-performance and liquidity risks.
Blackstone has also elected the fair value option for certain instruments it owns directly, including loans and receivables and investments in private debt securities, the assets of consolidated CLO vehicles and other proprietary investments. Blackstone is required to measure certain financial instruments at fair value, including debt instruments, equity securities and freestanding derivatives.
Fair Value of Investments or Instruments that are Publicly Traded
Securities that are publicly traded and for which a quoted market exists will be valued at the closing price of such securities in the principal market in which the security trades, or in the absence of a principal market, in the most advantageous market on the valuation date. When a quoted price in an active market exists, no block discounts or control premiums are permitted regardless of the size of the public security held. In some cases, securities will include legal and contractual restrictions limiting their purchase and sale for a period of time, such as may be required under SEC Rule 144 or by underwriters in certain transactions. A discount to publicly traded price may be appropriate in those cases; the amount of the discount, if taken, shall be determined based on the time period that must pass before the restricted security becomes unrestricted or otherwise available for sale.
Fair Value of Investments or Instruments that are not Publicly Traded
Investments for which market prices are not observable include private investments in the equity or debt of operating companies or real estate properties. Our primary methodology for determining the fair values of such investments is the income approach which provides an indication of fair value based on the present value of cash flows that a business, security, or property is expected to generate in the future. The most widely used methodology under the income approach is the discounted cash flow method which includes significant assumptions about the underlying investment’s projected net earnings or cash flows, discount rate, capitalization rate and exit multiple. Our secondary methodology, generally used to corroborate the results of the income approach, is the market approach. The most widely used methodology under the market approach relies upon valuations for comparable public companies, transactions, or assets, and includes making judgments about which companies, transactions, or assets are comparable.
In certain cases debt and equity securities are valued on the basis of prices from an orderly transaction between market participants provided by reputable dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices and market transactions in comparable investments and various relationships between investments.
Management Process on Fair Value
Due to the importance of fair value throughout the condensed consolidated financial statements and the significant judgment required to be applied in arriving at those fair values, we have developed a process around valuation that incorporates several levels of approval and review from both internal and external sources. Blackstone Fund investments are valued on a quarterly basis by our internal valuation teams, which are independent from our investment teams.
For investments valued utilizing the income method, and where Blackstone has information rights, we generally have a direct line of communication with each of the Portfolio Company finance teams and collect financial data used to support projections used in a discounted cash flow analysis. The respective businesses’ valuation team then analyzes the data received and updates the valuation models reflecting any changes in the underlying cash flow projections, weighted-average cost of capital, exit multiple, and any other valuation input relevant economic conditions.
The results of all valuations of investments held by Blackstone Fund and investment vehicles are reviewed and approved by the relevant business unit’s valuation sub-committee, which is comprised of key personnel from the business unit, typically the chief investment officer, chief operating officer, chief financial officer, chief compliance officer (or their respective equivalents where applicable) and other senior managing directors in the business. To further corroborate our results, we also generally obtain either a positive assurance opinion or a range of value by an independent valuation party, at least annually for all investments and quarterly for certain investments. Our firmwide valuation committee, chaired by our Chief Financial Officer and comprised of senior heads of our businesses and representatives from legal and finance, reviews the valuation process for investments held by us and our investment vehicles, including the application of appropriate valuation standards on a consistent basis. Each quarter, the valuations of the investment portfolios of Blackstone Funds are presented to the audit committee of our board of directors, which is comprised of non-employee directors.
The global outbreak of
COVID-19
required management to make significant judgments about the ultimate adverse impact of
COVID-19
on financial markets and economic conditions, which may change over time. These judgments and estimates were incorporated into the valuation process outlined herein. Management’s policies were unchanged and critical processes were executed in a remote working environment.
For a description of our accounting policy on taxes see Note 2. “Summary of Significant Accounting Policies” in “Part II. Item 8. Financial Statements and Supplementary Data” in our Annual Report on Form
10-K
for the year ended December 31, 2019. For additional information on taxes see Note 13. “Income Taxes” in the “Notes to Consolidated Financial Statements” in “— Item 8. Financial Statements and Supplementary Data” of this filing and Note 15. “Income Taxes” in “Part II. Item 8. Financial Statements and Supplementary Data” in our Annual Report on Form 10-K for the year ended December 31, 2019.
Our provision for income taxes is composed of current and deferred taxes. Current income taxes approximate taxes to be paid or refunded for the current period. Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the applicable enacted tax rates and laws that will be in effect when such differences are expected to reverse. During the year ended December 31, 2019, the Conversion resulted in a step-up in the tax basis of certain assets that will be recovered as those assets are sold or the basis is amortized.
Additionally, significant judgment is required in estimating the provision for (benefit from) income taxes, current and deferred tax balances (including valuation allowance), accrued interest or penalties and uncertain tax positions. In evaluating these judgments, we consider, among other items, projections of taxable income (including the character of such income), beginning with historic results and incorporating assumptions of the amount of future pretax operating income. These assumptions about future taxable income require significant judgment and are consistent with the plans and estimates that Blackstone uses to manage its business. A portion of the deferred tax assets are not considered to be more likely than not to be realized due to the character of income necessary for recovery. For that portion of the deferred tax assets, a valuation allowance has been recorded.
Revisions in estimates and/or actual costs of a tax assessment may ultimately be materially different from the recorded accruals and unrecognized tax benefits, if any.
Off-Balance Sheet Arrangements
In the normal course of business, we engage in off-balance sheet arrangements, including transactions in derivatives, guarantees, commitments, indemnifications and potential contingent repayment obligations. We do not have any off-balance sheet arrangements that would require us to fund losses or guarantee target returns to investors in our funds.
Further disclosure on our off-balance sheet arrangements is presented in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing as follows:
|
|
•
|
|
Note 9. “Variable Interest Entities”, and
|
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•
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Note 17. “Commitments and Contingencies — Commitments — Investment Commitments” and “— Contingencies — Guarantees”.
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Recent Accounting Developments
Information regarding recent accounting developments and their impact on Blackstone can be found in Note 2. “Summary of Significant Accounting Policies” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing.
Interbank Offered Rates Transition
Certain jurisdictions are currently reforming or phasing out their Interbank Offered Rates (“IBORs”), including, without limitation, the London Interbank Offered Rates, Euro Interbank Offered Rate, Tokyo Interbank Offered Rate, Hong Kong Interbank Offered Rate and Singapore Interbank Offered Rate. The timing of the anticipated reforms or phase-outs vary by jurisdiction, with most of the reforms or phase-outs currently scheduled to take effect at the end of calendar year 2021. Blackstone is evaluating the operational impact of such changes on existing transactions and contractual arrangements and managing transition efforts. See “Part I. Item 1A. Risk Factors — Risks Related to Our Business — Interest rates on our and our portfolio companies’ outstanding financial instruments might be subject to change based on regulatory developments, which could adversely affect our revenue, expenses and the value of those financial instruments.” in our Annual Report on Form
10-K
for the year ended December 31, 2019.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our predominant exposure to market risk is related to our role as general partner or investment adviser to the Blackstone Funds and the sensitivities to movements in the fair value of their investments, including the effect on management fees, performance revenues and investment income.
Effect on Fund Management Fees
Our management fees are based on (a) third parties’ capital commitments to a Blackstone Fund, (b) third parties’ capital invested in a Blackstone Fund or (c) the net asset value, or NAV, of a Blackstone Fund, as described in our Condensed Consolidated Financial Statements. Management fees will only be directly affected by short-term changes in market conditions to the extent they are based on NAV or represent permanent impairments of value. These management fees will be increased (or reduced) in direct proportion to the effect of changes in the fair value of our investments in the related funds. The proportion of our management fees that are based on NAV is dependent on the number and types of Blackstone Funds in existence and the current stage of each fund’s life cycle. For the nine months ended September 30, 2020 and September 30, 2019, the percentages of our fund management fees based on the NAV of the applicable funds or separately managed accounts, were as follows:
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Nine Months Ended
September 30,
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Fund Management Fees Based on the NAV of the Applicable Funds or Separately Managed Accounts
|
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|
33
|
%
|
|
|
36
|
%
|
The Blackstone Funds hold investments which are reported at fair value. Based on the fair value as of September 30, 2020 and September 30, 2019, we estimate that a 10% decline in fair value of the investments would result in the following declines in Management Fees, Performance Revenues, Net of Related Compensation Expense and Investment Income:
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10% Decline in Fair Value of the Investments
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|
$
|
179,501
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|
|
$
|
1,736,616
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|
$
|
168,377
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|
|
$
|
155,685
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|
|
$
|
1,612,040
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|
|
$
|
172,619
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|
(a)
|
Represents the annualized effect of the 10% decline.
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(b)
|
Represents the reporting date effect of the 10% decline.
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Total Assets Under Management, excluding undrawn capital commitments and the amount of capital raised for our CLOs, by segment, and the percentage amount classified as Level III investments as defined within the fair value standards of GAAP, are as follows:
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|
Total Assets Under Management,
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Excluding Undrawn Capital
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|
Commitments and the Amount of
|
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|
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|
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|
$
|
124,838,469
|
|
|
|
90
|
%
|
|
|
|
$
|
90,823,435
|
|
|
|
74
|
%
|
|
|
|
$
|
74,517,525
|
|
|
|
12
|
%
|
|
|
|
$
|
75,515,310
|
|
|
|
31
|
%
|
The fair value of our investments and securities can vary significantly based on a number of factors that take into consideration the diversity of the Blackstone Funds’ investment portfolio and on a number of factors and inputs such as similar transactions, financial metrics, and industry comparatives, among others. See “Part I. Item 1A. Risk Factors” in our Annual Report on
Form 10-K
for the year ended December 31, 2019. Also see “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Fair Value”. We believe these fair value amounts should be utilized with caution as our intent and strategy is to hold investments and securities until prevailing market conditions are beneficial for investment sales.
Investors in our carry funds (and certain other of our funds) make capital commitments to those funds that we are entitled to call from those investors at any time during prescribed periods. We depend on investors fulfilling their commitments when we call capital from them in order for those funds to consummate investments and otherwise pay their related obligations when due, including management fees. We have not had investors fail to honor capital calls to any meaningful extent and any investor that did not fund a capital call would be subject to having a significant amount of its existing investment forfeited in that fund; however, if investors were to fail to satisfy a significant amount of capital calls for any particular fund or funds, those funds could be materially and adversely affected.
The Blackstone Funds hold investments that are denominated in
non-U.S.
dollar currencies that may be affected by movements in the rate of exchange between the U.S. dollar and
non-U.S.
dollar currencies. Additionally, a portion of our management fees are denominated in
non-U.S.
dollar currencies. We estimate that as of September 30, 2020 and September 30, 2019, a 10% decline in the rate of exchange of all foreign currencies against the U.S. dollar would result in the following declines in Management Fees, Performance Revenues, Net of Related Compensation Expense and Investment Income:
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|
10% Decline in the Rate of Exchange of All Foreign Currencies Against the U.S. Dollar
|
|
$
|
42,598
|
|
|
$
|
681,985
|
|
|
$
|
49,338
|
|
|
$
|
19,941
|
|
|
$
|
413,625
|
|
|
$
|
37,458
|
|
|
(a)
|
Represents the annualized effect of the 10% decline.
|
|
(b)
|
Represents the reporting date effect of the 10% decline.
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Blackstone may have debt obligations payable that accrue interest at variable rates. Interest rate changes may therefore affect the amount of our interest payments, future earnings and cash flows. Based on our debt obligations payable as of September 30, 2020 and September 30, 2019, we estimate that interest expense relating to variable rates would increase on an annual basis, in the event interest rates were to increase by one percentage point, as follows:
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Annualized Increase in Interest Expense Due to a One Percentage Point Increase in Interest Rates (a)
|
|
$
|
—
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|
|
$
|
—
|
|
(a) As of September 30, 2020 and 2019, Blackstone had no such debt obligations payable outstanding.
Blackstone has a diversified portfolio of liquid assets to meet the liquidity needs of various businesses. This portfolio includes cash, open-ended money market mutual funds, open-ended bond mutual funds, marketable investment securities, freestanding derivative contracts, repurchase and reverse repurchase agreements and other investments. If interest rates were to increase by one percentage point, we estimate that our annualized investment income would decrease, offset by an estimated increase in interest income on an annual basis from interest on floating rate assets, as follows:
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Annualized
Decrease in
Investment
Income
|
|
Annualized
Increase in
Interest Income
from Floating
Rate Assets
|
|
Annualized
Decrease in
Investment
Income
|
|
Annualized
Increase in
Interest Income
from Floating
Rate Assets
|
|
|
|
|
One Percentage Point Increase in Interest Rates
|
|
$
|
17,872
|
(a)
|
|
$
|
26,831
|
|
|
$
|
5,613
|
(a)
|
|
$
|
34,630
|
|
|
(a)
|
As of September 30, 2020 and 2019, this represents 0.5% and 0.2% of our portfolio of liquid assets, respectively.
|
Blackstone has U.S. dollar and
non-U.S.
dollar based interest rate derivatives whose future cash flows and present value may be affected by movement in their respective underlying yield curves. We estimate that as of September 30, 2020 and September 30, 2019, a one percentage point increase parallel shift in global yield curves would result in the following impact on Other Revenue:
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|
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|
Annualized Increase in Other Revenue Due to a One Percentage Point Increase in Interest Rates
|
|
$
|
13,782
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|
|
$
|
15,374
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|
Certain Blackstone Funds and the Investee Funds are subject to certain inherent risks through their investments.
Our portfolio of liquid assets contains certain credit risks including, but not limited to, exposure to uninsured deposits with financial institutions, unsecured corporate bonds and mortgage-backed securities. These exposures are actively monitored on a continuous basis and positions are reallocated based on changes in risk profile, market or economic conditions.
We estimate that our annualized investment income would decrease, if credit spreads were to increase by one percentage point, as follows:
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|
|
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|
|
|
Decrease in Annualized Investment Income Due to a One Percentage Point Increase in Credit Spreads (a)
|
|
$
|
68,573
|
|
|
$
|
69,439
|
|
|
(a)
|
As of September 30, 2020 and 2019, this represents 2.1% and 2.0% of our portfolio of liquid assets, respectively.
|
Certain of our entities hold derivative instruments that contain an element of risk in the event that the counterparties may be unable to meet the terms of such agreements. We minimize our risk exposure by limiting the counterparties with which we enter into contracts to banks and investment banks that meet established credit and capital guidelines. We do not expect any counterparty to default on its obligations and therefore do not expect to incur any loss due to counterparty default.
Item 4. Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives.
Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective at the reasonable assurance level to accomplish their objectives of ensuring that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
No change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during our most recent quarter, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Part II. Other Information
Item 1. Legal Proceedings
We may from time to time be involved in litigation and claims incidental to the conduct of our business. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us. See “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019. We are not currently subject to any pending legal (including judicial, regulatory, administrative or arbitration) proceedings that we expect to have a material impact on our consolidated financial statements. However, given the inherent unpredictability of these types of proceedings and the potentially large and/or indeterminate amounts that could be sought, an adverse outcome in certain matters could have a material effect on Blackstone’s financial results in any particular period.
In December 2017, a purported derivative suit (
Mayberry v. KKR & Co., L.P., et al.
) was filed in the Commonwealth of Kentucky Franklin County Circuit Court on behalf of the Kentucky Retirement System (“KRS”) by eight of its members and beneficiaries alleging various breaches of fiduciary duty and other violations of Kentucky state law in connection with KRS’s investment in three hedge funds of funds, including a fund managed by Blackstone Alternative Asset Management L.P. (“BAAM L.P.”). The suit names more than 30 defendants, including The Blackstone Group L.P.; BAAM L.P.; Stephen A. Schwarzman, as Chairman and CEO of Blackstone; and J. Tomilson Hill, as then-President and CEO of the Hedge Fund Solutions Group, Vice Chairman of Blackstone and CEO of BAAM L.P. (collectively, the “Blackstone Defendants”). Aside from the Blackstone Defendants, the action also names current and former KRS trustees and former KRS officers and various other service providers to KRS and their related persons.
The plaintiffs filed an amended complaint in January 2018. In November 2018, the Circuit Court granted one defendant’s motion to dismiss and denied all other defendants’ motions to dismiss, including those of the Blackstone Defendants. In January 2019, certain of the KRS trustee and officer defendants noticed appeals from the denial of the motions to dismiss to the Kentucky Court of Appeals, and also filed a motion to stay the Mayberry proceedings in Circuit Court pending the outcome of those appeals. In addition, several defendants, including Blackstone and BAAM L.P., filed petitions in the Kentucky Court of Appeals for a writ of prohibition against the ongoing Mayberry proceedings on the ground that the plaintiffs lack standing. In April 2019, the KRS trustee and officer defendants’ appeals were transferred to the Kentucky Supreme Court.
On April 23, 2019, the Kentucky Court of Appeals granted the Blackstone Defendants’ petition for a writ of prohibition and vacated the Circuit Court’s November 30, 2018 Opinion and Order denying the motion to dismiss for lack of standing. On April 24, 2019, the Mayberry Plaintiffs filed a notice of appeal of that order to the Kentucky Supreme Court. The Kentucky Supreme Court heard oral argument on the appeal on October 24, 2019.
On July 9, 2020, the Kentucky Supreme Court unanimously held that the plaintiffs lack constitutional standing to bring their claims and remanded the case to the Circuit Court with direction to dismiss the complaint. On July 20, 2020, the Kentucky Attorney General filed a motion to intervene and a proposed intervening complaint in the Mayberry action on behalf of the Commonwealth of Kentucky. The Blackstone Defendants filed their objection to that motion on July 30, 2020 and a decision on the motion to intervene is pending. On July 21, 2020, the Kentucky Attorney General also filed a separate action in Franklin County Circuit Court that is nearly identical to its proposed intervening complaint. In addition, on July 29, 2020, counsel for certain of the Mayberry Plaintiffs filed a motion for leave to amend their complaint, purporting to remedy the standing defects identified by the Kentucky Supreme Court. The Blackstone Defendants intend to oppose the pending motion to amend.
Blackstone continues to believe that these suits are totally without merit and intends to defend them vigorously.
For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in our subsequently filed periodic reports as such factors may be updated from time to time, all of which are accessible on the Securities and Exchange Commission’s website at www.sec.gov.
See “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Business Environment” in this report for a discussion of the conditions in the financial markets and economic conditions affecting our businesses. This discussion updates, and should be read together with, the risk factor entitled “Difficult market conditions can adversely affect our business in many ways, including by reducing the value or performance of the investments made by our investment funds and reducing the ability of our investment funds to raise or deploy capital, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition.” in our Annual Report on Form 10-K for the year ended December 31, 2019 and “The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and is adversely impacting, and may continue to adversely impact, our performance and results of operations.” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
The risks described in our Annual Report on Form 10-K, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in our subsequently filed periodic reports are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table sets forth information regarding repurchases of shares of our Class A common stock during the quarter ended September 30, 2020:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number
of Shares
Purchased
|
|
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced
|
|
Approximate Dollar
Value of Shares that
May Yet Be Purchased
Under the Program
(Dollars in Thousands) (a)
|
|
|
|
|
142,857
|
|
|
$
|
54.28
|
|
|
|
142,857
|
|
|
$
|
405,065
|
|
|
|
|
|
999,999
|
|
|
$
|
53.14
|
|
|
|
999,999
|
|
|
$
|
351,930
|
|
|
|
|
|
857,144
|
|
|
$
|
52.21
|
|
|
|
857,144
|
|
|
$
|
307,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000,000
|
|
|
|
|
|
|
|
2,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
On July 16, 2019, our board of directors authorized the repurchase of up to $1.0 billion of Class A common stock and Blackstone Holdings Partnership Units. Under the repurchase program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual numbers repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date. See “Part I. Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 14. Earnings Per Share and Stockholder’s Equity” and “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Sources and Uses of Liquidity” for further information regarding this repurchase program.
|
As permitted by our policies and procedures governing transactions in our securities by our directors, executive officers and other employees, from time to time some of these persons may establish plans or arrangements complying with Rule 10b5-1 under the Exchange Act, and similar plans and arrangements relating to our Class A common stock and Blackstone Holdings Partnership Units.
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
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|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
Fifteenth Supplemental Indenture dated as of September 29, 2020 among Blackstone Holdings Finance Co. L.L.C., The Blackstone Group Inc., Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P., Blackstone Holdings IV L.P. and The Bank of New York Mellon, as trustee (incorporated herein by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 29, 2020).
|
|
|
|
|
4.2
|
|
Form of 1.600% Senior Note due 2031 (included in Exhibit 4.1 hereto).
|
|
|
|
|
4.3
|
|
Sixteenth Supplemental Indenture dated as of September 29, 2020 among Blackstone Holdings Finance Co. L.L.C., The Blackstone Group Inc., Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P., Blackstone Holdings IV L.P. and The Bank of New York Mellon, as trustee (incorporated herein by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 29, 2020).
|
|
|
|
|
4.4
|
|
Form of 2.800% Senior Note due 2050 (included in Exhibit 4.3 hereto).
|
|
|
|
|
10.1*
|
|
Third Amended and Restated Limited Partnership Agreement of Blackstone Holdings I L.P., dated as of August 10, 2020, by and among Blackstone Holdings I/II GP L.L.C. and the limited partners of Blackstone Holdings I L.P. party thereto.
|
|
|
|
|
10.2*
|
|
Third Amended and Restated Limited Partnership Agreement of Blackstone Holdings II L.P., dated as of August 10, 2020, by and among Blackstone Holdings I/II GP L.L.C. and the limited partners of Blackstone Holdings II L.P. party thereto.
|
|
|
|
|
10.3*
|
|
Fourth Amended and Restated Limited Partnership Agreement of Blackstone Holdings III L.P., dated as of August 10, 2020, by and among Blackstone Holdings III GP L.P. and the limited partners of Blackstone Holdings III L.P. party thereto.
|
|
|
|
|
10.4*
|
|
Fourth Amended and Restated Limited Partnership Agreement of Blackstone Holdings IV L.P., dated as of August 10, 2020, by and among Blackstone Holdings IV GP L.P. and the limited partners of Blackstone Holdings IV L.P. party thereto.
|
|
|
|
|
|
10.5*
|
|
Third Amended and Restated Limited Partnership Agreement of Blackstone Holdings AI L.P., dated as of August 10, 2020, by and among Blackstone Holdings I/II GP L.L.C. and the limited partners of Blackstone Holdings AI L.P. party thereto.
|
|
|
|
|
10.6+*
|
|
Amended and Restated Agreement of Limited Partnership, of Strategic Partners Fund Solutions Associates – NC Real Asset Opportunities, L.P., dated as of September 30, 2014.
|
|
|
|
|
10.7+*
|
|
Amended and Restated Limited Partnership Agreement of Strategic Partners Fund Solutions Associates Real Estate VI L.P., dated as of April 8, 2015.
|
|
|
|
|
10.8+*
|
|
Amended and Restated Limited Partnership Agreement of Strategic Partners Fund Solutions Associates Real Estate VII L.P., dated November 4, 2020, and effective as of December 13, 2018.
|
|
|
|
|
10.9+*
|
|
Amended and Restated Limited Partnership Agreement of Strategic Partners Fund Solutions Associates Infrastructure III L.P., dated November 4, 2020, and effective as of December 24, 2019.
|
|
|
|
|
10.10+*
|
|
Amended and Restated Agreement of Limited Partnership of Strategic Partners Fund Solutions Associates RA II L.P., dated November 4, 2020, and effective as of April 3, 2017.
|
|
|
|
|
10.11+*
|
|
Amended and Restated Limited Partnership Agreement of Strategic Partners Fund Solutions Associates VI L.P., dated as of December 19, 2013.
|
|
|
|
|
10.12+*
|
|
Amended and Restated Limited Partnership Agreement of Strategic Partners Fund Solutions Associates VII L.P., dated as of February 12, 2016.
|
|
|
|
|
10.13+*
|
|
Amended and Restated Limited Partnership Agreement of Strategic Partners Fund Solutions Associates VIII L.P., dated November 4, 2020, and effective as of December 21, 2018.
|
|
|
|
|
10.14+*
|
|
Amended and Restated Limited Partnership Agreement of Strategic Partners Fund Solutions Associates DE L.P., dated November 4, 2020, and effective as of February 26, 2018.
|
|
|
|
|
10.15+*
|
|
Amended and Restated Limited Partnership Agreement of Blackstone CEMA II GP L.P., dated as of November 4, 2020.
|
|
|
|
|
10.16+*
|
|
Amended and Restated Limited Partnership Agreement of BREDS IV L.P., dated as of November 4, 2020, and effective as of April 3, 2020.
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10.17+*
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Amended and Restated Limited Partnership Agreement of BXLS V GP L.P., dated as of November 4, 2020, and effective as of December 31, 2019.
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31.1*
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Certification of the Chief Executive Officer pursuant to Rule 13a-14(a).
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31.2*
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Certification of the Chief Financial Officer pursuant to Rule 13a-14(a).
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32.1*
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Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
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32.2*
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Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
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101.INS*
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
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101.SCH*
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Inline XBRL Taxonomy Extension Schema Document.
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101.CAL*
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Inline XBRL Taxonomy Extension Calculation Linkbase Document.
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101.DEF*
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Inline XBRL Taxonomy Extension Definition Linkbase Document.
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101.LAB*
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Inline XBRL Taxonomy Extension Label Linkbase Document.
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101.PRE*
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Inline XBRL Taxonomy Extension Presentation Linkbase Document.
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104.
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
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+
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Management contract or compensatory plan or arrangement in which directors or executive officers are eligible to participate.
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The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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The Blackstone Group Inc.
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Name:
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Michael S. Chae
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Title:
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Chief Financial Officer
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(Principal Financial Officer and
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Authorized Signatory)
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Exhibit 10.1
Execution Version
THIRD AMENDED AND RESTATED LIMITED
PARTNERSHIP AGREEMENT
OF
BLACKSTONE HOLDINGS I L.P.
Dated as of August 10, 2020
THE PARTNERSHIP UNITS OF BLACKSTONE HOLDINGS I L.P.
HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAWS OF ANY STATE, PROVINCE OR ANY OTHER APPLICABLE SECURITIES LAWS AND ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH LAWS. SUCH UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OR PROVINCE, AND ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE UNITS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE
WITH SUCH LAWS AND THIS LIMITED PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.
Table of Contents
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Page
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ARTICLE I
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DEFINITIONS
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SECTION 1.01.
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Definitions
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2
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ARTICLE II
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FORMATION, TERM, PURPOSE AND POWERS
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SECTION 2.01.
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Formation
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11
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SECTION 2.02.
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Name
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11
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SECTION 2.03.
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Term
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11
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SECTION 2.04.
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Offices
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12
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SECTION 2.05.
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Agent for Service of Process
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12
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SECTION 2.06.
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Business Purpose
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12
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SECTION 2.07.
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Powers of the Partnership
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12
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SECTION 2.08.
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Partners; Admission of New Partners
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12
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SECTION 2.09.
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Withdrawal
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12
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ARTICLE III
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MANAGEMENT
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SECTION 3.01.
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General Partner
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12
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SECTION 3.02.
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Compensation
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13
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SECTION 3.03.
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Expenses
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13
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SECTION 3.04.
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Officers
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13
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SECTION 3.05.
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Authority of Partners
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14
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SECTION 3.06.
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Action by Written Consent or Ratification
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14
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ARTICLE IV
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DISTRIBUTIONS
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SECTION 4.01.
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Distributions
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14
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SECTION 4.02.
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Liquidation Distribution
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15
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SECTION 4.03.
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Limitations on Distribution
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15
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SECTION 4.04.
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Other Distributions
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15
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SECTION 4.05.
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Administration Fee
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15
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ARTICLE V
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CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
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TAX ALLOCATIONS; TAX MATTERS
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SECTION 5.01.
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Initial Capital Contributions
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16
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SECTION 5.02.
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No Additional Capital Contributions
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16
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i
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SECTION 5.03.
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Capital Accounts
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16
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SECTION 5.04.
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Allocations of Profits and Losses
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16
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SECTION 5.05.
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Special Allocations
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17
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SECTION 5.06.
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Tax Allocations
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18
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SECTION 5.07.
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Tax Advances
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18
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SECTION 5.08.
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Tax Matters
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19
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SECTION 5.09.
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Other Allocation Provisions
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19
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ARTICLE VI
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BOOKS AND RECORDS; REPORTS
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SECTION 6.01.
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Books and Records
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20
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ARTICLE VII
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PARTNERSHIP UNITS
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SECTION 7.01.
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Units
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20
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SECTION 7.02.
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Register
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21
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SECTION 7.03.
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Registered Partners
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21
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ARTICLE VIII
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VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS
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SECTION 8.01.
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Vesting of Initial Unvested Units
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21
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SECTION 8.02.
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Forfeiture of Units Held by Initial Limited Partners
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22
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SECTION 8.03.
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Limited Partner Transfers
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23
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SECTION 8.04.
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Minimum Retained Ownership Requirement
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24
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SECTION 8.05.
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Mandatory Exchanges
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25
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SECTION 8.06.
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Encumbrances
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25
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SECTION 8.07.
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Further Restrictions
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25
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SECTION 8.08.
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Rights of Assignees
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26
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SECTION 8.09.
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Admissions, Withdrawals and Removals
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26
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SECTION 8.10.
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Admission of Assignees as Substitute Limited Partners
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26
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SECTION 8.11.
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Withdrawal and Removal of Limited Partners
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27
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ARTICLE IX
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DISSOLUTION, LIQUIDATION AND TERMINATION
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SECTION 9.01.
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No Dissolution
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27
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SECTION 9.02.
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Events Causing Dissolution
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27
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SECTION 9.03.
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Distribution upon Dissolution
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28
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SECTION 9.04.
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Time for Liquidation
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28
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SECTION 9.05.
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Termination
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28
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SECTION 9.06.
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Claims of the Partners
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28
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SECTION 9.07.
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Survival of Certain Provisions
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29
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ii
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ARTICLE X
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LIABILITY AND INDEMNIFICATION
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SECTION 10.01.
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Liability of Partners
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29
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SECTION 10.02.
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Indemnification
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30
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ARTICLE XI
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MISCELLANEOUS
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SECTION 11.01.
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Severability
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32
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SECTION 11.02.
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Notices
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32
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SECTION 11.03.
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Cumulative Remedies
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33
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SECTION 11.04.
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Binding Effect
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33
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SECTION 11.05.
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Interpretation
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33
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SECTION 11.06.
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Counterparts
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33
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SECTION 11.07.
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Further Assurances
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33
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SECTION 11.08.
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Entire Agreement
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33
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SECTION 11.09.
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Governing Law
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33
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SECTION 11.10.
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Submission to Jurisdiction; Waiver of Jury Trial
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33
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SECTION 11.11.
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Expenses
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35
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SECTION 11.12.
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Amendments and Waivers
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35
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SECTION 11.13.
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No Third Party Beneficiaries
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36
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SECTION 11.14.
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Headings
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36
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SECTION 11.15.
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Construction
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36
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SECTION 11.16.
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Power of Attorney
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36
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SECTION 11.17.
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Letter Agreements; Schedules
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37
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SECTION 11.18.
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Partnership Status
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37
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iii
THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
BLACKSTONE HOLDINGS
I L.P.
This THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (this “Agreement”) of Blackstone Holdings
I L.P. (the “Partnership”) is made as of the 10th day of August, 2020, by and among Blackstone Holdings I/II GP L.L.C., a limited liability company formed under the laws
of the State of Delaware, as general partner, and the Limited Partners (as defined herein) of the Partnership.
WHEREAS, the Partnership
was formed as a limited partnership pursuant to the Act, by the filing of a Certificate of Limited Partnership (as amended from time to time, the “Certificate”) with the Office of the Secretary of State of the State of Delaware
and the execution of the Limited Partnership Agreement of the Partnership dated as of May 18, 2007 (the “Original Agreement”);
WHEREAS, the Original Agreement was amended and restated by the Amended and Restated Limited Partnership Agreement of the Partnership dated as
of June 18, 2007, as amended by Amendment No. 1 thereto, dated as of November 3, 2009 (as so amended, the “First Amended and Restated Agreement”); and
WHEREAS, the First Amended and Restated Agreement was amended and restated by the Second Amended and Restated Limited Partnership Agreement of
the Partnership dated as of July 1, 2019 (the “Second Amended and Restated Agreement”);
WHEREAS, pursuant to
Section 11.12 of the Second Amended and Restated Agreement, the amendments set forth in this Agreement require only the consent of the General Partner and no consent or approval of any Limited Partner is required;
WHEREAS, the Limited Partners holding not less than a majority of the Vested Percentage Interests of the Units have also consented to amending
the Second Amended and Restated Agreement in the manner and as more fully set forth herein; and
WHEREAS, the parties to this Agreement
now wish to amend and restate the Second Amended and Restated Agreement in its entirety as more fully set forth below.
NOW, THEREFORE, in
consideration of the mutual promises and agreements herein made and intending to be legally bound hereby, the parties hereto agree to amend and restate the Second Amended and Restated Agreement in its entirety to read as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01.
Definitions. Capitalized terms used herein without definition have the following meanings (such meanings being equally applicable to both the singular and plural form of the terms defined):
“Act” means, the Delaware Revised Uniform Limited Partnership Act, 6 Del. C.
Section 17-101, et seq., as it may be amended from time to time.
“Additional Credit
Amount” has the meaning set forth in Section 4.01(b)(ii).
“Adjusted Capital Account Balance” means, with
respect to each Partner, the balance in such Partner’s Capital Account adjusted by (i) taking into account the adjustments, allocations and distributions described in U.S. Treasury Regulations Sections
1.704-1(b)(2)(ii)(c) (4), (5) and (6); and (ii) by adding to such balance such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, determined pursuant to
Regulations Sections 1.704-2(g) and 1.704-2(i)(5), any amounts such Partner is obligated to restore pursuant to any provision of this Agreement or by applicable
Law. The foregoing definition of Adjusted Capital Account Balance is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Administration Fee” has the meaning set forth in Section 4.05.
“Affiliate” means, with respect to a specified Person, any other Person that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person.
“Agreement” has the
meaning set forth in the preamble of this Agreement.
“Amended Tax Amount” has the meaning set forth in
Section 4.01(b)(ii).
“Assignee” has the meaning set forth in Section 8.08.
“Assumed Tax Rate” means the highest effective marginal combined U.S. federal, state and local income tax rate for a Fiscal
Year prescribed for an individual or corporate resident in New York, New York (taking into account (a) the nondeductibility of expenses subject to the limitation described in Section 67(a) of the Code and (b) the character (e.g., long-term or short-term capital gain or ordinary or exempt income) of the applicable income, but not taking into account the deductibility of state and local income taxes for
U.S. federal income tax purposes). For the avoidance of doubt, the Assumed Tax Rate will be the same for all Partners.
“Available
Cash” means, with respect to any fiscal period, the amount of cash on hand which the General Partner, in its reasonable discretion, deems available for distribution to the Partners, taking into account all debts, liabilities and obligations
of the Partnership then due and amounts which the General Partner, in its reasonable discretion, deems necessary to expend or retain for working capital or to place into reserves for customary and usual claims with respect to the Partnership’s
operations.
2
“Blackstone Holdings Partnerships” means each of the Partnership, Blackstone
Holdings AI L.P., a Delaware limited partnership, Blackstone Holdings II L.P., a Delaware limited partnership, Blackstone Holdings III L.P., a Québec société en commandite and Blackstone Holdings IV L.P., a Québec
société en commandite.
“Capital Account” means the separate capital account maintained for each Partner in
accordance with Section 5.03 hereof.
“Capital Contribution” means, with respect to any Partner, the aggregate
amount of money contributed to the Partnership and the Carrying Value of any property (other than money), net of any liabilities assumed by the Partnership upon contribution or to which such property is subject, contributed to the Partnership
pursuant to Article V.
“Carrying Value” means, with respect to any Partnership asset, the asset’s adjusted
basis for U.S. federal income tax purposes, except that the initial carrying value of assets contributed to the Partnership shall be their respective gross fair market values on the date of contribution as determined by the General Partner, and the
Carrying Values of all Partnership assets shall be adjusted to equal their respective fair market values, in accordance with the rules set forth in United States Treasury
Regulation Section 1.704-1(b)(2)(iv)(f), except as otherwise provided herein, as of: (a) the date of the acquisition of any additional Partnership Interest by any new or existing Partner in
exchange for more than a de minimis Capital Contribution; (b) the date of the distribution of more than a de minimis amount of Partnership assets to a Partner; (c) the date a Partnership Interest is relinquished to the Partnership; or
(d) any other date specified in the United States Treasury Regulations; provided, however, that adjustments pursuant to clauses (a), (b) (c) and (d) above shall be made only if such adjustments are deemed necessary or
appropriate by the General Partner to reflect the relative economic interests of the Partners. The Carrying Value of any Partnership asset distributed to any Partner shall be adjusted immediately before such distribution to equal its fair market
value. In the case of any asset that has a Carrying Value that differs from its adjusted tax basis, Carrying Value shall be adjusted by the amount of depreciation calculated for purposes of the definition of “Profits (Losses)” rather than
the amount of depreciation determined for U.S. federal income tax purposes, and depreciation shall be calculated by reference to Carrying Value rather than tax basis once Carrying Value differs from tax basis.
“Category 1 Limited Partner” means each of the Limited Partners identified in the books and records of the Partnership as a
Category 1 Limited Partner.
“Category 2 Limited Partner” means each of the Limited Partners identified in the books and
records of the Partnership as a Category 2 Limited Partner.
“Category 3 Limited Partner” means each of the Limited
Partners identified in the books and records of the Partnership as a Category 3 Limited Partner.
“Category 4 Limited
Partner” means each of the Limited Partners identified in the books and records of the Partnership as a Category 4 Limited Partner.
3
“Category 5 Limited Partner” means each of the Limited Partners identified in
the books and records of the Partnership as a Category 5 Limited Partner.
“Category 6 Limited Partner” means the Limited
Partner identified in the books and records of the Partnership as a Category 6 Limited Partner.
“Cause” means the
occurrence or existence of any of the following as determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by an Employed Limited Partner of any provision of this Agreement or the Non-Competition Agreement, (x) any material breach of any rules or regulations applicable to senior managing directors or employees, as applicable, of the Blackstone Holdings Partnerships, their subsidiaries
and their affiliated entities, (y) an Employed Limited Partner’s deliberate failure to perform his or her duties to the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, or (z) an Employed Limited
Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities in any material way (provided that, in the case of any of the
foregoing clauses (w), (x), (y) and (z), the General Partner has given the Employed Limited Partner written notice (a “Notice of Breach”) within fifteen days after the General Partner becomes aware of such action and such
Employed Limited Partner fails to cure such breach, failure to perform or conduct or behavior within fifteen days after receipt by the Employed Limited Partner of such Notice of Breach from the General Partner (or such longer period, not to exceed
an additional fifteen days, as shall be reasonably required for such cure, provided, that such Employed Limited Partner is diligently pursuing such cure), (iii) any act of fraud, misappropriation, dishonesty, embezzlement or similar
conduct against the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, or (iv) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony or crime (including any
misdemeanor charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of competent jurisdiction, by a U.S. federal or state or comparable non-U.S. regulatory body or by a self-regulatory body having authority with respect to U.S. federal or state or comparable non-U.S.
securities laws, rules or regulations of the securities industry, that such Employed Limited Partner individually has violated any U.S. federal or state or comparable non-U.S. securities laws or any rules or
regulations thereunder, or any rules of any such self-regulatory body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on
(A) such Employed Limited Partner’s ability to function as a senior managing director or employee, as applicable, of the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, taking into account the services
required of Employed Limited Partner and the nature of the business of the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities or (B) the business of the Blackstone Holdings Partnerships, their subsidiaries and
their affiliated entities.
“Certificate” has the meaning set forth in the preamble of this Agreement.
“Change of Control” means the occurrence of any Person, other than Blackstone Group Management L.L.C. or a Person approved by
Blackstone Group Management L.L.C., becoming the Class C Stockholder.
4
“Charity” means any organization that is organized and operated for a purpose
described in Section 170(c) of the Code (determined without reference to Code Section 170(c)(2)(A)) and described in Code Sections 2055(a) and 2522.
“Class” means the classes of Units into which the interests in the Partnership may be classified or divided from time to time
pursuant to the provisions of this Agreement.
“Class A Common Stock” means the Class A common
stock, par value $0.00001 per share, of the Issuer.
“Class A Units” means the Units of partnership
interest in the Partnership designated as the “Class A Units” herein and having the rights pertaining thereto as are set forth in this Agreement.
“Class C Stockholder” means Blackstone Group Management L.L.C., a Delaware limited liability company, and
any successor or permitted assign that owns the Class C common stock, par value $0.00001 per share, of the Issuer at the applicable time.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Contingencies” has the meaning set forth in Section 9.03(b).
“Control” (including the terms “Controlled by” and “under common Control with”) means the
possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without
limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
“Credit Amount” has the meaning set forth in Section 4.01(b)(ii) of this Agreement.
“Creditable Non-U.S. Tax” means a
non-U.S. tax paid or accrued for United States federal income tax purposes by the Partnership, in either case to the extent that such tax is eligible for credit under Section 901(a) of the Code. A non-U.S. tax is a Creditable Non-U.S. Tax for these purposes without regard to whether a partner receiving an allocation of such
non-U.S. tax elects to claim a credit for such amount. This definition is intended to be consistent with the definition of “Creditable Non-U.S. Tax” in
Temporary Treasury Regulations Section 1.704-1T (b)(4)(xi)(b), and shall be interpreted consistently therewith.
“Delaware Arbitration Act” has the meaning set forth in Section 11.10(d) of this Agreement.
“Disability” means, as to any Person, such Person’s inability to perform in all material respects his or her duties and
responsibilities to the General Partner, or any of its Affiliates, by reason of a physical or mental disability or infirmity which inability is reasonably expected to be permanent and has continued (i) for a period of six consecutive months or
(ii) such shorter period as the General Partner may reasonably determine in good faith.
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“Disabling Event” means the General Partner ceasing to be the general partner of
the Partnership pursuant to Section 17-402 of the Act.
“Dissolution Event”
has the meaning set forth in Section 9.02 of this Agreement.
“Employed Limited Partner” means any Limited Partner
that is employed by or providing services to the Class C Stockholder, the Issuer, the General Partner, the Partnership or any of its subsidiaries at the time in question, and any Personal Planning Vehicle of such Limited Partner.
“Encumbrance” means any mortgage, claim, lien, encumbrance, conditional sales or other title retention agreement, right of
first refusal, preemptive right, pledge, option, charge, security interest or other similar interest, easement, judgment or imperfection of title of any nature whatsoever.
“ERISA” means The Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
“Exchange Agreement” means the Fourth Amended and Restated Exchange Agreement, dated as of the date of the
Second Amended and Restated Agreement, among the Issuer, the Blackstone Holdings Partnerships and the limited partners of the Blackstone Holdings Partnerships from time to time, as it may be amended, supplemented or restated from time to time.
“Exchange Transaction” means an exchange of Units for shares of Class A Common Stock pursuant to, and in accordance
with, the Exchange Agreement or, if the Issuer and the exchanging Limited Partner shall mutually agree, a Transfer of Units to the Issuer, the Partnership or any of their subsidiaries for other consideration.
“Final Tax Amount” has the meaning set forth in Section 4.01(b)(ii).
“First Amended and Restated Agreement” has the meaning set forth in the preamble hereto.
“Fiscal Year” means (i) the period commencing upon the formation of the Partnership and ending on
December 31, 2007 or (ii) any subsequent twelve-month period commencing on January 1 and ending on December 31.
“GAAP” means accounting principles generally accepted in the United States of America as in effect from time to time.
“General Partner” means Blackstone Holdings I/II GP L.L.C., a limited liability company formed under the laws of the State of
Delaware or any successor general partner admitted to the Partnership in accordance with the terms of this Agreement.
“Government
Official” means a person who holds a high-level, full-time position with a national, supranational, U.S. federal, U.S. state or City of New York government.
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“Incapacity” means, with respect to any Person, the bankruptcy, dissolution,
termination, entry of an order of incompetence, or the insanity, permanent disability or death of such Person.
“Initial Limited
Partner” means each Limited Partner as of the date of the First Amended and Restated Agreement.
“Initial Units”
means, with respect to any Initial Limited Partner, the aggregate number of Class A Units owned by such Initial Limited Partner as of the date of the First Amended and Restated Agreement.
“Initial Unvested Units” means, with respect to any Initial Limited Partner, the aggregate number of Unvested Units owned by
such Initial Limited Partner as of the date of the First Amended and Restated Agreement.
“Initial Vested Units” means,
with respect to any Initial Limited Partner, the aggregate number of Vested Units listed in the books and records of the Partnership as of the date of the First Amended and Restated Agreement, and any additional Initial Units that have vested from
time to time in accordance with Section 8.01 of this Agreement.
“Intangible Assets” means the assets of the
Partnership that are described in Section 197(d) of the Code.
“Intangible Asset Gain” means the net gain recognized
by the Partnership with respect to the Partnership’s Intangible Assets in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership, including but not limited to net capital gain realized in
connection with an adjustment to the Carrying Value of Partnership assets; provided, however, that any such gain shall constitute “Intangible Asset Gain” only to the extent that any such gain exceeds losses previously recognized in an
actual or hypothetical sale of Intangible Assets.
“IPO” means the initial public offering and sale of common units
representing limited partner interests of The Blackstone Group L.P., as contemplated by The Blackstone Group L.P.’s Registration Statement on Form S-1 (File
No. 333-141504).
“Issuer” means The Blackstone Group Inc., a corporation
incorporated under the laws of the State of Delaware, or any successor thereto.
“Last Reported Sale Price” of the
Class A Common Stock on any date means:
(a) the closing sale price per share on the New York Stock Exchange on that date (or, if no
closing sale price is reported, the last reported sale price);
(b) if the Class A Common Stock is not listed for trading on the New
York Stock Exchange, the closing sale price (or, if no closing sale price is reported, the last reported sale price) as reported on that date in composite transactions for the principal national securities exchange registered pursuant to
Section 6(g) of the Exchange Act on which the Class A Common Stock is listed;
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(c) if the Class A Common Stock is not so listed on a national securities exchange, the last
quoted bid price for the Class A Common Stock on that date in the over-the-counter market as reported by Pink Sheets LLC or a similar organization; or
(d) if the Class A Common Stock is not so quoted by Pink Sheets LLC or a similar organization, the average of the midpoint of the last bid
and ask prices for the Class A Common Stock on that date from a nationally recognized independent investment banking firm selected by the Issuer for this purpose.
“Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order
issued or promulgated by any national, supranational, state, federal, provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdiction over the Partnership or any Partner, as the case may
be.
“Limited Partner” means each of the Persons from time to time listed as a limited partner in the books and records
of the Partnership, and, for purposes of Sections 8.01, 8.02, 8.03, 8.04, 8.05 and 8.06, any Personal Planning Vehicle of such Limited Partner.
“Liquidation Agent” has the meaning set forth in Section 9.03 of this Agreement.
“Minimum Retained Ownership Requirement” has the meaning set forth in Section 8.04(a).
“Net Taxable Income” has the meaning set forth in Section 4.01(b)(i).
“Non-Competition Agreement” means collectively, the Senior Managing Director Non-Competition and Non-Solicitation Agreement and Contracting Employees Non-Competition and
Non-Solicitation Agreement dated on or about the date of the First Amended and Restated Agreement by certain Employed Limited Partners with each of the Blackstone Holdings Partnerships and any agreement with
respect to similar subject matter entered into from time to time by an Employed Limited Partner, as amended from time to time.
“Nonrecourse Deductions” has the meaning set forth in Treasury Regulations
Section 1.704-2(b). The amount of Nonrecourse Deductions of the Partnership for a fiscal year equals the net increase, if any, in the amount of Partnership Minimum Gain of the Partnership during that
fiscal year, determined according to the provisions of Treasury Regulations Section 1.704-2(c).
“Original Agreement” has the meaning set forth in the preamble of this Agreement.
“Partners” means, at any time, each person listed as a Partner (including the General Partner) on the books and records of
the Partnership, in each case for so long as he, she or it remains a partner of the Partnership as provided hereunder.
“Partnership” has the meaning set forth in the preamble of this Agreement.
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“Partnership Minimum Gain” has the meaning set forth in Treasury Regulations
Sections 1.704-2(b)(2) and 1.704-2(d).
“Partnership Representative” has the meaning set forth in Section 5.08.
“Partner Nonrecourse Debt Minimum Gain” means an amount with respect to each partner nonrecourse debt (as defined in Treasury
Regulations Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such partner nonrecourse debt were treated as a nonrecourse liability (as defined in Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with Treasury Regulations Section 1.704-2(i)(3).
“Partner Nonrecourse Deductions” has the meaning ascribed to the term “partner nonrecourse deductions” set
forth in Treasury Regulations Section 1.704-2(i)(2).
“Person” means any
individual, corporation, partnership, limited partnership, limited liability company, limited company, joint venture, trust, unincorporated or governmental organization or any agency or political subdivision thereof.
“Personal Planning Vehicle” means, in respect of any Limited Partner, any estate, family limited liability company, family
limited partnership, or inter vivos or testamentary trust that holds Units that is designated as a Personal Planning Vehicle of such Limited Partner in the books and records of the Partnership.
“Profits” and “Losses” means, for each Fiscal Year or other period, the taxable income or loss of the
Partnership, or particular items thereof, determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (a) all items of income, gain, loss or deduction
allocated pursuant to Section 5.05 shall not be taken into account in computing such taxable income or loss; (b) any income of the Partnership that is exempt from U.S. federal income taxation and not otherwise taken into account in
computing Profits and Losses shall be added to such taxable income or loss; (c) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, any gain or loss resulting from a disposition of such
asset shall be calculated with reference to such Carrying Value; (d) upon an adjustment to the Carrying Value (other than an adjustment in respect of depreciation) of any asset, pursuant to the definition of Carrying Value, the amount of the
adjustment shall be included as gain or loss in computing such taxable income or loss; (e) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, the amount of depreciation, amortization or
cost recovery deductions with respect to such asset for purposes of determining Profits and Losses, if any, shall be an amount which bears the same ratio to such Carrying Value as the U.S. federal income tax depreciation, amortization or other cost
recovery deductions bears to such adjusted tax basis (provided that if the U.S. federal income tax depreciation, amortization or other cost recovery deduction is zero, the General Partner may use any reasonable method for purposes of
determining depreciation, amortization or other cost recovery deductions in calculating Profits and Losses); and (f) except for items in (a) above, any expenditures of the Partnership not deductible in computing taxable income or loss, not
properly capitalizable and not otherwise taken into account in computing Profits and Losses pursuant to this definition shall be treated as deductible items.
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“Restricted Period,” with respect to each Limited Partner that is or was an
Employed Limited Partner, has the meaning set forth in such Limited Partner’s Non-Competition Agreement.
“Restrictive Covenant,” with respect to each Limited Partner that is or was an Employed Limited Partner, has the meaning set
forth in such Limited Partner’s Non-Competition Agreement.
“Retirement”
(including the term “Retire”) means retirement of an Employed Limited Partner from his or her employment with the Class C Stockholder, the Issuer, the General Partner, the Partnership or any of their subsidiaries after
(a) he or she has reached age 65 and has at least five full years of service, or (b) (i) his or her age plus years of service totals at least 65, (ii) he or she has reached age 50 and (iii) he or she has had a minimum of
five years of service; provided, however, that no Employed Limited Partner will be eligible to Retire prior to June 30, 2010.
“Second Amended and Restated Agreement” has the meaning set forth in the preamble hereto.
“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Similar Law” means any law or regulation that could cause the underlying assets of the Partnership to be treated as
assets of the Limited Partner by virtue of its limited partner interest in the Partnership and thereby subject the Partnership and the General Partner (or other persons responsible for the investment and operation of the Partnership’s assets)
to laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the Code.
“Tax Advances” has the meaning set forth in Section 5.07.
“Tax Amount” has the meaning set forth in Section 4.01(b)(i).
“Tax Distributions” has the meaning set forth in Section 4.01(b)(i).
“Tax Matters Partner” has the meaning set forth in Section 5.08.
“Total Percentage Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Units (vested
or unvested) then owned by such Partner by the number of Units then owned by all Partners.
“Transfer” means, in respect
of any Unit, property or other asset, any sale, assignment, transfer, distribution or other disposition thereof, whether voluntarily or by operation of Law, including, without limitation, the exchange of any Unit for any other security.
“Transferee” means any Person that is a transferee of a Partner’s interest in the Partnership, or part thereof.
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“Treasury Regulations” means the income tax regulations, including temporary
regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“Units” means the Class A Units and any other Class of Units authorized in accordance with this Agreement, which
shall constitute interests in the Partnership as provided in this Agreement and under the Act, entitling the holders thereof to the relative rights, title and interests in the profits, losses, deductions and credits of the Partnership at any
particular time as set forth in this Agreement, and any and all other benefits to which a holder thereof may be entitled as a Partner as provided in this Agreement, together with the obligations of such Partner to comply with all terms and
provisions of this Agreement.
“Unvested Units” means those Units listed as unvested Units in the books and records of
the Partnership, as the same may be amended from time to time in accordance with this Agreement.
“Vested Percentage
Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Vested Units then owned by such Partner by the number of Vested Units then owned by all Partners.
“Vested Units” means those Units listed as vested Units in the books and records of the Partnership, as the same may be
amended from time to time in accordance with this Agreement.
ARTICLE II
FORMATION, TERM, PURPOSE AND POWERS
SECTION 2.01. Formation. The Partnership was formed as a limited partnership under the provisions of the Act by the filing on
May 18, 2007 of the Certificate as provided in the preamble of this Agreement and the execution of the Original Agreement. If requested by the General Partner, the Limited Partners shall promptly execute all certificates and other
documents consistent with the terms of this Agreement necessary for the General Partner to accomplish all filing, recording, publishing and other acts as may be appropriate to comply with all requirements for (a) the formation and operation of
a limited partnership under the laws of the State of Delaware, (b) if the General Partner deems it advisable, the operation of the Partnership as a limited partnership, or partnership in which the Limited Partners have limited liability, in all
jurisdictions where the Partnership proposes to operate and (c) all other filings required to be made by the Partnership.
SECTION 2.02. Name. The name of the Partnership shall be, and the business of the Partnership shall be conducted under the name
of, Blackstone Holdings I L.P.
SECTION 2.03. Term. The term of the Partnership commenced on the date of the filing of the
Certificate, and the term shall continue until the dissolution of the Partnership in accordance with Article IX. The existence of the Partnership shall continue until cancellation of the Certificate in the manner required by the Act.
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SECTION 2.04. Offices. The Partnership may have offices at such places either within
or outside the State of Delaware as the General Partner from time to time may select.
SECTION 2.05. Agent for Service of
Process. The Partnership’s registered agent for service of process in the State of Delaware shall be as set forth in the Certificate, as the same may be amended by the General Partner from time to time.
SECTION 2.06. Business Purpose. The Partnership was formed for the object and purpose of, and the nature and character of the
business to be conducted by the Partnership is, engaging in any lawful act or activity for which limited partnerships may be formed under the Act.
SECTION 2.07. Powers of the Partnership. Subject to the limitations set forth in this Agreement, the Partnership will possess and
may exercise all of the powers and privileges granted to it by the Act including, without limitation, the ownership and operation of the assets contributed to the Partnership by the Partners, by any other Law or this Agreement, together with all
powers incidental thereto, so far as such powers are necessary or convenient to the conduct, promotion or attainment of the purpose of the Partnership set forth in Section 2.06.
SECTION 2.08. Partners; Admission of New Partners. Each of the Persons listed in the books and records of the Partnership, as the
same may be amended from time to time in accordance with this Agreement, by virtue of the execution of this Agreement, are admitted, or hereby continue, as applicable, as Partners of the Partnership. The rights, duties and liabilities of the
Partners shall be as provided in the Act, except as is otherwise expressly provided herein, and the Partners consent to the variation of such rights, duties and liabilities as provided herein. A Person may be admitted from time to time as a new
Partner in accordance with Section 8.10; provided, however, that each new Partner shall execute and deliver to the General Partner an appropriate supplement to this Agreement pursuant to which the new Partner agrees to be bound by the terms and
conditions of the Agreement, as it may be amended from time to time.
SECTION 2.09. Withdrawal. No Partner shall have the
right to withdraw as a Partner of the Partnership other than following the Transfer of all Units owned by such Partner in accordance with Article VIII; provided, however, that a new General Partner or substitute General Partner may be
admitted to the Partnership in accordance with Section 8.09.
ARTICLE III
MANAGEMENT
SECTION 3.01.
General Partner. (a) The business, property and affairs of the Partnership shall be managed under the sole, absolute and exclusive direction of the General Partner, which may from time to time delegate authority to officers or to others
to act on behalf of the Partnership.
(b) Without limiting the foregoing provisions of this Section 3.01, the General Partner shall
have the general power to manage or cause the management of the Partnership (which may be delegated to officers of the Partnership), including, without limitation, the following powers:
(i) to develop and prepare a business plan each year which will set forth the operating goals and plans for the Partnership;
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(ii) to execute and deliver or to authorize the execution and delivery of contracts, deeds,
leases, licenses, instruments of transfer and other documents on behalf of the Partnership;
(iii) the making of any expenditures, the
lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness and the incurring of any other obligations;
(iv) to employ, retain, consult with and dismiss personnel;
(v) to establish and enforce limits of authority and internal controls with respect to all personnel and functions;
(vi) to engage attorneys, consultants and accountants for the Partnership;
(vii) to develop or cause to be developed accounting procedures for the maintenance of the Partnership’s books of account; and
(viii) to do all such other acts as shall be authorized in this Agreement or by the Partners in writing from time to time.
SECTION 3.02. Compensation. The General Partner shall not be entitled to any compensation for services rendered to the Partnership
in its capacity as General Partner.
SECTION 3.03. Expenses. The Partnership shall bear and/or reimburse the General Partner
for any expenses incurred by the General Partner in connection with serving as the general partner of the Partnership.
SECTION 3.04.
Officers. Subject to the direction and oversight of the General Partner, the day-to-day administration of the business of the Partnership may be carried out by
employees and agents who may be designated as officers by the General Partner, with titles including but not limited to “chief executive officer,” “chief financial officer,” “chief legal officer,” “chief
administrative officer,” “chief compliance officer,” “principal accounting officer,” “chairman,” “senior chairman,” “vice chairman,” “president,” “vice president,”
“treasurer,” “assistant treasurer,” “secretary,” “assistant secretary,” “general manager,” “senior managing director,” “managing director” and “director,” as and to the
extent authorized by the General Partner. The officers of the Partnership shall have such titles and powers and perform such duties as shall be determined from time to time by the General Partner and otherwise as shall customarily pertain to such
offices. Any number of offices may be held by the same person. All employees, agents and officers shall be subject to the supervision and direction of the General Partner and may be removed from such office by the General Partner and the authority,
duties or responsibilities of any employee, agent or officer of the Partnership may be suspended by the General Partner from time to time, in each case in the sole discretion of the General Partner. The General Partner shall not cease to be a
general partner of the Partnership as a result of the delegation of any duties hereunder. No officer of the Partnership, in its capacity as such, shall be considered a general partner of the Partnership by agreement, estoppel, as a result of the
performance of its duties hereunder or otherwise.
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SECTION 3.05. Authority of Partners. No Limited Partner, in its capacity as such,
shall participate in or have any control over the business of the Partnership. Except as expressly provided herein, the Units do not confer any rights upon the Limited Partners to participate in the affairs of the Partnership described in this
Agreement. Except as expressly provided herein, the Limited Partners shall have no right to vote on any matter involving the Partnership, including with respect to any merger, consolidation, combination or conversion of the Partnership. The conduct,
control and management of the Partnership shall be vested exclusively in the General Partner. In all matters relating to or arising out of the conduct of the operation of the Partnership, the decision of the General Partner shall be the decision of
the Partnership. Except as required or permitted by Law, or expressly provided in the ultimate sentence of this Section 3.05 or by separate agreement with the Partnership, no Partner who is not also a General Partner (and acting in such
capacity) shall take any part in the management or control of the operation or business of the Partnership in its capacity as a Partner, nor shall any Partner who is not also a General Partner (and acting in such capacity) have any right, authority
or power to act for or on behalf of or bind the Partnership in his or its capacity as a Partner in any respect or assume any obligation or responsibility of the Partnership or of any other Partner. Notwithstanding the foregoing, the Partnership may
employ one or more Partners from time to time, and such Partners, in their capacity as employees of the Partnership (and not, for clarity, in their capacity as Limited Partners of the Partnership), may take part in the control and management of the
business of the Partnership to the extent such authority and power to act for or on behalf of the Partnership has been delegated to them by the General Partner.
SECTION 3.06. Action by Written Consent or Ratification. Any action required or permitted to be taken by the Partners pursuant to
this Agreement shall be taken if all Partners whose consent or ratification is required consent thereto or provide a ratification in writing.
ARTICLE IV
DISTRIBUTIONS
SECTION 4.01. Distributions. (a) The General Partner, in its sole discretion, may authorize distributions by the Partnership
to the Partners, which distributions shall be made pro rata in accordance with the Partners’ respective Total Percentage Interests.
(b) (i) In addition to the foregoing, if the General Partner reasonably determines that the taxable income of the Partnership for a Fiscal
Year will give rise to taxable income for the Partners (“Net Taxable Income”), the General Partner shall cause the Partnership to distribute Available Cash in respect of income tax liabilities (the “Tax
Distributions”) to the extent that other distributions made by the Partnership for such year were otherwise insufficient to cover such tax liabilities, provided that distributions pursuant to Section 4.04 and allocations pursuant to
Section 5.04 related to such distributions shall not be taken into account for purposes of this Section 4.01(b). The Tax Distributions payable with respect to any Fiscal Year shall be computed based upon the General Partner’s estimate
of the allocable Net Taxable Income in accordance with Article V, multiplied by the Assumed Tax Rate (the “Tax Amount”). For purposes of computing the Tax Amount, the effect of any benefit under Section 743(b) of the
Code will be ignored.
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(ii) Tax Distributions shall be calculated and paid no later than one day prior to each
quarterly due date for the payment by corporations on a calendar year of estimated taxes under the Code in the following manner (A) for the first quarterly period, 25% of the Tax Amount, (B) for the second quarterly period, 50% of the Tax
Amount, less the prior Tax Distributions for the Fiscal Year, (C) for the third quarterly period, 75% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year and (D) for the fourth quarterly period, 100% of the Tax Amount,
less the prior Tax Distributions for the Fiscal Year. Following each Fiscal Year, and no later than one day prior to the due date for the payment by corporations of income taxes for such Fiscal Year, the General Partner shall make an amended
calculation of the Tax Amount for such Fiscal Year (the “Amended Tax Amount”), and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to the extent that the Amended Tax Amount so calculated
exceeds the cumulative Tax Distributions previously made by the Partnership in respect of such Fiscal Year. If the Amended Tax Amount is less than the cumulative Tax Distributions previously made by the Partnership in respect of the relevant Fiscal
Year, then the difference (the “Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Within 30 days following the date on which the Partnership files a
tax return on Form 1065, the General Partner shall make a final calculation of the Tax Amount of such Fiscal Year (the “Final Tax Amount”) and shall cause the Partnership to distribute a Tax Distribution, out of Available
Cash, to the extent that the Final Tax Amount so calculated exceeds the Amended Tax Amount. If the Final Tax Amount is less than the Amended Tax Amount in respect of the relevant Fiscal Year, then the difference (“Additional Credit
Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Any Credit Amount and Additional Credit Amount applied against future Tax Distributions shall be treated as an amount
actually distributed pursuant to this Section 4.01(b) for purposes of the computations herein.
SECTION 4.02. Liquidation
Distribution. Distributions made upon dissolution of the Partnership shall be made as provided in Section 9.03.
SECTION 4.03. Limitations on Distribution. Notwithstanding any provision to the contrary contained in this Agreement, the General
Partner shall not make a Partnership distribution to any Partner if such distribution would violate Section 17-607 of the Act or other applicable Law.
SECTION 4.04. Other Distributions. Distributions to each Partner pursuant to a Senior Managing Director Agreement or a Founding
Member Agreement shall constitute interests in the Partnership for U.S. federal income tax purposes.
SECTION 4.05. Administration
Fee. Notwithstanding anything to the contrary herein, unless the General Partner shall determine otherwise, commencing with the distribution in respect of the quarterly period ending June 30, 2020, an amount shall be withheld from each
quarterly distribution payable to a Limited Partner other than an Employed Limited Partner that, together with analogous administration fee amounts withheld from distributions payable to such
15
Limited Partner by the other Blackstone Holdings Partnerships in respect of the same quarterly period, equals the Administration Fee (as defined below). The “Administration
Fee” shall mean an amount per Class A Unit initially equal to $0.03125, which amount may increase or decrease by such percentage as the General Partner may determine from time to time in its sole discretion. Amounts withheld as an
Administration Fee shall be treated as if distributed to the applicable Limited Partner.
ARTICLE V
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
TAX ALLOCATIONS; TAX MATTERS
SECTION 5.01. Initial Capital Contributions. (a) The Partners have made, on or prior to the date hereof, Capital
Contributions and, in exchange, the Partnership has issued to the Partners the number of Class A Units as specified in the books and records of the Partnership.
(b) Upon issuance by the Partnership of Class A Units to the Partners pursuant to the First Amended and Restated Agreement, the interests
in the Partnership as provided in the First Amended and Restated Agreement and under the Act held by Blackstone Holdings I/II Limited Partner L.L.C. were cancelled.
SECTION 5.02. No Additional Capital Contributions. Except as otherwise provided in this Article V, no Partner shall be
required to make additional Capital Contributions to the Partnership without the consent of such Partner or permitted to make additional capital contributions to the Partnership without the consent of the General Partner.
SECTION 5.03. Capital Accounts. A separate capital account (a “Capital Account”) shall be established and
maintained for each Partner in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv). The Capital Account of each Partner shall be credited with such Partner’s Capital
Contributions, if any, all Profits allocated to such Partner pursuant to Section 5.04 and any items of income or gain which are specially allocated pursuant to Section 5.05; and shall be debited with all Losses allocated to such Partner
pursuant to Section 5.04, any items of loss or deduction of the Partnership specially allocated to such Partner pursuant to Section 5.05, and all cash and the Carrying Value of any property (net of liabilities assumed by such Partner and
the liabilities to which such property is subject) distributed by the Partnership to such Partner. Any references in any section of this Agreement to the Capital Account of a Partner shall be deemed to refer to such Capital Account as the same may
be credited or debited from time to time as set forth above. In the event of any transfer of any interest in the Partnership in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the
extent it relates to the transferred interest.
SECTION 5.04. Allocations of Profits and Losses. Except as otherwise provided
in this Agreement, Profits and Losses (and, to the extent necessary, individual items of income, gain or loss or deduction of the Partnership) shall be allocated in a manner such that the Capital Account of each Partner after giving effect to the
Special Allocations set forth in Section 5.05 is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made pursuant to Article IV if the Partnership were dissolved, its affairs wound up and its assets
sold for cash
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equal to their Carrying Value, all Partnership liabilities were satisfied (limited with respect to each non-recourse liability to the Carrying Value of the
assets securing such liability) and the net assets of the Partnership were distributed to the Partners pursuant to this Agreement, minus (ii) such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain, computed immediately prior to the hypothetical sale of assets. For purposes of this Article V, each Unvested Unit shall be treated as a Vested Unit. Notwithstanding the foregoing, the General Partner shall make such adjustments to Capital
Accounts as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a partner’s interest in the Partnership.
SECTION 5.05. Special Allocations. Notwithstanding any other provision in this Article V:
(a) Minimum Gain Chargeback. If there is a net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain (determined
in accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i)) during any Partnership taxable year, the Partners shall be specially
allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to their respective shares of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i) (5). The items to be so allocated shall be determined in accordance with Treasury Regulations
Section 1.704-2(f). This Section 5.05(a) is intended to comply with the minimum gain chargeback requirements in such Treasury Regulations Sections and shall be interpreted consistently therewith;
including that no chargeback shall be required to the extent of the exceptions provided in Treasury Regulations Sections 1.704-2(f) and 1.704-2(i) (4).
(b) Qualified Income Offset. If any Partner unexpectedly receives any adjustments, allocations, or distributions described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the deficit
balance in such Partner’s Adjusted Capital Account Balance created by such adjustments, allocations or distributions as promptly as possible; provided that an allocation pursuant to this Section 5.05(b) shall be made only to the
extent that a Partner would have a deficit Adjusted Capital Account Balance in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if this Section 5.05(b) were not in this Agreement.
This Section 5.05(b) is intended to comply with the “qualified income offset” requirement of the Code and shall be interpreted consistently therewith.
(c) Gross Income Allocation. If any Partner has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of
(i) the amount such Partner is obligated to restore, if any, pursuant to any provision of this Agreement, and (ii) the amount such Partner is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as
possible; provided that an allocation pursuant to this Section 5.05(c) shall be made only if and to the extent that a Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this
Article V have been tentatively made as if Section 5.05(b) and this Section 5.05(c) were not in this Agreement.
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(d) Nonrecourse Deductions. Nonrecourse Deductions shall be allocated to the Partners in
accordance with their respective Total Percentage Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for
any taxable period shall be allocated to the Partner who bears the economic risk of loss with respect to the liability to which such Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(j).
(f) Creditable Non-U.S.
Taxes. Creditable Non-U.S. Taxes for any taxable period attributable to the Partnership, or an entity owned directly or indirectly by the Partnership, shall be allocated to the Partners in proportion to
the partners’ distributive shares of income (including income allocated pursuant to Section 704(c) of the Code) to which the Creditable Non-U.S. Tax relates (under principles of Treasury Regulations Section 1.904-6). The provisions of this Section 5.05(f) are intended to comply with the provisions of Temporary Treasury Regulations
Section 1.704-1T(b)(4)(xi), and shall be interpreted consistently therewith.
(g)
Ameliorative Allocations. Any special allocations of income or gain pursuant to Sections 5.05(b) or 5.05(c) hereof shall be taken into account in computing subsequent allocations pursuant to Section 5.04 and this
Section 5.05(g), so that the net amount of any items so allocated and all other items allocated to each Partner shall, to the extent possible, be equal to the net amount that would have been allocated to each Partner if such allocations
pursuant to Sections 5.05(b) or 5.05(c) had not occurred.
SECTION 5.06. Tax Allocations. For income tax purposes, each
item of income, gain, loss and deduction of the Partnership shall be allocated among the Partners in the same manner as the corresponding items of Profits and Losses and specially allocated items are allocated for Capital Account purposes;
provided that in the case of any asset the Carrying Value of which differs from its adjusted tax basis for U.S. federal income tax purposes, income, gain, loss and deduction with respect to such asset shall be allocated solely for income tax
purposes in accordance with the principles of Sections 704(b) and (c) of the Code (in any manner determined by the General Partner and permitted by the Code and Treasury Regulations) so as to take account of the difference between Carrying
Value and adjusted basis of such asset. Notwithstanding the foregoing, the General Partner shall make such allocations for tax purposes as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a
partner’s interest in the Partnership.
SECTION 5.07. Tax Advances. To the extent the General Partner reasonably believes
that the Partnership is required by law to withhold or to make tax payments on behalf of or with respect to any Partner or the Partnership is subjected to tax itself by reason of the status of any Partner (“Tax Advances”), the
General Partner may withhold such amounts and make such tax payments as so required. All Tax Advances made on behalf of a Partner shall be repaid by reducing the amount of the current or next succeeding distribution or distributions which would
otherwise have been made to such Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Partner. For
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all purposes of this Agreement such Partner shall be treated as having received the amount of the distribution that is equal to the Tax Advance. Each Partner hereby agrees to indemnify and hold
harmless the Partnership and the other Partners from and against any liability (including, without limitation, any liability for taxes, penalties, additions to tax or interest other than any penalties, additions to tax or interest imposed as a
result of the Partnership’s failure to withhold or make a tax payment on behalf of such Partner which withholding or payment is required pursuant to applicable Law but only to the extent amounts sufficient to pay such taxes were not timely
distributed to the Partner pursuant to Section 4.01(b)) with respect to income attributable to or distributions or other payments to such Partner.
SECTION 5.08. Tax Matters. For tax years beginning before December 31, 2017, the General Partner shall be or shall designate
the “tax matters partner” within the meaning of Section 6231(a)(7) of the Code (as in effect prior to 2018) (the “Tax Matters Partner”) and, for the years beginning after December 31, 2017, the General Partner shall be
or shall designate the “partnership representative” within the meaning of Section 6223 of the Code (the “Partnership Representative”). The Partnership shall file as a partnership for federal, state, provincial and local
income tax purposes, except where otherwise required by Law. All elections required or permitted to be made by the Partnership, and all other tax decisions and determinations relating to federal, state, provincial or local tax matters of the
Partnership, shall be made by the Tax Matters Partner or the Partnership Representative, as applicable, in consultation with the Partnership’s attorneys and/or accountants. Tax audits, controversies and litigations shall be conducted under the
direction of the Tax Matters Partner or the Partnership Representative, as applicable. The Tax Matters Partner or the Partnership Representative, as applicable, shall keep the other Partners reasonably informed as to any tax actions, examinations or
proceedings relating to the Partnership and shall submit to the other Partners, for their review and comment, any settlement or compromise offer with respect to any disputed item of income, gain, loss, deduction or credit of the Partnership. As soon
as reasonably practicable after the end of each Fiscal Year, the Partnership shall send to each Partner a copy of U.S. Internal Revenue Service Schedule K-1, and any comparable statements required by
applicable U.S. state or local income tax Law as a result of the Partnership’s activities or investments, with respect to such Fiscal Year. The Partnership also shall provide the Partners with such other information as may be reasonably
requested for purposes of allowing the Partners to prepare and file their own tax returns.
SECTION 5.09. Other Allocation
Provisions. Certain of the foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations
Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such regulations. Sections 5.03, 5.04 and 5.05 may be amended at any time by the General Partner if necessary, in
the opinion of tax counsel to the Partnership, to comply with such regulations or any applicable Law, so long as any such amendment does not materially change the relative economic interests of the Partners.
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ARTICLE VI
BOOKS AND RECORDS; REPORTS
SECTION 6.01. Books and Records. (a) At all times during the continuance of the Partnership, the Partnership shall prepare
and maintain separate books of account for the Partnership in accordance with GAAP.
(b) Except as limited by Section 6.01(c), each
Limited Partner shall have the right to receive, for a purpose reasonably related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable written demand stating the purpose of such demand and at such Limited
Partner’s own expense:
(i) a copy of the Certificate and this Agreement and all amendments thereto, together with a copy of the
executed copies of all powers of attorney pursuant to which the Certificate and this Agreement and all amendments thereto have been executed; and
(ii) promptly after their becoming available, copies of the Partnership’s federal, state and local income tax returns and reports, if
any, for the three most recent years.
(c) The General Partner may keep confidential from the Limited Partners, for such period of time as
the General Partner determines in its sole discretion, (i) any information that the General Partner reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the General Partner believes is
not in the best interests of the Partnership, could damage the Partnership or its business or that the Partnership is required by law or by agreement with any third party to keep confidential.
ARTICLE VII
PARTNERSHIP UNITS
SECTION 7.01. Units. Interests in the Partnership shall be represented by Units. The Units initially are comprised of one
Class: Class A Units. The General Partner may establish, from time to time in accordance with such procedures as the General Partner shall determine from time to time, other Classes, one or more series of any such Classes, or other Partnership
securities with such designations, preferences, rights, powers and duties (which may be senior to existing Classes and series of Units or other Partnership securities), as shall be determined by the General Partner, including (i) the right to
share in Profits and Losses or items thereof; (ii) the right to share in Partnership distributions; (iii) the rights upon dissolution and liquidation of the Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may or shall be required to redeem the Units or other Partnership securities (including sinking fund provisions); (v) whether such Unit or other Partnership security is issued with the privilege of conversion or exchange and, if so,
the terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which each Unit or other Partnership security will be issued, evidenced by certificates and assigned or transferred; (vii) the method for
determining the Total Percentage Interest as to such Units or other Partnership securities; and
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(viii) the right, if any, of the holder of each such Unit or other Partnership security to vote on Partnership matters, including matters relating to the relative designations, preferences,
rights, powers and duties of such Units or other Partnership securities. Except as expressly provided in this Agreement to the contrary, any reference to “Units” shall include the Class A Units and any other Classes that may be
established in accordance with this Agreement. All Units of a particular Class shall have identical rights in all respects as all other Units of such Class, except in each case as otherwise specified in this Agreement.
SECTION 7.02. Register. The register of the Partnership shall be the definitive record of ownership of each Unit and all relevant
information with respect to each Partner. Unless the General Partner shall determine otherwise, Units shall be uncertificated and recorded in the books and records of the Partnership.
SECTION 7.03. Registered Partners. The Partnership shall be entitled to recognize the exclusive right of a Person registered on
its records as the owner of Units for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the Act or other applicable Law.
ARTICLE VIII
VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS
SECTION 8.01. Vesting of Initial Unvested Units. (a) Subject to Section 8.02 and except as set forth in
Section 8.01(b) or as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, the Initial Unvested Units shall vest and shall thereafter be Vested
Units for all purposes of this Agreement as follows:
(i) with respect to each Category 1 Limited Partner, 100% of the Initial Unvested
Units owned by such Limited Partner shall vest and thereafter be Vested Units for all purposes of this Agreement in equal 25% installments on each of the first, second, third and fourth anniversary dates of the consummation of the IPO;
(ii) with respect to each Category 3 Limited Partner and Category 4 Limited Partner, 100% of the Initial Unvested Units owned by such Limited
Partner shall vest and thereafter be Vested Units for all purposes of this Agreement in equal 20% installments on each of the first, second, third, fourth and fifth anniversary dates of the consummation of the IPO; and
(iii) with respect to each Category 5 Limited Partner, 100% of the Initial Unvested Units owned by such Limited Partner shall vest and
thereafter be Vested Units for all purposes of this Agreement in equal 12.5% installments on each of the first, second, third, fourth, fifth, sixth, seventh and eighth anniversary dates of the consummation of the IPO.
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(b) Notwithstanding Section 8.01(a), if earlier, the Initial Unvested Units shall vest and
shall thereafter be Vested Units for all purposes of this Agreement as follows: (i) upon the Retirement of an Employed Limited Partner, 50% of the Initial Unvested Units owned by such Limited Partner that are Unvested Units at that time shall
vest and thereafter be Vested Units for all purposes of this Agreement; (ii) upon the death or Disability of an Employed Limited Partner, 100% of the Initial Unvested Units owned by such Limited Partner that are Unvested Units at that time
shall vest and thereafter be Vested Units for all purposes of this Agreement; and (iii) upon the occurrence of a Change of Control, 100% of the Initial Unvested Units that are Unvested Units at that time shall vest and thereafter be Vested
Units for all purposes of this Agreement.
(c) In addition, the General Partner in its sole discretion may authorize the earlier vesting of
all or a portion of the Initial Unvested Units owned by any one or more Limited Partners at any time and from time to time, and in such event, such Initial Unvested Units shall vest and thereafter be Vested Units for all purposes of this Agreement.
Any such determination in the General Partner’s discretion in respect of Initial Unvested Units shall be final and binding. Such determinations need not be uniform and may be made selectively among Limited Partners, whether or not such Limited
Partners are similarly situated, and shall not constitute the breach of any duty hereunder or otherwise existing at law, in equity or otherwise.
(d) Upon the vesting of any Initial Unvested Units in accordance with this Section 8.01, the General Partner shall modify the books and
records of the Partnership to reflect such vesting.
SECTION 8.02. Forfeiture of Units Held by Initial Limited Partners.
(a) Other than as set forth in Section 8.01(b) and except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, if a Limited Partner
ceases to be an Employed Limited Partner for any reason, such Limited Partner’s Unvested Units shall be immediately forfeited without any consideration, and such Limited Partner shall cease to own or have any rights with respect to such
Unvested Units; provided, however, that if a Limited Partner ceases to be an Employed Limited Partner in order to become a Government Official, such Limited Partner’s Unvested Units shall continue to vest as set forth in
Section 8.01 until such Limited Partner ceases to be a Government Official for any reason, at which point such Limited Partner’s Unvested Units shall be immediately forfeited without any consideration (unless such Limited Partner becomes
an Employed Limited Partner immediately after such Limited Partner ceases to be such a Government Official, in which case such Limited Partner’s Unvested Units shall continue to vest as set forth in Section 8.01) and such Limited Partner
shall cease to own or have any rights with respect to such Unvested Units. Immediately upon the forfeiture of any Initial Unvested Units, such Unvested Units that have been so forfeited shall be cancelled.
(b) Except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and
records of the Partnership, (i) if a Limited Partner that is or was at any time an Employed Limited Partner breaches any Restrictive Covenant to which such Limited Partner is subject or (ii) if an Employed Limited Partner is terminated for
Cause, the Initial Units held by such Limited Partner or such Limited Partner’s Personal Planning Vehicle at that time (whether or not vested) shall be immediately forfeited without any consideration, and such Limited Partner shall cease to own
or have any rights with respect to such Initial Units; provided, however, that Initial Units held by a Personal Planning Vehicle of a Category 1 Limited Partner created prior to the date of the First Amended and Restated Agreement are not
subject to forfeiture. Immediately upon the forfeiture of any Initial Units, such Initial Units that have been so forfeited shall be cancelled.
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(c) Upon the forfeiture of any Unvested Units in accordance with this Section 8.02, the
General Partner shall modify the books and records of the Partnership to reflect such forfeiture.
SECTION 8.03. Limited Partner
Transfers. (a) Except as provided in clauses (b), (c), (d) and (f) of this Section 8.03, no Limited Partner or Assignee thereof may Transfer (including by exchanging in an Exchange Transaction) all or any portion of its Units or
other interest in the Partnership (or beneficial interest therein) without the prior consent of the General Partner, which consent may be given or withheld, or made subject to such conditions (including, without limitation, the receipt of such legal
opinions and other documents that the General Partner may require) as are determined by the General Partner, in each case in the General Partner’s sole discretion. Any such determination in the General Partner’s discretion in respect of
Units shall be final and binding. Such determinations need not be uniform and may be made selectively among Limited Partners, whether or not such Limited Partners are similarly situated, and shall not constitute the breach of any duty hereunder or
otherwise existing at law, in equity or otherwise. Any purported Transfer of Units that is not in accordance with, or subsequently violates, this Agreement shall be, to the fullest extent permitted by law, null and void.
(b) Notwithstanding clause (a) above, except as provided in or pursuant to clauses (b), (c), (d) and (f) below and subject to
Section 8.04, each Limited Partner may exchange in an Exchange Transaction up to 100% of the Initial Vested Units owned by such Limited Partner at any time and from time to time; provided that Unvested Units may not be Transferred at
any time.
(c) Notwithstanding clauses (a) or (b) above, with the prior consent of the General Partner, (i) the Category 1
Limited Partners may make one or more gratuitous Transfers (including by exchanging in an Exchange Transaction) to any Charity at any time and from time to time up to a number of Initial Vested Units owned by such Limited Partners that is equal to
the quotient of $250 million divided by the offering price per common unit in the IPO for the purpose of making gratuitous transfers to any Charity.
(d) Notwithstanding clauses (a) or (b) above, if earlier: (i) upon the death or Disability of an Employed Limited Partner, such
Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; (ii) other than with respect to a Category 1 Limited Partner, following an Employed Limited
Partner’s termination of employment and after the earlier to occur of (A) one year from the date of termination of employment or (B) the expiration of the longest applicable Restricted Period with respect to such Employed Limited
Partner, such Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; (iii) following Mr. Stephen A. Schwarzman’s termination of
employment, any Category 1 Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; and (iv) upon the occurrence of a Change of Control, any Limited
Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; provided that in each case Unvested Units may not by Transferred at any time.
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(e) [Reserved]
(f) Notwithstanding clauses (a), (b), (c) and (d) above, a Personal Planning Vehicle of a Limited Partner may Transfer Class A Units
(i) to the donor thereof or to the spouse of the donor thereof; (ii) if the Personal Planning Vehicle is a grantor retained annuity trust and the trustee(s) of such grantor retained annuity trust is obligated to make one or more
distributions to the donor of the grantor retained annuity trust, the estate of the donor of the grantor retained annuity trust, the spouse of the donor of the grantor retained annuity trust or the estate of the spouse of the donor of the grantor
retained annuity trust, to any such Persons; or (iii) upon the death of such Limited Partner, to the spouse of such Limited Partner or a trust for which a deduction under Section 2056 or 2056A (or any successor provisions) of the Code may
be sought.
SECTION 8.04. Minimum Retained Ownership Requirement. (a) Other than the Category 1 Limited Partners, the
Category 2 Limited Partners and the Category 6 Limited Partner and unless otherwise permitted by the General Partner in its sole discretion, each Limited Partner that is or was at any time an Employed Limited Partner other than a Personal Planning
Vehicle shall, until the first anniversary of such Employed Limited Partner’s termination of employment, continue to hold (and may not Transfer) at least 25% of all Initial Vested Units received collectively by such Employed Limited Partner and
by any Personal Planning Vehicle of such Employed Limited Partner (the “Minimum Retained Ownership Requirement”); and provided that upon the Retirement of an Employed Limited Partner, such Limited Partner shall be
subject to a Minimum Retained Ownership Requirement of 12.5% instead of 25%. For purposes of this paragraph (a), (i) Units held by a Personal Planning Vehicle of a Limited Partner (other than the portion of the Units received by a Personal
Planning Vehicle created prior to the date of the First Amended and Restated Agreement identified in the books and records of the Partnership as “Non- Minimum Retained Ownership Requirement Units”)
shall be deemed held by such Limited Partner for purposes of calculating the number of Initial Vested Units received by such Limited Partner and (ii) any Units held by a Personal Planning Vehicle of a Limited Partner shall not be deemed to be
held by such Limited Partner for purposes of calculating whether the relevant percentage of Initial Vested Units held satisfies the Minimum Retained Ownership Requirement set forth in this Section 8.04(a).
(b) Unless otherwise approved by the General Partner in its sole discretion, each Category 1 Limited Partner other than a Personal Planning
Vehicle shall, until Mr. Stephen A. Schwarzman’s termination of employment, continue to hold (and may not Transfer) the lesser of (i) at least 25% of all Initial Vested Units received collectively by the Category 1 Limited
Partners and (ii) a number of Initial Units that is equal to the quotient of $1.5 billion divided by the Last Reported Sale Price per share of Class A Common Stock from time to time. For purposes of this paragraph (b),
(i) Units held by a Personal Planning Vehicle of a Category 1 Limited Partner (other than the portion of the Units received by a Personal Planning Vehicle created prior to the date of the First Amended and Restated Agreement identified in the
books and records of the Partnership as “Non-Minimum Retained Ownership Requirement Units”) shall be deemed held by such Category 1 Limited Partner for purposes of calculating the number
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of Initial Vested Units received by such Category 1 Limited Partner and (ii) any Units held by a Personal Planning Vehicle of a Category 1 Limited Partner shall not be deemed to be held by
such Category 1 Limited Partner for purposes of calculating whether the relevant percentage of Initial Vested Units held satisfies the Minimum Retained Ownership Requirement set forth in this Section 8.04(b).
SECTION 8.05. Mandatory Exchanges. The General Partner may in its sole discretion at any time and from time to time, without the
consent of any Limited Partner, require any Limited Partner other than an Employed Limited Partner to Transfer in an Exchange Transaction all Units held by such Limited Partner. Any such determinations by the General Partner need not be uniform and
may be made selectively among Limited Partners, whether or not such Limited Partners are similarly situated. In addition, the General Partner may, with the consent of Partners whose Vested Percentage Interests exceed 75% of the Vested Percentage
Interests of all Partners in the aggregate, require all Limited Partners to Transfer in an Exchange Transaction all Units held by them.
SECTION 8.06. Encumbrances. No Limited Partner or Assignee may create an Encumbrance with respect to all or any portion of its
Units (or any beneficial interest therein) other than Encumbrances that run in favor of the Limited Partner unless the General Partner consents in writing thereto, which consent may be given or withheld, or made subject to such conditions as are
determined by the General Partner, in the General Partner’s sole discretion. Consent of the General Partner shall be withheld until the holder of the Encumbrance acknowledges the terms and conditions of this Agreement. Any purported Encumbrance
that is not in accordance with this Agreement shall be, to the fullest extent permitted by law, null and void.
SECTION 8.07.
Further Restrictions. Notwithstanding any contrary provision in this Agreement, in no event may any Transfer of a Unit be made by any Limited Partner or Assignee if:
(a) such Transfer is made to any Person who lacks the legal right, power or capacity to own such Unit;
(b) such Transfer would require the registration of such transferred Unit or of any Class of Unit pursuant to any applicable United States
federal or state securities laws (including, without limitation, the Securities Act or the Exchange Act) or other non-U.S. securities laws (including Canadian provincial or territorial securities laws) or
would constitute a non-exempt distribution pursuant to applicable provincial or state securities laws;
(c) such Transfer would cause (i) all or any portion of the assets of the Partnership to (A) constitute “plan assets”
(under ERISA, the Code or any applicable Similar Law) of any existing or contemplated Limited Partner, or (B) be subject to the provisions of ERISA, Section 4975 of the Code or any applicable Similar Law, or (ii) the General Partner
to become a fiduciary with respect to any existing or contemplated Limited Partner, pursuant to ERISA, any applicable Similar Law, or otherwise;
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(d) to the extent requested by the General Partner, the Partnership does not receive such legal
and/or tax opinions and written instruments (including, without limitation, copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as an Assignee) that are in a form satisfactory to the General Partner,
as determined in the General Partner’s sole discretion.
SECTION 8.08. Rights of Assignees. Subject to Section 8.07,
the transferee of any permitted Transfer pursuant to this Article VIII will be an assignee only (“Assignee”), and only will receive, to the extent transferred, the distributions and allocations of income, gain, loss, deduction,
credit or similar item to which the Partner which transferred its Units would be entitled, and such Assignee will not be entitled or enabled to exercise any other rights or powers of a Partner, such other rights, and all obligations relating to, or
in connection with, such Interest remaining with the transferring Partner. The transferring Partner will remain a Partner even if it has transferred all of its Units to one or more Assignees until such time as the Assignee(s) is admitted to the
Partnership as a Partner pursuant to Section 8.10.
SECTION 8.09. Admissions, Withdrawals and Removals. (a) No
Person may be admitted to the Partnership as an additional General Partner or substitute General Partner without the prior written consent or ratification of Partners whose Vested Percentage Interests exceed 50% of the Vested Percentage Interests of
all Partners in the aggregate. A General Partner will not be entitled to Transfer all of its Units or to withdraw from being a General Partner of the Partnership unless another General Partner shall have been admitted hereunder (and not have
previously been removed or withdrawn).
(b) No Limited Partner will be removed or entitled to withdraw from being a Partner of the
Partnership except in accordance with Section 8.11 hereof.
(c) Except as otherwise provided in Article IX or the Act, no
admission, substitution, withdrawal or removal of a Partner will cause the dissolution of the Partnership. To the fullest extent permitted by law, any purported admission, withdrawal or removal that is not in accordance with this Agreement shall be
null and void.
SECTION 8.10. Admission of Assignees as Substitute Limited Partners. An Assignee will become a substitute
Limited Partner only if and when each of the following conditions is satisfied:
(a) the General Partner consents in writing to such
admission, which consent may be given or withheld, or made subject to such conditions as are determined by the General Partner, in each case in the General Partner’s sole discretion;
(b) if required by the General Partner, the General Partner receives written instruments (including, without limitation, copies of any
instruments of Transfer and such Assignee’s consent to be bound by this Agreement as a substitute Limited Partner) that are in a form satisfactory to the General Partner (as determined in its sole discretion);
(c) if required by the General Partner, the General Partner receives an opinion of counsel satisfactory to the General Partner to the effect
that such Transfer is in compliance with this Agreement and all applicable Law; and
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(d) if required by the General Partner, the parties to the Transfer, or any one of them, pays all
of the Partnership’s reasonable expenses connected with such Transfer (including, but not limited to, the reasonable legal and accounting fees of the Partnership).
SECTION 8.11. Withdrawal and Removal of Limited Partners. If a Limited Partner ceases to hold any Units, then such Limited Partner
shall withdraw from the Partnership and shall cease to be a Limited Partner and to have the power to exercise any rights or powers of a Limited Partner.
ARTICLE IX
DISSOLUTION,
LIQUIDATION AND TERMINATION
SECTION 9.01. No Dissolution. Except as required by the Act, the Partnership shall not be
dissolved by the admission of additional Partners or withdrawal of Partners in accordance with the terms of this Agreement. The Partnership may be dissolved, liquidated wound up and terminated only pursuant to the provisions of this Article IX,
and the Partners hereby irrevocably waive any and all other rights they may have to cause a dissolution of the Partnership or a sale or partition of any or all of the Partnership assets.
SECTION 9.02. Events Causing Dissolution. The Partnership shall be dissolved and its affairs shall be wound up upon the occurrence
of any of the following events (each, a “Dissolution Event”):
(a) the entry of a decree of judicial dissolution of
the Partnership under Section 17-802 of the Act upon the finding by a court of competent jurisdiction that the General Partner (i) is permanently incapable of performing its part of this Agreement,
(ii) has been guilty of conduct that is calculated to affect prejudicially the carrying on of the business of the Partnership, (iii) willfully or persistently commits a breach of this Agreement or (iv) conducts itself in a manner
relating to the Partnership or its business such that it is not reasonably practicable for the other Partners to carry on the business of the Partnership with the General Partner;
(b) any event which makes it unlawful for the business of the Partnership to be carried on by the Partners;
(c) the written consent of all Partners;
(d) any other event not inconsistent with any provision hereof causing a dissolution of the Partnership under the Act;
(e) the Incapacity or removal of the General Partner or the occurrence of a Disabling Event with respect to the General Partner;
provided that the Partnership will not be dissolved or required to be wound up in connection with any of the events specified in this Section 9.02(e) if: (i) at the time of the occurrence of such event there is at least one other
general partner of the Partnership who is hereby authorized to, and elects to, carry on the business of the Partnership; or (ii) all remaining Limited Partners consent to or ratify the continuation of the business of the Partnership and the
appointment of another general partner of
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the Partnership, effective as of the event that caused the General Partner to cease to be a general partner of the Partnership, within 120 days following the occurrence of any such event, which
consent shall be deemed (and if requested each Limited Partner shall provide a written consent or ratification) to have been given for all Limited Partners if the holders of more than 50% of the Vested Units then outstanding agree in writing to so
continue the business of the Partnership.
SECTION 9.03. Distribution upon Dissolution. Upon dissolution, the Partnership
shall not be terminated and shall continue until the winding up of the affairs of the Partnership is completed. Upon the winding up of the Partnership, the General Partner, or any other Person designated by the General Partner
(the “Liquidation Agent”), shall take full account of the assets and liabilities of the Partnership and shall, unless the General Partner determines otherwise, liquidate the assets of the Partnership as promptly as is
consistent with obtaining the fair value thereof. The proceeds of any liquidation shall be applied and distributed in the following order:
(a) First, to the satisfaction of debts and liabilities of the Partnership (including satisfaction of all indebtedness to Partners and/or their
Affiliates to the extent otherwise permitted by law) including the expenses of liquidation, and including the establishment of any reserve which the Liquidation Agent shall deem reasonably necessary for any contingent, conditional or unmatured
contractual liabilities or obligations of the Partnership (“Contingencies”). Any such reserve may be paid over by the Liquidation Agent to any
attorney-at-law, or acceptable party, as escrow agent, to be held for disbursement in payment of any Contingencies and, at the expiration of such period as shall be
deemed advisable by the Liquidation Agent for distribution of the balance in the manner hereinafter provided in this Section 9.03; and
(b) The balance, if any, to the Partners, pro rata to each of the Partners in accordance with their Total Percentage Interests.
SECTION 9.04. Time for Liquidation. A reasonable amount of time shall be allowed for the orderly liquidation of the assets of
the Partnership and the discharge of liabilities to creditors so as to enable the Liquidation Agent to minimize the losses attendant upon such liquidation.
SECTION 9.05. Termination. The Partnership shall terminate when all of the assets of the Partnership, after payment of or due
provision for all debts, liabilities and obligations of the Partnership, shall have been distributed to the holders of Units in the manner provided for in this Article IX, and the Certificate shall have been cancelled in the manner required by
the Act.
SECTION 9.06. Claims of the Partners. The Partners shall look solely to the Partnership’s assets for the return
of their Capital Contributions, and if the assets of the Partnership remaining after payment of or due provision for all debts, liabilities and obligations of the Partnership are insufficient to return such Capital Contributions, the Partners shall
have no recourse against the Partnership or any other Partner or any other Person. No Partner with a negative balance in such Partner’s Capital Account shall have any obligation to the Partnership or to the other Partners or to any creditor or
other Person to restore such negative balance during the existence of the Partnership, upon dissolution or termination of the Partnership or otherwise, except to the extent required by the Act.
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SECTION 9.07. Survival of Certain Provisions. Notwithstanding anything to the
contrary in this Agreement, the provisions of Section 10.02 and Section 11.09 shall survive the termination of the Partnership.
ARTICLE X
LIABILITY AND
INDEMNIFICATION
SECTION 10.01. Liability of Partners.
(a) No Limited Partner shall be liable for any debt, obligation or liability of the Partnership or of any other Partner or have any obligation
to restore any deficit balance in its Capital Account solely by reason of being a Partner of the Partnership, except to the extent required by the Act.
(b) This Agreement is not intended to, and does not, create or impose any fiduciary duty on any of the Partners (including without limitation,
the General Partner) hereto or on their respective Affiliates. Further, the Partners hereby waive any and all fiduciary duties that, absent such waiver, may exist at or be implied by Law or in equity, and in doing so, recognize, acknowledge and
agree that their duties and obligations to one another and to the Partnership are only as expressly set forth in this Agreement and those required by the Act.
(c) To the extent that, at law or in equity, any Partner (including without limitation, the General Partner) has duties (including fiduciary
duties) and liabilities relating thereto to the Partnership or to another Partner, the Partners (including without limitation, the General Partner) acting under this Agreement will not be liable to the Partnership or to any such other Partner for
their 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 relating thereto of any Partner (including without limitation, the General
Partner) otherwise existing at law or in equity, are agreed by the Partners to replace to that extent such other duties and liabilities of the Partners relating thereto (including without limitation, the General Partner).
(d) The General Partner may consult with legal counsel, accountants and financial or other advisors and any act or omission suffered or taken
by the General Partner on behalf of the Partnership or in furtherance of the interests of the Partnership in good faith in reliance upon and in accordance with the advice of such counsel, accountants or financial or other advisors will be full
justification for any such act or omission, and the General Partner will be fully protected in so acting or omitting to act so long as such counsel or accountants or financial or other advisors were selected with reasonable care.
(e) Notwithstanding any other provision of this Agreement or otherwise applicable provision of law or equity, whenever in this Agreement the
General Partner is permitted or required to make a decision (i) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, such General Partner shall be entitled to consider only such
interests and factors as it desires, including its own interests, and shall, to the fullest extent permitted by applicable Law, have no duty or obligation to give any consideration to any interest of or factors affecting the Partnership or the
Limited Partners, or (ii) in its “good faith” or under another expressed standard, such General Partner shall act under such express standard and shall not be subject to any other or different standards.
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SECTION 10.02. Indemnification.
(a) Indemnification. To the fullest extent permitted by law, the Partnership shall indemnify any person (and such person’s heirs,
executors or administrators) who was or is made or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding (brought in the right of the Partnership or otherwise), whether civil,
criminal, administrative or investigative, and whether formal or informal, including appeals, by reason of the fact that such person, or a person for whom such person was the legal representative, is or was the General Partner or a director or
officer of the General Partner or the Partnership or, while a director or officer of the General Partner or the Partnership, is or was serving at the request of the Partnership as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, limited liability company, nonprofit entity or other enterprise, for and against all loss and liability suffered and expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement reasonably incurred by such person or such heirs, executors or administrators in connection with such action, suit or proceeding, including appeals, if such person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the Partnership and, with respect to any alleged conduct resulting in a criminal proceeding against the person, such person had no reasonable cause to believe that such person’s conduct was unlawful.
Notwithstanding the preceding sentence, except as otherwise provided in Section 10.02(c), the Partnership shall be required to indemnify a person described in such sentence in connection with any action, suit or proceeding (or part thereof)
commenced by such person only if the commencement of such action, suit or proceeding (or part thereof) by such person was authorized by the General Partner. Any reference to an officer of the General Partner or the Partnership in this
Section 10.02 shall be deemed to refer exclusively to the Chief Executive Officer, President, Chief Operating Officer, Executive Vice Chairman, Chief Financial Officer, Chief Legal Officer, Secretary or any other officer of the Partnership
appointed pursuant to Section 3.04 hereof or, with respect to the General Partner, appointed pursuant to the equivalent organizational documents of the General Partner. The fact that any person who is or was an employee of the General Partner
or the Partnership, but not an officer thereof as described in the preceding sentence, has been given or has used any title that could be construed to suggest or imply that such person is or may be an officer of the General Partner or the
Partnership shall not result in such person being constituted as, or being deemed to be, such an officer of the General Partner or the Partnership for purposes of this Section 10.02.
(b) Advancement of Expenses. To the fullest extent permitted by law, the Partnership shall promptly pay expenses (including
attorneys’ fees) incurred by any person described in Section 10.02(a) in appearing at, participating in or defending any action, suit or proceeding in advance of the final disposition of such action, suit or proceeding, including appeals,
upon (i) presentation of an undertaking on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified under this Section 10.02 or otherwise and (ii) to the extent
determined by the General Partner in its sole discretion to be necessary or advisable, receipt by the Partnership of security or other assurances satisfactory to the General Partner in its sole discretion that such person will be able to repay
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such amount if it ultimately shall be determined that such person is not entitled to be indemnified under this Section 10.02 or otherwise. Notwithstanding the preceding sentence, except as
otherwise provided in Section 10.02(c), the Partnership shall be required to advance expenses of a person described in such sentence in connection with any action, suit or proceeding (or part thereof) commenced by such person only if the
commencement of such action, suit or proceeding (or part thereof) by such person was authorized by the General Partner.
(c) Unpaid
Claims. If a claim for indemnification (following the final disposition of such action, suit or proceeding) or advancement of expenses under this Section 10.02 is not paid in full within thirty (30) days after a written claim therefor
by any person described in Section 10.02(a) has been received by the Partnership, such person may file proceedings to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Partnership shall have the burden of proving that such person is not entitled to the requested indemnification or advancement of expenses under applicable Law.
(d) Insurance. To the fullest extent permitted by law, the Partnership may purchase and maintain insurance on behalf of any person
described in Section 10.02(a) against any liability asserted against such person, whether or not the Partnership would have the power to indemnify such person against such liability under the provisions of this Section 10.02 or otherwise.
(e) Non-Exclusivity of Rights. The provisions of this Section 10.02 shall be
applicable to all actions, claims, suits or proceedings made or commenced after the date of the First Amended and Restated Agreement, whether arising from acts or omissions to act occurring before or after its adoption. The provisions of this
Section 10.02 shall be deemed to be a contract between the Partnership and each person entitled to indemnification under this Section 10.02 (or legal representative thereof) who serves in such capacity at any time while this
Section 10.02 and the relevant provisions of applicable Law, if any, are in effect, and any amendment, modification or repeal hereof shall not affect any rights or obligations then existing with respect to any state of facts or any action, suit
or proceeding then or theretofore existing, or any action, suit or proceeding thereafter brought or threatened based in whole or in part on any such state of facts. If any provision of this Section 10.02 shall be found to be invalid or limited
in application by reason of any law or regulation, it shall not affect the validity of the remaining provisions hereof. The rights of indemnification provided in this Section 10.02 shall neither be exclusive of, nor be deemed in limitation of,
any rights to which any person may otherwise be or become entitled or permitted by contract, this Partnership Agreement or as a matter of law, both as to actions in such person’s official capacity and actions in any other capacity, it being the
policy of the Partnership that indemnification of any person whom the Partnership is obligated to indemnify pursuant to Section 10.02(a) shall be made to the fullest extent permitted by law.
For purposes of this Section 10.02, references to “other enterprises” shall include employee benefit plans; references to
“fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Partnership” shall include any service as a director, officer, employee or
agent of the Partnership which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries.
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This Section 10.02 shall not limit the right of the Partnership, to the extent and in the
manner permitted by law, to indemnify and to advance expenses to, and purchase and maintain insurance on behalf of, persons other than persons described in Section 10.02(a).
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being
enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner
materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent
of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
SECTION 11.02. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail (delivery receipt requested) or by registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.02):
(a) If to the Partnership, to:
Blackstone Holdings I L.P.
c/o
Blackstone Holdings I/II GP L.L.C.
345 Park Avenue
New York, New York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
(b) If to any Partner, to:
c/o
Blackstone Holdings I/II GP L.L.C.
345 Park Avenue
New York, New York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
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(c) If to the General Partner, to:
Blackstone Holdings I/II GP L.L.C.
345 Park Avenue
New York, New
York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
SECTION 11.03. Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right
or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by Law.
SECTION 11.04. Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the
extent permitted by this Agreement, their successors, executors, administrators, heirs, legal representatives and assigns.
SECTION 11.05. Interpretation. Throughout this Agreement, nouns, pronouns and verbs shall be construed as masculine, feminine,
neuter, singular or plural, whichever shall be applicable. Unless otherwise specified, all references herein to “Articles,” “Sections” and paragraphs shall refer to corresponding provisions of this Agreement.
SECTION 11.06. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Copies of executed
counterparts transmitted by telecopy or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 11.06.
SECTION 11.07. Further Assurances. Each Limited Partner shall perform all other acts and execute and deliver all other documents
as may be necessary or appropriate to carry out the purposes and intent of this Agreement.
SECTION 11.08. Entire Agreement.
This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
SECTION 11.09. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of
Delaware.
SECTION 11.10. Submission to Jurisdiction; Waiver of Jury Trial.
(a) Any and all disputes which cannot be settled amicably, including any ancillary claims of any party, arising out of, relating to or in
connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) shall be
finally settled by arbitration conducted by a single arbitrator in New York in accordance with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the
dispute fail to agree on the selection of an arbitrator within thirty (30) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct
the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
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(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may cause
the Partnership to bring, on behalf of the General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking
temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of paragraph (c) of this
Section 11.10 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate,
and (iii) irrevocably appoints the General Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon such agent, who shall promptly advise such Partner
of any such service of process, shall be deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY
JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 11.10, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary
judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the fora designated by this
paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties
hereby waive, to the fullest extent permitted by applicable Law, any objection which they now or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to
in the preceding paragraph of this Section 11.10 and such parties agree not to plead or claim the same.
(d) Notwithstanding any
provision of this Agreement to the contrary, this Section 11.10 shall be construed to the maximum extent possible to comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et
seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of this Section 11.10, including any rules of the International Chamber of
Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or other applicable Law, such invalidity shall not invalidate all of this Section 11.10. In that case, this Section 11.10 shall be construed so as to limit any
term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act or other applicable Law, and, in the event such term or provision cannot be so limited, this Section 11.10 shall be construed to
omit such invalid or unenforceable provision.
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SECTION 11.11. Expenses. Except as otherwise specified in this Agreement, the
Partnership shall be responsible for all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with its operation.
SECTION 11.12. Amendments and Waivers. (a) This Agreement (including the Annexes hereto) may be amended, supplemented, waived
or modified by the written consent of the General Partner; provided that any amendment that would have a material adverse effect on the rights or preferences of any Class of Units in relation to other Classes of Units must be approved by
the holders of not less than a majority of the Vested Percentage Interests of the Class affected; provided further, that the General Partner may, without the written consent of any Limited Partner or any other Person, amend,
supplement, waive or modify any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect: (i) any amendment, supplement, waiver or
modification that the General Partner determines to be necessary or appropriate in connection with the creation, authorization or issuance of any class or series of equity interest in the Partnership; (ii) the admission, substitution,
withdrawal or removal of Partners in accordance with this Agreement; (iii) a change in the name of the Partnership, the location of the principal place of business of the Partnership, the registered agent of the Partnership or the registered
office of the Partnership; (iv) any amendment, supplement, waiver or modification that the General Partner determines in its sole discretion to be necessary or appropriate to address changes in U.S. federal income tax regulations, legislation
or interpretation; (v) a change in the Fiscal Year or taxable year of the Partnership and any other changes that the General Partner determines to be necessary or appropriate as a result of a change in the Fiscal Year or taxable year of the
Partnership including a change in the dates on which distributions are to be made by the Partnership.
(b) No failure or delay by any party
in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of time specified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.
(c) The General Partner may, in its sole discretion, unilaterally amend this Agreement on or before the effective date of the final regulations
to provide for (i) the election of a safe harbor under Proposed Treasury Regulation Section 1.83-3(l) (or any similar provision) under which the fair market value of a partnership interest that
is transferred is treated as being equal to the liquidation value of that interest, (ii) an agreement by the Partnership and each of its Partners to comply with all of the requirements set forth in such regulations and Notice 2005-43 (and any other guidance provided by the Internal Revenue Service with respect to such election) with respect to all partnership interests transferred in connection with the performance of services while the
election remains effective, (iii) the allocation of items of income, gains, deductions and losses required by the final regulations similar to Proposed Treasury
Regulation Section 1.704-1(b)(4)(xii)(b) and (c), and (iv) any other related amendments.
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(d) Except as may be otherwise required by law in connection with the winding-up, liquidation, or dissolution of the Partnership, each Partner hereby irrevocably waives any and all rights that it may have to maintain an action for judicial accounting or for partition of any of the
Partnership’s property.
SECTION 11.13. No Third Party Beneficiaries. This Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their permitted assigns and successors and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity, any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement (other than pursuant to Section 10.02 hereof).
SECTION 11.14.
Headings. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision
hereof.
SECTION 11.15. Construction. Each party hereto acknowledges and agrees it has had the opportunity to draft, review
and edit the language of this Agreement and that it is the intent of the parties hereto that no presumption for or against any party arising out of drafting all or any part of this Agreement will be applied in any dispute relating to, in connection
with or involving this Agreement. Accordingly, the parties hereby waive to the fullest extent permitted by law the benefit of any rule of Law or any legal decision that would require that in cases of uncertainty, the language of a contract should be
interpreted most strongly against the party who drafted such language.
SECTION 11.16. Power of Attorney. Each Limited
Partner, by its execution hereof, hereby irrevocably makes, constitutes and appoints the General Partner as its true and lawful agent and attorney in fact, with full power of substitution and full power and authority in its name, place and stead, to
make, execute, sign, acknowledge, swear to, record and file (a) this Agreement and any amendment to this Agreement that has been adopted as herein provided; (b) the original certificate of limited partnership of the Partnership and all
amendments thereto required or permitted by law or the provisions of this Agreement; (c) all certificates and other instruments (including consents and ratifications which the Limited Partners have agreed to provide upon a matter receiving the
agreed support of Limited Partners) deemed advisable by the General Partner to carry out the provisions of this Agreement (including the provisions of Section 8.05) and Law or to permit the Partnership to become or to continue as a limited
partnership or partnership wherein the Limited Partners have limited liability in each jurisdiction where the Partnership may be doing business; (d) all instruments that the General Partner deems appropriate to reflect a change or modification
of this Agreement or the Partnership in accordance with this Agreement, including, without limitation, the admission of additional Limited Partners or substituted Limited Partners pursuant to the provisions of this Agreement; (e) all
conveyances and other instruments or papers deemed advisable by the General Partner to effect the liquidation and termination of the Partnership; and (f) all fictitious or assumed name certificates required or permitted (in light of the
Partnership’s activities) to be filed on behalf of the Partnership.
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SECTION 11.17. Letter Agreements; Schedules. The General Partner may, or may cause
the Partnership to, without the approval of any Limited Partner or other Person, enter into separate letter agreements with individual Limited Partners with respect to any matter, in each case on terms and conditions not inconsistent with this
Agreement, which have the effect of establishing rights under, or supplementing the terms of, this Agreement. The General Partner may from time to time execute and deliver to the Limited Partners schedules which set forth information contained in
the books and records of the Partnership and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever.
SECTION 11.18. Partnership Status. The parties intend to treat the Partnership as a partnership for U.S. federal income tax
purposes.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement or have caused this
Agreement to be duly executed by their respective authorized officers, in each case as of the date first above stated.
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GENERAL PARTNER:
BLACKSTONE HOLDINGS I/II GP L.L.C.
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By:
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The Blackstone Group Inc., its sole member
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By:
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/s/ John G. Finley
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Name:
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John G. Finley
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Title:
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Chief Legal Officer
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[Signature Page to Third Amended and Restated Limited Partnership Agreement of Blackstone Holdings I
L.P.]
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LIMITED PARTNERS REPRESENTING A
MAJORITY VESTED PERCENTAGE INTEREST:
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/s/ Stephen A. Schwarzman
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Stephen A. Schwarzman
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/s/ Jonathan D. Gray
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Jonathan D. Gray
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/s/ Hamilton E. James
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Hamilton E. James
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[Signature Page to Third Amended and Restated Limited Partnership Agreement of Blackstone Holdings I
L.P.]
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ALL OTHER LIMITED PARTNERS:
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All other Limited Partners now and hereafter admitted as Limited Partners of the Partnership, pursuant to powers of attorney now and hereafter executed in favor of, and granted and delivered to the General Partner
without execution hereof pursuant to Section 11.16 of the Second Amended and Restated Agreement.
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By:
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BLACKSTONE HOLDINGS I/II GP L.L.C.
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By:
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The Blackstone Group Inc., its sole member
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By:
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/s/ John G. Finley
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Name: John G. Finley
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Title: Chief Legal Officer
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[Signature Page to
Third Amended and Restated Limited Partnership Agreement of Blackstone Holdings I L.P.]
Exhibit 10.2
Execution Version
THIRD AMENDED AND RESTATED LIMITED
PARTNERSHIP AGREEMENT
OF
BLACKSTONE HOLDINGS II L.P.
Dated as of August 10, 2020
THE PARTNERSHIP UNITS OF BLACKSTONE HOLDINGS II L.P.
HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAWS OF ANY STATE, PROVINCE OR ANY OTHER APPLICABLE SECURITIES LAWS AND ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH LAWS. SUCH UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OR PROVINCE, AND ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE UNITS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE
WITH SUCH LAWS AND THIS LIMITED PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.
Table of Contents
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Page
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ARTICLE I
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DEFINITIONS
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SECTION 1.01.
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Definitions
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2
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ARTICLE II
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FORMATION, TERM, PURPOSE AND POWERS
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SECTION 2.01.
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Formation
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11
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SECTION 2.02.
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Name
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11
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SECTION 2.03.
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Term
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11
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SECTION 2.04.
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Offices
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12
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SECTION 2.05.
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Agent for Service of Process
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12
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SECTION 2.06.
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Business Purpose
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12
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SECTION 2.07.
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Powers of the Partnership
|
|
|
12
|
|
|
SECTION 2.08.
|
|
Partners; Admission of New Partners
|
|
|
12
|
|
|
SECTION 2.09.
|
|
Withdrawal
|
|
|
12
|
|
|
|
|
ARTICLE III
|
|
|
|
|
MANAGEMENT
|
|
|
|
|
|
|
SECTION 3.01.
|
|
General Partner
|
|
|
12
|
|
|
SECTION 3.02.
|
|
Compensation
|
|
|
13
|
|
|
SECTION 3.03.
|
|
Expenses
|
|
|
13
|
|
|
SECTION 3.04.
|
|
Officers
|
|
|
13
|
|
|
SECTION 3.05.
|
|
Authority of Partners
|
|
|
14
|
|
|
SECTION 3.06.
|
|
Action by Written Consent or Ratification
|
|
|
14
|
|
|
|
|
ARTICLE IV
|
|
|
|
|
DISTRIBUTIONS
|
|
|
|
|
|
|
SECTION 4.01.
|
|
Distributions
|
|
|
14
|
|
|
SECTION 4.02.
|
|
Liquidation Distribution
|
|
|
15
|
|
|
SECTION 4.03.
|
|
Limitations on Distribution
|
|
|
15
|
|
|
SECTION 4.04.
|
|
Administration Fee
|
|
|
15
|
|
|
|
|
ARTICLE V
|
|
|
|
|
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
|
|
|
TAX ALLOCATIONS; TAX MATTERS
|
|
|
|
|
|
|
SECTION 5.01.
|
|
Initial Capital Contributions
|
|
|
16
|
|
|
SECTION 5.02.
|
|
No Additional Capital Contributions
|
|
|
16
|
|
|
SECTION 5.03.
|
|
Capital Accounts
|
|
|
16
|
|
i
|
|
|
|
|
|
|
|
|
SECTION 5.04.
|
|
Allocations of Profits and Losses
|
|
|
16
|
|
|
SECTION 5.05.
|
|
Special Allocations
|
|
|
17
|
|
|
SECTION 5.06.
|
|
Tax Allocations
|
|
|
18
|
|
|
SECTION 5.07.
|
|
Tax Advances
|
|
|
18
|
|
|
SECTION 5.08.
|
|
Tax Matters
|
|
|
19
|
|
|
SECTION 5.09.
|
|
Other Allocation Provisions
|
|
|
19
|
|
|
|
|
ARTICLE VI
|
|
|
|
|
BOOKS AND RECORDS; REPORTS
|
|
|
|
|
|
|
SECTION 6.01.
|
|
Books and Records
|
|
|
19
|
|
|
|
|
ARTICLE VII
|
|
|
|
|
PARTNERSHIP UNITS
|
|
|
|
|
|
|
SECTION 7.01.
|
|
Units
|
|
|
20
|
|
|
SECTION 7.02.
|
|
Register
|
|
|
20
|
|
|
SECTION 7.03.
|
|
Registered Partners
|
|
|
21
|
|
|
|
|
ARTICLE VIII
|
|
|
|
|
VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS
|
|
|
|
|
|
|
SECTION 8.01.
|
|
Vesting of Initial Unvested Units
|
|
|
21
|
|
|
SECTION 8.02.
|
|
Forfeiture of Units Held by Initial Limited Partners
|
|
|
22
|
|
|
SECTION 8.03.
|
|
Limited Partner Transfers
|
|
|
22
|
|
|
SECTION 8.04.
|
|
Minimum Retained Ownership Requirement
|
|
|
24
|
|
|
SECTION 8.05.
|
|
Mandatory Exchanges
|
|
|
24
|
|
|
SECTION 8.06.
|
|
Encumbrances
|
|
|
25
|
|
|
SECTION 8.07.
|
|
Further Restrictions
|
|
|
25
|
|
|
SECTION 8.08.
|
|
Rights of Assignees
|
|
|
25
|
|
|
SECTION 8.09.
|
|
Admissions, Withdrawals and Removals
|
|
|
26
|
|
|
SECTION 8.10.
|
|
Admission of Assignees as Substitute Limited Partners
|
|
|
26
|
|
|
SECTION 8.11.
|
|
Withdrawal and Removal of Limited Partners
|
|
|
26
|
|
|
|
|
ARTICLE IX
|
|
|
|
|
DISSOLUTION, LIQUIDATION AND TERMINATION
|
|
|
|
|
|
|
SECTION 9.01.
|
|
No Dissolution
|
|
|
27
|
|
|
SECTION 9.02.
|
|
Events Causing Dissolution
|
|
|
27
|
|
|
SECTION 9.03.
|
|
Distribution upon Dissolution
|
|
|
27
|
|
|
SECTION 9.04.
|
|
Time for Liquidation
|
|
|
28
|
|
|
SECTION 9.05.
|
|
Termination
|
|
|
28
|
|
|
SECTION 9.06.
|
|
Claims of the Partners
|
|
|
28
|
|
|
SECTION 9.07.
|
|
Survival of Certain Provisions
|
|
|
28
|
|
ii
|
|
|
|
|
|
|
|
|
|
|
ARTICLE X
|
|
|
|
|
LIABILITY AND INDEMNIFICATION
|
|
|
|
|
|
|
SECTION 10.01.
|
|
Liability of Partners
|
|
|
28
|
|
|
SECTION 10.02.
|
|
Indemnification
|
|
|
29
|
|
|
|
|
ARTICLE XI
|
|
|
|
|
MISCELLANEOUS
|
|
|
|
|
|
|
SECTION 11.01.
|
|
Severability
|
|
|
32
|
|
|
SECTION 11.02.
|
|
Notices
|
|
|
32
|
|
|
SECTION 11.03.
|
|
Cumulative Remedies
|
|
|
33
|
|
|
SECTION 11.04.
|
|
Binding Effect
|
|
|
33
|
|
|
SECTION 11.05.
|
|
Interpretation
|
|
|
33
|
|
|
SECTION 11.06.
|
|
Counterparts
|
|
|
33
|
|
|
SECTION 11.07.
|
|
Further Assurances
|
|
|
33
|
|
|
SECTION 11.08.
|
|
Entire Agreement
|
|
|
33
|
|
|
SECTION 11.09.
|
|
Governing Law
|
|
|
33
|
|
|
SECTION 11.10.
|
|
Submission to Jurisdiction; Waiver of Jury Trial
|
|
|
33
|
|
|
SECTION 11.11.
|
|
Expenses
|
|
|
34
|
|
|
SECTION 11.12.
|
|
Amendments and Waivers
|
|
|
35
|
|
|
SECTION 11.13.
|
|
No Third Party Beneficiaries
|
|
|
36
|
|
|
SECTION 11.14.
|
|
Headings
|
|
|
36
|
|
|
SECTION 11.15.
|
|
Construction
|
|
|
36
|
|
|
SECTION 11.16.
|
|
Power of Attorney
|
|
|
36
|
|
|
SECTION 11.17.
|
|
Letter Agreements; Schedules
|
|
|
36
|
|
|
SECTION 11.18.
|
|
Partnership Status
|
|
|
37
|
|
iii
THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
BLACKSTONE HOLDINGS
II L.P.
This THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (this “Agreement”) of Blackstone Holdings
II L.P. (the “Partnership”) is made as of the 10th day of August, 2020, by and among Blackstone Holdings I/II GP L.L.C., a limited liability company formed under the
laws of the State of Delaware, as general partner, and the Limited Partners (as defined herein) of the Partnership.
WHEREAS, the
Partnership was formed as a limited partnership pursuant to the Act, by the filing of a Certificate of Limited Partnership (as amended from time to time, the “Certificate”) with the Office of the Secretary of State of the State
of Delaware and the execution of the Limited Partnership Agreement of the Partnership dated as of May 18, 2007 (the “Original Agreement”);
WHEREAS, the Original Agreement was amended and restated by the Amended and Restated Limited Partnership Agreement of the Partnership dated as
of June 18, 2007, as amended by Amendment No. 1 thereto, dated as of November 3, 2009 (as so amended, the “First Amended and Restated Agreement”); and
WHEREAS, the First Amended and Restated Agreement was amended and restated by the Second Amended and Restated Limited Partnership Agreement of
the Partnership dated as of July 1, 2019 (the “Second Amended and Restated Agreement”);
WHEREAS, pursuant to
Section 11.12 of the Second Amended and Restated Agreement, the amendments set forth in this Agreement require only the consent of the General Partner and no consent or approval of any Limited Partner is required;
WHEREAS, the Limited Partners holding not less than a majority of the Vested Percentage Interests of the Units have also consented to amending
the Second Amended and Restated Agreement in the manner and as more fully set forth herein; and
WHEREAS, the parties to this Agreement
now wish to amend and restate the Second Amended and Restated Agreement in its entirety as more fully set forth below.
NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending
to be legally bound hereby, the parties hereto agree to amend and restate the Second Amended and Restated Agreement in its entirety to read as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Capitalized terms used herein without definition have the following meanings (such meanings being
equally applicable to both the singular and plural form of the terms defined):
“Act” means, the Delaware Revised Uniform
Limited Partnership Act, 6 Del. C. Section 17-101, et seq., as it may be amended from time to time.
“Additional Credit Amount” has the meaning set forth in Section 4.01(b)(ii).
“Adjusted Capital Account Balance” means, with respect to each Partner, the balance in such Partner’s Capital Account
adjusted by (i) taking into account the adjustments, allocations and distributions described in U.S. Treasury Regulations Sections 1.704-1(b)(2)(ii)(c) (4), (5) and (6); and (ii) by adding to
such balance such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, determined pursuant to Regulations Sections 1.704-2(g) and
1.704-2(i)(5), any amounts such Partner is obligated to restore pursuant to any provision of this Agreement or by applicable Law. The foregoing definition of Adjusted Capital Account Balance is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Administration Fee” has the meaning set forth in Section 4.04.
“Affiliate” means, with respect to a specified Person, any other Person that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person.
“Agreement” has the
meaning set forth in the preamble of this Agreement.
“Amended Tax Amount” has the meaning set forth in
Section 4.01(b)(ii).
“Assignee” has the meaning set forth in Section 8.08.
“Assumed Tax Rate” means the highest effective marginal combined U.S. federal, state and local income tax rate for a Fiscal
Year prescribed for an individual or corporate resident in New York, New York (taking into account (a) the nondeductibility of expenses subject to the limitation described in Section 67(a) of the Code and (b) the character (e.g., long-term or short-term capital gain or ordinary or exempt income) of the applicable income, but not taking into account the deductibility of state and local income taxes for
U.S. federal income tax purposes). For the avoidance of doubt, the Assumed Tax Rate will be the same for all Partners.
“Available
Cash” means, with respect to any fiscal period, the amount of cash on hand which the General Partner, in its reasonable discretion, deems available for distribution to the Partners, taking into account all debts, liabilities and obligations
of the Partnership then due and amounts which the General Partner, in its reasonable discretion, deems necessary to expend or retain for working capital or to place into reserves for customary and usual claims with respect to the Partnership’s
operations.
2
“Blackstone Holdings Partnerships” means each of the Partnership, Blackstone
Holdings I L.P., a Delaware limited partnership, Blackstone Holdings AI L.P., a Delaware limited partnership, Blackstone Holdings III L.P., a Québec société en commandite and Blackstone Holdings IV L.P., a Québec
société en commandite.
“Capital Account” means the separate capital account maintained for each Partner in
accordance with Section 5.03 hereof.
“Capital Contribution” means, with respect to any Partner, the aggregate
amount of money contributed to the Partnership and the Carrying Value of any property (other than money), net of any liabilities assumed by the Partnership upon contribution or to which such property is subject, contributed to the Partnership
pursuant to Article V.
“Carrying Value” means, with respect to any Partnership asset, the asset’s adjusted
basis for U.S. federal income tax purposes, except that the initial carrying value of assets contributed to the Partnership shall be their respective gross fair market values on the date of contribution as determined by the General Partner, and the
Carrying Values of all Partnership assets shall be adjusted to equal their respective fair market values, in accordance with the rules set forth in United States Treasury
Regulation Section 1.704-1(b)(2)(iv)(f), except as otherwise provided herein, as of: (a) the date of the acquisition of any additional Partnership Interest by any new or existing Partner in
exchange for more than a de minimis Capital Contribution; (b) the date of the distribution of more than a de minimis amount of Partnership assets to a Partner; (c) the date a Partnership Interest is relinquished to the Partnership; or
(d) any other date specified in the United States Treasury Regulations; provided, however, that adjustments pursuant to clauses (a), (b) (c) and (d) above shall be made only if such adjustments are deemed necessary or
appropriate by the General Partner to reflect the relative economic interests of the Partners. The Carrying Value of any Partnership asset distributed to any Partner shall be adjusted immediately before such distribution to equal its fair market
value. In the case of any asset that has a Carrying Value that differs from its adjusted tax basis, Carrying Value shall be adjusted by the amount of depreciation calculated for purposes of the definition of “Profits (Losses)” rather than
the amount of depreciation determined for U.S. federal income tax purposes, and depreciation shall be calculated by reference to Carrying Value rather than tax basis once Carrying Value differs from tax basis.
“Category 1 Limited Partner” means each of the Limited Partners identified in the books and records of the Partnership as a
Category 1 Limited Partner.
“Category 2 Limited Partner” means each of the Limited Partners identified in the books and
records of the Partnership as a Category 2 Limited Partner.
“Category 3 Limited Partner” means each of the Limited
Partners identified in the books and records of the Partnership as a Category 3 Limited Partner.
“Category 4 Limited
Partner” means each of the Limited Partners identified in the books and records of the Partnership as a Category 4 Limited Partner.
3
“Category 5 Limited Partner” means each of the Limited Partners identified in
the books and records of the Partnership as a Category 5 Limited Partner.
“Category 6 Limited Partner” means the Limited
Partner identified in the books and records of the Partnership as a Category 6 Limited Partner.
“Cause” means the
occurrence or existence of any of the following as determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by an Employed Limited Partner of any provision of this Agreement or the Non-Competition Agreement, (x) any material breach of any rules or regulations applicable to senior managing directors or employees, as applicable, of the Blackstone Holdings Partnerships, their subsidiaries
and their affiliated entities, (y) an Employed Limited Partner’s deliberate failure to perform his or her duties to the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, or (z) an Employed Limited
Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities in any material way (provided that, in the case of any of the
foregoing clauses (w), (x), (y) and (z), the General Partner has given the Employed Limited Partner written notice (a “Notice of Breach”) within fifteen days after the General Partner becomes aware of such action and such
Employed Limited Partner fails to cure such breach, failure to perform or conduct or behavior within fifteen days after receipt by the Employed Limited Partner of such Notice of Breach from the General Partner (or such longer period, not to exceed
an additional fifteen days, as shall be reasonably required for such cure, provided, that such Employed Limited Partner is diligently pursuing such cure), (iii) any act of fraud, misappropriation, dishonesty, embezzlement or similar
conduct against the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, or (iv) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony or crime (including any
misdemeanor charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of competent jurisdiction, by a U.S. federal or state or comparable non-U.S. regulatory body or by a self-regulatory body having authority with respect to U.S. federal or state or comparable non-U.S.
securities laws, rules or regulations of the securities industry, that such Employed Limited Partner individually has violated any U.S. federal or state or comparable non-U.S. securities laws or any rules or
regulations thereunder, or any rules of any such self-regulatory body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on
(A) such Employed Limited Partner’s ability to function as a senior managing director or employee, as applicable, of the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, taking into account the services
required of Employed Limited Partner and the nature of the business of the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities or (B) the business of the Blackstone Holdings Partnerships, their subsidiaries and
their affiliated entities.
“Certificate” has the meaning set forth in the preamble of this Agreement.
“Change of Control” means the occurrence of any Person, other than Blackstone Group Management L.L.C. or a Person approved by
Blackstone Group Management L.L.C., becoming the Class C Stockholder.
4
“Charity” means any organization that is organized and operated for a purpose
described in Section 170(c) of the Code (determined without reference to Code Section 170(c)(2)(A)) and described in Code Sections 2055(a) and 2522.
“Class” means the classes of Units into which the interests in the Partnership may be classified or divided from time to time
pursuant to the provisions of this Agreement.
“Class A Common Stock” means the Class A common
stock, par value $0.00001 per share, of the Issuer.
“Class A Units” means the Units of partnership
interest in the Partnership designated as the “Class A Units” herein and having the rights pertaining thereto as are set forth in this Agreement.
“Class C Stockholder” means Blackstone Group Management L.L.C., a Delaware limited liability company, and
any successor or permitted assign that owns the Class C common stock, par value $0.00001 per share, of the Issuer at the applicable time.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Contingencies” has the meaning set forth in Section 9.03(b).
“Control” (including the terms “Controlled by” and “under common Control with”) means the
possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without
limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
“Credit Amount” has the meaning set forth in Section 4.01(b)(ii) of this Agreement.
“Creditable Non-U.S. Tax” means a
non-U.S. tax paid or accrued for United States federal income tax purposes by the Partnership, in either case to the extent that such tax is eligible for credit under Section 901(a) of the Code. A non-U.S. tax is a Creditable Non-U.S. Tax for these purposes without regard to whether a partner receiving an allocation of such
non-U.S. tax elects to claim a credit for such amount. This definition is intended to be consistent with the definition of “Creditable Non-U.S. Tax” in
Temporary Treasury Regulations Section 1.704-1T (b)(4)(xi)(b), and shall be interpreted consistently therewith.
“Delaware Arbitration Act” has the meaning set forth in Section 11.10(d) of this Agreement.
“Disability” means, as to any Person, such Person’s inability to perform in all material respects his or her duties and
responsibilities to the General Partner, or any of its Affiliates, by reason of a physical or mental disability or infirmity which inability is reasonably expected to be permanent and has continued (i) for a period of six consecutive months or
(ii) such shorter period as the General Partner may reasonably determine in good faith.
5
“Disabling Event” means the General Partner ceasing to be the general partner of
the Partnership pursuant to Section 17-402 of the Act.
“Dissolution Event”
has the meaning set forth in Section 9.02 of this Agreement.
“Employed Limited Partner” means any Limited Partner
that is employed by or providing services to the Class C Stockholder, the Issuer, the General Partner, the Partnership or any of its subsidiaries at the time in question, and any Personal Planning Vehicle of such Limited Partner.
“Encumbrance” means any mortgage, claim, lien, encumbrance, conditional sales or other title retention agreement, right of
first refusal, preemptive right, pledge, option, charge, security interest or other similar interest, easement, judgment or imperfection of title of any nature whatsoever.
“ERISA” means The Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
“Exchange Agreement” means the Fourth Amended and Restated Exchange Agreement, dated as of the date of the
Second Amended and Restated Agreement, among the Issuer, the Blackstone Holdings Partnerships and the limited partners of the Blackstone Holdings Partnerships from time to time, as it may be amended, supplemented or restated from time to time.
“Exchange Transaction” means an exchange of Units for shares of Class A Common Stock pursuant to, and in accordance
with, the Exchange Agreement or, if the Issuer and the exchanging Limited Partner shall mutually agree, a Transfer of Units to the Issuer, the Partnership or any of their subsidiaries for other consideration.
“Final Tax Amount” has the meaning set forth in Section 4.01(b)(ii).
“First Amended and Restated Agreement” has the meaning set forth in the preamble hereto.
“Fiscal Year” means (i) the period commencing upon the formation of the Partnership and ending on
December 31, 2007 or (ii) any subsequent twelve-month period commencing on January 1 and ending on December 31.
“GAAP” means accounting principles generally accepted in the United States of America as in effect from time to time.
“General Partner” means Blackstone Holdings I/II GP L.L.C., a limited liability company formed under the laws of the State of
Delaware or any successor general partner admitted to the Partnership in accordance with the terms of this Agreement.
“Government
Official” means a person who holds a high-level, full-time position with a national, supranational, U.S. federal, U.S. state or City of New York government.
6
“Incapacity” means, with respect to any Person, the bankruptcy, dissolution,
termination, entry of an order of incompetence, or the insanity, permanent disability or death of such Person.
“Initial Limited
Partner” means each Limited Partner as of the date of the First Amended and Restated Agreement.
“Initial Units”
means, with respect to any Initial Limited Partner, the aggregate number of Class A Units owned by such Initial Limited Partner as of the date of the First Amended and Restated Agreement.
“Initial Unvested Units” means, with respect to any Initial Limited Partner, the aggregate number of Unvested Units owned by
such Initial Limited Partner as of the date of the First Amended and Restated Agreement.
“Initial Vested Units” means,
with respect to any Initial Limited Partner, the aggregate number of Vested Units listed in the books and records of the Partnership as of the date of the First Amended and Restated Agreement, and any additional Initial Units that have vested from
time to time in accordance with Section 8.01 of this Agreement.
“Intangible Assets” means the assets of the
Partnership that are described in Section 197(d) of the Code.
“Intangible Asset Gain” means the net gain recognized
by the Partnership with respect to the Partnership’s Intangible Assets in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership, including but not limited to net capital gain realized in
connection with an adjustment to the Carrying Value of Partnership assets; provided, however, that any such gain shall constitute “Intangible Asset Gain” only to the extent that any such gain exceeds losses previously recognized in an
actual or hypothetical sale of Intangible Assets.
“IPO” means the initial public offering and sale of common units
representing limited partner interests of The Blackstone Group L.P., as contemplated by The Blackstone Group L.P.’s Registration Statement on Form S-1 (File
No. 333-141504).
“Issuer” means The Blackstone Group Inc., a corporation
incorporated under the laws of the State of Delaware, or any successor thereto.
“Last Reported Sale Price” of the
Class A Common Stock on any date means:
(a) the closing sale price per share on the New York Stock Exchange on that date (or, if no
closing sale price is reported, the last reported sale price);
(b) if the Class A Common Stock is not listed for trading on the New
York Stock Exchange, the closing sale price (or, if no closing sale price is reported, the last reported sale price) as reported on that date in composite transactions for the principal national securities exchange registered pursuant to
Section 6(g) of the Exchange Act on which the Class A Common Stock is listed;
7
(c) if the Class A Common Stock is not so listed on a national securities exchange, the last
quoted bid price for the Class A Common Stock on that date in the over-the-counter market as reported by Pink Sheets LLC or a similar organization; or
(d) if the Class A Common Stock is not so quoted by Pink Sheets LLC or a similar organization, the average of the midpoint of the last bid
and ask prices for the Class A Common Stock on that date from a nationally recognized independent investment banking firm selected by the Issuer for this purpose.
“Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order
issued or promulgated by any national, supranational, state, federal, provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdiction over the Partnership or any Partner, as the case may
be.
“Limited Partner” means each of the Persons from time to time listed as a limited partner in the books and records
of the Partnership, and, for purposes of Sections 8.01, 8.02, 8.03, 8.04, 8.05 and 8.06, any Personal Planning Vehicle of such Limited Partner.
“Liquidation Agent” has the meaning set forth in Section 9.03 of this Agreement.
“Minimum Retained Ownership Requirement” has the meaning set forth in Section 8.04(a).
“Net Taxable Income” has the meaning set forth in Section 4.01(b)(i).
“Non-Competition Agreement” means collectively, the Senior Managing Director Non-Competition and Non-Solicitation Agreement and Contracting Employees Non-Competition and
Non-Solicitation Agreement dated on or about the date of the First Amended and Restated Agreement by certain Employed Limited Partners with each of the Blackstone Holdings Partnerships and any agreement with
respect to similar subject matter entered into from time to time by an Employed Limited Partner, as amended from time to time.
“Nonrecourse Deductions” has the meaning set forth in Treasury Regulations
Section 1.704-2(b). The amount of Nonrecourse Deductions of the Partnership for a fiscal year equals the net increase, if any, in the amount of Partnership Minimum Gain of the Partnership during that
fiscal year, determined according to the provisions of Treasury Regulations Section 1.704-2(c).
“Original Agreement” has the meaning set forth in the preamble of this Agreement.
“Partners” means, at any time, each person listed as a Partner (including the General Partner) on the books and records of
the Partnership, in each case for so long as he, she or it remains a partner of the Partnership as provided hereunder.
“Partnership” has the meaning set forth in the preamble of this Agreement.
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“Partnership Minimum Gain” has the meaning set forth in Treasury Regulations
Sections 1.704-2(b)(2) and 1.704-2(d).
“Partnership Representative” has the meaning set forth in Section 5.08.
“Partner Nonrecourse Debt Minimum Gain” means an amount with respect to each partner nonrecourse debt (as defined in Treasury
Regulations Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such partner nonrecourse debt were treated as a nonrecourse liability (as defined in Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with Treasury Regulations Section 1.704-2(i)(3).
“Partner Nonrecourse Deductions” has the meaning ascribed to the term “partner nonrecourse deductions” set
forth in Treasury Regulations Section 1.704-2(i)(2).
“Person” means any
individual, corporation, partnership, limited partnership, limited liability company, limited company, joint venture, trust, unincorporated or governmental organization or any agency or political subdivision thereof.
“Personal Planning Vehicle” means, in respect of any Limited Partner, any estate, family limited liability company, family
limited partnership, or inter vivos or testamentary trust that holds Units that is designated as a Personal Planning Vehicle of such Limited Partner in the books and records of the Partnership.
“Profits” and “Losses” means, for each Fiscal Year or other period, the taxable income or loss of the
Partnership, or particular items thereof, determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (a) all items of income, gain, loss or deduction
allocated pursuant to Section 5.05 shall not be taken into account in computing such taxable income or loss; (b) any income of the Partnership that is exempt from U.S. federal income taxation and not otherwise taken into account in
computing Profits and Losses shall be added to such taxable income or loss; (c) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, any gain or loss resulting from a disposition of such
asset shall be calculated with reference to such Carrying Value; (d) upon an adjustment to the Carrying Value (other than an adjustment in respect of depreciation) of any asset, pursuant to the definition of Carrying Value, the amount of the
adjustment shall be included as gain or loss in computing such taxable income or loss; (e) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, the amount of depreciation, amortization or
cost recovery deductions with respect to such asset for purposes of determining Profits and Losses, if any, shall be an amount which bears the same ratio to such Carrying Value as the U.S. federal income tax depreciation, amortization or other cost
recovery deductions bears to such adjusted tax basis (provided that if the U.S. federal income tax depreciation, amortization or other cost recovery deduction is zero, the General Partner may use any reasonable method for purposes of
determining depreciation, amortization or other cost recovery deductions in calculating Profits and Losses); and (f) except for items in (a) above, any expenditures of the Partnership not deductible in computing taxable income or loss, not
properly capitalizable and not otherwise taken into account in computing Profits and Losses pursuant to this definition shall be treated as deductible items.
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“Restricted Period,” with respect to each Limited Partner that is or was an
Employed Limited Partner, has the meaning set forth in such Limited Partner’s Non-Competition Agreement.
“Restrictive Covenant,” with respect to each Limited Partner that is or was an Employed Limited Partner, has the meaning set
forth in such Limited Partner’s Non-Competition Agreement.
“Retirement”
(including the term “Retire”) means retirement of an Employed Limited Partner from his or her employment with the Class C Stockholder, the Issuer, the General Partner, the Partnership or any of their subsidiaries after
(a) he or she has reached age 65 and has at least five full years of service, or (b) (i) his or her age plus years of service totals at least 65, (ii) he or she has reached age 50 and (iii) he or she has had a minimum of
five years of service; provided, however, that no Employed Limited Partner will be eligible to Retire prior to June 30, 2010.
“Second Amended and Restated Agreement” has the meaning set forth in the preamble hereto.
“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Similar Law” means any law or regulation that could cause the underlying assets of the Partnership to be treated as
assets of the Limited Partner by virtue of its limited partner interest in the Partnership and thereby subject the Partnership and the General Partner (or other persons responsible for the investment and operation of the Partnership’s assets)
to laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the Code.
“Tax Advances” has the meaning set forth in Section 5.07.
“Tax Amount” has the meaning set forth in Section 4.01(b)(i).
“Tax Distributions” has the meaning set forth in Section 4.01(b)(i).
“Tax Matters Partner” has the meaning set forth in Section 5.08.
“Total Percentage Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Units (vested
or unvested) then owned by such Partner by the number of Units then owned by all Partners.
“Transfer” means, in respect
of any Unit, property or other asset, any sale, assignment, transfer, distribution or other disposition thereof, whether voluntarily or by operation of Law, including, without limitation, the exchange of any Unit for any other security.
“Transferee” means any Person that is a transferee of a Partner’s interest in the Partnership, or part thereof.
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“Treasury Regulations” means the income tax regulations, including temporary
regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“Units” means the Class A Units and any other Class of Units authorized in accordance with this Agreement, which
shall constitute interests in the Partnership as provided in this Agreement and under the Act, entitling the holders thereof to the relative rights, title and interests in the profits, losses, deductions and credits of the Partnership at any
particular time as set forth in this Agreement, and any and all other benefits to which a holder thereof may be entitled as a Partner as provided in this Agreement, together with the obligations of such Partner to comply with all terms and
provisions of this Agreement.
“Unvested Units” means those Units listed as unvested Units in the books and records of
the Partnership, as the same may be amended from time to time in accordance with this Agreement.
“Vested Percentage
Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Vested Units then owned by such Partner by the number of Vested Units then owned by all Partners.
“Vested Units” means those Units listed as vested Units in the books and records of the Partnership, as the same may be
amended from time to time in accordance with this Agreement.
ARTICLE II
FORMATION, TERM, PURPOSE AND POWERS
SECTION 2.01. Formation. The Partnership was formed as a limited partnership under the provisions of the Act by the filing on
May 18, 2007 of the Certificate as provided in the preamble of this Agreement and the execution of the Original Agreement. If requested by the General Partner, the Limited Partners shall promptly execute all certificates and other
documents consistent with the terms of this Agreement necessary for the General Partner to accomplish all filing, recording, publishing and other acts as may be appropriate to comply with all requirements for (a) the formation and operation of
a limited partnership under the laws of the State of Delaware, (b) if the General Partner deems it advisable, the operation of the Partnership as a limited partnership, or partnership in which the Limited Partners have limited liability, in all
jurisdictions where the Partnership proposes to operate and (c) all other filings required to be made by the Partnership.
SECTION 2.02. Name. The name of the Partnership shall be, and the business of the Partnership shall be conducted under the name
of, Blackstone Holdings II L.P.
SECTION 2.03. Term. The term of the Partnership commenced on the date of the filing of the
Certificate, and the term shall continue until the dissolution of the Partnership in accordance with Article IX. The existence of the Partnership shall continue until cancellation of the Certificate in the manner required by the Act.
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SECTION 2.04. Offices. The Partnership may have offices at such places either within
or outside the State of Delaware as the General Partner from time to time may select.
SECTION 2.05. Agent for Service of
Process. The Partnership’s registered agent for service of process in the State of Delaware shall be as set forth in the Certificate, as the same may be amended by the General Partner from time to time.
SECTION 2.06. Business Purpose. The Partnership was formed for the object and purpose of, and the nature and character of the
business to be conducted by the Partnership is, engaging in any lawful act or activity for which limited partnerships may be formed under the Act.
SECTION 2.07. Powers of the Partnership. Subject to the limitations set forth in this Agreement, the Partnership will possess and
may exercise all of the powers and privileges granted to it by the Act including, without limitation, the ownership and operation of the assets contributed to the Partnership by the Partners, by any other Law or this Agreement, together with all
powers incidental thereto, so far as such powers are necessary or convenient to the conduct, promotion or attainment of the purpose of the Partnership set forth in Section 2.06.
SECTION 2.08. Partners; Admission of New Partners. Each of the Persons listed in the books and records of the Partnership, as the
same may be amended from time to time in accordance with this Agreement, by virtue of the execution of this Agreement, are admitted, or hereby continue, as applicable, as Partners of the Partnership. The rights, duties and liabilities of the
Partners shall be as provided in the Act, except as is otherwise expressly provided herein, and the Partners consent to the variation of such rights, duties and liabilities as provided herein. A Person may be admitted from time to time as a new
Partner in accordance with Section 8.10; provided, however, that each new Partner shall execute and deliver to the General Partner an appropriate supplement to this Agreement pursuant to which the new Partner agrees to be bound by the terms and
conditions of the Agreement, as it may be amended from time to time.
SECTION 2.09. Withdrawal. No Partner shall have the
right to withdraw as a Partner of the Partnership other than following the Transfer of all Units owned by such Partner in accordance with Article VIII; provided, however, that a new General Partner or substitute General Partner may be
admitted to the Partnership in accordance with Section 8.09.
ARTICLE III
MANAGEMENT
SECTION 3.01.
General Partner. (a) The business, property and affairs of the Partnership shall be managed under the sole, absolute and exclusive direction of the General Partner, which may from time to time delegate authority to officers or to others
to act on behalf of the Partnership.
(b) Without limiting the foregoing provisions of this Section 3.01, the General Partner shall
have the general power to manage or cause the management of the Partnership (which may be delegated to officers of the Partnership), including, without limitation, the following powers:
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(i) to develop and prepare a business plan each year which will set forth the operating goals
and plans for the Partnership;
(ii) to execute and deliver or to authorize the execution and delivery of contracts, deeds, leases,
licenses, instruments of transfer and other documents on behalf of the Partnership;
(iii) the making of any expenditures, the lending or
borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness and the incurring of any other obligations;
(iv) to employ, retain, consult with and dismiss personnel;
(v) to establish and enforce limits of authority and internal controls with respect to all personnel and functions;
(vi) to engage attorneys, consultants and accountants for the Partnership;
(vii) to develop or cause to be developed accounting procedures for the maintenance of the Partnership’s books of account; and
(viii) to do all such other acts as shall be authorized in this Agreement or by the Partners in writing from time to time.
SECTION 3.02. Compensation. The General Partner shall not be entitled to any compensation for services rendered to the Partnership
in its capacity as General Partner.
SECTION 3.03. Expenses. The Partnership shall bear and/or reimburse the General Partner
for any expenses incurred by the General Partner in connection with serving as the general partner of the Partnership.
SECTION 3.04.
Officers. Subject to the direction and oversight of the General Partner, the day-to-day administration of the business of the Partnership may be carried out by
employees and agents who may be designated as officers by the General Partner, with titles including but not limited to “chief executive officer,” “chief financial officer,” “chief legal officer,” “chief
administrative officer,” “chief compliance officer,” “principal accounting officer,” “chairman,” “senior chairman,” “vice chairman,” “president,” “vice president,”
“treasurer,” “assistant treasurer,” “secretary,” “assistant secretary,” “general manager,” “senior managing director,” “managing director” and “director,” as and to the
extent authorized by the General Partner. The officers of the Partnership shall have such titles and powers and perform such duties as shall be determined from time to time by the General Partner and otherwise as shall customarily pertain to such
offices. Any number of offices may be held by the same person. All employees, agents and officers shall be subject to the supervision and direction of the General Partner and may be removed from such office by the General Partner and the authority,
duties or responsibilities of any employee, agent or officer of the Partnership may be suspended by the General Partner from time to time, in each case in the sole discretion of the General Partner. The General Partner shall not cease to be a
general partner of the Partnership as a result of the delegation of any duties hereunder. No officer of the Partnership, in its capacity as such, shall be considered a general partner of the Partnership by agreement, estoppel, as a result of the
performance of its duties hereunder or otherwise.
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SECTION 3.05. Authority of Partners. No Limited Partner, in its capacity as such,
shall participate in or have any control over the business of the Partnership. Except as expressly provided herein, the Units do not confer any rights upon the Limited Partners to participate in the affairs of the Partnership described in this
Agreement. Except as expressly provided herein, the Limited Partners shall have no right to vote on any matter involving the Partnership, including with respect to any merger, consolidation, combination or conversion of the Partnership. The conduct,
control and management of the Partnership shall be vested exclusively in the General Partner. In all matters relating to or arising out of the conduct of the operation of the Partnership, the decision of the General Partner shall be the decision of
the Partnership. Except as required or permitted by Law, or expressly provided in the ultimate sentence of this Section 3.05 or by separate agreement with the Partnership, no Partner who is not also a General Partner (and acting in such
capacity) shall take any part in the management or control of the operation or business of the Partnership in its capacity as a Partner, nor shall any Partner who is not also a General Partner (and acting in such capacity) have any right, authority
or power to act for or on behalf of or bind the Partnership in his or its capacity as a Partner in any respect or assume any obligation or responsibility of the Partnership or of any other Partner. Notwithstanding the foregoing, the Partnership may
employ one or more Partners from time to time, and such Partners, in their capacity as employees of the Partnership (and not, for clarity, in their capacity as Limited Partners of the Partnership), may take part in the control and management of the
business of the Partnership to the extent such authority and power to act for or on behalf of the Partnership has been delegated to them by the General Partner.
SECTION 3.06. Action by Written Consent or Ratification. Any action required or permitted to be taken by the Partners pursuant to
this Agreement shall be taken if all Partners whose consent or ratification is required consent thereto or provide a ratification in writing.
ARTICLE IV
DISTRIBUTIONS
SECTION 4.01. Distributions. (a) The General Partner, in its sole discretion, may authorize distributions by the Partnership
to the Partners, which distributions shall be made pro rata in accordance with the Partners’ respective Total Percentage Interests.
(b) (i) In addition to the foregoing, if the General Partner reasonably determines that the taxable income of the Partnership for a Fiscal
Year will give rise to taxable income for the Partners (“Net Taxable Income”), the General Partner shall cause the Partnership to distribute Available Cash in respect of income tax liabilities (the “Tax
Distributions”) to the extent that other distributions made by the Partnership for such year were otherwise insufficient to cover such tax liabilities. The Tax Distributions payable with respect to any Fiscal Year shall be computed based
upon the General Partner’s estimate of the allocable Net Taxable Income in accordance with Article V, multiplied by the Assumed Tax Rate (the “Tax Amount”). For purposes of computing the Tax Amount, the effect of any
benefit under Section 743(b) of the Code will be ignored.
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(ii) Tax Distributions shall be calculated and paid no later than one day prior to each
quarterly due date for the payment by corporations on a calendar year of estimated taxes under the Code in the following manner (A) for the first quarterly period, 25% of the Tax Amount, (B) for the second quarterly period, 50% of the Tax
Amount, less the prior Tax Distributions for the Fiscal Year, (C) for the third quarterly period, 75% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year and (D) for the fourth quarterly period, 100% of the Tax Amount,
less the prior Tax Distributions for the Fiscal Year. Following each Fiscal Year, and no later than one day prior to the due date for the payment by corporations of income taxes for such Fiscal Year, the General Partner shall make an amended
calculation of the Tax Amount for such Fiscal Year (the “Amended Tax Amount”), and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to the extent that the Amended Tax Amount so calculated
exceeds the cumulative Tax Distributions previously made by the Partnership in respect of such Fiscal Year. If the Amended Tax Amount is less than the cumulative Tax Distributions previously made by the Partnership in respect of the relevant Fiscal
Year, then the difference (the “Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Within 30 days following the date on which the Partnership files a
tax return on Form 1065, the General Partner shall make a final calculation of the Tax Amount of such Fiscal Year (the “Final Tax Amount”) and shall cause the Partnership to distribute a Tax Distribution, out of Available
Cash, to the extent that the Final Tax Amount so calculated exceeds the Amended Tax Amount. If the Final Tax Amount is less than the Amended Tax Amount in respect of the relevant Fiscal Year, then the difference (“Additional Credit
Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Any Credit Amount and Additional Credit Amount applied against future Tax Distributions shall be treated as an amount
actually distributed pursuant to this Section 4.01(b) for purposes of the computations herein.
SECTION 4.02. Liquidation
Distribution. Distributions made upon dissolution of the Partnership shall be made as provided in Section 9.03.
SECTION 4.03. Limitations on Distribution. Notwithstanding any provision to the contrary contained in this Agreement, the General
Partner shall not make a Partnership distribution to any Partner if such distribution would violate Section 17-607 of the Act or other applicable Law.
SECTION 4.04. Administration Fee. Notwithstanding anything to the contrary herein, unless the General Partner shall determine
otherwise, commencing with the distribution in respect of the quarterly period ending June 30, 2020, an amount shall be withheld from each quarterly distribution payable to a Limited Partner other than an Employed Limited Partner that,
together with analogous administration fee amounts withheld from distributions payable to such Limited Partner by the other Blackstone Holdings Partnerships in respect of the same quarterly period, equals the Administration Fee (as defined
below). The “Administration Fee” shall mean an amount per Class A Unit initially equal to $0.03125, which amount may increase or decrease by such percentage as the General Partner may determine from time to time in its sole
discretion. Amounts withheld as an Administration Fee shall be treated as if distributed to the applicable Limited Partner.
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ARTICLE V
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
TAX ALLOCATIONS; TAX MATTERS
SECTION 5.01. Initial Capital Contributions. (a) The Partners have made, on or prior to the date hereof, Capital
Contributions and, in exchange, the Partnership has issued to the Partners the number of Class A Units as specified in the books and records of the Partnership.
(b) Upon issuance by the Partnership of Class A Units to the Partners pursuant to the First Amended and Restated Agreement, the interests
in the Partnership as provided in the First Amended and Restated Agreement and under the Act held by Blackstone Holdings I/II Limited Partner L.L.C. were cancelled.
SECTION 5.02. No Additional Capital Contributions. Except as otherwise provided in this Article V, no Partner shall be
required to make additional Capital Contributions to the Partnership without the consent of such Partner or permitted to make additional capital contributions to the Partnership without the consent of the General Partner.
SECTION 5.03. Capital Accounts. A separate capital account (a “Capital Account”) shall be established and
maintained for each Partner in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv). The Capital Account of each Partner shall be credited with such Partner’s Capital
Contributions, if any, all Profits allocated to such Partner pursuant to Section 5.04 and any items of income or gain which are specially allocated pursuant to Section 5.05; and shall be debited with all Losses allocated to such Partner
pursuant to Section 5.04, any items of loss or deduction of the Partnership specially allocated to such Partner pursuant to Section 5.05, and all cash and the Carrying Value of any property (net of liabilities assumed by such Partner and
the liabilities to which such property is subject) distributed by the Partnership to such Partner. Any references in any section of this Agreement to the Capital Account of a Partner shall be deemed to refer to such Capital Account as the same may
be credited or debited from time to time as set forth above. In the event of any transfer of any interest in the Partnership in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the
extent it relates to the transferred interest.
SECTION 5.04. Allocations of Profits and Losses. Except as otherwise provided
in this Agreement, Profits and Losses (and, to the extent necessary, individual items of income, gain or loss or deduction of the Partnership) shall be allocated in a manner such that the Capital Account of each Partner after giving effect to the
Special Allocations set forth in Section 5.05 is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made pursuant to Article IV if the Partnership were dissolved, its affairs wound up and its assets
sold for cash equal to their Carrying Value, all Partnership liabilities were satisfied (limited with respect to each non-recourse liability to the Carrying Value of the assets securing such liability) and the
net assets of the Partnership were distributed to the Partners pursuant to this Agreement, minus (ii) such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
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Gain, computed immediately prior to the hypothetical sale of assets. For purposes of this Article V, each Unvested Unit shall be treated as a Vested Unit. Notwithstanding the foregoing, the
General Partner shall make such adjustments to Capital Accounts as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a partner’s interest in the Partnership.
SECTION 5.05. Special Allocations. Notwithstanding any other provision in this Article V:
(a) Minimum Gain Chargeback. If there is a net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain (determined
in accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i)) during any Partnership taxable year, the Partners shall be specially
allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to their respective shares of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i) (5). The items to be so allocated shall be determined in accordance with Treasury Regulations
Section 1.704-2(f). This Section 5.05(a) is intended to comply with the minimum gain chargeback requirements in such Treasury Regulations Sections and shall be interpreted consistently therewith;
including that no chargeback shall be required to the extent of the exceptions provided in Treasury Regulations Sections 1.704-2(f) and 1.704-2(i) (4).
(b) Qualified Income Offset. If any Partner unexpectedly receives any adjustments, allocations, or distributions described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the deficit
balance in such Partner’s Adjusted Capital Account Balance created by such adjustments, allocations or distributions as promptly as possible; provided that an allocation pursuant to this Section 5.05(b) shall be made only to the
extent that a Partner would have a deficit Adjusted Capital Account Balance in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if this Section 5.05(b) were not in this Agreement.
This Section 5.05(b) is intended to comply with the “qualified income offset” requirement of the Code and shall be interpreted consistently therewith.
(c) Gross Income Allocation. If any Partner has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of
(i) the amount such Partner is obligated to restore, if any, pursuant to any provision of this Agreement, and (ii) the amount such Partner is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as
possible; provided that an allocation pursuant to this Section 5.05(c) shall be made only if and to the extent that a Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this
Article V have been tentatively made as if Section 5.05(b) and this Section 5.05(c) were not in this Agreement.
(d)
Nonrecourse Deductions. Nonrecourse Deductions shall be allocated to the Partners in accordance with their respective Total Percentage Interests.
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(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any taxable period
shall be allocated to the Partner who bears the economic risk of loss with respect to the liability to which such Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulations
Section 1.704-2(j).
(f) Creditable Non-U.S.
Taxes. Creditable Non-U.S. Taxes for any taxable period attributable to the Partnership, or an entity owned directly or indirectly by the Partnership, shall be allocated to the Partners in proportion to
the partners’ distributive shares of income (including income allocated pursuant to Section 704(c) of the Code) to which the Creditable Non-U.S. Tax relates (under principles of Treasury Regulations Section 1.904-6). The provisions of this Section 5.05(f) are intended to comply with the provisions of Temporary Treasury Regulations
Section 1.704-1T(b)(4)(xi), and shall be interpreted consistently therewith.
(g)
Ameliorative Allocations. Any special allocations of income or gain pursuant to Sections 5.05(b) or 5.05(c) hereof shall be taken into account in computing subsequent allocations pursuant to Section 5.04 and this
Section 5.05(g), so that the net amount of any items so allocated and all other items allocated to each Partner shall, to the extent possible, be equal to the net amount that would have been allocated to each Partner if such allocations
pursuant to Sections 5.05(b) or 5.05(c) had not occurred.
SECTION 5.06. Tax Allocations. For income tax purposes, each
item of income, gain, loss and deduction of the Partnership shall be allocated among the Partners in the same manner as the corresponding items of Profits and Losses and specially allocated items are allocated for Capital Account purposes;
provided that in the case of any asset the Carrying Value of which differs from its adjusted tax basis for U.S. federal income tax purposes, income, gain, loss and deduction with respect to such asset shall be allocated solely for income tax
purposes in accordance with the principles of Sections 704(b) and (c) of the Code (in any manner determined by the General Partner and permitted by the Code and Treasury Regulations) so as to take account of the difference between Carrying
Value and adjusted basis of such asset. Notwithstanding the foregoing, the General Partner shall make such allocations for tax purposes as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a
partner’s interest in the Partnership.
SECTION 5.07. Tax Advances. To the extent the General Partner reasonably believes
that the Partnership is required by law to withhold or to make tax payments on behalf of or with respect to any Partner or the Partnership is subjected to tax itself by reason of the status of any Partner (“Tax Advances”), the
General Partner may withhold such amounts and make such tax payments as so required. All Tax Advances made on behalf of a Partner shall be repaid by reducing the amount of the current or next succeeding distribution or distributions which would
otherwise have been made to such Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Partner. For all purposes of this Agreement such Partner shall be treated as
having received the amount of the distribution that is equal to the Tax Advance. Each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including, without limitation, any
liability for taxes, penalties, additions to tax or interest other than any penalties, additions to tax or interest imposed as a result of the Partnership’s failure to withhold or make a tax payment on behalf of such Partner which withholding
or payment is required pursuant to applicable Law but only to the extent amounts sufficient to pay such taxes were not timely distributed to the Partner pursuant to Section 4.01(b)) with respect to income attributable to or distributions or
other payments to such Partner.
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SECTION 5.08. Tax Matters. For tax years beginning before December 31, 2017, the
General Partner shall be or shall designate the “tax matters partner” within the meaning of Section 6231(a)(7) of the Code (as in effect prior to 2018) (the “Tax Matters Partner”) and, for the years beginning after
December 31, 2017, the General Partner shall be or shall designate the “partnership representative” within the meaning of Section 6223 of the Code (the “Partnership Representative”). The Partnership shall file as a
partnership for federal, state, provincial and local income tax purposes, except where otherwise required by Law. All elections required or permitted to be made by the Partnership, and all other tax decisions and determinations relating to federal,
state, provincial or local tax matters of the Partnership, shall be made by the Tax Matters Partner or the Partnership Representative, as applicable, in consultation with the Partnership’s attorneys and/or accountants. Tax audits, controversies
and litigations shall be conducted under the direction of the Tax Matters Partner or the Partnership Representative, as applicable. The Tax Matters Partner or the Partnership Representative, as applicable, shall keep the other Partners reasonably
informed as to any tax actions, examinations or proceedings relating to the Partnership and shall submit to the other Partners, for their review and comment, any settlement or compromise offer with respect to any disputed item of income, gain, loss,
deduction or credit of the Partnership. As soon as reasonably practicable after the end of each Fiscal Year, the Partnership shall send to each Partner a copy of U.S. Internal Revenue Service
Schedule K-1, and any comparable statements required by applicable U.S. state or local income tax Law as a result of the Partnership’s activities or investments, with respect to such Fiscal Year. The
Partnership also shall provide the Partners with such other information as may be reasonably requested for purposes of allowing the Partners to prepare and file their own tax returns.
SECTION 5.09. Other Allocation Provisions. Certain of the foregoing provisions and the other provisions of this Agreement relating
to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such regulations.
Sections 5.03, 5.04 and 5.05 may be amended at any time by the General Partner if necessary, in the opinion of tax counsel to the Partnership, to comply with such regulations or any applicable Law, so long as any such amendment does not
materially change the relative economic interests of the Partners.
ARTICLE VI
BOOKS AND RECORDS; REPORTS
SECTION 6.01. Books and Records. (a) At all times during the continuance of the Partnership, the Partnership shall prepare
and maintain separate books of account for the Partnership in accordance with GAAP.
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(b) Except as limited by Section 6.01(c), each Limited Partner shall have the right to
receive, for a purpose reasonably related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable written demand stating the purpose of such demand and at such Limited Partner’s own expense:
(i) a copy of the Certificate and this Agreement and all amendments thereto, together with a copy of the executed copies of all powers of
attorney pursuant to which the Certificate and this Agreement and all amendments thereto have been executed; and
(ii) promptly after
their becoming available, copies of the Partnership’s federal, state and local income tax returns and reports, if any, for the three most recent years.
(c) The General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner determines in its sole
discretion, (i) any information that the General Partner reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the General Partner believes is not in the best interests of the
Partnership, could damage the Partnership or its business or that the Partnership is required by law or by agreement with any third party to keep confidential.
ARTICLE VII
PARTNERSHIP UNITS
SECTION 7.01. Units. Interests in the Partnership shall be represented by Units. The Units initially are comprised of one
Class: Class A Units. The General Partner may establish, from time to time in accordance with such procedures as the General Partner shall determine from time to time, other Classes, one or more series of any such Classes, or other Partnership
securities with such designations, preferences, rights, powers and duties (which may be senior to existing Classes and series of Units or other Partnership securities), as shall be determined by the General Partner, including (i) the right to
share in Profits and Losses or items thereof; (ii) the right to share in Partnership distributions; (iii) the rights upon dissolution and liquidation of the Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may or shall be required to redeem the Units or other Partnership securities (including sinking fund provisions); (v) whether such Unit or other Partnership security is issued with the privilege of conversion or exchange and, if so,
the terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which each Unit or other Partnership security will be issued, evidenced by certificates and assigned or transferred; (vii) the method for
determining the Total Percentage Interest as to such Units or other Partnership securities; and (viii) the right, if any, of the holder of each such Unit or other Partnership security to vote on Partnership matters, including matters relating
to the relative designations, preferences, rights, powers and duties of such Units or other Partnership securities. Except as expressly provided in this Agreement to the contrary, any reference to “Units” shall include the Class A
Units and any other Classes that may be established in accordance with this Agreement. All Units of a particular Class shall have identical rights in all respects as all other Units of such Class, except in each case as otherwise specified in
this Agreement.
SECTION 7.02. Register. The register of the Partnership shall be the definitive record of ownership of each
Unit and all relevant information with respect to each Partner. Unless the General Partner shall determine otherwise, Units shall be uncertificated and recorded in the books and records of the Partnership.
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SECTION 7.03. Registered Partners. The Partnership shall be entitled to recognize the
exclusive right of a Person registered on its records as the owner of Units for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the Act or other applicable Law.
ARTICLE VIII
VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS
SECTION 8.01. Vesting of Initial Unvested Units. (a) Subject to Section 8.02 and except as set forth in
Section 8.01(b) or as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, the Initial Unvested Units shall vest and shall thereafter be Vested
Units for all purposes of this Agreement as follows:
(i) with respect to each Category 1 Limited Partner, 100% of the Initial Unvested
Units owned by such Limited Partner shall vest and thereafter be Vested Units for all purposes of this Agreement in equal 25% installments on each of the first, second, third and fourth anniversary dates of the consummation of the IPO;
(ii) with respect to each Category 3 Limited Partner and Category 4 Limited Partner, 100% of the Initial Unvested Units owned by such Limited
Partner shall vest and thereafter be Vested Units for all purposes of this Agreement in equal 20% installments on each of the first, second, third, fourth and fifth anniversary dates of the consummation of the IPO; and
(iii) with respect to each Category 5 Limited Partner, 100% of the Initial Unvested Units owned by such Limited Partner shall vest and
thereafter be Vested Units for all purposes of this Agreement in equal 12.5% installments on each of the first, second, third, fourth, fifth, sixth, seventh and eighth anniversary dates of the consummation of the IPO.
(b) Notwithstanding Section 8.01(a), if earlier, the Initial Unvested Units shall vest and shall thereafter be Vested Units for all
purposes of this Agreement as follows: (i) upon the Retirement of an Employed Limited Partner, 50% of the Initial Unvested Units owned by such Limited Partner that are Unvested Units at that time shall vest and thereafter be Vested Units for
all purposes of this Agreement; (ii) upon the death or Disability of an Employed Limited Partner, 100% of the Initial Unvested Units owned by such Limited Partner that are Unvested Units at that time shall vest and thereafter be Vested Units
for all purposes of this Agreement; and (iii) upon the occurrence of a Change of Control, 100% of the Initial Unvested Units that are Unvested Units at that time shall vest and thereafter be Vested Units for all purposes of this Agreement.
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(c) In addition, the General Partner in its sole discretion may authorize the earlier vesting of
all or a portion of the Initial Unvested Units owned by any one or more Limited Partners at any time and from time to time, and in such event, such Initial Unvested Units shall vest and thereafter be Vested Units for all purposes of this Agreement.
Any such determination in the General Partner’s discretion in respect of Initial Unvested Units shall be final and binding. Such determinations need not be uniform and may be made selectively among Limited Partners, whether or not such Limited
Partners are similarly situated, and shall not constitute the breach of any duty hereunder or otherwise existing at law, in equity or otherwise.
(d) Upon the vesting of any Initial Unvested Units in accordance with this Section 8.01, the General Partner shall modify the books and
records of the Partnership to reflect such vesting.
SECTION 8.02. Forfeiture of Units Held by Initial Limited Partners.
(a) Other than as set forth in Section 8.01(b) and except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, if a Limited Partner
ceases to be an Employed Limited Partner for any reason, such Limited Partner’s Unvested Units shall be immediately forfeited without any consideration, and such Limited Partner shall cease to own or have any rights with respect to such
Unvested Units; provided, however, that if a Limited Partner ceases to be an Employed Limited Partner in order to become a Government Official, such Limited Partner’s Unvested Units shall continue to vest as set forth in
Section 8.01 until such Limited Partner ceases to be a Government Official for any reason, at which point such Limited Partner’s Unvested Units shall be immediately forfeited without any consideration (unless such Limited Partner becomes
an Employed Limited Partner immediately after such Limited Partner ceases to be such a Government Official, in which case such Limited Partner’s Unvested Units shall continue to vest as set forth in Section 8.01) and such Limited Partner
shall cease to own or have any rights with respect to such Unvested Units. Immediately upon the forfeiture of any Initial Unvested Units, such Unvested Units that have been so forfeited shall be cancelled.
(b) Except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and
records of the Partnership, (i) if a Limited Partner that is or was at any time an Employed Limited Partner breaches any Restrictive Covenant to which such Limited Partner is subject or (ii) if an Employed Limited Partner is terminated for
Cause, the Initial Units held by such Limited Partner or such Limited Partner’s Personal Planning Vehicle at that time (whether or not vested) shall be immediately forfeited without any consideration, and such Limited Partner shall cease to own
or have any rights with respect to such Initial Units; provided, however, that Initial Units held by a Personal Planning Vehicle of a Category 1 Limited Partner created prior to the date of the First Amended and Restated Agreement are not
subject to forfeiture. Immediately upon the forfeiture of any Initial Units, such Initial Units that have been so forfeited shall be cancelled.
(c) Upon the forfeiture of any Unvested Units in accordance with this Section 8.02, the General Partner shall modify the books and records
of the Partnership to reflect such forfeiture.
SECTION 8.03. Limited Partner Transfers. (a) Except as provided in
clauses (b), (c), (d) and (f) of this Section 8.03, no Limited Partner or Assignee thereof may Transfer (including by exchanging in an Exchange Transaction) all or any portion of its Units or other interest in the
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Partnership (or beneficial interest therein) without the prior consent of the General Partner, which consent may be given or withheld, or made subject to such conditions (including, without
limitation, the receipt of such legal opinions and other documents that the General Partner may require) as are determined by the General Partner, in each case in the General Partner’s sole discretion. Any such determination in the General
Partner’s discretion in respect of Units shall be final and binding. Such determinations need not be uniform and may be made selectively among Limited Partners, whether or not such Limited Partners are similarly situated, and shall not
constitute the breach of any duty hereunder or otherwise existing at law, in equity or otherwise. Any purported Transfer of Units that is not in accordance with, or subsequently violates, this Agreement shall be, to the fullest extent permitted by
law, null and void.
(b) Notwithstanding clause (a) above, except as provided in or pursuant to clauses (b), (c), (d) and
(f) below and subject to Section 8.04, each Limited Partner may exchange in an Exchange Transaction up to 100% of the Initial Vested Units owned by such Limited Partner at any time and from time to time; provided that Unvested
Units may not be Transferred at any time.
(c) Notwithstanding clauses (a) or (b) above, with the prior consent of the General
Partner, (i) the Category 1 Limited Partners may make one or more gratuitous Transfers (including by exchanging in an Exchange Transaction) to any Charity at any time and from time to time up to a number of Initial Vested Units owned by such
Limited Partners that is equal to the quotient of $250 million divided by the offering price per common unit in the IPO for the purpose of making gratuitous transfers to any Charity.
(d) Notwithstanding clauses (a) or (b) above, if earlier: (i) upon the death or Disability of an Employed Limited Partner, such
Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; (ii) other than with respect to a Category 1 Limited Partner, following an Employed Limited
Partner’s termination of employment and after the earlier to occur of (A) one year from the date of termination of employment or (B) the expiration of the longest applicable Restricted Period with respect to such Employed Limited
Partner, such Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; (iii) following Mr. Stephen A. Schwarzman’s termination of
employment, any Category 1 Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; and (iv) upon the occurrence of a Change of Control, any Limited
Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; provided that in each case Unvested Units may not by Transferred at any time.
(e) [Reserved]
(f)
Notwithstanding clauses (a), (b), (c) and (d) above, a Personal Planning Vehicle of a Limited Partner may Transfer Class A Units (i) to the donor thereof or to the spouse of the donor thereof; (ii) if the Personal Planning
Vehicle is a grantor retained annuity trust and the trustee(s) of such grantor retained annuity trust is obligated to make one or more distributions to the donor of the grantor retained annuity trust, the estate of the donor of the grantor retained
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annuity trust, the spouse of the donor of the grantor retained annuity trust or the estate of the spouse of the donor of the grantor retained annuity trust, to any such Persons; or
(iii) upon the death of such Limited Partner, to the spouse of such Limited Partner or a trust for which a deduction under Section 2056 or 2056A (or any successor provisions) of the Code may be sought.
SECTION 8.04. Minimum Retained Ownership Requirement. (a) Other than the Category 1 Limited Partners, the Category 2 Limited
Partners and the Category 6 Limited Partner and unless otherwise permitted by the General Partner in its sole discretion, each Limited Partner that is or was at any time an Employed Limited Partner other than a Personal Planning Vehicle shall, until
the first anniversary of such Employed Limited Partner’s termination of employment, continue to hold (and may not Transfer) at least 25% of all Initial Vested Units received collectively by such Employed Limited Partner and by any Personal
Planning Vehicle of such Employed Limited Partner (the “Minimum Retained Ownership Requirement”); and provided that upon the Retirement of an Employed Limited Partner, such Limited Partner shall be subject to a Minimum
Retained Ownership Requirement of 12.5% instead of 25%. For purposes of this paragraph (a), (i) Units held by a Personal Planning Vehicle of a Limited Partner (other than the portion of the Units received by a Personal Planning Vehicle created
prior to the date of the First Amended and Restated Agreement identified in the books and records of the Partnership as “Non- Minimum Retained Ownership Requirement Units”) shall be deemed held by
such Limited Partner for purposes of calculating the number of Initial Vested Units received by such Limited Partner and (ii) any Units held by a Personal Planning Vehicle of a Limited Partner shall not be deemed to be held by such Limited
Partner for purposes of calculating whether the relevant percentage of Initial Vested Units held satisfies the Minimum Retained Ownership Requirement set forth in this Section 8.04(a).
(b) Unless otherwise approved by the General Partner in its sole discretion, each Category 1 Limited Partner other than a Personal Planning
Vehicle shall, until Mr. Stephen A. Schwarzman’s termination of employment, continue to hold (and may not Transfer) the lesser of (i) at least 25% of all Initial Vested Units received collectively by the Category 1 Limited
Partners and (ii) a number of Initial Units that is equal to the quotient of $1.5 billion divided by the Last Reported Sale Price per share of Class A Common Stock from time to time. For purposes of this paragraph (b),
(i) Units held by a Personal Planning Vehicle of a Category 1 Limited Partner (other than the portion of the Units received by a Personal Planning Vehicle created prior to the date of the First Amended and Restated Agreement identified in the
books and records of the Partnership as “Non-Minimum Retained Ownership Requirement Units”) shall be deemed held by such Category 1 Limited Partner for purposes of calculating the number of Initial
Vested Units received by such Category 1 Limited Partner and (ii) any Units held by a Personal Planning Vehicle of a Category 1 Limited Partner shall not be deemed to be held by such Category 1 Limited Partner for purposes of calculating
whether the relevant percentage of Initial Vested Units held satisfies the Minimum Retained Ownership Requirement set forth in this Section 8.04(b).
SECTION 8.05. Mandatory Exchanges. The General Partner may in its sole discretion at any time and from time to time, without the
consent of any Limited Partner, require any Limited Partner other than an Employed Limited Partner to Transfer in an Exchange Transaction all Units held by such Limited Partner. Any such determinations by the General
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Partner need not be uniform and may be made selectively among Limited Partners, whether or not such Limited Partners are similarly situated. In addition, the General Partner may, with the consent
of Partners whose Vested Percentage Interests exceed 75% of the Vested Percentage Interests of all Partners in the aggregate, require all Limited Partners to Transfer in an Exchange Transaction all Units held by them.
SECTION 8.06. Encumbrances. No Limited Partner or Assignee may create an Encumbrance with respect to all or any portion of its
Units (or any beneficial interest therein) other than Encumbrances that run in favor of the Limited Partner unless the General Partner consents in writing thereto, which consent may be given or withheld, or made subject to such conditions as are
determined by the General Partner, in the General Partner’s sole discretion. Consent of the General Partner shall be withheld until the holder of the Encumbrance acknowledges the terms and conditions of this Agreement. Any purported Encumbrance
that is not in accordance with this Agreement shall be, to the fullest extent permitted by law, null and void.
SECTION 8.07.
Further Restrictions. Notwithstanding any contrary provision in this Agreement, in no event may any Transfer of a Unit be made by any Limited Partner or Assignee if:
(a) such Transfer is made to any Person who lacks the legal right, power or capacity to own such Unit;
(b) such Transfer would require the registration of such transferred Unit or of any Class of Unit pursuant to any applicable United States
federal or state securities laws (including, without limitation, the Securities Act or the Exchange Act) or other non-U.S. securities laws (including Canadian provincial or territorial securities laws) or
would constitute a non-exempt distribution pursuant to applicable provincial or state securities laws;
(c) such Transfer would cause (i) all or any portion of the assets of the Partnership to (A) constitute “plan assets”
(under ERISA, the Code or any applicable Similar Law) of any existing or contemplated Limited Partner, or (B) be subject to the provisions of ERISA, Section 4975 of the Code or any applicable Similar Law, or (ii) the General Partner
to become a fiduciary with respect to any existing or contemplated Limited Partner, pursuant to ERISA, any applicable Similar Law, or otherwise;
(d) to the extent requested by the General Partner, the Partnership does not receive such legal and/or tax opinions and written instruments
(including, without limitation, copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as an Assignee) that are in a form satisfactory to the General Partner, as determined in the General Partner’s
sole discretion.
SECTION 8.08. Rights of Assignees. Subject to Section 8.07, the transferee of any permitted Transfer
pursuant to this Article VIII will be an assignee only (“Assignee”), and only will receive, to the extent transferred, the distributions and allocations of income, gain, loss, deduction, credit or similar item to which the
Partner which transferred its Units would be entitled, and such Assignee will not be entitled or enabled to exercise any other rights or powers
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of a Partner, such other rights, and all obligations relating to, or in connection with, such Interest remaining with the transferring Partner. The transferring Partner will remain a Partner even
if it has transferred all of its Units to one or more Assignees until such time as the Assignee(s) is admitted to the Partnership as a Partner pursuant to Section 8.10.
SECTION 8.09. Admissions, Withdrawals and Removals. (a) No Person may be admitted to the Partnership as an additional General
Partner or substitute General Partner without the prior written consent or ratification of Partners whose Vested Percentage Interests exceed 50% of the Vested Percentage Interests of all Partners in the aggregate. A General Partner will not be
entitled to Transfer all of its Units or to withdraw from being a General Partner of the Partnership unless another General Partner shall have been admitted hereunder (and not have previously been removed or withdrawn).
(b) No Limited Partner will be removed or entitled to withdraw from being a Partner of the Partnership except in accordance with
Section 8.11 hereof.
(c) Except as otherwise provided in Article IX or the Act, no admission, substitution, withdrawal or
removal of a Partner will cause the dissolution of the Partnership. To the fullest extent permitted by law, any purported admission, withdrawal or removal that is not in accordance with this Agreement shall be null and void.
SECTION 8.10. Admission of Assignees as Substitute Limited Partners. An Assignee will become a substitute Limited Partner only if
and when each of the following conditions is satisfied:
(a) the General Partner consents in writing to such admission, which consent may
be given or withheld, or made subject to such conditions as are determined by the General Partner, in each case in the General Partner’s sole discretion;
(b) if required by the General Partner, the General Partner receives written instruments (including, without limitation, copies of any
instruments of Transfer and such Assignee’s consent to be bound by this Agreement as a substitute Limited Partner) that are in a form satisfactory to the General Partner (as determined in its sole discretion);
(c) if required by the General Partner, the General Partner receives an opinion of counsel satisfactory to the General Partner to the effect
that such Transfer is in compliance with this Agreement and all applicable Law; and
(d) if required by the General Partner, the parties to
the Transfer, or any one of them, pays all of the Partnership’s reasonable expenses connected with such Transfer (including, but not limited to, the reasonable legal and accounting fees of the Partnership).
SECTION 8.11. Withdrawal and Removal of Limited Partners. If a Limited Partner ceases to hold any Units, then such Limited Partner
shall withdraw from the Partnership and shall cease to be a Limited Partner and to have the power to exercise any rights or powers of a Limited Partner.
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ARTICLE IX
DISSOLUTION, LIQUIDATION AND TERMINATION
SECTION 9.01. No Dissolution. Except as required by the Act, the Partnership shall not be dissolved by the admission of additional
Partners or withdrawal of Partners in accordance with the terms of this Agreement. The Partnership may be dissolved, liquidated wound up and terminated only pursuant to the provisions of this Article IX, and the Partners hereby irrevocably
waive any and all other rights they may have to cause a dissolution of the Partnership or a sale or partition of any or all of the Partnership assets.
SECTION 9.02. Events Causing Dissolution. The Partnership shall be dissolved and its affairs shall be wound up upon the occurrence
of any of the following events (each, a “Dissolution Event”):
(a) the entry of a decree of judicial dissolution of
the Partnership under Section 17-802 of the Act upon the finding by a court of competent jurisdiction that the General Partner (i) is permanently incapable of performing its part of this Agreement,
(ii) has been guilty of conduct that is calculated to affect prejudicially the carrying on of the business of the Partnership, (iii) willfully or persistently commits a breach of this Agreement or (iv) conducts itself in a manner
relating to the Partnership or its business such that it is not reasonably practicable for the other Partners to carry on the business of the Partnership with the General Partner;
(b) any event which makes it unlawful for the business of the Partnership to be carried on by the Partners;
(c) the written consent of all Partners;
(d) any other event not inconsistent with any provision hereof causing a dissolution of the Partnership under the Act;
(e) the Incapacity or removal of the General Partner or the occurrence of a Disabling Event with respect to the General Partner;
provided that the Partnership will not be dissolved or required to be wound up in connection with any of the events specified in this Section 9.02(e) if: (i) at the time of the occurrence of such event there is at least one other
general partner of the Partnership who is hereby authorized to, and elects to, carry on the business of the Partnership; or (ii) all remaining Limited Partners consent to or ratify the continuation of the business of the Partnership and the
appointment of another general partner of the Partnership, effective as of the event that caused the General Partner to cease to be a general partner of the Partnership, within 120 days following the occurrence of any such event, which consent shall
be deemed (and if requested each Limited Partner shall provide a written consent or ratification) to have been given for all Limited Partners if the holders of more than 50% of the Vested Units then outstanding agree in writing to so continue the
business of the Partnership.
SECTION 9.03. Distribution upon Dissolution. Upon dissolution, the Partnership shall not be
terminated and shall continue until the winding up of the affairs of the Partnership is completed. Upon the winding up of the Partnership, the General Partner, or any other Person
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designated by the General Partner (the “Liquidation Agent”), shall take full account of the assets and liabilities of the Partnership and shall, unless the General Partner
determines otherwise, liquidate the assets of the Partnership as promptly as is consistent with obtaining the fair value thereof. The proceeds of any liquidation shall be applied and distributed in the following order:
(a) First, to the satisfaction of debts and liabilities of the Partnership (including satisfaction of all indebtedness to Partners and/or their
Affiliates to the extent otherwise permitted by law) including the expenses of liquidation, and including the establishment of any reserve which the Liquidation Agent shall deem reasonably necessary for any contingent, conditional or unmatured
contractual liabilities or obligations of the Partnership (“Contingencies”). Any such reserve may be paid over by the Liquidation Agent to any
attorney-at-law, or acceptable party, as escrow agent, to be held for disbursement in payment of any Contingencies and, at the expiration of such period as shall be
deemed advisable by the Liquidation Agent for distribution of the balance in the manner hereinafter provided in this Section 9.03; and
(b) The balance, if any, to the Partners, pro rata to each of the Partners in accordance with their Total Percentage Interests.
SECTION 9.04. Time for Liquidation. A reasonable amount of time shall be allowed for the orderly liquidation of the assets of
the Partnership and the discharge of liabilities to creditors so as to enable the Liquidation Agent to minimize the losses attendant upon such liquidation.
SECTION 9.05. Termination. The Partnership shall terminate when all of the assets of the Partnership, after payment of or due
provision for all debts, liabilities and obligations of the Partnership, shall have been distributed to the holders of Units in the manner provided for in this Article IX, and the Certificate shall have been cancelled in the manner required by
the Act.
SECTION 9.06. Claims of the Partners. The Partners shall look solely to the Partnership’s assets for the return
of their Capital Contributions, and if the assets of the Partnership remaining after payment of or due provision for all debts, liabilities and obligations of the Partnership are insufficient to return such Capital Contributions, the Partners shall
have no recourse against the Partnership or any other Partner or any other Person. No Partner with a negative balance in such Partner’s Capital Account shall have any obligation to the Partnership or to the other Partners or to any creditor or
other Person to restore such negative balance during the existence of the Partnership, upon dissolution or termination of the Partnership or otherwise, except to the extent required by the Act.
SECTION 9.07. Survival of Certain Provisions. Notwithstanding anything to the contrary in this Agreement, the provisions of
Section 10.02 and Section 11.09 shall survive the termination of the Partnership.
ARTICLE X
LIABILITY AND INDEMNIFICATION
SECTION 10.01. Liability of Partners.
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(a) No Limited Partner shall be liable for any debt, obligation or liability of the Partnership
or of any other Partner or have any obligation to restore any deficit balance in its Capital Account solely by reason of being a Partner of the Partnership, except to the extent required by the Act.
(b) This Agreement is not intended to, and does not, create or impose any fiduciary duty on any of the Partners (including without limitation,
the General Partner) hereto or on their respective Affiliates. Further, the Partners hereby waive any and all fiduciary duties that, absent such waiver, may exist at or be implied by Law or in equity, and in doing so, recognize, acknowledge and
agree that their duties and obligations to one another and to the Partnership are only as expressly set forth in this Agreement and those required by the Act.
(c) To the extent that, at law or in equity, any Partner (including without limitation, the General Partner) has duties (including fiduciary
duties) and liabilities relating thereto to the Partnership or to another Partner, the Partners (including without limitation, the General Partner) acting under this Agreement will not be liable to the Partnership or to any such other Partner for
their 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 relating thereto of any Partner (including without limitation, the General
Partner) otherwise existing at law or in equity, are agreed by the Partners to replace to that extent such other duties and liabilities of the Partners relating thereto (including without limitation, the General Partner).
(d) The General Partner may consult with legal counsel, accountants and financial or other advisors and any act or omission suffered or taken
by the General Partner on behalf of the Partnership or in furtherance of the interests of the Partnership in good faith in reliance upon and in accordance with the advice of such counsel, accountants or financial or other advisors will be full
justification for any such act or omission, and the General Partner will be fully protected in so acting or omitting to act so long as such counsel or accountants or financial or other advisors were selected with reasonable care.
(e) Notwithstanding any other provision of this Agreement or otherwise applicable provision of law or equity, whenever in this Agreement the
General Partner is permitted or required to make a decision (i) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, such General Partner shall be entitled to consider only such
interests and factors as it desires, including its own interests, and shall, to the fullest extent permitted by applicable Law, have no duty or obligation to give any consideration to any interest of or factors affecting the Partnership or the
Limited Partners, or (ii) in its “good faith” or under another expressed standard, such General Partner shall act under such express standard and shall not be subject to any other or different standards.
SECTION 10.02. Indemnification.
(a) Indemnification. To the fullest extent permitted by law, the Partnership shall indemnify any person (and such person’s heirs,
executors or administrators) who was or is made or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding (brought in the right of the Partnership or otherwise), whether civil,
criminal, administrative or investigative, and whether formal or informal,
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including appeals, by reason of the fact that such person, or a person for whom such person was the legal representative, is or was the General Partner or a director or officer of the General
Partner or the Partnership or, while a director or officer of the General Partner or the Partnership, is or was serving at the request of the Partnership as a director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, limited liability company, nonprofit entity or other enterprise, for and against all loss and liability suffered and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement
reasonably incurred by such person or such heirs, executors or administrators in connection with such action, suit or proceeding, including appeals, if such person acted in good faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the Partnership and, with respect to any alleged conduct resulting in a criminal proceeding against the person, such person had no reasonable cause to believe that such person’s conduct was unlawful.
Notwithstanding the preceding sentence, except as otherwise provided in Section 10.02(c), the Partnership shall be required to indemnify a person described in such sentence in connection with any action, suit or proceeding (or part thereof)
commenced by such person only if the commencement of such action, suit or proceeding (or part thereof) by such person was authorized by the General Partner. Any reference to an officer of the General Partner or the Partnership in this
Section 10.02 shall be deemed to refer exclusively to the Chief Executive Officer, President, Chief Operating Officer, Executive Vice Chairman, Chief Financial Officer, Chief Legal Officer, Secretary or any other officer of the Partnership
appointed pursuant to Section 3.04 hereof or, with respect to the General Partner, appointed pursuant to the equivalent organizational documents of the General Partner. The fact that any person who is or was an employee of the General Partner
or the Partnership, but not an officer thereof as described in the preceding sentence, has been given or has used any title that could be construed to suggest or imply that such person is or may be an officer of the General Partner or the
Partnership shall not result in such person being constituted as, or being deemed to be, such an officer of the General Partner or the Partnership for purposes of this Section 10.02.
(b) Advancement of Expenses. To the fullest extent permitted by law, the Partnership shall promptly pay expenses (including
attorneys’ fees) incurred by any person described in Section 10.02(a) in appearing at, participating in or defending any action, suit or proceeding in advance of the final disposition of such action, suit or proceeding, including appeals,
upon (i) presentation of an undertaking on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified under this Section 10.02 or otherwise and (ii) to the extent
determined by the General Partner in its sole discretion to be necessary or advisable, receipt by the Partnership of security or other assurances satisfactory to the General Partner in its sole discretion that such person will be able to repay such
amount if it ultimately shall be determined that such person is not entitled to be indemnified under this Section 10.02 or otherwise. Notwithstanding the preceding sentence, except as otherwise provided in Section 10.02(c), the Partnership
shall be required to advance expenses of a person described in such sentence in connection with any action, suit or proceeding (or part thereof) commenced by such person only if the commencement of such action, suit or proceeding (or part thereof)
by such person was authorized by the General Partner.
30
(c) Unpaid Claims. If a claim for indemnification (following the final disposition of such
action, suit or proceeding) or advancement of expenses under this Section 10.02 is not paid in full within thirty (30) days after a written claim therefor by any person described in Section 10.02(a) has been received by the
Partnership, such person may file proceedings to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Partnership shall have the
burden of proving that such person is not entitled to the requested indemnification or advancement of expenses under applicable Law.
(d)
Insurance. To the fullest extent permitted by law, the Partnership may purchase and maintain insurance on behalf of any person described in Section 10.02(a) against any liability asserted against such person, whether or not the
Partnership would have the power to indemnify such person against such liability under the provisions of this Section 10.02 or otherwise.
(e) Non-Exclusivity of Rights. The provisions of this Section 10.02 shall be
applicable to all actions, claims, suits or proceedings made or commenced after the date of the First Amended and Restated Agreement, whether arising from acts or omissions to act occurring before or after its adoption. The provisions of this
Section 10.02 shall be deemed to be a contract between the Partnership and each person entitled to indemnification under this Section 10.02 (or legal representative thereof) who serves in such capacity at any time while this
Section 10.02 and the relevant provisions of applicable Law, if any, are in effect, and any amendment, modification or repeal hereof shall not affect any rights or obligations then existing with respect to any state of facts or any action, suit
or proceeding then or theretofore existing, or any action, suit or proceeding thereafter brought or threatened based in whole or in part on any such state of facts. If any provision of this Section 10.02 shall be found to be invalid or limited
in application by reason of any law or regulation, it shall not affect the validity of the remaining provisions hereof. The rights of indemnification provided in this Section 10.02 shall neither be exclusive of, nor be deemed in limitation of,
any rights to which any person may otherwise be or become entitled or permitted by contract, this Partnership Agreement or as a matter of law, both as to actions in such person’s official capacity and actions in any other capacity, it being the
policy of the Partnership that indemnification of any person whom the Partnership is obligated to indemnify pursuant to Section 10.02(a) shall be made to the fullest extent permitted by law.
For purposes of this Section 10.02, references to “other enterprises” shall include employee benefit plans; references to
“fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Partnership” shall include any service as a director, officer, employee or
agent of the Partnership which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries.
This Section 10.02 shall not limit the right of the Partnership, to the extent and in the manner permitted by law, to indemnify and to
advance expenses to, and purchase and maintain insurance on behalf of, persons other than persons described in Section 10.02(a).
31
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being
enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner
materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent
of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
SECTION 11.02. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail (delivery receipt requested) or by registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.02):
(a) If to the Partnership, to:
Blackstone Holdings II L.P.
c/o
Blackstone Holdings I/II GP L.L.C.
345 Park Avenue
New York, New York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
(b) If to any Partner, to:
c/o
Blackstone Holdings I/II GP L.L.C.
345 Park Avenue
New York, New York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
(c) If to the General Partner, to:
Blackstone Holdings I/II GP L.L.C.
345 Park Avenue
New York, New
York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
32
SECTION 11.03. Cumulative Remedies. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by Law.
SECTION 11.04. Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the
extent permitted by this Agreement, their successors, executors, administrators, heirs, legal representatives and assigns.
SECTION 11.05. Interpretation. Throughout this Agreement, nouns, pronouns and verbs shall be construed as masculine, feminine,
neuter, singular or plural, whichever shall be applicable. Unless otherwise specified, all references herein to “Articles,” “Sections” and paragraphs shall refer to corresponding provisions of this Agreement.
SECTION 11.06. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Copies of executed
counterparts transmitted by telecopy or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 11.06.
SECTION 11.07. Further Assurances. Each Limited Partner shall perform all other acts and execute and deliver all other documents
as may be necessary or appropriate to carry out the purposes and intent of this Agreement.
SECTION 11.08. Entire Agreement.
This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
SECTION 11.09. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of
Delaware.
SECTION 11.10. Submission to Jurisdiction; Waiver of Jury Trial.
(a) Any and all disputes which cannot be settled amicably, including any ancillary claims of any party, arising out of, relating to or in
connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) shall be
finally settled by arbitration conducted by a single arbitrator in New York in accordance with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the
dispute fail to agree on the selection of an arbitrator within thirty (30) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct
the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
33
(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may cause
the Partnership to bring, on behalf of the General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking
temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of paragraph (c) of this
Section 11.10 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate,
and (iii) irrevocably appoints the General Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon such agent, who shall promptly advise such Partner
of any such service of process, shall be deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY
JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 11.10, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary
judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the fora designated by this
paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties
hereby waive, to the fullest extent permitted by applicable Law, any objection which they now or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to
in the preceding paragraph of this Section 11.10 and such parties agree not to plead or claim the same.
(d) Notwithstanding any
provision of this Agreement to the contrary, this Section 11.10 shall be construed to the maximum extent possible to comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et
seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of this Section 11.10, including any rules of the International Chamber of
Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or other applicable Law, such invalidity shall not invalidate all of this Section 11.10. In that case, this Section 11.10 shall be construed so as to limit any
term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act or other applicable Law, and, in the event such term or provision cannot be so limited, this Section 11.10 shall be construed to
omit such invalid or unenforceable provision.
SECTION 11.11. Expenses. Except as otherwise specified in this Agreement, the
Partnership shall be responsible for all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with its operation.
34
SECTION 11.12. Amendments and Waivers. (a) This Agreement (including the Annexes
hereto) may be amended, supplemented, waived or modified by the written consent of the General Partner; provided that any amendment that would have a material adverse effect on the rights or preferences of any Class of Units in relation
to other Classes of Units must be approved by the holders of not less than a majority of the Vested Percentage Interests of the Class affected; provided further, that the General Partner may, without the written consent of any
Limited Partner or any other Person, amend, supplement, waive or modify any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect: (i) any
amendment, supplement, waiver or modification that the General Partner determines to be necessary or appropriate in connection with the creation, authorization or issuance of any class or series of equity interest in the Partnership; (ii) the
admission, substitution, withdrawal or removal of Partners in accordance with this Agreement; (iii) a change in the name of the Partnership, the location of the principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership; (iv) any amendment, supplement, waiver or modification that the General Partner determines in its sole discretion to be necessary or appropriate to address changes in U.S. federal income
tax regulations, legislation or interpretation; (v) a change in the Fiscal Year or taxable year of the Partnership and any other changes that the General Partner determines to be necessary or appropriate as a result of a change in the Fiscal
Year or taxable year of the Partnership including a change in the dates on which distributions are to be made by the Partnership.
(b) No
failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of time specified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.
(c) The General Partner may, in its sole discretion, unilaterally amend this Agreement on or before the effective date of the final regulations
to provide for (i) the election of a safe harbor under Proposed Treasury Regulation Section 1.83-3(l) (or any similar provision) under which the fair market value of a partnership interest that
is transferred is treated as being equal to the liquidation value of that interest, (ii) an agreement by the Partnership and each of its Partners to comply with all of the requirements set forth in such regulations and Notice 2005-43 (and any other guidance provided by the Internal Revenue Service with respect to such election) with respect to all partnership interests transferred in connection with the performance of services while the
election remains effective, (iii) the allocation of items of income, gains, deductions and losses required by the final regulations similar to Proposed Treasury
Regulation Section 1.704-1(b)(4)(xii)(b) and (c), and (iv) any other related amendments.
(d) Except as may be otherwise required by law in connection with the winding-up, liquidation, or
dissolution of the Partnership, each Partner hereby irrevocably waives any and all rights that it may have to maintain an action for judicial accounting or for partition of any of the Partnership’s property.
35
SECTION 11.13. No Third Party Beneficiaries. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their permitted assigns and successors and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity, any legal or equitable right, benefit or remedy of
any nature whatsoever under or by reason of this Agreement (other than pursuant to Section 10.02 hereof).
SECTION 11.14.
Headings. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision
hereof.
SECTION 11.15. Construction. Each party hereto acknowledges and agrees it has had the opportunity to draft, review
and edit the language of this Agreement and that it is the intent of the parties hereto that no presumption for or against any party arising out of drafting all or any part of this Agreement will be applied in any dispute relating to, in connection
with or involving this Agreement. Accordingly, the parties hereby waive to the fullest extent permitted by law the benefit of any rule of Law or any legal decision that would require that in cases of uncertainty, the language of a contract should be
interpreted most strongly against the party who drafted such language.
SECTION 11.16. Power of Attorney. Each Limited
Partner, by its execution hereof, hereby irrevocably makes, constitutes and appoints the General Partner as its true and lawful agent and attorney in fact, with full power of substitution and full power and authority in its name, place and stead, to
make, execute, sign, acknowledge, swear to, record and file (a) this Agreement and any amendment to this Agreement that has been adopted as herein provided; (b) the original certificate of limited partnership of the Partnership and all
amendments thereto required or permitted by law or the provisions of this Agreement; (c) all certificates and other instruments (including consents and ratifications which the Limited Partners have agreed to provide upon a matter receiving the
agreed support of Limited Partners) deemed advisable by the General Partner to carry out the provisions of this Agreement (including the provisions of Section 8.05) and Law or to permit the Partnership to become or to continue as a limited
partnership or partnership wherein the Limited Partners have limited liability in each jurisdiction where the Partnership may be doing business; (d) all instruments that the General Partner deems appropriate to reflect a change or modification
of this Agreement or the Partnership in accordance with this Agreement, including, without limitation, the admission of additional Limited Partners or substituted Limited Partners pursuant to the provisions of this Agreement; (e) all
conveyances and other instruments or papers deemed advisable by the General Partner to effect the liquidation and termination of the Partnership; and (f) all fictitious or assumed name certificates required or permitted (in light of the
Partnership’s activities) to be filed on behalf of the Partnership.
SECTION 11.17. Letter Agreements; Schedules. The
General Partner may, or may cause the Partnership to, without the approval of any Limited Partner or other Person, enter into separate letter agreements with individual Limited Partners with respect to any matter, in each case on terms and
conditions not inconsistent with this Agreement, which have the effect of establishing rights under, or supplementing the terms of, this Agreement. The General Partner may from time to time execute and deliver to the Limited Partners schedules which
set forth information contained in the books and records of the Partnership and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement
for any purpose whatsoever.
36
SECTION 11.18. Partnership Status. The parties intend to treat the Partnership as a
partnership for U.S. federal income tax purposes.
[Remainder of Page Intentionally Left Blank]
37
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement or have caused this
Agreement to be duly executed by their respective authorized officers, in each case as of the date first above stated.
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GENERAL PARTNER:
BLACKSTONE HOLDINGS I/II GP L.L.C.
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By:
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The Blackstone Group Inc., its sole member
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By:
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/s/ John G. Finley
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Name:
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John G. Finley
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Title:
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Chief Legal Officer
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[Signature Page to Third Amended and Restated Limited Partnership Agreement of Blackstone Holdings II
L.P.]
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LIMITED PARTNERS REPRESENTING A MAJORITY VESTED PERCENTAGE INTEREST:
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/s/ Stephen A. Schwarzman
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Stephen A. Schwarzman
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/s/ Jonathan D. Gray
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Jonathan D. Gray
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/s/ Hamilton E. James
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Hamilton E. James
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[Signature Page to Third Amended and Restated Limited Partnership Agreement of Blackstone Holdings II
L.P.]
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ALL OTHER LIMITED PARTNERS:
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All other Limited Partners now and hereafter admitted as Limited Partners of the Partnership, pursuant to powers of attorney now and hereafter executed in favor of, and granted and delivered to the General Partner
without execution hereof pursuant to Section 11.16 of the Second Amended and Restated Agreement.
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By:
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BLACKSTONE HOLDINGS I/II GP L.L.C.
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By:
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The Blackstone Group Inc., its sole member
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By:
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/s/ John G. Finley
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Name:
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John G. Finley
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Title:
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Chief Legal Officer
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[Signature Page to Third Amended and Restated Limited Partnership Agreement of Blackstone Holdings II
L.P.]
Exhibit 10.3
Execution Version
FOURTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
BLACKSTONE HOLDINGS
III L.P.
Dated as of August 10, 2020
THE PARTNERSHIP UNITS OF BLACKSTONE HOLDINGS III L.P. HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAWS OF ANY
STATE, PROVINCE OR ANY OTHER APPLICABLE SECURITIES LAWS AND ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR PROVINCE, AND ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS
AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE UNITS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS LIMITED PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH
UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.
Table of Contents
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Page
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ARTICLE I
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DEFINITIONS
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Section 1.01.
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Definitions
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2
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ARTICLE II
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FORMATION, TERM, PURPOSE AND POWERS
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Section 2.01.
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Formation
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11
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Section 2.02.
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Name
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11
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Section 2.03.
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Term
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11
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Section 2.04.
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Offices
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12
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Section 2.05.
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Agent for Service of Process
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12
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Section 2.06.
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Business Purpose
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12
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Section 2.07.
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Powers of the Partnership
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12
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Section 2.08.
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Partners; Admission of New Partners
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12
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Section 2.09.
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Withdrawal
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12
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ARTICLE III
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MANAGEMENT
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Section 3.01.
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General Partner
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12
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Section 3.02.
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Compensation
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13
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Section 3.03.
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Expenses
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13
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Section 3.04.
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Officers
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13
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Section 3.05.
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Authority of Partners
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14
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Section 3.06.
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Action by Written Consent or Ratification
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14
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ARTICLE IV
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DISTRIBUTIONS
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Section 4.01.
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Distributions
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14
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Section 4.02.
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Liquidation Distribution
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15
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Section 4.03.
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Limitations on Distribution
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15
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Section 4.04.
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Administration Fee
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15
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ARTICLE V
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CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
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TAX ALLOCATIONS; TAX MATTERS
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Section 5.01.
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Initial Capital Contributions
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16
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Section 5.02.
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No Additional Capital Contributions
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16
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Section 5.03.
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Capital Accounts
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16
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i
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Section 5.04.
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Allocations of Profits and Losses
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16
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Section 5.05.
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Special Allocations
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17
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Section 5.06.
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Tax Allocations
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18
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Section 5.07.
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Tax Advances
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18
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Section 5.08.
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Tax Matters
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19
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Section 5.09.
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Other Allocation Provisions
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ARTICLE VI
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BOOKS AND RECORDS; REPORTS
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Section 6.01.
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Books and Records
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19
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ARTICLE VII
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PARTNERSHIP UNITS
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Section 7.01.
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Units
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20
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Section 7.02.
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Register
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21
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Section 7.03.
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Registered Partners
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21
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ARTICLE VIII
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VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS
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Section 8.01.
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Vesting of Initial Unvested Units
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21
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Section 8.02.
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Forfeiture of Units Held by Initial Limited Partners
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22
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Section 8.03.
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Limited Partner Transfers
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23
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Section 8.04.
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Minimum Retained Ownership Requirement
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24
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Section 8.05.
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Mandatory Exchanges
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25
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Section 8.06.
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Encumbrances
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25
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Section 8.07.
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Further Restrictions
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25
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Section 8.08.
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Rights of Assignees
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26
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Section 8.09.
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Admissions, Withdrawals and Removals
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26
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Section 8.10.
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Admission of Assignees as Substitute Limited Partners
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26
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Section 8.11.
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Withdrawal and Removal of Limited Partners
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27
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ARTICLE IX
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DISSOLUTION, LIQUIDATION AND TERMINATION
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Section 9.01.
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No Dissolution
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27
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Section 9.02.
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Events Causing Dissolution
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27
|
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Section 9.03.
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Distribution upon Dissolution
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28
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Section 9.04.
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Time for Liquidation
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28
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Section 9.05.
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Termination
|
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28
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Section 9.06.
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Claims of the Partners
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28
|
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Section 9.07.
|
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Survival of Certain Provisions
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29
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ii
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ARTICLE X
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|
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LIABILITY AND INDEMNIFICATION
|
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Section 10.01.
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Liability of Partners
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29
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Section 10.02.
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Indemnification
|
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30
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|
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ARTICLE XI
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MISCELLANEOUS
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Section 11.01.
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Severability
|
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32
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Section 11.02.
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Notices
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32
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Section 11.03.
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Cumulative Remedies
|
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33
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Section 11.04.
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Binding Effect
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33
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Section 11.05.
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Interpretation
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33
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Section 11.06.
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Counterparts
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33
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Section 11.07.
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Further Assurances
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33
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Section 11.08.
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Entire Agreement
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33
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Section 11.09.
|
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Governing Law
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33
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Section 11.10.
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Submission to Jurisdiction; Waiver of Jury Trial
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33
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Section 11.11.
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Expenses
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34
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Section 11.12.
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Amendments and Waivers
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34
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Section 11.13.
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No Third Party Beneficiaries
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35
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Section 11.14.
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Headings
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36
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Section 11.15.
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Construction
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36
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Section 11.16.
|
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Power of Attorney
|
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36
|
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Section 11.17.
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Letter Agreements; Schedules
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36
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Section 11.18.
|
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Partnership Status
|
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36
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iii
FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
BLACKSTONE HOLDINGS
III L.P.
This FOURTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (this “Agreement”) of Blackstone Holdings
III L.P. (the “Partnership”) is made as of the 10th day of August, 2020, by and among Blackstone Holdings III GP L.P., a limited partnership formed under the laws of the State of
Delaware, as general partner, and the Limited Partners (as defined herein) of the Partnership.
WHEREAS, the Partnership was formed as a
limited partnership pursuant to the Act, by the execution of the Limited Partnership Agreement of the Partnership dated as of June 13, 2007 (the “Original Agreement”);
WHEREAS, the Original Agreement was amended and restated by the Amended and Restated Limited Partnership Agreement of the Partnership dated as
of June 18, 2007 (the “First Amended and Restated Limited Partnership Agreement”) and was further amended and restated by the Second Amended and Restated Limited Partnership Agreement of the Partnership dated as of
January 1, 2009, as amended by Amendment No. 1 thereto, dated as of November 3, 2009 (as so amended, the “Second Amended and Restated Limited Partnership Agreement”); and
WHEREAS, the Second Amended and Restated Limited Partnership Agreement was amended and restated by the Third Amended and Restated Limited
Partnership Agreement of the Partnership dated as of July 1, 2019 (the “Third Amended and Restated Agreement”);
WHEREAS, pursuant to Section 11.12 of the Third Amended and Restated Agreement, the amendments set forth in this Agreement require only
the consent of the General Partner and no consent or approval of any Limited Partner is required;
WHEREAS, the Limited Partners holding
not less than a majority of the Vested Percentage Interests of the Units have also consented to amending the Third Amended and Restated Agreement in the manner and as more fully set forth herein; and
WHEREAS, the parties to this Agreement now wish to amend and restate the Third Amended and Restated Limited Partnership Agreement in its
entirety as more fully set forth below.
NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending
to be legally bound hereby, the parties hereto agree to amend and restate the Third Amended and Restated Limited Partnership Agreement in its entirety to read as follows:
1
ARTICLE I
DEFINITIONS
Section 1.01.
Definitions. Capitalized terms used herein without definition have the following meanings (such meanings being equally applicable to both the singular and plural form of the terms defined):
“Act” means, the Civil Code and An Act respecting legal publicity of sole proprietorships, partnerships and legal persons
(Québec), as they may be amended from time to time, and the laws of Québec applicable to partnerships.
“Additional
Credit Amount” has the meaning set forth in Section 4.01(b)(ii).
“Adjusted Capital Account Balance” means,
with respect to each Partner, the balance in such Partner’s Capital Account adjusted (i) by taking into account the adjustments, allocations and distributions described in U.S. Treasury Regulations Sections
1.704-1(b)(2)(ii)(c) (4), (5) and (6); and (ii) by adding to such balance such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, determined pursuant to
Regulations Sections 1.704-2(g) and 1.704-2(i)(5), any amounts such Partner is obligated to restore pursuant to any provision of this Agreement or by applicable Law. The
foregoing definition of Adjusted Capital Account Balance is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Administration Fee” has the meaning set forth in Section 4.04.
“Affiliate” means, with respect to a specified Person, any other Person that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person.
“Agreement” has the
meaning set forth in the preamble of this Agreement.
“Amended Tax Amount” has the meaning set forth in
Section 4.01(b)(ii).
“Assignee” has the meaning set forth in Section 8.08.
“Assumed Tax Rate” means the highest effective marginal combined U.S. federal, state and local income tax rate for a Fiscal
Year prescribed for an individual or corporate resident in New York, New York (taking into account (a) the nondeductibility of expenses subject to the limitation described in Section 67(a) of the Code and (b) the character (e.g.,
long-term or short-term capital gain or ordinary or exempt income) of the applicable income, but not taking into account the deductibility of state and local income taxes for U.S. federal income tax purposes). For the avoidance of doubt, the Assumed
Tax Rate will be the same for all Partners.
“Available Cash” means, with respect to any fiscal period, the amount of
cash on hand which the General Partner, in its reasonable discretion, deems available for distribution to the Partners, taking into account all debts, liabilities and obligations of the Partnership then due and amounts which the General Partner, in
its reasonable discretion, deems necessary to expend or retain for working capital or to place into reserves for customary and usual claims with respect to the Partnership’s operations.
2
“Blackstone Holdings Partnerships” means each of the Partnership, Blackstone
Holdings AI L.P., a Delaware limited partnership, Blackstone Holdings I L.P., a Delaware limited partnership, Blackstone Holdings II L.P., a Delaware limited partnership, and Blackstone Holdings IV L.P., a Québec société en
commandite.
“Capital Account” means the separate capital account maintained for each Partner in accordance with
Section 5.03 hereof.
“Capital Contribution” means, with respect to any Partner, the aggregate amount of money
contributed to the Partnership and the Carrying Value of any property (other than money), net of any liabilities assumed by the Partnership upon contribution or to which such property is subject, contributed to the Partnership pursuant to Article V.
“Carrying Value” means, with respect to any Partnership asset, the asset’s adjusted basis for U.S. federal income
tax purposes, except that the initial carrying value of assets contributed to the Partnership shall be their respective gross fair market values on the date of contribution as determined by the General Partner, and the Carrying Values of all
Partnership assets shall be adjusted to equal their respective fair market values, in accordance with the rules set forth in United States Treasury Regulation Section 1.704-1(b)(2)(iv)(f), except as
otherwise provided herein, as of: (a) the date of the acquisition of any additional Partnership Interest by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (b) the date of the distribution of more
than a de minimis amount of Partnership assets to a Partner; (c) the date a Partnership Interest is relinquished to the Partnership; or (d) any other date specified in the United States Treasury Regulations; provided,
however, that adjustments pursuant to clauses (a), (b) (c) and (d) above shall be made only if such adjustments are deemed necessary or appropriate by the General Partner to reflect the relative economic interests of the Partners. The
Carrying Value of any Partnership asset distributed to any Partner shall be adjusted immediately before such distribution to equal its fair market value. In the case of any asset that has a Carrying Value that differs from its adjusted tax basis,
Carrying Value shall be adjusted by the amount of depreciation calculated for purposes of the definition of “Profits (Losses)” rather than the amount of depreciation determined for U.S. federal income tax purposes, and depreciation
shall be calculated by reference to Carrying Value rather than tax basis once Carrying Value differs from tax basis.
“Category 1
Limited Partner” means each of the Limited Partners identified in the books and records of the Partnership as a Category 1 Limited Partner.
“Category 2 Limited Partner” means each of the Limited Partners identified in the books and records of the Partnership as a
Category 2 Limited Partner.
“Category 3 Limited Partner” means each of the Limited Partners identified in the books and
records of the Partnership as a Category 3 Limited Partner.
“Category 4 Limited Partner” means each of the Limited
Partners identified in the books and records of the Partnership as a Category 4 Limited Partner.
3
“Category 5 Limited Partner” means each of the Limited Partners identified in
the books and records of the Partnership as a Category 5 Limited Partner.
“Category 6 Limited Partner” means the Limited
Partner identified in the books and records of the Partnership as a Category 6 Limited Partner.
“Cause” means the
occurrence or existence of any of the following as determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by an Employed Limited Partner of any provision of this Agreement or the Non-Competition Agreement, (x) any material breach of any rules or regulations applicable to senior managing directors or employees, as applicable, of the Blackstone Holdings Partnerships, their subsidiaries
and their affiliated entities, (y) an Employed Limited Partner’s deliberate failure to perform his or her duties to the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, or (z) an Employed Limited
Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities in any material way (provided that, in the case of any of
the foregoing clauses (w), (x), (y) and (z), the General Partner has given the Employed Limited Partner written notice (a “Notice of Breach”) within fifteen days after the General Partner becomes aware of such action and such
Employed Limited Partner fails to cure such breach, failure to perform or conduct or behavior within fifteen days after receipt by the Employed Limited Partner of such Notice of Breach from the General Partner (or such longer period, not to exceed
an additional fifteen days, as shall be reasonably required for such cure, provided, that such Employed Limited Partner is diligently pursuing such cure), (iii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct
against the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, or (iv) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony or crime (including any misdemeanor
charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of competent jurisdiction, by a U.S. federal or state or comparable non-U.S. regulatory body or by a self-regulatory body having authority with respect to U.S. federal or state or comparable non-U.S. securities laws, rules or regulations of
the securities industry, that such Employed Limited Partner individually has violated any U.S. federal or state or comparable non-U.S. securities laws or any rules or regulations thereunder, or any rules of
any such self-regulatory body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such Employed Limited Partner’s ability to function as a senior managing
director or employee, as applicable, of the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, taking into account the services required of Employed Limited Partner and the nature of the business of the Blackstone
Holdings Partnerships, their subsidiaries and their affiliated entities or (B) the business of the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities.
“Change of Control” means the occurrence of any Person, other than Blackstone Group Management L.L.C. or a Person approved by
Blackstone Group Management L.L.C., becoming the Class C Stockholder.
4
“Charity” means any organization that is organized and operated for a purpose
described in Section 170(c) of the Code (determined without reference to Code Section 170(c)(2)(A)) and described in Code Sections 2055(a) and 2522.
“Civil Code” means the Civil Code of Québec, RSQ ch. C-1991, as it may be
amended from time to time.
“Class” means the classes of Units into which the interests in the Partnership may be
classified or divided from time to time pursuant to the provisions of this Agreement.
“Class A Common
Stock” means the Class A common stock, par value $0.00001 per share, of the Issuer.
“Class A
Units” means the Units of partnership interest in the Partnership designated as the “Class A Units” herein and having the rights pertaining thereto as are set forth in this Agreement.
“Class C Stockholder” means Blackstone Group Management L.L.C., a Delaware limited liability company, and
any successor or permitted assign that owns the Class C common stock, par value $0.00001 per share, of the Issuer at the applicable time.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Contingencies” has the meaning set forth in Section 9.03(b).
“Control” (including the terms “Controlled by” and “under common Control with”) means the
possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without
limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
“Credit Amount” has the meaning set forth in Section 4.01(b)(ii) of this Agreement.
“Creditable Non-U.S. Tax” means a non-U.S.
tax paid or accrued for United States federal income tax purposes by the Partnership, in either case to the extent that such tax is eligible for credit under Section 901(a) of the Code. A non-U.S. tax is
a Creditable Non-U.S. Tax for these purposes without regard to whether a partner receiving an allocation of such non-U.S. tax elects to claim a credit for such amount.
This definition is intended to be consistent with the definition of “Creditable Non-U.S. Tax” in Temporary Treasury Regulations Section 1.704-1T
(b)(4)(xi)(b), and shall be interpreted consistently therewith.
“Declaration” means the declaration of registration of
the Partnership filed with the Registraire des entreprises (Québec) pursuant to the Act, as amended from time to time.
“Disability” means, as to any Person, such Person’s inability to perform in all material respects his or her duties and
responsibilities to the General Partner, or any of its Affiliates, by reason of a physical or mental disability or infirmity which inability is reasonably expected to be permanent and has continued (i) for a period of six consecutive months or
(ii) such shorter period as the General Partner may reasonably determine in good faith.
5
“Disabling Event” means the General Partner ceasing to be the general partner of
the Partnership pursuant to Section 17-402 of the Act.
“Dissolution Event”
has the meaning set forth in Section 9.02 of this Agreement.
“Employed Limited Partner” means any Limited Partner
that is employed by or providing services to the Class C Stockholder, the Issuer, the General Partner, the Partnership or any of its subsidiaries at the time in question, and any Personal Planning Vehicle of such Limited Partner.
“Encumbrance” means any mortgage, claim, lien, encumbrance, conditional sales or other title retention agreement, right of
first refusal, preemptive right, pledge, option, charge, security interest or other similar interest, easement, judgment or imperfection of title of any nature whatsoever.
“ERISA” means The Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
“Exchange Agreement” means the Fourth Amended and Restated Exchange Agreement, dated as of the date of the
Third Amended and Restated Agreement, among the Issuer, the Blackstone Holdings Partnerships and the limited partners of the Blackstone Holdings Partnerships from time to time, as it may be amended, supplemented or restated from time to time.
“Exchange Transaction” means an exchange of Units for shares of Class A Common Stock pursuant to, and in accordance
with, the Exchange Agreement or, if the Issuer and the exchanging Limited Partner shall mutually agree, a Transfer of Units to the Issuer, the Partnership or any of their subsidiaries for other consideration.
“Final Tax Amount” has the meaning set forth in Section 4.01(b)(ii).
“First Amended and Restated Limited Partnership Agreement” has the meaning set forth in the preamble hereto.
“Fiscal Year” means (i) the period commencing upon the formation of the Partnership and ending on December 31, 2007
or (ii) any subsequent twelve-month period commencing on January 1 and ending on December 31.
“GAAP” means
accounting principles generally accepted in the United States of America as in effect from time to time.
“General
Partner” means Blackstone Holdings III GP L.P., a limited partnership formed under the laws of the State of Delaware or any successor general partner admitted to the Partnership in accordance with the terms of this Agreement.
6
“Government Official” means a person who holds a high-level, full-time position
with a national, supranational, U.S. federal, U.S. state or City of New York government.
“Incapacity” means, with
respect to any Person, the bankruptcy, dissolution, termination, entry of an order of incompetence, or the insanity, permanent disability or death of such Person.
“Initial Limited Partner” means each Limited Partner as of the date of the First Amended and Restated Limited Partnership
Agreement.
“Initial Units” means, with respect to any Initial Limited Partner, the aggregate number of Class A
Units owned by such Initial Limited Partner as of the date of the First Amended and Restated Limited Partnership Agreement.
“Initial Unvested Units” means, with respect to any Initial Limited Partner, the aggregate number of Unvested Units owned by
such Initial Limited Partner as of the date of the First Amended and Restated Limited Partnership Agreement.
“Initial Vested
Units” means, with respect to any Initial Limited Partner, the aggregate number of Vested Units listed in the books and records of the Partnership as of the date of the First Amended and Restated Limited Partnership Agreement, and any
additional Initial Units that have vested from time to time in accordance with Section 8.01 of this Agreement.
“Intangible
Assets” means the assets of the Partnership that are described in Section 197(d) of the Code.
“Intangible Asset
Gain” means the net gain recognized by the Partnership with respect to the Partnership’s Intangible Assets in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership, including but
not limited to net capital gain realized in connection with an adjustment to the Carrying Value of Partnership assets; provided, however, that any such gain shall constitute “Intangible Asset Gain” only to the extent that any
such gain exceeds losses previously recognized in an actual or hypothetical sale of Intangible Assets.
“IPO” means the
initial public offering and sale of common units representing limited partner interests of The Blackstone Group L.P., as contemplated by The Blackstone Group L.P.’s Registration Statement on Form S-1
(File No. 333-141504).
“Issuer” means The Blackstone Group Inc., a
corporation incorporated under the laws of the State of Delaware, or any successor thereto.
“Last Reported Sale Price”
of the Class A Common Stock on any date means:
(a) the closing sale price per share on the New York Stock Exchange on that date (or,
if no closing sale price is reported, the last reported sale price);
(b) if the Class A Common Stock is not listed for trading on the
New York Stock Exchange, the closing sale price (or, if no closing sale price is reported, the last reported sale price) as reported on that date in composite transactions for the principal national securities exchange registered pursuant to
Section 6(g) of the Exchange Act on which the Class A Common Stock is listed;
7
(c) if the Class A Common Stock is not so listed on a national securities exchange, the last
quoted bid price for the Class A Common Stock on that date in the over-the-counter market as reported by Pink Sheets LLC or a similar organization; or
(d) if the Class A Common Stock is not so quoted by Pink Sheets LLC or a similar organization, the average of the midpoint of the last bid
and ask prices for the Class A Common Stock on that date from a nationally recognized independent investment banking firm selected by the Issuer for this purpose.
“Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order
issued or promulgated by any national, supranational, state, federal, provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdiction over the Partnership or any Partner, as the case may
be.
“Limited Partner” means a special partner, as defined in the Act and, more specifically, each of the Persons from
time to time listed as a limited partner in the books and records of the Partnership, and, for purposes of Sections 8.01, 8.02, 8.03, 8.04, 8.05 and 8.06, any Personal Planning Vehicle of such Limited Partner.
“Liquidation Agent” has the meaning set forth in Section 9.03 of this Agreement.
“Minimum Retained Ownership Requirement” has the meaning set forth in Section 8.04(a).
“Net Taxable Income” has the meaning set forth in Section 4.01(b)(i).
“Non-Competition Agreement” means collectively, the Senior Managing Director Non-Competition and Non-Solicitation Agreement and Contracting Employees Non-Competition and
Non-Solicitation Agreement dated on or about the date of the First Amended and Restated Limited Partnership Agreement by certain Employed Limited Partners with each of the Blackstone Holdings Partnerships and
any agreement with respect to similar subject matter entered into from time to time by an Employed Limited Partner, as amended from time to time.
“Nonrecourse Deductions” has the meaning set forth in Treasury Regulations
Section 1.704-2(b). The amount of Nonrecourse Deductions of the Partnership for a fiscal year equals the net increase, if any, in the amount of Partnership Minimum Gain of the Partnership during that
fiscal year, determined according to the provisions of Treasury Regulations Section 1.704-2(c).
“Original Agreement” has the meaning set forth in the preamble of this Agreement.
“Partners” means, at any time, each person listed as a Partner (including the General Partner) on the books and records of
the Partnership, in each case for so long as he, she or it remains a partner of the Partnership as provided hereunder.
8
“Partnership” has the meaning set forth in the preamble of this Agreement.
“Partnership Minimum Gain” has the meaning set forth in Treasury Regulations Sections
1.704-2(b)(2) and 1.704-2(d).
“Partnership
Representative” has the meaning set forth in Section 5.08.
“Partner Nonrecourse Debt Minimum Gain” means
an amount with respect to each partner nonrecourse debt (as defined in Treasury Regulations Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such partner nonrecourse debt
were treated as a nonrecourse liability (as defined in Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with Treasury Regulations
Section 1.704-2(i)(3).
“Partner Nonrecourse Deductions” has the meaning
ascribed to the term “partner nonrecourse deductions” set forth in Treasury Regulations Section 1.704-2(i)(2).
“Person” means any individual, corporation, partnership, limited partnership, limited liability company, limited company,
joint venture, trust, unincorporated or governmental organization or any agency or political subdivision thereof.
“Personal
Planning Vehicle” means, in respect of any Limited Partner, any estate, family limited liability company, family limited partnership, or inter vivos or testamentary trust that holds Units that is designated as a Personal Planning Vehicle of
such Limited Partner in the books and records of the Partnership.
“Profits” and “Losses” means, for
each Fiscal Year or other period, the taxable income or loss of the Partnership, or particular items thereof, determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following
adjustments: (a) all items of income, gain, loss or deduction allocated pursuant to Section 5.05 shall not be taken into account in computing such taxable income or loss; (b) any income of the Partnership that is exempt from U.S.
federal income taxation and not otherwise taken into account in computing Profits and Losses shall be added to such taxable income or loss; (c) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax
purposes, any gain or loss resulting from a disposition of such asset shall be calculated with reference to such Carrying Value; (d) upon an adjustment to the Carrying Value (other than an adjustment in respect of depreciation) of any asset,
pursuant to the definition of Carrying Value, the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (e) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal
income tax purposes, the amount of depreciation, amortization or cost recovery deductions with respect to such asset for purposes of determining Profits and Losses, if any, shall be an amount which bears the same ratio to such Carrying Value as the
U.S. federal income tax depreciation, amortization or other cost recovery deductions bears to such adjusted tax basis (provided that if the U.S. federal income tax depreciation, amortization or other cost recovery deduction is zero, the
General Partner may use any reasonable method for purposes of determining depreciation, amortization or other cost recovery deductions in calculating Profits and Losses); and (f) except for items in (a) above, any expenditures of the
Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing Profits and Losses pursuant to this definition shall be treated as deductible items.
9
“Restricted Period,” with respect to each Limited Partner that is or was an
Employed Limited Partner, has the meaning set forth in such Limited Partner’s Non-Competition Agreement.
“Restrictive Covenant,” with respect to each Limited Partner that is or was an Employed Limited Partner, has the meaning set
forth in such Limited Partner’s Non-Competition Agreement.
“Retirement”
(including the term “Retire”) means retirement of an Employed Limited Partner from his or her employment with the Class C Stockholder, the Issuer, the General Partner, the Partnership or any of their subsidiaries after
(a) he or she has reached age 65 and has at least five full years of service, or (b) (i) his or her age plus years of service totals at least 65, (ii) he or she has reached age 50 and (iii) he or she has had a minimum of five years of
service; provided, however, that no Employed Limited Partner will be eligible to Retire prior to June 30, 2010.
“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Similar Law” means any law or regulation that could cause the underlying assets of the Partnership to be treated as
assets of the Limited Partner by virtue of its limited partner interest in the Partnership and thereby subject the Partnership and the General Partner (or other persons responsible for the investment and operation of the Partnership’s assets)
to laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the Code.
“Tax Advances” has the meaning set forth in Section 5.07.
“Tax Amount” has the meaning set forth in Section 4.01(b)(i).
“Tax Distributions” has the meaning set forth in Section 4.01(b)(i).
“Tax Matters Partner” has the meaning set forth in Section 5.08.
“Third Amended and Restated Agreement” has the meaning set forth in the preamble hereto.
“Total Percentage Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Units (vested
or unvested) then owned by such Partner by the number of Units then owned by all Partners.
“Transfer” means, in respect
of any Unit, property or other asset, any sale, assignment, transfer, distribution or other disposition thereof, whether voluntarily or by operation of Law, including, without limitation, the exchange of any Unit for any other security.
10
“Transferee” means any Person that is a transferee of a Partner’s interest
in the Partnership, or part thereof.
“Treasury Regulations” means the income tax regulations, including temporary
regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“Units” means the Class A Units and any other Class of Units authorized in accordance with this Agreement, which
shall constitute interests in the Partnership as provided in this Agreement and under the Act, entitling the holders thereof to the relative rights, title and interests in the profits, losses, deductions and credits of the Partnership at any
particular time as set forth in this Agreement, and any and all other benefits to which a holder thereof may be entitled as a Partner as provided in this Agreement, together with the obligations of such Partner to comply with all terms and
provisions of this Agreement.
“Unvested Units” means those Units listed as unvested Units in the books and records of
the Partnership, as the same may be amended from time to time in accordance with this Agreement.
“Vested Percentage
Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Vested Units then owned by such Partner by the number of Vested Units then owned by all Partners.
“Vested Units” means those Units listed as vested Units in the books and records of the Partnership, as the same may be
amended from time to time in accordance with this Agreement.
ARTICLE II
FORMATION, TERM, PURPOSE AND POWERS
Section 2.01. Formation. The Partnership was formed as a limited partnership under the provisions of the Act by the execution of
the Original Agreement. A Declaration was filed with the Registraire des entreprises (Québec) as of June 13, 2007, in accordance with the provisions of the Act. If requested by the General Partner, the Limited Partners shall promptly
execute all certificates and other documents consistent with the terms of this Agreement necessary for the General Partner to accomplish all filing, recording, publishing and other acts as may be appropriate to comply with all requirements for
(a) the formation and operation of a limited partnership under the laws of the Province of Québec, (b) if the General Partner deems it advisable, the operation of the Partnership as a limited partnership, or partnership in which the
Limited Partners have limited liability, in all jurisdictions where the Partnership proposes to operate and (c) all other filings required to be made by the Partnership.
Section 2.02. Name. The name of the Partnership shall be, and the business of the Partnership shall be conducted under the name
of, Placements Blackstone III s.e.c. and, in its English version, Blackstone Holdings III L.P.
Section 2.03. Term. The term
of the Partnership commenced on the date of the Original Agreement, and the term shall continue until the dissolution of the Partnership in accordance with Article IX. The existence of the Partnership shall continue until dissolution of the
Partnership in the manner required by the Act.
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Section 2.04. Offices. The Partnership may have offices at such places either within
or outside the Province of Québec as the General Partner from time to time may select. As of the date hereof, the principal place of business and office of the Partnership is located at 345 Park Avenue, New York, New York 10154. The
Québec domicile of the Partnership shall be located at 1 Place Ville Marie, 37th Floor, Montréal, Québec, Canada H3B 3P4.
Section 2.05. Agent for Service of Process. The Partnership’s registered agent for service of process in the Province of
Québec shall be as set forth in the Declaration, or such other person as the General Partner shall designate in its sole discretion from time to time.
Section 2.06. Business Purpose. The Partnership was formed for the object and purpose of, and the nature and character of the
business to be conducted by the Partnership is, engaging in any lawful act or activity for which limited partnerships may be formed under the Act.
Section 2.07. Powers of the Partnership. Subject to the limitations set forth in this Agreement, the Partnership will possess and
may exercise all of the powers and privileges granted to it by the Act including, without limitation, the ownership and operation of the assets contributed to the Partnership by the Partners, by any other Law or this Agreement, together with all
powers incidental thereto, so far as such powers are necessary or convenient to the conduct, promotion or attainment of the purpose of the Partnership set forth in Section 2.06.
Section 2.08. Partners; Admission of New Partners. Each of the Persons listed in the books and records of the Partnership, as the
same may be amended from time to time in accordance with this Agreement, by virtue of the execution of this Agreement, are admitted, or hereby continue, as applicable, as Partners of the Partnership. The rights, duties and liabilities of the
Partners shall be as provided in the Act, except as is otherwise expressly provided herein, and the Partners consent to the variation of such rights, duties and liabilities as provided herein. A Person may be admitted from time to time as a new
Partner in accordance with Section 8.10; provided, however, that each new Partner shall execute and deliver to the General Partner an appropriate supplement to this Agreement pursuant to which the new Partner agrees to be bound by
the terms and conditions of the Agreement, as it may be amended from time to time.
Section 2.09. Withdrawal. No Partner shall
have the right to withdraw as a Partner of the Partnership other than following the Transfer of all Units owned by such Partner in accordance with Article VIII; provided, however, that a new General Partner or substitute General
Partner may be admitted to the Partnership in accordance with Section 8.09.
ARTICLE III
MANAGEMENT
Section 3.01.
General Partner. (a) The business, property and affairs of the Partnership shall be managed under the sole, absolute and exclusive direction of the General Partner, which may from time to time delegate authority to officers or to others
to act on behalf of the Partnership.
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(b) Without limiting the foregoing provisions of this Section 3.01, the General Partner
shall have the general power to manage or cause the management of the Partnership (which may be delegated to officers of the Partnership), including, without limitation, the following powers:
(i) to develop and prepare a business plan each year which will set forth the operating goals and plans for the Partnership;
(ii) to execute and deliver or to authorize the execution and delivery of contracts, deeds, leases, licenses, instruments of transfer and
other documents on behalf of the Partnership;
(iii) the making of any expenditures, the lending or borrowing of money, the assumption or
guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness and the incurring of any other obligations;
(iv) to employ, retain, consult with and dismiss personnel;
(v) to establish and enforce limits of authority and internal controls with respect to all personnel and functions;
(vi) to engage attorneys, consultants and accountants for the Partnership;
(vii) to develop or cause to be developed accounting procedures for the maintenance of the Partnership’s books of account; and
(viii) to do all such other acts as shall be authorized in this Agreement or by the Partners in writing from time to time.
Section 3.02. Compensation. The General Partner shall not be entitled to any compensation for services rendered to the Partnership
in its capacity as General Partner.
Section 3.03. Expenses. The Partnership shall bear and/or reimburse the General Partner
for any expenses incurred by the General Partner in connection with serving as the general partner of the Partnership.
Section 3.04.
Officers. Subject to the direction and oversight of the General Partner, the day-to-day administration of the business of the Partnership may be carried out by
employees and agents who may be designated as officers by the General Partner, with titles including but not limited to “chief executive officer,” “chief financial officer,” “chief legal officer,”
“chief administrative officer,” “chief compliance officer,” “principal accounting officer,” “chairman,” “senior chairman,” “vice chairman,”
“president,” “vice president,” “treasurer,” “assistant treasurer,” “secretary,” “assistant secretary,” “general manager,”
“senior managing director,” “managing director” and “director,” as and to the extent authorized by the General Partner. The officers of the Partnership shall have such titles and powers and perform
such duties as shall be determined from time to time by the General Partner and otherwise as shall customarily pertain to such offices. Any number of offices may be held by the same person. All employees, agents and officers shall be subject to the
supervision and direction of the General Partner and may be
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removed from such office by the General Partner and the authority, duties or responsibilities of any employee, agent or officer of the Partnership may be suspended by the General Partner from
time to time, in each case in the sole discretion of the General Partner. The General Partner shall not cease to be a general partner of the Partnership as a result of the delegation of any duties hereunder. No officer of the Partnership, in its
capacity as such, shall be considered a general partner of the Partnership by agreement, estoppel, as a result of the performance of its duties hereunder or otherwise.
Section 3.05. Authority of Partners. Other than exercising a Limited Partner’s rights and powers as a Limited Partner, as
contemplated in the Act, no Limited Partner, in its capacity as such, shall participate in or have any control over the business of the Partnership. Except as expressly provided herein, the Units do not confer any rights upon the Limited Partners to
participate in the affairs of the Partnership described in this Agreement. Except as expressly provided herein, the Limited Partners shall have no right to vote on any matter involving the Partnership, including with respect to any merger,
consolidation, combination or conversion of the Partnership. The conduct, control and management of the Partnership shall be vested exclusively in the General Partner. In all matters relating to or arising out of the conduct of the operation of the
Partnership, the decision of the General Partner shall be the decision of the Partnership. Except as required or permitted by Law, or expressly provided in the ultimate sentence of this Section 3.05 or by separate agreement with the
Partnership, no Partner who is not also a General Partner (and acting in such capacity) shall take any part in the management or control of the operation or business of the Partnership in its capacity as a Partner, nor shall any Partner who is not
also a General Partner (and acting in such capacity) have any right, authority or power to act for or on behalf of or bind the Partnership in his or its capacity as a Partner in any respect or assume any obligation or responsibility of the
Partnership or of any other Partner. Notwithstanding the foregoing, the Partnership may employ one or more Partners from time to time, and such Partners, in their capacity as employees of the Partnership (and not, for clarity, in their capacity as
Limited Partners of the Partnership), may take part in the control and management of the business of the Partnership to the extent such authority and power to act for or on behalf of the Partnership has been delegated to them by the General Partner.
Section 3.06. Action by Written Consent or Ratification. Any action required or permitted to be taken by the Partners
pursuant to this Agreement shall be taken if all Partners whose consent or ratification is required consent thereto or provide a ratification in writing.
ARTICLE IV
DISTRIBUTIONS
Section 4.01. Distributions. (a) The General Partner, in its sole discretion, may authorize distributions by the Partnership
to the Partners, which distributions shall be made pro rata in accordance with the Partners’ respective Total Percentage Interests.
(b) (i) In addition to the foregoing, if the General Partner reasonably determines that the taxable income of the Partnership for a Fiscal
Year will give rise to taxable income for the Partners (“Net Taxable Income”), the General Partner shall cause the Partnership to distribute Available Cash in respect of income tax liabilities (the “Tax
Distributions”) to the extent that other distributions made by the Partnership for such year were otherwise insufficient to cover such tax liabilities. The Tax Distributions payable with respect to any Fiscal Year shall be computed based
upon the General Partner’s estimate of the allocable Net Taxable Income in accordance with Article V, multiplied by the Assumed Tax Rate (the “Tax Amount”). For purposes of computing the Tax Amount, the effect of any benefit
under Section 743(b) of the Code will be ignored.
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(ii) Tax Distributions shall be calculated and paid no later than one day prior to each
quarterly due date for the payment by corporations on a calendar year of estimated taxes under the Code in the following manner (A) for the first quarterly period, 25% of the Tax Amount, (B) for the second quarterly period, 50% of the Tax
Amount, less the prior Tax Distributions for the Fiscal Year, (C) for the third quarterly period, 75% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year and (D) for the fourth quarterly period, 100% of the Tax Amount,
less the prior Tax Distributions for the Fiscal Year. Following each Fiscal Year, and no later than one day prior to the due date for the payment by corporations of income taxes for such Fiscal Year, the General Partner shall make an amended
calculation of the Tax Amount for such Fiscal Year (the “Amended Tax Amount”), and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to the extent that the Amended Tax Amount so calculated exceeds
the cumulative Tax Distributions previously made by the Partnership in respect of such Fiscal Year. If the Amended Tax Amount is less than the cumulative Tax Distributions previously made by the Partnership in respect of the relevant Fiscal Year,
then the difference (the “Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Within 30 days following the date on which the Partnership files a tax return on
Form 1065, the General Partner shall make a final calculation of the Tax Amount of such Fiscal Year (the “Final Tax Amount”) and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to the extent that
the Final Tax Amount so calculated exceeds the Amended Tax Amount. If the Final Tax Amount is less than the Amended Tax Amount in respect of the relevant Fiscal Year, then the difference (“Additional Credit Amount”) shall be applied
against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Any Credit Amount and Additional Credit Amount applied against future Tax Distributions shall be treated as an amount actually distributed pursuant to this
Section 4.01(b) for purposes of the computations herein.
Section 4.02. Liquidation Distribution. Distributions made upon
dissolution of the Partnership shall be made as provided in Section 9.03.
Section 4.03. Limitations on Distribution.
Notwithstanding any provision to the contrary contained in this Agreement, the General Partner shall not make a Partnership distribution to any Partner if such distribution would violate Article 2242 of the Civil Code or any other applicable
provision of the Act or other applicable Law.
Section 4.04. Administration Fee. Notwithstanding anything to the contrary
herein, unless the General Partner shall determine otherwise, commencing with the distribution in respect of the quarterly period ending June 30, 2020, an amount shall be withheld from each quarterly distribution payable to a Limited
Partner other than an Employed Limited Partner that, together with analogous administration fee amounts withheld from distributions payable to such Limited Partner by the other Blackstone Holdings Partnerships in respect of the same quarterly
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period, equals the Administration Fee (as defined below). The “Administration Fee” shall mean an amount per Class A Unit initially equal to $0.03125, which amount may increase
or decrease by such percentage as the General Partner may determine from time to time in its sole discretion. Amounts withheld as an Administration Fee shall be treated as if distributed to the applicable Limited Partner.
ARTICLE V
CAPITAL CONTRIBUTIONS;
CAPITAL ACCOUNTS;
TAX ALLOCATIONS; TAX MATTERS
Section 5.01. Initial Capital Contributions. (a) The Partners have made, on or prior to the date hereof, Capital
Contributions and, in exchange, the Partnership has issued to the Partners the number of Class A Units as specified in the books and records of the Partnership.
(b) Upon issuance by the Partnership of Class A Units to the Partners pursuant to the Second Amended and Restated Agreement, the interests
in the Partnership as provided in the Second Amended and Restated Agreement and under the Act held by Blackstone Holdings III GP Limited Partner L.L.C. were cancelled.
Section 5.02. No Additional Capital Contributions. Except as otherwise provided in this Article V, no Partner shall be required to
make additional Capital Contributions to the Partnership without the consent of such Partner or permitted to make additional capital contributions to the Partnership without the consent of the General Partner.
Section 5.03. Capital Accounts. A separate capital account (a “Capital Account”) shall be established and
maintained for each Partner in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv). The Capital Account of each Partner shall be credited with such Partner’s Capital
Contributions, if any, all Profits allocated to such Partner pursuant to Section 5.04 and any items of income or gain which are specially allocated pursuant to Section 5.05; and shall be debited with all Losses allocated to such Partner
pursuant to Section 5.04, any items of loss or deduction of the Partnership specially allocated to such Partner pursuant to Section 5.05, and all cash and the Carrying Value of any property (net of liabilities assumed by such Partner and
the liabilities to which such property is subject) distributed by the Partnership to such Partner. Any references in any section of this Agreement to the Capital Account of a Partner shall be deemed to refer to such Capital Account as the same may
be credited or debited from time to time as set forth above. In the event of any transfer of any interest in the Partnership in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the
extent it relates to the transferred interest.
Section 5.04. Allocations of Profits and Losses. Except as otherwise provided
in this Agreement, Profits and Losses (and, to the extent necessary, individual items of income, gain or loss or deduction of the Partnership) shall be allocated in a manner such that the Capital Account of each Partner after giving effect to the
Special Allocations set forth in Section 5.05 is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made pursuant to Article IV if the Partnership were dissolved, its affairs wound up and its assets sold
for cash equal to their Carrying Value, all Partnership liabilities were satisfied (limited with respect to each non-
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recourse liability to the Carrying Value of the assets securing such liability) and the net assets of the Partnership were distributed to the Partners pursuant to this Agreement, minus
(ii) such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical sale of assets. For purposes of this Article V, each Unvested Unit shall be treated as a Vested
Unit. Notwithstanding the foregoing, the General Partner shall make such adjustments to Capital Accounts as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a partner’s interest in the
Partnership.
Section 5.05. Special Allocations. Notwithstanding any other provision in this Article V:
(a) Minimum Gain Chargeback. If there is a net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain (determined
in accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i)) during any Partnership taxable year, the Partners shall be specially
allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to their respective shares of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i) (5). The items to be so allocated shall be determined in accordance with Treasury Regulations
Section 1.704-2(f). This Section 5.05(a) is intended to comply with the minimum gain chargeback requirements in such Treasury Regulations Sections and shall be interpreted consistently therewith;
including that no chargeback shall be required to the extent of the exceptions provided in Treasury Regulations Sections 1.704-2(f) and 1.704-2(i) (4).
(b) Qualified Income Offset. If any Partner unexpectedly receives any adjustments, allocations, or distributions described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the deficit
balance in such Partner’s Adjusted Capital Account Balance created by such adjustments, allocations or distributions as promptly as possible; provided that an allocation pursuant to this Section 5.05(b) shall be made only to the extent
that a Partner would have a deficit Adjusted Capital Account Balance in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if this Section 5.05(b) were not in this Agreement. This
Section 5.05(b) is intended to comply with the “qualified income offset” requirement of the Code and shall be interpreted consistently therewith.
(c) Gross Income Allocation. If any Partner has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of
(i) the amount such Partner is obligated to restore, if any, pursuant to any provision of this Agreement, and (ii) the amount such Partner is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as
possible; provided that an allocation pursuant to this Section 5.05(c) shall be made only if and to the extent that a Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this
Article V have been tentatively made as if Section 5.05(b) and this Section 5.05(c) were not in this Agreement.
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(d) Nonrecourse Deductions. Nonrecourse Deductions shall be allocated to the Partners in
accordance with their respective Total Percentage Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for
any taxable period shall be allocated to the Partner who bears the economic risk of loss with respect to the liability to which such Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(j).
(f) Creditable Non-U.S. Taxes.
Creditable Non-U.S. Taxes for any taxable period attributable to the Partnership, or an entity owned directly or indirectly by the Partnership, shall be allocated to the Partners in proportion to the
partners’ distributive shares of income (including income allocated pursuant to Section 704(c) of the Code) to which the Creditable Non-U.S. Tax relates (under principles of Treasury Regulations Section 1.904-6). The provisions of this Section 5.05(f) are intended to comply with the provisions of Temporary Treasury Regulations
Section 1.704-1T(b)(4)(xi), and shall be interpreted consistently therewith.
(g)
Ameliorative Allocations. Any special allocations of income or gain pursuant to Sections 5.05(b) or 5.05(c) hereof shall be taken into account in computing subsequent allocations pursuant to Section 5.04 and this Section 5.05(g), so
that the net amount of any items so allocated and all other items allocated to each Partner shall, to the extent possible, be equal to the net amount that would have been allocated to each Partner if such allocations pursuant to Sections 5.05(b) or
5.05(c) had not occurred.
Section 5.06. Tax Allocations. For income tax purposes, each item of income, gain, loss and
deduction of the Partnership shall be allocated among the Partners in the same manner as the corresponding items of Profits and Losses and specially allocated items are allocated for Capital Account purposes; provided that in the case of any asset
the Carrying Value of which differs from its adjusted tax basis for U.S. federal income tax purposes, income, gain, loss and deduction with respect to such asset shall be allocated solely for income tax purposes in accordance with the principles of
Sections 704(b) and (c) of the Code (in any manner determined by the General Partner and permitted by the Code and Treasury Regulations) so as to take account of the difference between Carrying Value and adjusted basis of such asset.
Notwithstanding the foregoing, the General Partner shall make such allocations for tax purposes as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a partner’s interest in the Partnership.
Section 5.07. Tax Advances. To the extent the General Partner reasonably believes that the Partnership is required by law to
withhold or to make tax payments on behalf of or with respect to any Partner or the Partnership is subjected to tax itself by reason of the status of any Partner (“Tax Advances”), the General Partner may withhold such amounts and
make such tax payments as so required. All Tax Advances made on behalf of a Partner shall be repaid by reducing the amount of the current or next succeeding distribution or distributions which would otherwise have been made to such Partner or, if
such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Partner. For all purposes of this Agreement such Partner shall be treated as having received the amount of the distribution
that is equal to the Tax Advance. Each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including, without
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limitation, any liability for taxes, penalties, additions to tax or interest other than any penalties, additions to tax or interest imposed as a result of the Partnership’s failure to
withhold or make a tax payment on behalf of such Partner which withholding or payment is required pursuant to applicable Law but only to the extent amounts sufficient to pay such taxes were not timely distributed to the Partner pursuant to
Section 4.01(b)) with respect to income attributable to or distributions or other payments to such Partner.
Section 5.08.
Tax Matters. For tax years beginning before December 31, 2017, the General Partner shall be or shall designate the “tax matters partner” within the meaning of Section 6231(a)(7) of the Code (as in effect prior to
2018) (the “Tax Matters Partner”) and, for the years beginning after December 31, 2017, the General Partner shall be or shall designate the “partnership representative” within the meaning of Section 6223
of the Code (the “Partnership Representative”). The Partnership shall file as a partnership for federal, state, provincial and local income tax purposes, except where otherwise required by Law. All elections required or permitted to
be made by the Partnership, and all other tax decisions and determinations relating to federal, state, provincial or local tax matters of the Partnership, shall be made by the Tax Matters Partner or the Partnership Representative, as applicable, in
consultation with the Partnership’s attorneys and/or accountants. Tax audits, controversies and litigations shall be conducted under the direction of the Tax Matters Partner or the Partnership Representative, as applicable. The Tax Matters
Partner or the Partnership Representative, as applicable, shall keep the other Partners reasonably informed as to any tax actions, examinations or proceedings relating to the Partnership and shall submit to the other Partners, for their review and
comment, any settlement or compromise offer with respect to any disputed item of income, gain, loss, deduction or credit of the Partnership. As soon as reasonably practicable after the end of each Fiscal Year, the Partnership shall send to each
Partner a copy of U.S. Internal Revenue Service Schedule K-1, and any comparable statements required by applicable U.S. state or local income tax Law as a result of the Partnership’s activities or
investments, with respect to such Fiscal Year. The Partnership also shall provide the Partners with such other information as may be reasonably requested for purposes of allowing the Partners to prepare and file their own tax returns.
Section 5.09. Other Allocation Provisions. Certain of the foregoing provisions and the other provisions of this Agreement relating
to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such regulations. Sections 5.03,
5.04 and 5.05 may be amended at any time by the General Partner if necessary, in the opinion of tax counsel to the Partnership, to comply with such regulations or any applicable Law, so long as any such amendment does not materially change the
relative economic interests of the Partners.
ARTICLE VI
BOOKS AND RECORDS; REPORTS
Section 6.01. Books and Records. (a) At all times during the continuance of the Partnership, the Partnership shall prepare
and maintain separate books of account for the Partnership in accordance with GAAP.
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(b) Except as limited by Section 6.01(c), each Limited Partner shall have the right to
receive, for a purpose reasonably related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable written demand stating the purpose of such demand and at such Limited Partner’s own expense:
(i) a copy of the Declaration and this Agreement and all amendments thereto, together with a copy of the executed copies of all powers of
attorney pursuant to which the Declaration and this Agreement and all amendments thereto have been executed; and
(ii) promptly after
their becoming available, copies of the Partnership’s federal, state and local income tax returns and reports, if any, for the three most recent years.
(c) The General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner determines in its sole
discretion, (i) any information that the General Partner reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the General Partner believes is not in the best interests of the
Partnership, could damage the Partnership or its business or that the Partnership is required by law or by agreement with any third party to keep confidential.
ARTICLE VII
PARTNERSHIP UNITS
Section 7.01. Units. Interests in the Partnership shall be represented by Units. The Units initially are comprised of one
Class: Class A Units. The General Partner may establish, from time to time in accordance with such procedures as the General Partner shall determine from time to time, other Classes, one or more series of any such Classes, or other Partnership
securities with such designations, preferences, rights, powers and duties (which may be senior to existing Classes and series of Units or other Partnership securities), as shall be determined by the General Partner, including (i) the right to
share in Profits and Losses or items thereof; (ii) the right to share in Partnership distributions; (iii) the rights upon dissolution and liquidation of the Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may or shall be required to redeem the Units or other Partnership securities (including sinking fund provisions); (v) whether such Unit or other Partnership security is issued with the privilege of conversion or exchange and, if so, the
terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which each Unit or other Partnership security will be issued, evidenced by certificates and assigned or transferred; (vii) the method for determining
the Total Percentage Interest as to such Units or other Partnership securities; and (viii) the right, if any, of the holder of each such Unit or other Partnership security to vote on Partnership matters, including matters relating to the
relative designations, preferences, rights, powers and duties of such Units or other Partnership securities. Except as expressly provided in this Agreement to the contrary, any reference to “Units” shall include the Class A
Units and any other Classes that may be established in accordance with this Agreement. All Units of a particular Class shall have identical rights in all respects as all other Units of such Class, except in each case as otherwise specified in
this Agreement.
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Section 7.02. Register. The register of the Partnership shall be the definitive
record of ownership of each Unit and all relevant information with respect to each Partner. Such register shall be kept at its registered office and the General Partner shall make changes to the register of the Partnership to reflect any change in
relation thereto, such register remaining the definite record of ownership of each Unit and all relevant information with respect to each Partner. Unless the General Partner shall determine otherwise, Units shall be uncertificated and recorded in
the books and records of the Partnership.
Section 7.03. Registered Partners. The Partnership shall be entitled to recognize
the exclusive right of a Person registered on its records as the owner of Units for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the Act or other applicable Law.
ARTICLE VIII
VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS
Section 8.01. Vesting of Initial Unvested Units. (a) Subject to Section 8.02 and except as set forth in
Section 8.01(b) or as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, the Initial Unvested Units shall vest and shall thereafter be Vested
Units for all purposes of this Agreement as follows:
(i) with respect to each Category 1 Limited Partner, 100% of the Initial Unvested
Units owned by such Limited Partner shall vest and thereafter be Vested Units for all purposes of this Agreement in equal 25% installments on each of the first, second, third and fourth anniversary dates of the consummation of the IPO;
(ii) with respect to each Category 3 Limited Partner and Category 4 Limited Partner, 100% of the Initial Unvested Units owned by such Limited
Partner shall vest and thereafter be Vested Units for all purposes of this Agreement in equal 20% installments on each of the first, second, third, fourth and fifth anniversary dates of the consummation of the IPO; and
(iii) with respect to each Category 5 Limited Partner, 100% of the Initial Unvested Units owned by such Limited Partner shall vest and
thereafter be Vested Units for all purposes of this Agreement in equal 12.5% installments on each of the first, second, third, fourth, fifth, sixth, seventh and eighth anniversary dates of the consummation of the IPO.
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(b) Notwithstanding Section 8.01(a), if earlier, the Initial Unvested Units shall vest and
shall thereafter be Vested Units for all purposes of this Agreement as follows: (i) upon the Retirement of an Employed Limited Partner, 50% of the Initial Unvested Units owned by such Limited Partner that are Unvested Units at that time shall
vest and thereafter be Vested Units for all purposes of this Agreement; (ii) upon the death or Disability of an Employed Limited Partner, 100% of the Initial Unvested Units owned by such Limited Partner that are Unvested Units at that time
shall vest and thereafter be Vested Units for all purposes of this Agreement; and (iii) upon the occurrence of a Change of Control, 100% of the Initial Unvested Units that are Unvested Units at that time shall vest and thereafter be Vested
Units for all purposes of this Agreement.
(c) In addition, the General Partner in its sole discretion may authorize the earlier vesting of
all or a portion of the Initial Unvested Units owned by any one or more Limited Partners at any time and from time to time, and in such event, such Initial Unvested Units shall vest and thereafter be Vested Units for all purposes of this Agreement.
Any such determination in the General Partner’s discretion in respect of Initial Unvested Units shall be final and binding. Such determinations need not be uniform and may be made selectively among Limited Partners, whether or not such Limited
Partners are similarly situated, and shall not constitute the breach of any duty hereunder or otherwise existing at law, in equity or otherwise.
(d) Upon the vesting of any Initial Unvested Units in accordance with this Section 8.01, the General Partner shall modify the books and
records of the Partnership to reflect such vesting.
Section 8.02. Forfeiture of Units Held by Initial Limited Partners.
(a) Other than as set forth in Section 8.01(b) and except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, if a Limited Partner
ceases to be an Employed Limited Partner for any reason, such Limited Partner’s Unvested Units shall be immediately forfeited without any consideration, and such Limited Partner shall cease to own or have any rights with respect to such
Unvested Units; provided, however, that if a Limited Partner ceases to be an Employed Limited Partner in order to become a Government Official, such Limited Partner’s Unvested Units shall continue to vest as set forth in
Section 8.01 until such Limited Partner ceases to be a Government Official for any reason, at which point such Limited Partner’s Unvested Units shall be immediately forfeited without any consideration (unless such Limited Partner becomes
an Employed Limited Partner immediately after such Limited Partner ceases to be such a Government Official, in which case such Limited Partner’s Unvested Units shall continue to vest as set forth in Section 8.01) and such Limited Partner
shall cease to own or have any rights with respect to such Unvested Units. Immediately upon the forfeiture of any Initial Unvested Units, such Unvested Units that have been so forfeited shall be cancelled.
(b) Except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and
records of the Partnership, (i) if a Limited Partner that is or was at any time an Employed Limited Partner breaches any Restrictive Covenant to which such Limited Partner is subject or (ii) if an Employed Limited Partner is terminated for
Cause, the Initial Units held by such Limited Partner or such Limited Partner’s Personal Planning Vehicle at that time (whether or not vested) shall be immediately forfeited without any consideration, and such Limited Partner shall cease to own
or have any rights with respect to such Initial Units; provided, however, that Initial Units held by a Personal Planning Vehicle of a Category 1 Limited Partner created prior to the date of the First Amended and Restated Limited
Partnership Agreement are not subject to forfeiture. Immediately upon the forfeiture of any Initial Units, such Initial Units that have been so forfeited shall be cancelled.
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(c) Upon the forfeiture of any Unvested Units in accordance with this Section 8.02, the
General Partner shall modify the books and records of the Partnership to reflect such forfeiture.
Section 8.03. Limited Partner
Transfers. (a) Except as provided in clauses (b), (c), (d) and (f) of this Section 8.03, no Limited Partner or Assignee thereof may Transfer (including by exchanging in an Exchange Transaction) all or any portion of its Units or
other interest in the Partnership (or beneficial interest therein) without the prior consent of the General Partner, which consent may be given or withheld, or made subject to such conditions (including, without limitation, the receipt of such legal
opinions and other documents that the General Partner may require) as are determined by the General Partner, in each case in the General Partner’s sole discretion. Any such determination in the General Partner’s discretion in respect of
Units shall be final and binding. Such determinations need not be uniform and may be made selectively among Limited Partners, whether or not such Limited Partners are similarly situated, and shall not constitute the breach of any duty hereunder or
otherwise existing at law, in equity or otherwise. Any purported Transfer of Units that is not in accordance with, or subsequently violates, this Agreement shall be, to the fullest extent permitted by law, null and void.
(b) Notwithstanding clause (a) above, except as provided in or pursuant to clauses (b), (c), (d) and (f) below and subject to
Section 8.04, each Limited Partner may exchange in an Exchange Transaction up to 100% of the Initial Vested Units owned by such Limited Partner at any time and from time to time; provided that Unvested Units may not be Transferred at any time.
(c) Notwithstanding clauses (a) or (b) above, with the prior consent of the General Partner, (i) the Category 1 Limited Partners
may make one or more gratuitous Transfers (including by exchanging in an Exchange Transaction) to any Charity at any time and from time to time up to a number of Initial Vested Units owned by such Limited Partners that is equal to the quotient of
$250 million divided by the offering price per common unit in the IPO for the purpose of making gratuitous transfers to any Charity.
(d) Notwithstanding clauses (a) or (b) above, if earlier: (i) upon the death or Disability of an Employed Limited Partner, such
Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; (ii) other than with respect to a Category 1 Limited Partner, following an Employed Limited
Partner’s termination of employment and after the earlier to occur of (A) one year from the date of termination of employment or (B) the expiration of the longest applicable Restricted Period with respect to such Employed Limited
Partner, such Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; (iii) following Mr. Stephen A. Schwarzman’s termination of
employment, any Category 1 Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; and (iv) upon the occurrence of a Change of Control, any Limited
Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; provided that in each case Unvested Units may not by Transferred at any time.
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(e) [Reserved]
(f) Notwithstanding clauses (a), (b), (c) and (d) above, a Personal Planning Vehicle of a Limited Partner may Transfer Class A Units
(i) to the donor thereof or to the spouse of the donor thereof; (ii) if the Personal Planning Vehicle is a grantor retained annuity trust and the trustee(s) of such grantor retained annuity trust is obligated to make one or more
distributions to the donor of the grantor retained annuity trust, the estate of the donor of the grantor retained annuity trust, the spouse of the donor of the grantor retained annuity trust or the estate of the spouse of the donor of the grantor
retained annuity trust, to any such Persons; or (iii) upon the death of such Limited Partner, to the spouse of such Limited Partner or a trust for which a deduction under Section 2056 or 2056A (or any successor provisions) of the Code may
be sought.
Section 8.04. Minimum Retained Ownership Requirement. (a) Other than the Category 1 Limited Partners, the
Category 2 Limited Partners and the Category 6 Limited Partner and unless otherwise permitted by the General Partner in its sole discretion, each Limited Partner that is or was at any time an Employed Limited Partner other than a Personal Planning
Vehicle shall, until the first anniversary of such Employed Limited Partner’s termination of employment, continue to hold (and may not Transfer) at least 25% of all Initial Vested Units received collectively by such Employed Limited Partner and
by any Personal Planning Vehicle of such Employed Limited Partner (the “Minimum Retained Ownership Requirement”); and provided that upon the Retirement of an Employed Limited Partner, such Limited Partner shall be subject to
a Minimum Retained Ownership Requirement of 12.5% instead of 25%. For purposes of this paragraph (a), (i) Units held by a Personal Planning Vehicle of a Limited Partner (other than the portion of the Units received by a Personal Planning Vehicle
created prior to the date of the First Amended and Restated Limited Partnership Agreement identified in the books and records of the Partnership as “Non-Minimum Retained Ownership Requirement
Units”) shall be deemed held by such Limited Partner for purposes of calculating the number of Initial Vested Units received by such Limited Partner and (ii) any Units held by a Personal Planning Vehicle of a Limited Partner shall not
be deemed to be held by such Limited Partner for purposes of calculating whether the relevant percentage of Initial Vested Units held satisfies the Minimum Retained Ownership Requirement set forth in this Section 8.04(a).
(b) Unless otherwise approved by the General Partner in its sole discretion, each Category 1 Limited Partner other than a Personal Planning
Vehicle shall, until Mr. Stephen A. Schwarzman’s termination of employment, continue to hold (and may not Transfer) the lesser of (i) at least 25% of all Initial Vested Units received collectively by the Category 1 Limited
Partners and (ii) a number of Initial Units that is equal to the quotient of $1.5 billion divided by the Last Reported Sale Price per share of Class A Common Stock from time to time. For purposes of this paragraph (b), (i)
Units held by a Personal Planning Vehicle of a Category 1 Limited Partner (other than the portion of the Units received by a Personal Planning Vehicle created prior to the date of the First Amended and Restated Limited Partnership Agreement
identified in the books and records of the Partnership as “Non-Minimum Retained Ownership Requirement Units”) shall be deemed held by such Category 1 Limited Partner for purposes of
calculating the number of Initial Vested Units received by such Category 1 Limited Partner and (ii) any Units held by a Personal Planning Vehicle of a Category 1 Limited Partner shall not be deemed to be held by such Category 1 Limited Partner
for purposes of calculating whether the relevant percentage of Initial Vested Units held satisfies the Minimum Retained Ownership Requirement set forth in this Section 8.04(b).
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Section 8.05. Mandatory Exchanges. The General Partner may in its sole discretion at
any time and from time to time, without the consent of any Limited Partner, require any Limited Partner other than an Employed Limited Partner to Transfer in an Exchange Transaction all Units held by such Limited Partner. Any such determinations by
the General Partner need not be uniform and may be made selectively among Limited Partners, whether or not such Limited Partners are similarly situated. In addition, the General Partner may, with the consent of Partners whose Vested Percentage
Interests exceed 75% of the Vested Percentage Interests of all Partners in the aggregate, require all Limited Partners to Transfer in an Exchange Transaction all Units held by them.
Section 8.06. Encumbrances. No Limited Partner or Assignee may create an Encumbrance with respect to all or any portion of its
Units (or any beneficial interest therein) other than Encumbrances that run in favor of the Limited Partner unless the General Partner consents in writing thereto, which consent may be given or withheld, or made subject to such conditions as are
determined by the General Partner, in the General Partner’s sole discretion. Consent of the General Partner shall be withheld until the holder of the Encumbrance acknowledges the terms and conditions of this Agreement. Any purported Encumbrance
that is not in accordance with this Agreement shall be, to the fullest extent permitted by law, null and void.
Section 8.07.
Further Restrictions. Notwithstanding any contrary provision in this Agreement, in no event may any Transfer of a Unit be made by any Limited Partner or Assignee if:
(a) such Transfer is made to any Person who lacks the legal right, power or capacity to own such Unit;
(b) such Transfer would require the registration of such transferred Unit or of any Class of Unit pursuant to any applicable United States
federal or state securities laws (including, without limitation, the Securities Act or the Exchange Act) or other non-U.S. securities laws (including Canadian provincial or territorial securities laws) or
would constitute a non-exempt distribution pursuant to applicable provincial or state securities laws;
(c) such Transfer would cause (i) all or any portion of the assets of the Partnership to (A) constitute “plan
assets” (under ERISA, the Code or any applicable Similar Law) of any existing or contemplated Limited Partner, or (B) be subject to the provisions of ERISA, Section 4975 of the Code or any applicable Similar Law, or (ii) the
General Partner to become a fiduciary with respect to any existing or contemplated Limited Partner, pursuant to ERISA, any applicable Similar Law, or otherwise;
(d) to the extent requested by the General Partner, the Partnership does not receive such legal and/or tax opinions and written instruments
(including, without limitation, copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as an Assignee) that are in a form satisfactory to the General Partner, as determined in the General Partner’s
sole discretion.
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Section 8.08. Rights of Assignees. Subject to Section 8.07, the transferee of
any permitted Transfer pursuant to this Article VIII will be an assignee only (“Assignee”), and only will receive, to the extent transferred, the distributions and allocations of income, gain, loss, deduction, credit or similar item
to which the Partner which transferred its Units would be entitled, and such Assignee will not be entitled or enabled to exercise any other rights or powers of a Partner, such other rights, and all obligations relating to, or in connection with,
such Interest remaining with the transferring Partner. The transferring Partner will remain a Partner even if it has transferred all of its Units to one or more Assignees until such time as the Assignee(s) is admitted to the Partnership as a Partner
pursuant to Section 8.10.
Section 8.09. Admissions, Withdrawals and Removals. (a) No Person may be admitted to the
Partnership as an additional General Partner or substitute General Partner without the prior written consent or ratification of Partners whose Vested Percentage Interests exceed 50% of the Vested Percentage Interests of all Partners in the
aggregate. A General Partner will not be entitled to Transfer all of its Units or to withdraw from being a General Partner of the Partnership unless another General Partner shall have been admitted hereunder (and not have previously been removed or
withdrawn).
(b) No Limited Partner will be removed or entitled to withdraw from being a Partner of the Partnership except in accordance
with Section 8.11 hereof.
(c) Except as otherwise provided in Article IX or the Act, no admission, substitution, withdrawal or
removal of a Partner will cause the dissolution of the Partnership. To the fullest extent permitted by law, any purported admission, withdrawal or removal that is not in accordance with this Agreement shall be null and void.
Section 8.10. Admission of Assignees as Substitute Limited Partners. An Assignee will become a substitute Limited Partner only if
and when each of the following conditions is satisfied:
(a) the General Partner consents in writing to such admission, which consent may
be given or withheld, or made subject to such conditions as are determined by the General Partner, in each case in the General Partner’s sole discretion;
(b) if required by the General Partner, the General Partner receives written instruments (including, without limitation, copies of any
instruments of Transfer and such Assignee’s consent to be bound by this Agreement as a substitute Limited Partner) that are in a form satisfactory to the General Partner (as determined in its sole discretion);
(c) if required by the General Partner, the General Partner receives an opinion of counsel satisfactory to the General Partner to the effect
that such Transfer is in compliance with this Agreement and all applicable Law; and
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(d) if required by the General Partner, the parties to the Transfer, or any one of them, pays all
of the Partnership’s reasonable expenses connected with such Transfer (including, but not limited to, the reasonable legal and accounting fees of the Partnership).
Section 8.11. Withdrawal and Removal of Limited Partners. If a Limited Partner ceases to hold any Units, then such Limited Partner
shall withdraw from the Partnership and shall cease to be a Limited Partner and to have the power to exercise any rights or powers of a Limited Partner.
ARTICLE IX
DISSOLUTION,
LIQUIDATION AND TERMINATION
Section 9.01. No Dissolution. Except as required by the Act, the Partnership shall not be
dissolved by the admission of additional Partners or withdrawal of Partners in accordance with the terms of this Agreement. The Partnership may be dissolved, liquidated wound up and terminated only pursuant to the provisions of this Article IX, and
the Partners hereby irrevocably waive any and all other rights they may have to cause a dissolution of the Partnership or a sale or partition of any or all of the Partnership assets.
Section 9.02. Events Causing Dissolution. The Partnership shall be dissolved and its affairs shall be wound up upon the occurrence
of any of the following events (each, a “Dissolution Event”):
(a) the rendering of a judicial judgment ordering the
dissolution of the Partnership under the Act upon the finding by a court of competent jurisdiction that the General Partner (i) is permanently incapable of performing its part of this Agreement, (ii) has been guilty of conduct that is
calculated to affect prejudicially the carrying on of the business of the Partnership, (iii) willfully or persistently commits a breach of this Agreement or (iv) conducts itself in a manner relating to the Partnership or its business such
that it is not reasonably practicable for the other Partners to carry on the business of the Partnership with the General Partner;
(b) any
event which makes it unlawful for the business of the Partnership to be carried on by the Partners;
(c) the written consent of all
Partners;
(d) any other event not inconsistent with any provision hereof causing a dissolution of the Partnership under the Act;
(e) the Incapacity or removal of the General Partner or the occurrence of a Disabling Event with respect to the General Partner;
provided that the Partnership will not be dissolved or required to be wound up in connection with any of the events specified in this Section 9.02(e) if: (i) at the time of the occurrence of such event there is at least one other
general partner of the Partnership who is hereby authorized to, and elects to, carry on the business of the Partnership; or (ii) all remaining Limited Partners consent to or ratify the continuation of the business of the Partnership and the
appointment of another general partner of
27
the Partnership, effective as of the event that caused the General Partner to cease to be a general partner of the Partnership, within 120 days following the occurrence of any such event, which
consent shall be deemed (and if requested each Limited Partner shall provide a written consent or ratification) to have been given for all Limited Partners if the holders of more than 50% of the Vested Units then outstanding agree in writing to so
continue the business of the Partnership.
Section 9.03. Distribution upon Dissolution. Upon dissolution, the Partnership
shall not be terminated and shall continue until the winding up of the affairs of the Partnership is completed. Upon the winding up of the Partnership, the General Partner, or any other Person designated by the General Partner (the
“Liquidation Agent”), shall take full account of the assets and liabilities of the Partnership and shall, unless the General Partner determines otherwise, liquidate the assets of the Partnership as promptly as is consistent with
obtaining the fair value thereof. The proceeds of any liquidation shall be applied and distributed in the following order:
(a) First, to
the satisfaction of debts and liabilities of the Partnership (including satisfaction of all indebtedness to Partners and/or their Affiliates to the extent otherwise permitted by law) including the expenses of liquidation, and including the
establishment of any reserve which the Liquidation Agent shall deem reasonably necessary for any contingent, conditional or unmatured contractual liabilities or obligations of the Partnership (“Contingencies”). Any such reserve may
be paid over by the Liquidation Agent to any attorney-at-law, or acceptable party, as escrow agent, to be held for disbursement in payment of any Contingencies and, at
the expiration of such period as shall be deemed advisable by the Liquidation Agent for distribution of the balance in the manner hereinafter provided in this Section 9.03; and
(b) The balance, if any, to the Partners, pro rata to each of the Partners in accordance with their Total Percentage Interests.
Section 9.04. Time for Liquidation. A reasonable amount of time shall be allowed for the orderly liquidation of the assets of the
Partnership and the discharge of liabilities to creditors so as to enable the Liquidation Agent to minimize the losses attendant upon such liquidation.
Section 9.05. Termination. The Partnership shall terminate when all of the assets of the Partnership, after payment of or due
provision for all debts, liabilities and obligations of the Partnership, shall have been distributed to the holders of Units in the manner provided for in this Article IX and the relevant declaration has been filed under the Act.
Section 9.06. Claims of the Partners. The Partners shall look solely to the Partnership’s assets for the return of their
Capital Contributions, and if the assets of the Partnership remaining after payment of or due provision for all debts, liabilities and obligations of the Partnership are insufficient to return such Capital Contributions, the Partners shall have no
recourse against the Partnership or any other Partner or any other Person. No Partner with a negative balance in such Partner’s Capital Account shall have any obligation to the Partnership or to the other Partners or to any creditor or other
Person to restore such negative balance during the existence of the Partnership, upon dissolution or termination of the Partnership or otherwise, except to the extent required by the Act.
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Section 9.07. Survival of Certain Provisions. Notwithstanding anything to the
contrary in this Agreement, the provisions of Section 10.02 and Section 11.09 shall survive the termination of the Partnership.
ARTICLE X
LIABILITY AND
INDEMNIFICATION
Section 10.01. Liability of Partners.
(a) No Limited Partner shall be liable for any debt, obligation or liability of the Partnership or of any other Partner or have any obligation
to restore any deficit balance in its Capital Account solely by reason of being a Partner of the Partnership, except to the extent required by the Act.
(b) This Agreement is not intended to, and does not, create or impose any fiduciary duty on any of the Partners (including without limitation,
the General Partner) hereto or on their respective Affiliates. Further, the Partners hereby waive any and all fiduciary duties that, absent such waiver, may exist at or be implied by Law or in equity, and in doing so, recognize, acknowledge and
agree that their duties and obligations to one another and to the Partnership are only as expressly set forth in this Agreement and those required by the Act.
(c) To the extent that, at law or in equity, any Partner (including without limitation, the General Partner) has duties (including fiduciary
duties) and liabilities relating thereto to the Partnership or to another Partner, the Partners (including without limitation, the General Partner) acting under this Agreement will not be liable to the Partnership or to any such other Partner for
their 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 relating thereto of any Partner (including without limitation, the General
Partner) otherwise existing at law or in equity, are agreed by the Partners to replace to that extent such other duties and liabilities of the Partners relating thereto (including without limitation, the General Partner).
(d) The General Partner may consult with legal counsel, accountants and financial or other advisors and any act or omission suffered or taken
by the General Partner on behalf of the Partnership or in furtherance of the interests of the Partnership in good faith in reliance upon and in accordance with the advice of such counsel, accountants or financial or other advisors will be full
justification for any such act or omission, and the General Partner will be fully protected in so acting or omitting to act so long as such counsel or accountants or financial or other advisors were selected with reasonable care.
(e) Notwithstanding any other provision of this Agreement or otherwise applicable provision of law or equity, whenever in this Agreement the
General Partner is permitted or required to make a decision (i) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, such General Partner shall be entitled to consider
only such interests and factors as it desires, including its own interests, and shall, to the fullest extent permitted by applicable Law, have no duty or obligation to give any consideration to any interest of or factors affecting the Partnership or
the Limited Partners, or (ii) in its “good faith” or under another expressed standard, such General Partner shall act under such express standard and shall not be subject to any other or different standards.
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Section 10.02. Indemnification.
(a) Indemnification. To the fullest extent permitted by law, the Partnership shall indemnify any person (and such person’s heirs,
executors or administrators) who was or is made or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding (brought in the right of the Partnership or otherwise), whether civil,
criminal, administrative or investigative, and whether formal or informal, including appeals, by reason of the fact that such person, or a person for whom such person was the legal representative, is or was the General Partner or a director or
officer of the General Partner or the Partnership or, while a director or officer of the General Partner or the Partnership, is or was serving at the request of the Partnership as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, limited liability company, nonprofit entity or other enterprise, for and against all loss and liability suffered and expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement reasonably incurred by such person or such heirs, executors or administrators in connection with such action, suit or proceeding, including appeals, if such person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the Partnership and, with respect to any alleged conduct resulting in a criminal proceeding against the person, such person had no reasonable cause to believe that such person’s conduct was unlawful.
Notwithstanding the preceding sentence, except as otherwise provided in Section 10.02(c), the Partnership shall be required to indemnify a person described in such sentence in connection with any action, suit or proceeding (or part thereof)
commenced by such person only if the commencement of such action, suit or proceeding (or part thereof) by such person was authorized by the General Partner. Any reference to an officer of the General Partner or the Partnership in this
Section 10.02 shall be deemed to refer exclusively to the Chief Executive Officer, President, Chief Operating Officer, Executive Vice Chairman, Chief Financial Officer, Chief Legal Officer, Secretary or any other officer of the Partnership
appointed pursuant to Section 3.04 hereof or, with respect to the General Partner, appointed pursuant to the equivalent organizational documents of the General Partner. The fact that any person who is or was an employee of the General Partner
or the Partnership, but not an officer thereof as described in the preceding sentence, has been given or has used any title that could be construed to suggest or imply that such person is or may be an officer of the General Partner or the
Partnership shall not result in such person being constituted as, or being deemed to be, such an officer of the General Partner or the Partnership for purposes of this Section 10.02.
(b) Advancement of Expenses. To the fullest extent permitted by law, the Partnership shall promptly pay expenses (including
attorneys’ fees) incurred by any person described in Section 10.02(a) in appearing at, participating in or defending any action, suit or proceeding in advance of the final disposition of such action, suit or proceeding, including appeals,
upon (i) presentation of an undertaking on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified under this Section 10.02 or otherwise and (ii) to the extent
determined by the General Partner in its sole discretion to be necessary or advisable, receipt by the Partnership of security or other assurances satisfactory to the General Partner in its sole discretion that such person will be able to repay
30
such amount if it ultimately shall be determined that such person is not entitled to be indemnified under this Section 10.02 or otherwise. Notwithstanding the preceding sentence, except as
otherwise provided in Section 10.02(c), the Partnership shall be required to advance expenses of a person described in such sentence in connection with any action, suit or proceeding (or part thereof) commenced by such person only if the
commencement of such action, suit or proceeding (or part thereof) by such person was authorized by the General Partner.
(c) Unpaid
Claims. If a claim for indemnification (following the final disposition of such action, suit or proceeding) or advancement of expenses under this Section 10.02 is not paid in full within thirty (30) days after a written claim therefor
by any person described in Section 10.02(a) has been received by the Partnership, such person may file proceedings to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Partnership shall have the burden of proving that such person is not entitled to the requested indemnification or advancement of expenses under applicable Law.
(d) Insurance. To the fullest extent permitted by law, the Partnership may purchase and maintain insurance on behalf of any person
described in Section 10.02(a) against any liability asserted against such person, whether or not the Partnership would have the power to indemnify such person against such liability under the provisions of this Section 10.02 or otherwise.
(e) Non-Exclusivity of Rights. The provisions of this Section 10.02 shall be
applicable to all actions, claims, suits or proceedings made or commenced after the date of the First Amended and Restated Limited Partnership Agreement, whether arising from acts or omissions to act occurring before or after its adoption. The
provisions of this Section 10.02 shall be deemed to be a contract between the Partnership and each person entitled to indemnification under this Section 10.02 (or legal representative thereof) who serves in such capacity at any time while
this Section 10.02 and the relevant provisions of applicable Law, if any, are in effect, and any amendment, modification or repeal hereof shall not affect any rights or obligations then existing with respect to any state of facts or any action,
suit or proceeding then or theretofore existing, or any action, suit or proceeding thereafter brought or threatened based in whole or in part on any such state of facts. If any provision of this Section 10.02 shall be found to be invalid or
limited in application by reason of any law or regulation, it shall not affect the validity of the remaining provisions hereof. The rights of indemnification provided in this Section 10.02 shall neither be exclusive of, nor be deemed in
limitation of, any rights to which any person may otherwise be or become entitled or permitted by contract, this Partnership Agreement or as a matter of law, both as to actions in such person’s official capacity and actions in any other
capacity, it being the policy of the Partnership that indemnification of any person whom the Partnership is obligated to indemnify pursuant to Section 10.02(a) shall be made to the fullest extent permitted by law.
For purposes of this Section 10.02, references to “other enterprises” shall include employee benefit plans; references
to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Partnership” shall include any service as a director,
officer, employee or agent of the Partnership which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries.
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This Section 10.02 shall not limit the right of the Partnership, to the extent and in the
manner permitted by law, to indemnify and to advance expenses to, and purchase and maintain insurance on behalf of, persons other than persons described in Section 10.02(a).
ARTICLE XI
MISCELLANEOUS
Section 11.01. Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being
enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner
materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent
of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
Section 11.02. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail (delivery receipt requested) or by registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.02):
|
|
(a)
|
If to the Partnership, to:
|
Blackstone Holdings III L.P.
c/o Blackstone Holdings III GP L.P.
345 Park Avenue
New York, New
York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
|
|
(b)
|
If to any Partner, to:
|
c/o Blackstone Holdings III GP L.P.
345 Park Avenue
New York, New
York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
32
|
|
(c)
|
If to the General Partner, to:
|
Blackstone Holdings III GP L.P.
345 Park Avenue
New York, New
York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
Section 11.03. Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right
or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by Law.
Section 11.04. Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the
extent permitted by this Agreement, their successors, executors, administrators, heirs, legal representatives and assigns.
Section 11.05. Interpretation. Throughout this Agreement, nouns, pronouns and verbs shall be construed as masculine, feminine,
neuter, singular or plural, whichever shall be applicable. Unless otherwise specified, all references herein to “Articles,” “Sections” and paragraphs shall refer to corresponding provisions of this Agreement.
Section 11.06. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Copies of executed
counterparts transmitted by telecopy or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 11.06.
Section 11.07. Further Assurances. Each Limited Partner shall perform all other acts and execute and deliver all other documents
as may be necessary or appropriate to carry out the purposes and intent of this Agreement.
Section 11.08. Entire Agreement.
This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
Section 11.09. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the Province of
Québec.
Section 11.10. Submission to Jurisdiction; Waiver of Jury Trial.
(a) Any and all disputes which cannot be settled amicably, including any ancillary claims of any party, arising out of, relating to or in
connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) shall be
finally settled by arbitration conducted by a single arbitrator in New York in accordance with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an
arbitrator within thirty (30) days of the receipt of the
33
request for arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the English language. Performance
under this Agreement shall continue if reasonably possible during any arbitration proceedings.
(b) Notwithstanding the provisions of
paragraph (a), the General Partner may bring, or may cause the Partnership to bring, on behalf of the General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for
the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents
to the application of paragraph (c) of this Section 11.10 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to
calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the General Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process
upon such agent, who shall promptly advise such Partner of any such service of process, shall be deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY
JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 11.10, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary
judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the fora designated by this
paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties
hereby waive, to the fullest extent permitted by applicable Law, any objection which they now or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to
in the preceding paragraph of this Section 11.10 and such parties agree not to plead or claim the same.
Section 11.11.
Expenses. Except as otherwise specified in this Agreement, the Partnership shall be responsible for all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in
connection with its operation.
Section 11.12. Amendments and Waivers. (a) This Agreement (including the Annexes hereto)
may be amended, supplemented, waived or modified by the written consent of the General Partner; provided that any amendment that would have a material adverse effect on the rights or preferences of any Class of Units in relation to other
Classes of Units must be approved by the holders of not less than a majority of the Vested Percentage Interests of the Class affected; provided further, that the General Partner may, without the written consent of any Limited
34
Partner or any other Person, amend, supplement, waive or modify any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in
connection therewith, to reflect: (i) any amendment, supplement, waiver or modification that the General Partner determines to be necessary or appropriate in connection with the creation, authorization or issuance of any class or series of
equity interest in the Partnership; (ii) the admission, substitution, withdrawal or removal of Partners in accordance with this Agreement; (iii) a change in the name of the Partnership, the location of the principal place of business of
the Partnership, the registered agent of the Partnership or the registered office of the Partnership; (iv) any amendment, supplement, waiver or modification that the General Partner determines in its sole discretion to be necessary or
appropriate to address changes in U.S. federal income tax regulations, legislation or interpretation; (v) a change in the Fiscal Year or taxable year of the Partnership and any other changes that the General Partner determines to be necessary
or appropriate as a result of a change in the Fiscal Year or taxable year of the Partnership including a change in the dates on which distributions are to be made by the Partnership.
(b) No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of
time specified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by Law.
(c) The General Partner may, in its sole discretion,
unilaterally amend this Agreement on or before the effective date of the final regulations to provide for (i) the election of a safe harbor under Proposed Treasury Regulation Section 1.83-3(l) (or
any similar provision) under which the fair market value of a partnership interest that is transferred is treated as being equal to the liquidation value of that interest, (ii) an agreement by the Partnership and each of its Partners to comply
with all of the requirements set forth in such regulations and Notice 2005-43 (and any other guidance provided by the Internal Revenue Service with respect to such election) with respect to all partnership
interests transferred in connection with the performance of services while the election remains effective, (iii) the allocation of items of income, gains, deductions and losses required by the final regulations similar to Proposed Treasury
Regulation Section 1.704-1(b)(4)(xii)(b) and (c), and (iv) any other related amendments.
(d) Except as may be otherwise required by law in connection with the winding-up, liquidation, or
dissolution of the Partnership, each Partner hereby irrevocably waives any and all rights that it may have to maintain an action for judicial accounting or for partition of any of the Partnership’s property.
Section 11.13. No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their permitted assigns and successors and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement (other than pursuant to Section 10.02 hereof).
35
Section 11.14. Headings. The headings and subheadings in this Agreement are included
for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.
Section 11.15. Construction. Each party hereto acknowledges and agrees it has had the opportunity to draft, review and edit the
language of this Agreement and that it is the intent of the parties hereto that no presumption for or against any party arising out of drafting all or any part of this Agreement will be applied in any dispute relating to, in connection with or
involving this Agreement. Accordingly, the parties hereby waive to the fullest extent permitted by law the benefit of any rule of Law or any legal decision that would require that in cases of uncertainty, the language of a contract should be
interpreted most strongly against the party who drafted such language.
Section 11.16. Power of Attorney. Each Limited
Partner, by its execution hereof, hereby makes, constitutes and appoints the General Partner as its true and lawful agent and attorney in fact, with full power of substitution and full power and authority in its name, place and stead, to make,
execute, sign, acknowledge, swear to, record and file (a) this Agreement and any amendment to this Agreement that has been adopted as herein provided; (b) the original certificate of limited partnership of the Partnership and all
amendments thereto required or permitted by law or the provisions of this Agreement; (c) all certificates and other instruments (including consents and ratifications which the Limited Partners have agreed to provide upon a matter receiving the
agreed support of Limited Partners) deemed advisable by the General Partner to carry out the provisions of this Agreement (including the provisions of Section 8.05) and Law or to permit the Partnership to become or to continue as a limited
partnership or partnership wherein the Limited Partners have limited liability in each jurisdiction where the Partnership may be doing business; (d) all instruments that the General Partner deems appropriate to reflect a change or modification
of this Agreement or the Partnership in accordance with this Agreement, including, without limitation, the admission of additional Limited Partners or substituted Limited Partners pursuant to the provisions of this Agreement; (e) all
conveyances and other instruments or papers deemed advisable by the General Partner to effect the liquidation and termination of the Partnership; and (f) all fictitious or assumed name certificates required or permitted (in light of the
Partnership’s activities) to be filed on behalf of the Partnership.
Section 11.17. Letter Agreements; Schedules. The
General Partner may, or may cause the Partnership to, without the approval of any Limited Partner or other Person, enter into separate letter agreements with individual Limited Partners with respect to any matter, in each case on terms and
conditions not inconsistent with this Agreement, which have the effect of establishing rights under, or supplementing the terms of, this Agreement. The General Partner may from time to time execute and deliver to the Limited Partners schedules which
set forth information contained in the books and records of the Partnership and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement
for any purpose whatsoever.
Section 11.18. Partnership Status. The parties intend to treat the Partnership as a partnership
for U.S. federal income tax purposes.
[Remainder of Page Intentionally Left Blank]
36
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement or have caused this
Agreement to be duly executed by their respective authorized officers, in each case as of the date first above stated.
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GENERAL PARTNER:
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BLACKSTONE HOLDINGS III GP L.P.
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By:
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Blackstone Holdings III GP Management L.L.C.,
its general partner
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By:
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The Blackstone Group Inc., its sole member
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By:
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/s/ John G. Finley
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Name: John G. Finley
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Title: Chief Legal Officer
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[Signature Page to Fourth Amended and Restated Limited Partnership Agreement of Blackstone Holdings III
L.P.]
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LIMITED PARTNERS REPRESENTING A
MAJORITY VESTED PERCENTAGE INTEREST:
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/s/ Stephen A. Schwarzman
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Stephen A. Schwarzman
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/s/ Jonathan D. Gray
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Jonathan D. Gray
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/s/ Hamilton E. James
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Hamilton E. James
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[Signature Page to
Fourth Amended and Restated Limited Partnership Agreement of Blackstone Holdings III L.P.]
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ALL OTHER LIMITED PARTNERS:
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All other Limited Partners now and hereafter admitted as Limited Partners of the Partnership, pursuant to powers of attorney now and hereafter executed in favor of, and granted and delivered to the General Partner
without execution hereof pursuant to Section 11.16 of the Third Amended and Restated Limited Partnership Agreement.
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By:
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BLACKSTONE HOLDINGS III GP L.P.
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By:
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Blackstone Holdings III GP Management L.L.C., its general partner
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By:
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The Blackstone Group Inc., its sole member
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By:
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/s/ John G. Finley
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Name: John G. Finley
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Title: Chief Legal Officer
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[Signature Page to
Fourth Amended and Restated Limited Partnership Agreement of Blackstone Holdings III L.P.]
Exhibit 10.4
Execution Version
FOURTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
BLACKSTONE HOLDINGS
IV L.P.
Dated as of August 10, 2020
THE PARTNERSHIP UNITS OF BLACKSTONE HOLDINGS IV L.P. HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAWS OF ANY
STATE, PROVINCE OR ANY OTHER APPLICABLE SECURITIES LAWS AND ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR PROVINCE, AND ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS
AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE UNITS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS LIMITED PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH
UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.
Table of Contents
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Page
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ARTICLE I
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DEFINITIONS
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Section 1.01.
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Definitions
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2
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ARTICLE II
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FORMATION, TERM, PURPOSE AND POWERS
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Section 2.01.
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Formation
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11
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Section 2.02.
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Name
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11
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Section 2.03.
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Term
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12
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Section 2.04.
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Offices
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12
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Section 2.05.
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Agent for Service of Process
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12
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Section 2.06.
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Business Purpose
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12
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Section 2.07.
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Powers of the Partnership
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12
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Section 2.08.
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Partners; Admission of New Partners
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12
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Section 2.09.
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Withdrawal
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12
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ARTICLE III
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MANAGEMENT
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Section 3.01.
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General Partner
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12
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Section 3.02.
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Compensation
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13
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Section 3.03.
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Expenses
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13
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Section 3.04.
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Officers
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13
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Section 3.05.
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Authority of Partners
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14
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Section 3.06.
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Action by Written Consent or Ratification
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14
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ARTICLE IV
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DISTRIBUTIONS
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Section 4.01.
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Distributions
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14
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Section 4.02.
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Liquidation Distribution
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15
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Section 4.03.
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Limitations on Distribution
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15
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Section 4.04.
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Administration Fee
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16
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ARTICLE V
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CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
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TAX ALLOCATIONS; TAX MATTERS
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Section 5.01.
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Initial Capital Contributions
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16
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Section 5.02.
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No Additional Capital Contributions
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16
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Section 5.03.
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Capital Accounts
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16
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i
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Section 5.04.
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Allocations of Profits and Losses
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16
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Section 5.05.
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Special Allocations
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17
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Section 5.06.
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Tax Allocations
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18
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Section 5.07.
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Tax Advances
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18
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Section 5.08.
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Tax Matters
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19
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Section 5.09.
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Other Allocation Provisions
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19
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ARTICLE VI
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BOOKS AND RECORDS; REPORTS
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Section 6.01.
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Books and Records
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20
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ARTICLE VII
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PARTNERSHIP UNITS
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Section 7.01.
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Units
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20
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Section 7.02.
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Register
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21
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Section 7.03.
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Registered Partners
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21
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ARTICLE VIII
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VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS
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Section 8.01.
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Vesting of Initial Unvested Units
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21
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Section 8.02.
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Forfeiture of Units Held by Initial Limited Partners
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22
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Section 8.03.
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Limited Partner Transfers
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23
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Section 8.04.
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Minimum Retained Ownership Requirement
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24
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Section 8.05.
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Mandatory Exchanges
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25
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Section 8.06.
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Encumbrances
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25
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Section 8.07.
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Further Restrictions
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25
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Section 8.08.
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Rights of Assignees
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26
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Section 8.09.
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Admissions, Withdrawals and Removals
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26
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Section 8.10.
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Admission of Assignees as Substitute Limited Partners
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26
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Section 8.11.
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Withdrawal and Removal of Limited Partners
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27
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ARTICLE IX
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DISSOLUTION, LIQUIDATION AND TERMINATION
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Section 9.01.
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No Dissolution
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27
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Section 9.02.
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Events Causing Dissolution
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27
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Section 9.03.
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Distribution upon Dissolution
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28
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Section 9.04.
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Time for Liquidation
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28
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Section 9.05.
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Termination
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28
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Section 9.06.
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Claims of the Partners
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29
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Section 9.07.
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Survival of Certain Provisions
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ii
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ARTICLE X
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LIABILITY AND INDEMNIFICATION
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Section 10.01.
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Liability of Partners
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29
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Section 10.02.
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Indemnification
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30
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ARTICLE XI
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MISCELLANEOUS
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Section 11.01.
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Severability
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32
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Section 11.02.
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Notices
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32
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Section 11.03.
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Cumulative Remedies
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33
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Section 11.04.
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Binding Effect
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33
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Section 11.05.
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Interpretation
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33
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Section 11.06.
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Counterparts
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33
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Section 11.07.
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Further Assurances
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33
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Section 11.08.
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Entire Agreement
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33
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Section 11.09.
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Governing Law
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33
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Section 11.10.
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Submission to Jurisdiction; Waiver of Jury Trial
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34
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Section 11.11.
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Expenses
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34
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Section 11.12.
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Amendments and Waivers
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35
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Section 11.13.
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No Third Party Beneficiaries
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36
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Section 11.14.
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Headings
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36
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Section 11.15.
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Construction
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36
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Section 11.16.
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Power of Attorney
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36
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Section 11.17.
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Letter Agreements; Schedules
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36
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Section 11.18.
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Partnership Status
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37
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iii
FOURTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
BLACKSTONE HOLDINGS
IV L.P.
This FOURTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (this “Agreement”) of Blackstone Holdings IV
L.P. (the “Partnership”) is made as of the 10th day of August, 2020, by and among Blackstone Holdings IV GP L.P., a société en commandite formed under the laws of
the Province of Québec, as general partner, and the Limited Partners (as defined herein) of the Partnership.
WHEREAS, the
Partnership was formed as a limited partnership pursuant to the Act, by the execution of the Limited Partnership Agreement of the Partnership dated as of June 13, 2007 (the “Original Agreement”);
WHEREAS, the Original Agreement was amended and restated by the Amended and Restated Limited Partnership Agreement of the Partnership dated as
of June 18, 2007 (the “First Amended and Restated Limited Partnership Agreement”) and was further amended and restated by the Second Amended and Restated Limited Partnership Agreement of the Partnership dated as of
January 1, 2009, as amended by Amendment No. 1 thereto, dated as of November 3, 2009 (as so amended, the “Second Amended and Restated Limited Partnership Agreement”); and
WHEREAS, the Second Amended and Restated Limited Partnership Agreement was amended and restated by the Third Amended and Restated Limited
Partnership Agreement of the Partnership dated as of July 1, 2019 (the “Third Amended and Restated Agreement”);
WHEREAS, pursuant to Section 11.12 of the Third Amended and Restated Agreement, the amendments set forth in this Agreement require only
the consent of the General Partner and no consent or approval of any Limited Partner is required;
WHEREAS, the Limited Partners holding
not less than a majority of the Vested Percentage Interests of the Units have also consented to amending the Third Amended and Restated Agreement in the manner and as more fully set forth herein; and
WHEREAS, the parties to this Agreement now wish to amend and restate the Third Amended and Restated Limited Partnership Agreement in its
entirety as more fully set forth below.
1
NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending
to be legally bound hereby, the parties hereto agree to amend and restate the Third Amended and Restated Limited Partnership Agreement in its entirety to read as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Capitalized terms used herein without definition have the following meanings (such meanings being
equally applicable to both the singular and plural form of the terms defined):
“Act” means, the Civil Code and An Act
respecting legal publicity of sole proprietorships, partnerships and legal persons (Québec), as they may be amended from time to time, and the laws of Québec applicable to partnerships.
“Additional Credit Amount” has the meaning set forth in Section 4.01(b)(ii).
“Adjusted Capital Account Balance” means, with respect to each Partner, the balance in such Partner’s Capital Account
adjusted (i) by taking into account the adjustments, allocations and distributions described in U.S. Treasury Regulations Sections 1.704-1(b)(2)(ii)(c) (4), (5) and (6); and (ii) by adding to such
balance such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, determined pursuant to Regulations Sections 1.704-2(g) and
1.704-2(i)(5), any amounts such Partner is obligated to restore pursuant to any provision of this Agreement or by applicable Law. The foregoing definition of Adjusted Capital Account Balance is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Administration Fee” has the meaning set forth in Section 4.04.
“Affiliate” means, with respect to a specified Person, any other Person that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person.
“Agreement” has the
meaning set forth in the preamble of this Agreement.
“Amended Tax Amount” has the meaning set forth in
Section 4.01(b)(ii).
“Assignee” has the meaning set forth in Section 8.08.
“Assumed Tax Rate” means the highest effective marginal combined U.S. federal, state and local income tax rate for a Fiscal
Year prescribed for an individual or corporate resident in New York, New York (taking into account (a) the nondeductibility of expenses subject to the limitation described in Section 67(a) of the Code and (b) the character (e.g.,
long-term or short-term capital gain or ordinary or exempt income) of the applicable income, but not taking into account the deductibility of state and local income taxes for U.S. federal income tax purposes). For the avoidance of doubt, the Assumed
Tax Rate will be the same for all Partners.
“Available Cash” means, with respect to any fiscal period, the amount of
cash on hand which the General Partner, in its reasonable discretion, deems available for distribution to the Partners, taking into account all debts, liabilities and obligations of the Partnership then due and amounts which the General Partner, in
its reasonable discretion, deems necessary to expend or retain for working capital or to place into reserves for customary and usual claims with respect to the Partnership’s operations.
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“Blackstone Holdings Partnerships” means each of the Partnership, Blackstone
Holdings I L.P., a Delaware limited partnership, Blackstone Holdings AI L.P., a Delaware limited partnership, Blackstone Holdings II L.P., a Delaware limited partnership, and Blackstone Holdings III L.P., a Québec société en
commandite.
“Capital Account” means the separate capital account maintained for each Partner in accordance with
Section 5.03 hereof.
“Capital Contribution” means, with respect to any Partner, the aggregate amount of money
contributed to the Partnership and the Carrying Value of any property (other than money), net of any liabilities assumed by the Partnership upon contribution or to which such property is subject, contributed to the Partnership pursuant to Article V.
“Carrying Value” means, with respect to any Partnership asset, the asset’s adjusted basis for U.S. federal income
tax purposes, except that the initial carrying value of assets contributed to the Partnership shall be their respective gross fair market values on the date of contribution as determined by the General Partner, and the Carrying Values of all
Partnership assets shall be adjusted to equal their respective fair market values, in accordance with the rules set forth in United States Treasury Regulation Section 1.704-1(b)(2)(iv)(f), except as
otherwise provided herein, as of: (a) the date of the acquisition of any additional Partnership Interest by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (b) the date of the distribution of more
than a de minimis amount of Partnership assets to a Partner; (c) the date a Partnership Interest is relinquished to the Partnership; or (d) any other date specified in the United States Treasury Regulations; provided,
however, that adjustments pursuant to clauses (a), (b) (c) and (d) above shall be made only if such adjustments are deemed necessary or appropriate by the General Partner to reflect the relative economic interests of the Partners. The
Carrying Value of any Partnership asset distributed to any Partner shall be adjusted immediately before such distribution to equal its fair market value. In the case of any asset that has a Carrying Value that differs from its adjusted tax basis,
Carrying Value shall be adjusted by the amount of depreciation calculated for purposes of the definition of “Profits (Losses)” rather than the amount of depreciation determined for U.S. federal income tax purposes, and depreciation
shall be calculated by reference to Carrying Value rather than tax basis once Carrying Value differs from tax basis.
“Category 1
Limited Partner” means each of the Limited Partners identified in the books and records of the Partnership as a Category 1 Limited Partner.
“Category 2 Limited Partner” means each of the Limited Partners identified in the books and records of the Partnership as a
Category 2 Limited Partner.
“Category 3 Limited Partner” means each of the Limited Partners identified in the books and
records of the Partnership as a Category 3 Limited Partner.
“Category 4 Limited Partner” means each of the Limited
Partners identified in the books and records of the Partnership as a Category 4 Limited Partner.
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“Category 5 Limited Partner” means each of the Limited Partners identified in
the books and records of the Partnership as a Category 5 Limited Partner.
“Category 6 Limited Partner” means the Limited
Partner identified in the books and records of the Partnership as a Category 6 Limited Partner.
“Cause” means the
occurrence or existence of any of the following as determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by an Employed Limited Partner of any provision of this Agreement or the Non-Competition Agreement, (x) any material breach of any rules or regulations applicable to senior managing directors or employees, as applicable, of the Blackstone Holdings Partnerships, their subsidiaries
and their affiliated entities, (y) an Employed Limited Partner’s deliberate failure to perform his or her duties to the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, or (z) an Employed Limited
Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities in any material way (provided that, in the case of any of
the foregoing clauses (w), (x), (y) and (z), the General Partner has given the Employed Limited Partner written notice (a “Notice of Breach”) within fifteen days after the General Partner becomes aware of such action and such
Employed Limited Partner fails to cure such breach, failure to perform or conduct or behavior within fifteen days after receipt by the Employed Limited Partner of such Notice of Breach from the General Partner (or such longer period, not to exceed
an additional fifteen days, as shall be reasonably required for such cure, provided, that such Employed Limited Partner is diligently pursuing such cure), (iii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct
against the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, or (iv) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony or crime (including any misdemeanor
charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of competent jurisdiction, by a U.S. federal or state or comparable non-U.S. regulatory body or by a self-regulatory body having authority with respect to U.S. federal or state or comparable non-U.S. securities laws, rules or regulations of
the securities industry, that such Employed Limited Partner individually has violated any U.S. federal or state or comparable non-U.S. securities laws or any rules or regulations thereunder, or any rules of
any such self-regulatory body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such Employed Limited Partner’s ability to function as a senior managing
director or employee, as applicable, of the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, taking into account the services required of Employed Limited Partner and the nature of the business of the Blackstone
Holdings Partnerships, their subsidiaries and their affiliated entities or (B) the business of the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities.
“Change of Control” means the occurrence of any Person, other than Blackstone Group Management L.L.C. or a Person approved by
Blackstone Group Management L.L.C., becoming the Class C Stockholder.
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“Charity” means any organization that is organized and operated for a purpose
described in Section 170(c) of the Code (determined without reference to Code Section 170(c)(2)(A)) and described in Code Sections 2055(a) and 2522.
“Civil Code” means the Civil Code of Québec, RSQ ch. C-1991, as it may be
amended from time to time.
“Class” means the classes of Units into which the interests in the Partnership may be
classified or divided from time to time pursuant to the provisions of this Agreement.
“Class A Common
Stock” means the Class A common stock, par value $0.00001 per share, of the Issuer.
“Class A
Units” means the Units of partnership interest in the Partnership designated as the “Class A Units” herein and having the rights pertaining thereto as are set forth in this Agreement.
“Class C Stockholder” means Blackstone Group Management L.L.C., a Delaware limited liability company, and
any successor or permitted assign that owns the Class C common stock, par value $0.00001 per share, of the Issuer at the applicable time.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Contingencies” has the meaning set forth in Section 9.03(b).
“Control” (including the terms “Controlled by” and “under common Control with”) means the
possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without
limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
“Credit Amount” has the meaning set forth in Section 4.01(b)(ii) of this Agreement.
“Creditable Non-U.S. Tax” means a non-U.S.
tax paid or accrued for United States federal income tax purposes by the Partnership, in either case to the extent that such tax is eligible for credit under Section 901(a) of the Code. A non-U.S. tax is
a Creditable Non-U.S. Tax for these purposes without regard to whether a partner receiving an allocation of such non-U.S. tax elects to claim a credit for such amount.
This definition is intended to be consistent with the definition of “Creditable Non-U.S. Tax” in Temporary Treasury Regulations Section 1.704-1T
(b)(4)(xi)(b), and shall be interpreted consistently therewith.
“Declaration” means the declaration of registration of
the Partnership filed with the Registraire des entreprises (Québec) pursuant to the Act, as amended from time to time.
“Disability” means, as to any Person, such Person’s inability to perform in all material respects his or her duties and
responsibilities to the General Partner, or any of its Affiliates, by reason of a physical or mental disability or infirmity which inability is reasonably expected to be permanent and has continued (i) for a period of six consecutive months or
(ii) such shorter period as the General Partner may reasonably determine in good faith.
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“Disabling Event” means the General Partner ceasing to be the general partner of
the Partnership pursuant to Section 17-402 of the Act.
“Dissolution Event”
has the meaning set forth in Section 9.02 of this Agreement.
“Employed Limited Partner” means any Limited Partner
that is employed by or providing services to the Class C Stockholder, the Issuer, the General Partner, the Partnership or any of its subsidiaries at the time in question, and any Personal Planning Vehicle of such Limited Partner.
“Encumbrance” means any mortgage, claim, lien, encumbrance, conditional sales or other title retention agreement, right of
first refusal, preemptive right, pledge, option, charge, security interest or other similar interest, easement, judgment or imperfection of title of any nature whatsoever.
“ERISA” means The Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
“Exchange Agreement” means the Fourth Amended and Restated Exchange Agreement, dated as of the date of the
Third Amended and Restated Agreement, among the Issuer, the Blackstone Holdings Partnerships and the limited partners of the Blackstone Holdings Partnerships from time to time, as it may be amended, supplemented or restated from time to time.
“Exchange Transaction” means an exchange of Units for shares of Class A Common Stock pursuant to, and in accordance
with, the Exchange Agreement or, if the Issuer and the exchanging Limited Partner shall mutually agree, a Transfer of Units to the Issuer, the Partnership or any of their subsidiaries for other consideration.
“Final Tax Amount” has the meaning set forth in Section 4.01(b)(ii).
“First Amended and Restated Limited Partnership Agreement” has the meaning set forth in the preamble hereto.
“Fiscal Year” means (i) the period commencing upon the formation of the Partnership and ending on December 31, 2007
or (ii) any subsequent twelve-month period commencing on January 1 and ending on December 31.
“GAAP” means
accounting principles generally accepted in the United States of America as in effect from time to time.
“General
Partner” means Blackstone Holdings IV GP L.P., a société en commandite formed under the laws of the Province of Québec or any successor general partner admitted to the Partnership in accordance with the terms of this
Agreement.
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“Government Official” means a person who holds a high-level, full-time position
with a national, supranational, U.S. federal, U.S. state or City of New York government.
“Incapacity” means, with
respect to any Person, the bankruptcy, dissolution, termination, entry of an order of incompetence, or the insanity, permanent disability or death of such Person.
“Initial Limited Partner” means each Limited Partner as of the date of the First Amended and Restated Limited Partnership
Agreement.
“Initial Units” means, with respect to any Initial Limited Partner, the aggregate number of Class A
Units owned by such Initial Limited Partner as of the date of the First Amended and Restated Limited Partnership Agreement.
“Initial Unvested Units” means, with respect to any Initial Limited Partner, the aggregate number of Unvested Units owned by
such Initial Limited Partner as of the date of the First Amended and Restated Limited Partnership Agreement.
“Initial Vested
Units” means, with respect to any Initial Limited Partner, the aggregate number of Vested Units listed in the books and records of the Partnership as of the date of the First Amended and Restated Limited Partnership Agreement, and any
additional Initial Units that have vested from time to time in accordance with Section 8.01 of this Agreement.
“Intangible
Assets” means the assets of the Partnership that are described in Section 197(d) of the Code.
“Intangible Asset
Gain” means the net gain recognized by the Partnership with respect to the Partnership’s Intangible Assets in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership, including but
not limited to net capital gain realized in connection with an adjustment to the Carrying Value of Partnership assets; provided, however, that any such gain shall constitute “Intangible Asset Gain” only to the extent
that any such gain exceeds losses previously recognized in an actual or hypothetical sale of Intangible Assets.
“IPO”
means the initial public offering and sale of common units representing limited partner interests of The Blackstone Group L.P., as contemplated by The Blackstone Group L.P.’s Registration Statement on Form
S-1 (File No. 333-141504).
“Issuer”
means The Blackstone Group Inc., a corporation incorporated under the laws of the State of Delaware, or any successor thereto.
“Last Reported Sale Price” of the Class A Common Stock on any date means:
(a) the closing sale price per share on the New York Stock Exchange on that date (or, if no closing sale price is reported, the last reported
sale price);
(b) if the Class A Common Stock is not listed for trading on the New York Stock Exchange, the closing sale price (or, if
no closing sale price is reported, the last reported sale price) as reported on that date in composite transactions for the principal national securities exchange registered pursuant to Section 6(g) of the Exchange Act on which the Class A
Common Stock is listed;
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(c) if the Class A Common Stock is not so listed on a national securities exchange, the last
quoted bid price for the Class A Common Stock on that date in the over-the-counter market as reported by Pink Sheets LLC or a similar organization; or
(d) if the Class A Common Stock is not so quoted by Pink Sheets LLC or a similar organization, the average of the midpoint of the last bid
and ask prices for the Class A Common Stock on that date from a nationally recognized independent investment banking firm selected by the Issuer for this purpose.
“Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order
issued or promulgated by any national, supranational, state, federal, provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdiction over the Partnership or any Partner, as the case may
be.
“Limited Partner” means a special partner, as defined in the Act and, more specifically, each of the Persons from
time to time listed as a limited partner in the books and records of the Partnership, and, for purposes of Sections 8.01, 8.02, 8.03, 8.04, 8.05 and 8.06, any Personal Planning Vehicle of such Limited Partner.
“Liquidation Agent” has the meaning set forth in Section 9.03 of this Agreement.
“Minimum Retained Ownership Requirement” has the meaning set forth in Section 8.04(a).
“Net Taxable Income” has the meaning set forth in Section 4.01(b)(i).
“Non-Competition Agreement” means collectively, the Senior Managing Director Non-Competition and Non-Solicitation Agreement and Contracting Employees Non-Competition and
Non-Solicitation Agreement dated on or about the date of the First Amended and Restated Limited Partnership Agreement by certain Employed Limited Partners with each of the Blackstone Holdings Partnerships and
any agreement with respect to similar subject matter entered into from time to time by an Employed Limited Partner, as amended from time to time.
“Nonrecourse Deductions” has the meaning set forth in Treasury Regulations
Section 1.704-2(b). The amount of Nonrecourse Deductions of the Partnership for a fiscal year equals the net increase, if any, in the amount of Partnership Minimum Gain of the Partnership during that
fiscal year, determined according to the provisions of Treasury Regulations Section 1.704-2(c).
“Original Agreement” has the meaning set forth in the preamble of this Agreement.
“Partners” means, at any time, each person listed as a Partner (including the General Partner) on the books and records of
the Partnership, in each case for so long as he, she or it remains a partner of the Partnership as provided hereunder.
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“Partnership” has the meaning set forth in the preamble of this Agreement.
“Partnership Minimum Gain” has the meaning set forth in Treasury Regulations Sections
1.704-2(b)(2) and 1.704-2(d).
“Partnership
Representative” has the meaning set forth in Section 5.08.
“Partner Nonrecourse Debt Minimum Gain” means
an amount with respect to each partner nonrecourse debt (as defined in Treasury Regulations Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such partner nonrecourse debt
were treated as a nonrecourse liability (as defined in Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with Treasury Regulations
Section 1.704-2(i)(3).
“Partner Nonrecourse Deductions” has the meaning
ascribed to the term “partner nonrecourse deductions” set forth in Treasury Regulations Section 1.704-2(i)(2).
“Person” means any individual, corporation, partnership, limited partnership, limited liability company, limited company,
joint venture, trust, unincorporated or governmental organization or any agency or political subdivision thereof.
“Personal
Planning Vehicle” means, in respect of any Limited Partner, any estate, family limited liability company, family limited partnership, or inter vivos or testamentary trust that holds Units that is designated as a Personal Planning Vehicle of
such Limited Partner in the books and records of the Partnership.
“Profits” and “Losses” means, for
each Fiscal Year or other period, the taxable income or loss of the Partnership, or particular items thereof, determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following
adjustments: (a) all items of income, gain, loss or deduction allocated pursuant to Section 5.05 shall not be taken into account in computing such taxable income or loss; (b) any income of the Partnership that is exempt from U.S.
federal income taxation and not otherwise taken into account in computing Profits and Losses shall be added to such taxable income or loss; (c) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax
purposes, any gain or loss resulting from a disposition of such asset shall be calculated with reference to such Carrying Value; (d) upon an adjustment to the Carrying Value (other than an adjustment in respect of depreciation) of any asset,
pursuant to the definition of Carrying Value, the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (e) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal
income tax purposes, the amount of depreciation, amortization or cost recovery deductions with respect to such asset for purposes of determining Profits and Losses, if any, shall be an amount which bears the same ratio to such Carrying Value as the
U.S. federal income tax depreciation, amortization or other cost recovery deductions bears to such adjusted tax basis (provided that if the U.S. federal income tax depreciation, amortization or other cost recovery deduction is zero, the
General Partner may use any reasonable method for purposes of determining depreciation, amortization or other cost recovery deductions in calculating Profits and Losses); and (f) except for items in (a) above, any expenditures of the
Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing Profits and Losses pursuant to this definition shall be treated as deductible items.
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“Restricted Period,” with respect to each Limited Partner that is or was an
Employed Limited Partner, has the meaning set forth in such Limited Partner’s Non-Competition Agreement.
“Restrictive Covenant,” with respect to each Limited Partner that is or was an Employed Limited Partner, has the meaning set
forth in such Limited Partner’s Non-Competition Agreement.
“Retirement”
(including the term “Retire”) means retirement of an Employed Limited Partner from his or her employment with the Class C Stockholder, the Issuer, the General Partner, the Partnership or any of their subsidiaries after
(a) he or she has reached age 65 and has at least five full years of service, or (b) (i) his or her age plus years of service totals at least 65, (ii) he or she has reached age 50 and (iii) he or she has had a minimum of five years of
service; provided, however, that no Employed Limited Partner will be eligible to Retire prior to June 30, 2010.
“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Similar Law” means any law or regulation that could cause the underlying assets of the Partnership to be treated as
assets of the Limited Partner by virtue of its limited partner interest in the Partnership and thereby subject the Partnership and the General Partner (or other persons responsible for the investment and operation of the Partnership’s assets)
to laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the Code.
“Tax Advances” has the meaning set forth in Section 5.07.
“Tax Amount” has the meaning set forth in Section 4.01(b)(i).
“Tax Distributions” has the meaning set forth in Section 4.01(b)(i).
“Tax Matters Partner” has the meaning set forth in Section 5.08.
“Third Amended and Restated Agreement” has the meaning set forth in the preamble hereto.
“Total Percentage Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Units (vested
or unvested) then owned by such Partner by the number of Units then owned by all Partners.
“Transfer” means, in respect
of any Unit, property or other asset, any sale, assignment, transfer, distribution or other disposition thereof, whether voluntarily or by operation of Law, including, without limitation, the exchange of any Unit for any other security.
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“Transferee” means any Person that is a transferee of a Partner’s interest
in the Partnership, or part thereof.
“Treasury Regulations” means the income tax regulations, including temporary
regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“Units” means the Class A Units and any other Class of Units authorized in accordance with this Agreement, which
shall constitute interests in the Partnership as provided in this Agreement and under the Act, entitling the holders thereof to the relative rights, title and interests in the profits, losses, deductions and credits of the Partnership at any
particular time as set forth in this Agreement, and any and all other benefits to which a holder thereof may be entitled as a Partner as provided in this Agreement, together with the obligations of such Partner to comply with all terms and
provisions of this Agreement.
“Unvested Units” means those Units listed as unvested Units in the books and records of
the Partnership, as the same may be amended from time to time in accordance with this Agreement.
“Vested Percentage
Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Vested Units then owned by such Partner by the number of Vested Units then owned by all Partners.
“Vested Units” means those Units listed as vested Units in the books and records of the Partnership, as the same may be
amended from time to time in accordance with this Agreement.
ARTICLE II
FORMATION, TERM, PURPOSE AND POWERS
Section 2.01. Formation. The Partnership was formed as a limited partnership under the provisions of the Act by the execution of
the Original Agreement. A Declaration was filed with the Registraire des entreprises (Québec) as of June 13, 2007, in accordance with the provisions of the Act. If requested by the General Partner, the Limited Partners shall promptly
execute all certificates and other documents consistent with the terms of this Agreement necessary for the General Partner to accomplish all filing, recording, publishing and other acts as may be appropriate to comply with all requirements for
(a) the formation and operation of a limited partnership under the laws of the Province of Québec, (b) if the General Partner deems it advisable, the operation of the Partnership as a limited partnership, or partnership in which the
Limited Partners have limited liability, in all jurisdictions where the Partnership proposes to operate and (c) all other filings required to be made by the Partnership.
Section 2.02. Name. The name of the Partnership shall be, and the business of the Partnership shall be conducted under the name
of, Placements Blackstone IV s.e.c. and, in its English version, Blackstone Holdings IV L.P.
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Section 2.03. Term. The term of the Partnership commenced on the date of the Original
Agreement, and the term shall continue until the dissolution of the Partnership in accordance with Article IX. The existence of the Partnership shall continue until dissolution of the Partnership in the manner required by the Act.
Section 2.04. Offices. The Partnership may have offices at such places either within or outside the Province of Québec as
the General Partner from time to time may select. As of the date hereof, the principal place of business and office of the Partnership is located at 345 Park Avenue, New York, New York 10154. The Québec domicile of the Partnership shall be
located at 1 Place Ville Marie, 37th Floor, Montréal, Québec, Canada H3B 3P4.
Section 2.05. Agent for Service of
Process. The Partnership’s registered agent for service of process in the Province of Québec shall be as set forth in the Declaration, or such other person as the General Partner shall designate in its sole discretion from time to
time.
Section 2.06. Business Purpose. The Partnership was formed for the object and purpose of, and the nature and character
of the business to be conducted by the Partnership is, engaging in any lawful act or activity for which limited partnerships may be formed under the Act.
Section 2.07. Powers of the Partnership. Subject to the limitations set forth in this Agreement, the Partnership will possess and
may exercise all of the powers and privileges granted to it by the Act including, without limitation, the ownership and operation of the assets contributed to the Partnership by the Partners, by any other Law or this Agreement, together with all
powers incidental thereto, so far as such powers are necessary or convenient to the conduct, promotion or attainment of the purpose of the Partnership set forth in Section 2.06.
Section 2.08. Partners; Admission of New Partners. Each of the Persons listed in the books and records of the Partnership, as the
same may be amended from time to time in accordance with this Agreement, by virtue of the execution of this Agreement, are admitted, or hereby continue, as applicable, as Partners of the Partnership. The rights, duties and liabilities of the
Partners shall be as provided in the Act, except as is otherwise expressly provided herein, and the Partners consent to the variation of such rights, duties and liabilities as provided herein. A Person may be admitted from time to time as a new
Partner in accordance with Section 8.10; provided, however, that each new Partner shall execute and deliver to the General Partner an appropriate supplement to this Agreement pursuant to which the new Partner agrees to be bound by
the terms and conditions of the Agreement, as it may be amended from time to time.
Section 2.09. Withdrawal. No Partner shall
have the right to withdraw as a Partner of the Partnership other than following the Transfer of all Units owned by such Partner in accordance with Article VIII; provided, however, that a new General Partner or substitute General
Partner may be admitted to the Partnership in accordance with Section 8.09.
ARTICLE III
MANAGEMENT
Section 3.01.
General Partner. (a) The business, property and affairs of the Partnership shall be managed under the sole, absolute and exclusive direction of the General Partner, which may from time to time delegate authority to officers or to others
to act on behalf of the Partnership.
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(b) Without limiting the foregoing provisions of this Section 3.01, the General Partner
shall have the general power to manage or cause the management of the Partnership (which may be delegated to officers of the Partnership), including, without limitation, the following powers:
(i) to develop and prepare a business plan each year which will set forth the operating goals and plans for the Partnership;
(ii) to execute and deliver or to authorize the execution and delivery of contracts, deeds, leases, licenses, instruments
of transfer and other documents on behalf of the Partnership;
(iii) the making of any expenditures, the lending or
borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness and the incurring of any other obligations;
(iv) to employ, retain, consult with and dismiss personnel;
(v) to establish and enforce limits of authority and internal controls with respect to all personnel and functions;
(vi) to engage attorneys, consultants and accountants for the Partnership;
(vii) to develop or cause to be developed accounting procedures for the maintenance of the Partnership’s books of account;
and
(viii) to do all such other acts as shall be authorized in this Agreement or by the Partners in writing from time to
time.
Section 3.02. Compensation. The General Partner shall not be entitled to any compensation for services rendered to the
Partnership in its capacity as General Partner.
Section 3.03. Expenses. The Partnership shall bear and/or reimburse the
General Partner for any expenses incurred by the General Partner in connection with serving as the general partner of the Partnership.
Section 3.04. Officers. Subject to the direction and oversight of the General Partner, the day-to-day administration of the business of the Partnership may be carried out by employees and agents who may be designated as officers by the General Partner, with titles including but not limited to
“chief executive officer,” “chief financial officer,” “chief legal officer,” “chief administrative officer,” “chief compliance officer,” “principal accounting officer,”
“chairman,” “senior chairman,” “vice chairman,” “president,” “vice president,” “treasurer,” “assistant treasurer,” “secretary,” “assistant secretary,”
“general manager,” “senior managing director,” “managing director” and “director,” as and to the extent authorized by the General Partner. The officers of the Partnership shall have such titles and powers and
perform such duties as shall be determined from time to time by the General Partner and otherwise as shall customarily pertain
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to such offices. Any number of offices may be held by the same person. All employees, agents and officers shall be subject to the supervision and direction of the General Partner and may be
removed from such office by the General Partner and the authority, duties or responsibilities of any employee, agent or officer of the Partnership may be suspended by the General Partner from time to time, in each case in the sole discretion of the
General Partner. The General Partner shall not cease to be a general partner of the Partnership as a result of the delegation of any duties hereunder. No officer of the Partnership, in its capacity as such, shall be considered a general partner of
the Partnership by agreement, estoppel, as a result of the performance of its duties hereunder or otherwise.
Section 3.05.
Authority of Partners. Other than exercising a Limited Partner’s rights and powers as a Limited Partner, as contemplated in the Act, no Limited Partner, in its capacity as such, shall participate in or have any control over the business
of the Partnership. Except as expressly provided herein, the Units do not confer any rights upon the Limited Partners to participate in the affairs of the Partnership described in this Agreement. Except as expressly provided herein, the Limited
Partners shall have no right to vote on any matter involving the Partnership, including with respect to any merger, consolidation, combination or conversion of the Partnership. The conduct, control and management of the Partnership shall be vested
exclusively in the General Partner. In all matters relating to or arising out of the conduct of the operation of the Partnership, the decision of the General Partner shall be the decision of the Partnership. Except as required or permitted by Law,
or expressly provided in the ultimate sentence of this Section 3.05 or by separate agreement with the Partnership, no Partner who is not also a General Partner (and acting in such capacity) shall take any part in the management or control of
the operation or business of the Partnership in its capacity as a Partner, nor shall any Partner who is not also a General Partner (and acting in such capacity) have any right, authority or power to act for or on behalf of or bind the Partnership in
his or its capacity as a Partner in any respect or assume any obligation or responsibility of the Partnership or of any other Partner. Notwithstanding the foregoing, the Partnership may employ one or more Partners from time to time, and such
Partners, in their capacity as employees of the Partnership (and not, for clarity, in their capacity as Limited Partners of the Partnership), may take part in the control and management of the business of the Partnership to the extent such authority
and power to act for or on behalf of the Partnership has been delegated to them by the General Partner.
Section 3.06. Action by
Written Consent or Ratification. Any action required or permitted to be taken by the Partners pursuant to this Agreement shall be taken if all Partners whose consent or ratification is required consent thereto or provide a ratification in
writing.
ARTICLE IV
DISTRIBUTIONS
Section 4.01. Distributions. (a) The General Partner, in its sole discretion, may authorize distributions by the Partnership
to the Partners, which distributions shall be made pro rata in accordance with the Partners’ respective Total Percentage Interests.
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(b) (i) In addition to the foregoing, if the General Partner reasonably determines that the
taxable income of the Partnership for a Fiscal Year will give rise to taxable income for the Partners (“Net Taxable Income”), the General Partner shall cause the Partnership to distribute Available Cash in respect of income tax
liabilities (the “Tax Distributions”) to the extent that other distributions made by the Partnership for such year were otherwise insufficient to cover such tax liabilities. The Tax Distributions payable with respect to any Fiscal
Year shall be computed based upon the General Partner’s estimate of the allocable Net Taxable Income in accordance with Article V, multiplied by the Assumed Tax Rate (the “Tax Amount”). For purposes of computing the Tax Amount,
the effect of any benefit under Section 743(b) of the Code will be ignored.
(ii) Tax Distributions shall be
calculated and paid no later than one day prior to each quarterly due date for the payment by corporations on a calendar year of estimated taxes under the Code in the following manner (A) for the first quarterly period, 25% of the Tax Amount,
(B) for the second quarterly period, 50% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year, (C) for the third quarterly period, 75% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year and
(D) for the fourth quarterly period, 100% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year. Following each Fiscal Year, and no later than one day prior to the due date for the payment by corporations of income taxes for
such Fiscal Year, the General Partner shall make an amended calculation of the Tax Amount for such Fiscal Year (the “Amended Tax Amount”), and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to
the extent that the Amended Tax Amount so calculated exceeds the cumulative Tax Distributions previously made by the Partnership in respect of such Fiscal Year. If the Amended Tax Amount is less than the cumulative Tax Distributions previously made
by the Partnership in respect of the relevant Fiscal Year, then the difference (the “Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Within 30 days
following the date on which the Partnership files a tax return on Form 1065, the General Partner shall make a final calculation of the Tax Amount of such Fiscal Year (the “Final Tax Amount”) and shall cause the Partnership to
distribute a Tax Distribution, out of Available Cash, to the extent that the Final Tax Amount so calculated exceeds the Amended Tax Amount. If the Final Tax Amount is less than the Amended Tax Amount in respect of the relevant Fiscal Year, then the
difference (“Additional Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Any Credit Amount and Additional Credit Amount applied against future Tax
Distributions shall be treated as an amount actually distributed pursuant to this Section 4.01(b) for purposes of the computations herein.
Section 4.02. Liquidation Distribution. Distributions made upon dissolution of the Partnership shall be made as provided in
Section 9.03.
Section 4.03. Limitations on Distribution. Notwithstanding any provision to the contrary contained in this
Agreement, the General Partner shall not make a Partnership distribution to any Partner if such distribution would violate Article 2242 of the Civil Code or any other applicable provision of the Act or other applicable Law.
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Section 4.04. Administration Fee. Notwithstanding anything to the contrary herein,
unless the General Partner shall determine otherwise, commencing with the distribution in respect of the quarterly period ending June 30, 2020, an amount shall be withheld from each quarterly distribution payable to a Limited Partner other than
an Employed Limited Partner that, together with analogous administration fee amounts withheld from distributions payable to such Limited Partner by the other Blackstone Holdings Partnerships in respect of the same quarterly period, equals the
Administration Fee (as defined below). The “Administration Fee” shall mean an amount per Class A Unit initially equal to $0.03125, which amount may increase or decrease by such percentage as the General Partner may determine from time
to time in its sole discretion. Amounts withheld as an Administration Fee shall be treated as if distributed to the applicable Limited Partner.
ARTICLE V
CAPITAL CONTRIBUTIONS;
CAPITAL ACCOUNTS;
TAX ALLOCATIONS; TAX MATTERS
Section 5.01. Initial Capital Contributions. (a) The Partners have made, on or prior to the date hereof, Capital
Contributions and, in exchange, the Partnership has issued to the Partners the number of Class A Units as specified in the books and records of the Partnership.
(b) Upon issuance by the Partnership of Class A Units to the Partners pursuant to the Second Amended and Restated Agreement, the interests
in the Partnership as provided in the Second Amended and Restated Agreement and under the Act held by Blackstone Holdings IV GP Limited Partner L.L.C. were cancelled.
Section 5.02. No Additional Capital Contributions. Except as otherwise provided in this Article V, no Partner shall be required to
make additional Capital Contributions to the Partnership without the consent of such Partner or permitted to make additional capital contributions to the Partnership without the consent of the General Partner.
Section 5.03. Capital Accounts. A separate capital account (a “Capital Account”) shall be established and
maintained for each Partner in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv). The Capital Account of each Partner shall be credited with such Partner’s Capital
Contributions, if any, all Profits allocated to such Partner pursuant to Section 5.04 and any items of income or gain which are specially allocated pursuant to Section 5.05; and shall be debited with all Losses allocated to such Partner
pursuant to Section 5.04, any items of loss or deduction of the Partnership specially allocated to such Partner pursuant to Section 5.05, and all cash and the Carrying Value of any property (net of liabilities assumed by such Partner and
the liabilities to which such property is subject) distributed by the Partnership to such Partner. Any references in any section of this Agreement to the Capital Account of a Partner shall be deemed to refer to such Capital Account as the same may
be credited or debited from time to time as set forth above. In the event of any transfer of any interest in the Partnership in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the
extent it relates to the transferred interest.
Section 5.04. Allocations of Profits and Losses. Except as otherwise provided
in this Agreement, Profits and Losses (and, to the extent necessary, individual items of income, gain or loss or deduction of the Partnership) shall be allocated in a manner such that the Capital Account
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of each Partner after giving effect to the Special Allocations set forth in Section 5.05 is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made
pursuant to Article IV if the Partnership were dissolved, its affairs wound up and its assets sold for cash equal to their Carrying Value, all Partnership liabilities were satisfied (limited with respect to each
non-recourse liability to the Carrying Value of the assets securing such liability) and the net assets of the Partnership were distributed to the Partners pursuant to this Agreement, minus (ii) such
Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical sale of assets. For purposes of this Article V, each Unvested Unit shall be treated as a Vested Unit.
Notwithstanding the foregoing, the General Partner shall make such adjustments to Capital Accounts as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a partner’s interest in the
Partnership.
Section 5.05. Special Allocations. Notwithstanding any other provision in this Article V:
(a) Minimum Gain Chargeback. If there is a net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain (determined
in accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i)) during any Partnership taxable year, the Partners shall be specially
allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to their respective shares of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i) (5). The items to be so allocated shall be determined in accordance with Treasury Regulations
Section 1.704-2(f). This Section 5.05(a) is intended to comply with the minimum gain chargeback requirements in such Treasury Regulations Sections and shall be interpreted consistently therewith;
including that no chargeback shall be required to the extent of the exceptions provided in Treasury Regulations Sections 1.704-2(f) and 1.704-2(i) (4).
(b) Qualified Income Offset. If any Partner unexpectedly receives any adjustments, allocations, or distributions described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the deficit
balance in such Partner’s Adjusted Capital Account Balance created by such adjustments, allocations or distributions as promptly as possible; provided that an allocation pursuant to this Section 5.05(b) shall be made only to the extent
that a Partner would have a deficit Adjusted Capital Account Balance in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if this Section 5.05(b) were not in this Agreement. This
Section 5.05(b) is intended to comply with the “qualified income offset” requirement of the Code and shall be interpreted consistently therewith.
(c) Gross Income Allocation. If any Partner has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of
(i) the amount such Partner is obligated to restore, if any, pursuant to any provision of this Agreement, and (ii) the amount such Partner is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as
possible; provided that an allocation pursuant to this Section 5.05(c) shall be made only if and to the extent that a Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this
Article V have been tentatively made as if Section 5.05(b) and this Section 5.05(c) were not in this Agreement.
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(d) Nonrecourse Deductions. Nonrecourse Deductions shall be allocated to the Partners in
accordance with their respective Total Percentage Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for
any taxable period shall be allocated to the Partner who bears the economic risk of loss with respect to the liability to which such Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(j).
(f) Creditable Non-U.S. Taxes.
Creditable Non-U.S. Taxes for any taxable period attributable to the Partnership, or an entity owned directly or indirectly by the Partnership, shall be allocated to the Partners in proportion to the
partners’ distributive shares of income (including income allocated pursuant to Section 704(c) of the Code) to which the Creditable Non-U.S. Tax relates (under principles of Treasury Regulations Section 1.904-6). The provisions of this Section 5.05(f) are intended to comply with the provisions of Temporary Treasury Regulations
Section 1.704-1T(b)(4)(xi), and shall be interpreted consistently therewith.
(g)
Ameliorative Allocations. Any special allocations of income or gain pursuant to Sections 5.05(b) or 5.05(c) hereof shall be taken into account in computing subsequent allocations pursuant to Section 5.04 and this Section 5.05(g), so
that the net amount of any items so allocated and all other items allocated to each Partner shall, to the extent possible, be equal to the net amount that would have been allocated to each Partner if such allocations pursuant to Sections 5.05(b) or
5.05(c) had not occurred.
Section 5.06. Tax Allocations. For income tax purposes, each item of income, gain, loss and
deduction of the Partnership shall be allocated among the Partners in the same manner as the corresponding items of Profits and Losses and specially allocated items are allocated for Capital Account purposes; provided that in the case of any
asset the Carrying Value of which differs from its adjusted tax basis for U.S. federal income tax purposes, income, gain, loss and deduction with respect to such asset shall be allocated solely for income tax purposes in accordance with the
principles of Sections 704(b) and (c) of the Code (in any manner determined by the General Partner and permitted by the Code and Treasury Regulations) so as to take account of the difference between Carrying Value and adjusted basis of such
asset. Notwithstanding the foregoing, the General Partner shall make such allocations for tax purposes as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a partner’s interest in the
Partnership.
Section 5.07. Tax Advances. To the extent the General Partner reasonably believes that the Partnership is
required by law to withhold or to make tax payments on behalf of or with respect to any Partner or the Partnership is subjected to tax itself by reason of the status of any Partner (“Tax Advances”), the General Partner may withhold
such amounts and make such tax payments as so required. All Tax Advances made on behalf of a Partner shall be repaid by reducing the amount of the current or next succeeding distribution or distributions which would otherwise have been made to such
Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Partner. For all
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purposes of this Agreement such Partner shall be treated as having received the amount of the distribution that is equal to the Tax Advance. Each Partner hereby agrees to indemnify and hold
harmless the Partnership and the other Partners from and against any liability (including, without limitation, any liability for taxes, penalties, additions to tax or interest other than any penalties, additions to tax or interest imposed as a
result of the Partnership’s failure to withhold or make a tax payment on behalf of such Partner which withholding or payment is required pursuant to applicable Law but only to the extent amounts sufficient to pay such taxes were not timely
distributed to the Partner pursuant to Section 4.01(b)) with respect to income attributable to or distributions or other payments to such Partner.
Section 5.08. Tax Matters. For tax years beginning before December 31, 2017, the General Partner shall be or shall designate
the “tax matters partner” within the meaning of Section 6231(a)(7) of the Code (as in effect prior to 2018) (the “Tax Matters Partner”) and, for the years beginning after December 31, 2017, the General
Partner shall be or shall designate the “partnership representative” within the meaning of Section 6223 of the Code (the “Partnership Representative”). The Partnership shall file as a partnership for federal,
state, provincial and local income tax purposes, except where otherwise required by Law. All elections required or permitted to be made by the Partnership, and all other tax decisions and determinations relating to federal, state, provincial or
local tax matters of the Partnership, shall be made by the Tax Matters Partner or the Partnership Representative, as applicable, in consultation with the Partnership’s attorneys and/or accountants. Tax audits, controversies and litigations
shall be conducted under the direction of the Tax Matters Partner or the Partnership Representative, as applicable. The Tax Matters Partner or the Partnership Representative, as applicable, shall keep the other Partners reasonably informed as to any
tax actions, examinations or proceedings relating to the Partnership and shall submit to the other Partners, for their review and comment, any settlement or compromise offer with respect to any disputed item of income, gain, loss, deduction or
credit of the Partnership. As soon as reasonably practicable after the end of each Fiscal Year, the Partnership shall send to each Partner a copy of U.S. Internal Revenue Service Schedule K-1, and any
comparable statements required by applicable U.S. state or local income tax Law as a result of the Partnership’s activities or investments, with respect to such Fiscal Year. The Partnership also shall provide the Partners with such other
information as may be reasonably requested for purposes of allowing the Partners to prepare and file their own tax returns.
Section 5.09. Other Allocation Provisions. Certain of the foregoing provisions and the other provisions of this Agreement relating
to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such regulations. Sections 5.03,
5.04 and 5.05 may be amended at any time by the General Partner if necessary, in the opinion of tax counsel to the Partnership, to comply with such regulations or any applicable Law, so long as any such amendment does not materially change the
relative economic interests of the Partners.
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ARTICLE VI
BOOKS AND RECORDS; REPORTS
Section 6.01. Books and Records. (a) At all times during the continuance of the Partnership, the Partnership shall prepare
and maintain separate books of account for the Partnership in accordance with GAAP.
(b) Except as limited by Section 6.01(c), each
Limited Partner shall have the right to receive, for a purpose reasonably related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable written demand stating the purpose of such demand and at such Limited
Partner’s own expense:
(i) a copy of the Declaration and this Agreement and all amendments thereto, together with a
copy of the executed copies of all powers of attorney pursuant to which the Declaration and this Agreement and all amendments thereto have been executed; and
(ii) promptly after their becoming available, copies of the Partnership’s federal, state and local income tax returns and
reports, if any, for the three most recent years.
(c) The General Partner may keep confidential from the Limited Partners, for such period
of time as the General Partner determines in its sole discretion, (i) any information that the General Partner reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the General Partner
believes is not in the best interests of the Partnership, could damage the Partnership or its business or that the Partnership is required by law or by agreement with any third party to keep confidential.
ARTICLE VII
PARTNERSHIP UNITS
Section 7.01. Units. Interests in the Partnership shall be represented by Units. The Units initially are comprised of one
Class: Class A Units. The General Partner may establish, from time to time in accordance with such procedures as the General Partner shall determine from time to time, other Classes, one or more series of any such Classes, or other Partnership
securities with such designations, preferences, rights, powers and duties (which may be senior to existing Classes and series of Units or other Partnership securities), as shall be determined by the General Partner, including (i) the right to
share in Profits and Losses or items thereof; (ii) the right to share in Partnership distributions; (iii) the rights upon dissolution and liquidation of the Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may or shall be required to redeem the Units or other Partnership securities (including sinking fund provisions); (v) whether such Unit or other Partnership security is issued with the privilege of conversion or exchange and, if so, the
terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which each Unit or other Partnership security will be issued, evidenced by certificates and assigned or transferred; (vii) the method for determining
the Total
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Percentage Interest as to such Units or other Partnership securities; and (viii) the right, if any, of the holder of each such Unit or other Partnership security to vote on Partnership
matters, including matters relating to the relative designations, preferences, rights, powers and duties of such Units or other Partnership securities. Except as expressly provided in this Agreement to the contrary, any reference to
“Units” shall include the Class A Units and any other Classes that may be established in accordance with this Agreement. All Units of a particular Class shall have identical rights in all respects as all other Units of
such Class, except in each case as otherwise specified in this Agreement.
Section 7.02. Register. The register of the
Partnership shall be the definitive record of ownership of each Unit and all relevant information with respect to each Partner. Such register shall be kept at its registered office and the General Partner shall make changes to the register of the
Partnership to reflect any change in relation thereto, such register remaining the definite record of ownership of each Unit and all relevant information with respect to each Partner. Unless the General Partner shall determine otherwise, Units shall
be uncertificated and recorded in the books and records of the Partnership.
Section 7.03. Registered Partners. The
Partnership shall be entitled to recognize the exclusive right of a Person registered on its records as the owner of Units for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any
other Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the Act or other applicable Law.
ARTICLE VIII
VESTING; FORFEITURE
OF INTERESTS; TRANSFER RESTRICTIONS
Section 8.01. Vesting of Initial Unvested Units. (a) Subject to Section 8.02
and except as set forth in Section 8.01(b) or as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, the Initial Unvested Units shall vest and
shall thereafter be Vested Units for all purposes of this Agreement as follows:
(i) with respect to each Category 1
Limited Partner, 100% of the Initial Unvested Units owned by such Limited Partner shall vest and thereafter be Vested Units for all purposes of this Agreement in equal 25% installments on each of the first, second, third and fourth anniversary dates
of the consummation of the IPO;
(ii) with respect to each Category 3 Limited Partner and Category 4 Limited Partner, 100%
of the Initial Unvested Units owned by such Limited Partner shall vest and thereafter be Vested Units for all purposes of this Agreement in equal 20% installments on each of the first, second, third, fourth and fifth anniversary dates of the
consummation of the IPO; and
(iii) with respect to each Category 5 Limited Partner, 100% of the Initial Unvested Units
owned by such Limited Partner shall vest and thereafter be Vested Units for all purposes of this Agreement in equal 12.5% installments on each of the first, second, third, fourth, fifth, sixth, seventh and eighth anniversary dates of the
consummation of the IPO.
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(b) Notwithstanding Section 8.01(a), if earlier, the Initial Unvested Units shall vest and
shall thereafter be Vested Units for all purposes of this Agreement as follows: (i) upon the Retirement of an Employed Limited Partner, 50% of the Initial Unvested Units owned by such Limited Partner that are Unvested Units at that time shall
vest and thereafter be Vested Units for all purposes of this Agreement; (ii) upon the death or Disability of an Employed Limited Partner, 100% of the Initial Unvested Units owned by such Limited Partner that are Unvested Units at that time
shall vest and thereafter be Vested Units for all purposes of this Agreement; and (iii) upon the occurrence of a Change of Control, 100% of the Initial Unvested Units that are Unvested Units at that time shall vest and thereafter be Vested
Units for all purposes of this Agreement.
(c) In addition, the General Partner in its sole discretion may authorize the earlier vesting of
all or a portion of the Initial Unvested Units owned by any one or more Limited Partners at any time and from time to time, and in such event, such Initial Unvested Units shall vest and thereafter be Vested Units for all purposes of this Agreement.
Any such determination in the General Partner’s discretion in respect of Initial Unvested Units shall be final and binding. Such determinations need not be uniform and may be made selectively among Limited Partners, whether or not such Limited
Partners are similarly situated, and shall not constitute the breach of any duty hereunder or otherwise existing at law, in equity or otherwise.
(d) Upon the vesting of any Initial Unvested Units in accordance with this Section 8.01, the General Partner shall modify the books and
records of the Partnership to reflect such vesting.
Section 8.02. Forfeiture of Units Held by Initial Limited Partners.
(a) Other than as set forth in Section 8.01(b) and except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, if a Limited Partner
ceases to be an Employed Limited Partner for any reason, such Limited Partner’s Unvested Units shall be immediately forfeited without any consideration, and such Limited Partner shall cease to own or have any rights with respect to such
Unvested Units; provided, however, that if a Limited Partner ceases to be an Employed Limited Partner in order to become a Government Official, such Limited Partner’s Unvested Units shall continue to vest as set forth in
Section 8.01 until such Limited Partner ceases to be a Government Official for any reason, at which point such Limited Partner’s Unvested Units shall be immediately forfeited without any consideration (unless such Limited Partner becomes
an Employed Limited Partner immediately after such Limited Partner ceases to be such a Government Official, in which case such Limited Partner’s Unvested Units shall continue to vest as set forth in Section 8.01) and such Limited Partner
shall cease to own or have any rights with respect to such Unvested Units. Immediately upon the forfeiture of any Initial Unvested Units, such Unvested Units that have been so forfeited shall be cancelled.
(b) Except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and
records of the Partnership, (i) if a Limited Partner that is or was at any time an Employed Limited Partner breaches any Restrictive
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Covenant to which such Limited Partner is subject or (ii) if an Employed Limited Partner is terminated for Cause, the Initial Units held by such Limited Partner or such Limited
Partner’s Personal Planning Vehicle at that time (whether or not vested) shall be immediately forfeited without any consideration, and such Limited Partner shall cease to own or have any rights with respect to such Initial Units;
provided, however, that Initial Units held by a Personal Planning Vehicle of a Category 1 Limited Partner created prior to the date of the First Amended and Restated Limited Partnership Agreement are not subject to forfeiture.
Immediately upon the forfeiture of any Initial Units, such Initial Units that have been so forfeited shall be cancelled.
(c) Upon the
forfeiture of any Unvested Units in accordance with this Section 8.02, the General Partner shall modify the books and records of the Partnership to reflect such forfeiture.
Section 8.03. Limited Partner Transfers. (a) Except as provided in clauses (b), (c), (d) and (f) of this
Section 8.03, no Limited Partner or Assignee thereof may Transfer (including by exchanging in an Exchange Transaction) all or any portion of its Units or other interest in the Partnership (or beneficial interest therein) without the prior
consent of the General Partner, which consent may be given or withheld, or made subject to such conditions (including, without limitation, the receipt of such legal opinions and other documents that the General Partner may require) as are determined
by the General Partner, in each case in the General Partner’s sole discretion. Any such determination in the General Partner’s discretion in respect of Units shall be final and binding. Such determinations need not be uniform and may be
made selectively among Limited Partners, whether or not such Limited Partners are similarly situated, and shall not constitute the breach of any duty hereunder or otherwise existing at law, in equity or otherwise. Any purported Transfer of Units
that is not in accordance with, or subsequently violates, this Agreement shall be, to the fullest extent permitted by law, null and void.
(b) Notwithstanding clause (a) above, except as provided in or pursuant to clauses (b), (c), (d) and (f) below and subject to
Section 8.04, each Limited Partner may exchange in an Exchange Transaction up to 100% of the Initial Vested Units owned by such Limited Partner at any time and from time to time; provided that Unvested Units may not be Transferred at any time.
(c) Notwithstanding clauses (a) or (b) above, with the prior consent of the General Partner, (i) the Category 1 Limited Partners
may make one or more gratuitous Transfers (including by exchanging in an Exchange Transaction) to any Charity at any time and from time to time up to a number of Initial Vested Units owned by such Limited Partners that is equal to the quotient of
$250 million divided by the offering price per common unit in the IPO for the purpose of making gratuitous transfers to any Charity.
(d) Notwithstanding clauses (a) or (b) above, if earlier: (i) upon the death or Disability of an Employed Limited Partner, such
Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; (ii) other than with respect to a Category 1 Limited Partner, following an Employed Limited
Partner’s termination of employment and after the earlier to occur of (A) one year from the date of termination of employment or (B) the expiration of the longest applicable Restricted Period with respect to such Employed Limited
Partner, such Limited Partner may
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exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; (iii) following Mr. Stephen A.
Schwarzman’s termination of employment, any Category 1 Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; and (iv) upon the occurrence of
a Change of Control, any Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; provided that in each case Unvested Units may not by Transferred
at any time.
(e) [Reserved]
(f) Notwithstanding clauses (a), (b), (c) and (d) above, a Personal Planning Vehicle of a Limited Partner may Transfer Class A Units
(i) to the donor thereof or to the spouse of the donor thereof; (ii) if the Personal Planning Vehicle is a grantor retained annuity trust and the trustee(s) of such grantor retained annuity trust is obligated to make one or more
distributions to the donor of the grantor retained annuity trust, the estate of the donor of the grantor retained annuity trust, the spouse of the donor of the grantor retained annuity trust or the estate of the spouse of the donor of the grantor
retained annuity trust, to any such Persons; or (iii) upon the death of such Limited Partner, to the spouse of such Limited Partner or a trust for which a deduction under Section 2056 or 2056A (or any successor provisions) of the Code may
be sought.
Section 8.04. Minimum Retained Ownership Requirement. (a) Other than the Category 1 Limited Partners, the
Category 2 Limited Partners and the Category 6 Limited Partner and unless otherwise permitted by the General Partner in its sole discretion, each Limited Partner that is or was at any time an Employed Limited Partner other than a Personal Planning
Vehicle shall, until the first anniversary of such Employed Limited Partner’s termination of employment, continue to hold (and may not Transfer) at least 25% of all Initial Vested Units received collectively by such Employed Limited Partner and
by any Personal Planning Vehicle of such Employed Limited Partner (the “Minimum Retained Ownership Requirement”); and provided that upon the Retirement of an Employed Limited Partner, such Limited Partner shall be subject to
a Minimum Retained Ownership Requirement of 12.5% instead of 25%. For purposes of this paragraph (a), (i) Units held by a Personal Planning Vehicle of a Limited Partner (other than the portion of the Units received by a Personal Planning Vehicle
created prior to the date of the First Amended and Restated Limited Partnership Agreement identified in the books and records of the Partnership as “Non-Minimum Retained Ownership Requirement
Units”) shall be deemed held by such Limited Partner for purposes of calculating the number of Initial Vested Units received by such Limited Partner and (ii) any Units held by a Personal Planning Vehicle of a Limited Partner shall not
be deemed to be held by such Limited Partner for purposes of calculating whether the relevant percentage of Initial Vested Units held satisfies the Minimum Retained Ownership Requirement set forth in this Section 8.04(a).
(b) Unless otherwise approved by the General Partner in its sole discretion, each Category 1 Limited Partner other than a Personal Planning
Vehicle shall, until Mr. Stephen A. Schwarzman’s termination of employment, continue to hold (and may not Transfer) the lesser of (i) at least 25% of all Initial Vested Units received collectively by the Category 1 Limited
Partners and (ii) a number of Initial Units that is equal to the quotient of $1.5 billion divided by
24
the Last Reported Sale Price per share of Class A Common Stock from time to time. For purposes of this paragraph (b), (i) Units held by a Personal Planning Vehicle of a Category 1 Limited
Partner (other than the portion of the Units received by a Personal Planning Vehicle created prior to the date of the First Amended and Restated Limited Partnership Agreement identified in the books and records of the Partnership as “Non-Minimum Retained Ownership Requirement Units”) shall be deemed held by such Category 1 Limited Partner for purposes of calculating the number of Initial Vested Units received by such Category 1 Limited
Partner and (ii) any Units held by a Personal Planning Vehicle of a Category 1 Limited Partner shall not be deemed to be held by such Category 1 Limited Partner for purposes of calculating whether the relevant percentage of Initial Vested Units
held satisfies the Minimum Retained Ownership Requirement set forth in this Section 8.04(b).
Section 8.05. Mandatory
Exchanges. The General Partner may in its sole discretion at any time and from time to time, without the consent of any Limited Partner, require any Limited Partner other than an Employed Limited Partner to Transfer in an Exchange Transaction
all Units held by such Limited Partner. Any such determinations by the General Partner need not be uniform and may be made selectively among Limited Partners, whether or not such Limited Partners are similarly situated. In addition, the General
Partner may, with the consent of Partners whose Vested Percentage Interests exceed 75% of the Vested Percentage Interests of all Partners in the aggregate, require all Limited Partners to Transfer in an Exchange Transaction all Units held by them.
Section 8.06. Encumbrances. No Limited Partner or Assignee may create an Encumbrance with respect to all or any portion of
its Units (or any beneficial interest therein) other than Encumbrances that run in favor of the Limited Partner unless the General Partner consents in writing thereto, which consent may be given or withheld, or made subject to such conditions as are
determined by the General Partner, in the General Partner’s sole discretion. Consent of the General Partner shall be withheld until the holder of the Encumbrance acknowledges the terms and conditions of this Agreement. Any purported Encumbrance
that is not in accordance with this Agreement shall be, to the fullest extent permitted by law, null and void.
Section 8.07.
Further Restrictions. Notwithstanding any contrary provision in this Agreement, in no event may any Transfer of a Unit be made by any Limited Partner or Assignee if:
(a) such Transfer is made to any Person who lacks the legal right, power or capacity to own such Unit;
(b) such Transfer would require the registration of such transferred Unit or of any Class of Unit pursuant to any applicable United States
federal or state securities laws (including, without limitation, the Securities Act or the Exchange Act) or other non-U.S. securities laws (including Canadian provincial or territorial securities laws) or
would constitute a non-exempt distribution pursuant to applicable provincial or state securities laws;
25
(c) such Transfer would cause (i) all or any portion of the assets of the Partnership to
(A) constitute “plan assets” (under ERISA, the Code or any applicable Similar Law) of any existing or contemplated Limited Partner, or (B) be subject to the provisions of ERISA, Section 4975 of the Code or any
applicable Similar Law, or (ii) the General Partner to become a fiduciary with respect to any existing or contemplated Limited Partner, pursuant to ERISA, any applicable Similar Law, or otherwise;
(d) to the extent requested by the General Partner, the Partnership does not receive such legal and/or tax opinions and written instruments
(including, without limitation, copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as an Assignee) that are in a form satisfactory to the General Partner, as determined in the General Partner’s
sole discretion.
Section 8.08. Rights of Assignees. Subject to Section 8.07, the transferee of any permitted Transfer
pursuant to this Article VIII will be an assignee only (“Assignee”), and only will receive, to the extent transferred, the distributions and allocations of income, gain, loss, deduction, credit or similar item to which the Partner
which transferred its Units would be entitled, and such Assignee will not be entitled or enabled to exercise any other rights or powers of a Partner, such other rights, and all obligations relating to, or in connection with, such Interest remaining
with the transferring Partner. The transferring Partner will remain a Partner even if it has transferred all of its Units to one or more Assignees until such time as the Assignee(s) is admitted to the Partnership as a Partner pursuant to
Section 8.10.
Section 8.09. Admissions, Withdrawals and Removals. (a) No Person may be admitted to the Partnership
as an additional General Partner or substitute General Partner without the prior written consent or ratification of Partners whose Vested Percentage Interests exceed 50% of the Vested Percentage Interests of all Partners in the aggregate. A General
Partner will not be entitled to Transfer all of its Units or to withdraw from being a General Partner of the Partnership unless another General Partner shall have been admitted hereunder (and not have previously been removed or withdrawn).
(b) No Limited Partner will be removed or entitled to withdraw from being a Partner of the Partnership except in accordance with
Section 8.11 hereof.
(c) Except as otherwise provided in Article IX or the Act, no admission, substitution, withdrawal or removal of
a Partner will cause the dissolution of the Partnership. To the fullest extent permitted by law, any purported admission, withdrawal or removal that is not in accordance with this Agreement shall be null and void.
Section 8.10. Admission of Assignees as Substitute Limited Partners. An Assignee will become a substitute Limited Partner only if
and when each of the following conditions is satisfied:
(a) the General Partner consents in writing to such admission, which consent may
be given or withheld, or made subject to such conditions as are determined by the General Partner, in each case in the General Partner’s sole discretion;
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(b) if required by the General Partner, the General Partner receives written instruments
(including, without limitation, copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as a substitute Limited Partner) that are in a form satisfactory to the General Partner (as determined in its sole
discretion);
(c) if required by the General Partner, the General Partner receives an opinion of counsel satisfactory to the General
Partner to the effect that such Transfer is in compliance with this Agreement and all applicable Law; and
(d) if required by the General
Partner, the parties to the Transfer, or any one of them, pays all of the Partnership’s reasonable expenses connected with such Transfer (including, but not limited to, the reasonable legal and accounting fees of the Partnership).
Section 8.11. Withdrawal and Removal of Limited Partners. If a Limited Partner ceases to hold any Units, then such Limited Partner
shall withdraw from the Partnership and shall cease to be a Limited Partner and to have the power to exercise any rights or powers of a Limited Partner.
ARTICLE IX
DISSOLUTION,
LIQUIDATION AND TERMINATION
Section 9.01. No Dissolution. Except as required by the Act, the Partnership shall not be
dissolved by the admission of additional Partners or withdrawal of Partners in accordance with the terms of this Agreement. The Partnership may be dissolved, liquidated wound up and terminated only pursuant to the provisions of this Article IX, and
the Partners hereby irrevocably waive any and all other rights they may have to cause a dissolution of the Partnership or a sale or partition of any or all of the Partnership assets.
Section 9.02. Events Causing Dissolution. The Partnership shall be dissolved and its affairs shall be wound up upon the occurrence
of any of the following events (each, a “Dissolution Event”):
(a) the rendering of a judicial judgment ordering the
dissolution of the Partnership under the Act upon the finding by a court of competent jurisdiction that the General Partner (i) is permanently incapable of performing its part of this Agreement, (ii) has been guilty of conduct that is
calculated to affect prejudicially the carrying on of the business of the Partnership, (iii) willfully or persistently commits a breach of this Agreement or (iv) conducts itself in a manner relating to the Partnership or its business such
that it is not reasonably practicable for the other Partners to carry on the business of the Partnership with the General Partner;
(b) any
event which makes it unlawful for the business of the Partnership to be carried on by the Partners;
(c) the written consent of all
Partners;
(d) any other event not inconsistent with any provision hereof causing a dissolution of the Partnership under the Act;
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(e) the Incapacity or removal of the General Partner or the occurrence of a Disabling Event with
respect to the General Partner; provided that the Partnership will not be dissolved or required to be wound up in connection with any of the events specified in this Section 9.02(e) if: (i) at the time of the occurrence of such
event there is at least one other general partner of the Partnership who is hereby authorized to, and elects to, carry on the business of the Partnership; or (ii) all remaining Limited Partners consent to or ratify the continuation of the
business of the Partnership and the appointment of another general partner of the Partnership, effective as of the event that caused the General Partner to cease to be a general partner of the Partnership, within 120 days following the occurrence of
any such event, which consent shall be deemed (and if requested each Limited Partner shall provide a written consent or ratification) to have been given for all Limited Partners if the holders of more than 50% of the Vested Units then outstanding
agree in writing to so continue the business of the Partnership.
Section 9.03. Distribution upon Dissolution. Upon
dissolution, the Partnership shall not be terminated and shall continue until the winding up of the affairs of the Partnership is completed. Upon the winding up of the Partnership, the General Partner, or any other Person designated by the General
Partner (the “Liquidation Agent”), shall take full account of the assets and liabilities of the Partnership and shall, unless the General Partner determines otherwise, liquidate the assets of the Partnership as promptly as is
consistent with obtaining the fair value thereof. The proceeds of any liquidation shall be applied and distributed in the following order:
(a) First, to the satisfaction of debts and liabilities of the Partnership (including satisfaction of all indebtedness to Partners and/or their
Affiliates to the extent otherwise permitted by law) including the expenses of liquidation, and including the establishment of any reserve which the Liquidation Agent shall deem reasonably necessary for any contingent, conditional or unmatured
contractual liabilities or obligations of the Partnership (“Contingencies”). Any such reserve may be paid over by the Liquidation Agent to any
attorney-at-law, or acceptable party, as escrow agent, to be held for disbursement in payment of any Contingencies and, at the expiration of such period as shall be
deemed advisable by the Liquidation Agent for distribution of the balance in the manner hereinafter provided in this Section 9.03; and
(b) The balance, if any, to the Partners, pro rata to each of the Partners in accordance with their Total Percentage Interests.
Section 9.04. Time for Liquidation. A reasonable amount of time shall be allowed for the orderly liquidation of the assets of the
Partnership and the discharge of liabilities to creditors so as to enable the Liquidation Agent to minimize the losses attendant upon such liquidation.
Section 9.05. Termination. The Partnership shall terminate when all of the assets of the Partnership, after payment of or due
provision for all debts, liabilities and obligations of the Partnership, shall have been distributed to the holders of Units in the manner provided for in this Article IX and the relevant declaration has been filed under the Act.
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Section 9.06. Claims of the Partners. The Partners shall look solely to the
Partnership’s assets for the return of their Capital Contributions, and if the assets of the Partnership remaining after payment of or due provision for all debts, liabilities and obligations of the Partnership are insufficient to return such
Capital Contributions, the Partners shall have no recourse against the Partnership or any other Partner or any other Person. No Partner with a negative balance in such Partner’s Capital Account shall have any obligation to the Partnership or to
the other Partners or to any creditor or other Person to restore such negative balance during the existence of the Partnership, upon dissolution or termination of the Partnership or otherwise, except to the extent required by the Act.
Section 9.07. Survival of Certain Provisions. Notwithstanding anything to the contrary in this Agreement, the provisions of
Section 10.02 and Section 11.09 shall survive the termination of the Partnership.
ARTICLE X
LIABILITY AND INDEMNIFICATION
Section 10.01. Liability of Partners.
(a) No Limited Partner shall be liable for any debt, obligation or liability of the Partnership or of any other Partner or have any obligation
to restore any deficit balance in its Capital Account solely by reason of being a Partner of the Partnership, except to the extent required by the Act.
(b) This Agreement is not intended to, and does not, create or impose any fiduciary duty on any of the Partners (including without limitation,
the General Partner) hereto or on their respective Affiliates. Further, the Partners hereby waive any and all fiduciary duties that, absent such waiver, may exist at or be implied by Law or in equity, and in doing so, recognize, acknowledge and
agree that their duties and obligations to one another and to the Partnership are only as expressly set forth in this Agreement and those required by the Act.
(c) To the extent that, at law or in equity, any Partner (including without limitation, the General Partner) has duties (including fiduciary
duties) and liabilities relating thereto to the Partnership or to another Partner, the Partners (including without limitation, the General Partner) acting under this Agreement will not be liable to the Partnership or to any such other Partner for
their 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 relating thereto of any Partner (including without limitation, the General
Partner) otherwise existing at law or in equity, are agreed by the Partners to replace to that extent such other duties and liabilities of the Partners relating thereto (including without limitation, the General Partner).
(d) The General Partner may consult with legal counsel, accountants and financial or other advisors and any act or omission suffered or taken
by the General Partner on behalf of the Partnership or in furtherance of the interests of the Partnership in good faith in reliance upon and in accordance with the advice of such counsel, accountants or financial or other advisors will be full
justification for any such act or omission, and the General Partner will be fully protected in so acting or omitting to act so long as such counsel or accountants or financial or other advisors were selected with reasonable care.
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(e) Notwithstanding any other provision of this Agreement or otherwise applicable provision of
law or equity, whenever in this Agreement the General Partner is permitted or required to make a decision (i) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, such
General Partner shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall, to the fullest extent permitted by applicable Law, have no duty or obligation to give any consideration to any
interest of or factors affecting the Partnership or the Limited Partners, or (ii) in its “good faith” or under another expressed standard, such General Partner shall act under such express standard and shall not be subject to
any other or different standards.
Section 10.02. Indemnification.
(a) Indemnification. To the fullest extent permitted by law, the Partnership shall indemnify any person (and such person’s heirs,
executors or administrators) who was or is made or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding (brought in the right of the Partnership or otherwise), whether civil,
criminal, administrative or investigative, and whether formal or informal, including appeals, by reason of the fact that such person, or a person for whom such person was the legal representative, is or was the General Partner or a director or
officer of the General Partner or the Partnership or, while a director or officer of the General Partner or the Partnership, is or was serving at the request of the Partnership as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, limited liability company, nonprofit entity or other enterprise, for and against all loss and liability suffered and expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement reasonably incurred by such person or such heirs, executors or administrators in connection with such action, suit or proceeding, including appeals, if such person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the Partnership and, with respect to any alleged conduct resulting in a criminal proceeding against the person, such person had no reasonable cause to believe that such person’s conduct was unlawful.
Notwithstanding the preceding sentence, except as otherwise provided in Section 10.02(c), the Partnership shall be required to indemnify a person described in such sentence in connection with any action, suit or proceeding (or part thereof)
commenced by such person only if the commencement of such action, suit or proceeding (or part thereof) by such person was authorized by the General Partner. Any reference to an officer of the General Partner or the Partnership in this
Section 10.02 shall be deemed to refer exclusively to the Chief Executive Officer, President, Chief Operating Officer, Executive Vice Chairman, Chief Financial Officer, Chief Legal Officer, Secretary or any other officer of the Partnership
appointed pursuant to Section 3.04 hereof or, with respect to the General Partner, appointed pursuant to the equivalent organizational documents of the General Partner. The fact that any person who is or was an employee of the General Partner
or the Partnership, but not an officer thereof as described in the preceding sentence, has been given or has used any title that could be construed to suggest or imply that such person is or may be an officer of the General Partner or the
Partnership shall not result in such person being constituted as, or being deemed to be, such an officer of the General Partner or the Partnership for purposes of this Section 10.02.
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(b) Advancement of Expenses. To the fullest extent permitted by law, the Partnership shall
promptly pay expenses (including attorneys’ fees) incurred by any person described in Section 10.02(a) in appearing at, participating in or defending any action, suit or proceeding in advance of the final disposition of such action, suit
or proceeding, including appeals, upon (i) presentation of an undertaking on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified under this Section 10.02 or
otherwise and (ii) to the extent determined by the General Partner in its sole discretion to be necessary or advisable, receipt by the Partnership of security or other assurances satisfactory to the General Partner in its sole discretion that
such person will be able to repay such amount if it ultimately shall be determined that such person is not entitled to be indemnified under this Section 10.02 or otherwise. Notwithstanding the preceding sentence, except as otherwise provided in
Section 10.02(c), the Partnership shall be required to advance expenses of a person described in such sentence in connection with any action, suit or proceeding (or part thereof) commenced by such person only if the commencement of such action,
suit or proceeding (or part thereof) by such person was authorized by the General Partner.
(c) Unpaid Claims. If a claim for
indemnification (following the final disposition of such action, suit or proceeding) or advancement of expenses under this Section 10.02 is not paid in full within thirty (30) days after a written claim therefor by any person described in
Section 10.02(a) has been received by the Partnership, such person may file proceedings to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In
any such action the Partnership shall have the burden of proving that such person is not entitled to the requested indemnification or advancement of expenses under applicable Law.
(d) Insurance. To the fullest extent permitted by law, the Partnership may purchase and maintain insurance on behalf of any person
described in Section 10.02(a) against any liability asserted against such person, whether or not the Partnership would have the power to indemnify such person against such liability under the provisions of this Section 10.02 or otherwise.
(e) Non-Exclusivity of Rights. The provisions of this Section 10.02 shall be
applicable to all actions, claims, suits or proceedings made or commenced after the date of the First Amended and Restated Limited Partnership Agreement, whether arising from acts or omissions to act occurring before or after its adoption. The
provisions of this Section 10.02 shall be deemed to be a contract between the Partnership and each person entitled to indemnification under this Section 10.02 (or legal representative thereof) who serves in such capacity at any time while
this Section 10.02 and the relevant provisions of applicable Law, if any, are in effect, and any amendment, modification or repeal hereof shall not affect any rights or obligations then existing with respect to any state of facts or any action,
suit or proceeding then or theretofore existing, or any action, suit or proceeding thereafter brought or threatened based in whole or in part on any such state of facts. If any provision of this Section 10.02 shall be found to be invalid or
limited in application by reason of any law or regulation, it shall not affect the validity of the remaining provisions hereof. The rights of indemnification provided in this Section 10.02 shall neither be exclusive of, nor be deemed in
limitation of, any rights to which any person may otherwise be or become entitled or permitted by contract, this Partnership Agreement or as a matter of law, both as to actions in such person’s official capacity and actions in any other
capacity, it being the policy of the Partnership that indemnification of any person whom the Partnership is obligated to indemnify pursuant to Section 10.02(a) shall be made to the fullest extent permitted by law.
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For purposes of this Section 10.02, references to “other enterprises” shall
include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Partnership” shall
include any service as a director, officer, employee or agent of the Partnership which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or
beneficiaries.
This Section 10.02 shall not limit the right of the Partnership, to the extent and in the manner permitted by law, to
indemnify and to advance expenses to, and purchase and maintain insurance on behalf of, persons other than persons described in Section 10.02(a).
ARTICLE XI
MISCELLANEOUS
Section 11.01. Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being
enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner
materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent
of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
Section 11.02. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail (delivery receipt requested) or by registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.02):
|
|
(a)
|
If to the Partnership, to:
|
Blackstone Holdings IV L.P.
c/o Blackstone Holdings IV GP L.P.
345 Park Avenue
New York, New
York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
32
|
|
(b)
|
If to any Partner, to:
|
c/o Blackstone Holdings IV GP L.P.
345 Park Avenue
New York, New
York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
|
|
(c)
|
If to the General Partner, to:
|
Blackstone Holdings IV GP L.P.
345 Park Avenue
New York, New
York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
Section 11.03. Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right
or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by Law.
Section 11.04. Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the
extent permitted by this Agreement, their successors, executors, administrators, heirs, legal representatives and assigns.
Section 11.05. Interpretation. Throughout this Agreement, nouns, pronouns and verbs shall be construed as masculine, feminine,
neuter, singular or plural, whichever shall be applicable. Unless otherwise specified, all references herein to “Articles,” “Sections” and paragraphs shall refer to corresponding provisions of this Agreement.
Section 11.06. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Copies of executed
counterparts transmitted by telecopy or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 11.06.
Section 11.07. Further Assurances. Each Limited Partner shall perform all other acts and execute and deliver all other documents
as may be necessary or appropriate to carry out the purposes and intent of this Agreement.
Section 11.08. Entire Agreement.
This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
Section 11.09. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the Province of
Québec.
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Section 11.10. Submission to Jurisdiction; Waiver of Jury Trial.
(a) Any and all disputes which cannot be settled amicably, including any ancillary claims of any party, arising out of, relating to or in
connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) shall be
finally settled by arbitration conducted by a single arbitrator in New York in accordance with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an
arbitrator within thirty (30) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the English language.
Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
(b) Notwithstanding the
provisions of paragraph (a), the General Partner may bring, or may cause the Partnership to bring, on behalf of the General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent
jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner
(i) expressly consents to the application of paragraph (c) of this Section 11.10 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement
would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the General Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees
that service of process upon such agent, who shall promptly advise such Partner of any such service of process, shall be deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY
JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 11.10, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary
judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the fora designated by this
paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable Law, any objection which they now or hereafter may
have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in the preceding paragraph of this Section 11.10 and such parties agree not to plead or claim the same.
Section 11.11. Expenses. Except as otherwise specified in this Agreement, the Partnership shall be responsible for all costs
and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with its operation.
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Section 11.12. Amendments and Waivers. (a) This Agreement (including the Annexes
hereto) may be amended, supplemented, waived or modified by the written consent of the General Partner; provided that any amendment that would have a material adverse effect on the rights or preferences of any Class of Units in relation
to other Classes of Units must be approved by the holders of not less than a majority of the Vested Percentage Interests of the Class affected; provided further, that the General Partner may, without the written consent of any
Limited Partner or any other Person, amend, supplement, waive or modify any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect: (i) any
amendment, supplement, waiver or modification that the General Partner determines to be necessary or appropriate in connection with the creation, authorization or issuance of any class or series of equity interest in the Partnership; (ii) the
admission, substitution, withdrawal or removal of Partners in accordance with this Agreement; (iii) a change in the name of the Partnership, the location of the principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership; (iv) any amendment, supplement, waiver or modification that the General Partner determines in its sole discretion to be necessary or appropriate to address changes in U.S. federal income
tax regulations, legislation or interpretation; (v) a change in the Fiscal Year or taxable year of the Partnership and any other changes that the General Partner determines to be necessary or appropriate as a result of a change in the Fiscal
Year or taxable year of the Partnership including a change in the dates on which distributions are to be made by the Partnership.
(b) No
failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of time specified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.
(c) The General Partner may, in its sole discretion, unilaterally amend this Agreement on or before the effective date of the final regulations
to provide for (i) the election of a safe harbor under Proposed Treasury Regulation Section 1.83-3(l) (or any similar provision) under which the fair market value of a partnership interest that is
transferred is treated as being equal to the liquidation value of that interest, (ii) an agreement by the Partnership and each of its Partners to comply with all of the requirements set forth in such regulations and Notice 2005-43 (and any other guidance provided by the Internal Revenue Service with respect to such election) with respect to all partnership interests transferred in connection with the performance of services while the
election remains effective, (iii) the allocation of items of income, gains, deductions and losses required by the final regulations similar to Proposed Treasury Regulation
Section 1.704-1(b)(4)(xii)(b) and (c), and (iv) any other related amendments.
(d) Except
as may be otherwise required by law in connection with the winding-up, liquidation, or dissolution of the Partnership, each Partner hereby irrevocably waives any and all rights that it may have to maintain an
action for judicial accounting or for partition of any of the Partnership’s property.
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Section 11.13. No Third Party Beneficiaries. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their permitted assigns and successors and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity, any legal or equitable right, benefit or remedy of
any nature whatsoever under or by reason of this Agreement (other than pursuant to Section 10.02 hereof).
Section 11.14.
Headings. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision
hereof.
Section 11.15. Construction. Each party hereto acknowledges and agrees it has had the opportunity to draft, review
and edit the language of this Agreement and that it is the intent of the parties hereto that no presumption for or against any party arising out of drafting all or any part of this Agreement will be applied in any dispute relating to, in connection
with or involving this Agreement. Accordingly, the parties hereby waive to the fullest extent permitted by law the benefit of any rule of Law or any legal decision that would require that in cases of uncertainty, the language of a contract should be
interpreted most strongly against the party who drafted such language.
Section 11.16. Power of Attorney. Each Limited
Partner, by its execution hereof, hereby makes, constitutes and appoints the General Partner as its true and lawful agent and attorney in fact, with full power of substitution and full power and authority in its name, place and stead, to make,
execute, sign, acknowledge, swear to, record and file (a) this Agreement and any amendment to this Agreement that has been adopted as herein provided; (b) the original certificate of limited partnership of the Partnership and all
amendments thereto required or permitted by law or the provisions of this Agreement; (c) all certificates and other instruments (including consents and ratifications which the Limited Partners have agreed to provide upon a matter receiving the
agreed support of Limited Partners) deemed advisable by the General Partner to carry out the provisions of this Agreement (including the provisions of Section 8.05) and Law or to permit the Partnership to become or to continue as a limited
partnership or partnership wherein the Limited Partners have limited liability in each jurisdiction where the Partnership may be doing business; (d) all instruments that the General Partner deems appropriate to reflect a change or modification
of this Agreement or the Partnership in accordance with this Agreement, including, without limitation, the admission of additional Limited Partners or substituted Limited Partners pursuant to the provisions of this Agreement; (e) all
conveyances and other instruments or papers deemed advisable by the General Partner to effect the liquidation and termination of the Partnership; and (f) all fictitious or assumed name certificates required or permitted (in light of the
Partnership’s activities) to be filed on behalf of the Partnership.
Section 11.17. Letter Agreements; Schedules. The
General Partner may, or may cause the Partnership to, without the approval of any Limited Partner or other Person, enter into separate letter agreements with individual Limited Partners with respect to any matter, in each case on terms and
conditions not inconsistent with this Agreement, which have the effect of establishing rights under, or supplementing the terms of, this Agreement. The General Partner may from time to time execute and deliver to the Limited Partners schedules which
set forth information contained in the books and records of the Partnership and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement
for any purpose whatsoever.
36
Section 11.18. Partnership Status. The parties intend to treat the Partnership as a
partnership for U.S. federal income tax purposes.
[Remainder of Page Intentionally Left Blank]
37
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement or have caused this
Agreement to be duly executed by their respective authorized officers, in each case as of the date first above stated.
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GENERAL PARTNER:
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BLACKSTONE HOLDINGS IV GP L.P.
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By:
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Blackstone Holdings IV GP Management L.L.C., its general partner
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By:
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The Blackstone Group Inc., its sole member
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By:
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/s/ John G. Finley
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Name: John G. Finley
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Title: Chief Legal Officer and Secretary
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[Signature Page to Fourth Amended and Restated Limited Partnership Agreement of Blackstone Holdings IV
L.P.]
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LIMITED PARTNERS REPRESENTING A MAJORITY VESTED PERCENTAGE INTEREST:
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/s/ Stephen A. Schwarzman
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Stephen A. Schwarzman
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/s/ Jonathan D. Gray
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Jonathan D. Gray
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/s/ Hamilton E. James
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Hamilton E. James
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[Signature Page to Fourth Amended and Restated Limited Partnership Agreement of Blackstone Holdings IV
L.P.]
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ALL OTHER LIMITED PARTNERS:
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All other Limited Partners now and hereafter admitted as Limited Partners of the Partnership, pursuant to powers of attorney now and hereafter executed in favor of, and granted and delivered to the General Partner
without execution hereof pursuant to Section 11.16 of the Third Amended and Restated Limited Partnership Agreement.
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By:
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BLACKSTONE HOLDINGS IV GP L.P.
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By:
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Blackstone Holdings IV GP Management L.L.C., its general partner
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By:
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The Blackstone Group Inc., its sole member
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By:
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/s/ John G. Finley
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Name: John G. Finley
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Title: Chief Legal Officer and Secretary
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[Signature Page to Fourth Amended and Restated Limited Partnership Agreement of Blackstone Holdings IV
L.P.]
Exhibit 10.5
Execution Version
THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
BLACKSTONE HOLDINGS
AI L.P.
Dated as of August 10, 2020
THE PARTNERSHIP UNITS OF BLACKSTONE HOLDINGS AI L.P. HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAWS OF ANY
STATE, PROVINCE OR ANY OTHER APPLICABLE SECURITIES LAWS AND ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR PROVINCE, AND ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS
AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE UNITS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS LIMITED PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH
UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.
Table of Contents
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Page
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ARTICLE I
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DEFINITIONS
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Section 1.01
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Definitions
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1
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ARTICLE II
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FORMATION, TERM, PURPOSE AND POWERS
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Section 2.01
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Formation
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11
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Section 2.02
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Name
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11
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Section 2.03
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Term
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11
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Section 2.04
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Offices
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11
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Section 2.05
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Agent for Service of Process
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12
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Section 2.06
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Business Purpose
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12
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Section 2.07
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Powers of the Partnership
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12
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Section 2.08
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Partners; Admission of New Partners
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12
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Section 2.09
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Withdrawal
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12
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ARTICLE III
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MANAGEMENT
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Section 3.01
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General Partner
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12
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Section 3.02
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Compensation
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13
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Section 3.03
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Expenses
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13
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Section 3.04
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Officers
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13
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Section 3.05
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Authority of Partners
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14
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Section 3.06
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Action by Written Consent or Ratification
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14
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ARTICLE IV
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DISTRIBUTIONS
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Section 4.01
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Distributions
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14
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Section 4.02
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Liquidation Distribution
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15
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Section 4.03
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Limitations on Distribution
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15
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Section 4.04
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Administration Fee
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15
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ARTICLE V
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CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; TAX ALLOCATIONS; TAX MATTERS
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Section 5.01
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Initial Capital Contributions
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16
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i
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Section 5.02
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No Additional Capital Contributions
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16
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Section 5.03
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Capital Accounts
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16
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Section 5.04
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Allocations of Profits and Losses
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16
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Section 5.05
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Special Allocations
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17
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Section 5.06
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Tax Allocations
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18
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Section 5.07
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Tax Advances
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18
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Section 5.08
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Tax Matters
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19
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Section 5.09
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Other Allocation Provisions
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19
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ARTICLE VI
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BOOKS AND RECORDS; REPORTS
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Section 6.01
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Books and Records
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19
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ARTICLE VII
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PARTNERSHIP UNITS
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Section 7.01
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Units
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20
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Section 7.02
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Register
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21
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Section 7.03
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Registered Partners
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21
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ARTICLE VIII
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VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS
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Section 8.01
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Vesting of Initial Unvested Units
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21
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Section 8.02
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Forfeiture of Units Held by Initial Limited Partners
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22
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Section 8.03
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Limited Partner Transfers
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23
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Section 8.04
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Minimum Retained Ownership Requirement
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24
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Section 8.05
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Mandatory Exchanges
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25
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Section 8.06
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Encumbrances
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25
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Section 8.07
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Further Restrictions
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25
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Section 8.08
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Rights of Assignees
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26
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Section 8.09
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Admissions, Withdrawals and Removals
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26
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Section 8.10
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Admission of Assignees as Substitute Limited Partners
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26
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Section 8.11
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Withdrawal and Removal of Limited Partners
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27
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ARTICLE IX
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DISSOLUTION, LIQUIDATION AND TERMINATION
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Section 9.01
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No Dissolution
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27
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Section 9.02
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Events Causing Dissolution
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27
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Section 9.03
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Distribution upon Dissolution
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28
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Section 9.04
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Time for Liquidation
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28
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Section 9.05
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Termination
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28
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Section 9.06
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Claims of the Partners
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28
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Section 9.07
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Survival of Certain Provisions
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28
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ii
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ARTICLE X
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LIABILITY AND INDEMNIFICATION
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Section 10.01
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Liability of Partners
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29
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Section 10.02
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Indemnification
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30
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ARTICLE XI
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MISCELLANEOUS
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Section 11.01
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Severability
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32
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Section 11.02
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Notices
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32
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Section 11.03
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Cumulative Remedies
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33
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Section 11.04
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Binding Effect
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33
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Section 11.05
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Interpretation
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33
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Section 11.06
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Counterparts
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33
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Section 11.07
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Further Assurances
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33
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Section 11.08
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Entire Agreement
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33
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Section 11.09
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Governing Law
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33
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Section 11.10
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Submission to Jurisdiction; Waiver of Jury Trial
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33
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Section 11.11
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Expenses
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34
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Section 11.12
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Amendments and Waivers
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34
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Section 11.13
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No Third Party Beneficiaries
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35
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Section 11.14
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Headings
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36
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Section 11.15
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Construction
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36
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Section 11.16
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Power of Attorney
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36
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Section 11.17
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Letter Agreements; Schedules
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36
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Section 11.18
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Partnership Status
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37
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iii
THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
BLACKSTONE HOLDINGS
AI L.P.
This THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (this “Agreement”) of Blackstone Holdings AI
L.P. (the “Partnership”) is made as of the 10th day of August, 2020, by and among Blackstone Holdings I/II GP L.L.C., a limited liability company formed under the laws of the
State of Delaware, as general partner, and the Limited Partners (as defined herein) of the Partnership.
WHEREAS, the Partnership was
formed as a limited partnership pursuant to the Act, by the filing of a Certificate of Limited Partnership (as amended from time to time, the “Certificate”) with the Office of the Secretary of State of the State of Delaware and the
execution of the Limited Partnership Agreement of the Partnership dated as of September 17, 2015 (the “Original Agreement”);
WHEREAS, the Original Agreement was amended and restated by the Amended and Restated Limited Partnership Agreement of the Partnership dated as
of October 1, 2015 (the “First Amended and Restated Agreement); and
WHEREAS, the First Amended and Restated Agreement
was amended and restated by the Second Amended and Restated Limited Partnership Agreement of the Partnership dated as of July 1, 2019 (the “Second Amended and Restated Agreement”);
WHEREAS, pursuant to Section 11.12 of the Second Amended and Restated Agreement, the amendments set forth in this Agreement require only
the consent of the General Partner and no consent or approval of any Limited Partner is required;
WHEREAS, the Limited Partners holding
not less than a majority of the Vested Percentage Interests of the Units have also consented to amending the Second Amended and Restated Agreement in the manner and as more fully set forth herein; and
WHEREAS, the parties to this Agreement now wish to amend and restate the Second Amended and Restated Agreement in its entirety as more fully
set forth below.
NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound
hereby, the parties hereto agree to amend and restate the Second Amended and Restated Agreement in its entirety to read as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Capitalized terms used herein without definition have the following meanings (such meanings being
equally applicable to both the singular and plural form of the terms defined):
“Act” means, the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. Section 17-101, et seq., as it may be amended from time to time.
“Additional Credit
Amount” has the meaning set forth in Section 4.01(b)(ii).
“Adjusted Capital Account Balance” means, with
respect to each Partner, the balance in such Partner’s Capital Account adjusted (i) by taking into account the adjustments, allocations and distributions described in U.S. Treasury Regulations Sections
1.704-1(b)(2)(ii)(c)(4), (5) and (6); and (ii) by adding to such balance such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, determined pursuant to Regulations
Sections 1.704-2(g) and 1.704-2(i)(5), any amounts such Partner is obligated to restore pursuant to any provision of this Agreement or by applicable Law. The foregoing
definition of Adjusted Capital Account Balance is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Administration Fee” has the meaning set forth in Section 4.04.
“Affiliate” means, with respect to a specified Person, any other Person that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person.
“Agreement” has the
meaning set forth in the preamble of this Agreement.
“Amended Tax Amount” has the meaning set forth in
Section 4.01(b)(ii).
“Assignee” has the meaning set forth in Section 8.08.
“Assumed Tax Rate” means the highest effective marginal combined U.S. federal, state and local income tax rate for a Fiscal
Year prescribed for an individual or corporate resident in New York, New York (taking into account (a) the nondeductibility of expenses subject to the limitation described in Section 67(a) of the Code and (b) the character (e.g.,
long-term or short-term capital gain or ordinary or exempt income) of the applicable income, but not taking into account the deductibility of state and local income taxes for U.S. federal income tax purposes). For the avoidance of doubt, the Assumed
Tax Rate will be the same for all Partners.
“Available Cash” means, with respect to any fiscal period, the amount of
cash on hand which the General Partner, in its reasonable discretion, deems available for distribution to the Partners, taking into account all debts, liabilities and obligations of the Partnership then due and amounts which the General Partner, in
its reasonable discretion, deems necessary to expend or retain for working capital or to place into reserves for customary and usual claims with respect to the Partnership’s operations.
“Blackstone Holdings I Limited Partnership Agreement” means the Second Amended and Restated Limited Partnership Agreement of
Blackstone Holdings I L.P., dated as of July 1, 2019, as amended from time to time.
“Blackstone Holdings
Partnerships” means each of the Partnership, Blackstone Holdings I L.P., a Delaware limited partnership, Blackstone Holdings II L.P., a Delaware limited partnership, Blackstone Holdings III L.P., a Québec société en
commandite, and Blackstone Holdings IV L.P., a Québec société en commandite.
2
“Capital Account” means the separate capital account maintained for each Partner
in accordance with Section 5.03 hereof.
“Capital Contribution” means, with respect to any Partner, the aggregate
amount of money contributed to the Partnership and the Carrying Value of any property (other than money), net of any liabilities assumed by the Partnership upon contribution or to which such property is subject, contributed to the Partnership
pursuant to Article V.
“Carrying Value” means, with respect to any Partnership asset, the asset’s adjusted basis
for U.S. federal income tax purposes, except that the initial carrying value of assets contributed to the Partnership shall be their respective gross fair market values on the date of contribution as determined by the General Partner, and the
Carrying Values of all Partnership assets shall be adjusted to equal their respective fair market values, in accordance with the rules set forth in United States Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), except as otherwise provided herein, as of: (a) the date of the acquisition of any additional Partnership Interest by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (b) the date of the distribution of more than a de minimis amount of Partnership assets to a Partner; (c) the date a Partnership Interest is relinquished to the Partnership; or (d) any other
date specified in the United States Treasury Regulations; provided, however, that adjustments pursuant to clauses (a), (b) (c) and (d) above shall be made only if such adjustments are deemed necessary or appropriate by the General
Partner to reflect the relative economic interests of the Partners. The Carrying Value of any Partnership asset distributed to any Partner shall be adjusted immediately before such distribution to equal its fair market value. In the case of any
asset that has a Carrying Value that differs from its adjusted tax basis, Carrying Value shall be adjusted by the amount of depreciation calculated for purposes of the definition of “Profits (Losses)” rather than the amount of
depreciation determined for U.S. federal income tax purposes, and depreciation shall be calculated by reference to Carrying Value rather than tax basis once Carrying Value differs from tax basis.
“Category 1 Limited Partner” means each of the Limited Partners identified in the books and records of the Partnership as a
Category 1 Limited Partner.
“Category 2 Limited Partner” means each of the Limited Partners identified in the books and
records of the Partnership as a Category 2 Limited Partner.
“Category 3 Limited Partner” means each of the Limited
Partners identified in the books and records of the Partnership as a Category 3 Limited Partner.
“Category 4 Limited
Partner” means each of the Limited Partners identified in the books and records of the Partnership as a Category 4 Limited Partner.
“Category 5 Limited Partner” means each of the Limited Partners identified in the books and records of the Partnership as a
Category 5 Limited Partner.
3
“Category 6 Limited Partner” means the Limited Partner identified in the books
and records of the Partnership as a Category 6 Limited Partner.
“Cause” means the occurrence or existence of any of the
following as determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by an Employed Limited Partner of any provision of this Agreement or the
Non-Competition Agreement, (x) any material breach of any rules or regulations applicable to senior managing directors or employees, as applicable, of the Blackstone Holdings Partnerships, their
subsidiaries and their affiliated entities, (y) an Employed Limited Partner’s deliberate failure to perform his or her duties to the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, or (z) an
Employed Limited Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities in any material way (provided that, in the case
of any of the foregoing clauses (w), (x), (y) and (z), the General Partner has given the Employed Limited Partner written notice (a “Notice of Breach”) within fifteen days after the General Partner becomes aware of such action and
such Employed Limited Partner fails to cure such breach, failure to perform or conduct or behavior within fifteen days after receipt by the Employed Limited Partner of such Notice of Breach from the General Partner (or such longer period, not to
exceed an additional fifteen days, as shall be reasonably required for such cure, provided, that such Employed Limited Partner is diligently pursuing such cure), (iii) any act of fraud, misappropriation, dishonesty, embezzlement or similar
conduct against the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, or (iv) conviction (on the basis of a trial or by an accepted plea of guilty or nolo con tendere) of a felony or crime (including any
misdemeanor charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of competent jurisdiction, by a U.S. federal or state or comparable non-U.S. regulatory body or by a self-regulatory body having authority with respect to U.S. federal or state or comparable non-U.S. securities laws, rules or regulations of
the securities industry, that such Employed Limited Partner individually has violated any U.S. federal or state or comparable non-U.S. securities laws or any rules or regulations thereunder, or any rules of
any such self-regulatory body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such Employed Limited Partner’s ability to function as a senior managing
director or employee, as applicable, of the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities, taking into account the services required of Employed Limited Partner and the nature of the business of the Blackstone
Holdings Partnerships, their subsidiaries and their affiliated entities or (B) the business of the Blackstone Holdings Partnerships, their subsidiaries and their affiliated entities.
“Certificate” has the meaning set forth in the preamble of this Agreement.
“Change of Control” means the occurrence of any Person, other than Blackstone Group Management L.L.C. or a Person approved by
Blackstone Group Management L.L.C., becoming the Class C Stockholder.
“Charity” means any organization that is
organized and operated for a purpose described in Section 170(c) of the Code (determined without reference to Code Section 170(c)(2)(A)) and described in Code Sections 2055(a) and 2522.
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“Class” means the classes of Units into which the interests in the Partnership
may be classified or divided from time to time pursuant to the provisions of this Agreement.
“Class A Common
Stock” means the Class A common stock, par value $0.00001 per share, of the Issuer.
“Class A
Units” means the Units of partnership interest in the Partnership designated as the “Class A Units” herein and having the rights pertaining thereto as are set forth in this Agreement.
“Class C Stockholder” means Blackstone Group Management L.L.C., a Delaware limited liability company, and
any successor or permitted assign that owns the Class C common stock, par value $0.00001 per share, of the Issuer at the applicable time.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Contingencies” has the meaning set forth in Section 9.03(b).
“Control” (including the terms “Controlled by” and “under common Control with”) means the
possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without
limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
“Credit Amount” has the meaning set forth in Section 4.01(b)(ii) of this Agreement.
“Creditable Non-U.S. Tax” means a non-U.S.
tax paid or accrued for United States federal income tax purposes by the Partnership, in either case to the extent that such tax is eligible for credit under Section 901(a) of the Code. A non-U.S. tax is
a Creditable Non-U.S. Tax for these purposes without regard to whether a partner receiving an allocation of such non-U.S. tax elects to claim a credit for such amount.
This definition is intended to be consistent with the definition of “Creditable Non-U.S. Tax” in Temporary Treasury Regulations
Section 1.704-1T(b)(4)(xi)(b), and shall be interpreted consistently therewith.
“Delaware Arbitration Act” has the meaning set forth in Section 11.10(d) of this Agreement.
“Disability” means, as to any Person, such Person’s inability to perform in all material respects his or her duties and
responsibilities to the General Partner, or any of its Affiliates, by reason of a physical or mental disability or infirmity which inability is reasonably expected to be permanent and has continued (i) for a period of six consecutive months or
(ii) such shorter period as the General Partner may reasonably determine in good faith.
“Disabling Event” means the
General Partner ceasing to be the general partner of the Partnership pursuant to Section 17-402 of the Act.
“Dissolution Event” has the meaning set forth in Section 9.02 of this Agreement.
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“Employed Limited Partner” means any Limited Partner that is employed by or
providing services to the Class C Stockholder, the Issuer, the General Partner, the Partnership or any of its subsidiaries at the time in question, and any Personal Planning Vehicle of such Limited Partner.
“Encumbrance” means any mortgage, claim, lien, encumbrance, conditional sales or other title retention agreement, right of
first refusal, preemptive right, pledge, option, charge, security interest or other similar interest, easement, judgment or imperfection of title of any nature whatsoever.
“ERISA” means The Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
“Exchange Agreement” means the Fourth Amended and Restated Exchange Agreement, dated as of the date of the
Second Amended and Restated Agreement, among the Issuer, the Blackstone Holdings Partnerships and the limited partners of the Blackstone Holdings Partnerships from time to time, as it may be amended, supplemented or restated from time to time.
“Exchange Transaction” means an exchange of Units for shares of Class A Common Stock pursuant to, and in accordance
with, the Exchange Agreement or, if the Issuer and the exchanging Limited Partner shall mutually agree, a Transfer of Units to the Issuer, the Partnership or any of their subsidiaries for other consideration.
“Final Tax Amount” has the meaning set forth in Section 4.01(b)(ii).
“First Amended and Restated Agreement” has the meaning set forth in the preamble hereto.
“Fiscal Year” means (i) the period commencing upon the formation of the Partnership and ending on December 31, 2007
or (ii) any subsequent twelve-month period commencing on January 1 and ending on December 31.
“GAAP” means
accounting principles generally accepted in the United States of America as in effect from time to time.
“General
Partner” means Blackstone Holdings I/II GP L.L.C., a limited liability company formed under the laws of the State of Delaware or any successor general partner admitted to the Partnership in accordance with the terms of this Agreement.
“Government Official” means a person who holds a high-level, full-time position with a national, supranational, U.S. federal,
U.S. state or City of New York government.
“Incapacity” means, with respect to any Person, the bankruptcy, dissolution,
termination, entry of an order of incompetence, or the insanity, permanent disability or death of such Person.
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“Initial Limited Partner” means each Limited Partner as of the date of the First
Amended and Restated Agreement that is an “Initial Limited Partner” as defined in the Blackstone Holdings I Limited Partnership Agreement.
“Initial Units” means, with respect to any Initial Limited Partner, the aggregate number of Class A Units acquired by
such Initial Limited Partner as of the date of the First Amended and Restated Agreement as a distribution in respect of “Initial Units” as defined in the Blackstone Holdings I Limited Partnership Agreement.
“Initial Unvested Units” means, with respect to any Initial Limited Partner, the aggregate number of Unvested Units acquired
by such Initial Limited Partner as of the date of the First Amended and Restated Agreement as a distribution in respect of “Initial Unvested Units” as defined in the Blackstone Holdings I Limited Partnership Agreement.
“Initial Vested Units” means, with respect to any Initial Limited Partner, the aggregate number of Vested Units acquired by
such Initial Limited Partner as of the date of the First Amended and Restated Agreement as a distribution in respect of “Initial Vested Units” as defined in the Blackstone Holdings I Limited Partnership Agreement, and any additional
Initial Units that have vested from time to time in accordance with Section 8.01 of this Agreement.
“Intangible
Assets” means the assets of the Partnership that are described in Section 197(d) of the Code.
“Intangible Asset
Gain” means the net gain recognized by the Partnership with respect to the Partnership’s Intangible Assets in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership, including but
not limited to net capital gain realized in connection with an adjustment to the Carrying Value of Partnership assets; provided, however, that any such gain shall constitute “Intangible Asset Gain” only to the extent that any
such gain exceeds losses previously recognized in an actual or hypothetical sale of Intangible Assets.
“IPO” means the
initial public offering and sale of common units representing limited partner interests of The Blackstone Group L.P., as contemplated by The Blackstone Group L.P.’s Registration Statement on Form S-1
(File No. 333-141504).
“Issuer” means The Blackstone Group Inc., a
corporation incorporated under the laws of the State of Delaware, or any successor thereto.
“Last Reported Sale Price”
of the Class A Common Stock on any date means:
(a) the closing sale price per share on the New York Stock Exchange on that date (or,
if no closing sale price is reported, the last reported sale price);
(b) if the Class A Common Stock is not listed for trading on the
New York Stock Exchange, the closing sale price (or, if no closing sale price is reported, the last reported sale price) as reported on that date in composite transactions for the principal national securities exchange registered pursuant to
Section 6(g) of the Exchange Act on which the Class A Common Stock is listed;
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(c) if the Class A Common Stock is not so listed on a national securities exchange, the last
quoted bid price for the Class A Common Stock on that date in the over-the-counter market as reported by Pink Sheets LLC or a similar organization; or
(d) if the Class A Common Stock is not so quoted by Pink Sheets LLC or a similar organization, the average of the midpoint of the last bid
and ask prices for the Class A Common Stock on that date from a nationally recognized independent investment banking firm selected by the Issuer for this purpose.
“Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order
issued or promulgated by any national, supranational, state, federal, provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdiction over the Partnership or any Partner, as the case may
be.
“Limited Partner” means each of the Persons from time to time listed as a limited partner in the books and records
of the Partnership, and, for purposes of Sections 8.01, 8.02, 8.03, 8.04, 8.05 and 8.06, any Personal Planning Vehicle of such Limited Partner.
“Liquidation Agent” has the meaning set forth in Section 9.03 of this Agreement.
“Minimum Retained Ownership Requirement” has the meaning set forth in Section 8.04(a).
“Net Taxable Income” has the meaning set forth in Section 4.01(b)(i).
“Non-Competition Agreement” means collectively, the Senior Managing Director Non-Competition and Non-Solicitation Agreement and Contracting Employees Non-Competition and
Non-Solicitation Agreement dated on or about June 18, 2007 by certain Employed Limited Partners with each of the Blackstone Holdings Partnerships and any agreement with respect to similar subject matter
entered into from time to time by an Employed Limited Partner, as amended from time to time.
“Nonrecourse Deductions”
has the meaning set forth in Treasury Regulations Section 1.704-2(b). The amount of Nonrecourse Deductions of the Partnership for a fiscal year equals the net increase, if any, in the amount of
Partnership Minimum Gain of the Partnership during that fiscal year, determined according to the provisions of Treasury Regulations Section 1.704-2(c).
“Original Agreement” has the meaning set forth in the preamble of this Agreement.
“Partners” means, at any time, each person listed as a Partner (including the General Partner) on the books and records of
the Partnership, in each case for so long as he, she or it remains a partner of the Partnership as provided hereunder.
“Partnership” has the meaning set forth in the preamble of this Agreement.
“Partnership Minimum Gain” has the meaning set forth in Treasury Regulations Sections
1.704-2(b)(2) and 1.7042-(d).
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“Partnership Representative” has the meaning set forth in Section 5.08.
“Partner Nonrecourse Debt Minimum Gain” means an amount with respect to each partner nonrecourse debt (as defined in
Treasury Regulations Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such partner nonrecourse debt were treated as a nonrecourse liability (as defined in Treasury
Regulations Section 1.752-1(a) (2)) determined in accordance with Treasury Regulations Section 1.7042(i)(3).
“Partner Nonrecourse Deductions” has the meaning ascribed to the term “partner nonrecourse deductions” set forth in
Treasury Regulations Section 1.704-2(i)(2).
“Person” means any individual,
corporation, partnership, limited partnership, limited liability company, limited company, joint venture, trust, unincorporated or governmental organization or any agency or political subdivision thereof.
“Personal Planning Vehicle” means, in respect of any Limited Partner, any estate, family limited liability company, family
limited partnership, or inter vivos or testamentary trust that holds Units that is designated as a Personal Planning Vehicle of such Limited Partner in the books and records of the Partnership.
“Profits” and “Losses” means, for each Fiscal Year or other period, the taxable income or loss of the
Partnership, or particular items thereof, determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (a) all items of income, gain, loss or deduction
allocated pursuant to Section 5.05 shall not be taken into account in computing such taxable income or loss; (b) any income of the Partnership that is exempt from U.S. federal income taxation and not otherwise taken into account in
computing Profits and Losses shall be added to such taxable income or loss; (c) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, any gain or loss resulting from a disposition of such
asset shall be calculated with reference to such Carrying Value; (d) upon an adjustment to the Carrying Value (other than an adjustment in respect of depreciation) of any asset, pursuant to the definition of Carrying Value, the amount of the
adjustment shall be included as gain or loss in computing such taxable income or loss; (e) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, the amount of depreciation, amortization or
cost recovery deductions with respect to such asset for purposes of determining Profits and Losses, if any, shall be an amount which bears the same ratio to such Carrying Value as the U.S. federal income tax depreciation, amortization or other cost
recovery deductions bears to such adjusted tax basis (provided that if the U.S. federal income tax depreciation, amortization or other cost recovery deduction is zero, the General Partner may use any reasonable method for purposes of
determining depreciation, amortization or other cost recovery deductions in calculating Profits and Losses); and (f) except for items in (a) above, any expenditures of the Partnership not deductible in computing taxable income or loss, not
properly capitalizable and not otherwise taken into account in computing Profits and Losses pursuant to this definition shall be treated as deductible items.
“Restricted Period,” with respect to each Limited Partner that is or was an Employed Limited Partner, has the meaning set
forth in such Limited Partner’s Non-Competition Agreement.
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“Restrictive Covenant,” with respect to each Limited Partner that is or was an
Employed Limited Partner, has the meaning set forth in such Limited Partner’s Non-Competition Agreement.
“Retirement” (including the term “Retire”) means retirement of an Employed Limited Partner from his or her
employment with the Class C Stockholder, the Issuer, the General Partner, the Partnership or any of their subsidiaries after (a) he or she has reached age 65 and has at least five full years of service, or (b) (i) his or her age plus
years of service totals at least 65, (ii) he or she has reached age 50 and (iii) he or she has had a minimum of five years of service; provided, however, that no Employed Limited Partner will be eligible to Retire prior to June 30,
2010.
“Second Amended and Restated Agreement” has the meaning set forth in the preamble hereto.
“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Similar Law” means any law or regulation that could cause the underlying assets of the Partnership to be treated as
assets of the Limited Partner by virtue of its limited partner interest in the Partnership and thereby subject the Partnership and the General Partner (or other persons responsible for the investment and operation of the Partnership’s assets)
to laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the Code.
“Tax Advances” has the meaning set forth in Section 5.07.
“Tax Amount” has the meaning set forth in Section 4.01(b)(i).
“Tax Distributions” has the meaning set forth in Section 4.01(b)(i).
“Tax Matters Partner” has the meaning set forth in Section 5.08.
“Total Percentage Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Units (vested
or unvested) then owned by such Partner by the number of Units then owned by all Partners.
“Transfer” means, in respect
of any Unit, property or other asset, any sale, assignment, transfer, distribution or other disposition thereof, whether voluntarily or by operation of Law, including, without limitation, the exchange of any Unit for any other security.
“Transferee” means any Person that is a transferee of a Partner’s interest in the Partnership, or part thereof.
“Treasury Regulations” means the income tax regulations, including temporary regulations, promulgated under the Code, as such
regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
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“Units” means the Class A Units and any other Class of Units
authorized in accordance with this Agreement, which shall constitute interests in the Partnership as provided in this Agreement and under the Act, entitling the holders thereof to the relative rights, title and interests in the profits, losses,
deductions and credits of the Partnership at any particular time as set forth in this Agreement, and any and all other benefits to which a holder thereof may be entitled as a Partner as provided in this Agreement, together with the obligations of
such Partner to comply with all terms and provisions of this Agreement.
“Unvested Units” means those Units listed as
unvested Units in the books and records of the Partnership, as the same may be amended from time to time in accordance with this Agreement.
“Vested Percentage Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Vested Units
then owned by such Partner by the number of Vested Units then owned by all Partners.
“Vested Units” means those Units
listed as vested Units in the books and records of the Partnership, as the same may be amended from time to time in accordance with this Agreement.
ARTICLE II
FORMATION, TERM,
PURPOSE AND POWERS
Section 2.01 Formation. The Partnership was formed as a limited partnership under the provisions of the
Act by the filing on September 17, 2015 of the Certificate as provided in the preamble of this Agreement and the execution of the Original Agreement. If requested by the General Partner, the Limited Partners shall promptly execute all
certificates and other documents consistent with the terms of this Agreement necessary for the General Partner to accomplish all filing, recording, publishing and other acts as may be appropriate to comply with all requirements for (a) the
formation and operation of a limited partnership under the laws of the State of Delaware, (b) if the General Partner deems it advisable, the operation of the Partnership as a limited partnership, or partnership in which the Limited Partners
have limited liability, in all jurisdictions where the Partnership proposes to operate and (c) all other filings required to be made by the Partnership.
Section 2.02 Name. The name of the Partnership shall be, and the business of the Partnership shall be conducted under the name of,
Blackstone Holdings AI L.P.
Section 2.03 Term. The term of the Partnership commenced on the date of the filing of the
Certificate, and the term shall continue until the dissolution of the Partnership in accordance with Article IX. The existence of the Partnership shall continue until cancellation of the Certificate in the manner required by the Act.
Section 2.04 Offices. The Partnership may have offices at such places either within or outside the State of Delaware as the
General Partner from time to time may select.
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Section 2.05 Agent for Service of Process. The Partnership’s registered agent
for service of process in the State of Delaware shall be as set forth in the Certificate, as the same may be amended by the General Partner from time to time.
Section 2.06 Business Purpose. The Partnership was formed for the object and purpose of, and the nature and character of the
business to be conducted by the Partnership is, engaging in any lawful act or activity for which limited partnerships may be formed under the Act.
Section 2.07 Powers of the Partnership. Subject to the limitations set forth in this Agreement, the Partnership will possess and
may exercise all of the powers and privileges granted to it by the Act including, without limitation, the ownership and operation of the assets contributed to the Partnership by the Partners, by any other Law or this Agreement, together with all
powers incidental thereto, so far as such powers are necessary or convenient to the conduct, promotion or attainment of the purpose of the Partnership set forth in Section 2.06.
Section 2.08 Partners; Admission of New Partners. Each of the Persons listed in the books and records of the Partnership, as the
same may be amended from time to time in accordance with this Agreement, by virtue of the execution of this Agreement, are admitted, or hereby continue, as applicable, as Partners of the Partnership. The rights, duties and liabilities of the
Partners shall be as provided in the Act, except as is otherwise expressly provided herein, and the Partners consent to the variation of such rights, duties and liabilities as provided herein. A Person may be admitted from time to time as a new
Partner in accordance with Section 8.10; provided, however, that each new Partner shall execute and deliver to the General Partner an appropriate supplement to this Agreement pursuant to which the new Partner agrees to be bound by the
terms and conditions of the Agreement, as it may be amended from time to time.
Section 2.09 Withdrawal. No Partner shall have
the right to withdraw as a Partner of the Partnership other than following the Transfer of all Units owned by such Partner in accordance with Article VIII; provided, however, that a new General Partner or substitute General Partner may be admitted
to the Partnership in accordance with Section 8.09.
ARTICLE III
MANAGEMENT
Section 3.01
General Partner. (a) The business, property and affairs of the Partnership shall be managed under the sole, absolute and exclusive direction of the General Partner, which may from time to time delegate authority to officers or to others
to act on behalf of the Partnership.
(b) Without limiting the foregoing provisions of this Section 3.01, the General Partner shall
have the general power to manage or cause the management of the Partnership (which may be delegated to officers of the Partnership), including, without limitation, the following powers:
(i) to develop and prepare a business plan each year which will set forth the operating goals and plans for the Partnership;
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(ii) to execute and deliver or to authorize the execution and delivery of
contracts, deeds, leases, licenses, instruments of transfer and other documents on behalf of the Partnership;
(iii) the
making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness and the incurring of any other obligations;
(iv) to employ, retain, consult with and dismiss personnel;
(v) to establish and enforce limits of authority and internal controls with respect to all personnel and functions;
(vi) to engage attorneys, consultants and accountants for the Partnership;
(vii) to develop or cause to be developed accounting procedures for the maintenance of the Partnership’s books of account;
and
(viii) to do all such other acts as shall be authorized in this Agreement or by the Partners in writing from time to
time.
Section 3.02 Compensation. The General Partner shall not be entitled to any compensation for services rendered to the
Partnership in its capacity as General Partner.
Section 3.03 Expenses. The Partnership shall bear and/or reimburse the
General Partner for any expenses incurred by the General Partner in connection with serving as the general partner of the Partnership.
Section 3.04 Officers. Subject to the direction and oversight of the General Partner, the day-to-day administration of the business of the Partnership may be carried out by employees and agents who may be designated as officers by the General Partner, with titles including but not limited to
“chief executive officer,” “chief financial officer,” “chief legal officer,” “chief administrative officer,” “chief compliance officer,” “principal accounting officer,”
“chairman,” “senior chairman,” “vice chairman,” “president,” “vice president,” “treasurer,” “assistant treasurer,” “secretary,” “assistant secretary,”
“general manager,” “senior managing director,” “managing director” and “director,” as and to the extent authorized by the General Partner. The officers of the Partnership shall have such titles and powers and
perform such duties as shall be determined from time to time by the General Partner and otherwise as shall customarily pertain to such offices. Any number of offices may be held by the same person. All employees, agents and officers shall be subject
to the supervision and direction of the General Partner and may be removed from such office by the General Partner and the authority, duties or responsibilities of any employee, agent or officer of the Partnership may be suspended by the General
Partner from time to time, in each case in the sole discretion of the General Partner. The General Partner shall not cease to be a general partner of the Partnership as a result of the delegation of any duties hereunder. No officer of the
Partnership, in its capacity as such, shall be considered a general partner of the Partnership by agreement, estoppel, as a result of the performance of its duties hereunder or otherwise.
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Section 3.05 Authority of Partners. No Limited Partner, in its capacity as such,
shall participate in or have any control over the business of the Partnership. Except as expressly provided herein, the Units do not confer any rights upon the Limited Partners to participate in the affairs of the Partnership described in this
Agreement. Except as expressly provided herein, the Limited Partners shall have no right to vote on any matter involving the Partnership, including with respect to any merger, consolidation, combination or conversion of the Partnership. The conduct,
control and management of the Partnership shall be vested exclusively in the General Partner. In all matters relating to or arising out of the conduct of the operation of the Partnership, the decision of the General Partner shall be the decision of
the Partnership. Except as required or permitted by Law, or expressly provided in the ultimate sentence of this Section 3.05 or by separate agreement with the Partnership, no Partner who is not also a General Partner (and acting in such
capacity) shall take any part in the management or control of the operation or business of the Partnership in its capacity as a Partner, nor shall any Partner who is not also a General Partner (and acting in such capacity) have any right, authority
or power to act for or on behalf of or bind the Partnership in his or its capacity as a Partner in any respect or assume any obligation or responsibility of the Partnership or of any other Partner. Notwithstanding the foregoing, the Partnership may
employ one or more Partners from time to time, and such Partners, in their capacity as employees of the Partnership (and not, for clarity, in their capacity as Limited Partners of the Partnership), may take part in the control and management of the
business of the Partnership to the extent such authority and power to act for or on behalf of the Partnership has been delegated to them by the General Partner.
Section 3.06 Action by Written Consent or Ratification. Any action required or permitted to be taken by the Partners pursuant to
this Agreement shall be taken if all Partners whose consent or ratification is required consent thereto or provide a ratification in writing.
ARTICLE IV
DISTRIBUTIONS
Section 4.01 Distributions. (a) The General Partner, in its sole discretion, may authorize distributions by the Partnership
to the Partners, which distributions shall be made pro rata in accordance with the Partners’ respective Total Percentage Interests.
(b) (i) In addition to the foregoing, if the General Partner reasonably determines that the taxable income of the Partnership for a Fiscal
Year will give rise to taxable income for the Partners (“Net Taxable Income”), the General Partner shall cause the Partnership to distribute Available Cash in respect of income tax liabilities (the “Tax
Distributions”) to the extent that other distributions made by the Partnership for such year were otherwise insufficient to cover such tax liabilities. The Tax Distributions payable with respect to any Fiscal Year shall be computed based
upon the General Partner’s estimate of the allocable Net Taxable Income in accordance with Article V, multiplied by the Assumed Tax Rate (the “Tax Amount”). For purposes of computing the Tax Amount, the effect of any
benefit under Section 743(b) of the Code will be ignored.
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(ii) Tax Distributions shall be calculated and paid no later than one day prior
to each quarterly due date for the payment by corporations on a calendar year of estimated taxes under the Code in the following manner (A) for the first quarterly period, 25% of the Tax Amount, (B) for the second quarterly period, 50% of
the Tax Amount, less the prior Tax Distributions for the Fiscal Year, (C) for the third quarterly period, 75% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year and (D) for the fourth quarterly period, 100% of the Tax
Amount, less the prior Tax Distributions for the Fiscal Year. Following each Fiscal Year, and no later than one day prior to the due date for the payment by corporations of income taxes for such Fiscal Year, the General Partner shall make an amended
calculation of the Tax Amount for such Fiscal Year (the “Amended Tax Amount”), and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to the extent that the Amended Tax Amount so calculated exceeds
the cumulative Tax Distributions previously made by the Partnership in respect of such Fiscal Year. If the Amended Tax Amount is less than the cumulative Tax Distributions previously made by the Partnership in respect of the relevant Fiscal Year,
then the difference (the “Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Within 30 days following the date on which the Partnership files a tax return on
Form 1065, the General Partner shall make a final calculation of the Tax Amount of such Fiscal Year (the “Final Tax Amount”) and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to the extent that
the Final Tax Amount so calculated exceeds the Amended Tax Amount. If the Final Tax Amount is less than the Amended Tax Amount in respect of the relevant Fiscal Year, then the difference (“Additional Credit Amount”) shall be applied
against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Any Credit Amount and Additional Credit Amount applied against future Tax Distributions shall be treated as an amount actually distributed pursuant to this
Section 4.01(b) for purposes of the computations herein.
Section 4.02 Liquidation Distribution. Distributions made upon
dissolution of the Partnership shall be made as provided in Section 9.03.
Section 4.03 Limitations on Distribution.
Notwithstanding any provision to the contrary contained in this Agreement, the General Partner shall not make a Partnership distribution to any Partner if such distribution would violate Section 17-607 of
the Act or other applicable Law.
Section 4.04 Administration Fee. Notwithstanding anything to the contrary herein, unless the
General Partner shall determine otherwise, commencing with the distribution in respect of the quarterly period ending June 30, 2020, an amount shall be withheld from each quarterly distribution payable to a Limited Partner other than an
Employed Limited Partner that, together with analogous administration fee amounts withheld from distributions payable to such Limited Partner by the other Blackstone Holdings Partnerships in respect of the same quarterly period, equals the
Administration Fee (as defined below). The “Administration Fee” shall mean an amount per Class A Unit initially equal to $0.03125, which amount may increase or decrease by such percentage as the General Partner may determine from
time to time in its sole discretion. Amounts withheld as an Administration Fee shall be treated as if distributed to the applicable Limited Partner.
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ARTICLE V
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; TAX ALLOCATIONS; TAX MATTERS
Section 5.01 Initial Capital Contributions. (a) The Partners have made, on or prior to the date hereof, Capital Contributions
and, in exchange, the Partnership has issued to the Partners the number of Class A Units as specified in the books and records of the Partnership.
(b) Upon issuance by the Partnership of Class A Units to the Partners pursuant to the First Amended and Restated Agreement, the interests
in the Partnership as provided in the First Amended and Restated Agreement and under the Act held by Blackstone Holdings I L.P. were cancelled.
Section 5.02 No Additional Capital Contributions. Except as otherwise provided in this Article V, no Partner shall be required to
make additional Capital Contributions to the Partnership without the consent of such Partner or permitted to make additional capital contributions to the Partnership without the consent of the General Partner.
Section 5.03 Capital Accounts. A separate capital account (a “Capital Account”) shall be established and
maintained for each Partner in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv). The Capital Account of each Partner shall be credited with such Partner’s Capital
Contributions, if any, all Profits allocated to such Partner pursuant to Section 5.04 and any items of income or gain which are specially allocated pursuant to Section 5.05; and shall be debited with all Losses allocated to such Partner
pursuant to Section 5.04, any items of loss or deduction of the Partnership specially allocated to such Partner pursuant to Section 5.05, and all cash and the Carrying Value of any property (net of liabilities assumed by such Partner and
the liabilities to which such property is subject) distributed by the Partnership to such Partner. Any references in any section of this Agreement to the Capital Account of a Partner shall be deemed to refer to such Capital Account as the same may
be credited or debited from time to time as set forth above. In the event of any transfer of any interest in the Partnership in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the
extent it relates to the transferred interest.
Section 5.04 Allocations of Profits and Losses. Except as otherwise provided
in this Agreement, Profits and Losses (and, to the extent necessary, individual items of income, gain or loss or deduction of the Partnership) shall be allocated in a manner such that the Capital Account of each Partner after giving effect to the
Special Allocations set forth in Section 5.05 is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made pursuant to Article IV if the Partnership were dissolved, its affairs wound up and its assets sold
for cash equal to their Carrying Value, all Partnership liabilities were satisfied (limited with respect to each non-recourse liability to the Carrying Value of the assets securing such liability) and the net
assets of the Partnership were distributed to the Partners pursuant to this Agreement, minus (ii) such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical
sale of assets. For purposes of this Article V, each Unvested Unit shall be treated as a Vested Unit. Notwithstanding the foregoing, the General Partner shall make such adjustments to Capital Accounts as it determines in its sole discretion to be
appropriate to ensure allocations are made in accordance with a partner’s interest in the Partnership.
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Section 5.05 Special Allocations. Notwithstanding any other provision in this Article
V:
(a) Minimum Gain Chargeback. If there is a net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain
(determined in accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2 (i)) during any Partnership taxable year, the Partners shall be
specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to their respective shares of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i) (5). The items to be so allocated shall be determined in accordance with Treasury Regulations
Section 1.704-2(f). This Section 5.05(a) is intended to comply with the minimum gain chargeback requirements in such Treasury Regulations Sections and shall be interpreted consistently therewith;
including that no chargeback shall be required to the extent of the exceptions provided in Treasury Regulations Sections 1.704-2(f) and 1.704-2(i) (4).
(b) Qualified Income Offset. If any Partner unexpectedly receives any adjustments, allocations, or distributions described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the deficit
balance in such Partner’s Adjusted Capital Account Balance created by such adjustments, allocations or distributions as promptly as possible; provided that an allocation pursuant to this Section 5.05(b) shall be made only to the
extent that a Partner would have a deficit Adjusted Capital Account Balance in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if this Section 5.05(b) were not in this Agreement. This
Section 5.05(b) is intended to comply with the “qualified income offset” requirement of the Code and shall be interpreted consistently therewith.
(c) Gross Income Allocation. If any Partner has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of
(i) the amount such Partner is obligated to restore, if any, pursuant to any provision of this Agreement, and (ii) the amount such Partner is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as
possible; provided that an allocation pursuant to this Section 5.05 (c) shall be made only if and to the extent that a Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this
Article V have been tentatively made as if Section 5.05(b) and this Section 5.05(c) were not in this Agreement.
(d)
Nonrecourse Deductions. Nonrecourse Deductions shall be allocated to the Partners in accordance with their respective Total Percentage Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any taxable period shall be allocated to the Partner who bears
the economic risk of loss with respect to the liability to which such Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(j).
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(f) Creditable Non-U.S. Taxes. Creditable Non-U.S. Taxes for any taxable period attributable to the Partnership, or an entity owned directly or indirectly by the Partnership, shall be allocated to the Partners in proportion to the partners’
distributive shares of income (including income allocated pursuant to Section 704(c) of the Code) to which the Creditable Non-U.S. Tax relates (under principles of Treasury Regulations Section 1.904-6). The provisions of this Section 5.05(f) are intended to comply with the provisions of Temporary Treasury Regulations Section 1.704-1T(b)
(4)(xi), and shall be interpreted consistently therewith.
(g) Ameliorative Allocations. Any special allocations of income or gain
pursuant to Sections 5.05(b) or 5.05(c) hereof shall be taken into account in computing subsequent allocations pursuant to Section 5.04 and this Section 5.05(g), so that the net amount of any items so allocated and all other items
allocated to each Partner shall, to the extent possible, be equal to the net amount that would have been allocated to each Partner if such allocations pursuant to Sections 5.05(b) or 5.05(c) had not occurred.
(h) Section 751 Allocations. Any gain or loss from items described in Section 751(c) or (d) that were
previously held by Blackstone Holdings I L.P. will be allocated in a manner that is consistent with Blackstone Holdings I L.P.’s partners’ shares of such gain or loss immediately before the distribution of the Partnership by Blackstone
Holdings I L.P.
Section 5.06 Tax Allocations. For income tax purposes, each item of income, gain, loss and deduction of the
Partnership shall be allocated among the Partners in the same manner as the corresponding items of Profits and Losses and specially allocated items are allocated for Capital Account purposes; provided that in the case of any asset the
Carrying Value of which differs from its adjusted tax basis for U.S. federal income tax purposes, income, gain, loss and deduction with respect to such asset shall be allocated solely for income tax purposes in accordance with the principles of
Sections 704(b) and (c) of the Code (in any manner determined by the General Partner and permitted by the Code and Treasury Regulations) so as to take account of the difference between Carrying Value and adjusted basis of such asset.
Notwithstanding the foregoing, the General Partner shall make such allocations for tax purposes as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a partner’s interest in the Partnership.
Section 5.07 Tax Advances. To the extent the General Partner reasonably believes that the Partnership is required by law to
withhold or to make tax payments on behalf of or with respect to any Partner or the Partnership is subjected to tax itself by reason of the status of any Partner (“Tax Advances”), the General Partner may withhold such amounts and
make such tax payments as so required. All Tax Advances made on behalf of a Partner shall be repaid by reducing the amount of the current or next succeeding distribution or distributions which would otherwise have been made to such Partner or, if
such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Partner. For all purposes of this Agreement such Partner shall be treated as having received the amount of the distribution
that is equal to the Tax Advance. Each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including, without limitation, any liability for taxes, penalties, additions to tax or
interest other than any penalties, additions to tax or interest imposed as a result of the Partnership’s failure to withhold or make a tax payment on behalf of such Partner which withholding or payment is required pursuant to applicable Law but
only to the extent amounts sufficient to pay such taxes were not timely distributed to the Partner pursuant to Section 4.01(b)) with respect to income attributable to or distributions or other payments to such Partner.
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Section 5.08 Tax Matters. For tax years beginning before December 31, 2017, the
General Partner shall be or shall designate the “tax matters partner” within the meaning of Section 6231(a)(7) of the Code (as in effect prior to 2018) (the “Tax Matters Partner”) and, for the years beginning after
December 31, 2017, the General Partner shall be or shall designate the “partnership representative” within the meaning of Section 6223 of the Code (the “Partnership Representative”). The Partnership shall file as
a partnership for federal, state, provincial and local income tax purposes, except where otherwise required by Law. All elections required or permitted to be made by the Partnership, and all other tax decisions and determinations relating to
federal, state, provincial or local tax matters of the Partnership, shall be made by the Tax Matters Partner or the Partnership Representative, as applicable, in consultation with the Partnership’s attorneys and/or accountants. Tax audits,
controversies and litigations shall be conducted under the direction of the Tax Matters Partner or the Partnership Representative, as applicable. The Tax Matters Partner or the Partnership Representative, as applicable, shall keep the other Partners
reasonably informed as to any tax actions, examinations or proceedings relating to the Partnership and shall submit to the other Partners, for their review and comment, any settlement or compromise offer with respect to any disputed item of income,
gain, loss, deduction or credit of the Partnership. As soon as reasonably practicable after the end of each Fiscal Year, the Partnership shall send to each Partner a copy of U.S. Internal Revenue Service Schedule
K-1, and any comparable statements required by applicable U.S. state or local income tax Law as a result of the Partnership’s activities or investments, with respect to such Fiscal Year. The Partnership
also shall provide the Partners with such other information as may be reasonably requested for purposes of allowing the Partners to prepare and file their own tax returns.
Section 5.09 Other Allocation Provisions. Certain of the foregoing provisions and the other provisions of this Agreement relating
to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such regulations. Sections 5.03,
5.04 and 5.05 may be amended at any time by the General Partner if necessary, in the opinion of tax counsel to the Partnership, to comply with such regulations or any applicable Law, so long as any such amendment does not materially change the
relative economic interests of the Partners.
ARTICLE VI
BOOKS AND RECORDS; REPORTS
Section 6.01 Books and Records. (a) At all times during the continuance of the Partnership, the Partnership shall prepare and
maintain separate books of account for the Partnership in accordance with GAAP.
(b) Except as limited by Section 6.01(c), each
Limited Partner shall have the right to receive, for a purpose reasonably related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable written demand stating the purpose of such demand and at such Limited
Partner’s own expense:
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(i) a copy of the Certificate and this Agreement and all amendments thereto,
together with a copy of the executed copies of all powers of attorney pursuant to which the Certificate and this Agreement and all amendments thereto have been executed; and
(ii) promptly after their becoming available, copies of the Partnership’s federal, state and local income tax returns and
reports, if any, for the three most recent years.
(c) The General Partner may keep confidential from the Limited Partners, for such period
of time as the General Partner determines in its sole discretion, (i) any information that the General Partner reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the General Partner
believes is not in the best interests of the Partnership, could damage the Partnership or its business or that the Partnership is required by law or by agreement with any third party to keep confidential.
ARTICLE VII
PARTNERSHIP UNITS
Section 7.01 Units. Interests in the Partnership shall be represented by Units. The Units initially are comprised of one
Class: Class A Units. The General Partner may establish, from time to time in accordance with such procedures as the General Partner shall determine from time to time, other Classes, one or more series of any such Classes, or other Partnership
securities with such designations, preferences, rights, powers and duties (which may be senior to existing Classes and series of Units or other Partnership securities), as shall be determined by the General Partner, including (i) the right to
share in Profits and Losses or items thereof; (ii) the right to share in Partnership distributions; (iii) the rights upon dissolution and liquidation of the Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may or shall be required to redeem the Units or other Partnership securities (including sinking fund provisions); (v) whether such Unit or other Partnership security is issued with the privilege of conversion or exchange and, if so, the
terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which each Unit or other Partnership security will be issued, evidenced by certificates and assigned or transferred; (vii) the method for determining
the Total Percentage Interest as to such Units or other Partnership securities; and (viii) the right, if any, of the holder of each such Unit or other Partnership security to vote on Partnership matters, including matters relating to the
relative designations, preferences, rights, powers and duties of such Units or other Partnership securities. Except as expressly provided in this Agreement to the contrary, any reference to “Units” shall include the Class A
Units and any other Classes that may be established in accordance with this Agreement. All Units of a particular Class shall have identical rights in all respects as all other Units of such Class, except in each case as otherwise specified in
this Agreement.
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Section 7.02 Register. The register of the Partnership shall be the definitive record
of ownership of each Unit and all relevant information with respect to each Partner. Unless the General Partner shall determine otherwise, Units shall be uncertificated and recorded in the books and records of the Partnership.
Section 7.03 Registered Partners. The Partnership shall be entitled to recognize the exclusive right of a Person registered on its
records as the owner of Units for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the Act or other applicable Law.
ARTICLE VIII
VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS
Section 8.01 Vesting of Initial Unvested Units. (a) Subject to Section 8.02 and except as set forth in
Section 8.01(b) or as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, the Initial Unvested Units shall vest and shall thereafter be Vested
Units for all purposes of this Agreement as follows:
(i) with respect to each Category 1 Limited Partner, 100% of the
Initial Unvested Units owned by such Limited Partner shall vest and thereafter be Vested Units for all purposes of this Agreement in equal 25% installments on each of the first, second, third and fourth anniversary dates of the consummation of the
IPO;
(ii) with respect to each Category 3 Limited Partner and Category 4 Limited Partner, 100% of the Initial Unvested
Units owned by such Limited Partner shall vest and thereafter be Vested Units for all purposes of this Agreement in equal 20% installments on each of the first, second, third, fourth and fifth anniversary dates of the consummation of the IPO; and
(iii) with respect to each Category 5 Limited Partner, 100% of the Initial Unvested Units owned by such Limited Partner
shall vest and thereafter be Vested Units for all purposes of this Agreement in equal 12.5% installments on each of the first, second, third, fourth, fifth, sixth, seventh and eighth anniversary dates of the consummation of the IPO.
(b) Notwithstanding Section 8.01(a), if earlier, the Initial Unvested Units shall vest and shall thereafter be Vested Units for all
purposes of this Agreement as follows: (i) upon the Retirement of an Employed Limited Partner, 50% of the Initial Unvested Units owned by such Limited Partner that are Unvested Units at that time shall vest and thereafter be Vested Units for
all purposes of this Agreement; (ii) upon the death or Disability of an Employed Limited Partner, 100% of the Initial Unvested Units owned by such Limited Partner that are Unvested Units at that time shall vest and thereafter be Vested Units
for all purposes of this Agreement; and (iii) upon the occurrence of a Change of Control, 100% of the Initial Unvested Units that are Unvested Units at that time shall vest and thereafter be Vested Units for all purposes of this Agreement.
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(c) In addition, the General Partner in its sole discretion may authorize the earlier vesting of
all or a portion of the Initial Unvested Units owned by any one or more Limited Partners at any time and from time to time, and in such event, such Initial Unvested Units shall vest and thereafter be Vested Units for all purposes of this Agreement.
Any such determination in the General Partner’s discretion in respect of Initial Unvested Units shall be final and binding. Such determinations need not be uniform and may be made selectively among Limited Partners, whether or not such Limited
Partners are similarly situated, and shall not constitute the breach of any duty hereunder or otherwise existing at law, in equity or otherwise.
(d) Upon the vesting of any Initial Unvested Units in accordance with this Section 8.01, the General Partner shall modify the books and
records of the Partnership to reflect such vesting.
Section 8.02 Forfeiture of Units Held by Initial Limited Partners.
(a) Other than as set forth in Section 8.01(b) and except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, if a Limited Partner
ceases to be an Employed Limited Partner for any reason, such Limited Partner’s Unvested Units shall be immediately forfeited without any consideration, and such Limited Partner shall cease to own or have any rights with respect to such
Unvested Units; provided, however, that if a Limited Partner ceases to be an Employed Limited Partner in order to become a Government Official, such Limited Partner’s Unvested Units shall continue to vest as set forth in
Section 8.01 until such Limited Partner ceases to be a Government Official for any reason, at which point such Limited Partner’s Unvested Units shall be immediately forfeited without any consideration (unless such Limited Partner becomes
an Employed Limited Partner immediately after such Limited Partner ceases to be such a Government Official, in which case such Limited Partner’s Unvested Units shall continue to vest as set forth in Section 8.01) and such Limited Partner
shall cease to own or have any rights with respect to such Unvested Units. Immediately upon the forfeiture of any Initial Unvested Units, such Unvested Units that have been so forfeited shall be cancelled.
(b) Except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and
records of the Partnership, (i) if a Limited Partner that is or was at any time an Employed Limited Partner breaches any Restrictive Covenant to which such Limited Partner is subject or (ii) if an Employed Limited Partner is terminated for
Cause, the Initial Units held by such Limited Partner or such Limited Partner’s Personal Planning Vehicle at that time (whether or not vested) shall be immediately forfeited without any consideration, and such Limited Partner shall cease to own
or have any rights with respect to such Initial Units; provided, however, that Initial Units held by a Personal Planning Vehicle of a Category 1 Limited Partner created prior to June 18, 2007 are not subject to forfeiture. Immediately
upon the forfeiture of any Initial Units, such Initial Units that have been so forfeited shall be cancelled.
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(c) Upon the forfeiture of any Unvested Units in accordance with this Section 8.02, the
General Partner shall modify the books and records of the Partnership to reflect such forfeiture.
Section 8.03 Limited Partner
Transfers. (a) Except as provided in clauses (b), (c), (d) and (f) of this Section 8.03, no Limited Partner or Assignee thereof may Transfer (including by exchanging in an Exchange Transaction) all or any portion of its Units or
other interest in the Partnership (or beneficial interest therein) without the prior consent of the General Partner, which consent may be given or withheld, or made subject to such conditions (including, without limitation, the receipt of such legal
opinions and other documents that the General Partner may require) as are determined by the General Partner, in each case in the General Partner’s sole discretion. Any such determination in the General Partner’s discretion in respect of
Units shall be final and binding. Such determinations need not be uniform and may be made selectively among Limited Partners, whether or not such Limited Partners are similarly situated, and shall not constitute the breach of any duty hereunder or
otherwise existing at law, in equity or otherwise. Any purported Transfer of Units that is not in accordance with, or subsequently violates, this Agreement shall be, to the fullest extent permitted by law, null and void.
(b) Notwithstanding clause (a) above, except as provided in or pursuant to clauses (b), (c), (d) and (f) below and subject to
Section 8.04, each Limited Partner may exchange in an Exchange Transaction up to 100% of the Initial Vested Units owned by such Limited Partner at any time and from time to time; provided that Unvested Units may not be Transferred at any time.
(c) Notwithstanding clauses (a) or (b) above, with the prior consent of the General Partner, (i) the Category 1 Limited Partners
may make one or more gratuitous Transfers (including by exchanging in an Exchange Transaction) to any Charity at any time and from time to time up to a number of Initial Vested Units owned by such Limited Partners that is equal to the quotient of
$250 million divided by the offering price per common unit in the IPO for the purpose of making gratuitous transfers to any Charity.
(d) Notwithstanding clauses (a) or (b) above, if earlier: (i) upon the death or Disability of an Employed Limited Partner, such
Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; (ii) other than with respect to a Category 1 Limited Partner, following an Employed Limited
Partner’s termination of employment and after the earlier to occur of (A) one year from the date of termination of employment or (B) the expiration of the longest applicable Restricted Period with respect to such Employed Limited
Partner, such Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; (iii) following Mr. Stephen A. Schwarzman’s termination of
employment, any Category 1 Limited Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; and (iv) upon the occurrence of a Change of Control, any Limited
Partner may exchange in an Exchange Transaction at any time and from time to time up to 100% of the Initial Units owned by such Limited Partner; provided that in each case Unvested Units may not by Transferred at any time.
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(e) [Reserved]
(f) Notwithstanding clauses (a), (b), (c) and (d) above, a Personal Planning Vehicle of a Limited Partner may Transfer Class A Units
(i) to the donor thereof or to the spouse of the donor thereof; (ii) if the Personal Planning Vehicle is a grantor retained annuity trust and the trustee(s) of such grantor retained annuity trust is obligated to make one or more
distributions to the donor of the grantor retained annuity trust, the estate of the donor of the grantor retained annuity trust, the spouse of the donor of the grantor retained annuity trust or the estate of the spouse of the donor of the grantor
retained annuity trust, to any such Persons; or (iii) upon the death of such Limited Partner, to the spouse of such Limited Partner or a trust for which a deduction under Section 2056 or 2056A (or any successor provisions) of the Code may
be sought.
Section 8.04 Minimum Retained Ownership Requirement. (a) Other than the Category 1 Limited Partners, the
Category 2 Limited Partners and the Category 6 Limited Partner and unless otherwise permitted by the General Partner in its sole discretion, each Limited Partner that is or was at any time an Employed Limited Partner other than a Personal Planning
Vehicle shall, until the first anniversary of such Employed Limited Partner’s termination of employment, continue to hold (and may not Transfer) at least 25% of all Initial Vested Units received collectively by such Employed Limited Partner and
by any Personal Planning Vehicle of such Employed Limited Partner (the “Minimum Retained Ownership Requirement”); and provided that upon the Retirement of an Employed Limited Partner, such Limited Partner shall be subject to
a Minimum Retained Ownership Requirement of 12.5% instead of 25%. For purposes of this paragraph (a), (i) Units held by a Personal Planning Vehicle of a Limited Partner (other than the portion of the Units received by a Personal Planning Vehicle
created prior to June 18, 2007 identified in the books and records of the Partnership as “Non-Minimum Retained Ownership Requirement Units”) shall be deemed held by such Limited Partner for
purposes of calculating the number of Initial Vested Units received by such Limited Partner and (ii) any Units held by a Personal Planning Vehicle of a Limited Partner shall not be deemed to be held by such Limited Partner for purposes of
calculating whether the relevant percentage of Initial Vested Units held satisfies the Minimum Retained Ownership Requirement set forth in this Section 8.04(a).
(b) Unless otherwise approved by the General Partner in its sole discretion, each Category 1 Limited Partner other than a Personal Planning
Vehicle shall, until Mr. Stephen A. Schwarzman’s termination of employment, continue to hold (and may not Transfer) the lesser of (i) at least 25% of all Initial Vested Units received collectively by the Category 1 Limited
Partners and (ii) a number of Initial Units that is equal to the quotient of $1.5 billion divided by the Last Reported Sale Price per share of Class A Common Stock from time to time. For purposes of this paragraph (b), (i)
Units held by a Personal Planning Vehicle of a Category 1 Limited Partner (other than the portion of the Units received by a Personal Planning Vehicle created prior to June 18, 2007 identified in the books and records of the Partnership as “Non-Minimum Retained Ownership Requirement Units”) shall be deemed held by such Category 1 Limited Partner for purposes of calculating the number of Initial Vested Units received by such Category 1
Limited Partner and (ii) any Units held by a Personal Planning Vehicle of a Category 1 Limited Partner shall not be deemed to be held by such Category 1 Limited Partner for purposes of calculating whether the relevant percentage of Initial
Vested Units held satisfies the Minimum Retained Ownership Requirement set forth in this Section 8.04(b).
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Section 8.05 Mandatory Exchanges. The General Partner may in its sole discretion at
any time and from time to time, without the consent of any Limited Partner, require any Limited Partner other than an Employed Limited Partner to Transfer in an Exchange Transaction all Units held by such Limited Partner. Any such determinations by
the General Partner need not be uniform and may be made selectively among Limited Partners, whether or not such Limited Partners are similarly situated. In addition, the General Partner may, with the consent of Partners whose Vested Percentage
Interests exceed 75% of the Vested Percentage Interests of all Partners in the aggregate, require all Limited Partners to Transfer in an Exchange Transaction all Units held by them.
Section 8.06 Encumbrances. No Limited Partner or Assignee may create an Encumbrance with respect to all or any portion of its
Units (or any beneficial interest therein) other than Encumbrances that run in favor of the Limited Partner unless the General Partner consents in writing thereto, which consent may be given or withheld, or made subject to such conditions as are
determined by the General Partner, in the General Partner’s sole discretion. Consent of the General Partner shall be withheld until the holder of the Encumbrance acknowledges the terms and conditions of this Agreement. Any purported Encumbrance
that is not in accordance with this Agreement shall be, to the fullest extent permitted by law, null and void.
Section 8.07
Further Restrictions. Notwithstanding any contrary provision in this Agreement, in no event may any Transfer of a Unit be made by any Limited Partner or Assignee if:
(a) such Transfer is made to any Person who lacks the legal right, power or capacity to own such Unit;
(b) such Transfer would require the registration of such transferred Unit or of any Class of Unit pursuant to any applicable United States
federal or state securities laws (including, without limitation, the Securities Act or the Exchange Act) or other non-U.S. securities laws (including Canadian provincial or territorial securities laws) or
would constitute a non-exempt distribution pursuant to applicable provincial or state securities laws;
(c) such Transfer would cause (i) all or any portion of the assets of the Partnership to (A) constitute “plan assets”
(under ERISA, the Code or any applicable Similar Law) of any existing or contemplated Limited Partner, or (B) be subject to the provisions of ERISA, Section 4975 of the Code or any applicable Similar Law, or (ii) the General Partner
to become a fiduciary with respect to any existing or contemplated Limited Partner, pursuant to ERISA, any applicable Similar Law, or otherwise;
(d) to the extent requested by the General Partner, the Partnership does not receive such legal and/or tax opinions and written instruments
(including, without limitation, copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as an Assignee) that are in a form satisfactory to the General Partner, as determined in the General Partner’s
sole discretion.
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Section 8.08 Rights of Assignees. Subject to Section 8.07, the transferee of any
permitted Transfer pursuant to this Article VIII will be an assignee only (“Assignee”), and only will receive, to the extent transferred, the distributions and allocations of income, gain, loss, deduction, credit or similar item to
which the Partner which transferred its Units would be entitled, and such Assignee will not be entitled or enabled to exercise any other rights or powers of a Partner, such other rights, and all obligations relating to, or in connection with, such
Interest remaining with the transferring Partner. The transferring Partner will remain a Partner even if it has transferred all of its Units to one or more Assignees until such time as the Assignee(s) is admitted to the Partnership as a Partner
pursuant to Section 8.10.
Section 8.09 Admissions, Withdrawals and Removals. (a) No Person may be admitted to the
Partnership as an additional General Partner or substitute General Partner without the prior written consent or ratification of Partners whose Vested Percentage Interests exceed 50% of the Vested Percentage Interests of all Partners in the
aggregate. A General Partner will not be entitled to Transfer all of its Units or to withdraw from being a General Partner of the Partnership unless another General Partner shall have been admitted hereunder (and not have previously been removed or
withdrawn).
(b) No Limited Partner will be removed or entitled to withdraw from being a Partner of the Partnership except in accordance
with Section 8.11 hereof.
(c) Except as otherwise provided in Article IX or the Act, no admission, substitution, withdrawal or
removal of a Partner will cause the dissolution of the Partnership. To the fullest extent permitted by law, any purported admission, withdrawal or removal that is not in accordance with this Agreement shall be null and void.
Section 8.10 Admission of Assignees as Substitute Limited Partners. An Assignee will become a substitute Limited Partner only if
and when each of the following conditions is satisfied:
(a) the General Partner consents in writing to such admission, which consent may
be given or withheld, or made subject to such conditions as are determined by the General Partner, in each case in the General Partner’s sole discretion;
(b) if required by the General Partner, the General Partner receives written instruments (including, without limitation, copies of any
instruments of Transfer and such Assignee’s consent to be bound by this Agreement as a substitute Limited Partner) that are in a form satisfactory to the General Partner (as determined in its sole discretion);
(c) if required by the General Partner, the General Partner receives an opinion of counsel satisfactory to the General Partner to the effect
that such Transfer is in compliance with this Agreement and all applicable Law; and
(d) if required by the General Partner, the parties to
the Transfer, or any one of them, pays all of the Partnership’s reasonable expenses connected with such Transfer (including, but not limited to, the reasonable legal and accounting fees of the Partnership).
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Section 8.11 Withdrawal and Removal of Limited Partners. If a Limited Partner ceases
to hold any Units, then such Limited Partner shall withdraw from the Partnership and shall cease to be a Limited Partner and to have the power to exercise any rights or powers of a Limited Partner.
ARTICLE IX
DISSOLUTION,
LIQUIDATION AND TERMINATION
Section 9.01 No Dissolution. Except as required by the Act, the Partnership shall not be
dissolved by the admission of additional Partners or withdrawal of Partners in accordance with the terms of this Agreement. The Partnership may be dissolved, liquidated wound up and terminated only pursuant to the provisions of this Article IX, and
the Partners hereby irrevocably waive any and all other rights they may have to cause a dissolution of the Partnership or a sale or partition of any or all of the Partnership assets.
Section 9.02 Events Causing Dissolution. The Partnership shall be dissolved and its affairs shall be wound up upon the occurrence
of any of the following events (each, a “Dissolution Event”):
(a) the entry of a decree of judicial dissolution of the
Partnership under Section 17-802 of the Act upon the finding by a court of competent jurisdiction that the General Partner (i) is permanently incapable of performing its part of this Agreement,
(ii) has been guilty of conduct that is calculated to affect prejudicially the carrying on of the business of the Partnership, (iii) willfully or persistently commits a breach of this Agreement or (iv) conducts itself in a manner
relating to the Partnership or its business such that it is not reasonably practicable for the other Partners to carry on the business of the Partnership with the General Partner;
(b) any event which makes it unlawful for the business of the Partnership to be carried on by the Partners;
(c) the written consent of all Partners;
(d) any other event not inconsistent with any provision hereof causing a dissolution of the Partnership under the Act;
(e) the Incapacity or removal of the General Partner or the occurrence of a Disabling Event with respect to the General Partner;
provided that the Partnership will not be dissolved or required to be wound up in connection with any of the events specified in this Section 9.02(e) if: (i) at the time of the occurrence of such event there is at least one other
general partner of the Partnership who is hereby authorized to, and elects to, carry on the business of the Partnership; or (ii) all remaining Limited Partners consent to or ratify the continuation of the business of the Partnership and the
appointment of another general partner of the Partnership, effective as of the event that caused the General Partner to cease to be a general partner of the Partnership, within 120 days following the occurrence of any such event, which consent shall
be deemed (and if requested each Limited Partner shall provide a written consent or ratification) to have been given for all Limited Partners if the holders of more than 50% of the Vested Units then outstanding agree in writing to so continue the
business of the Partnership.
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Section 9.03 Distribution upon Dissolution. Upon dissolution, the Partnership shall
not be terminated and shall continue until the winding up of the affairs of the Partnership is completed. Upon the winding up of the Partnership, the General Partner, or any other Person designated by the General Partner (the “Liquidation
Agent”), shall take full account of the assets and liabilities of the Partnership and shall, unless the General Partner determines otherwise, liquidate the assets of the Partnership as promptly as is consistent with obtaining the fair value
thereof. The proceeds of any liquidation shall be applied and distributed in the following order:
(a) First, to the satisfaction of debts
and liabilities of the Partnership (including satisfaction of all indebtedness to Partners and/or their Affiliates to the extent otherwise permitted by law) including the expenses of liquidation, and including the establishment of any reserve which
the Liquidation Agent shall deem reasonably necessary for any contingent, conditional or unmatured contractual liabilities or obligations of the Partnership (“Contingencies”). Any such reserve may be paid over by the Liquidation
Agent to any attorney-at-law, or acceptable party, as escrow agent, to be held for disbursement in payment of any Contingencies and, at the expiration of such period as
shall be deemed advisable by the Liquidation Agent for distribution of the balance in the manner hereinafter provided in this Section 9.03; and
(b) The balance, if any, to the Partners, pro rata to each of the Partners in accordance with their Total Percentage Interests.
Section 9.04 Time for Liquidation. A reasonable amount of time shall be allowed for the orderly liquidation of the assets of the
Partnership and the discharge of liabilities to creditors so as to enable the Liquidation Agent to minimize the losses attendant upon such liquidation.
Section 9.05 Termination. The Partnership shall terminate when all of the assets of the Partnership, after payment of or due
provision for all debts, liabilities and obligations of the Partnership, shall have been distributed to the holders of Units in the manner provided for in this Article IX, and the Certificate shall have been cancelled in the manner required by the
Act.
Section 9.06 Claims of the Partners. The Partners shall look solely to the Partnership’s assets for the return of
their Capital Contributions, and if the assets of the Partnership remaining after payment of or due provision for all debts, liabilities and obligations of the Partnership are insufficient to return such Capital Contributions, the Partners shall
have no recourse against the Partnership or any other Partner or any other Person. No Partner with a negative balance in such Partner’s Capital Account shall have any obligation to the Partnership or to the other Partners or to any creditor or
other Person to restore such negative balance during the existence of the Partnership, upon dissolution or termination of the Partnership or otherwise, except to the extent required by the Act.
Section 9.07 Survival of Certain Provisions. Notwithstanding anything to the contrary in this Agreement, the provisions of
Section 10.02 and Section 11.09 shall survive the termination of the Partnership.
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ARTICLE X
LIABILITY AND INDEMNIFICATION
Section 10.01 Liability of Partners. (a) No Limited Partner shall be liable for any debt, obligation or liability of the
Partnership or of any other Partner or have any obligation to restore any deficit balance in its Capital Account solely by reason of being a Partner of the Partnership, except to the extent required by the Act.
(b) This Agreement is not intended to, and does not, create or impose any fiduciary duty on any of the Partners (including without limitation,
the General Partner) hereto or on their respective Affiliates. Further, the Partners hereby waive any and all fiduciary duties that, absent such waiver, may exist at or be implied by Law or in equity, and in doing so, recognize, acknowledge and
agree that their duties and obligations to one another and to the Partnership are only as expressly set forth in this Agreement and those required by the Act.
(c) To the extent that, at law or in equity, any Partner (including without limitation, the General Partner) has duties (including fiduciary
duties) and liabilities relating thereto to the Partnership or to another Partner, the Partners (including without limitation, the General Partner) acting under this Agreement will not be liable to the Partnership or to any such other Partner for
their 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 relating thereto of any Partner (including without limitation, the General
Partner) otherwise existing at law or in equity, are agreed by the Partners to replace to that extent such other duties and liabilities of the Partners relating thereto (including without limitation, the General Partner).
(d) The General Partner may consult with legal counsel, accountants and financial or other advisors and any act or omission suffered or taken
by the General Partner on behalf of the Partnership or in furtherance of the interests of the Partnership in good faith in reliance upon and in accordance with the advice of such counsel, accountants or financial or other advisors will be full
justification for any such act or omission, and the General Partner will be fully protected in so acting or omitting to act so long as such counsel or accountants or financial or other advisors were selected with reasonable care.
(e) Notwithstanding any other provision of this Agreement or otherwise applicable provision of law or equity, whenever in this Agreement the
General Partner is permitted or required to make a decision (i) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, such General Partner shall be entitled to consider only such
interests and factors as it desires, including its own interests, and shall, to the fullest extent permitted by applicable Law, have no duty or obligation to give any consideration to any interest of or factors affecting the Partnership or the
Limited Partners, or (ii) in its “good faith” or under another expressed standard, such General Partner shall act under such express standard and shall not be subject to any other or different standards.
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Section 10.02 Indemnification.
(a) Indemnification. To the fullest extent permitted by law, the Partnership shall indemnify any person (and such person’s heirs,
executors or administrators) who was or is made or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding (brought in the right of the Partnership or otherwise), whether civil,
criminal, administrative or investigative, and whether formal or informal, including appeals, by reason of the fact that such person, or a person for whom such person was the legal representative, is or was the General Partner or a director or
officer of the General Partner or the Partnership or, while a director or officer of the General Partner or the Partnership, is or was serving at the request of the Partnership as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, limited liability company, nonprofit entity or other enterprise, for and against all loss and liability suffered and expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement reasonably incurred by such person or such heirs, executors or administrators in connection with such action, suit or proceeding, including appeals, if such person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the Partnership and, with respect to any alleged conduct resulting in a criminal proceeding against the person, such person had no reasonable cause to believe that such person’s conduct was unlawful.
Notwithstanding the preceding sentence, except as otherwise provided in Section 10.02(c), the Partnership shall be required to indemnify a person described in such sentence in connection with any action, suit or proceeding (or part thereof)
commenced by such person only if the commencement of such action, suit or proceeding (or part thereof) by such person was authorized by the General Partner. Any reference to an officer of the General Partner or the Partnership in this
Section 10.02 shall be deemed to refer exclusively to the Chief Executive Officer, President, Chief Operating Officer, Executive Vice Chairman, Chief Financial Officer, Chief Legal Officer, Secretary or any other officer of the Partnership
appointed pursuant to Section 3.04 hereof or, with respect to the General Partner, appointed pursuant to the equivalent organizational documents of the General Partner. The fact that any person who is or was an employee of the General Partner
or the Partnership, but not an officer thereof as described in the preceding sentence, has been given or has used any title that could be construed to suggest or imply that such person is or may be an officer of the General Partner or the
Partnership shall not result in such person being constituted as, or being deemed to be, such an officer of the General Partner or the Partnership for purposes of this Section 10.02.
(b) Advancement of Expenses. To the fullest extent permitted by law, the Partnership shall promptly pay expenses (including
attorneys’ fees) incurred by any person described in Section 10.02(a) in appearing at, participating in or defending any action, suit or proceeding in advance of the final disposition of such action, suit or proceeding, including appeals,
upon (i) presentation of an undertaking on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified under this Section 10.02 or otherwise and (ii) to the extent
determined by the General Partner in its sole discretion to be necessary or advisable, receipt by the Partnership of security or other assurances satisfactory to the General Partner in its sole discretion that such person will be able to repay such
amount if it ultimately shall be determined that such person is not entitled to be indemnified under this Section 10.02 or otherwise. Notwithstanding the preceding sentence, except as otherwise provided in Section 10.02(c), the Partnership
shall be required to advance expenses of a person described in such sentence in connection with any action, suit or proceeding (or part thereof) commenced by such person only if the commencement of such action, suit or proceeding (or part thereof)
by such person was authorized by the General Partner.
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(c) Unpaid Claims. If a claim for indemnification (following the final disposition of such
action, suit or proceeding) or advancement of expenses under this Section 10.02 is not paid in full within thirty (30) days after a written claim therefor by any person described in Section 10.02(a) has been received by the
Partnership, such person may file proceedings to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Partnership shall have the
burden of proving that such person is not entitled to the requested indemnification or advancement of expenses under applicable Law.
(d)
Insurance. To the fullest extent permitted by law, the Partnership may purchase and maintain insurance on behalf of any person described in Section 10.02(a) against any liability asserted against such person, whether or not the
Partnership would have the power to indemnify such person against such liability under the provisions of this Section 10.02 or otherwise.
(e) Non-Exclusivity of Rights. The provisions of this Section 10.02 shall be applicable to
all actions, claims, suits or proceedings made or commenced after the date of the First Amended and Restated Agreement, whether arising from acts or omissions to act occurring before or after its adoption. The provisions of this Section 10.02
shall be deemed to be a contract between the Partnership and each person entitled to indemnification under this Section 10.02 (or legal representative thereof) who serves in such capacity at any time while this Section 10.02 and the
relevant provisions of applicable Law, if any, are in effect, and any amendment, modification or repeal hereof shall not affect any rights or obligations then existing with respect to any state of facts or any action, suit or proceeding then or
theretofore existing, or any action, suit or proceeding thereafter brought or threatened based in whole or in part on any such state of facts. If any provision of this Section 10.02 shall be found to be invalid or limited in application by
reason of any law or regulation, it shall not affect the validity of the remaining provisions hereof. The rights of indemnification provided in this Section 10.02 shall neither be exclusive of, nor be deemed in limitation of, any rights to
which any person may otherwise be or become entitled or permitted by contract, this Partnership Agreement or as a matter of law, both as to actions in such person’s official capacity and actions in any other capacity, it being the policy of the
Partnership that indemnification of any person whom the Partnership is obligated to indemnify pursuant to Section 10.02(a) shall be made to the fullest extent permitted by law.
For purposes of this Section 10.02, references to “other enterprises” shall include employee benefit plans; references
to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Partnership” shall include any service as a director,
officer, employee or agent of the Partnership which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries.
This Section 10.02 shall not limit the right of the Partnership, to the extent and in the manner permitted by law, to indemnify and to
advance expenses to, and purchase and maintain insurance on behalf of, persons other than persons described in Section 10.02(a).
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being
enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner
materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent
of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
Section 11.02 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail (delivery receipt requested) or by registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.02):
(a) If to the Partnership, to:
Blackstone Holdings AI L.P.
c/o Blackstone Holdings I/II GP L.L.C.
345 Park Avenue
New York, New
York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
(b) If to any Partner, to:
c/o
Blackstone Holdings I/II GP L.L.C.
345 Park Avenue
New York, New York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
(c) If to the General Partner, to:
Blackstone Holdings I/II GP L.L.C.
345 Park Avenue
New York, New
York, 10154
Attention: Chief Legal Officer
Fax: (212) 583-5749
Electronic Mail: john.finley@blackstone.com
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Section 11.03 Cumulative Remedies. The rights and remedies provided by this Agreement
are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by Law.
Section 11.04 Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the
extent permitted by this Agreement, their successors, executors, administrators, heirs, legal representatives and assigns.
Section 11.05 Interpretation. Throughout this Agreement, nouns, pronouns and verbs shall be construed as masculine, feminine,
neuter, singular or plural, whichever shall be applicable. Unless otherwise specified, all references herein to “Articles,” “Sections” and paragraphs shall refer to corresponding provisions of this Agreement.
Section 11.06 Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Copies of executed
counterparts transmitted by telecopy or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 11.06.
Section 11.07 Further Assurances. Each Limited Partner shall perform all other acts and execute and deliver all other documents as
may be necessary or appropriate to carry out the purposes and intent of this Agreement.
Section 11.08 Entire Agreement. This
Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
Section 11.09 Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of
Delaware.
Section 11.10 Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be
settled amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this
Agreement (including the validity, scope and enforceability of this arbitration provision) shall be finally settled by arbitration conducted by a single arbitrator in New York in accordance with the then-existing Rules of Arbitration of the
International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the
appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may cause the Partnership to bring, on behalf of the
General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary
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relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of
paragraph (c) of this Section 11.10 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies
at law would be inadequate, and (iii) irrevocably appoints the General Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon such agent, who shall
promptly advise such Partner of any such service of process, shall be deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY
JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 11.10, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary
judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the fora designated by this
paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable Law, any objection which they now or hereafter may
have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in the preceding paragraph of this Section 11.10 and such parties agree not to plead or claim the same.
(d) Notwithstanding any provision of this Agreement to the contrary, this Section 11.10 shall be construed to the maximum extent
possible to comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be determined by a court of
competent jurisdiction that any provision or wording of this Section 11.10, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or other applicable Law, such
invalidity shall not invalidate all of this Section 11.10. In that case, this Section 11.10 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration
Act or other applicable Law, and, in the event such term or provision cannot be so limited, this Section 11.10 shall be construed to omit such invalid or unenforceable provision.
Section 11.11 Expenses. Except as otherwise specified in this Agreement, the Partnership shall be responsible for all costs and
expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with its operation.
Section 11.12 Amendments and Waivers. (a) This Agreement (including the Annexes hereto) may be amended, supplemented, waived
or modified by the written consent of the General Partner; provided that any amendment that would have a material adverse effect on the
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rights or preferences of any Class of Units in relation to other Classes of Units must be approved by the holders of not less than a majority of the Vested Percentage Interests of the
Class affected; provided further, that the General Partner may, without the written consent of any Limited Partner or any other Person, amend, supplement, waive or modify any provision of this Agreement and execute, swear to, acknowledge,
deliver, file and record whatever documents may be required in connection therewith, to reflect: (i) any amendment, supplement, waiver or modification that the General Partner determines to be necessary or appropriate in connection with the
creation, authorization or issuance of any class or series of equity interest in the Partnership; (ii) the admission, substitution, withdrawal or removal of Partners in accordance with this Agreement; (iii) a change in the name of the
Partnership, the location of the principal place of business of the Partnership, the registered agent of the Partnership or the registered office of the Partnership; (iv) any amendment, supplement, waiver or modification that the General
Partner determines in its sole discretion to be necessary or appropriate to address changes in U.S. federal income tax regulations, legislation or interpretation; (v) a change in the Fiscal Year or taxable year of the Partnership and any other
changes that the General Partner determines to be necessary or appropriate as a result of a change in the Fiscal Year or taxable year of the Partnership including a change in the dates on which distributions are to be made by the Partnership.
(b) No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of
time specified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by Law.
(c) The General Partner may, in its sole discretion,
unilaterally amend this Agreement on or before the effective date of the final regulations to provide for (i) the election of a safe harbor under Proposed Treasury Regulation Section 1.83-3 (1) (or
any similar provision) under which the fair market value of a partnership interest that is transferred is treated as being equal to the liquidation value of that interest, (ii) an agreement by the Partnership and each of its Partners to comply
with all of the requirements set forth in such regulations and Notice 2005-43 (and any other guidance provided by the Internal Revenue Service with respect to such election) with respect to all partnership
interests transferred in connection with the performance of services while the election remains effective, (iii) the allocation of items of income, gains, deductions and losses required by the final regulations similar to Proposed Treasury
Regulation Section 1.704-1(b)(4)(xii)(b) and (c), and (iv) any other related amendments.
(d) Except as may be otherwise required by law in connection with the winding-up, liquidation, or
dissolution of the Partnership, each Partner hereby irrevocably waives any and all rights that it may have to maintain an action for judicial accounting or for partition of any of the Partnership’s property.
Section 11.13 No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their permitted assigns and successors and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement (other than pursuant to Section 10.02 hereof).
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Section 11.14 Headings. The headings and subheadings in this Agreement are included
for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.
Section 11.15 Construction. Each party hereto acknowledges and agrees it has had the opportunity to draft, review and edit the
language of this Agreement and that it is the intent of the parties hereto that no presumption for or against any party arising out of drafting all or any part of this Agreement will be applied in any dispute relating to, in connection with or
involving this Agreement. Accordingly, the parties hereby waive to the fullest extent permitted by law the benefit of any rule of Law or any legal decision that would require that in cases of uncertainty, the language of a contract should be
interpreted most strongly against the party who drafted such language.
Section 11.16 Power of Attorney. Each Limited Partner,
by its execution hereof, hereby irrevocably makes, constitutes and appoints the General Partner as its true and lawful agent and attorney in fact, with full power of substitution and full power and authority in its name, place and stead, to make,
execute, sign, acknowledge, swear to, record and file (a) this Agreement and any amendment to this Agreement that has been adopted as herein provided; (b) the original certificate of limited partnership of the Partnership and all
amendments thereto required or permitted by law or the provisions of this Agreement; (c) all certificates and other instruments (including consents and ratifications which the Limited Partners have agreed to provide upon a matter receiving the
agreed support of Limited Partners) deemed advisable by the General Partner to carry out the provisions of this Agreement (including the provisions of Section 8.05) and Law or to permit the Partnership to become or to continue as a limited
partnership or partnership wherein the Limited Partners have limited liability in each jurisdiction where the Partnership may be doing business; (d) all instruments that the General Partner deems appropriate to reflect a change or modification
of this Agreement or the Partnership in accordance with this Agreement, including, without limitation, the admission of additional Limited Partners or substituted Limited Partners pursuant to the provisions of this Agreement; (e) all
conveyances and other instruments or papers deemed advisable by the General Partner to effect the liquidation and termination of the Partnership; and (f) all fictitious or assumed name certificates required or permitted (in light of the
Partnership’s activities) to be filed on behalf of the Partnership.
Section 11.17 Letter Agreements; Schedules. The
General Partner may, or may cause the Partnership to, without the approval of any Limited Partner or other Person, enter into separate letter agreements with individual Limited Partners with respect to any matter, in each case on terms and
conditions not inconsistent with this Agreement, which have the effect of establishing rights under, or supplementing the terms of, this Agreement. The General Partner may from time to time execute and deliver to the Limited Partners schedules which
set forth information contained in the books and records of the Partnership and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement
for any purpose whatsoever.
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Section 11.18 Partnership Status. The parties intend to treat the Partnership as a
partnership for U.S. federal income tax purposes.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement or have caused this
Agreement to be duly executed by their respective authorized officers, in each case as of the date first above stated.
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GENERAL PARTNER:
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BLACKSTONE HOLDINGS I/II GP L.L.C.
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By:
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The Blackstone Group Inc., its sole member
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By:
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/s/ John G. Finley
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Name: John G. Finley
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Title: Chief Legal Officer
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[Signature Page to Third Amended and Restated Limited Partnership Agreement of Blackstone Holdings AI
L.P.]
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LIMITED PARTNERS REPRESENTING A MAJORITY VESTED PERCENTAGE INTEREST:
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/s/ Stephen A. Schwarzman
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Stephen A. Schwarzman
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/s/ Jonathan D. Gray
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Jonathan D. Gray
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/s/ Hamilton E. James
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Hamilton E. James
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[Signature Page to Third Amended and Restated Limited Partnership Agreement of Blackstone Holdings AI
L.P.]
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ALL OTHER LIMITED PARTNERS:
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All other Limited Partners now and hereafter admitted as Limited Partners of the Partnership, pursuant to powers of attorney now and hereafter executed in favor of, and granted and delivered to the General Partner
without execution hereof pursuant to Section 11.16 of the Second Amended and Restated Agreement.
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By:
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BLACKSTONE HOLDINGS I/II GP L.L.C.
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By:
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The Blackstone Group Inc., its sole member
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By:
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/s/ John G. Finley
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Name: John G. Finley
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Title: Chief Legal Officer
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[Signature Page to Third Amended and Restated Limited Partnership Agreement of Blackstone Holdings AI
L.P.]
Exhibit 10.6
HIGHLY CONFIDENTIAL & TRADE SECRET
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES – NC REAL ASSET OPPORTUNITIES, L.P.
AMENDED AND RESTATED
AGREEMENT OF
LIMITED PARTNERSHIP
Dated as of September 30, 2014
Table of Contents
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Page
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ARTICLE I DEFINITIONS
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1
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Section 1.1. Definitions
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1
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Section 1.2. Terms Generally
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16
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ARTICLE II GENERAL PROVISIONS
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16
|
|
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Section 2.1. General Partner and Limited Partners
|
|
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16
|
|
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Section 2.2. Formation; Name
|
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17
|
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Section 2.3. Term
|
|
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17
|
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Section 2.4. Purpose; Powers
|
|
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17
|
|
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Section 2.5. Place of Business
|
|
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19
|
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Section 2.6. Withdrawal of Initial Limited Partner
|
|
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19
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|
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|
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ARTICLE III MANAGEMENT
|
|
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20
|
|
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Section 3.1. General Partners
|
|
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20
|
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Section 3.2. Limitations on Limited Partners
|
|
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20
|
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Section 3.3. Partner Voting
|
|
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20
|
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Section 3.4. Management
|
|
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20
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Section 3.5. Responsibilities of Partners
|
|
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22
|
|
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Section 3.6. Exculpation and Indemnification
|
|
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22
|
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Section 3.7. Representations of Limited Partners
|
|
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24
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Section 3.8. Tax Representation
|
|
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25
|
|
|
|
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ARTICLE IV CAPITAL OF THE PARTNERSHIP
|
|
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25
|
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Section 4.1. Capital Contributions by Partners
|
|
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25
|
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Section 4.2. Interest
|
|
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31
|
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Section 4.3. Withdrawals of Capital
|
|
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32
|
|
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|
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ARTICLE V PARTICIPATION IN PROFITS AND LOSSES
|
|
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32
|
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Section 5.1. General Accounting Matters
|
|
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32
|
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Section 5.2. GP-Related Capital Accounts
|
|
|
33
|
|
|
Section 5.3. GP-Related Profit Sharing
Percentages
|
|
|
34
|
|
|
Section 5.4. Allocations of GP-Related Net Income
(Loss)
|
|
|
35
|
|
|
Section 5.5. Liability of General Partners
|
|
|
35
|
|
|
Section 5.6. Liability of Limited Partners
|
|
|
35
|
|
|
Section 5.7. Repurchase Rights, etc.
|
|
|
36
|
|
|
Section 5.8. Distributions
|
|
|
36
|
|
|
Section 5.9. Business Expenses
|
|
|
42
|
|
|
Section 5.10. Tax Capital Accounts; Tax Allocations
|
|
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42
|
|
|
|
|
|
ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND DISCHARGE OF PARTNERSHIP
INTERESTS; TERMINATION
|
|
|
42
|
|
|
Section 6.1. Additional Partners
|
|
|
42
|
|
|
Section 6.2. Withdrawal of Partners
|
|
|
43
|
|
|
Section 6.3. GP-Related Partner Interests Not
Transferable
|
|
|
44
|
|
|
Section 6.4. General Partner Withdrawal; Transfer of General Partner’s Interest
|
|
|
45
|
|
|
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interest
|
|
|
45
|
|
|
|
|
|
|
|
|
Section 6.6. Termination of the Partnership
|
|
|
50
|
|
|
Section 6.7. Certain Tax Matters
|
|
|
50
|
|
|
Section 6.8. Special Basis Adjustments
|
|
|
51
|
|
|
|
|
|
ARTICLE VII Capital Commitment Interests; Capital Contributions; Allocations;
Distributions
|
|
|
51
|
|
|
Section 7.1. Capital Commitment Interests, etc.
|
|
|
51
|
|
|
Section 7.2. Capital Commitment Capital Accounts
|
|
|
53
|
|
|
Section 7.3. Allocations
|
|
|
53
|
|
|
Section 7.4. Distributions
|
|
|
53
|
|
|
Section 7.5. Valuations
|
|
|
57
|
|
|
Section 7.6. Disposition Election
|
|
|
57
|
|
|
Section 7.7. Capital Commitment Special Distribution Election
|
|
|
58
|
|
|
|
|
|
ARTICLE VIII Withdrawal; Admission of New Partners
|
|
|
58
|
|
|
Section 8.1. Limited Partner Withdrawal; Repurchase of Capital Commitment Interests
|
|
|
58
|
|
|
Section 8.2. Transfer of Limited Partner’s Capital Commitment Interest
|
|
|
62
|
|
|
Section 8.3. Compliance with Law
|
|
|
63
|
|
|
|
|
|
ARTICLE IX DISSOLUTION
|
|
|
63
|
|
|
Section 9.1. Dissolution
|
|
|
63
|
|
|
Section 9.2. Final Distribution
|
|
|
63
|
|
|
Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests
|
|
|
64
|
|
|
|
|
|
ARTICLE X MISCELLANEOUS
|
|
|
65
|
|
|
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial
|
|
|
65
|
|
|
Section 10.2. Ownership and Use of the Firm Name
|
|
|
66
|
|
|
Section 10.3. Written Consent
|
|
|
66
|
|
|
Section 10.4. Letter Agreements; Schedules
|
|
|
66
|
|
|
Section 10.5. Governing Law
|
|
|
66
|
|
|
Section 10.6. Successors and Assigns; Third Party Beneficiaries
|
|
|
66
|
|
|
Section 10.7. Partner’s Will
|
|
|
67
|
|
|
Section 10.8. Confidentiality
|
|
|
67
|
|
|
Section 10.9. Notices
|
|
|
67
|
|
|
Section 10.10. Counterparts
|
|
|
68
|
|
|
Section 10.11. Power of Attorney
|
|
|
68
|
|
|
Section 10.12. Cumulative Remedies
|
|
|
68
|
|
|
Section 10.13. Legal Fees
|
|
|
68
|
|
|
Section 10.14. Entire Agreement
|
|
|
68
|
|
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES – NC REAL ASSET
OPPORTUNITIES, L.P.
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of September 30, 2014, of Strategic Partners Fund Solutions Associates
– NC Real Asset Opportunities, L.P., a Delaware limited partnership (the “Partnership”), by and between SPFSA VI L.L.C., a Delaware limited liability company (the “General Partner”), and the limited partners
listed in the books and records of the Partnership, as limited partners.
WITNESSETH
WHEREAS, the Limited Partnership Agreement of Strategic Partners Fund Solutions Associates – NC Real Asset Opportunities, L.P., dated as
of July 31, 2014, constitutes the existing partnership agreement of the Partnership (the “Original Agreement”); and
WHEREAS, in order to amend the Partnership’s Original Agreement to reflect certain changes thereto and to reflect the withdrawal of the
Initial Limited Partner, the parties hereto wish to amend and restate the Original Agreement in its entirety as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein made and intending to be legally bound, the parties hereto
hereby agree that the Original Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1.
Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for purposes of this Agreement:
“Advancing Party” has the meaning set forth in Section 7.1(b).
“Affiliate” when used with reference to another person means any person (other than the Partnership), directly
or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person.
“Agreement” means this Amended and Restated Agreement of Limited Partnership, as it may be further amended,
supplemented, restated or otherwise modified from time to time.
“Alternative Vehicle” means any
“Alternative Investment Fund” (as defined in section 4.6(a) of the SP NC Partnership Agreements).
“Applicable Collateral Percentage,” with respect to any Firm Collateral or Special Firm Collateral, has the
meaning set forth in the books and records of the Partnership with respect thereto.
“Bankruptcy” means, with respect to any person, the
occurrence of any of the following events: (i) the filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his assets; (ii) the filing by such person of a voluntary petition in Bankruptcy
or the seeking of relief under Title 11 of the United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his inability to pay his debts as they become due; (iii) the
failure of such person to pay his debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of an answer admitting the material allegations of, or his
consenting to, or defaulting in answering, a Bankruptcy petition filed against him in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States Code, as now constituted or as hereafter amended; or (vi) the entry
of an order, judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a trustee or custodian of his assets and the continuance of such order,
judgment or decree unstayed and in effect for a period of 60 consecutive days.
“BCE Agreement” means the
limited partnership agreement, limited liability company agreement or other governing document of any limited partnership, limited liability company or other entity named or referred to in the definition of any of “BFREP,”
“BFIP,” “BFMEZP,” “BFCOMP” or “Other Blackstone Collateral Entity,” as such limited partnership agreement, limited liability company agreement or other governing document may be amended, supplemented, restated
or otherwise modified to date, and as such limited partnership agreement, limited liability company agreement or other governing document may be further amended, supplemented, restated or otherwise modified from time to time, and any other
Blackstone Collateral Entity limited partnership agreement, limited liability company agreement or other governing document.
“BCE Investment” means any direct or indirect investment by any Blackstone Collateral Entity.
“BCOM” is the collective reference to (i) Blackstone Communications Partners I L.P., a Delaware limited
partnership, and (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above.
“BCP VI” is the collective reference to (i) Blackstone Capital Partners VI L.P., a Delaware limited
partnership, and (ii) any alternative investment vehicle relating thereto and any parallel fund.
“BCTP” means (i) Blackstone Clean Technology Partners L.P., a Delaware limited partnership, and
(ii) any alternative vehicle relating thereto and any parallel fund.
“BEP” means (i) Blackstone
Energy Partners L.P. and Blackstone Energy Partners Q L.P., each a Delaware limited partnership, and (ii) any alternative investment vehicle relating thereto and any parallel fund.
“BFCOMP” means Blackstone Family Communications Partnership I L.P., Blackstone Family Communications
Partnership I-SMD L.P. and any other entity that is an Affiliate thereof and has terms substantially similar to those of the foregoing partnerships and is formed in connection with the participation by one or
more partners thereof directly or indirectly in investments in securities also purchased by BCOM or any other funds with substantially similar investment objectives to BCOM and that are sponsored or managed by an Affiliate of the General Partner
(which includes serving as general partner of such funds).
2
“BFIP” means Blackstone Capital Associates II L.P.,
Blackstone Capital Associates III L.P., Blackstone Family Investment Partnership II L.P., Blackstone Family Investment Partnership III L.P., Blackstone Family Investment Partnership IV-A L.P., Blackstone
Family Investment Partnership IV-A -SMD L.P., Blackstone Family Investment Partnership V L.P., Blackstone Family Investment Partnership
V- SMD L.P., Blackstone Family Investment Partnership VI L.P., Blackstone Family Investment Partnership VI-SMD L.P., Blackstone Family Cleantech Investment Partnership
L.P., Blackstone Family Cleantech Investment Partnership—SMD L.P., Blackstone Family Energy Investment Partnership L.P., Blackstone Family Energy Investment Partnership—SMD L.P. and any other entity that is an Affiliate thereof and has
terms similar to those of the foregoing partnerships and is formed in connection with the participation by one or more of the partners thereof in investments in securities also purchased by BCP VI, BCTP, BEP or any other fund with substantially
similar investment objectives to BCP VI, BCTP or BEP and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).
“BFMEZP” means Blackstone Family Mezzanine Partnership-SMD L.P.,
Blackstone Family Mezzanine Partnership II-SMD L.P., Blackstone Mezzanine Holdings L.P., Blackstone Mezzanine Holdings II L.P., any entity formed to invest side-by-side with any GSO Fund and any other entity that is an Affiliate thereof and that has terms substantially similar to those of the foregoing partnerships or other entities and is formed in connection
with the participation by one or more partners or other equity owners thereof directly or indirectly in investments in securities also purchased by BMEZP I, BMEZP II, any GSO Fund or any other funds with substantially similar investment objectives
to BMEZP I, BMEZP II or any GSO Fund and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).
“BFREP” means Blackstone Real Estate Capital Associates L.P., Blackstone Real Estate Capital Associates II
L.P., Blackstone Real Estate Capital Associates III L.P., Blackstone Family Real Estate Partnership L.P., Blackstone Family Real Estate Partnership II L.P., Blackstone Family Real Estate Partnership III L.P., Blackstone Family Real Estate
Partnership International- A-SMD L.P., Blackstone Family Real Estate Partnership IV-SMD L.P., Blackstone Family Real Estate Partnership International II-SMD L.P., Blackstone Family Real Estate Partnership V-SMD L.P., Blackstone Family Real Estate Partnership VI-SMD L.P., Blackstone
Family Real Estate Partnership VII-SMD L.P., Blackstone Family Real Estate Partnership Europe III-SMD L.P., Partnership Europe
IV-SMD L.P, Blackstone Family Real Estate Partnership Asia-SMD L.P., Blackstone Family Real Estate Special Situations Partnership—SMD L.P., Blackstone Family Real
Estate Special Situations Partnership Europe—SMD L.P., Blackstone Real Estate Debt Strategies II-SMD L.P., Blackstone Real Estate Holdings L.P., Blackstone Real Estate Holdings II L.P., Blackstone Real
Estate Holdings III L.P., Blackstone Real Estate Holdings International—A L.P., Blackstone Real Estate Holdings IV L.P., Blackstone Real Estate Holdings International II L.P., Blackstone Real Estate Holdings V L.P., Blackstone Real Estate
Holdings VI L.P., , Blackstone Real Estate Holdings VII L.P. , Blackstone Real Estate Holdings Europe III L.P., Blackstone Real Estate Special Situations Holdings II L.P., Blackstone Real Estate Special Situations Holdings Europe L.P., and any other
entity that is an Affiliate thereof and that has terms substantially similar to those of the foregoing partnerships and/or is formed in connection with Blackstone’s
side-by-side investment program with respect to investments made by real estate and real estate-related investment funds that are sponsored or managed by an Affiliate of
the General Partner (which includes serving as general partner of such funds).
“Blackstone Collateral
Entity” means any limited partnership, limited liability company or other entity named or referred to in the definition of any of “BFREP,” “BFIP,” “BFMEZP,” “BFCOMP” or “Other Blackstone
Collateral Entity.”
3
“Blackstone Commitment” has the meaning set forth in the SP
NC Partnership Agreements.
“Blackstone Entity” means any partnership, limited liability company or other
entity (excluding any natural persons and any portfolio companies of any Blackstone-sponsored fund) that is an Affiliate of The Blackstone Group L.P. For the avoidance of doubt, any partnership, limited liability company or other entity that
comprise the Strategic Partners Fund Solutions Business shall be considered a Blackstone Entity.
“BMEZP
I” means (i) Blackstone Mezzanine Partners L.P., a Delaware limited partnership, and (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause
(i) above.
“BMEZP II” means (i) Blackstone Mezzanine Partners II L.P., a Delaware limited
partnership, and (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above.
“BSSF Europe” means (i) Blackstone Real Estate Special Situations Europe L.P., Blackstone Real Estate
Special Situations Europe.1 L.P. and Blackstone Real Estate Special Situations Europe.2 L.P., each a limited partnership formed or to be formed under the laws of the United Kingdom pursuant to the Limited Partnerships Act 1907 of the United Kingdom,
(ii) any alternative vehicle, parallel fund or other investment vehicle established pursuant to Article 2 of the partnership agreements for the partnerships referred to in clause (i) above, and (iii) any investment vehicle formed to co-invest with any of the partnerships referred to in clause (i) above using third party capital and that potentially pays Carried Interest Distributions (as such term is used in such partnership agreements).
“BSSF II” means (i) Blackstone Real Estate Special Situations Fund II L.P., a Delaware limited
partnership, Blackstone Real Estate Special Situations Fund II.1 L.P., a Delaware limited partnership, and Blackstone Real Estate Special Situations Fund II.2 L.P., a Delaware limited partnership, and (ii) any alternative vehicles of or
parallel funds formed in connection with, any of the limited partnerships referred to in clause (i) above.
“Capital Commitment Capital Account” means, with respect to each Capital Commitment Investment for each
Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such Capital Commitment Investment and any net income allocated to such Partner pursuant to Section 7.3
with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment Investment to such Partner and any net losses allocated to such Partner with respect to such Capital Commitment
Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the related Capital Commitment Investment shall be adjusted as if the asset distributed had been sold in a taxable
transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners participating in such Capital Commitment Investment pursuant to Section 7.3.
“Capital Commitment Class A Interest” has the meaning set forth in Section 7.4(f).
“Capital Commitment Class B Interest” has the meaning set forth in
Section 7.4(f).
“Capital Commitment Defaulting Party” has the meaning specified in
Section 7.4(g).
4
“Capital Commitment Deficiency Contribution” has the
meaning specified in Section 7.4(g).
“Capital Commitment Disposable Investment” has the meaning set forth
in Section 7.4(f).
“Capital Commitment Distributions” means, with respect to each Capital Commitment
Investment, all amounts of distributions, received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Capital Commitment SP NC Interest, if any, less any costs, fees and expenses of the Partnership with
respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of such Capital Commitment
Investment as it may determine in good faith is appropriate.
“Capital Commitment Giveback Amount” has the
meaning set forth in Section 7.4(g).
“Capital Commitment Interest” means the interest of a Partner
in a specific Capital Commitment Investment as provided herein.
“Capital Commitment Investment” means any
Capital Commitment SP NC Investment, but shall exclude any GP-Related Investment.
“Capital Commitment Liquidating Share” with respect to each Capital Commitment Investment means, in the case
of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with Section 9.3) as of the close of business on the effective date of dissolution.
“Capital Commitment Net Income (Loss)” with respect to each Capital Commitment Investment means all amounts of
income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition, in whole or in part, of such Capital Commitment Investment, less any costs, fees and
expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated thereto.
“Capital Commitment Partner Interest” means a Partner’s partnership interest in the Partnership with
respect to the Capital Commitment SP NC Interest.
“Capital Commitment Profit Sharing Percentage” with
respect to each Capital Commitment Investment means the percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the Partnership.
“Capital Commitment Recontribution Amount” has the meaning set forth in Section 7.4(g).
“Capital Commitment-Related Capital Contributions” has the meaning set forth in Section 7.1(a).
“Capital Commitment-Related Commitment”, with respect to any Partner, means such Partner’s commitment to
the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such commitment that may be set forth in such Partner’s Commitment
Agreement or SMD Agreement, if any.
5
“Capital Commitment SP NC Commitment” means the Capital
Commitment (as defined in the SP NC Partnership Agreements), if any, of the Partnership to SP NC that relates solely to the Capital Commitment SP NC Interest, if any.
“Capital Commitment SP NC Interest” means the interest, if any, of the Partnership as a capital partner of SP
NC.
“Capital Commitment SP NC Investment” means the Partnership’s interest in a specific investment
of SP NC held by the Partnership through the Capital Commitment SP NC Interest.
“Capital Commitment Special
Distribution” has the meaning set forth in Section 7.7(a).
“Capital Commitment Value” has
the meaning set forth in Section 7.5.
“Carried Interest” means “Carried Interest,” as
defined in the SP NC Partnership Agreements.
“Carried Interest Give Back Percentage” means, for any
Partner or Withdrawn Partner, subject to Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner from the Partnership or any Other Fund GPs or their
Affiliates in respect of Carried Interest by (B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership or any Other Fund GP or any of their Affiliates (in any capacity) in respect
of Carried Interest. For purposes of determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership or any Other Fund GPs on behalf of a Partner or Withdrawn Partner (but
not the Trust Income thereon) shall be deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as members, partners or other equity owners of the Partnership or any of the Other Fund GPs or their Affiliates.
“Carried Interest Sharing Percentage” means, with respect to each
GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
“Cause” means the occurrence or existence of any of the following with respect to any Partner, as
determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any non-competition agreement, (x) any material
breach of this Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such Partner’s deliberate failure to perform his or her duties to the Partnership or any of its Affiliates, or
(z) such Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Partnership or any of its Affiliates in a material way as determined by the General Partner; provided, that in the case of any
of the foregoing clauses (w), (x), (y) and (z), the General Partner has given such Partner written notice (a “Notice of Breach”) within fifteen days after the General Partner becomes aware of such action and such Partner fails to
cure such breach, failure to perform or conduct or behavior within fifteen days after receipt of such Notice of Breach from the General Partner (or such longer period, not to exceed an additional fifteen days, as shall be reasonably required for
such cure, provided that such Partner is diligently pursuing such cure); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Partnership or any of its Affiliates; (iii) conviction (on the
basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony or crime
6
(including any misdemeanor charge involving moral turpitude, false
statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of competent jurisdiction, by a regulatory body or by a self-regulatory body having authority with respect to securities
laws, rules or regulations of the applicable securities industry, that such Partner individually has violated any applicable securities laws or any rules or regulations thereunder, or any rules of any such self-regulatory body (including, without
limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such Partner’s ability to function as a Partner of the Partnership, taking into account the services required of such Partner
and the nature of the business of the Partnership and its Affiliates or (B) the business of the Partnership and its Affiliates; or (iv) becoming subject to an event described in Rule 506(d)(1)(i)-(viii) of Regulation D under the Securities
Act of 1933 (the “Securities Act”).
“CC Carried Interest” means, with respect to any Partner,
the aggregate amount of distributions or payments received by such Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest”, including the amount of any bonuses received by a Partner as
an employee of an Affiliate of the Partnership that relate to the amount of “carried interest” received by an Affiliate of the Partnership. “CC Carried Interest” includes any amount initially received by an Affiliate of
the Partnership from any fund (including SP NC, any similar funds formed after the date hereof, and any other private equity merchant banking, secondary, real estate or debt funds, whether or not in existence as of the date hereof) to which such
Affiliate serves as general partner (or other similar capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions thereto (or the capital contributions to make the investment of such
fund giving rise to such “carried interest”).
“Clawback Adjustment Amount” has the meaning set
forth in Section 5.8(e).
“Clawback Amount” means the “Overdistribution Amount,” as defined
in the SP NC Partnership Agreements, and any other clawback amount payable pursuant to any SP NC Agreement, as applicable.
“Clawback Provisions” means section 11.3 of the SP NC Partnership Agreements and any other similar provisions
in any other SP NC Agreement existing heretofore or hereafter entered into.
“Code” means the Internal
Revenue Code of 1986, as amended from time to time, or any successor statute. Any reference herein to a particular provision of the Code means, where appropriate, the corresponding provision in any successor statute.
“Commitment Agreement” means the agreement between the Partnership or an Affiliate thereof and a Partner,
pursuant to which such Partner undertakes certain obligations, including the obligation to make capital contributions pursuant to Sections 4.1 and/or 7.1. Each Commitment Agreement is hereby incorporated by reference as between the Partnership and
the relevant Partner.
“Contingent” means subject to repurchase rights and/or other requirements.
“Covered Person” has the meaning set forth in Section 3.6(a).
7
The term “control” when used with reference to any person
means the power to direct the management and policies of such person, directly or indirectly, by or through stock or other equity ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding
(written or oral) with one or more other persons by or through stock or other equity ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing.
“Controlled Entity” when used with reference to another person means any person controlled by such other
person.
“Deceased Partner” means any Partner or Withdrawn Partner who has died or who suffers from
Incompetence. For purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the case may be, that have received such Deceased
Partner’s interest in the Partnership.
“Default Interest Rate” means the lower of (i) the sum
of (a) the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate and (b) 5%, or (ii) the highest rate of interest permitted under applicable law.
“Disabling Event” means (a) the withdrawal of the General Partner, other than in accordance with
Section 6.4(a) or (b) if the General Partner (i) makes an assignment for the benefit of its creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent or has entered against it an
order for relief in any bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or
regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in a proceeding described in clause (iv), or (v) seeks consents to or acquiesces in the appointment
of a trustee, receiver or liquidator of the General Partner or of all or substantially all of its properties.
“Estate Planning Vehicle” has the meaning set forth in Section 6.3.
“Excess Holdback” has the meaning set forth in Section 4.1(d).
“Excess Holdback Percentage” has the meaning set forth in Section 4.1(d).
“Excess Tax-Related Amount” has the meaning set forth in
Section 5.8(e).
“Existing Partner” means any Partner who is neither a Retaining Withdrawn Partner
nor a Deceased Partner.
“Final Event” means the death, Total Disability, Incompetence, Bankruptcy,
liquidation, dissolution or Withdrawal from the Partnership of any person who is a Partner.
“Firm
Advances” has the meaning set forth in Section 7.1.
“Firm Collateral” means a
Partner’s or Withdrawn Partner’s interest in one or more partnerships or limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been
pledged or made available to the Trustee(s) to satisfy all or any portion of the Excess Holdback of such Partner or Withdrawn Partner as more fully described in the books and records of the Partnership; provided, that for all purposes hereof
(and any other agreement (e.g., the Trust Agreement) that incorporates the meaning of the term “Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”, excluding
references to “Firm Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).
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“Firm Collateral Realization” has the meaning set forth in
Section 4.1(d).
“Fiscal Year” means a calendar year, or any other period chosen by the General
Partner.
“Fund GP” means the Partnership (only with respect to the
GP-Related SP NC Interest) and the Other Fund GPs.
“GAAP” has the
meaning specified in Section 5.1(b).
“General Partner” means SPFSA VI L.L.C. and any person admitted
to the Partnership as an additional General Partner in accordance with the provisions of this Agreement, until such time as such person ceases to be a general partner of the Partnership as provided herein or in the Partnership Act.
“Giveback” means obligations to return distributions to satisfy certain fund-related obligations and
liabilities pursuant to section 9.2 of SP NC Partnership Agreements.
“Giveback Amount” means the amounts
required to satisfy Giveback.
“Giveback Provisions” means section 9.2 of the SP NC Partnership Agreements
and any other similar provisions in any other SP NC Agreement existing heretofore or hereafter entered into.
“GP-Related SP NC Interest” means the interest held by the Partnership in SP NC in the Partnership’s capacity as general partner of SP NC, excluding any Capital Commitment SP NC Interest.
“GP-Related SP NC Investment” means the Partnership’s interest in
a Portfolio Investment (for purposes of this definition, as defined in the SP NC Partnership Agreements) in the Partnership’s capacity as the general partner of SP NC, but does not include any Capital Commitment Investment.
“GP-Related Capital Account” has the meaning set forth in
Section 5.2.
“GP-Related Capital Contribution” has the
meaning set forth in Section 4.1(a).
“GP-Related
Class A Interest” has the meaning set forth in Section 5.8(a).
“GP-Related Class B Interest” has the meaning set forth in Section 5.8(a).
“GP-Related Commitment”, with respect to any Partner, means such
Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such
commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“GP-Related Defaulting Party” has the meaning set forth in Section 5.8(d).
“GP-Related Deficiency Contribution” has the meaning set forth in
Section 5.8(d).
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“GP-Related Disposable
Investment” has the meaning set forth in Section 5.8(a).
“GP-Related Giveback Amount” has the meaning set forth in
Section 5.8(d).
“GP-Related Investment” means any investment
(direct or indirect) of the Partnership in respect of the GP-Related SP NC Interest (including, without limitation, any GP-Related SP NC Investment, but
excluding any Capital Commitment Investment).
“GP-Related Net Income
(Loss)” has the meaning set forth in Section 5.1(b).
“GP-Related Partner Interest” of a Partner means all interests of such
Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect to the GP-Related
SP NC Interest and with respect to all GP-Related Investments.
“GP-Related Profit Sharing Percentage” means the “Carried Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each
Partner; provided that any references in this Agreement to GP-Related Profit Sharing Percentages made (i) in connection with voting or voting rights or
(ii) GP-Related Capital Contributions with respect to GP-Related Investments (including Section 5.3(b)) means the
“Non-Carried Interest Sharing Percentage” of each Partner; provided further that, the term “GP-Related Profit Sharing Percentage” shall not
include any Capital Commitment Profit Sharing Percentage.
“GP-Related
Recontribution Amount” has the meaning set forth in Section 5.8(d).
“GP-Related Required Amounts” has the meaning set forth in
Section 4.1(a).
“GP-Related Unallocated Percentage” has the
meaning set forth in Section 5.3(b).
“GP-Related Unrealized Net
Income (Loss)” attributable to any GP-Related SP NC Investment as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership
with respect to such GP-Related SP NC Investment if SP NC’s entire portfolio of investments were sold on such date for cash in an amount equal to their aggregate value on such date (determined in
accordance with Section 5.1(e)) and all distributions payable by SP NC to the Partnership pursuant to any SP NC Agreement with respect to such GP-Related SP NC Investment were made on such date. “GP-Related Unrealized Net Income (Loss)” attributable to any other GP-Related Investment (other than any Capital Commitment Investment) as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related Investment if such GP-Related
Investment were sold on such date for cash in an amount equal to its value on such date (determined in accordance with Section 5.1(e)).
“GSO Fund” means (i) any of GSO Capital Opportunities Fund LP, GSO Capital Opportunities Overseas Fund
L.P., GSO Capital Opportunities Overseas Master Fund L.P., GSO Liquidity Partners LP, GSO Liquidity Overseas Partners LP, Blackstone / GSO Capital Solutions Fund LP, Blackstone / GSO Capital Solutions Overseas Fund L.P., Blackstone / GSO Capital
Solutions Overseas Master Fund L.P., GSO Targeted Opportunity Partners LP, GSO Targeted Opportunity Overseas Partners L.P., GSO Targeted Opportunity Overseas Intermediate Partners L.P., GSO Targeted Opportunity Master Partners L.P., GSO SJ Partners
LP, GSO Capital Opportunities Fund II LP, GSO Capital Opportunities Cayman Overseas Fund II LP or GSO NMERB LP, or (ii) any alternative vehicle or parallel fund relating to any of the partnerships referred to in clause (i) above.
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“Holdback” has the meaning set forth in
Section 4.1(d).
“Holdback Percentage” has the meaning set forth in Section 4.1(d).
“Holdback Vote” has the meaning set forth in Section 4.1(d).
“Holdings” means Blackstone Holdings II L.P., a Delaware limited partnership.
“Incompetence” means, with respect to any Partner, the determination by the General Partner in its sole
discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his or her person or his or her property.
“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d).
“Initial Limited Partner” means Peter Song.
“Interest” means a Partner’s interest in the Partnership, including any interest that is held by a
Retaining Withdrawn Partner, and including any Partner’s GP-Related Partner Interest and Capital Commitment Partner Interest.
“Investment” means any investment (direct or indirect) of the Partnership designated by the General Partner
from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments, and (b) Capital Commitment Investments.
“Investor Limited Partner” means any Limited Partner so designated at the time of its admission as a partner
of the Partnership.
“Investor Note” means a promissory note of a Partner evidencing indebtedness incurred
by such Partner to purchase a Capital Commitment Interest, the terms of which were or are approved by the General Partner and which is secured by such Capital Commitment Interest, all other Capital Commitment Interests of such Partner and all other
interests of such Partner in Blackstone Collateral Entities; provided, that such promissory note may also evidence indebtedness relating to other interests of such Partner in Blackstone Collateral Entities, and such indebtedness shall be
prepayable with Capital Commitment Net Income (whether or not such indebtedness relates to Capital Commitment Investments) as set forth in this Agreement, the Investor Note, the other BCE Agreements and any documentation relating to Other Sources;
provided further, that references to “Investor Notes” herein refer to multiple loans made pursuant to such note, whether made with respect to Capital Commitment Investments or other BCE Investments, and references to an
“Investor Note” refer to one such loan as the context requires. In no way shall any indebtedness incurred to acquire Capital Commitment Interests or other interests in Blackstone Collateral Entities be considered part of the Investor Notes
for purposes hereof if the Lender or Guarantor is not the lender or guarantor with respect thereto.
“Issuer” means the issuer of any Security comprising part of an Investment.
“L/C” has the meaning set forth in Section 4.1(d).
“L/C Partner” has the meaning set forth in Section 4.1(d).
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“Lender or Guarantor” means Blackstone Holdings I L.P., in
its capacity as lender or guarantor under the Investor Notes, or any other Affiliate of the Partnership that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests or other interests in Blackstone Collateral Entities.
“Limited Partner” means any person who is shown on the books and records of the Partnership as a Limited
Partner of the Partnership, including any Special Limited Partner and any Nonvoting Limited Partner.
“Liquidator” has the meaning set forth in Section 9.1(b).
“Loss Amount” has the meaning set forth in Section 5.8(e).
“Loss Investment” has the meaning set forth in Section 5.8(e).
“Majority in Interest of the Partners” on any date (a “vote date”) means one or more persons
who are Partners (including the General Partner and the Limited Partners but excluding Nonvoting Limited Partners) on the vote date and who, as of the last day of the most recent accounting period ending on or prior to the vote date (or as of such
later date on or prior to the vote date selected by the General Partner as of which the Partners’ capital account balances can be determined), have aggregate capital account balances representing at least a majority in amount of the total
capital account balances of all the persons who are Partners (including the General Partner and the Limited Partners but excluding Nonvoting Limited Partners) on the vote date.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
“Net Carried Interest Distribution” has the meaning set forth in Section 5.8(e).
“Net Carried Interest Distribution Recontribution Amount” has the meaning set forth in Section 5.8(e).
“Net GP-Related Recontribution Amount” has the meaning set forth
in Section 5.8(d).
“Non-Carried Interest” means, with
respect to each GP-Related Investment, all amounts of distributions, other than Carried Interest (and other than Capital Commitment Distributions) received by the Partnership with respect to such GP-Related Investment, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with
respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments as it may determine in good faith is appropriate.
“Non-Carried Interest Sharing Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Non-Carried Interest from such GP-Related Investment set forth in the
books and records of the Partnership.
“Non-Contingent” means
generally not subject to repurchase rights or other requirements.
“Nonvoting Limited Partner” has the
meaning set forth in Section 6.1(a).
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“Other Blackstone Collateral Entity” means any Blackstone
Entity (other than any limited partnership, limited liability company or other entity named or referred to in the definition of any of “BFIP,” “BFREP,” “BFMEZP” or “BFCOMP”) in which any limited partner
interest, limited liability company interest, unit or other interest is pledged to secure any Investor Note.
“Other Fund GPs” means the General Partner (only with respect to the General Partner’s GP-Related SP NC Partner Interest in the Partnership) and any other entity (other than the Partnership) through which any Partner, Withdrawn Partner or any other person directly receives any amounts of Carried
Interest, and any successor thereto; provided, that this includes any other entity which has in its organizational documents a provision which indicates that it is a “Fund GP” or an “Other Fund GP”; provided
further, that notwithstanding any of the foregoing, neither Holdings nor any estate planning vehicle established for the benefit of family members of any Partner or of any member or partner of any Other Fund GP shall be considered an “Other
Fund GP” for purposes hereof.
“Other Sources” means (i) distributions or payments of CC Carried
Interest (which shall include amounts of CC Carried Interest which are not distributed or paid to a Partner but are instead contributed to a trust (or similar arrangement) to satisfy any “holdback” obligation with respect thereto), and
(ii) distributions from Blackstone Collateral Entities (other than the Partnership) to such Partner.
“Partner” means any person who is a partner of the Partnership, whether a General Partner or a Limited Partner
in whatsoever Partner Category.
“Partner Category” means the Existing Partners, Retaining Withdrawn
Partners or Deceased Partners, each referred to as a group for purposes hereof.
“Partnership” means
Strategic Partners Fund Solutions Associates – NC Real Asset Opportunities, L.P., a Delaware limited partnership.
“Partnership Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101, et seq., as it may be amended from time to time, and any successor to such statute.
“Pledgable Blackstone Interests” has the meaning set forth in Section 4.1(d).
“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank,
N.A. as its prime rate.
“Qualifying Fund” means any fund designated by the General Partner as a
“Qualifying Fund.”
“Repurchase Period” has the meaning set forth in Section 5.8.
“Required Rating” has the meaning set forth in Section 4.1(d).
“Retained Portion” has the meaning set forth in Section 7.6.
“Retaining Withdrawn Partner” means a Withdrawn Partner who has retained a
GP- Related Partner Interest, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Nonvoting Limited Partner for all purposes hereof.
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“Securities” means any debt or equity securities of an
Issuer and its subsidiaries and other Controlled Entities constituting part of an Investment, including without limitation common and preferred stock, interests in limited partnerships and interests in limited liability companies (including
warrants, rights, put and call options and other options relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or
interests commonly regarded as securities, interests in real property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as money-market investments, bank deposits
and interests in personal property of all kinds, whether tangible or intangible.
“Settlement Date” has
the meaning set forth in Section 6.5(a).
“SMD Agreements” means the agreements between the
Partnership and/or one or more of its Affiliates and certain of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby incorporated by
reference as between the Partnership and the relevant Partner.
“SP NC” means (i) Strategic Partners
NC Real Asset Opportunities, L.P., a Delaware limited partnership, (ii) Strategic Partners NC Real Asset Opportunities (Overage), L.P., (iii) any alternative vehicle, parallel fund or other investment vehicle established pursuant to the
partnership agreements for the partnerships referred to in clause (i) or (ii) above, and (iv) any investment vehicle formed to co-invest with any of the partnerships referred to in clause (i) or
(ii) above using third party capital and that potentially pays Carried Interest (as such term is used in such partnership agreements).
“SP NC Agreements” means (i) the SP NC Partnership Agreements and (ii) any other SP NC partnership
agreements, as each may be amended, supplemented, restated or otherwise modified from time to time.
“SP NC
Partnership Agreements” means (i) the Amended and Restated Agreement of Limited Partnership of Strategic Partners NC Real Asset Opportunities, L.P., dated as of September 30, 2014, as may be amended, supplemented, restated or
otherwise modified from time to time, (ii) the Amended and Restated Agreement of Limited Partnership of Strategic Partners NC Real Asset Opportunities (Overage), L.P., dated as of April 6, 2015, as may be amended, supplemented, restated or
otherwise modified from time to time, or (iii) both (i) and (ii) above, as the context may require.
“Special Firm Collateral” means interests in a Qualifying Fund or other assets that have been pledged to the
Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the books and records of the Partnership.
“Special Firm Collateral Realization” has the meaning set forth in Section 4.1(d).
“Special Limited Partner” means any of the persons shown in the books and records of the Partnership as a
Special Limited Partner and any person admitted to the Partnership as an additional Special Limited Partner in accordance with the provisions of this Agreement.
“S&P” means Standard & Poor’s Ratings Group, and any successor thereto.
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“Strategic Partners Fund Solutions Business” shall mean
Blackstone’s business line responsible for managing Strategic Partners Fund, L.P., Strategic Partners Fund II, L.P., Strategic Partners Fund III, L.P., Strategic Partners Fund IV, L.P., Strategic Partners Fund V, L.P., Strategic Partners Fund
VI, L.P. and their respective parallel vehicles, as well as any predecessor and successor funds of any of the foregoing.
“Subject Investment” has the meaning set forth in Section 5.8(e).
“Subject Partner” has the meaning set forth in Section 4.1(d).
“Successor in Interest” means any (i) shareholder of; (ii) trustee, custodian, receiver or other
person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or receiver, or former officer, director or partner,
or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or assign of, any Partner, whether by operation of law or
otherwise.
“Tax Matters Partner” has the meaning set forth in Section 6.7(b).
“TM” has the meaning set forth in Section 10.2
“Total Disability” means the inability of a Limited Partner substantially to perform the services required of
such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether arising out of
sickness, accident or otherwise.
“Transfer” has the meaning set forth in Section 8.2.
“Trust Account” has the meaning set forth in the Trust Agreement.
“Trust Agreement” means the Trust Agreement dated as of the date set forth therein, as amended, supplemented,
restated or otherwise modified from time to time, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time to time.
“Trust Amount” has the meaning set forth in the Trust Agreement.
“Trust Income” has the meaning set forth in the Trust Agreement.
“Trustee(s)” has the meaning set forth in the Trust Agreement.
“Unadjusted Carried Interest Distributions” has the meaning set forth in Section 5.8(e).
“Unallocated Capital Commitment Interests” has the meaning set forth in Section 8.1(f).
“Withdraw” or “Withdrawal” with respect to a Partner means a Partner ceasing to be a partner
of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary), unless the context shall limit the type of withdrawal to a
specific reason, and “Withdrawn” with respect to a Partner means, as aforesaid, a Partner who has ceased to be a partner of the Partnership.
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“Withdrawal Date” means the date of the Withdrawal from the
Partnership of a Withdrawn Partner.
“Withdrawn Partner” means a Limited Partner whose GP-Related Partner Interest or Capital Commitment Partner Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include, unless
the context requires otherwise, the estate or legal representatives of any such Partner.
“W-8BEN” has the meaning set forth in Section 3.8.
“W-8IMY” has the meaning set forth in Section 3.8.
“W-9” has the meaning set forth in Section 3.8
Section 1.2. Terms Generally.
The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term
“person” includes individuals, partnerships (including limited liability partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions
thereof) and other associations and entities. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
ARTICLE II
GENERAL PROVISIONS
Section 2.1. General Partner and Limited Partners. The Partners may be General Partners or Limited Partners. The General
Partner as of the date hereof is SPFSA VI L.L.C.. The Limited Partners shall be as shown on the books and records of the Partnership. The books and records of the Partnership contain the GP-Related Profit
Sharing Percentage and GP-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to the GP-Related Investments of the
Partnership as of the date hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each Partner (including, without limitation, the General Partner) with
respect to the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to time to reflect additional
GP-Related Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by the Partnership of Capital
Commitment Investments, the GP-Related Profit Sharing Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the Capital Commitment Profit Sharing
Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the admission of additional Partners, the Withdrawal of Partners, and the transfer or assignment of interests in the Partnership pursuant
to the terms of this Agreement. At the time of admission of each additional Partner, the General Partner shall determine in its sole discretion the GP-Related Investments and Capital Commitment Investments in
which such Partner shall participate and such Partner’s GP-Related Commitment, Capital Commitment-Related Commitment, GP-Related Profit Sharing Percentage with
respect to each such GP-Related Investment and Capital Commitment Profit Sharing Percentage with respect to each such Capital Commitment Investment. Each Partner may have a
GP-Related Partner Interest and/or a Capital Commitment Partner Interest.
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Section 2.2. Formation; Name; Foreign Jurisdictions.The Partnership is hereby
continued as a limited partnership pursuant to the Partnership Act and shall conduct its activities on and after the date hereof under the name of Strategic Partners Fund Solutions Associates – NC Real Asset Opportunities, L.P. The certificate
of limited partnership of the Partnership may be amended and/or restated from time to time by the General Partner The General Partner is further authorized to execute and deliver and file any other certificates (and any amendments and/or
restatements thereof) necessary for the Partnership to qualify to do business in a jurisdiction in which the Partnership may wish to conduct business.
Section 2.3. Term. The term of the Partnership shall continue until December 31, 2061, unless earlier dissolved and terminated
in accordance with this Agreement and the Act.
Section 2.4. Purpose; Powers. (a) The purposes of the Partnership shall
be, directly or indirectly through subsidiaries or Affiliates:
(i) to serve as the general partner of SP NC (including any Alternative
Vehicle or other partnership included in the definition of “SP NC”) and perform the functions of a general partner of SP NC (including any Alternative Vehicle or other partnership included in the definition of “SP NC”) specified
in the SP NC Agreements,
(ii) to serve as, and hold the Capital Commitment SP NC Interest as, a capital partner (and, if applicable, a
limited partner and/or a general partner) of SP NC (including any Alternative Vehicle or other partnership included in the definition of “SP NC”) and perform the functions of a capital partner (and, if applicable, a limited partner and/or
a general partner) of SP NC (including any Alternative Vehicle or other partnership included in the definition of “SP NC”) specified in the SP NC Agreements,
(iii) to make the Blackstone Commitment or a portion thereof, either directly or indirectly through another entity,
(iv) to serve as a general partner or limited partner of other partnerships and perform the functions of a general partner or limited partner
specified in the respective partnership agreements, as amended, supplemented, restated or otherwise modified from time to time, of any such partnership,
(v) to serve as a member of limited liability companies and perform the functions of a member specified in the respective limited liability
company agreements, as amended, supplemented, restated or otherwise modified from time to time, of any such limited liability company,
(vi) to invest in Capital Commitment Investments and/or GP-Related Investments and acquire and invest
in Securities or other property (directly or indirectly through SP NC (including any Alternative Vehicle or other partnership included in the definition of “SP NC”), including, without limitation, in connection with any action referred to
in any of clauses (i) through (v) above,
(vii) to carry on such other businesses, perform such other services and make such other
investments as are deemed desirable by the General Partner and as are permitted under the Partnership Act and SP NC Agreements, and the respective partnership agreement of any partnership referred to in clause (iv) above and the respective
limited liability company agreement of any limited liability company referred to in clause (v) above, in the case of each of the foregoing, as amended, supplemented, restated or otherwise modified from time to time,
(viii) any other lawful purpose, and
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(ix) to do all things necessary, desirable, convenient or incidental thereto.
(b) In furtherance of its purposes, the Partnership shall have all powers necessary, suitable or convenient for the accomplishment of its
purposes, alone or with others, as principal or agent, including the following:
(i) to be and become a general or limited
partner of partnerships, a member of limited liability companies, a holder of common and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with the making of Investments or the acquisition,
holding or disposition of Securities or other property or as otherwise deemed appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection therewith;
(ii) to acquire and invest in general or limited partner interests, in limited liability company interests, in common and
preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or direct or indirect interests therein, whether such Investments and
Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company interests, stock, interests, obligations, Investments or Securities or
other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or short, options on futures contracts;
(iii) to buy, sell and otherwise acquire investments, whether such investments are readily marketable or not;
(iv) to invest and reinvest the cash assets of the Partnership in money-market or other short-term investments;
(v) to hold, receive, mortgage, pledge, lease, transfer, exchange or otherwise dispose of, grant options with respect to, and
otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or owned by the Partnership;
(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by mortgage, pledge,
conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and to buy, sell,
pledge or otherwise dispose of any such instrument or evidence of indebtedness;
(vii) to lend any of its property or
funds, either with or without security, at any legal rate of interest or without interest;
(viii) to have and maintain one
or more offices within or without the State of Delaware, and in connection therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection with the
maintenance of such office or offices;
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(ix) to open, maintain and close accounts, including margin accounts, with
brokers;
(x) to open, maintain and close bank accounts and draw checks and other orders for the payment of moneys;
(xi) to engage accountants, auditors, custodians, investment advisers, attorneys and any and all other agents and assistants,
both professional and nonprofessional, and to compensate any of them as may be necessary or advisable;
(xii) to form or
cause to be formed and to own the stock of one or more corporations, whether foreign or domestic, to form or cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic, and to form or cause to be formed and
be a member or manager or both of one or more limited liability companies;
(xiii) to enter into, make and perform all
contracts, agreements and other undertakings as may be necessary, convenient or advisable or incident to carrying out its purposes;
(xiv) to sue and be sued, to prosecute, settle or compromise all claims against third parties, to compromise, settle or accept
judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection therewith;
(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to the Partners cash or
investments or other property of the Partnership, or any combination thereof; and
(xvi) to take such other actions
necessary, desirable, convenient or incidental thereto and to engage in such other businesses as may be permitted under Delaware and other applicable law.
Section 2.5. Place of Business. The Partnership shall maintain a registered office at The Corporation Trust Company, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801. The Partnership shall maintain an office and principal place of business at such place or places as the General Partner specifies from time to time and as set forth in the books and records of
the Partnership. The name and address of the Partnership’s registered agent is The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The General Partner may from time to time change the registered
agent or office by an amendment to the certificate of limited partnership of the Partnership.
Section 2.6. Withdrawal of Initial
Limited Partner. Upon the admission of one or more Limited Partners to the Partnership, the Initial Limited Partner shall Withdraw as the Initial Limited Partner of the Partnership and have no further right, interest or obligation of any kind
whatsoever as a Partner in the Partnership.
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ARTICLE III
MANAGEMENT
Section 3.1.
General Partners. The General Partner shall be the general partner of the Partnership. The General Partner may not be removed without its consent.
Section 3.2. Limitations on Limited Partners. Except as may be expressly required or permitted by the Partnership Act,
Limited Partners as such shall have no right to, and shall not, take part in the management, conduct or control of the Partnership’s business or act for or bind the Partnership, and shall have only the rights and powers granted to Limited
Partners herein.
Section 3.3. Partner Voting.
(a) To the extent a Partner is entitled to vote with respect to any matter relating to the Partnership, such Partner shall not be obligated to
abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such Partner (or any Affiliate thereof) in such matter.
(b) Meetings of the Partners may be called only by the General Partner.
Section 3.4. Management. (a) The management, control and operation of the Partnership and the formulation and execution of
business and investment policy shall be vested in the General Partner, and the General Partner shall have full control over the business and affairs of the Partnership. The General Partner shall, in the General Partner’s discretion, exercise
all powers necessary and convenient for the purposes of the Partnership, including those enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the
General Partner pursuant to this Agreement shall be made in the General Partner’s discretion, subject only to the express terms and conditions of this Agreement.
(b) All outside business or investment activities of the Partners (including outside directorships or trusteeships) shall be subject to such
rules and regulations as are established by the General Partner from time to time.
(c) Notwithstanding any provision in this Agreement to
the contrary, the Partnership is hereby authorized, without the need for any further act, vote or consent of any person (directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in
its capacity as a general partner, capital partner and/or limited partner of SP NC, or in the Partnership’s capacity as a general or limited partner, member or other equity owner of any Partnership Affiliate (as hereinafter defined), (i) to
execute and deliver, and to perform the Partnership’s obligations under, the SP NC Agreements, including, without limitation, serving as a general partner of SP NC, (ii) to execute and deliver, and to perform the Partnership’s
obligations under, the governing agreement, as amended, supplemented, restated or otherwise modified (each a “Partnership Affiliate Governing Agreement”), of any other partnership, limited liability company or other entity
(each a “Partnership Affiliate”) of which the Partnership is to become a general or limited partner, member or other equity owner, including, without limitation, serving as a general or limited partner, member or other equity
owner of each Partnership Affiliate, and (iii) to take any action, in the applicable capacity, contemplated by or arising out of this Agreement, the SP NC Agreements or any Partnership Affiliate Governing Agreement (and any amendment,
supplement, restatement and/or other modification of any of the foregoing).
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(d) Each of Stephen A. Schwarzman, Hamilton E. James, John G. Finley, John A. Magliano,
Kathleen Skero, Matthew Skurbe, Christopher J. James, Peter Song, Stephen H. Can, Verdun Perry, Joshua S. Blaine, Michael Petryczenko and any other person designated by the General Partner, each acting individually, is hereby authorized and
empowered, as an authorized representative of the Partnership or as an authorized person of the General Partner (within the meaning of the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101
et seq., as amended, or otherwise) (the General Partner hereby authorizing and ratifying any of the following actions):
(i) (i) to execute and deliver and/or file (including any such action, directly or indirectly through one or more other
entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP NC, or in the Partnership’s capacity as a general or limited partner, member or
other equity owner of any Partnership Affiliate, any of the following:
(A) any agreement, certificate, instrument or other
document of the Partnership, SP NC or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications thereof), including, without limitation, the following: (I) the SP NC Agreements and each Partnership
Affiliate Governing Agreement, (II) Subscription Agreements on behalf of SP NC and/or the Partnership, (III) side letters issued in connection with investments in SP NC on behalf of SP NC and/or the Partnership, and (IV) such other
agreements, certificates, instruments and other documents as may be necessary or desirable in furtherance of the purposes of the Partnership, SP NC or any Partnership Affiliate (and any amendments, supplements, restatements and/or other
modifications of any of the foregoing referred to in (I) through (IV) hereof);
(B) the certificates of formation,
certificates of limited partnership and/or other organizational documents of the Partnership, SP NC or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications thereof); and
(C) any other certificates, notices, applications or other documents (and any amendments, supplements, restatements and/or
other modifications thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Partnership, SP NC or any Partnership Affiliate to qualify to do business
in a jurisdiction in which the Partnership, SP NC or such Partnership Affiliate desires to do business;
(ii) to prepare or
cause to be prepared, and to sign, execute and deliver and/or file (including any such action, directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a general
partner, capital partner and/or limited partner of SP NC or in the Partnership’s capacity as a general or limited partner, member or other equity owner of any Partnership Affiliate): (A) any certificates, forms, notices, applications or other
documents to be filed with any government or governmental or regulatory body on behalf of the Partnership, SP NC or any Partnership Affiliate, (B) any certificates, forms, notices, applications or other documents that may be
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necessary or advisable in connection with any bank account of the Partnership, SP NC or any
Partnership Affiliate or any banking facilities or services that may be utilized by the Partnership, SP NC or any Partnership Affiliate, and all checks, notes, drafts and other documents of the Partnership, SP NC or any Partnership Affiliate that
may be required in connection with any such bank account, banking facilities or services, (C) resolutions with respect to any of the foregoing matters (which resolutions, when executed by any person authorized as provided in this
Section 3.4(d), each acting individually, shall be deemed to have been adopted by the General Partner, the Partnership, SP NC or any Partnership Affiliate, as applicable, for all purposes).
The authority granted to any person (other than Stephen A. Schwarzman) in this Section 3.4(d) may be revoked at any time by the General Partner by an
instrument in writing signed by the General Partner.
Section 3.5. Responsibilities of Partners.Unless otherwise
determined by the General Partner in a particular case, each Limited Partner shall devote substantially all his time and attention to the businesses of the Partnership and its Affiliates.
(b) All outside business or investment activities of the Partners (including outside directorships or trusteeships), shall be subject to such
rules and regulations as are established by the General Partner from time to time.
(c) The General Partner may from time to time establish
such other rules and regulations applicable to Partners or other employees as the General Partner deems appropriate, including rules governing the authority of Partners or other employees to bind the Partnership to financial commitments or other
obligations.
Section 3.6. Exculpation and Indemnification.
(a) Liability to Partners. Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent
permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually, a
“Covered Person” and collectively, the “Covered Persons”) shall be liable to the Partnership or any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related document or any
transaction or investment contemplated hereby or thereby) taken or omitted by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable judicial
determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority
granted to such Covered Person by this Agreement, and, with respect to any criminal act or proceeding, had reasonable cause to believe that such Covered Person’s conduct was unlawful. Each Covered Person shall be entitled to rely in good faith
on the advice of legal counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by any Covered Person in reliance on such advice shall in any event subject such person to any liability to any Partner or
the Partnership. To the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to another Partner, to the fullest extent permitted by law, such Partner acting under
this Agreement shall not be liable to the Partnership or to any such other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they expand or restrict the duties and
liabilities of a Partner otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by law, to modify to that extent such other duties and liabilities of such Partner.
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(b) Indemnification. (i) To the fullest extent permitted by law, the Partnership
shall indemnify and hold harmless (but only to the extent of the Partnership’s assets (including, without limitation, the remaining capital commitments of the Partners) each Covered Person from and against any and all claims, damages, losses,
costs, expenses and liabilities (including, without limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable expenses of investigating or defending against
any claim or alleged claim), joint and several, of any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, for purposes of this Section 3.6, “Losses”), arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative, in which the Covered Person may be involved, or threatened to be involved, as a party or otherwise, by reason of such Covered Person’s management of the affairs of
the Partnership or which relate to or arise out of or in connection with the Partnership, its property, its business or affairs (other than claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, arising out
of any act or omission of such Covered Person constituting Cause); provided, that a Covered Person shall not be entitled to indemnification under this Section with respect to any claim, issue or matter if there is a final and non-appealable judicial determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the
best interest of the Partnership and within the authority granted to such Covered Person by this Agreement, and, with respect to any criminal act or proceeding, had reasonable cause to believe that such Covered Person’s conduct was unlawful;
provided further, that if such Covered Person is a Partner or a Withdrawn Partner, such Covered Person shall bear its share of such Losses in accordance with such Covered Person’s GP-Related Profit
Sharing Percentage in the Partnership as of the time of the actions or omissions that gave rise to such Losses. To the fullest extent permitted by law, expenses (including legal fees) incurred by a Covered Person (including, without limitation, the
General Partner) in defending any claim, demand, action, suit or proceeding may, with the approval of the General Partner, from time to time, be advanced by the Partnership prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Partnership of a written undertaking by or on behalf of the Covered Person to repay such amount to the extent that it shall be subsequently determined that the Covered Person is not entitled to be indemnified as
authorized in this Section, and the Partnership and its Affiliates shall have a continuing right of offset against such Covered Person’s interests/investments in the Partnership and such Affiliates and shall have the right to withhold amounts
otherwise distributable to such Covered Person to satisfy such repayment obligation. If a Partner institutes litigation against a Covered Person which gives rise to an indemnity obligation hereunder, such Partner shall be responsible, up to the
amount of such Partner’s Interests and remaining capital commitment, for such Partner’s pro rata share of the Partnership’s expenses related to such indemnity obligation, as determined by the General Partner. The Partnership
may purchase insurance, to the extent available at reasonable cost, to cover losses, claims, damages or liabilities covered by the foregoing indemnification provisions. Partners will not be personally obligated with respect to indemnification
pursuant to this Section. The General Partner shall have the authority to enter into separate agreements with any Covered Person in order to give effect to the obligations to indemnify pursuant to this Section 3.6.
(ii) (A) Notwithstanding anything to the contrary herein, for greater certainty, it is understood and/or agreed that the
Partnership’s obligations hereunder are not intended to render the Partnership as a primary indemnitor for purposes of the indemnification, advancement of expenses and related provisions under applicable law governing SP NC and/or a particular
portfolio entity through which an Investment is indirectly held. It is further understood and/or agreed that a Covered Person shall first seek to be so indemnified and have such expenses advanced in the following order of priority: first out of
proceeds available in respect of applicable insurance policies maintained by the applicable portfolio entity and/or SP NC, second by the applicable portfolio entity through which such investment is indirectly held, and third by SP NC (only to the
extent the foregoing sources are exhausted).
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(B) The Partnership’s obligation, if any, to indemnify or advance expenses to any
Covered Person shall be reduced by any amount that such Covered Person may collect as indemnification or advancement from SP NC and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained thereby), and
to the extent the Partnership (or any Affiliate thereof) pays or causes to be paid any amounts that should have been paid by SP NC and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained thereby),
it is agreed among the Partners that the Partnership shall have a subrogation claim against SP NC and/or such portfolio entity in respect of such advancement or payments. The General Partner and the Partnership shall be specifically empowered to
structure any such advancement or payment as a loan or other arrangement (except for a loan to an executive officer of The Blackstone Group L.P. or any of its Affiliates, which shall not be permitted) as the General Partner may determine necessary
or advisable to give effect to or otherwise implement the foregoing.
Section 3.7. Representations of Limited Partners.
(a) Each Limited Partner by execution of this Agreement (or by otherwise becoming bound by the terms and conditions hereof as provided herein
or in the Partnership Act) represents and warrants to every other Partner and to the Partnership, except as may be waived by the General Partner, that such Limited Partner is acquiring each of such Limited Partner’s Interests for such Limited
Partner’s own account for investment and not with a view to resell or distribute the same or any part hereof, and that no other person has any interest in any such Interest or in the rights of such Limited Partner hereunder; provided,
that a Partner may choose to make transfers for estate and charitable planning purposes (in accordance with the terms hereof). Each Limited Partner represents and warrants that such Limited Partner understands that the Interests have not been
registered under the Securities Act of 1933 and therefore such Interests may not be resold without registration under such Act or exemption from such registration, and that accordingly such Limited Partner must bear the economic risk of an
investment in the Partnership for an indefinite period of time. Each Limited Partner represents that such Limited Partner has such knowledge and experience in financial and business matters that such Limited Partner is capable of evaluating the
merits and risks of an investment in the Partnership, and that such Limited Partner is able to bear the economic risk of such investment. Each Limited Partner represents that such Limited Partner’s overall commitment to the Partnership and
other investments which are not readily marketable is not disproportionate to the Limited Partner’s net worth and the Limited Partner has no need for liquidity in the Limited Partner’s investment in Interests. Each Limited Partner
represents that to the full satisfaction of the Limited Partner, the Limited Partner has been furnished any materials that such Limited Partner has requested relating to the Partnership, any Investment and the offering of Interests and has been
afforded the opportunity to ask questions of representatives of the Partnership concerning the terms and conditions of the offering of Interests and any matters pertaining to each Investment and to obtain any other additional information relating
thereto. Each Limited Partner represents that the Limited Partner has consulted to the extent deemed appropriate by the Limited Partner with the Limited Partner’s own advisers as to the financial, tax, legal and related matters concerning an
investment in Interests and on that basis believes that an investment in the Interests is suitable and appropriate for the Limited Partner.
(b) Each Partner agrees that the representations and warranties contained in paragraph (a) above shall be true and correct as of any date
that such Partner (1) makes a capital contribution to the Partnership (whether as a result of Firm Advances made to such Partner or otherwise) with respect to any Investment, and such Partner hereby agrees that such capital contribution shall
serve as confirmation thereof and/or (2) repays any portion of the principal amount of a Firm Advance, and such Partner hereby agrees that such repayment shall serve as confirmation thereof.
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Section 3.8. Tax Representation. Each Limited Partner certifies that (A) if
the Limited Partner is a United States person (as defined in the Code) (x) (i) the Limited Partner’s name, social security number (or, if applicable, employer identification number) and address provided to the Partnership and its
Affiliates pursuant to an IRS Form W-9, Payer’s Request for Taxpayer Identification Number Certification (“W-9”) or otherwise are correct and
(ii) the Limited Partner will complete and return a W-9, and (y) (i) the Limited Partner is a United States person (as defined in the Code) and (ii) the Limited Partner will notify the
Partnership within 60 days of a change to foreign (non-United States) status or (B) if the Limited Partner is not a United States person (as defined in the Code) (x) (i) the information on the
completed IRS Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (“W-8BEN”) or other applicable form,
including but not limited to IRS Form W-8IMY, Certificate of Foreign Intermediary, Foreign Partnership, or Certain U.S. Branches for United States Tax Withholding
(“W-8IMY”), or otherwise is correct and (ii) the Limited Partner will complete and return the applicable IRS form, including but not limited to a
W-8BEN or W-8IMY, and (y) (i) the Limited Partner is not a United States person (as defined in the Code) and (ii) the Limited Partner will notify the Partnership
within 60 days of any change of such status. The Limited Partner agrees to properly execute and provide to the Partnership in a timely manner any tax documentation that may be reasonably required by the Partnership or the General Partner.
ARTICLE IV
CAPITAL OF THE
PARTNERSHIP
Section 4.1. Capital Contributions by Partners. (a) Each Partner shall be required to make capital
contributions to the Partnership (“GP-Related Capital Contributions”) at such times and in such amounts (the “GP-Related Required
Amounts”) as are required to satisfy the Partnership’s obligation to make capital contributions to SP NC in respect of the GP-Related SP NC Interest with respect to any GP-Related SP NC Investment and as are otherwise determined by the General Partner from time to time or as may be set forth in such Limited Partner’s Commitment Agreement or SMD Agreement, if any;
provided, that additional GP-Related Capital Contributions in excess of the GP-Related Required Amounts may be made pro rata among the Partners based upon each
Partner’s Carried Interest Sharing Percentage. GP-Related Capital Contributions in excess of the GP-Related Required Amounts which are to be used for ongoing
business operations (as distinct from financing, legal or other specific liabilities of the Partnership (including those specifically set forth in Sections 4.1(d) and 5.8(d)) shall be determined by the General Partner. Limited Partners shall not be
required to make additional GP-Related Capital Contributions to the Partnership in excess of the GP-Related Required Amounts, except (i) as a condition of an
increase in such Limited Partner’s GP-Related Profit Sharing Percentage or (ii) as specifically set forth in this Agreement; provided, that the General Partner and any Limited Partner may
agree from time to time that such Limited Partner shall make an additional GP-Related Capital Contribution to the Partnership; provided further, that each Investor Limited Partner shall maintain its GP-Related Capital Accounts at an aggregate level equal to the product of (i) its GP-Related Profit Sharing Percentage from time to time and (ii) the total capital
of the Partnership related to the GP-Related SP NC Interest.
(b) The General Partner may elect on
a case by case basis to (i) cause the Partnership to loan any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group
L.P. or any Affiliate thereof) the amount of any GP-Related Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the
Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group L.P. or any Affiliate thereof) to make a required GP-Related Capital Contribution to
the Partnership in installments, in each case on terms determined by the General Partner.
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(c) Each GP-Related Capital Contribution by a
Partner shall be credited to the appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2, subject to Section 5.10.
(d) The Partners and the Withdrawn Partners have entered into the Trust Agreement, pursuant to which certain amounts of distributions relating
to Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account constituting a “Holdback”).
(i) The General Partner shall determine, as set forth below, the percentage of each distribution of Carried Interest that shall
be withheld for any General Partner (including, without limitation, the General Partner) and each Partner Category (such withheld percentage constituting a General Partner’s and such Partner Category’s “Holdback
Percentage”). The applicable Holdback Percentages initially shall be 0% for any General Partner, 15% for Existing Partners (other than any General Partner), 21% for Retaining Withdrawn Partners (other than any General Partner) and 24% for
Deceased Partners (the “Initial Holdback Percentages”). Any provision of this Agreement to the contrary notwithstanding, the Holdback Percentage for any General Partner (including, without limitation, the General Partner) shall not
be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).
(ii) The Holdback Percentage
may not be reduced for any individual Partner as compared to the other Partners in his Partner Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner Categories on a
proportionate basis. For example, if the Holdback Percentage for Existing Partners is decreased to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any reduction
in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such reduction.
(iii) The Holdback Percentage may not be increased for any individual Partner as compared to the other Partners in his Partner
Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’ Holdback Percentage beyond 21% unless the General Partner concurrently increases the Existing Partners’
Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the General Partner increases the Holdback Percentage for both Existing Partners and Retaining Withdrawn Partners to
24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies equally to all Partner Categories. Any increase in the Holdback Percentage for any Partner shall apply only to
distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner from proportionately increasing the Holdback Percentage of any Partner Category (following a reduction of the
Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For example, if the General Partner reduces the Holdback Percentages for Existing Partners, Retaining Withdrawn
Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the Holdback Percentages to the Initial Holdback Percentages.
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(iv) (A) Notwithstanding anything contained herein to the contrary, the
Partnership may increase or decrease the Holdback Percentage for any Partner in any Partner Category (in such capacity, the “Subject Partner”) pursuant to a majority vote of the Limited Partners and the General Partner (a
“Holdback Vote”); provided, that, notwithstanding anything to the contrary contained herein, the Holdback Percentage applicable to any General Partner shall not be increased or decreased without its prior written consent;
provided further, that a Subject Partner’s Holdback Percentage shall not be (I) increased prior to such time as such Subject Partner (x) is notified by the Partnership of the decision to increase such Subject Partner’s Holdback
Percentage and (y) has, if requested by such Subject Partner, been given 30 days to gather and provide information to the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) or (II) decreased
unless such decrease occurs subsequent to an increase in a Subject Partner’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv); provided further, that such decrease shall not exceed an amount such that such Subject
Partner’s Holdback Percentage is less than the prevailing Holdback Percentage for such Subject Partner’s Partner Category; provided further, that a Partner shall not vote to increase a Subject Partner’s Holdback Percentage
unless such voting Partner determines, in such Partner’s good faith judgment, that the facts and circumstances indicate that it is reasonably likely that such Subject Partner, or any of such Subject Partner’s successors or assigns
(including such Subject Partner’s estate or heirs) who at the time of such vote holds the GP-Related Partner Interest or otherwise has the right to receive distributions relating thereto, will not be
capable of satisfying any GP-Related Recontribution Amounts that may become due.
(B) A Holdback Vote shall take place at a Partnership meeting. Each of the Limited Partners and the General Partner shall be
entitled to cast one vote with respect to the Holdback Vote regardless of such Partner’s interest in the Partnership. Such vote may be cast by any such Partner in person or by proxy.
(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback Percentage, such Subject
Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided, that if the Partnership and the Subject Partner cannot agree upon a mutually
satisfactory arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates; provided further,
that if such candidates fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the arbitrator. Each Subject Partner that
submits the decision of the Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected out-of-pocket
expenses relating thereto and each such party shall, to the satisfaction of the arbitrator and prior to any determination being made by the arbitrator, pay the total of such estimated expenses (i.e., both the Subject Partner’s and the
Partnership’s expenses) into an escrow account to be controlled by Simpson Thacher & Bartlett LLP, as escrow agent (or such other comparable law firm as the Partnership and the Subject Partner shall agree). The arbitrator shall direct
the escrow agent to pay out of such escrow account all expenses associated with such arbitration (including costs leading thereto) and to return to the “victorious” party the entire amount of funds such party paid into such escrow account.
If the amount contributed to the escrow account by the losing party is insufficient to cover the expenses of such arbitration, such “losing” party shall then provide any additional funds necessary to cover such costs to such
“victorious” party. For purposes hereof, the “victorious” party shall be the Partnership, if the Holdback Percentage ultimately determined by the arbitrator is closer to the percentage determined in the second Holdback Vote than
it is to the prevailing Holdback Percentage for the Subject Partner’s Partner Category; otherwise, the Subject Partner shall be the “victorious” party. The party that is not the “victorious” party shall be the
“losing” party.
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(D) In the event of a decrease in a Subject Partner’s Holdback
Percentage (1) pursuant to a Holdback Vote under this clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and distribute to such Subject Partner any Trust
Amounts (and the Trust Income thereon (except as expressly provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance with such Subject Partner’s reduced
Holdback Percentage) as though such reduced Holdback Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).
(v) (A) If a Partner’s Holdback Percentage exceeds 15% (such percentage in excess of 15% constituting the
“Excess Holdback Percentage”), such Partner may satisfy the portion of his Holdback obligation in respect of his Excess Holdback Percentage (such portion constituting such Partner’s “Excess Holdback”), and such
Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he was a Partner), to the extent his Excess Holdback obligation has previously been satisfied in cash, may obtain the release of the Trust Amounts (but
not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback obligation, by pledging or otherwise making available
to the Partnership, on a first priority basis (except as provided below), all or any portion of his Firm Collateral in satisfaction of his Excess Holdback obligation. Any Partner seeking to satisfy all or any portion of the Excess Holdback utilizing
Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of
the Partnership to realize on (if required), such Firm Collateral; provided, that in the case of entities listed in the books and records of the Partnership, in which Partners/members are permitted to pledge their interests therein to finance
all or a portion of their capital contributions thereto (“Pledgable Blackstone Interests”), to the extent a first priority security interest is unavailable because of an existing lien on such Firm Collateral, the Partner or
Withdrawn Partner seeking to utilize such Firm Collateral shall grant the Partnership a second priority security interest therein in the manner provided above; provided further, that (x) in the case of Pledgable Blackstone Interests, to
the extent that neither a first priority nor a second priority security interest is available, or (y) if the General Partner otherwise determines in its good faith judgment that a security interest in Firm Collateral (and the corresponding
documents and actions) are not necessary or appropriate, the Partner or Withdrawn Partner shall (in the case of either clause (x) or (y) above) irrevocably instruct in writing the relevant partnership, limited liability company or other entity
listed in the books and records of the Partnership to remit any and all net proceeds resulting from a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully provided in clause (B) below. The Partnership shall, at the
request of any Partner or Withdrawn Partner, assist such Partner or Withdrawn Partner in taking such action as is necessary to enable such Partner or Withdrawn Partner to use Firm Collateral as provided hereunder.
(B) If upon a sale or other realization of all or any portion of any Firm Collateral (a “Firm Collateral
Realization”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn
Partner from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust Account to fully satisfy such Excess Holdback
requirement (allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount necessary to satisfy such Excess Holdback
requirement shall be distributed to such Partner or Withdrawn Partner.
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(C) Upon any valuation or revaluation of Firm Collateral that results in a
decreased valuation of such Firm Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including upon a Firm Collateral Realization, if net proceeds therefrom and
the remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the foregoing to such Partner or Withdrawn Partner and such Partner or
Withdrawn Partner shall, within 30 days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his Excess Holdback requirement. If any such Partner or Withdrawn Partner
defaults upon his obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable to a default under this clause (C); provided
further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such
Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and
“GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(vi) Any Limited Partner or Withdrawn Partner may (A) obtain the release of any Trust Amounts (but not the Trust Income
thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such Partner or Withdrawn Partner or (B) require the Partnership
to distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit (an “L/C”) for the benefit of the Trustee(s) in such amounts. Any
Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall deliver to the Trustee(s) an unconditional and irrevocable L/C from a commercial bank whose (x) short-term
deposits are rated at least A-1 by S&P and P-1 by Moody’s (if the L/C is for a term of 1 year or less), or (y) long-term deposits are rated at least A+ by
S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more) (each a “Required Rating”). If the relevant rating of the commercial bank issuing such L/C drops below the relevant Required Rating, the L/C Partner shall
supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, in lieu of the insufficient L/C. In addition, if the L/C has a term expiring on a
date earlier than the latest possible termination date of SP NC, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to provide a new L/C from a commercial bank whose relevant rating is at least equal to the relevant
Required Rating, at least 30 days prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to drawing on any L/C. The Trustee(s) may (as directed by the Partnership in the case of clause
(I) below) draw down on an L/C only if (I) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the Partnership’s obligations under the Clawback Provisions or (II) an L/C Partner has not provided a
new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash and/or Firm Collateral (to the extent permitted hereunder)), at least 30 days prior to the stated expiration of
an existing L/C in accordance with this clause (vi). The Trustee(s), as directed by the Partnership, shall return to any L/C Partner his L/C upon (1) the termination of the Trust Account and satisfaction of the Partnership’s obligations,
if any, in respect of the Clawback Provisions, (2) an L/C Partner satisfying his entire Holdback obligation in cash and Firm Collateral (to the extent
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permitted hereunder), or (3) the release, by the Trustee(s), as directed by the
Partnership, of all amounts in the Trust Account to the Partners or Withdrawn Partners. If an L/C Partner satisfies a portion of his Holdback obligation in cash and/or Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as
directed by the Partnership, release a portion of the amounts in the Trust Account to the Partners or Withdrawn Partners in the Partner Category of such L/C Partner, the L/C of an L/C Partner may be reduced by an amount corresponding to such portion
satisfied in cash and/or Firm Collateral (to the extent permitted hereunder) or such portion released by the Trustee(s), as directed by the Partnership; provided, that in no way shall the general release of any Trust Income cause an L/C Partner to
be permitted to reduce the amount of an L/C by any amount.
(vii) (A) Any
in-kind distributions by the Partnership relating to Carried Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose
of any in-kind distributions held in the Trust Account at any time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.
(B) In lieu of the foregoing, any Existing Partner may pledge with respect to any
in-kind distribution the Special Firm Collateral referred to in the applicable category in the books and records of the Partnership; provided, that the initial contribution of such Special Firm
Collateral shall initially equal 130% of the required Holdback Amount for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback Amount. Paragraphs 4.1(d)(viii)(C) and (D) shall apply to such Special Firm
Collateral. To the extent such Special Firm Collateral exceeds the applicable minimum percentage of the required Holdback Amount specified in the first sentence of this clause (vii)(B), the related Partner may obtain a release of such excess amount
from the Trust Account.
(viii) (A) Any Limited Partner or Withdrawn Partner may satisfy all or any portion of his
Holdback (excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by the use of an L/C as provided herein, obtain a release of
Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn Partner’s Holdback (excluding any Excess Holdback) by
pledging to the Trustee(s) on a first priority basis all of his Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or exceed the amount of the Holdback distributed to the Partner or Withdrawn Partner (as more
fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the
General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) )to realize on (if required), such Special Firm Collateral.
(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or any portion of any Special Firm
Collateral (a “Special Firm Collateral Realization”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in
connection with an Excess Holdback) is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided herein (i.e., cash contributed to the Trust Account or
an L/C in the Trust Account)), then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Special Firm Collateral Realization (which shall not
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include the amount of Firm Collateral that consists of a Qualifying Fund or other asset and
is being used in connection with an Excess Holdback) shall be paid into the Trust (and allocated to such Partner or Withdrawn Partner) to fully satisfy such Holdback and shall be deemed thereafter to be Trust Amounts for purposes hereunder. Any net
proceeds from such Special Firm Collateral Realization in excess of the amount necessary to satisfy such Holdback (excluding any Excess Holdback) shall be distributed to such Partner or Withdrawn Partner. To the extent a Qualifying Fund distributes
Securities to a Partner or Withdrawn Partner in connection with a Special Firm Collateral Realization, such Partner or Withdrawn Partner shall be required to promptly fund such Partner’s or Withdrawn Partner’s deficiency with respect to
his Holdback in cash or an L/C.
(C) Upon any valuation or revaluation of the Special Firm Collateral and/or any adjustment
in the Applicable Collateral Percentage applicable to a Qualifying Fund (as provided in the books and records of the Partnership), if such Partner’s or Withdrawn Partner’s Special Firm Collateral valued at less than such Partner’s
Holdback (excluding any Excess Holdback) as provided in the books and records of the Partnership, taking into account other permitted means of satisfying the Holdback hereunder, the Partnership shall provide notice of the foregoing to such Partner
or Withdrawn Partner and, within 10 business days of receiving such notice, such Partner or Withdrawn Partner shall contribute cash or additional Special Firm Collateral to the Trust Account in an amount necessary to make up such deficiency. If any
such Partner or Withdrawn Partner defaults upon his obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable to such default;
provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such
Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and
“GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(D) Upon a Partner becoming a Withdrawn Partner, at any time thereafter the General Partner may revoke the ability of such
Withdrawn Partner to use Special Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding anything else in this Section 4.1(d)(viii). In that case the provisions of clause (C) above shall apply to the Withdrawn
Partner’s obligation to satisfy the Holdback (except that 30 days’ notice of such revocation shall be given), given that the Special Firm Collateral is no longer available to satisfy any portion of the Holdback (excluding any Excess
Holdback).
(E) Nothing in this Section 4.1(d)(viii) shall prevent any Partner or Withdrawn Partner from using any
amount of such Partner’s interest in a Qualifying Fund as Firm Collateral; provided that at all times Section 4.1(d)(v) and this Section 4.1(d)(viii) are each satisfied.
Section 4.2. Interest. Interest on the balances of the Partners’ capital related to the Partners’ GP-Related Partner Interests (excluding capital invested in GP-Related Investments and, if deemed appropriate by the General Partner, capital invested in any other investment
of the Partnership) shall be credited to the Partners’ GP-Related Capital Accounts at the end of each accounting period pursuant to Section 5.2, or at any other time as determined by the General
Partner, at rates determined by the General Partner from time to time, and shall be charged as an expense of the Partnership.
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Section 4.3. Withdrawals of Capital. No Partner may withdraw capital related to
such Partner’s GP-Related Partner Interest from the Partnership except (i) for distributions of cash or other property pursuant to Section 5.8, (ii) as otherwise expressly provided in this
Agreement, or (iii) as determined by the General Partner.
ARTICLE V
PARTICIPATION IN PROFITS AND LOSSES
Section 5.1. General Accounting Matters.
(a) GP-Related Net Income (Loss) shall be determined by the General Partner at the end of each
accounting period and shall be allocated as described in Section 5.4.
(b) “GP-Related
Net Income (Loss)” from any activity of the Partnership related to the GP-Related SP NC Interest for any accounting period means (i) the gross income realized by the Partnership from such
activity during such accounting period less (ii) all expenses of the Partnership, and all other items that are deductible from gross income, for such accounting period that are allocable to such activity (determined as provided below).
“GP-Related Net Income (Loss)” from any GP-Related Investment
for any accounting period in which such GP-Related Investment has not been sold or otherwise disposed of means (i) the gross amount of dividends, interest or other income received by the Partnership from
such GP-Related Investment during such accounting period less (ii) all expenses of the Partnership for such accounting period that are allocable to such GP-Related
Investment (determined as provided below).
“GP-Related Net Income (Loss)” from any GP-Related Investment for the accounting period in which such GP-Related Investment is sold or otherwise disposed of means (i) the sum of the gross proceeds from the sale
or other disposition of such GP-Related Investment and the gross amount of dividends, interest or other income received by the Partnership from such GP-Related
Investment during such accounting period less (ii) the sum of the cost or other basis to the Partnership of such GP-Related Investment and all expenses of the Partnership for such accounting period that
are allocable to such GP- Related Investment.
GP-Related Net Income
(Loss) shall be determined in accordance with the accounting method used by the Partnership for Federal income tax purposes with the following adjustments: (i) any income of the Partnership that is exempt from Federal income taxation and not
otherwise taken into account in computing GP-Related Net Income (Loss) shall be added to such taxable income or loss; (ii) if any asset has a value on the books of the Partnership that differs from its
adjusted tax basis for Federal income tax purposes, any depreciation, amortization or gain resulting from a disposition of such asset shall be calculated with reference to such value; (iii) upon an adjustment to the value of any asset on the
books of the Partnership pursuant to Regulation Section 1.704-1(b)(2), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (iv) any expenditures
of the Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing GP-Related Net Income (Loss) pursuant to this definition
shall be treated as deductible items; (v) any income from a GP-Related Investment that is payable to Partnership employees in respect of “phantom interests” in such GP-Related Investment awarded by the General Partner to employees shall be included as an expense in the calculation of GP-Related Net Income (Loss) from such GP-Related Investment, and (vi) items of income and expense (including interest income and overhead and other indirect expenses) of the Partnership and Affiliates of the
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Partnership shall be allocated among the Partnership and such Affiliates, among various Partnership
activities and GP-Related Investments and between accounting periods, in each case as determined by the General Partner. Any adjustments to GP-Related Net Income (Loss)
by the General Partner, including adjustments for items of income accrued but not yet received, unrealized gains, items of expense accrued but not yet paid, unrealized losses, reserves (including reserves for taxes, bad debts, actual or threatened
litigation, or any other expenses, contingencies or obligations) and other appropriate items, shall be made in accordance with U.S. generally accepted accounting principles (“GAAP”); provided, that the General Partner shall
not be required to make any such adjustment.
(c) An accounting period shall be a Fiscal Year except that, at the option of the General
Partner, an accounting period will terminate and a new accounting period will begin on the admission date of an additional Partner or the Settlement Date of a Withdrawn Partner, if any such date is not the first day of a Fiscal Year. If any event
referred to in the preceding sentence occurs and the General Partner does not elect to terminate an accounting period and begin a new accounting period, then the General Partner may make such adjustments as it deems appropriate to the Partners’
GP-Related Profit Sharing Percentages for the accounting period in which such event occurs (prior to any allocations of GP-Related Unallocated Percentages or adjustments
to GP-Related Profit Sharing Percentages pursuant to Section 5.3) to reflect the Partners’ average GP-Related Profit Sharing Percentages during such accounting
period; provided, that the GP-Related Profit Sharing Percentages of Partners in GP-Related Net Income (Loss) from
GP-Related Investments acquired during such accounting period will be based on GP-Related Profit Sharing Percentages in effect when each such GP-Related Investment was acquired.
(d) In establishing
GP-Related Profit Sharing Percentages and allocating GP-Related Unallocated Percentages pursuant to Section 5.3, the General Partner may consider such factors as it
deems appropriate.
(e) All determinations, valuations and other matters of judgment required to be made for accounting purposes under this
Agreement shall be made by the General Partner and approved by the Partnership’s independent accountants. Such approved determinations, valuations and other accounting matters shall be conclusive and binding on all Partners, all Withdrawn
Partners, their successors, heirs, estates or legal representatives and any other person, and to the fullest extent permitted by law no such person shall have the right to an accounting or an appraisal of the assets of the Partnership or any
successor thereto.
Section 5.2. GP-Related Capital Accounts.
(a) There shall be established for each Partner on the books of the Partnership, to the extent and at such times as may be appropriate, one or
more capital accounts as the General Partner may deem to be appropriate for purposes of accounting for such Partner’s interests in the capital of the Partnership related to the GP-Related SP NC Interest
and the GP-Related Net Income (Loss) of the Partnership (each a “GP-Related Capital Account”).
(b) As of the end of each accounting period or, in the case of a contribution to the Partnership by one or more of the Partners with respect to
such Partner or Partners’ GP-Related Partner Interests or a distribution by the Partnership to one or more of the Partners with respect to such Partner or Partners’
GP-Related Partner Interests, at the time of such contribution or distribution, (i) the appropriate GP-Related Capital Accounts of each Partner shall be credited
with the following amounts: (A) the amount of cash and the value of any property contributed by such Partner to the capital of the Partnership related to the GP-Related SP NC Interest during such
accounting period, (B) the GP-Related Net Income allocated to such Partner for such accounting period and (C) the interest credited on the balance of such Partner’s capital related to such
Partner’s GP-Related Partner Interest for such accounting period pursuant
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to Section 4.2; and (ii) the appropriate GP-Related
Capital Accounts of each Partner shall be debited with the following amounts: (x) the amount of cash, the principal amount of any subordinated promissory note of the Partnership referred to in Section 6.5 (as such amount is paid) and the
value of any property distributed to such Partner during such accounting period with respect to such Partner’s GP-Related Partner Interest and (y) the
GP-Related Net Loss allocated to such Partner for such accounting period.
Section 5.3. GP-Related Profit Sharing Percentages.
(a) Prior to the beginning of each annual accounting period,
the General Partner shall establish the profit sharing percentage (the “GP-Related Profit Sharing Percentage”) of each Partner in each category of
GP-Related Net Income (Loss) for such annual accounting period pursuant to Section 5.1(a) taking into account such factors as the General Partner deems appropriate; provided, however, that
(i) the General Partner may elect to establish GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from any
GP-Related Investment acquired by the Partnership during such accounting period at the time such GP-Related Investment is acquired in accordance with paragraph
(d) below and (ii) GP-Related Net Income (Loss) for such accounting period from any GP-Related Investment shall be allocated in accordance with the GP-Related Profit Sharing Percentages in such GP-Related Investment established in accordance with paragraph (d) below. The General Partner may establish different GP-
Related Profit Sharing Percentages for any Partner in different categories of GP-Related Net Income (Loss). In the case of the Withdrawal of a Partner, such former Partner’s
GP-Related Profit Sharing Percentages shall be allocated by the General Partner to one or more of the remaining Partners as the General Partner shall determine. In the case of the admission of any Partner to
the Partnership as an additional Partner, the GP-Related Profit Sharing Percentages of the other Partners shall be reduced by an amount equal to the GP-Related Profit
Sharing Percentage allocated to such new Partner pursuant to Section 6.1(b); such reduction of each other Partner’s GP-Related Profit Sharing Percentage shall be pro rata based upon such
Partner’s GP-Related Profit Sharing Percentage as in effect immediately prior to the admission of the new Partner. Notwithstanding the foregoing, the General Partner may also adjust the GP-Related Profit Sharing Percentage of any Partner for any annual accounting period at the end of such annual accounting period in its sole discretion.
(b) The General Partner may elect to allocate to the Partners less than 100% of the GP-Related Profit
Sharing Percentages of any category for any annual accounting period at the time specified in Section 5.3(a) for the annual fixing of GP-Related Profit Sharing Percentages (any remainder of such GP-Related Profit Sharing Percentages being called a “GP-Related Unallocated Percentage”); provided, that any
GP-Related Unallocated Percentage in any category of GP-Related Net Income (Loss) for any annual accounting period that is not allocated by the General Partner within 90
days after the end of such accounting period shall be deemed to be allocated among all the Partners (including the General Partner) in the manner determined by the General Partner in its sole discretion.
(c) Unless otherwise determined by the General Partner in a particular case, (i) GP- Related
Profit Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment shall be allocated in proportion to the Partners’ respective GP-Related Capital Contributions in respect of such GP-Related Investment and (ii) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from each GP-Related Investment shall be fixed at the time such GP-Related Investment is acquired and
shall not thereafter change, subject to any repurchase rights established by the General Partner pursuant to Section 5.7.
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Section 5.4. Allocations of GP-Related Net
Income (Loss).
(a) Except as provided in Section 5.4(d), GP-Related Net Income of the
Partnership for each GP-Related Investment shall be allocated to the GP-Related Capital Accounts related to such GP-Related
Investment of all the Partners participating in such GP-Related Investment (including the General Partner): first, in proportion to and to the extent of the amount of
Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest distributed to the Partners, second, to Partners
that received Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest in years prior to the years such GP- Related Net Income is being allocated to the extent such Non-Carried Interest (other than amounts representing a return of
GP-Related Capital Contributions) or Carried Interest exceeded GP-Related Net Income allocated to such Partners in such earlier years; and third, to the Partners in the
same manner that such Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest would have been distributed
if cash were available to distribute with respect thereto.
(b) GP-Related Net Loss of the
Partnership shall be allocated as follows: (i) GP- Related Net Loss relating to realized losses suffered by SP NC and allocated to the Partnership with respect to its pro rata share thereof (based on
capital contributions made by the Partnership to SP NC with respect to the GP-Related SP NC Interest) shall be allocated to the Partners in accordance with each Partner’s
Non-Carried Interest Sharing Percentage with respect to the GP-Related Investment giving rise to such loss suffered by SP NC and
(ii) GP-Related Net Loss relating to realized losses suffered by SP NC and allocated to the Partnership with respect to the Carried Interest shall be allocated in accordance with a Partner’s
(including a Withdrawn Partner’s) Carried Interest Give Back Percentage (as of the date of such loss) (subject to adjustment pursuant to Section 5.8(e)).
(c) Notwithstanding Section 5.4(a) above, GP-Related Net Income relating to Carried Interest
allocated after the allocation of a GP-Related Net Loss pursuant to clause (ii) of Section 5.4(b) shall be allocated in accordance with such Carried Interest Give Back Percentages until such time as
the Partners have been allocated GP-Related Net Income relating to Carried Interest equal to the aggregate amount of GP-Related Net Loss previously allocated in
accordance with clause (ii) of Section 5.4(b). Withdrawn Partners shall remain Partners for purposes of allocating such GP-Related Net Loss with respect to Carried Interest.
(d) To the extent the Partnership has any GP-Related Net Income (Loss) for any accounting period
unrelated to SP NC, such GP-Related Net Income (Loss) will be allocated in accordance with GP-Related Profit Sharing Percentages prevailing at the beginning of such
accounting period.
(e) The General Partner may authorize from time to time advances to Partners (including any additional Partner admitted
to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group L.P. or any Affiliate thereof) against their allocable shares of GP-Related
Net Income (Loss).
Section 5.5. Liability of General Partners. General Partners shall have unlimited liability
for the satisfaction and discharge of all losses, liabilities and expenses of the Partnership.
Section 5.6. Liability of Limited
Partners. Each Limited Partner and former Limited Partner shall be liable for the satisfaction and discharge of all losses, liabilities and expenses of the Partnership allocable to him pursuant to Section 5.4 or 7.3, but only to the extent
required by applicable law. Except as otherwise provided in the following sentence, in no event shall any Limited Partner or former Limited Partner be obligated to make any additional capital contribution to the Partnership in excess of his
aggregate GP-Related Capital Contributions and Capital Commitment-Related Capital Contributions pursuant to Sections 4.1 and 7.1, or have any liability in excess of such aggregate GP- Related Capital Contributions and Capital Commitment-Related Capital Contributions for the satisfaction and discharge of the losses, liabilities and expenses of the Partnership. In no way does any of the
foregoing limit any Partner’s obligations under Section 4.1(d), 5.8(d) or 7.4(g) or otherwise to make capital contributions as provided hereunder.
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Section 5.7. Repurchase Rights, etc.. The General Partner may from time to time
establish such repurchase rights and/or other requirements with respect to the Partners’ GP-Related Partner Interests relating to GP-Related SP NC Investments as
the General Partner may determine. The General Partner shall have authority to (a) withhold any distribution otherwise payable to any Partner until any such repurchase rights have lapsed or any such requirements have been satisfied,
(b) pay any distribution to any Partner that is Contingent as of the distribution date and require the refund of any portion of such distribution that is Contingent as of the Withdrawal Date of such Partner, (c) amend any previously
established repurchase rights or other requirements from time to time, and (d) make such exceptions thereto as it may determine on a case by case basis.
Section 5.8. Distributions.
(a) (i) The Partnership shall make distributions of available cash (subject to reserves and other adjustments as provided herein) or other
property to Partners with respect to such Partners’ GP-Related Partner Interests at such times and in such amounts as are determined by the General Partner. The General Partner shall, if it deems it
appropriate, determine the availability for distribution of, and distribute, cash or other property separately for each category of GP-Related Net Income (Loss) established pursuant to Section 5.1(a).
Distributions of cash or other property with respect to Non-Carried Interest shall be made among the Partners in accordance with their respective Non-Carried Interest
Sharing Percentages, and, subject to Sections 4.1(d) and 5.8(e), distributions of cash or other property with respect to Carried Interest shall be made among Partners in accordance with their respective Carried Interest Sharing Percentages.
(ii) At any time that a sale, exchange, transfer or other disposition by SP NC of a portion of a GP-
Related Investment is being considered by the Partnership (a “GP-Related Disposable Investment”), at the election of the General Partner each Partner’s
GP-Related Partner Interest with respect to such GP- Related Investment shall be vertically divided into two separate GP-Related
Partner Interests, a GP- Related Partner Interest attributable to the GP-Related Disposable Investment (a Partner’s
“GP-Related Class B Interest”), and a GP-Related Partner Interest attributable to such
GP-Related Investment excluding the GP-Related Disposable Investment (a Partner’s “GP-Related
Class A Interest”). Distributions (including those resulting from a sale, transfer, exchange or other disposition by SP NC) relating to a GP-Related Disposable Investment (with
respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of GP-Related Class B Interests with respect to such GP-Related Investment in accordance with their GP-Related Profit Sharing Percentages relating to such GP-Related Class B
Interests, and distributions (including those resulting from the sale, transfer, exchange or other disposition by SP NC) relating to a GP-Related Investment excluding such
GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of
GP-Related Class A Interests with respect to such GP-Related Investment in accordance with their respective GP-Related
Profit Sharing Percentages relating to such GP-Related Class A Interests. Except as provided above, distributions of cash or other property with respect to each category of
GP-Related Net Income (Loss) shall be allocated among the Partners in the same proportions as the allocations of GP- Related Net Income (Loss) of each such category.
(b) Subject to the Partnership’s having sufficient available cash in the reasonable judgment of the General Partner, the Partnership
shall make cash distributions to each Partner with respect to each Fiscal Year of the Partnership in an aggregate amount at least equal to the total Federal, New York State and New York City income and other taxes that would be payable by such
Partner with respect to all categories of GP-Related Net Income (Loss) allocated to such Partner for such Fiscal Year,
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the amount of which shall be calculated (i) on the assumption that each Partner is an individual
subject to the then prevailing maximum Federal, New York State and New York City income and other tax rates, (ii) taking into account the deductibility of State and local income and other taxes for Federal income tax purposes and (iii) taking
into account any differential in applicable rates due to the type and character of GP-Related Net Income (Loss) allocated to such Partner. Notwithstanding the provisions of the foregoing sentence, the General
Partner may refrain from making any distribution if, in the reasonable judgment of the General Partner, such distribution is prohibited by the Partnership Act.
(c) The General Partner may provide that the GP-Related Partner Interest of any Partner or employee
(including such Partner’s or employee’s right to distributions and investments of the Partnership related thereto) may be subject to repurchase by the Partnership during such period as the General Partner shall determine (a
“Repurchase Period”). Any Contingent distributions from GP-Related Investments subject to repurchase rights will be withheld by the Partnership and will be distributed to the recipient thereof
(together with interest thereon at rates determined by the General Partner from time to time) as the recipient’s rights to such distributions become Non-Contingent (by virtue of the expiration of the
applicable Repurchase Period or otherwise). The General Partner may elect in an individual case to have the Partnership distribute any Contingent distribution to the applicable recipient thereof irrespective of whether the applicable Repurchase
Period has lapsed. If a Partner Withdraws from the Partnership for any reason other than his death, Total Disability or Incompetence, the undistributed share of any GP- Related Investment that remains
Contingent as of the applicable Withdrawal Date shall be repurchased by the Partnership at a purchase price determined at such time by the General Partner. Unless determined otherwise by the General Partner, the repurchased portion thereof will be
allocated among the remaining Partners with interests in such GP-Related Investment in proportion to their respective percentage interests in such GP-Related Investment,
or if no other Partner has a percentage interest in such specific GP-Related Investment, to the General Partner; provided, that the General Partner may allocate the Withdrawn Partner’s share of
unrealized investment income from a repurchased GP-Related Investment attributable to the period after the Withdrawn Partner’s Withdrawal Date on any basis it may determine, including to existing or new
Partners who did not previously have interests in such GP-Related Investment, except that, in any event, each Investor Limited Partner shall be allocated a share of such unrealized investment income equal to
its respective GP-Related Profit Sharing Percentage of such unrealized investment income.
(d)
(i)(A) If the Partnership is obligated under the Clawback Provisions or Giveback Provisions to contribute to SP NC a Clawback Amount or a Giveback Amount (other than a Capital Commitment Giveback Amount) in respect of the GP-Related SP NC Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount being herein called a “GP-Related Giveback
Amount”), the Partnership shall call for such amounts as are necessary to satisfy such obligations of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the
Partnership, in cash, when and as called by the Partnership, such an amount of prior distributions by the Partnership (and the Other Fund GPs) with respect to Carried Interest (and/or Non-Carried Interest in
the case of a GP-Related Giveback Amount) (the “GP-Related Recontribution Amount”) which equals (I) the product of (a) a Partner’s or
Withdrawn Partner’s Carried Interest Give Back Percentage and (b) the aggregate Clawback Amount payable by the Partnership, in the case of Clawback Amounts, and (II) with respect to a GP-Related
Giveback Amount, such Partner’s pro rata share of prior distributions of Carried Interest and/or Non-Carried Interest in connection with (a) the GP-Related SP
NC Investment giving rise to the GP-Related Giveback Amount, (b) if the amounts contributed pursuant to clause (II)(a) above are insufficient to satisfy such
GP-Related Giveback Amount, GP-Related SP NC Investments other than the one giving rise to such obligation, but only those amounts received by the Partners with an
interest in the GP-Related SP NC Investment referred to in clause (II)(a) above, and (c) if the GP-Related Giveback Amount is unrelated to a specific GP-Related SP NC Investment, all GP-Related SP NC Investments. Each Partner and Withdrawn Partner shall promptly
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contribute to the Partnership, along with satisfying his comparable obligations to the Other Fund GPs, if
any, upon such call, such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount, less the amount paid out of the Trust Account on behalf of such Partner or Withdrawn Partner by the
Trustee(s) pursuant to written instructions from the Partnership, or if applicable, any of the Other Fund GPs with respect to Carried Interest (and/or Non-Carried Interest in the case of GP-Related Giveback Amounts) (the “Net GP-Related Recontribution Amount”), irrespective of the fact that the amounts in the Trust Account may be sufficient on
an aggregate basis to satisfy the Partnership’s and the Other Fund GPs’ obligation under the Clawback Provisions and/or Giveback Provisions; provided, that to the extent a Partner’s or Withdrawn Partner’s share of the
amount paid with respect to the Clawback Amount and/or the GP-Related Giveback Amount exceeds his GP-Related Recontribution Amount, such excess shall be repaid to such
Partner or Withdrawn Partner as promptly as reasonably practicable, subject to clause (ii) below; provided further, that such written instructions from the Partnership shall specify each Partner’s and Withdrawn Partner’s GP-Related Recontribution Amount. Prior to such time, the Partnership may, in its discretion (but shall be under no obligation to), provide notice that in the Partnership’s judgment, the potential obligations
in respect of the Clawback Provisions or the Giveback Provisions will probably materialize (and an estimate of the aggregate amount of such obligations); provided further, that any amount from a Partner’s Trust Account used to pay any
part of any GP-Related Giveback Amount (or such lesser amount as may be required by the General Partner) shall be contributed by such Partner to such Partner’s Trust Account no later than 30 days after
the Net GP-Related Recontribution Amount is paid with respect to such GP-Related Giveback Amount. Solely to the extent required by the SP NC Agreements, each member of
the General Partner shall have the same obligations as a Partner (which obligations shall be subject to the same limitations as the obligations of a Partner) under this Section 5.8(d)(i)(A) and under Section 5.8(d)(ii)(A) solely with
respect to such member’s pro rata share of any Clawback Amount (for purpose of this sentence, as defined in section 11.3(b) of the SP NC Partnership Agreements) and solely to the extent the Partnership has insufficient funds to meet the
Partnership’s obligations under section 11.3 of the SP NC Partnership Agreements and/or the corresponding provisions under any other SP NC Agreement.
(B) To the extent any Partner or Withdrawn Partner has satisfied any Holdback obligation with Firm Collateral, such Partner or Withdrawn
Partner shall, within 10 days of the Partnership’s call for GP- Related Recontribution Amounts, make a cash payment into the Trust Account in an amount equal to the amount of the Holdback obligation
satisfied with such Firm Collateral, or such lesser amount such that the amount in the Trust Account allocable to such Partner or Withdrawn Partner equals the sum of (I) such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount and (II) any similar amounts payable to any of the Other Fund GPs. Immediately upon receipt of such cash, the Trustee(s) shall take such steps as are necessary to release such
Firm Collateral of such Partner or Withdrawn Partner equal to the amount of such cash payment. If the amount of such cash payment is less than the amount of Firm Collateral of such Partner or Withdrawn Partner, the balance of such Firm Collateral if
any, shall be retained to secure the payment of GP-Related Deficiency Contributions, if any, and shall be fully released upon the satisfaction of the Partnership’s and the Other Fund GPs’ obligation
to pay the Clawback Amount. The failure of any Partner or Withdrawn Partner to make a cash payment in accordance with this clause (B) (to the extent applicable) shall constitute a default under Section 5.8(d)(ii) as if such cash payment
hereunder constitutes a Net GP-Related Recontribution Amount under Section 5.8(d)(ii).
(ii) (A) In the event any Partner or Withdrawn Partner (a “GP-Related
Defaulting Party”) fails to recontribute all or any portion of such GP-Related Defaulting Party’s Net GP- Related Recontribution Amount for any reason, the
Partnership shall require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Carried Interest Give Back Percentages in the case of Clawback Amounts, and GP-Related Profit Sharing Percentages in the case of GP-Related Giveback Amounts (as more fully described in clause (II) of Section 5.8(d)(i)(A) above)), such
amounts as are necessary to fulfill the GP-
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Related Defaulting Party’s obligation to pay such
GP-Related Defaulting Party’s Net GP-Related Recontribution Amount (a “GP-Related Deficiency Contribution”)
if the General Partner determines in its good faith judgment that the Partnership (or an Other Fund GP) will be unable to collect such amount in cash from such GP-Related Defaulting Party for payment of the
Clawback Amount or GP-Related Giveback Amount, as the case may be, at least 20 Business Days prior to the latest date that the Partnership, and the Other Fund GPs, if applicable, are permitted to pay the
Clawback Amount or GP-Related Giveback Amount, as the case may be; provided, that no Partner or Withdrawn Partner shall as a result of such GP-Related Deficiency
Contribution be required to contribute an amount in excess of 150% of the amount of the Net GP-Related Recontribution Amount initially requested from such Partner or Withdrawn Partner in respect of such
default.
(B) Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should either
(1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all remedies
(at law or equity) available to the Partnership against the GP-Related Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the GP-Related Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such GP-Related Defaulting Party becoming a
GP-Related Defaulting Party) to set-off as appropriate and apply against such GP- Related Defaulting Party’s Net GP-Related Recontribution Amount any amounts otherwise payable to the GP-Related Defaulting Party by the Partnership or any Affiliate thereof (including amounts unrelated to
Carried Interest, such as returns of capital and profit thereon). Each Partner and Withdrawn Partner hereby grants to the Partnership a security interest, effective upon such Partner or Withdrawn Partner becoming a
GP-Related Defaulting Party, in all accounts receivable and other rights to receive payment from any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the
Partnership may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner and Withdrawn Partner hereby appoints the Partnership as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or Withdrawn Partner or in the name of the Partnership, to take any actions which may be necessary to accomplish the
intent of the immediately preceding sentence. The Partnership shall be entitled to collect interest on the Net GP-Related Recontribution Amount of a GP-Related
Defaulting Party from the date such Net GP-Related Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(C) Any Partner’s or Withdrawn Partner’s failure to make a GP-Related
Deficiency Contribution shall cause such Partner or Withdrawn Partner to be a GP-Related Defaulting Party with respect to such amount. The Partnership shall first seek any remaining Trust Amounts (and Trust
Income thereon) allocated to such Partner or Withdrawn Partner to satisfy such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution before seeking cash
contributions from such Partner or Withdrawn Partner in satisfaction of such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution.
(iii) A Partner’s or Withdrawn Partner’s obligation to make contributions to the Partnership under this
Section 5.8(d) shall survive the termination of the Partnership.
(e) The Partners acknowledge that the General Partner will (and is
hereby authorized to) take such steps as it deems appropriate, in its good faith judgment, to further the objective of providing for the fair and equitable treatment of all Partners, including by allocating writedowns and losses (to be determined by
the General Partner in accordance with GAAP and as reported by SP NC) on GP-Related
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SP NC Investments that have been the subject of a writedown and/or losses (each, a “Loss
Investment”) to those Partners who participated in such Loss Investments based on their Carried Interest Sharing Percentage therein to the extent that such Partners receive or have received Carried Interest distributions from other GP-Related SP NC Investments. Consequently and notwithstanding anything herein to the contrary, adjustments to Carried Interest distributions shall be made as set forth in this Section 5.8(e).
(i) At the time the Partnership is making Carried Interest distributions in connection with a
GP-Related SP NC Investment (the “Subject Investment”) that have been reduced under any SP NC Agreement as a result of one or more Loss Investments, the General Partner shall calculate amounts
distributable to or due from each such Partner as follows:
(A) determine each Partner’s share of each such Loss
Investment based on his Carried Interest Sharing Percentage in each such Loss Investment (which may be zero) to the extent such Loss Investment has reduced the Carried Interest distributions otherwise available for distribution to all Partners
(indirectly through the Partnership from SP NC) from the Subject Investment (such reduction, the “Loss Amount”);
(B) determine the amount of Carried Interest distributions otherwise distributable to such Partner with respect to the Subject
Investment (indirectly through the Partnership from SP NC) before any reduction in respect of the amount determined in clause (A) above (the “Unadjusted Carried Interest Distributions”); and
(C) subtract (I) the Loss Amounts relating to all Loss Investments from (II) the Unadjusted Carried Interest
Distributions for such Partner, to determine the amount of Carried Interest distributions to actually be paid to such Partner (“Net Carried Interest Distribution”).
To the extent that the Net Carried Interest Distribution for a Partner as calculated in this clause (i) is a negative number, the General
Partner shall (I) notify such Partner, at or prior to the time such Carried Interest distributions are actually made to the Partners, of his obligation to recontribute to the Partnership prior Carried Interest distributions (a “Net
Carried Interest Distribution Recontribution Amount”), up to the amount of such negative Net Carried Interest Distribution, and (II) to the extent amounts recontributed pursuant to clause (I) are insufficient to satisfy such
negative Net Carried Interest Distribution amount, reduce future Carried Interest distributions otherwise due such Partner, up to the amount of such remaining negative Net Carried Interest Distribution. If a Partner’s (x) Net Carried
Interest Distribution Recontribution Amount exceeds (y) the aggregate amount of prior Carried Interest distributions less the amount of tax thereon, calculated based on the Assumed Tax Rate in effect in the Fiscal Years of such distributions
(the “Excess Tax-Related Amount”), then such Partner may, in lieu of paying such Partner’s Excess Tax-Related Amount, defer such amounts as set
forth below. Such deferred amount shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced and repaid by the amount of Carried Interest otherwise distributable to such Partner in connection with future Carried Interest
distributions until such balance is reduced to zero. Any deferred amounts shall be payable in full upon the earlier of (i) such time as the Clawback Amount is determined (as provided herein) and (ii) such time as the Partner becomes a
Withdrawn Partner.
To the extent there is an amount of negative Net Carried Interest Distribution with respect to a Partner remaining
after the application of this clause (i), notwithstanding clause (II) of the preceding paragraph, such remaining amount of negative Net Carried Interest Distribution shall be allocated to the other Partners pro rata based on each of their
Carried Interest Sharing Percentages in the Subject Investment.
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A Partner who fails to pay a Net Carried Interest Distribution Recontribution Amount
promptly upon notice from the General Partner (as provided above) shall be deemed a GP-Related Defaulting Party for all purposes hereof.
A Partner may satisfy in part any Net Carried Interest Distribution Recontribution Amount from cash that is then subject to a Holdback, to the
extent that the amounts that remain subject to a Holdback satisfy the Holdback requirements hereof as they relate to the reduced amount of aggregate Carried Interest distributions received by such Partner (taking into account any Net Carried
Interest Distribution Recontribution Amount contributed to the Partnership by such Partner).
Any Net Carried Interest Distribution
Recontribution Amount contributed by a Partner, including amounts of cash subject to a Holdback as provided above, shall increase the amount available for distribution to the other Partners as Carried Interest distributions with respect to the
Subject Investment; provided, that any such amounts then subject to a Holdback may be so distributed to the other Partners to the extent a Partner receiving such distribution has satisfied the Holdback requirements with respect to such
distribution (taken together with the other Carried Interest distributions received by such Partner to date).
(ii) In the
case of Clawback Amounts which are required to be contributed to the Partnership as otherwise provided herein, the obligation of the Partners with respect to any Clawback Amount shall be adjusted by the General Partner as follows:
(A) determine each Partner’s share of any Losses in any GP-Related SP NC
Investments which gave rise to the Clawback Amount (i.e., the Losses that followed the last GP-Related SP NC Investment with respect to which Carried Interest distributions were made), based on such
Partner’s Carried Interest Sharing Percentage in such GP-Related SP NC Investments;
(B) determine each Partner’s obligation with respect to the Clawback Amount based on such Partner’s Carried Interest
Give Back Percentage as otherwise provided herein; and
(C) subtract the amount determined in clause (B) above from
the amount determined in clause (A) above with respect to each Partner to determine the amount of adjustment to each Partner’s share of the Clawback Amount (a Partner’s “Clawback Adjustment Amount”).
A Partner’s share of the Clawback Amount shall for all purposes hereof be decreased by such Partner’s Clawback Adjustment Amount, to
the extent it is a negative number (except to the extent expressly provided below). A Partner’s share of the Clawback Amount shall for all purposes hereof be increased by such Partner’s Clawback Adjustment Amount (to the extent it is a
positive number); provided, that in no way shall a Partner’s aggregate obligation to satisfy a Clawback Amount as a result of this clause (ii) exceed the aggregate Carried Interest distributions received by such Partner. To the
extent a positive Clawback Adjustment Amount remains after the application of this clause (ii) with respect to a Partner, such remaining Clawback Adjustment Amount shall be allocated to the Partners (including any Partner whose Clawback Amount
was increased pursuant to this clause (ii)) pro rata based on their Carried Interest Give Back Percentages (determined without regard to this clause (ii)).
Any distribution or contribution adjustments pursuant to this Section 5.8(e) by the General Partner shall be based on its good faith
judgment, and no Partner shall have any claim against the Partnership, the General Partner or any other Partners as a result of any adjustment made as set forth above. This Section 5.8(e) applies to all Partners, including Withdrawn Partners.
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It is agreed and acknowledged that this Section 5.8(e) is an agreement among the
Partners and in no way modifies the obligations of each Partner regarding the Clawback Amount as provided in the SP NC Agreements.
Section 5.9. Business Expenses. The Partnership shall reimburse the Partners for reasonable travel, entertainment and
miscellaneous expenses incurred by them in the conduct of the Partnership’s business in accordance with rules and regulations established by the General Partner from time to time.
Section 5.10. Tax Capital Accounts; Tax Allocations.
(a) For Federal income tax purposes, there shall be established for each Partner a single capital account combining such Partner’s Capital
Commitment Capital Account and GP-Related Capital Account, with such adjustments as the General Partner determines are appropriate so that such single capital account is maintained in compliance with the
principles and requirements of Section 704(b) of the Code and the Regulations thereunder.
(b) For Federal, State and local income tax
purposes only, Partnership income, gain, loss, deduction or expense (or any item thereof) for each fiscal year shall be allocated to and among the Partners in a manner corresponding to the manner in which corresponding items are allocated among the
Partners pursuant to clause (a) above, provided the General Partner may in its sole discretion make such allocations for tax purposes as it determines are appropriate so that allocations have substantial economic effect or are in accordance
with the interests of the Partners, within the meaning of the Code and the Regulations thereunder.
ARTICLE VI
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS;
SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
Section 6.1. Additional Partners.
(a) Effective on the first day of any month (or on such other date as shall be determined by the General Partner in its sole discretion), the
General Partner shall have the right to admit one or more additional or substitute persons into the Partnership as General Partners or Limited Partners. Each such person shall make the representations and certifications with respect to itself set
forth in Sections 3.7 and 3.8. The General Partner shall determine and negotiate with the additional Partner all terms of such additional Partner’s participation in the Partnership, including the additional Partner’s initial GP-Related Capital Contribution, Capital Commitment-Related Capital Contribution, GP-Related Profit Sharing Percentage and Capital Commitment Profit Sharing Percentage. Each
additional Partner shall have such voting rights as may be determined by the General Partner from time to time unless, upon the admission to the Partnership of any Limited Partner, the General Partner shall designate that such Limited Partner shall
not have such voting rights (any such Limited Partner being called a “Nonvoting Limited Partner”). Any additional Partner shall, as a condition to becoming a Partner, agree to become a party to, and be bound by the terms and
conditions of, the Trust Agreement. If Blackstone or another or subsequent holder of an Investor Note approved by the General Partner for purposes of this Section 6.1(a)
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shall foreclose upon a Limited Partner’s Investor Note issued to finance such Limited Partner’s
purchase of his Capital Commitment Interests, Blackstone or such other or subsequent holder shall succeed to such Limited Partner’s Capital Commitment Interests and shall be deemed to have become a Limited Partner to such extent. Any Additional
Partner may have a GP-Related Partner Interest or a Capital Commitment Partner Interest, without having the other such interest.
(b) The GP-Related Profit Sharing Percentages, if any, to be allocated to an additional Partner as of
the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’ GP-Related Profit Sharing Percentages as of such date, shall be established by the General
Partner pursuant to Section 5.3. The Capital Commitment Profit Sharing Percentages, if any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all
other Partners’ Capital Commitment Profit Sharing Percentages as of such date, shall be established by the General Partner.
(c) An
additional Partner shall be required to contribute to the Partnership his pro rata share of the Partnership’s total capital, excluding capital in respect of GP-Related Investments and Capital Commitment
Investments in which such Partner does not acquire any interests, at such times and in such amounts as shall be determined by the General Partner in accordance with Sections 4.1 and 7.1.
(d) The admission of an additional Partner will be evidenced by (i) the execution of a counterpart copy of, or counter-signature page with
respect to, this Agreement by such additional Partner, or (ii) the execution of an amendment to this Agreement by the General Partner and the additional Partner, as determined by the General Partner, or (iii) the execution by such
additional Partner of any other writing evidencing the intent of such person to become a substitute or additional Limited Partner and to be bound by the terms of this Agreement and such writing being accepted by the General Partner on behalf of the
Partnership. In addition, each additional Partner shall sign a counterpart copy of the Trust Agreement or any other writing evidencing the intent of such person to become a party to the Trust Agreement.
Section 6.2. Withdrawal of Partners.
(a) Any Partner may Withdraw voluntarily from the Partnership subject to the prior written consent of the General Partner. The General Partner
generally intends to permit voluntary Withdrawals on the last day of any calendar month (or on such other date as shall be determined by the General Partner in its sole discretion), on not less than 15 days’ prior written notice by such Partner
to the General Partner (or on such shorter notice period as may be mutually agreed upon between such Partner and the General Partner); provided, that a Partner may not voluntarily Withdraw without the consent of the General Partner if such
Withdrawal would (i) cause the Partnership to be in default under any of its contractual obligations or (ii) in the reasonable judgment of the General Partner, have a material adverse effect on the Partnership or its business; provided
further that a Partner may Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest without Withdrawing from the Partnership with respect to such Partner’s Capital
Commitment Partner Interest, and a Partner may Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest without Withdrawing from the Partnership with respect to such Partner’s GP-Related Partner Interest.
(b) Upon the Withdrawal of any Partner, including by the occurrence of any
withdrawal event under the Partnership Act with respect to any Partner, such Partner shall thereupon cease to be a Partner, except as expressly provided herein.
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(c) Upon the Total Disability of a Limited Partner, such Partner shall thereupon cease to be
a Limited Partner with respect to such Partner’s GP-Related Partner Interest; provided, however, that the General Partner may elect to admit such Withdrawn Partner to the Partnership as a
Nonvoting Limited Partner with respect to such Partner’s GP-Related Partner Interest, with such GP- Related Partner Interest as the General Partner may determine.
The determination of whether any Partner has suffered a Total Disability shall be made by the General Partner in its sole discretion after consultation with a qualified medical doctor. In the absence of agreement between the General Partner and such
Partner, each party shall nominate a qualified medical doctor and the two doctors shall select a third doctor, who shall make the determination as to Total Disability.
(d) If the General Partner determines that it shall be in the best interests of the Partnership for any Partner (including any Partner who has
given notice of voluntary Withdrawal pursuant to paragraph (a) above) to Withdraw from the Partnership (whether or not Cause exists) with respect to such Partner’s GP-Related Partner Interest and/or
with respect to such Partner’s Capital Commitment Partner Interest, such Partner, upon written notice by the General Partner to such Partner, shall be required to Withdraw with respect to such Partner’s
GP-Related Partner Interest and/or with respect to such Partner’s Capital Commitment Partner Interest, as of a date specified in such notice, which date shall be on or after the date of such notice. If
the General Partner requires any Partner to Withdraw for Cause with respect to such Partner’s GP-Related Partner Interest and/or with respect to such Partner’s Capital Commitment Partner Interest,
such notice shall state that it has been given for Cause and shall describe the particulars thereof in reasonable detail.
(e) The
Withdrawal from the Partnership of any Partner shall not, in and of itself, affect the obligations of the other Partners to continue the Partnership during the remainder of its term. A Withdrawn General Partner shall remain liable for all
obligations of the Partnership incurred while it was a General Partner and resulting from its acts or omissions as a General Partner to the fullest extent provided by law.
Section 6.3. GP-Related Partner Interests Not Transferable.
(a) No Partner may sell, assign, pledge or otherwise transfer or encumber all or any portion of such Partner’s GP-Related Partner Interest without the prior written consent of the General Partner; provided, that, subject to the Partnership Act, this Section 6.3 shall not impair transfers by operation of law,
transfers by will or by other testamentary instrument occurring by virtue of the death or dissolution of a Partner, or transfers required by trust agreements; provided further, that, subject to the prior written consent of the General
Partner, which shall not be unreasonably withheld, a Limited Partner may transfer, for estate planning purposes, up to 25% of his GP-Related Profit Sharing Percentage to any estate planning trust, limited
partnership or limited liability company with respect to which such Limited Partner controls investments related to any interest in the Partnership held therein (an “Estate Planning Vehicle”). Each Estate Planning Vehicle will be a
Nonvoting Limited Partner. Such Limited Partner and the Nonvoting Limited Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such Nonvoting Limited Partner with respect to the interest transferred
(including the obligation to make additional GP-Related Capital Contributions). The General Partner may at its sole option exercisable at any time require such Estate Planning Vehicle to Withdraw from the
Partnership on the terms of this Article VI. Except as provided in the second proviso to the first sentence of this Section 6.3(a), no assignee, legatee, distributee, heir or transferee (by conveyance, operation of law or otherwise) of the
whole or any portion of any Partner’s GP-Related Partner Interest shall have any right to be a General Partner or Limited Partner without the prior written consent of the General Partner (which consent
may be given or withheld in its sole discretion without giving any reason therefor). Notwithstanding the granting of a security interest in the entire partnership interest of any Partner, such Partner shall continue to be a partner of the
Partnership.
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(b) Notwithstanding any provision hereof to the contrary, no sale or transfer of any GP-Related Partner Interest in the Partnership may be made except in compliance with all Federal, State and other applicable laws, including Federal and State securities laws.
Section 6.4. General Partner Withdrawal; Transfer of General Partner’s Interest.
(a) The General Partner may not transfer or assign its interest as a General Partner in the Partnership or its right to manage the affairs of
the Partnership, except that the General Partner may, with the prior written approval of a Majority In Interest of the Partners admit another person as an additional or substitute General Partner who makes such representations with respect to itself
as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise); provided, however, that the General Partner may, in its sole discretion, transfer all or part of its interest in the
Partnership to a person who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise) and who owns, directly or indirectly, the principal part
of the business then conducted by the General Partner in connection with any liquidation, dissolution or reorganization of the General Partner, and, upon the assumption by such person of liability for all the obligations of the General Partner under
this Agreement, such person shall be admitted as the General Partner. A person who is so admitted as an additional or substitute General Partner shall thereby become a General Partner and shall have the right to manage the affairs of the Partnership
and to vote as a Partner to the extent of the interest in the Partnership so acquired. The General Partner shall not cease to be the general partner of the Partnership upon the collateral assignment of or the pledging or granting of a security
interest in its entire Interest in the Partnership.
(b) Except as contemplated by clause (a) above, Withdrawal by a General Partner
is not permitted. The Withdrawal of a General Partner shall not dissolve the Partnership if at the time of such Withdrawal there are one or more remaining General Partners and any one or more of such remaining General Partners continue the business
of the Partnership (any and all such remaining General Partners being hereby authorized to continue the business of the Partnership without dissolution and hereby agreeing to do so). If upon the Withdrawal of a General Partner there shall be no
remaining General Partner, the Partnership nonetheless shall not be dissolved and shall not be required to be wound up if, within 90 days after the occurrence of such event of Withdrawal, all remaining Limited Partners (excluding Withdrawn Partners)
agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such Withdrawal, of one or more General Partners.
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interest.
(a) The terms of this Section 6.5 shall apply to the GP-Related Partner Interest of a Withdrawn
Partner, but, except as otherwise expressly provided in this Section 6.5, shall not apply to the Capital Commitment Partner Interest of a Withdrawn Partner. For purposes of this Section 6.5, the term “Settlement Date”
means the date as of which a Withdrawn Partner’s GP-Related Partner Interest in the Partnership is settled as determined under paragraph (b) below. Notwithstanding the foregoing, any Limited Partner
who Withdraws from the Partnership, and all or any portion of whose GP-Related Partner Interest is retained as a Limited Partner, shall be considered a Withdrawn Partner for all purposes hereof.
(b) Except where a later date for the settlement of a Withdrawn Partner’s GP-Related Partner
Interest in the Partnership may be agreed to by the General Partner and a Withdrawn Partner, a Withdrawn Partner’s Settlement Date shall be his Withdrawal Date; provided, that if a Withdrawn Partner’s Withdrawal Date is not the last
day of a month, then the General Partner may elect for such Withdrawn Partner’s Settlement Date to be the last day of the month in which his Withdrawal Date
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occurs. During the interval, if any, between a Withdrawn Partner’s Withdrawal Date and Settlement Date,
such Withdrawn Partner shall have the same rights and obligations with respect to GP-Related Capital Contributions, interest on capital, allocations of GP-Related Net
Income (Loss) and distributions as would have applied had such Withdrawn Partner remained a Partner of the Partnership during such period.
(c) In the event of the Withdrawal of a Partner with respect to such Withdrawn Partner’s
GP-Related Partner Interest, the General Partner shall, promptly after such Withdrawn Partner’s Settlement Date, (i) determine and allocate to the Withdrawn Partner’s GP-Related Capital Accounts such Withdrawn Partner’s allocable share of the GP-Related Net Income (Loss) of the Partnership for the period ending on such Settlement Date
in accordance with Article V and (ii) credit the Withdrawn Partner’s GP-Related Capital Accounts with interest in accordance with Section 5.2. In making the foregoing calculations, the General
Partner shall be entitled to establish such reserves (including reserves for taxes, bad debts, unrealized losses, actual or threatened litigation or any other expenses, contingencies or obligations) as it deems appropriate. Unless otherwise
determined by the General Partner in a particular case, a Withdrawn Partner shall not be entitled to receive any GP-Related Unallocated Percentage in respect of the accounting period during which such Partner
Withdraws from the Partnership (whether or not previously awarded or allocated) or any GP-Related Unallocated Percentage in respect of prior accounting periods that have not been paid or allocated (whether or
not previously awarded) as of such Withdrawn Partner’s Withdrawal Date.
(d) From and after the Settlement Date of the Withdrawn
Partner, the Withdrawn Partner’s GP-Related Profit Sharing Percentages shall, unless otherwise allocated by the General Partner pursuant to Section 5.3(a), be deemed to be GP-Related Unallocated Percentages (except for GP-Related Profit Sharing Percentages with respect to GP-Related Investments as provided
in paragraph (f) below).
(e) (i) Upon the Withdrawal from the Partnership of a Partner with respect to such Partner’s GP-Related Partner Interest, such Withdrawn Partner thereafter shall not, except as expressly provided in this Section 6.5, have any rights of a Partner (including voting rights) with respect to such
Partner’s GP-Related Partner Interest, and, except as expressly provided in this Section 6.5, such Withdrawn Partner shall not have any interest in the Partnership’s GP-Related Net Income (Loss) or in distributions related to such Partner’s GP-Related Partner Interest, GP-Related Investments or
other assets related to such Partner’s GP-Related Partner Interest. If a Partner Withdraws from the Partnership with respect to such Partner’s GP-Related
Partner Interest for any reason other than for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be entitled to receive, at the time or times specified in Section 6.5(i) below, in satisfaction and discharge in full of the
Withdrawn Partner’s GP-Related Partner Interest in the Partnership, (x) payment equal to the aggregate credit balance, if any, as of the Settlement Date of the Withdrawn Partner’s GP-Related Capital Accounts, (excluding any GP-Related Capital Account or portion thereof attributable to any GP-Related Investment)
and (y) the Withdrawn Partner’s percentage interest attributable to each GP-Related Investment in which the Withdrawn Partner has an interest as of the Settlement Date as provided in paragraph
(f) below (which shall be settled in accordance with paragraph (f) below), subject to all the terms and conditions of paragraphs (a)-(p) of this Section 6.5. If the amount determined pursuant to clause (x) above is an aggregate
negative balance, the Withdrawn Partner shall pay the amount thereof to the Partnership upon demand by the General Partner on or after the date of the statement referred to in Section 6.5(i) below; provided, that if the Withdrawn Partner
was solely a Limited Partner (other than a Special Limited Partner) on his Withdrawal Date, such payment shall be required only to the extent of any amounts payable to such Withdrawn Partner pursuant to this Section 6.5. Any aggregate negative
balance in the GP-Related Capital Accounts of a Withdrawn Partner who was solely a Limited Partner (other than a Special Limited Partner), upon the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5, shall be allocated among the other Partners’ GP-Related Capital Accounts in accordance
with their respective GP-
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Related Profit Sharing Percentages in the categories of GP-Related
Net Income (Loss) giving rise to such negative balance as determined by the General Partner as of such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn Partner’s GP-Related
Partner Interest in the Partnership, no value shall be ascribed to goodwill, the Partnership name or the anticipation of any value the Partnership or any successor thereto might have in the event the Partnership or any interest therein were to be
sold in whole or in part.
(ii) Notwithstanding clause (i) of this Section 6.5(e), in the case of a Partner whose
Withdrawal with respect to such Partner’s GP-Related Partner Interest resulted from such Partner’s death or Incompetence, such Partner’s estate or legal representative, as the case may be, may
elect, at the time described below, to receive a Nonvoting Limited Partner GP-Related Partner Interest and retain such Partner’s GP-Related Profit Sharing
Percentage in all (but not less than all) illiquid investments of the Partnership in lieu of a cash payment (or Note) in settlement of that portion of the Withdrawn Partner’s GP-Related Partner Interest.
The election referred to above shall be made within 60 days after the Withdrawn Partner’s Settlement Date, based on a statement of the settlement of such Withdrawn Partner’s GP-Related Partner
Interest in the Partnership pursuant to this Section 6.5.
(f) For purposes of clause (y) of paragraph (e)(i) above, a Withdrawn
Partner’s “percentage interest” means his GP-Related Profit Sharing Percentage as of the Settlement Date in the relevant GP-Related Investment. The
Withdrawn Partner shall retain his percentage interest in such GP- Related Investment and shall retain his GP-Related Capital Account or portion thereof attributable to
such GP-Related Investment, in which case such Withdrawn Partner (a “Retaining Withdrawn Partner”) shall become and remain a Limited Partner for such purpose (and, if the General Partner so
designates, such Limited Partner shall be a Nonvoting Limited Partner). The GP-Related Partner Interest of a Retaining Withdrawn Partner pursuant to this paragraph (f) shall be subject to the terms and
conditions applicable to GP-Related Partner Interests of any kind hereunder and such other terms and conditions as are established by the General Partner. At the option of the General Partner in its sole
discretion, the General Partner and the Retaining Withdrawn Partner may agree to have the Partnership acquire such GP-Related Partner Interest without the approval of the other Partners; provided, that
the General Partner shall reflect in the books and records of the Partnership the terms of any acquisition pursuant to this sentence.
(g)
The General Partner may elect, in lieu of payment in cash of any amount payable to a Withdrawn Partner pursuant to paragraph (e) above, to have the Partnership issue to the Withdrawn Partner a subordinated promissory note and/or to distribute
in kind to the Withdrawn Partner such Withdrawn Partner’s pro rata share (as determined by the General Partner) of any securities or other investments of the Partnership in relation to such Partner’s
GP-Related Partner Interest. If any securities or other investments are distributed in kind to a Withdrawn Partner under this paragraph (g), the amount described in clause (x) of paragraph (e)(i) shall be
reduced by the value of such distribution as valued on the latest balance sheet of the Partnership in accordance with generally accepted accounting principles or, if not appearing on such balance sheet, as reasonably determined by the General
Partner.
(h) [Intentionally omitted].
(i) Within 120 days after each Settlement Date, the General Partner shall submit to the Withdrawn Partner a statement of the settlement of such
Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5 together with any cash payment, subordinated promissory note and in kind distributions to be made to
such Partner as shall be determined by the General Partner. The General Partner shall submit to the Withdrawn Partner supplemental statements with respect to additional amounts payable to or by the Withdrawn Partner in respect of the settlement of
his GP-Related Partner Interest in the Partnership (e.g., payments in respect of GP-Related Investments
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pursuant to paragraph (f) above or adjustments to reserves pursuant to paragraph (j) below)
promptly after such amounts are determined by the General Partner. To the fullest extent permitted by law, such statements and the valuations on which they are based shall be accepted by the Withdrawn Partner without examination of the accounting
books and records of the Partnership or other inquiry. Any amounts payable by the Partnership to a Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in right of payment and subject to the prior payment or provision for payment
in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to the applicable date of payment or distribution; provided that such Withdrawn Partner shall otherwise
rank pari passu in right of payment (x) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year before the Withdrawal Date of the Withdrawn Partner in question and (y) with all persons who become
Withdrawn Partners and whose Withdrawal Date is within one year after the Withdrawal Date of the Withdrawn Partner in question.
(j) If the
aggregate reserves established by the General Partner as of the Settlement Date in making the foregoing calculations should prove, in the determination of the General Partner, to be excessive or inadequate, the General Partner may elect, but shall
not be obligated, to pay the Withdrawn Partner or his estate such excess, or to charge the Withdrawn Partner or his estate such deficiency, as the case may be.
(k) Any amounts owed by the Withdrawn Partner to the Partnership at any time on or after the Settlement Date (e.g., outstanding Partnership
loans or advances to such Withdrawn Partner) shall be offset against any amounts payable or distributable by the Partnership to the Withdrawn Partner at any time on or after the Settlement Date or shall be paid by the Withdrawn Partner to the
Partnership, in each case as determined by the General Partner. All cash amounts payable by a Withdrawn Partner to the Partnership under this Section 6.5 shall bear interest from the due date to the date of payment at a floating rate equal to
the lesser of (x) the rate of interest publicly announced from time to time by JPMorgan Chase Bank, N.A., as its prime rate or (y) the maximum rate of interest permitted by applicable law. The “due date” of amounts payable by a
Withdrawn Partner pursuant to Section 6.5(i) above shall be 120 days after a Withdrawn Partner’s Settlement Date. The “due date” of amounts payable to or by a Withdrawn Partner in respect of
GP-Related Investments for which the Withdrawn Partner has retained a percentage interest in accordance with paragraph (f) above shall be 120 days after realization with respect to such GP-Related Investment. The “due date” of any other amounts payable by a Withdrawn Partner shall be 60 days after the date such amounts are determined to be payable.
(l) At the time of the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the
Partnership pursuant to this Section 6.5, the General Partner may, to the fullest extent permitted by applicable law, impose any restrictions it deems appropriate on the assignment, pledge, encumbrance or other transfer by such Withdrawn
Partner of any interest in any GP-Related Investment retained by such Withdrawn Partner, any securities or other investments distributed in kind to such Withdrawn Partner or such Withdrawn Partner’s right
to any payment from the Partnership.
(m) If a Partner is required to Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest for Cause pursuant to Section 6.2(d), then his GP-Related Partner Interest shall be settled in accordance with paragraphs (a)-(r) of this
Section 6.5; provided, however, that the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
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(i) In settling the Withdrawn Partner’s interest in any GP-Related Investment in which he has an interest as of his Settlement Date, the General Partner may elect to (A) determine the GP-Related Unrealized Net Income (Loss)
attributable to each such GP-Related Investment as of the Settlement Date and allocate to the appropriate GP-Related Capital Account of the Withdrawn Partner his
allocable share of such GP-Related Unrealized Net Income (Loss) for purposes of calculating the aggregate balance of such Withdrawn Partner’s GP-Related Capital
Account pursuant to clause (x) of paragraph (e)(i) above, (B) credit or debit, as applicable, the Withdrawn Partner with the balance of his GP-Related Capital Account or portion thereof attributable
to each such GP-Related Investment as of his Settlement Date without giving effect to the GP-Related Unrealized Net Income (Loss) from such GP-Related Investment as of his Settlement Date, which shall be forfeited by the Withdrawn Partner or (C) apply the provisions of paragraph (f) above, provided, that the maximum amount of GP-Related Net Income (Loss) allocable to such Withdrawn Partner with respect to any GP-Related Investment shall equal such Partner’s percentage interest of the GP-Related Unrealized Net Income, if any, attributable to such GP-Related Investment as of the Settlement Date (the balance of such
GP-Related Net Income (Loss), if any, shall be allocated as determined by the General Partner). The Withdrawn Partner shall not have any continuing interest in any
GP-Related Investment to the extent an election is made pursuant to (A) or (B) above.
(ii) Any amounts payable by the Partnership to the Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in
right of payment and subject to the prior payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to or on or after the applicable date of payment or
distribution.
(n) The payments to a Withdrawn Partner pursuant to this Section 6.5 may be conditioned on the compliance by such
Withdrawn Partner with any lawful and reasonable (under the circumstances) restrictions against engaging or investing in a business competitive with that of the Partnership or any of its subsidiaries and Affiliates for a period not exceeding two
years determined by the General Partner. Upon written notice to the General Partner, any Withdrawn Partner who is subject to noncompetition restrictions established by the General Partner pursuant to this paragraph (o) may elect to forfeit the
principal amount payable in the final installment of his subordinated promissory note, together with interest to be accrued on such installment after the date of forfeiture, in lieu of being bound by such restrictions.
(o) In addition to the foregoing, the General Partner shall have the right to pay a Withdrawn Partner (other than the General Partner) a
discretionary additional payment in an amount and based upon such circumstances and conditions as it determines to be relevant. The provisions of this Section 6.5 shall apply to any Investor Limited Partner relating to another Limited Partner,
and to any transferee of any GP-Related Partner Interest of such Partner pursuant to Section 6.3, if such Partner Withdraws from the Partnership.
(p) (i) The Partnership will assist a Withdrawn Partner or his estate or guardian, as the case may be, in the settlement of the Withdrawn
Partner’s GP-Related Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his estate.
(ii) The Partnership may reasonably determine in good faith to retain outside professionals to provide the assistance to Withdrawn Partners or
their estates or guardians, as referred to above. In such instances, the Partnership will obtain the prior approval of a Withdrawn Partner or his estate or guardian, as the case may be, prior to engaging such professionals. If the Withdrawn Partner
(or his estate or guardian) declines to incur such costs, the Partnership will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s
day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
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(q) Each Partner (other than the General Partner) hereby irrevocably appoints the General
Partner as such Partner’s true and lawful agent, representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make,
execute, sign and file, on behalf of such Partner, any and all agreements, instruments, consents, ratifications, documents and certificates which the General Partner deems necessary or advisable in connection with any transaction or matter
contemplated by or provided for in this Section 6.5, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is
coupled with an interest and shall survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 6.6. Termination of the Partnership. The General Partner may dissolve the Partnership at any time on not less than 60
days’ notice of the dissolution date given to the other Partners. Upon the dissolution of the Partnership, the Partners’ respective interests in the Partnership shall be valued and settled in accordance with the procedures set forth in
Sections, 6.5, which provide for allocations to the GP-Related Capital Accounts of the Partners and distributions in accordance with the capital account balances of the Partners.
Section 6.7. Certain Tax Matters. i. All items of income, gain, loss, deduction and credit of the Partnership shall be allocated
among the Partners for Federal, State and local income tax purposes in the same manner as such items of income, gain, loss, deduction and credit shall be allocated among the Partners pursuant to this Agreement, except as may otherwise be provided
herein or by the Code or other applicable law. To the extent U.S. Treasury Regulations promulgated pursuant to Subchapter K of the Code (including under Sections 704(b) and (c) of the Code) or other applicable law require allocations for tax
purposes that differ from the foregoing allocations, the General Partner may determine the manner in which such tax allocations shall be made so as to comply more fully with such Treasury Regulations or other applicable law and, at the same time,
preserve the economic relationships among the Partners as set forth in this Agreement. In the event there is a net decrease in partnership minimum gain or partner nonrecourse debt minimum gain (determined in accordance with the principles of
Regulations Sections 1.704-2(d) and 1.704-2(i)) during any taxable year of the Partnership, each Partner shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to its respective share of such net decrease during such year, determined pursuant to Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(f). In addition, this Agreement shall be considered to
contain a “qualified income offset” as provided in Regulations Section 1.704- 1(b)(2)(ii)(d).
(a) The General Partner shall cause to be prepared all Federal, State and local tax returns of the Partnership for each year for which such
returns are required to be filed and, after approval of such returns by the General Partner, shall cause such returns to be timely filed. The General Partner shall determine the appropriate treatment of each item of income, gain, loss, deduction and
credit of the Partnership and the accounting methods and conventions under the tax laws of the United States, the several States and other relevant jurisdictions as to the treatment of any such item or any other method or procedure related to the
preparation of such tax returns. The General Partner may cause the Partnership to make or refrain from making any and all elections permitted by such tax laws. Each Partner agrees that he shall not, unless he provides prior notice of such action to
the Partnership, (i) treat, on his individual income tax returns, any item of income, gain, loss, deduction or credit relating to his interest in the Partnership in a manner inconsistent with the treatment of such item by the Partnership as
reflected on the Form K-1 or other information statement furnished by the Partnership to such Partner for use in preparing his income tax returns or (ii) file any claim for refund relating to any such
item based on, or which would result in, such inconsistent treatment. In respect of an income tax audit of any tax return of the
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Partnership, the filing of any amended return or claim for refund in connection with any item of income,
gain, loss, deduction or credit reflected on any tax return of the Partnership, or any administrative or judicial proceedings arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, (A) the
Tax Matters Partner (as defined below) shall be authorized to act for, and his decision shall be final and binding upon, the Partnership and all Partners except to the extent a Partner shall properly elect to be excluded from such proceeding
pursuant to the Code, (B) all expenses incurred by the Tax Matters Partner in connection therewith (including, without limitation, attorneys’, accountants’ and other experts’ fees and disbursements) shall be expenses of the
Partnership and (C) no Partner shall have the right to (1) participate in the audit of any Partnership tax return, (2) file any amended return or claim for refund in connection with any item of income, gain, loss, deduction or credit
reflected on any tax return of the Partnership (unless he provides prior notice of such action to the Partnership as provided above), (3) participate in any administrative or judicial proceedings conducted by the Partnership or the Tax Matters
Partner arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, or (4) appeal, challenge or otherwise protest any adverse findings in any such audit conducted by the Partnership or the Tax
Matters Partner or with respect to any such amended return or claim for refund filed by the Partnership or the Tax Matters Partner or in any such administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner. The
Partnership and each Partner hereby designate any Partner selected by the General Partner as the “tax matters partner” for purposes of Section 6231(a)(7) of the Code (the “Tax Matters Partner”). To the fullest extent
permitted by applicable law, each Partner agrees to indemnify and hold harmless the Partnership and all other Partners from and against any and all liabilities, obligations, damages, deficiencies and expenses resulting from any breach or violation
by such Partner of the provisions of this Section 6.8 and from all actions, suits, proceedings, demands, assessments, judgments, costs and expenses, including reasonable attorneys’ fees and disbursements, incident to any such breach or
violation.
(b) Each individual Partner shall provide to the Partnership copies of each Federal, State and local income tax return of such
Partner (including any amendment thereof) within 30 days after filing such return.
Section 6.8. Special Basis Adjustments. In
connection with any assignment or transfer of a Partnership interest permitted by the terms of this Agreement, the General Partner may cause the Partnership, on behalf of the Partners and at the time and in the manner provided in Code Regulations Section 1.754-1(b), to make an election to adjust the basis of the Partnership’s property in the manner provided in Sections 734(b) and 743(b) of the Code.
ARTICLE VII
CAPITAL COMMITMENT
INTERESTS; CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
Section 7.1. Capital Commitment Interests, etc.
(a) (i) This Article VII and Article VIII hereof set forth certain terms and conditions with respect to the Capital Commitment Partner
Interests and the Capital Commitment SP NC Interest and matters related to the Capital Commitment Partner Interests and the Capital Commitment SP NC Interest. Except as otherwise expressly provided in this Article VII or in Article VIII, the terms
and provisions of this Article VII and Article VIII shall not apply to the GP-Related Partner Interests or the GP-Related SP NC Interest.
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(ii) Each Partner severally, agrees to make contributions of capital to the
Partnership (“Capital Commitment-Related Capital Contributions”) as required to fund the Partnership’s direct or indirect capital contributions to SP NC, in respect of the Capital Commitment SP NC Interest, if any, and the
related Capital Commitment SP NC Commitment, if any. No Partner shall be obligated to make Capital Commitment-Related Capital Contributions to the Partnership in an amount in excess of such Partner’s Capital Commitment-Related Commitment. The
Commitment Agreements and SMD Agreements, if any, of the Partners may include provisions with respect to the foregoing matters. It is understood that a Partner will not necessarily participate in each Capital Commitment Investment (which may include
additional amounts invested in an existing Capital Commitment Investment) nor will a Partner necessarily have the same Capital Commitment Profit Sharing Percentage with respect to (i) the Partnership’s portion of the Capital Commitment SP
NC Commitment, if any, or (ii) the making of each Capital Commitment Investment in which such Partner participates; provided, that this in no way limits the terms of any Commitment Agreement or SMD Agreement. In addition, nothing
contained herein shall be construed to give any Partner the right to obtain financing with respect to the purchase of any Capital Commitment Interest, and nothing contained herein shall limit or dictate the terms upon which the General Partner and
its Affiliates may provide such financing. The acquisition of a Capital Commitment Interest by a Partner shall be evidenced by receipt by the Partnership of funds equal to such Partner’s Capital Commitment-Related Commitment then due with
respect to such Capital Commitment Interest and such appropriate documentation as the General Partner may submit to the Partners from time to time.
(b) The General Partner or one of its Affiliates (in such capacity, the “Advancing Party”) may in its sole discretion advance
to any Limited Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are also executive officers of The Blackstone Group L.P. or any Affiliate thereof) all or any portion
of the Capital Commitment-Related Capital Contributions due to the Partnership from such Limited Partner with respect to any Capital Commitment Investment (“Firm Advances”). Each such Limited Partner shall pay to the Advancing Party
interest on each Firm Advance from the date of such Firm Advance until the repayment thereof by such Limited Partner. Each Firm Advance shall be repayable in full, including accrued interest to the date of such repayment, upon prior written notice
by the Advancing Party. The making and repayment of each Firm Advance shall be recorded in the books and records of the Partnership, and such recording shall be conclusive evidence of each such Firm Advance, binding on the Limited Partner and the
Advancing Party absent manifest error. Except as provided below, the interest rate applicable to a Firm Advance shall equal the cost of funds of the Advancing Party at the time of the making of such Firm Advance. The Advancing Party shall inform any
Limited Partner of such rate upon such Limited Partner’s request; provided, that such interest rate shall not exceed the maximum interest rate allowable by applicable law; provided further, that amounts that are otherwise payable
to such Limited Partner pursuant to Section 7.4(a) shall be used to repay such Firm Advance (including interest thereon). The Advancing Party may, in its sole discretion, change the terms of Firm Advances (including the terms contained herein)
and/or discontinue the making of Firm Advances; provided, that (i) the Advancing Party shall notify the relevant Limited Partners of any material changes to such terms and (ii) the interest rate applicable to such Firm Advances and
overdue amounts thereon shall not exceed the maximum interest rate allowable by applicable law.
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Section 7.2. Capital Commitment Capital Accounts.
(a) There shall be established for each Partner on the books of the Partnership as of the date of formation of the Partnership, or such later
date on which such Partner is admitted to the Partnership, and on each such other date as such Partner first acquires a Capital Commitment Interest in a particular Capital Commitment Investment, a Capital Commitment Capital Account for each Capital
Commitment Investment in which such Partner acquires a Capital Commitment Interest on such date. Each Capital Commitment-Related Capital Contribution of a Partner shall be credited to the appropriate Capital Commitment Capital Account of such
Partner on the date such Capital Commitment-Related Capital Contribution is paid to the Partnership. Capital Commitment Capital Accounts shall be adjusted to reflect any transfer of a Partner’s interest in the Partnership related to his Capital
Commitment Partner Interest, as provided in this Agreement.
(b) A Partner shall not have any obligation to the Partnership or to any other
Partner to restore any negative balance in the Capital Commitment Capital Account of such Partner. Until distribution of any such Partner’s interest in the Partnership with respect to a Capital Commitment Interest as a result of the disposition
by the Partnership of the related Capital Commitment Investment and in whole upon the dissolution of the Partnership, neither such Partner’s Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption
except with the consent of the General Partner.
Section 7.3. Allocations.
(a) Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be allocated to the related Capital
Commitment Capital Accounts of all the Partners (including the General Partner) participating in such Capital Commitment Investment in proportion to their respective Capital Commitment Profit Sharing Percentages for such Capital Commitment
Investment. Capital Commitment Net Income (Loss) on any Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion which such Partner’s aggregate Capital Commitment Capital Accounts bear to the aggregate
Capital Commitment Capital Accounts of all Partners; provided, that if any Partner makes the election provided for in Section 7.6, Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be
allocated to the related Capital Commitment Capital Accounts of all the Partners participating in such Capital Commitment Investment who do not make such election in proportion to their respective Capital Commitment Profit Sharing Percentages for
such Capital Commitment Investment.
(b) Any special costs relating to distributions pursuant to Section 7.6 or 7.7 shall be specially
allocated to the electing Limited Partner.
Section 7.4. Distributions.
(a) Each Limited Partner’s allocable portion of Capital Commitment Net Income received from his Capital Commitment Investments,
distributions to such Limited Partner that constitute returns of capital, and other Capital Commitment Net Income of the Partnership (including without limitation Capital Commitment Net Income attributable to Unallocated Capital Commitment
Interests) during a fiscal year of the Partnership will be credited to payment of the Investor Notes to the extent required below as of the last day of such fiscal year (or on such earlier date as related distributions are made in the sole
discretion of the General Partner) with any cash amount distributable to such Limited Partner pursuant to clauses (ii) and (vii) below to be distributed within 45 days after the end of each fiscal year of the Partnership (or in each case on
such earlier date as selected by the General Partner in its sole discretion) as follows (subject to Section 7.4(c) below):
(i) First, to the payment of interest then due on all Investor Notes (relating to Capital Commitment Investments or otherwise)
of such Limited Partner (to the extent Capital Commitment Net Income and distributions or payments from Other Sources do not equal or exceed all interest payments due, the selection of those of such Limited Partner’s Investor Notes upon which
interest is to be paid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor);
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(ii) Second, to distribution to the Limited Partner of an amount equal to
the Federal, State and local income taxes on income of the Partnership allocated to such Limited Partner for such year in respect of such Limited Partner’s Capital Commitment Partner Interest (the aggregate amount of any such distribution shall
be determined by the General Partner, subject to the limitation that the minimum aggregate amount of such distribution be the tax that would be payable if the taxable income of the Partnership related to all Partners’ Capital Commitment Partner
Interests were all allocated to an individual subject to the then-prevailing maximum Federal, New York State and New York City tax rates (taking into account the extent to which such taxable income allocated by the Partnership was composed of
long-term capital gains and the deductibility of State and local income taxes for Federal income tax purposes)); provided, that additional amounts shall be paid to the Limited Partner pursuant to this clause (ii) to the extent that such amount
reduces the amount otherwise distributable to the Limited Partner pursuant to a comparable provision in any other BCE Agreement and there are not sufficient amounts to fully satisfy such provision from the relevant partnership or other entity;
provided further, that amounts paid pursuant to the provisions in such other BCE Agreements comparable to the immediately preceding proviso shall reduce those amounts otherwise distributable to the Limited Partner pursuant to provisions in such
other BCE Agreements that are comparable to this clause (ii);
(iii) Third, to the payment in full of the principal amount
of the Investor Note financing (A) any Capital Commitment Investment disposed of during or prior to such fiscal year or (B) any BCE Investments (other than Capital Commitment Investments) disposed of during or prior to such fiscal year, to
the extent not repaid from Other Sources;
(iv) Fourth, to the return to such Limited Partner of (A) all Capital
Commitment-Related Capital Contributions made in respect of the Capital Commitment Interest to which any Capital Commitment Investment disposed of during or prior to such fiscal year relates or (B) all capital contributions made to any
Blackstone Collateral Entity (other than the Partnership) in respect of interests therein relating to BCE Investments (other than Capital Commitment Investments) disposed of during or prior to such fiscal year (including all principal paid on the
related Investor Notes), to the extent not repaid from amounts of Other Sources (other than amounts of CC Carried Interest);
(v) Fifth, to the payment of principal (including any previously deferred amounts) then owing under all other Investor Notes of
such Limited Partner (including those unrelated to the Partnership), the selection of those of such Limited Partner’s Investor Notes to be repaid and the division of payments among such Investor Notes to be determined by the Lender or
Guarantor;
(vi) Sixth, up to 50% of any Capital Commitment Net Income remaining after application pursuant to clauses
(i) through (v) above shall be applied pro rata to prepayment of principal of all remaining Investor Notes of such Limited Partner (including those unrelated to the Partnership), the selection of those of such Limited Partner’s Investor
Notes to be repaid, the division of payments among such Investor Notes and the percentage of remaining Capital Commitment Net Income to be applied thereto to be determined by the Lender or Guarantor; and
(vii) Seventh, to such Limited Partner to the extent of any amount of Capital Commitment Net Income remaining after making the
distributions in clauses (i) through (vi) above, and such amount is not otherwise required to be applied to Investor Notes pursuant to the terms thereof.
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To the extent there is a partial disposition of a Capital Commitment Investment or any other
BCE Investment, as applicable, the payments in clauses (iii) and (iv) above shall be based on that portion of the Capital Commitment Investment or other BCE Investment, as applicable, disposed of, and the principal amount and related interest
payments of such Investor Note shall be adjusted to reflect such partial payment so that there are equal payments over the remaining term of the related Investor Note. For a Limited Partner who is no longer an employee or officer of Blackstone,
distributions shall be made pursuant to clauses (i) through (iii) above, and then, unless the General Partner or its Affiliate has exercised its rights pursuant to Section 8.1 hereof, any remaining income or other distribution in respect
of such Limited Partner’s Capital Commitment Partner Interest shall be applied to the prepayment of the outstanding Investor Notes of such Limited Partner, until all such Limited Partner’s Investor Notes have been repaid in full, with any
such income or other distribution remaining thereafter distributed to such Limited Partner.
Distributions of Capital Commitment Net
Income may be made at any other time at the discretion of the General Partner. At the General Partner’s discretion, any amounts distributed to a Limited Partner in respect of such Limited Partner’s Capital Commitment Partner Interest will
be net of any interest and principal payable on his Investor Notes for the full period in respect of which the distribution is made. A distribution of Capital Commitment Net Income to the General Partner shall be made contemporaneously with each
distribution of Capital Commitment Net Income to or for the accounts of the Limited Partners.
(b) [Intentionally omitted]
(c) To the extent that the foregoing Partnership distributions and distributions and payments from Other Sources are insufficient to satisfy
any principal and/or interest due on Investor Notes, and to the extent that the General Partner in its sole discretion elects to apply this paragraph (c) to any individual payments due, such unpaid interest will be added to the remaining
principal amount of such Investor Notes and shall be payable on the next scheduled principal payment date (along with any deferred principal and any principal and interest due on such date); provided, that such deferral shall not apply to a
Limited Partner that is no longer an employee or officer of Blackstone. All unpaid interest on such Investor Notes shall accrue interest at the interest rate then in effect for such Investor Notes.
(d) [Intentionally omitted.]
(e)
The Capital Commitment Capital Account of each Partner shall be reduced by the amount of any distribution to such Partner pursuant to paragraph (a) of this Section 7.4.
(f) At any time that a sale, exchange, transfer or other disposition of a portion of a Capital Commitment Investment is being considered by the
Partnership or SP NC (a “Capital Commitment Disposable Investment”), at the election of the General Partner each Partner’s Capital Commitment Interest with respect to such Capital Commitment Investment shall be vertically
divided into two separate Capital Commitment Interests, a Capital Commitment Interest attributable to the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class B Interest”), and a
Capital Commitment Interest attributable to such Capital Commitment Investment excluding the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class A Interest”). Distributions
(including those resulting from a direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class B Interests
with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital
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Commitment Class B Interests, and distributions (including those resulting from the direct or indirect
sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Investment excluding such Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class A Interests with
respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class A Interests.
(g) (i) If the Partnership) is obligated under the Giveback Provisions to contribute to SP NC all or a portion of a Giveback Amount with
respect to the Capital Commitment SP NC Interest (the amount of any such obligation of the Partnership being herein called a “Capital Commitment Giveback Amount”), the Partnership shall call for such amounts as are
necessary to satisfy such obligation of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the Partnership, such an amount of
prior distributions by the Partnership with respect to the Capital Commitment SP NC Interest (the “Capital Commitment Recontribution Amount”) which equals such Partner’s pro rata share of prior distributions in connection with
(a) the Capital Commitment SP NC Investment giving rise to the Capital Commitment Giveback Amount, or (b) if the amounts contributed pursuant to clause (a) above are insufficient to satisfy such Capital Commitment Giveback Amount,
Capital Commitment SP NC Investments other than the one giving rise to such obligation. Each Partner shall promptly contribute to the Partnership upon notice thereof such Partner’s Capital Commitment Recontribution Amount. Prior to such time,
the Partnership may, in the General Partner’s discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of the Capital Commitment Giveback Amount will
probably materialize (and an estimate of the aggregate amount of such obligations).
(ii) (A) In the event any Partner
(a “Capital Commitment Defaulting Party”) fails to recontribute all or any portion of such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount for any reason, the Partnership shall require all other
Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Capital Commitment Profit Sharing Percentages), such amounts as are necessary to fulfill the Capital Commitment Defaulting Party’s obligation
to pay such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount (a “Capital Commitment Deficiency Contribution”) if the General Partner determines in its good faith judgment that the Partnership will
be unable to collect such amount in cash from such Capital Commitment Defaulting Party for payment of the Capital Commitment Giveback Amount at least 20 Business Days prior to the latest date that the Partnership is permitted to pay the Capital
Commitment Giveback Amount; provided, that no Partner shall as a result of such Capital Commitment Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Capital Commitment Recontribution Amount
initially requested from such Partner in respect of such default. Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs
associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership against the Capital
Commitment Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the Capital Commitment Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such Capital
Commitment Defaulting Party becoming a Capital Commitment Defaulting Party) to set-off as appropriate and apply against such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount
any amounts otherwise payable to the Capital Commitment Defaulting Party by the Partnership or any Affiliate thereof. Each Partner hereby grants to the Partnership a security interest, effective upon such Partner becoming a Capital Commitment
Defaulting Party, in
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all accounts receivable and other rights to receive payment from the Partnership or any
Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the Partnership may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner hereby appoints the
Partnership as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or in the name of the Partnership, to take any
actions which may be necessary to accomplish the intent of the immediately preceding sentence. The Partnership shall be entitled to collect interest on the Capital Commitment Recontribution Amount of a Capital Commitment Defaulting Party from the
date such Capital Commitment Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(B) Any Partner’s failure to make a Capital Commitment Deficiency Contribution shall cause such Partner to be a Capital
Commitment Defaulting Party with respect to such amount.
(iii) A Partner’s obligation to make contributions to the Partnership under
this Section 7.4(g) shall survive the termination of the Partnership.
Section 7.5. Valuations. Capital Commitment
Investments shall be valued annually as of the end of each year (and at such other times as deemed appropriate by the General Partner) in accordance with the principles utilized by the Partnership (or any Affiliate of the Partnership that is a
general partner of SP NC) in valuing investments of SP NC or, in the case of investments not held by SP NC, in the good faith judgment of the General Partner, subject in each case to the second proviso of the immediately succeeding sentence. The
value of any Capital Commitment Interest as of any date (the “Capital Commitment Value”) shall be based on the value of the underlying Capital Commitment Investment as set forth above; provided, that the Capital Commitment
Value may be determined as of an earlier date if determined appropriate by the General Partner in good faith; provided further, that such value may be adjusted by the General Partner to take into account factors relating solely to the value
of a Capital Commitment Interest (as compared to the value of the underlying Capital Commitment Investment), such as restrictions on transferability, the lack of a market for such Capital Commitment Interest and lack of control of the underlying
Capital Commitment Investment. To the full extent permitted by applicable law such valuations shall be final and binding on all Partners; provided further, that the immediately preceding proviso shall not apply to any Capital Commitment
Interests held by a person who is or was at any time a direct member of a General Partner.
Section 7.6. Disposition Election.
(a) At any time prior to the date of the Partnership’s execution of a definitive agreement to dispose of a Capital Commitment
Investment, the General Partner may in its sole discretion permit a Partner to retain all or any portion of its pro rata share of such Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in
such Capital Commitment Investment). If the General Partner so permits, such Partner shall instruct the General Partner in writing prior to such date (i) not to dispose of all or any portion of such Partner’s pro rata share of such Capital
Commitment Investment (the “Retained Portion”) and (ii) either to (A) distribute such Retained Portion to such Partner on the closing date of such disposition or (B) retain such Retained Portion in the Partnership on
behalf of such Partner until such time as such Partner shall instruct the General Partner upon 5 days notice to distribute such Retained Portion to such Partner. Such Partner’s Capital Commitment Capital Account shall not be adjusted in any way
to reflect the retention in the Partnership of such Retained Portion or the Partnership’s disposition of other Partners’ pro rata shares of such Capital Commitment Investment; provided, that such Partner’s Capital Commitment
Capital Account shall be adjusted upon distribution of such Retained Portion to such Partner or upon distribution of proceeds with respect to a subsequent disposition thereof by the Partnership.
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(b) No distribution of such Retained Portion shall occur unless any Investor Notes relating
thereto shall have been paid in full prior to or simultaneously with such distribution.
Section 7.7. Capital Commitment Special
Distribution Election.
(a) From time to time during the term of this Agreement, the General Partner may in its sole discretion, upon
receipt of a written request from a Partner, distribute to such Partner any portion of its pro rata share of a Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such Capital Commitment
Investment) (a “Capital Commitment Special Distribution”). Such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Capital Commitment Special Distribution.
(b) No Capital Commitment Special Distributions shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or
simultaneously with such Capital Commitment Special Distribution.
ARTICLE VIII
WITHDRAWAL; ADMISSION OF NEW PARTNERS
Section 8.1. Limited Partner Withdrawal; Repurchase of Capital Commitment Interests.
(a) Capital Commitment Interests (or a portion thereof) that were financed by Investor Notes will be treated as not subject to repurchase for
purposes hereof based upon the proportion of (a) the sum of Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to each Capital Commitment Interest and principal payments on the related Investor Note
to (b) the sum of the Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to such Capital Commitment Interest, the original principal amount of such Investor Note and all deferred amounts of interest which
from time to time comprise part of the principal amount of the Investor Note. A Limited Partner may prepay a portion of any outstanding principal on the Investor Notes; provided, that in the event that a Limited Partner prepays all or any
portion of the principal amount of the Investor Notes within nine months prior to the date on which such Limited Partner is no longer an employee or officer of Blackstone, the Partnership (or its designee) shall have the right, in its sole
discretion, to purchase the Capital Commitment Interest that became Non-Contingent as a result of such prepayment; provided further, that the purchase price for such Capital Commitment Interest shall be
determined in accordance with the determination of the purchase price of a Limited Partner’s Contingent Capital Commitment Interests as set forth in paragraph (b) below. Prepayments made by a Limited Partner shall apply pro rata against
all of such Limited Partner’s Investor Notes; provided, that such Limited Partner may request that such prepayments be applied only to Investor Notes related to BCE Investments that are related to one or more Blackstone Collateral
Entities specified by such Limited Partner. Except as expressly provided herein, Capital Commitment Interests that were not financed in any respect with Investor Notes shall be treated as Non-Contingent
Capital Commitment Interests.
(b) Upon a Limited Partner ceasing to be an officer or employee of the General Partner or any of its
Affiliates, other than as a result of such Limited Partner dying or suffering a Total Disability, such Limited Partner (the “Withdrawn Partner”) and the Partnership or any other person designated by the General Partner shall each
have the right (exercisable by the Withdrawn Partner within 30 days and by the Partnership or its designee(s) within 45 days of such Limited Partner’s ceasing to be such an officer or employee) or any time thereafter, upon 30 days notice, but
not the obligation, to require
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the Partnership, subject to the Partnership Act, to buy (in the case of exercise of such right by such
Withdrawn Partner) or the Withdrawn Partner to sell (in the case of exercise of such right by the Partnership or its designee(s)) all (but not less than all) such Withdrawn Partner’s Contingent Capital Commitment Interests. The purchase price
for each such Contingent Capital Commitment Interest will be an amount equal to (i) the outstanding principal amount of the related Investor Note plus accrued interest thereon to the date of purchase (such portion of the purchase price to be
made in cash) and (ii) an additional amount (the “Adjustment Amount”) equal to (x) all interest paid by the Limited Partner on the portion of the principal amount of the Investor Note relating to the portion of the related
Capital Commitment Interest remaining Contingent plus (y) all Capital Commitment Net Losses allocated to the Withdrawn Partner on the Contingent portion of such Capital Commitment Interest minus (z) all Capital Commitment Net Income
allocated to the Withdrawn Partner on the Contingent portion of such Capital Commitment Interest; provided, that, if the Withdrawn Partner was terminated from employment or his position as an officer for Cause, the amounts referred to in
clause (x) or (y) of the Adjustment Amount, in the General Partner’s sole discretion, may be deemed to equal zero. The Adjustment Amount shall, if positive, be payable by the holders of the purchased Capital Commitment Interests to the
Withdrawn Partner from the next Capital Commitment Net Income received by such holders on the Contingent portion of such Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received. If the
Adjustment Amount resulting from an exchange is negative, it shall be payable to the holders of the purchased Capital Commitment Interest by the Withdrawn Partner at the time such Capital Commitment Net Income is received by the Withdrawn Partner
from the next Capital Commitment Net Income on the Non-Contingent portion of the Withdrawn Partner’s Capital Commitment Interests or, if the Partnership or its designee(s) elect to purchase such Withdrawn
Partner’s Non-Contingent Capital Commitment Interests, in cash by the Withdrawn Partner at the time of such purchase; provided, that the General Partner and its Affiliates may offset any amounts
otherwise owing to a Withdrawn Partner against any Adjustment Amount owed by such Withdrawn Partner. Until so paid, such remaining Adjustment Amount will not itself bear interest. At the time of such purchase of the Withdrawn Partner’s
Contingent Capital Commitment Interests, his related Investor Note shall be payable in full. If neither the Withdrawn Partner nor the Partnership nor its designee(s) exercise the right to require repurchase of such Contingent Capital Commitment
Interests, then the Withdrawn Partner shall retain the Contingent portion of his Capital Commitment Interests and the Investor Notes shall remain outstanding, shall become fully recourse to the Withdrawn Partner in his individual capacity, shall be
payable in accordance with their remaining original maturity schedules and shall be prepayable at any time by the Withdrawn Partner at his option, and the General Partner shall apply such prepayments against outstanding Investor Notes on a pro rata
basis. To the extent that another Partner purchases a portion of a Capital Commitment Interest of a Withdrawn Partner, the purchasing Partner’s Capital Commitment Capital Account and Capital Commitment Profit Sharing Percentage for such Capital
Commitment Investment shall be correspondingly increased.
(c) Upon the occurrence of a Final Event with respect to any Limited Partner,
such Limited Partner shall thereupon cease to be a Partner with respect to such Limited Partner’s Capital Commitment Partner Interest. If such a Final Event shall occur, no Successor in Interest to any such Limited Partner shall for any purpose
hereof become or be deemed to become a Partner. The sole right, as against the Partnership and the remaining Partners, acquired hereunder by, or resulting hereunder to, a Successor in Interest to any Partner shall be to receive any distributions and
allocations with respect to such Limited Partner’s Capital Commitment Partner Interest pursuant to Article VII and this Article VIII, subject to the right of the Partnership to purchase the Capital Commitment Interests of such former Partner
pursuant to Section 8.1(b) or Section 8.1(d)) to the extent, at the time, in the manner and in the amount otherwise payable to such Limited Partner had such a Final Event not occurred, and no other right shall be acquired hereunder by, or
shall result hereunder to, a Successor in Interest to such Partner, whether by operation of law or otherwise. Until distribution of any such Partner’s interest in the Partnership upon the dissolution of the Partnership as provided in
Section 9.2, neither his Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption without the consent of the General Partner. The Partnership shall be entitled to treat any Successor in Interest to
such Partner as the only person entitled to receive distributions and allocations hereunder with respect to such Partner’s Capital Commitment Partner Interest.
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(d) If a Limited Partner dies or suffers a Total Disability, all Contingent Capital
Commitment Interests of such Partner shall be purchased by the Partnership or its designee (within 30 days of the first date on which the Partnership knows or has reason to know of such Limited Partner’s death or Total Disability) as provided
in Section 8.1(b) (except that any Adjustment Amount shall be payable by or to the estate or personal representative in cash), and any Investor Notes financing such Contingent Capital Commitment Interests shall thereupon be prepaid as provided
in Section 8.1(b). In addition, in the case of the death or Total Disability of a Limited Partner, if the estate or personal representative of such Limited Partner so requests in writing within 180 days of the Limited Partner’s death or
ceasing to be an employee or member (directly or indirectly) of the General Partner or any of its Affiliates by reason of Total Disability (such requests shall not exceed one per calendar year), the Partnership or its designee may but is not
obligated to purchase for cash all (but not less than all) Non- Contingent Capital Commitment Interests of such Limited Partner as of the last day of the Partnership’s then current fiscal year at a price
equal to the Capital Commitment Value thereof. Each Limited Partner shall be required to include appropriate provisions in his will to reflect such provisions of this Agreement. In addition, the Partnership may, in the sole discretion of the General
Partner, upon notice to the estate or personal representative of such Limited Partner within 30 days of the first date on which the Partnership knows or has reason to know of such Limited Partner’s death or Total Disability, determine either
(i) to distribute Securities or other property to the estate or personal representative in exchange for such Non- Contingent Capital Commitment Interests as provided in Section 8.1(e) or (ii) to
require sale of such Non- Contingent Capital Commitment Interests to the Partnership or its designee as of the last day of any fiscal year of the Partnership (or earlier period, as determined by the General
Partner in its sole discretion) for an amount in cash equal to the Capital Commitment Value thereof.
(e) In lieu of retaining a Withdrawn
Partner as a Limited Partner with respect to any Non-Contingent Capital Commitment Interests, the General Partner may, in its sole discretion, by notice to such Withdrawn Partner within 45 days of his ceasing
to be an employee or officer of the General Partner or any of its Affiliates, or at any time thereafter, upon 30 days written notice, determine (1) to distribute to such Withdrawn Partner the pro rata portion of the Securities or other property
underlying such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, subject to any restrictions on distributions associated with the Securities or other property, in satisfaction of his Non-Contingent Capital Commitment Interests in the Partnership or (2) to cause, as of the last day of any fiscal year of the Partnership (or earlier period, as determined by the General Partner in its sole
discretion), the Partnership or another person designated by the General Partner (who may be itself another Limited Partner or another Affiliate of the General Partner) to purchase all (but not less than all) of such Withdrawn Partner’s Non-Contingent Capital Commitment Interests for a price equal to the Capital Commitment Value thereof. The General Partner shall condition any distribution or purchase of voting Securities pursuant to paragraph
(d) above or this paragraph (e) upon the Withdrawn Partner’s execution and delivery to the Partnership of an appropriate irrevocable proxy, in favor of the Partnership or its nominee, relating to such Securities.
(f) The Partnership may subsequently transfer any Unallocated Capital Commitment Interest or portion thereof which is purchased by it as
described above to any other person approved by the General Partner. In connection with such purchase or transfer or the purchase of a Capital Commitment Interest or portion thereof by the Partnership’s designee(s), Blackstone may loan all or a
portion of the purchase price of the transferred or purchased Capital Commitment Interest to the Partnership, the transferee or the designee-purchaser(s), as applicable (excluding any of the foregoing
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who is an executive officer of The Blackstone Group L.P. or any of its Affiliates). To the extent that a
Withdrawn Partner’s Capital Commitment Interests (or portions thereof) are repurchased by the Partnership and not transferred to or purchased by another person, all or any portion of such repurchased Capital Commitment Interests may, in the
sole discretion of the General Partner, (i) be allocated to each Partner already participating in the Capital Commitment Investment to which the repurchased Capital Commitment Interest relates, (ii) be allocated to each Partner in the
Partnership, whether or not already participating in such Capital Commitment Investment, and/or (iii) continue to be held by the Partnership itself as an unallocated Capital Commitment Investment (such Capital Commitment Interests being herein
called “Unallocated Capital Commitment Interests”). To the extent that a Capital Commitment Interest is allocated to Partners as provided in clause (i) and/or (ii) above, any indebtedness incurred by the Partnership to
finance such repurchase shall also be allocated to such Partners. All such Capital Commitment Interests allocated to Limited Partners shall be deemed to be Contingent and shall become Non-Contingent as and to
the extent that the principal amount of such related indebtedness is repaid. The Limited Partners receiving such allocations shall be responsible for such related indebtedness only on a nonrecourse basis to the extent appropriate as provided in this
Agreement, except as such Limited Partners and the General Partner shall otherwise agree. If the indebtedness financing such repurchased interests is not so limited, the Partnership may require an assumption by the Limited Partners of such
indebtedness on the terms thereof as a precondition to allocation of the related Capital Commitment Interests to such Limited Partners; provided, that a Limited Partner shall not, except as set forth in his Investor Note, be obligated to
accept any personally recourse obligation unless his prior consent is obtained. So long as the Partnership itself retains the Unallocated Capital Commitment Interests pursuant to clause (iii) above, such Unallocated Capital Commitment Interests
shall belong to the Partnership and any indebtedness financing the Unallocated Capital Commitment Interests shall be an obligation of the Partnership to which all income of the Partnership is subject except as otherwise agreed by the lender of such
indebtedness. Any Capital Commitment Net Income (Loss) on an Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion his aggregate Capital Commitment Capital Accounts bear to the aggregate Capital Commitment
Capital Accounts of all Partners; debt service on such related financing will be an expense of the Partnership allocable to all Partners in such proportions.
(g) If a Partner is required to Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest for
Cause, then his Capital Commitment Interest shall be settled in accordance with paragraphs (a)-(f) and (j) of this Section 8.1; provided, that if such Partner was not at any time a direct member of a General Partner, the General
Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) purchase for cash all of such Withdrawn Partner’s Non-Contingent Capital
Commitment Interests. The purchase price for each such Non-Contingent Capital Commitment Interest shall be the lower of (A) the original cost of such Non-Contingent
Capital Commitment Interest or (B) an amount equal to the Capital Commitment Value thereof;
(ii) allow the Withdrawn
Partner to retain such Non-Contingent Capital Commitment Interests; provided, that the maximum amount of Capital Commitment Net Income allocable to such Withdrawn Partner with respect to any Capital
Commitment Investment shall equal the amount of Capital Commitment Net Income that would have been allocated to such Withdrawn Partner if such Capital Commitment Investment had been sold as of the Settlement Date at the then prevailing Capital
Commitment Value thereof; or
(iii) in lieu of cash, purchase such Non-Contingent
Capital Commitment Interests by providing the Withdrawn Partner with a promissory note in the amount determined in (i) above. Such promissory note shall have a maximum term of ten (10) years with interest at the Federal Funds Rate.
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(h) The Partnership will assist a Withdrawn Partner or his estate or guardian, as the case
may be, in the settlement of the Withdrawn Partner’s Capital Commitment Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his estate.
(i) The Partnership may reasonably determine in good faith to retain outside professionals to provide the assistance to Withdrawn Partners or
their estates or guardians, as referred to above. In such instances, the Partnership will obtain the prior approval of a Withdrawn Partner or his estate or guardian, as the case may be, prior to engaging such professionals. If the Withdrawn Partner
(or his estate or guardian) declines to incur such costs, the Partnership will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s
day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(j) Each Limited Partner hereby irrevocably appoints each General Partner as such Limited Partner’s true and lawful agent, representative
and attorney-in-fact, each acting alone, in such Limited Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Limited Partner, any
and all agreements, instruments, documents and certificates which such General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this Section 8.1, including, without limitation,
the performance of any obligation of such Limited Partner or the Partnership or the exercise of any right of such Limited Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and
effect notwithstanding the Withdrawal from the Partnership of any Limited Partner for any reason and shall not be affected by the death, disability or incapacity of such Limited Partner.
Section 8.2. Transfer of Limited Partner’s Capital Commitment Interest. Without the prior written consent of
the General Partner, no Limited Partner or former Limited Partner shall have the right to sell, assign, mortgage, pledge or otherwise dispose of or transfer (“Transfer”) all or part of any such Partner’s Capital Commitment
Partner Interest in the Partnership; provided, that this Section 8.2 shall in no way impair (i) Transfers as permitted in Section 8.1 above, in the case of the purchase of a Withdrawn Partner’s or deceased or Totally
Disabled Limited Partner’s Capital Commitment Interests, (ii) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers by a Limited Partner to another Limited Partner of Non-Contingent Capital Commitment Interests, (iii) Transfers with the prior written consent of the General Partner, which consent may be granted or withheld in its sole discretion without giving any reason
therefor, and (iv) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers, for estate planning purposes, of up to 25% of a Limited Partner’s Capital Commitment Partner Interest to an
Estate Planning Vehicle. Each Estate Planning Vehicle will be a Nonvoting Limited Partner. Such Limited Partner and the Nonvoting Limited Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such
Nonvoting Limited Partner with respect to the interest transferred (including the obligation to make additional Capital Commitment-Related Capital Contributions). The General Partner may at its sole option exercisable at any time require such Estate
Planning Vehicle to Withdraw from the Partnership on the terms of Section 8.1 and Article VI. No person acquiring an interest in the Partnership pursuant to this Section 8.2 shall become a Limited Partner of the Partnership, or acquire
such Partner’s right to participate in the affairs of the Partnership, unless such person shall be admitted as a Limited Partner pursuant to Section 6.1. A Limited Partner shall not cease to be a limited partner of the Partnership upon the
collateral assignment of, or the pledging or granting of a security interest in, its entire limited partner interest in the Partnership in accordance with the provisions of this Agreement.
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Section 8.3. Compliance with Law. Notwithstanding any provision hereof to the
contrary, no Transfer of a Capital Commitment Interest in the Partnership may be made except in compliance with all Federal, State and other applicable laws, including Federal and State securities laws.
ARTICLE IX
DISSOLUTION
Section 9.1. Dissolution.
(a) The Partnership shall be dissolved and subsequently terminated:
(i) pursuant to Section 6.6;
(ii) upon the expiration of the Term; or
(iii) upon the occurrence of a Disabling Event with respect to the last remaining General Partner, provided that the
Partnership shall not be dissolved if, within 90 days after the Disabling Event, Limited Partners entitled to vote thereon as provided herein who, as of the last day of the most recent accounting period ending on or prior to the date of the
Disabling Event, have aggregate GP-Related Capital Account balances representing at least a majority in amount of the total GP-Related Capital Account balances of all
the persons who are Limited Partners entitled to vote thereon as provided herein agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of the Disabling Event, of another General Partner.
(b) When the Partnership is dissolved, the business and property of the Partnership shall be wound up and liquidated by the General Partner or,
in the event of the unavailability of the General Partner, such Limited Partner or other liquidating trustee as shall be named by the Designated Limited Partner (the General Partner, such Limited Partner or other liquidating trustee, as the case may
be, being hereinafter referred to as the “Liquidator”).
Section 9.2. Final Distribution. Within 120 calendar
days after the effective date of dissolution of the Partnership, the assets of the Partnership shall be distributed in the following manner and order:
(i) to the payment of the expenses of the winding-up, liquidation and dissolution of
the Partnership;
(ii) to pay all creditors of the Partnership, other than Partners, either by the payment thereof or the
making of reasonable provision therefor;
(iii) to establish reserves, in amounts established by the General Partner or the
Liquidator, to meet other liabilities of the Partnership; and
(iv) to pay, in accordance with the terms agreed among them
and otherwise on a pro rata basis, all creditors of the Partnership that are Partners, either by the payment thereof or the making of reasonable provision therefor.
(b) The remaining assets of the Partnership shall be applied and distributed among the Partners as follows:
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(i) With respect to each Partner’s
GP-Related Partner Interest, the remaining assets of the Partnership shall be applied and distributed to such Partner in accordance with the procedures set forth in Section 6.5 which provide for
allocations to the capital accounts of the Partners and distributions in accordance with the capital account balances of the Partners; and for purposes of the application of this Section 9.2 (b)(i), determining
GP-Related Capital Accounts on liquidation, all unrealized gains, losses and accrued income and deductions of the Partnership shall be treated as realized and recognized immediately before the date of
distribution; and
(ii) With respect to each Partner’s Capital Commitment Partner Interest, an amount shall be paid to
such Partner in cash or Securities in an amount equal to such Partner’s respective Capital Commitment Liquidating Share for each Capital Commitment Investment; provided, that if the remaining assets relating to any Capital Commitment
Investment shall not be equal to or exceed the aggregate Capital Commitment Liquidating Shares for such Capital Commitment Investment, to each Partner in proportion to its Capital Commitment Liquidating Share for such Capital Commitment Investment;
and the remaining assets of the Partnership related to the Partners’ Capital Commitment Partner Interests shall be paid to the Partners in cash or Securities in proportion to their respective Capital Commitment Profit Sharing Percentages for
each Capital Commitment Investment from which such cash or Securities are derived.
Section 9.3. Amounts Reserved Related to
Capital Commitment Partner Interests.If there are any Securities or other property or other investments or securities related to the Partners’ Capital Commitment Partner Interests which, in the judgment of the Liquidator, cannot be
sold, or properly distributed in kind in the case of dissolution, without sacrificing a significant portion of the value thereof, the value of a Partner’s interest in each such Security or other investment or security may be excluded from the
amount distributed to the Partners participating in the related Capital Commitment Investment pursuant to clause (ii) of Section 9.2(b). Any interest of a Partner, including his pro rata interest in any gains, losses or distributions, in
Securities or other property or other investments or securities so excluded shall not be paid or distributed until such time as the Liquidator shall determine.
(b) If there is any pending transaction, contingent liability or claim by or against the Partnership related to the Partners’ Capital
Commitment Partner Interests as to which the interest or obligation of any Partner therein cannot, in the judgment of the Liquidator, be then ascertained, the value thereof or probable loss therefrom may be deducted from the amount distributable to
such Partner pursuant to clause (ii) of Section 9.2(b). No amount shall be paid or charged to any such Partner on account of any such transaction or claim until its final settlement or such earlier time as the Liquidator shall determine.
The Partnership may meanwhile retain from other sums due such Partner in respect of such Partner’s Capital Commitment Partner Interest an amount which the Liquidator estimates to be sufficient to cover the share of such Partner in any probable
loss or liability on account of such transaction or claim.
(c) Upon determination by the Liquidator that circumstances no longer require
the exclusion of any Securities or other property or retention of sums as provided in paragraphs (a) and (b) of this Section 9.3, the Liquidator shall, at the earliest practicable time, distribute as provided in clause (ii) of
Section 9.2(b) such sums or such Securities or other property or the proceeds realized from the sale of such Securities or other property to each Partner from whom such sums or Securities or other property were withheld.
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ARTICLE X
MISCELLANEOUS
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be settled
amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement
(including the validity, scope and enforceability of this arbitration provision) shall be finally settled by arbitration conducted by a single arbitrator in New York , NY in accordance with the then-existing Rules of Arbitration of the International
Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The
arbitrator shall be a lawyer and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may cause the Partnership to bring, on behalf of the
General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an
arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of paragraph (c) of this Section 10.1 to any such action or proceeding,
(ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the General
Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon any such agent, who shall promptly advise such Partner of any such service of process, shall be
deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 10.1, OR ANY JUDICIAL PROCEEDING ANCILLARY TO
AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial
relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the forum(s) designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may
have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 10.1 and such parties agree not to plead or claim the same.
(d) Notwithstanding any provision of this Agreement to the contrary, this Section 10.1 shall be construed to the maximum extent possible to
comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be determined by a court of
competent jurisdiction that any provision or wording of this Section 10.1, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or other applicable law, such
invalidity shall not invalidate all of this Section 10.1. In that case, this Section 10.1 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act
or other applicable law, and, in the event such term or provision cannot be so limited, this Section 10.1 shall be construed to omit such invalid or unenforceable provision.
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Section 10.2. Ownership and Use of the Firm Name. The Partnership acknowledges
that Blackstone TM L.L.C. (“TM”), a Delaware limited liability company with a principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., (or its successors or assigns) is the sole and exclusive owner of the
mark and name BLACKSTONE and that the ownership of, and the right to use, sell or otherwise dispose of, the firm name or any abbreviation or modification thereof which consists of or includes BLACKSTONE, shall belong exclusively to TM, which company
(or its predecessors, successors or assigns) has licensed the Partnership to use BLACKSTONE in its name. The Partnership acknowledges that TM owns the service mark BLACKSTONE for various services and that the Partnership is using the BLACKSTONE mark
and name on a non-exclusive, non-sublicensable and non-assignable basis in connection with its business and authorized activities
with the permission of TM. All services rendered by the Partnership under the BLACKSTONE mark and name will be rendered in a manner and with quality levels that are consistent with the high reputation heretofore developed for the BLACKSTONE mark by
TM and its Affiliates and licensees. The Partnership understands that TM may terminate its right to use BLACKSTONE at any time in TM’s sole discretion by giving the Partnership written notice of termination. Promptly following any such
termination, the Partnership will take all steps necessary to change its partnership name to one which does not include BLACKSTONE or any confusingly similar term and cease all use of BLACKSTONE or any term confusingly similar thereto as a service
mark or otherwise.
Section 10.3. Written Consent. Any action required or permitted to be taken by a vote of Partners at a
meeting may be taken without a meeting if a Majority in Interest of the Partners consent thereto in writing.
Section 10.4. Letter
Agreements; Schedules. The General Partner may, or may cause the Partnership to, enter or has previously entered, into separate letter agreements with individual Partners with respect to GP-Related Profit
Sharing Percentages, Capital Commitment Profit Sharing Percentages or any other matter. The General Partner may from time to time execute and deliver to the Partners Schedules which set forth the then current capital balances, GP-Related Profit Sharing Percentages and Capital Commitment Profit Sharing Percentages of the Partners and any other matters deemed appropriate by the General Partner. Such Schedules shall be for information
purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever; provided that this in no way limits the effectiveness of any Commitment Agreement.
Section 10.5. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of
Delaware without regard to principles of conflict of laws. In particular, the Partnership has been formed pursuant to the Partnership Act, and the rights and liabilities of the Partners shall be as provided therein, except as herein otherwise
expressly provided. If any provision of this Agreement shall be held to be invalid, such provision shall be given its meaning to the maximum extent permitted by law and the remainder of this Agreement shall not be affected thereby.
Section 10.6. Successors and Assigns; Third Party Beneficiaries. This Agreement shall be binding upon and shall, subject to the
penultimate sentence of Section 6.3(a), inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any successor to a trustee of a trust which is or becomes a party hereto; provided that no person
claiming by, through or under a Partner (whether such Partner’s heir, personal representative or otherwise), as distinct from such Partner itself, shall have any rights as, or in respect to, a Partner (including the right to approve or vote on
any matter or to notice thereof) except the right to receive only those distributions expressly payable to such person pursuant to Articles VI and VIII. Any Partner or Withdrawn Partner shall remain liable for the
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obligations under this Agreement (including any Net GP-Related
Recontribution Amounts and any Capital Commitment Recontribution Amounts) of any transferee of all or any portion of such Partner’s or Withdrawn Partner’s interest in the Partnership, unless waived by the General Partner. The Partnership
shall, if the General Partner determines, in its good faith judgment, based on the standards set forth in Sections 5.8(d)(ii)(A) and 7.4(g)(ii)(A), to pursue such transferee, pursue payment (including any Net
GP-Related Recontribution Amounts and/or any Capital Commitment Recontribution Amounts) from the transferee with respect to any such obligations. Nothing in this Agreement is intended, nor shall anything
herein be construed, to confer any rights, legal or equitable, on any person other than the Partners and their respective legal representatives, heirs, successors and permitted assigns. Notwithstanding the foregoing, solely to the extent required by
the SP NC Agreements, the limited partners in SP NC shall be third-party beneficiaries of the provisions of Sections 5.8(d)(i)(A) and 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount (for purpose of
this sentence, as defined in section 11.3 (b) of the SP NC Partnership Agreements).
Section 10.7. Partner’s
Will. Each Limited Partner and Withdrawn Partner shall include in his or her will a provision that addresses certain matters in respect of his or her obligation relating to the Partnership that is satisfactory to the General Partner, and each
such Limited Partner and Withdrawn Partner shall confirm annually to the Partnership, in writing, that such provision remains in his or her current will. Where applicable, any estate planning trust of such Partner or Withdrawn Partner to which a
portion of such Limited Partner’s or Withdrawn Partner’s Interest is transferred shall include a provision substantially similar to such provision and the trustee of such trust shall confirm annually to the Partnership, in writing, that
such provision or its substantial equivalent remains in such trust. In the event any Limited Partner or Withdrawn Partner fails to comply with the provisions of this Section 10.7 after the Partnership has notified such Limited Partner or
Withdrawn Partner of his or her failure to so comply and such failure to so comply is not cured within 30 days of such notice, the Partnership may withhold any and all distributions to such Limited Partner or Withdrawn Partner until the time at
which such party complies with the requirements of this Section 10.7.
Section 10.8. Confidentiality. By executing this
Agreement, each Partner expressly agrees, at all times during the term of the Partnership and thereafter and whether or not at the time a Partner of the Partnership, to maintain the confidentiality of, and not to disclose to any person other than
the Partnership, another Partner or a person designated by the Partnership, any information relating to the business, financial structure, financial position or financial results, clients or affairs of the Partnership that shall not be generally
known to the public or the securities industry, except as otherwise required by law or by any regulatory or self-regulatory organization having jurisdiction; provided, however, that any corporate Partner may disclose any such information it is
required by law, rule, regulation or custom to disclose. Notwithstanding anything in this Agreement to the contrary, to comply with Treasury Regulation Section 1.6011-4(b)(3)(i), each Partner (and any
employee, representative or other agent of such Partner) may disclose to any and all persons, without limitation of any kind, the Federal income tax treatment and tax structure of the Partnership, it being understood and agreed, for this purpose,
(1) the name of, or any other identifying information regarding (a) the Partners or any existing or future investor (or any Affiliate thereof) in any of the Partners, or (b) any investment or transaction entered into by the Partners;
(2) any performance information relating to any of the Partners or their investments; and (3) any performance or other information relating to previous funds or investments sponsored by any of the Partners, does not constitute such tax
treatment or tax structure information.
Section 10.9. Notices. Whenever notice is required or permitted by this Agreement to
be given, such notice shall be in writing (including telecopy or similar writing) and shall be given by hand delivery (including any courier service) or telecopy to any Partner at its address or telecopy number shown in the books and records of the
Partnership or, if given to the General Partner or the Partnership, at the address or telecopy number of the Partnership in New York City. Each such notice shall be effective (i) if given by telecopy, upon dispatch, and (ii) if given by hand
delivery, when delivered to the address of such Partner or the General Partner or the Partnership specified as aforesaid.
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Section 10.10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together shall constitute a single instrument.
Section 10.11.
Power of Attorney. Each Partner hereby irrevocably appoints the General Partner as such Partner’s true and lawful representative and attorney-in-fact, each
acting alone, in such Partner’s name, place and stead, to make, execute, sign and file all instruments, documents and certificates which, from time to time, may be required to set forth any amendment to this Agreement or may be required by this
Agreement or by the laws of the United States of America, the State of Delaware or any other state in which the Partnership shall determine to do business, or any political subdivision or agency thereof, to execute, implement and continue the valid
and subsisting existence of the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and effect notwithstanding the subsequent Withdrawal from the Partnership of any Partner for any reason and
shall not be affected by the subsequent disability or incapacity of such Partner.
Section 10.12. Cumulative Remedies. Rights
and remedies under this Agreement are cumulative and do not preclude use of other rights and remedies available under applicable law.
Section 10.13. Legal Fees. Except as more specifically provided herein, in the event of a legal dispute (including litigation,
arbitration or mediation) between any Partner or Withdrawn Partner and the Partnership, arising in connection with any party seeking to enforce Section 4.1(d) or any other provision of this Agreement relating to the Holdback, the Clawback
Amount, the GP-Related Giveback Amount, the Capital Commitment Giveback Amount, the Net GP-Related Recontribution Amount or the Capital Commitment Recontribution Amount,
the “losing” party to such dispute shall promptly reimburse the “victorious party” for all reasonable legal fees and expenses incurred in connection with such dispute (such determination to be made by the relevant adjudicator).
Any amounts due under this Section 10.13 shall be paid within 30 days of the date upon which such amounts are due to be paid and such amounts remaining unpaid after such date shall accrue interest at the Default Interest Rate.
Section 10.14. Entire Agreement. This Agreement embodies the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. Subject to Section 10.4, this Agreement
supersedes all prior agreements and understandings between the parties with respect to such subject matter.
.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first
above written. In the event that it is impracticable to obtain the signature of any one or more of the Partners to this Agreement, this Agreement shall be binding among the other Partners executing the same.
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GENERAL PARTNER:
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SPFSA VI L.L.
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By:
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/s/ Peter Song
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Name: Peter Song
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Title: Authorized Person
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INITIAL LIMITED PARTNER
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/s/ Peter Song
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Peter Song, as Initial Limited
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Partner, to reflect his withdrawal from the
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Partnership
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Exhibit 10.7
HIGHLY CONFIDENTIAL & TRADE SECRET
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES REAL ESTATE VI L.P.
AMENDED AND RESTATED
AGREEMENT OF
LIMITED PARTNERSHIP
Dated as of April 8, 2015
Table of Contents
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Page
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ARTICLE I DEFINITIONS
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1
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Section 1.1. Definitions
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1
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Section 1.2. Terms Generally
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16
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ARTICLE II GENERAL PROVISIONS
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16
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Section 2.1. General Partner and Limited Partners
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16
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Section 2.2. Formation; Name
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16
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Section 2.3. Term
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17
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Section 2.4. Purpose; Powers
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17
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Section 2.5. Place of Business
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19
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Section 2.6. Withdrawal of Initial Limited Partner
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19
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ARTICLE III MANAGEMENT
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19
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Section 3.1. General Partners
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19
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Section 3.2. Limitations on Limited Partners
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19
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Section 3.3. Partner Voting
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20
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Section 3.4. Management
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20
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Section 3.5. Responsibilities of Partners
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22
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Section 3.6. Exculpation and Indemnification
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22
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Section 3.7. Representations of Limited Partners
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24
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Section 3.8. Tax Representation
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24
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ARTICLE IV CAPITAL OF THE PARTNERSHIP
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25
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Section 4.1. Capital Contributions by Partners
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25
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Section 4.2. Interest
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31
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Section 4.3. Withdrawals of Capital
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31
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ARTICLE V PARTICIPATION IN PROFITS AND LOSSES
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32
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Section 5.1. General Accounting Matters
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32
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Section 5.2. GP-Related Capital Accounts
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33
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Section 5.3. GP-Related Profit Sharing
Percentages
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34
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Section 5.4. Allocations of GP-Related Net Income
(Loss)
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34
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Section 5.5. Liability of General Partners
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35
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Section 5.6. Liability of Limited Partners
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35
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Section 5.7. Repurchase Rights, etc.
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35
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Section 5.8. Distributions
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36
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Section 5.9. Business Expenses
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42
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Section 5.10. Tax Capital Accounts; Tax Allocations
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42
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ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND DISCHARGE OF PARTNERSHIP
INTERESTS; TERMINATION
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42
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Section 6.1. Additional Partners
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42
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Section 6.2. Withdrawal of Partners
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43
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Section 6.3. GP-Related Partner Interests Not
Transferable
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44
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Section 6.4. General Partner Withdrawal; Transfer of General Partner’s Interest
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45
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Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interest
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45
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Section 6.6. Termination of the Partnership
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50
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Section 6.7. Certain Tax Matters
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50
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Section 6.8. Special Basis Adjustments
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51
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ARTICLE VII Capital Commitment Interests; Capital Contributions; Allocations;
Distributions
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51
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Section 7.1. Capital Commitment Interests, etc.
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51
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Section 7.2. Capital Commitment Capital Accounts
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52
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Section 7.3. Allocations
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53
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Section 7.4. Distributions
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53
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Section 7.5. Valuations
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57
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Section 7.6. Disposition Election
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57
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Section 7.7. Capital Commitment Special Distribution Election
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58
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ARTICLE VIII Withdrawal; Admission of New Partners
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58
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Section 8.1. Limited Partner Withdrawal; Repurchase of Capital Commitment Interests
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58
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Section 8.2. Transfer of Limited Partner’s Capital Commitment Interest
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62
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Section 8.3. Compliance with Law
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63
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ARTICLE IX DISSOLUTION
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63
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Section 9.1. Dissolution
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63
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Section 9.2. Final Distribution
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63
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Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests.
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ARTICLE X MISCELLANEOUS
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65
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Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial
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65
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Section 10.2. Ownership and Use of the Firm Name
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66
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Section 10.3. Written Consent
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66
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Section 10.4. Letter Agreements; Schedules
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66
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Section 10.5. Governing Law
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66
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Section 10.6. Successors and Assigns; Third Party Beneficiaries
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66
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Section 10.7. Partner’s Will
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Section 10.8. Confidentiality
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67
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Section 10.9. Notices
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67
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Section 10.10. Counterparts
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68
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Section 10.11. Power of Attorney
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68
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Section 10.12. Cumulative Remedies
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68
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Section 10.13. Legal Fees
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68
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Section 10.14. Entire Agreement
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STRATEGIC PARTNERS FUND ASSOCIATES REAL ESTATE VI L.P.
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of April 8, 2015, of Strategic Partners Fund Solutions Associates Real
Estate VI L.P., a Delaware limited partnership (the “Partnership”), by and between SPFSA VI L.L.C., a Delaware limited liability company (the “General Partner”), and the limited partners listed in the books and
records of the Partnership, as limited partners.
WITNESSETH
WHEREAS, the Limited Partnership Agreement of Strategic Partners Fund Solutions Associates Real Estate VI L.P., dated as of November 12,
2014, constitutes the existing partnership agreement of the Partnership (the “Original Agreement”); and
WHEREAS, in
order to amend the Partnership’s Original Agreement to reflect certain changes thereto and to reflect the withdrawal of the Initial Limited Partner, the parties hereto wish to amend and restate the Original Agreement in its entirety as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein made and intending to be legally
bound, the parties hereto hereby agree that the Original Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for
purposes of this Agreement:
“Advancing Party” has the meaning set forth in Section 7.1(b).
“Affiliate” when used with reference to another person means any person (other than the Partnership), directly
or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person.
“Agreement” means this Amended and Restated Agreement of Limited Partnership, as it may be further amended,
supplemented, restated or otherwise modified from time to time.
“Alternative Vehicle” means any
“Alternative Investment Fund” (as defined in section 4.7(a) of the SP RE VI Partnership Agreement).
“Applicable Collateral Percentage,” with respect to any Firm Collateral or Special Firm Collateral, has the
meaning set forth in the books and records of the Partnership with respect thereto.
“Assumed Income Tax
Rate” shall mean the highest effective marginal combined U.S. federal, state and local income tax rate for a Fiscal Year prescribed for an individual resident in New York, New York.
“Bankruptcy” means, with respect to any person, the
occurrence of any of the following events: (i) the filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his assets; (ii) the filing by such person of a voluntary petition in Bankruptcy
or the seeking of relief under Title 11 of the United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his inability to pay his debts as they become due; (iii) the
failure of such person to pay his debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of an answer admitting the material allegations of, or his
consenting to, or defaulting in answering, a Bankruptcy petition filed against him in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States Code, as now constituted or as hereafter amended; or (vi) the entry
of an order, judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a trustee or custodian of his assets and the continuance of such order,
judgment or decree unstayed and in effect for a period of 60 consecutive days.
“BCE Agreement” means the
limited partnership agreement, limited liability company agreement or other governing document of any limited partnership, limited liability company or other entity named or referred to in the definition of any of “BFREP,”
“BFIP,” “BFGSO,” “BFCOMP” or “Other Blackstone Collateral Entity,” as such limited partnership agreement, limited liability company agreement or other governing document may be amended, supplemented, restated
or otherwise modified to date, and as such limited partnership agreement, limited liability company agreement or other governing document may be further amended, supplemented, restated or otherwise modified from time to time, and any other
Blackstone Collateral Entity limited partnership agreement, limited liability company agreement or other governing document.
“BCE Investment” means any direct or indirect investment by any Blackstone Collateral Entity.
“BCOM” is the collective reference to (i) Blackstone Communications Partners I L.P., a Delaware limited
partnership, and (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above.
“BCP VI” is the collective reference to (i) Blackstone Capital Partners VI L.P., a Delaware limited
partnership, and (ii) any alternative investment vehicle relating thereto and any parallel fund.
“BCTP” means (i) Blackstone Clean Technology Partners L.P., a Delaware limited partnership, and
(ii) any alternative vehicle relating thereto and any parallel fund.
“BEP” means“(i) Blackstone
Energy Partners L.P. and Blackstone Energy Partners Q L.P., each a Delaware limited partnership, and (ii) any alternative investment vehicle relating thereto and any parallel fund.
“BFCOMP” means Blackstone Family Communications Partnership I L.P., Blackstone Family Communications
Partnership I-SMD L.P. and any other entity that is an Affiliate thereof and has terms substantially similar to those of the foregoing partnerships and is formed in connection with the participation by one or
more partners thereof directly or indirectly in investments in securities also purchased by BCOM or any other funds with substantially similar investment objectives to BCOM and that are sponsored or managed by an Affiliate of the General Partner
(which includes serving as general partner of such funds).
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“BFGSO” means any entity formed to invest side-by-side with any GSO Fund and any other entity that is an Affiliate thereof and that has terms substantially similar to those of the foregoing partnerships or other
entities and is formed in connection with the participation by one or more partners or other equity owners thereof directly or indirectly in investments in securities also purchased by any GSO Fund or any other funds with substantially similar
investment objectives to any GSO Fund and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).
“BFIP” means Blackstone Capital Associates II L.P., Blackstone Capital Associates III L.P., Blackstone Family
Investment Partnership II L.P., Blackstone Family Investment Partnership III L.P., Blackstone Family Investment Partnership IV-A L.P., Blackstone Family Investment Partnership
IV-A—SMD L.P., Blackstone Family Investment Partnership V L.P., Blackstone Family Investment Partnership V- SMD L.P., Blackstone Family Investment Partnership VI
L.P., Blackstone Family Investment Partnership VI-SMD L.P., Blackstone Family Investment Partnership VII—ESC L.P., Blackstone Family Cleantech Investment Partnership L.P., Blackstone Family Cleantech
Investment Partnership—SMD L.P., Blackstone Energy Family Investment Partnership L.P., Blackstone Energy Family Investment Partnership—SMD L.P., Blackstone Family Tactical Opportunities Investment Partnership L.P., Blackstone Family
Tactical Opportunities Investment Partnership—SMD L.P., Blackstone Family Tactical Opportunities Investment Partnership (Cayman) L.P., Blackstone Family Tactical Opportunities Investment Partnership (Cayman)—SMD L.P., Blackstone Energy
Family Investment Partnership II L.P., and any other entity that is an Affiliate thereof and has terms similar to those of the foregoing partnerships and is formed in connection with the participation by one or more of the partners thereof in
investments in securities also purchased by BCP VI, BCP VII, BCTP, BEP, BEP II, BTO or any other fund with substantially similar investment objectives to BCP VI, BCP VII, BCTP, BEP, BEP II or BTO and that are sponsored or managed by an Affiliate of
the General Partner (which includes serving as general partner of such funds).
“BFREP” means Blackstone
Real Estate Capital Associates L.P., Blackstone Real Estate Capital Associates II L.P., Blackstone Real Estate Capital Associates III L.P., Blackstone Family Real Estate Partnership L.P., Blackstone Family Real Estate Partnership II L.P., Blackstone
Family Real Estate Partnership III L.P., Blackstone Family Real Estate Partnership International- A-SMD L.P., Blackstone Family Real Estate Partnership IV-SMD L.P.,
Blackstone Family Real Estate Partnership International II-SMD L.P., Blackstone Family Real Estate Partnership V-SMD L.P., Blackstone Family Real Estate Partnership VI-SMD L.P., Blackstone Family Real Estate Partnership VII-SMD L.P., Blackstone Family Real Estate Partnership VIII-SMD L.P.,
Blackstone Family Real Estate Partnership Europe III-SMD L.P., Blackstone Family Real Estate Special Situations Partnership - SMD L.P., Blackstone Family Real Estate Special Situations Partnership Europe - SMD
L.P., Blackstone Real Estate Holdings L.P., Blackstone Real Estate Holdings II L.P., Blackstone Real Estate Holdings III L.P., Blackstone Real Estate Holdings International - A L.P., Blackstone Real Estate Holdings IV L.P., Blackstone Real Estate
Holdings International II L.P., Blackstone Real Estate Holdings V L.P., Blackstone Real Estate Holdings VI L.P., Blackstone Real Estate Holdings VII L.P., Blackstone Real Estate Holdings Europe III L.P., Blackstone Real Estate Holdings Europe IV
L.P., Blackstone Real Estate Special Situations Holdings II L.P., Blackstone Real Estate Special Situations Holdings Europe L.P., Blackstone Family Real Estate Partnership Europe IV SMD L.P., Blackstone Real Estate Holdings Europe IV ESC L.P.,
Blackstone Family Real Estate Partnership Asia - SMD L.P., Blackstone Real Estate Holdings Asia - ESC L.P., Blackstone Real Estate Holdings VII-ESC L.P., Blackstone Real
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Estate Holdings VIII-ESC L.P., and any other entity that is an
Affiliate thereof and that has terms substantially similar to those of the foregoing partnerships and is formed in connection with the participation by one or more partners thereof in real estate and real estate-related investments also purchased by
BREP VII, BREP VIII, the BREDS Funds, BREP Europe IV or BREP Asia and any other funds with substantially similar investment objectives to BREP VII, BREP VIII, the BREDS Funds, BREP Europe IV, BREP Asia or BPP and that are sponsored or managed by an
Affiliate of the General Partner (which includes serving as general partner of such funds).
“Blackstone Co-Investment Rights” has the meaning set forth in section 5.2(e) of the SP RE VI Partnership Agreement.
“Blackstone Collateral Entity” means any limited partnership, limited liability company or other entity named
or referred to in the definition of any of “BFREP,” “BFIP,” “BFGSO,” “BFCOMP” or “Other Blackstone Collateral Entity.”
“Blackstone Commitment” has the meaning set forth in the SP RE VI Partnership Agreement.
“Blackstone Entity” means any partnership, limited liability company or other entity (excluding any natural
persons and any portfolio companies of any Blackstone—sponsored fund) that is an Affiliate of The Blackstone Group L.P. For the avoidance of doubt, any partnership, limited liability company or other entity that comprise the Strategic Partners
Fund Solutions Business shall be considered a Blackstone Entity.
“Capital Commitment SP RE VI Commitment”
means the Capital Commitment (as defined in the SP RE VI Partnership Agreement), if any, of the Partnership to SP RE VI that relates solely to the Capital Commitment SP RE VI Interest, if any.
“Capital Commitment SP RE VI Interest” means the Interest (as used in the SP RE VI Partnership Agreement), if
any, of the Partnership as a capital partner of SP RE VI.
“Capital Commitment SP RE VI Investment” means
the Partnership’s interest in a specific investment of SP RE VI held by the Partnership through the Capital Commitment SP RE VI Interest.
“Capital Commitment Capital Account” means, with respect to each Capital Commitment Investment for each
Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such Capital Commitment Investment and any net income allocated to such Partner pursuant to Section 7.3
with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment Investment to such Partner and any net losses allocated to such Partner with respect to such Capital Commitment
Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the related Capital Commitment Investment shall be adjusted as if the asset distributed had been sold in a taxable
transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners participating in such Capital Commitment Investment pursuant to Section 7.3.
“Capital Commitment Class A Interest” has the meaning set forth in Section 7.4(f).
“Capital Commitment Class B Interest” has the meaning set forth in
Section 7.4(f).
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“Capital Commitment Defaulting Party” has the meaning
specified in Section 7.4(g).
“Capital Commitment Deficiency Contribution” has the meaning specified
in Section 7.4(g).
“Capital Commitment Disposable Investment” has the meaning set forth in
Section 7.4(f).
“Capital Commitment Distributions” means, with respect to each Capital Commitment
Investment, all amounts of distributions, received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Capital Commitment SP RE VI Interest, if any, less any costs, fees and expenses of the Partnership with
respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of such Capital Commitment
Investment as it may determine in good faith is appropriate.
“Capital Commitment Giveback Amount” has the
meaning set forth in Section 7.4(g).
“Capital Commitment Interest” means the interest of a Partner
in a specific Capital Commitment Investment as provided herein.
“Capital Commitment Investment” means any
Capital Commitment SP RE VI Investment, but shall exclude any GP-Related Investment.
“Capital Commitment Liquidating Share” with respect to each Capital Commitment Investment means, in the case
of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with Section 9.3) as of the close of business on the effective date of dissolution.
“Capital Commitment Net Income (Loss)” with respect to each Capital Commitment Investment means all amounts of
income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition, in whole or in part, of such Capital Commitment Investment, less any costs, fees and
expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated thereto.
“Capital Commitment Partner Interest” means a Partner’s partnership interest in the Partnership with
respect to the Capital Commitment SP RE VI Interest.
“Capital Commitment Profit Sharing Percentage” with
respect to each Capital Commitment Investment means the percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the Partnership.
“Capital Commitment Recontribution Amount” has the meaning set forth in Section 7.4(g).
“Capital Commitment-Related Capital Contributions” has the meaning set forth in Section 7.1(a).
“Capital Commitment-Related Commitment”, with respect to any Partner, means such Partner’s commitment to
the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such commitment that may be set forth in such Partner’s Commitment
Agreement or SMD Agreement, if any.
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“Capital Commitment Special Distribution” has the meaning
set forth in Section 7.7(a).
“Capital Commitment Value” has the meaning set forth in
Section 7.5.
“Carried Interest” means “Carried Interest Distributions,” as defined in the
SP RE VI Partnership Agreement,. In the case of each of (i) and (ii) above, except as determined by the General Partner, the amount shall not be less any costs, fees and expenses of the Partnership with respect thereto and less reasonable
reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto (in each case which the General Partner may allocate among all or any portion of the GP-Related
Investments as it determines in good faith is appropriate).
“Carried Interest Give Back Percentage”
means, for any Partner or Withdrawn Partner, subject to Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner from the Partnership or any Other Fund
GPs or their Affiliates in respect of Carried Interest by (B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership or any Other Fund GP or any of their Affiliates (in any
capacity) in respect of Carried Interest. For purposes of determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership or any Other Fund GPs on behalf of a Partner or
Withdrawn Partner (but not the Trust Income thereon) shall be deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as members, partners or other equity owners of the Partnership or any of the Other Fund GPs or
their Affiliates.
“Carried Interest Sharing Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
“Cause” means the occurrence or existence of any of the following with respect to any Partner, as determined
fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any non-competition agreement, (x) any material breach of this
Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such Partner’s deliberate failure to perform his or her duties to the Partnership or any of its Affiliates, or (z) such
Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Partnership or any of its Affiliates in a material way as determined by the General Partner; provided, that in the case of any of the
foregoing clauses (w), (x), (y) and (z), the General Partner has given such Partner written notice (a “Notice of Breach”) within fifteen days after the General Partner becomes aware of such action and such Partner fails to cure such
breach, failure to perform or conduct or behavior within fifteen days after receipt of such Notice of Breach from the General Partner (or such longer period, not to exceed an additional fifteen days, as shall be reasonably required for such cure,
provided that such Partner is diligently pursuing such cure); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Partnership or any of its Affiliates; (iii) conviction (on the basis of a
trial or by an accepted plea of guilty or nolo contendere) of a felony or crime (including any misdemeanor charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or
a determination by a court of competent jurisdiction, by a regulatory body or by a self-regulatory body having
6
authority with respect to securities laws, rules or regulations of the applicable securities
industry, that such Partner individually has violated any applicable securities laws or any rules or regulations thereunder, or any rules of any such self-regulatory body (including, without limitation, any licensing requirement), if such conviction
or determination has a material adverse effect on (A) such Partner’s ability to function as a Partner of the Partnership, taking into account the services required of such Partner and the nature of the business of the Partnership and its
Affiliates or (B) the business of the Partnership and its Affiliates; or (iv) becoming subject to an event described in Rule 506(d)(1)(i)-(viii) of Regulation D under the Securities Act of 1933 (the “Securities Act”).
“CC Carried Interest” means, with respect to any Partner, the aggregate amount of distributions or payments
received by such Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest”, including the amount of any bonuses received by a Partner as an employee of an Affiliate of the Partnership that
relate to the amount of “carried interest” received by an Affiliate of the Partnership. “CC Carried Interest” includes any amount initially received by an Affiliate of the Partnership from any fund (including SP RE VI, any
similar funds formed after the date hereof, and any other private equity merchant banking, secondary, real estate or debt funds, whether or not in existence as of the date hereof) to which such Affiliate serves as general partner (or other similar
capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions thereto (or the capital contributions to make the investment of such fund giving rise to such “carried interest”).
“Clawback Adjustment Amount” has the meaning set forth in Section 5.8(e).
“Clawback Amount” means the “Overdistribution Amount,” as defined in the SP RE VI Partnership
Agreement, and any other clawback amount payable pursuant to any SP RE VI Agreement, as applicable.
“Clawback
Provisions” means sections 2.7(d)(iii) and 11.3 of the SP RE VI Partnership Agreement and any other similar provisions in any other SP RE VI Agreement existing heretofore or hereafter entered into.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute. Any
reference herein to a particular provision of the Code means, where appropriate, the corresponding provision in any successor statute.
“Commitment Agreement” means the agreement between the Partnership or an Affiliate thereof and a Partner,
pursuant to which such Partner undertakes certain obligations, including the obligation to make capital contributions pursuant to Sections 4.1 and/or 7.1. Each Commitment Agreement is hereby incorporated by reference as between the Partnership and
the relevant Partner.
“Contingent” means subject to repurchase rights and/or other requirements.
“Covered Person” has the meaning set forth in Section 3.6(a).
The term “control” when used with reference to any person means the power to direct the management and
policies of such person, directly or indirectly, by or through stock or other equity ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with one or more other persons by
or through stock or other equity ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing.
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“Controlled Entity” when used with reference to another
person means any person controlled by such other person.
“Deceased Partner” means any Partner or
Withdrawn Partner who has died or who suffers from Incompetence. For purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the
case may be, that have received such Deceased Partner’s interest in the Partnership.
“Default Interest
Rate” means the lower of (i) the sum of (a) the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate and (b) 5%, or (ii) the highest rate of interest permitted under
applicable law.
“Disabling Event” means (a) the withdrawal of the General Partner, other than in
accordance with Section 6.4(a) or (b) if the General Partner (i) makes an assignment for the benefit of its creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent or has entered
against it an order for relief in any bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute,
law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in a proceeding described in clause (iv), or (v) seeks consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the General Partner or of all or substantially all of its properties.
“Estate Planning Vehicle” has the meaning set forth in Section 6.3.
“Excess Holdback” has the meaning set forth in Section 4.1(d).
“Excess Holdback Percentage” has the meaning set forth in Section 4.1(d).
“Excess Tax-Related Amount” has the meaning set forth in
Section 5.8(e).
“Existing Partner” means any Partner who is neither a Retaining Withdrawn Partner
nor a Deceased Partner.
“Final Event” means the death, Total Disability, Incompetence, Bankruptcy,
liquidation, dissolution or Withdrawal from the Partnership of any person who is a Partner.
“Firm
Advances” has the meaning set forth in Section 7.1.
“Firm Collateral” means a
Partner’s or Withdrawn Partner’s interest in one or more partnerships or limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been
pledged or made available to the Trustee(s) to satisfy all or any portion of the Excess Holdback of such Partner or Withdrawn Partner as more fully described in the books and records of the Partnership; provided, that for all purposes hereof
(and any other agreement (e.g., the Trust Agreement) that incorporates the meaning of the term “Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”, excluding
references to “Firm Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).
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“Firm Collateral Realization” has the meaning set forth in
Section 4.1(d).
“Fiscal Year” means a calendar year, or any other period chosen by the General
Partner.
“Fund GP” means the Partnership (only with respect to the
GP-Related SP RE VI Interest) and the Other Fund GPs.
“GAAP” has
the meaning specified in Section 5.1(b).
“General Partner” means SPFSA VI L.L.C. and any person
admitted to the Partnership as an additional General Partner in accordance with the provisions of this Agreement, until such time as such person ceases to be a general partner of the Partnership as provided herein or in the Partnership Act.
“Giveback” means obligations to return distributions to satisfy certain fund-related obligations and
liabilities pursuant to section 9.2 of SP RE VI Partnership Agreement.
“Giveback Amount” means the
amounts required to satisfy Giveback.
“Giveback Provisions” means section 9.2 of the SP RE VI Partnership
Agreement and any other similar provisions in any other SP RE VI Agreement existing heretofore or hereafter entered into.
“GP-Related SP RE VI Interest” means the interest held by the
Partnership in SP RE VI in the Partnership’s capacity as general partner of SP RE VI, excluding any Capital Commitment SP RE VI Interest.
“GP-Related SP RE VI Investment” means the Partnership’s interest
in a Portfolio Investment (for purposes of this definition, as defined in the SP RE VI Partnership Agreement) in the Partnership’s capacity as the general partner of SP RE VI, but does not include any Capital Commitment Investment.
“GP-Related Capital Account” has the meaning set forth in
Section 5.2.
“GP-Related Capital Contribution” has the
meaning set forth in Section 4.1(a).
“GP-Related
Class A Interest” has the meaning set forth in Section 5.8(a).
“GP-Related Class B Interest” has the meaning set forth in Section 5.8(a).
“GP-Related Commitment”, with respect to any Partner, means such
Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such
commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“GP-Related Defaulting Party” has the meaning set forth in Section 5.8(d).
“GP-Related Deficiency Contribution” has the meaning set forth in
Section 5.8(d).
“GP-Related Disposable Investment” has the
meaning set forth in Section 5.8(a).
“GP-Related Giveback
Amount” has the meaning set forth in Section 5.8(d).
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“GP-Related
Investment” means any investment (direct or indirect) of the Partnership in respect of the GP-Related SP RE VI Interest (including, without limitation, any
GP-Related SP RE VI Investment, but excluding any Capital Commitment Investment).
“GP-Related Net Income (Loss)” has the meaning set forth in
Section 5.1(b).
“GP-Related Partner Interest” of a Partner
means all interests of such Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect to the GP-Related SP RE VI Interest and with respect to all GP-Related Investments.
“GP-Related Profit Sharing Percentage” means the “Carried
Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each Partner; provided that any references in this Agreement to
GP-Related Profit Sharing Percentages made (i) in connection with voting or voting rights or (ii) GP-Related Capital Contributions with respect to GP-Related Investments (including Section 5.3(b)) means the “Non-Carried Interest Sharing Percentage” of each Partner; provided further that, the term “GP-Related Profit Sharing Percentage” shall not include any Capital Commitment Profit Sharing Percentage.
“GP-Related Recontribution Amount” has the meaning set forth in
Section 5.8(d).
“GP-Related Required Amounts” has the
meaning set forth in Section 4.1(a).
“GP-Related Unallocated
Percentage” has the meaning set forth in Section 5.3(b).
“GP-Related Unrealized Net Income (Loss)” attributable to any GP-Related SP RE VI Investment as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related SP RE VI Investment if SP RE VI’s entire portfolio of investments were sold on such date for cash in an amount equal to their aggregate value on such date (determined in accordance with
Section 5.1(e)) and all distributions payable by SP RE VI to the Partnership (indirectly through the general partner of SP RE VI) pursuant to any SP RE VI Agreement with respect to such GP-Related SP RE
VI Investment were made on such date. “GP-Related Unrealized Net Income (Loss)” attributable to any other GP-Related Investment (other than any Capital
Commitment Investment) as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related Investment if such
GP-Related Investment were sold on such date for cash in an amount equal to its value on such date (determined in accordance with Section 5.1(e)).
“GSO Fund” means (i) any of GSO Capital Opportunities Fund LP, GSO Capital Opportunities Overseas Fund
L.P., GSO Capital Opportunities Overseas Master Fund L.P., GSO Liquidity Partners LP, GSO Liquidity Overseas Partners LP, Blackstone / GSO Capital Solutions Fund LP, Blackstone / GSO Capital Solutions Overseas Fund L.P., Blackstone / GSO Capital
Solutions Overseas Master Fund L.P., GSO Capital Solutions Fund II LP, GSO Capital Solutions Overseas Feeder Fund II LP, GSO European Senior Debt Fund LP, GSO European Senior Debt Feeder Fund LP, GSO Targeted Opportunity Partners LP, GSO Targeted
Opportunity Overseas Partners L.P., GSO Targeted Opportunity Overseas Intermediate Partners L.P., GSO Targeted Opportunity Master Partners L.P., GSO SJ Partners LP, GSO Capital Opportunities Fund II LP, GSO Capital Opportunities Cayman Overseas Fund
II LP, GSO NMERB LP, GSO Energy Partners-A LP, GSO Palmetto Opportunistic Investment Partners LP, GSO Foreland Co-Invest Holdings LP, GSO Bakken Holdings I LP or GSO
Churchill Partners LP, or (ii) any alternative vehicle or parallel fund relating to any of the partnerships referred to in clause (i) above.
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“Holdback” has the meaning set forth in
Section 4.1(d).
“Holdback Percentage” has the meaning set forth in Section 4.1(d).
“Holdback Vote” has the meaning set forth in Section 4.1(d).
“Holdings” means Blackstone Holdings II L.P., a Delaware limited partnership.
“Incompetence” means, with respect to any Partner, the determination by the General Partner in its sole
discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his or her person or his or her property.
“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d).
“Initial Limited Partner” means Peter Song.
“Interest” means a Partner’s interest in the Partnership, including any interest that is held by a
Retaining Withdrawn Partner, and including any Partner’s GP-Related Partner Interest and Capital Commitment Partner Interest.
“Investment” means any investment (direct or indirect) of the Partnership designated by the General Partner
from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments, and (b) Capital Commitment Investments.
“Investor Limited Partner” means any Limited Partner so designated at the time of its admission as a partner
of the Partnership.
“Investor Note” means a promissory note of a Partner evidencing indebtedness incurred
by such Partner to purchase a Capital Commitment Interest, the terms of which were or are approved by the General Partner and which is secured by such Capital Commitment Interest, all other Capital Commitment Interests of such Partner and all other
interests of such Partner in Blackstone Collateral Entities; provided, that such promissory note may also evidence indebtedness relating to other interests of such Partner in Blackstone Collateral Entities, and such indebtedness shall be
prepayable with Capital Commitment Net Income (whether or not such indebtedness relates to Capital Commitment Investments) as set forth in this Agreement, the Investor Note, the other BCE Agreements and any documentation relating to Other Sources;
provided further, that references to “Investor Notes” herein refer to multiple loans made pursuant to such note, whether made with respect to Capital Commitment Investments or other BCE Investments, and references to an
“Investor Note” refer to one such loan as the context requires. In no way shall any indebtedness incurred to acquire Capital Commitment Interests or other interests in Blackstone Collateral Entities be considered part of the Investor Notes
for purposes hereof if the Lender or Guarantor is not the lender or guarantor with respect thereto.
“Issuer” means the issuer of any Security comprising part of an Investment.
“L/C” has the meaning set forth in Section 4.1(d).
“L/C Partner” has the meaning set forth in Section 4.1(d).
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“Lender or Guarantor” means Blackstone Holdings I L.P., in
its capacity as lender or guarantor under the Investor Notes, or any other Affiliate of the Partnership that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests or other interests in Blackstone Collateral Entities.
“Limited Partner” means any person who is shown on the books and records of the Partnership as a Limited
Partner of the Partnership, including any Special Limited Partner and any Nonvoting Limited Partner.
“Liquidator” has the meaning set forth in Section 9.1(b).
“Loss Amount” has the meaning set forth in Section 5.8(e).
“Loss Investment” has the meaning set forth in Section 5.8(e).
“Majority in Interest of the Partners” on any date (a “vote date”) means one or more persons
who are Partners (including the General Partner and the Limited Partners but excluding Nonvoting Limited Partners) on the vote date and who, as of the last day of the most recent accounting period ending on or prior to the vote date (or as of such
later date on or prior to the vote date selected by the General Partner as of which the Partners’ capital account balances can be determined), have aggregate capital account balances representing at least a majority in amount of the total
capital account balances of all the persons who are Partners (including the General Partner and the Limited Partners but excluding Nonvoting Limited Partners) on the vote date.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
“Net Carried Interest Distribution” has the meaning set forth in Section 5.8(e).
“Net Carried Interest Distribution Recontribution Amount” has the meaning set forth in Section 5.8(e).
“Net GP-Related Recontribution Amount” has the meaning set forth
in Section 5.8(d).
“Non-Carried Interest” means, with
respect to each GP-Related Investment, all amounts of distributions, other than Carried Interest (and other than Capital Commitment Distributions) received by the Partnership with respect to such GP-Related Investment, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with
respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments as it may determine in good faith is appropriate.
“Non-Carried Interest Sharing Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Non-Carried Interest from such GP-Related Investment set forth in the
books and records of the Partnership.
“Non-Contingent” means
generally not subject to repurchase rights or other requirements.
“Nonvoting Limited Partner” has the
meaning set forth in Section 6.1(a).
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“Other Blackstone Collateral Entity” means any Blackstone
Entity (other than any limited partnership, limited liability company or other entity named or referred to in the definition of any of “BFIP,” “BFREP,” “BFGSO” or “BFCOMP”) in which any limited partner
interest, limited liability company interest, unit or other interest is pledged to secure any Investor Note.
“Other Fund GPs” means the General Partner (only with respect to the General Partner’s GP-Related SP RE VI Partner Interest in the Partnership) and any other entity (other than the Partnership) through which any Partner, Withdrawn Partner or any other person directly receives any amounts of Carried
Interest, and any successor thereto; provided, that this includes any other entity which has in its organizational documents a provision which indicates that it is a “Fund GP” or an “Other Fund GP”; provided
further, that notwithstanding any of the foregoing, neither Holdings nor any estate planning vehicle established for the benefit of family members of any Partner or of any member or partner of any Other Fund GP shall be considered an “Other
Fund GP” for purposes hereof.
“Other Sources” means (i) distributions or payments of CC Carried
Interest (which shall include amounts of CC Carried Interest which are not distributed or paid to a Partner but are instead contributed to a trust (or similar arrangement) to satisfy any “holdback” obligation with respect thereto), and
(ii) distributions from Blackstone Collateral Entities (other than the Partnership) to such Partner.
“Parallel Fund” has the meaning set forth in section 4.6(a) of the SP RE VI Partnership Agreement.
“Partner” means any person who is a partner of the Partnership, whether a General Partner or a Limited Partner
in whatsoever Partner Category.
“Partner Category” means the Existing Partners, Retaining Withdrawn
Partners or Deceased Partners, each referred to as a group for purposes hereof.
“Partnership” means
Strategic Partners Fund Solutions Associates Real Estate VI L.P., a Delaware limited partnership.
“Partnership
Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101, et seq., as it may be amended from time to time, and any successor to such statute.
“Pledgable Blackstone Interests” has the meaning set forth in Section 4.1(d).
“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank,
N.A. as its prime rate.
“Qualifying Fund” means any fund designated by the General Partner as a
“Qualifying Fund.”
“Repurchase Period” has the meaning set forth in Section 5.8.
“Required Rating” has the meaning set forth in Section 4.1(d).
“Retained Portion” has the meaning set forth in Section 7.6.
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“Retaining Withdrawn Partner” means a Withdrawn Partner who
has retained a GP- Related Partner Interest, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Nonvoting Limited Partner for all purposes hereof.
“Securities” means any debt or equity securities of an Issuer and its subsidiaries and other Controlled
Entities constituting part of an Investment, including without limitation common and preferred stock, interests in limited partnerships and interests in limited liability companies (including warrants, rights, put and call options and other options
relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or interests commonly regarded as securities, interests in real
property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as money-market investments, bank deposits and interests in personal property of all kinds, whether
tangible or intangible.
“Settlement Date” has the meaning set forth in Section 6.5(a).
“SMD Agreements” means the agreements between the Partnership and/or one or more of its Affiliates and certain
of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby incorporated by reference as between the Partnership and the relevant Partner.
“SP RE VI” means (i) Strategic Partners Real Estate Fund VI, L.P., a Delaware limited partnership,
(ii) any alternative vehicle, parallel fund or other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above, and (iii) any investment vehicle formed to co-invest with any of the partnerships referred to in clause (i) above using third party capital and that potentially pays Carried Interest Distributions (as such term is used in such partnership agreements).
“SP RE VI Agreements” means (i) the SP RE VI Partnership Agreement and (ii) any other SP RE VI
partnership agreements, as each may be amended, supplemented, restated or otherwise modified from time to time.
“SP RE VI Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership of Strategic
Partners Real Estate Fund VI, L.P., dated as of April 8, 2015, as may be amended, supplemented, restated or otherwise modified from time to time.
“Special Firm Collateral” means interests in a Qualifying Fund or other assets that have been pledged to the
Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the books and records of the Partnership.
“Special Firm Collateral Realization” has the meaning set forth in Section 4.1(d).
“Special Limited Partner” means any of the persons shown in the books and records of the Partnership as a
Special Limited Partner and any person admitted to the Partnership as an additional Special Limited Partner in accordance with the provisions of this Agreement.
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“S&P” means Standard & Poor’s Ratings
Group, and any successor thereto.
“Strategic Partners Fund Solutions Business” shall mean
Blackstone’s business line responsible for managing SP RE VI and any predecessor and successor funds thereto, including Strategic Partners Fund, L.P., Strategic Partners Fund II, L.P., Strategic Partners Fund III, L.P., Strategic Partners Fund
IV, L.P., Strategic Partners Fund V, L.P., Strategic Partners Fund VI, L.P. and their respective parallel vehicles.
“Subject Investment” has the meaning set forth in Section 5.8(e).
“Subject Partner” has the meaning set forth in Section 4.1(d).
“Successor in Interest” means any (i) shareholder of; (ii) trustee, custodian, receiver or other
person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or receiver, or former officer, director or partner,
or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or assign of, any Partner, whether by operation of law or
otherwise.
“Tax Matters Partner” has the meaning set forth in Section 6.7(b).
“TM” has the meaning set forth in Section 10.2
“Total Disability” means the inability of a Limited Partner substantially to perform the services required of
such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether arising out of
sickness, accident or otherwise.
“Transfer” has the meaning set forth in Section 8.2.
“Trust Account” has the meaning set forth in the Trust Agreement.
“Trust Agreement” means the Trust Agreement dated as of the date set forth therein, as amended, supplemented,
restated or otherwise modified from time to time, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time to time.
“Trust Amount” has the meaning set forth in the Trust Agreement.
“Trust Income” has the meaning set forth in the Trust Agreement.
“Trustee(s)” has the meaning set forth in the Trust Agreement.
“Unadjusted Carried Interest Distributions” has the meaning set forth in Section 5.8(e).
“Unallocated Capital Commitment Interests” has the meaning set forth in Section 8.1(f).
“Withdraw” or “Withdrawal” with respect to a Partner means a Partner ceasing to be a partner
of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary), unless the context shall limit the type of withdrawal to a
specific reason, and “Withdrawn” with respect to a Partner means, as aforesaid, a Partner who has ceased to be a partner of the Partnership.
“Withdrawal Date” means the date of the Withdrawal from the Partnership of a Withdrawn Partner.
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“Withdrawn Partner” means a Limited Partner whose GP-Related Partner Interest or Capital Commitment Partner Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include, unless
the context requires otherwise, the estate or legal representatives of any such Partner.
“W-8BEN” has the meaning set forth in Section 3.8.
“W-8IMY” has the meaning set forth in Section 3.8.
“W-9” has the meaning set forth in Section 3.8
Section 1.2. Terms Generally.
The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term
“person” includes individuals, partnerships (including limited liability partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions
thereof) and other associations and entities. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
ARTICLE II
GENERAL PROVISIONS
Section 2.1. General Partner and Limited Partners. The Partners may be General Partners or Limited Partners. The General
Partner as of the date hereof is SPFSA VI L.L.C.. The Limited Partners shall be as shown on the books and records of the Partnership. The books and records of the Partnership contain the GP-Related Profit
Sharing Percentage and GP-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to the GP-Related Investments of the
Partnership as of the date hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each Partner (including, without limitation, the General Partner) with
respect to the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to time to reflect additional
GP-Related Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by the Partnership of Capital
Commitment Investments, the GP-Related Profit Sharing Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the Capital Commitment Profit Sharing
Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the admission of additional Partners, the Withdrawal of Partners, and the transfer or assignment of interests in the Partnership pursuant
to the terms of this Agreement. At the time of admission of each additional Partner, the General Partner shall determine in its sole discretion the GP-Related Investments and Capital Commitment Investments in
which such Partner shall participate and such Partner’s GP-Related Commitment, Capital Commitment-Related Commitment, GP-Related Profit Sharing Percentage with
respect to each such GP-Related Investment and Capital Commitment Profit Sharing Percentage with respect to each such Capital Commitment Investment. Each Partner may have a
GP-Related Partner Interest and/or a Capital Commitment Partner Interest.
Section 2.2.
Formation; Name Foreign JurisdictionsThe Partnership is hereby continued as a limited partnership pursuant to the Partnership Act and shall conduct its activities on and after the date hereof under the name of Strategic
Partners Fund Solutions Associates Real Estate VI L.P. The certificate of limited partnership of the Partnership may be amended and/or restated from time to time by the General Partner The General Partner is further authorized to execute and deliver
and file any other certificates (and any amendments and/or restatements thereof) necessary for the Partnership to qualify to do business in a jurisdiction in which the Partnership may wish to conduct business.
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Section 2.3. Term. The term of the Partnership shall continue until
December 31, 2061, unless earlier dissolved and terminated in accordance with this Agreement and the Act.
Section 2.4.
Purpose; Powers. (a) The purposes of the Partnership shall be, directly or indirectly through subsidiaries or Affiliates:
(i)
to serve as the general partner of SP RE VI (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP RE VI”) and perform the functions of a general partner of SP RE VI (including any
Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP RE VI”) specified in the SP RE VI Agreements,
(ii) to serve as, and hold the Capital Commitment SP RE VI Interest as, a capital partner (and, if applicable, a limited partner and/or a
general partner) of SP RE VI (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP RE VI”) and perform the functions of a capital partner (and, if applicable, a limited partner and/or a
general partner) of SP RE VI (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP RE VI”) specified in the SP RE VI Agreements,
(iii) to make the Blackstone Commitment or a portion thereof, either directly or indirectly through another entity,
(iv) to serve as a general partner or limited partner of other partnerships and perform the functions of a general partner or limited partner
specified in the respective partnership agreements, as amended, supplemented, restated or otherwise modified from time to time, of any such partnership,
(v) to serve as a member of limited liability companies and perform the functions of a member specified in the respective limited liability
company agreements, as amended, supplemented, restated or otherwise modified from time to time, of any such limited liability company,
(vi) to invest in Capital Commitment Investments and/or GP-Related Investments and acquire and invest
in Securities or other property (directly or indirectly through SP RE VI (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP RE VI”), including, without limitation, in connection with
any action referred to in any of clauses (i) through (v) above,
(vii) to carry on such other businesses, perform such other services
and make such other investments as are deemed desirable by the General Partner and as are permitted under the Partnership Act and SP RE VI Agreements, and the respective partnership agreement of any partnership referred to in clause (iv) above
and the respective limited liability company agreement of any limited liability company referred to in clause (v) above, in the case of each of the foregoing, as amended, supplemented, restated or otherwise modified from time to time,
(viii) any other lawful purpose, and
(ix) to do all things necessary, desirable, convenient or incidental thereto.
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(b) In furtherance of its purposes, the Partnership shall have all powers necessary,
suitable or convenient for the accomplishment of its purposes, alone or with others, as principal or agent, including the following:
(i) to be and become a general or limited partner of partnerships, a member of limited liability companies, a holder of common
and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with the making of Investments or the acquisition, holding or disposition of Securities or other property or as otherwise deemed
appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection therewith;
(ii) to acquire and invest in general or limited partner interests, in limited liability company interests, in common and
preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or direct or indirect interests therein, whether such Investments and
Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company interests, stock, interests, obligations, Investments or Securities or
other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or short, options on futures contracts;
(iii) to buy, sell and otherwise acquire investments, whether such investments are readily marketable or not;
(iv) to invest and reinvest the cash assets of the Partnership in money-market or other short-term investments;
(v) to hold, receive, mortgage, pledge, lease, transfer, exchange or otherwise dispose of, grant options with respect to, and
otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or owned by the Partnership;
(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by mortgage, pledge,
conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and to buy, sell,
pledge or otherwise dispose of any such instrument or evidence of indebtedness;
(vii) to lend any of its property or
funds, either with or without security, at any legal rate of interest or without interest;
(viii) to have and maintain one
or more offices within or without the State of Delaware, and in connection therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection with the
maintenance of such office or offices;
(ix) to open, maintain and close accounts, including margin accounts, with brokers;
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(x) to open, maintain and close bank accounts and draw checks and other
orders for the payment of moneys;
(xi) to engage accountants, auditors, custodians, investment advisers, attorneys and any
and all other agents and assistants, both professional and nonprofessional, and to compensate any of them as may be necessary or advisable;
(xii) to form or cause to be formed and to own the stock of one or more corporations, whether foreign or domestic, to form or
cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic, and to form or cause to be formed and be a member or manager or both of one or more limited liability companies;
(xiii) to enter into, make and perform all contracts, agreements and other undertakings as may be necessary, convenient or
advisable or incident to carrying out its purposes;
(xiv) to sue and be sued, to prosecute, settle or compromise all
claims against third parties, to compromise, settle or accept judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection therewith;
(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to the Partners cash or
investments or other property of the Partnership, or any combination thereof; and
(xvi) to take such other actions
necessary, desirable, convenient or incidental thereto and to engage in such other businesses as may be permitted under Delaware and other applicable law.
Section 2.5. Place of Business. The Partnership shall maintain a registered office at The Corporation Trust Company, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801. The Partnership shall maintain an office and principal place of business at such place or places as the General Partner specifies from time to time and as set forth in the books and records of
the Partnership. The name and address of the Partnership’s registered agent is The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The General Partner may from time to time change the registered
agent or office by an amendment to the certificate of limited partnership of the Partnership.
Section 2.6. Withdrawal of Initial
Limited Partner. Upon the admission of one or more Limited Partners to the Partnership, the Initial Limited Partner shall Withdraw as the Initial Limited Partner of the Partnership and have no further right, interest or obligation of any kind
whatsoever as a Partner in the Partnership.
ARTICLE III
MANAGEMENT
Section 3.1.
General Partners. The General Partner shall be the general partner of the Partnership. The General Partner may not be removed without its consent.
Section 3.2. Limitations on Limited Partners. Except as may be expressly required or permitted by the Partnership Act,
Limited Partners as such shall have no right to, and shall not, take part in the management, conduct or control of the Partnership’s business or act for or bind the Partnership, and shall have only the rights and powers granted to Limited
Partners herein.
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Section 3.3. Partner Voting.
(a) To the extent a Partner is entitled to vote with respect to any matter relating to the Partnership, such Partner shall not be obligated to
abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such Partner (or any Affiliate thereof) in such matter.
(b) Meetings of the Partners may be called only by the General Partner.
Section 3.4. Management. (a) The management, control and operation of the Partnership and the formulation and execution of
business and investment policy shall be vested in the General Partner, and the General Partner shall have full control over the business and affairs of the Partnership. The General Partner shall, in the General Partner’s discretion, exercise
all powers necessary and convenient for the purposes of the Partnership, including those enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the
General Partner pursuant to this Agreement shall be made in the General Partner’s discretion, subject only to the express terms and conditions of this Agreement.
(b) All outside business or investment activities of the Partners (including outside directorships or trusteeships) shall be subject to such
rules and regulations as are established by the General Partner from time to time.
(c) Notwithstanding any provision in this Agreement to
the contrary, the Partnership is hereby authorized, without the need for any further act, vote or consent of any person (directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in
its capacity as a general partner, capital partner and/or limited partner of SP RE VI, or in the Partnership’s capacity as a general or limited partner, member or other equity owner of any Partnership Affiliate (as hereinafter defined), (i) to
execute and deliver, and to perform the Partnership’s obligations under, the SP RE VI Agreements, including, without limitation, serving as a general partner of SP RE VI, (ii) to execute and deliver, and to perform the Partnership’s
obligations under, the governing agreement, as amended, supplemented, restated or otherwise modified (each a “Partnership Affiliate Governing Agreement”), of any other partnership, limited liability company or other entity (each a
“Partnership Affiliate”) of which the Partnership is to become a general or limited partner, member or other equity owner, including, without limitation, serving as a general or limited partner, member or other equity owner of each
Partnership Affiliate, and (iii) to take any action, in the applicable capacity, contemplated by or arising out of this Agreement, the SP RE VI Agreements or any Partnership Affiliate Governing Agreement (and any amendment, supplement,
restatement and/or other modification of any of the foregoing).
(d) Each of Stephen A. Schwarzman, Hamilton E. James, John G. Finley, John
A. Magliano, Kathleen Skero, Matthew Skurbe, Christopher J. James, Peter Song, Stephen H. Can, Verdun Perry, Joshua S. Blaine, Michael Petryczenko and any other person designated by the General Partner, each acting individually, is hereby authorized
and empowered, as an authorized representative of the Partnership or as an authorized person of the General Partner (within the meaning of the Delaware Limited Liability Company Act, 6 Del. C. §§
18-101 et seq., as amended, or otherwise) (the General Partner hereby authorizing and ratifying any of the following actions):
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(i) (i) to execute and deliver and/or file (including any such action,
directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP RE VI, or in the Partnership’s
capacity as a general or limited partner, member or other equity owner of any Partnership Affiliate, any of the following:
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(A)
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any agreement, certificate, instrument or other document of the Partnership, SP RE VI or any Partnership
Affiliate (and any amendments, supplements, restatements and/or other modifications thereof), including, without limitation, the following: (I) the SP RE VI Agreements and each Partnership Affiliate Governing Agreement, (II) Subscription
Agreements on behalf of SP RE VI and/or the Partnership, (III) side letters issued in connection with investments in SP RE VI on behalf of SP RE VI and/or the Partnership, and (IV) such other agreements, certificates, instruments and other
documents as may be necessary or desirable in furtherance of the purposes of the Partnership, SP RE VI or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing referred to in
(I) through (IV) hereof);
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(B)
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the certificates of formation, certificates of limited partnership and/or other organizational documents of the
Partnership, SP RE VI or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications thereof); and
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(C)
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any other certificates, notices, applications or other documents (and any amendments, supplements, restatements
and/or other modifications thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Partnership, SP RE VI or any Partnership Affiliate to qualify to
do business in a jurisdiction in which the Partnership, SP RE VI or such Partnership Affiliate desires to do business;
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(ii) to prepare or cause to be prepared, and to sign, execute and deliver and/or file (including any such action, directly or
indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP RE VI or in the Partnership’s capacity as a
general or limited partner, member or other equity owner of any Partnership Affiliate): (A) any certificates, forms, notices, applications or other documents to be filed with any government or governmental or regulatory body on behalf of the
Partnership, SP RE VI or any Partnership Affiliate, (B) any certificates, forms, notices, applications or other documents that may be necessary or advisable in connection with any bank account of the Partnership, SP RE VI or any Partnership
Affiliate or any banking facilities or services that may be utilized by the Partnership, SP RE VI or any Partnership Affiliate, and all checks, notes, drafts and other documents of the Partnership, SP RE VI or any Partnership Affiliate that may be
required in connection with any such bank account, banking facilities or services, (C) resolutions with respect to any of the foregoing matters (which resolutions, when executed by any person authorized as provided in this Section 3.4(d),
each acting individually, shall be deemed to have been adopted by the General Partner, the Partnership, SP RE VI or any Partnership Affiliate, as applicable, for all purposes).
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The authority granted to any person (other than Stephen A. Schwarzman) in this Section 3.4(d) may be
revoked at any time by the General Partner by an instrument in writing signed by the General Partner.
Section 3.5.
Responsibilities of Partners.Unless otherwise determined by the General Partner in a particular case, each Limited Partner shall devote substantially all his time and attention to the businesses of the Partnership and its
Affiliates.
(b) All outside business or investment activities of the Partners (including outside directorships or trusteeships), shall be
subject to such rules and regulations as are established by the General Partner from time to time.
(c) The General Partner may from time
to time establish such other rules and regulations applicable to Partners or other employees as the General Partner deems appropriate, including rules governing the authority of Partners or other employees to bind the Partnership to financial
commitments or other obligations.
Section 3.6. Exculpation and Indemnification.
(a) Liability to Partners. Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent
permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually, a
“Covered Person” and collectively, the “Covered Persons”) shall be liable to the Partnership or any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related document or any
transaction or investment contemplated hereby or thereby) taken or omitted by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable judicial
determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority
granted to such Covered Person by this Agreement, and, with respect to any criminal act or proceeding, had reasonable cause to believe that such Covered Person’s conduct was unlawful. Each Covered Person shall be entitled to rely in good faith
on the advice of legal counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by any Covered Person in reliance on such advice shall in any event subject such person to any liability to any Partner or
the Partnership. To the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to another Partner, to the fullest extent permitted by law, such Partner acting under
this Agreement shall not be liable to the Partnership or to any such other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they expand or restrict the duties and
liabilities of a Partner otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by law, to modify to that extent such other duties and liabilities of such Partner.
(b) Indemnification. (i) To the fullest extent permitted by law, the Partnership shall indemnify and hold harmless (but only to the
extent of the Partnership’s assets (including, without limitation, the remaining capital commitments of the Partners) each Covered Person from and against any and all claims, damages, losses, costs, expenses and liabilities (including, without
limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable expenses of investigating or defending against any claim or alleged claim), joint and several, of
any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, for purposes of this Section 3.6, “Losses”), arising from any and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which the Covered Person may be involved, or threatened to be involved, as a party or otherwise, by reason of such Covered Person’s
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management of the affairs of the Partnership or which relate to or arise out of or in connection with the
Partnership, its property, its business or affairs (other than claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, arising out of any act or omission of such Covered Person constituting Cause);
provided, that a Covered Person shall not be entitled to indemnification under this Section with respect to any claim, issue or matter if there is a final and non-appealable judicial determination
and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interest of the Partnership and within the authority granted to such
Covered Person by this Agreement, and, with respect to any criminal act or proceeding, had reasonable cause to believe that such Covered Person’s conduct was unlawful; provided further, that if such Covered Person is a Partner or a
Withdrawn Partner, such Covered Person shall bear its share of such Losses in accordance with such Covered Person’s GP-Related Profit Sharing Percentage in the Partnership as of the time of the actions or
omissions that gave rise to such Losses. To the fullest extent permitted by law, expenses (including legal fees) incurred by a Covered Person (including, without limitation, the General Partner) in defending any claim, demand, action, suit or
proceeding may, with the approval of the General Partner, from time to time, be advanced by the Partnership prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Partnership of a written undertaking by
or on behalf of the Covered Person to repay such amount to the extent that it shall be subsequently determined that the Covered Person is not entitled to be indemnified as authorized in this Section, and the Partnership and its Affiliates shall have
a continuing right of offset against such Covered Person’s interests/investments in the Partnership and such Affiliates and shall have the right to withhold amounts otherwise distributable to such Covered Person to satisfy such repayment
obligation. If a Partner institutes litigation against a Covered Person which gives rise to an indemnity obligation hereunder, such Partner shall be responsible, up to the amount of such Partner’s Interests and remaining capital commitment, for
such Partner’s pro rata share of the Partnership’s expenses related to such indemnity obligation, as determined by the General Partner. The Partnership may purchase insurance, to the extent available at reasonable cost, to cover
losses, claims, damages or liabilities covered by the foregoing indemnification provisions. Partners will not be personally obligated with respect to indemnification pursuant to this Section. The General Partner shall have the authority to enter
into separate agreements with any Covered Person in order to give effect to the obligations to indemnify pursuant to this Section 3.6.
(ii) (A) Notwithstanding anything to the contrary herein, for greater certainty, it is understood and/or agreed that the
Partnership’s obligations hereunder are not intended to render the Partnership as a primary indemnitor for purposes of the indemnification, advancement of expenses and related provisions under applicable law governing SP RE VI and/or a
particular portfolio entity through which an Investment is indirectly held. It is further understood and/or agreed that a Covered Person shall first seek to be so indemnified and have such expenses advanced in the following order of priority: first
out of proceeds available in respect of applicable insurance policies maintained by the applicable portfolio entity and/or SP RE VI, second by the applicable portfolio entity through which such investment is indirectly held, and third by SP RE VI
(only to the extent the foregoing sources are exhausted).
(B) The Partnership’s obligation, if any, to indemnify or advance expenses
to any Covered Person shall be reduced by any amount that such Covered Person may collect as indemnification or advancement from SP RE VI and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained
thereby), and to the extent the Partnership (or any Affiliate thereof) pays or causes to be paid any amounts that should have been paid by SP RE VI and/or the applicable portfolio entity (including by virtue of any applicable insurance policies
maintained thereby), it is agreed among the Partners that the Partnership shall have a subrogation claim against SP RE VI and/or such portfolio entity in respect of such advancement or payments. The General Partner and the Partnership shall be
specifically empowered to structure any such advancement or payment as a loan or other arrangement (except for a loan to an executive officer of The Blackstone Group L.P. or any of its Affiliates, which shall not be permitted) as the General Partner
may determine necessary or advisable to give effect to or otherwise implement the foregoing.
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Section 3.7. Representations of Limited Partners.
(a) Each Limited Partner by execution of this Agreement (or by otherwise becoming bound by the terms and conditions hereof as provided herein
or in the Partnership Act) represents and warrants to every other Partner and to the Partnership, except as may be waived by the General Partner, that such Limited Partner is acquiring each of such Limited Partner’s Interests for such Limited
Partner’s own account for investment and not with a view to resell or distribute the same or any part hereof, and that no other person has any interest in any such Interest or in the rights of such Limited Partner hereunder; provided,
that a Partner may choose to make transfers for estate and charitable planning purposes (in accordance with the terms hereof). Each Limited Partner represents and warrants that such Limited Partner understands that the Interests have not been
registered under the Securities Act of 1933 and therefore such Interests may not be resold without registration under such Act or exemption from such registration, and that accordingly such Limited Partner must bear the economic risk of an
investment in the Partnership for an indefinite period of time. Each Limited Partner represents that such Limited Partner has such knowledge and experience in financial and business matters that such Limited Partner is capable of evaluating the
merits and risks of an investment in the Partnership, and that such Limited Partner is able to bear the economic risk of such investment. Each Limited Partner represents that such Limited Partner’s overall commitment to the Partnership and
other investments which are not readily marketable is not disproportionate to the Limited Partner’s net worth and the Limited Partner has no need for liquidity in the Limited Partner’s investment in Interests. Each Limited Partner
represents that to the full satisfaction of the Limited Partner, the Limited Partner has been furnished any materials that such Limited Partner has requested relating to the Partnership, any Investment and the offering of Interests and has been
afforded the opportunity to ask questions of representatives of the Partnership concerning the terms and conditions of the offering of Interests and any matters pertaining to each Investment and to obtain any other additional information relating
thereto. Each Limited Partner represents that the Limited Partner has consulted to the extent deemed appropriate by the Limited Partner with the Limited Partner’s own advisers as to the financial, tax, legal and related matters concerning an
investment in Interests and on that basis believes that an investment in the Interests is suitable and appropriate for the Limited Partner.
(b) Each Partner agrees that the representations and warranties contained in paragraph (a) above shall be true and correct as of any date
that such Partner (1) makes a capital contribution to the Partnership (whether as a result of Firm Advances made to such Partner or otherwise) with respect to any Investment, and such Partner hereby agrees that such capital contribution shall
serve as confirmation thereof and/or (2) repays any portion of the principal amount of a Firm Advance, and such Partner hereby agrees that such repayment shall serve as confirmation thereof.
Section 3.8. Tax Representation. Each Limited Partner certifies that (A) if the Limited Partner is a United States person (as
defined in the Code) (x) (i) the Limited Partner’s name, social security number (or, if applicable, employer identification number) and address provided to the Partnership and its Affiliates pursuant to an IRS Form W-9, Payer’s Request for Taxpayer Identification Number Certification (“W-9”) or otherwise are correct and (ii) the Limited Partner will complete
and return a W-9, and (y) (i) the Limited Partner is a United States person (as defined in the Code) and (ii) the Limited Partner will notify the Partnership within 60 days of a change to foreign (non-United States) status or (B) if the Limited Partner is not a United States person (as defined in the Code) (x) (i) the information on the completed IRS Form
W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (“W-8BEN”) or other applicable form, including but not
limited to IRS Form W-8IMY, Certificate of Foreign Intermediary, Foreign Partnership, or Certain U.S. Branches for
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United States Tax Withholding (“W-8IMY”), or
otherwise is correct and (ii) the Limited Partner will complete and return the applicable IRS form, including but not limited to a W-8BEN or W-8IMY, and (y) (i) the
Limited Partner is not a United States person (as defined in the Code) and (ii) the Limited Partner will notify the Partnership within 60 days of any change of such status. The Limited Partner agrees to properly execute and provide to the
Partnership in a timely manner any tax documentation that may be reasonably required by the Partnership or the General Partner.
ARTICLE IV
CAPITAL OF THE PARTNERSHIP
Section 4.1. Capital Contributions by Partners. (a) Each Partner shall be required to make capital contributions to the
Partnership (“GP-Related Capital Contributions”) at such times and in such amounts (the “GP-Related Required Amounts”) as are required
to satisfy the Partnership’s obligation to make capital contributions to SP RE VI in respect of the GP-Related SP RE VI Interest with respect to any GP-Related SP
RE VI Investment and as are otherwise determined by the General Partner from time to time or as may be set forth in such Limited Partner’s Commitment Agreement or SMD Agreement, if any; provided, that additional GP-Related Capital Contributions in excess of the GP-Related Required Amounts may be made pro rata among the Partners based upon each Partner’s Carried Interest Sharing
Percentage. GP-Related Capital Contributions in excess of the GP-Related Required Amounts which are to be used for ongoing business operations (as distinct from
financing, legal or other specific liabilities of the Partnership (including those specifically set forth in Sections 4.1(d) and 5.8(d)) shall be determined by the General Partner. Limited Partners shall not be required to make additional GP-Related Capital Contributions to the Partnership in excess of the GP-Related Required Amounts, except (i) as a condition of an increase in such Limited Partner’s GP-Related Profit Sharing Percentage or (ii) as specifically set forth in this Agreement; provided, that the General Partner and any Limited Partner may agree from time to time that such Limited Partner
shall make an additional GP-Related Capital Contribution to the Partnership; provided further, that each Investor Limited Partner shall maintain its GP-Related
Capital Accounts at an aggregate level equal to the product of (i) its GP-Related Profit Sharing Percentage from time to time and (ii) the total capital of the Partnership related to the GP-Related SP RE VI Interest.
(b) The General Partner may elect on a case by case basis to
(i) cause the Partnership to loan any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group L.P. or any Affiliate
thereof) the amount of any GP-Related Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the Partnership pursuant to
Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group L.P. or any Affiliate thereof) to make a required GP-Related Capital Contribution to the Partnership in
installments, in each case on terms determined by the General Partner.
(c) Each GP-Related Capital
Contribution by a Partner shall be credited to the appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2, subject to Section 5.10.
(d) The Partners and the Withdrawn Partners have entered into the Trust Agreement, pursuant to which certain amounts of distributions relating
to Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account constituting a “Holdback”).
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(i) The General Partner shall determine, as set forth below, the percentage
of each distribution of Carried Interest that shall be withheld for any General Partner (including, without limitation, the General Partner) and each Partner Category (such withheld percentage constituting a General Partner’s and such Partner
Category’s “Holdback Percentage”). The applicable Holdback Percentages initially shall be 0% for any General Partner, 15% for Existing Partners (other than any General Partner), 21% for Retaining Withdrawn Partners (other than
any General Partner) and 24% for Deceased Partners (the “Initial Holdback Percentages”). Any provision of this Agreement to the contrary notwithstanding, the Holdback Percentage for any General Partner (including, without
limitation, the General Partner) shall not be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).
(ii) The Holdback Percentage may not be reduced for any individual Partner as compared to the other Partners in his Partner
Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner Categories on a proportionate basis. For example, if the Holdback Percentage for Existing Partners is decreased
to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any reduction in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried
Interest made after the date of such reduction.
(iii) The Holdback Percentage may not be increased for any individual
Partner as compared to the other Partners in his Partner Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’ Holdback Percentage beyond 21% unless the General Partner
concurrently increases the Existing Partners’ Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the General Partner increases the Holdback Percentage for both
Existing Partners and Retaining Withdrawn Partners to 24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies equally to all Partner Categories. Any increase in the Holdback
Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner from proportionately increasing the Holdback Percentage of any
Partner Category (following a reduction of the Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For example, if the General Partner reduces the Holdback Percentages
for Existing Partners, Retaining Withdrawn Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the Holdback Percentages to the Initial Holdback Percentages.
(iv) (A) Notwithstanding anything contained herein to the contrary, the Partnership may increase or decrease the Holdback
Percentage for any Partner in any Partner Category (in such capacity, the “Subject Partner”) pursuant to a majority vote of the Limited Partners and the General Partner (a “Holdback Vote”); provided, that,
notwithstanding anything to the contrary contained herein, the Holdback Percentage applicable to any General Partner shall not be increased or decreased without its prior written consent; provided further, that a Subject Partner’s
Holdback Percentage shall not be (I) increased prior to such time as such Subject Partner (x) is notified by the Partnership of the decision to increase such Subject Partner’s Holdback Percentage and (y) has, if requested by such
Subject Partner, been given 30 days to gather and provide information to the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) or (II) decreased unless such decrease occurs subsequent to an increase
in a Subject Partner’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv); provided further, that such decrease shall not exceed an amount such that such Subject Partner’s
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Holdback Percentage is less than the prevailing Holdback Percentage for such Subject
Partner’s Partner Category; provided further, that a Partner shall not vote to increase a Subject Partner’s Holdback Percentage unless such voting Partner determines, in such Partner’s good faith judgment, that the facts and
circumstances indicate that it is reasonably likely that such Subject Partner, or any of such Subject Partner’s successors or assigns (including such Subject Partner’s estate or heirs) who at the time of such vote holds the GP-Related Partner Interest or otherwise has the right to receive distributions relating thereto, will not be capable of satisfying any GP-Related Recontribution Amounts that
may become due.
(B) A Holdback Vote shall take place at a Partnership meeting. Each of the Limited Partners and the
General Partner shall be entitled to cast one vote with respect to the Holdback Vote regardless of such Partner’s interest in the Partnership. Such vote may be cast by any such Partner in person or by proxy.
(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback Percentage, such Subject
Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided, that if the Partnership and the Subject Partner cannot agree upon a mutually
satisfactory arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates; provided further,
that if such candidates fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the arbitrator. Each Subject Partner that
submits the decision of the Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected out-of-pocket
expenses relating thereto and each such party shall, to the satisfaction of the arbitrator and prior to any determination being made by the arbitrator, pay the total of such estimated expenses (i.e., both the Subject Partner’s and the
Partnership’s expenses) into an escrow account to be controlled by Simpson Thacher & Bartlett LLP, as escrow agent (or such other comparable law firm as the Partnership and the Subject Partner shall agree). The arbitrator shall direct
the escrow agent to pay out of such escrow account all expenses associated with such arbitration (including costs leading thereto) and to return to the “victorious” party the entire amount of funds such party paid into such escrow account.
If the amount contributed to the escrow account by the losing party is insufficient to cover the expenses of such arbitration, such “losing” party shall then provide any additional funds necessary to cover such costs to such
“victorious” party. For purposes hereof, the “victorious” party shall be the Partnership, if the Holdback Percentage ultimately determined by the arbitrator is closer to the percentage determined in the second Holdback Vote than
it is to the prevailing Holdback Percentage for the Subject Partner’s Partner Category; otherwise, the Subject Partner shall be the “victorious” party. The party that is not the “victorious” party shall be the
“losing” party.
(D) In the event of a decrease in a Subject Partner’s Holdback Percentage (1) pursuant
to a Holdback Vote under this clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and distribute to such Subject Partner any Trust Amounts (and the Trust Income
thereon (except as expressly provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance with such Subject Partner’s reduced Holdback Percentage) as though
such reduced Holdback Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).
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(v) (A) If a Partner’s Holdback Percentage exceeds 15% (such
percentage in excess of 15% constituting the “Excess Holdback Percentage”), such Partner may satisfy the portion of his Holdback obligation in respect of his Excess Holdback Percentage (such portion constituting such Partner’s
“Excess Holdback”), and such Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he was a Partner), to the extent his Excess Holdback obligation has previously been satisfied in cash, may
obtain the release of the Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback
obligation, by pledging or otherwise making available to the Partnership, on a first priority basis (except as provided below), all or any portion of his Firm Collateral in satisfaction of his Excess Holdback obligation. Any Partner seeking to
satisfy all or any portion of the Excess Holdback utilizing Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority
security interest in, and otherwise assure the ability of the Partnership to realize on (if required), such Firm Collateral; provided, that in the case of entities listed in the books and records of the Partnership, in which Partners/members
are permitted to pledge their interests therein to finance all or a portion of their capital contributions thereto (“Pledgable Blackstone Interests”), to the extent a first priority security interest is unavailable because of an
existing lien on such Firm Collateral, the Partner or Withdrawn Partner seeking to utilize such Firm Collateral shall grant the Partnership a second priority security interest therein in the manner provided above; provided further, that
(x) in the case of Pledgable Blackstone Interests, to the extent that neither a first priority nor a second priority security interest is available, or (y) if the General Partner otherwise determines in its good faith judgment that a
security interest in Firm Collateral (and the corresponding documents and actions) are not necessary or appropriate, the Partner or Withdrawn Partner shall (in the case of either clause (x) or (y) above) irrevocably instruct in writing the
relevant partnership, limited liability company or other entity listed in the books and records of the Partnership to remit any and all net proceeds resulting from a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully
provided in clause (B) below. The Partnership shall, at the request of any Partner or Withdrawn Partner, assist such Partner or Withdrawn Partner in taking such action as is necessary to enable such Partner or Withdrawn Partner to use Firm
Collateral as provided hereunder.
(B) If upon a sale or other realization of all or any portion of any Firm Collateral (a
“Firm Collateral Realization”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds otherwise distributable to such
Partner or Withdrawn Partner from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust Account to fully satisfy such
Excess Holdback requirement (allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount necessary to satisfy such
Excess Holdback requirement shall be distributed to such Partner or Withdrawn Partner.
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(C) Upon any valuation or revaluation of Firm Collateral that results in a
decreased valuation of such Firm Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including upon a Firm Collateral Realization, if net proceeds therefrom and
the remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the foregoing to such Partner or Withdrawn Partner and such Partner or
Withdrawn Partner shall, within 30 days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his Excess Holdback requirement. If any such Partner or Withdrawn Partner
defaults upon his obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable to a default under this clause (C); provided
further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such
Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and
“GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(vi) Any Limited Partner or Withdrawn Partner may (A) obtain the release of any Trust Amounts (but not the Trust Income
thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such Partner or Withdrawn Partner or (B) require the Partnership
to distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit (an “L/C”) for the benefit of the Trustee(s) in such amounts. Any
Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall deliver to the Trustee(s) an unconditional and irrevocable L/C from a commercial bank whose (x) short-term
deposits are rated at least A-1 by S&P and P-1 by Moody’s (if the L/C is for a term of 1 year or less), or (y) long-term deposits are rated at least A+ by
S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more) (each a “Required Rating”). If the relevant rating of the commercial bank issuing such L/C drops below the relevant Required Rating, the L/C Partner shall
supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, in lieu of the insufficient L/C. In addition, if the L/C has a term expiring on a
date earlier than the latest possible termination date of SP RE VI, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to provide a new L/C from a commercial bank whose relevant rating is at least equal to the
relevant Required Rating, at least 30 days prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to drawing on any L/C. The Trustee(s) may (as directed by the Partnership in the case of
clause (I) below) draw down on an L/C only if (I) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the Partnership’s obligations under the Clawback Provisions or (II) an L/C Partner has not
provided a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash and/or Firm Collateral (to the extent permitted hereunder)), at least 30 days prior to the stated
expiration of an existing L/C in accordance with this clause (vi). The Trustee(s), as directed by the Partnership, shall return to any L/C Partner his L/C upon (1) the termination of the Trust Account and satisfaction of the Partnership’s
obligations, if any, in respect of the Clawback Provisions, (2) an L/C Partner satisfying his entire Holdback obligation in cash and Firm Collateral (to the extent permitted hereunder), or (3) the release, by the Trustee(s), as directed by
the Partnership, of all amounts in the Trust Account to the Partners or Withdrawn Partners. If an L/C Partner satisfies a portion of his Holdback obligation in cash and/or Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as
directed by the Partnership, release a portion of the amounts in the Trust Account to the Partners or Withdrawn Partners in the Partner Category of such L/C Partner, the L/C of an L/C Partner may be reduced by an amount corresponding to such portion
satisfied in cash and/or Firm Collateral (to the extent permitted hereunder) or such portion released by the Trustee(s), as directed by the Partnership; provided, that in no way shall the general release of any Trust Income cause an L/C Partner to
be permitted to reduce the amount of an L/C by any amount.
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(vii) (A) Any in-kind
distributions by the Partnership relating to Carried Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose of any
in-kind distributions held in the Trust Account at any time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.
(B) In lieu of the foregoing, any Existing Partner may pledge with respect to any
in-kind distribution the Special Firm Collateral referred to in the applicable category in the books and records of the Partnership; provided, that the initial contribution of such Special Firm
Collateral shall initially equal 130% of the required Holdback Amount for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback Amount. Paragraphs 4.1(d)(viii)(C) and (D) shall apply to such Special Firm
Collateral. To the extent such Special Firm Collateral exceeds the applicable minimum percentage of the required Holdback Amount specified in the first sentence of this clause (vii)(B), the related Partner may obtain a release of such excess amount
from the Trust Account.
(viii) (A) Any Limited Partner or Withdrawn Partner may satisfy all or any portion of his
Holdback (excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by the use of an L/C as provided herein, obtain a release of
Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn Partner’s Holdback (excluding any Excess Holdback) by
pledging to the Trustee(s) on a first priority basis all of his Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or exceed the amount of the Holdback distributed to the Partner or Withdrawn Partner (as more
fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the
General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) )to realize on (if required), such Special Firm Collateral.
(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or any portion of any Special Firm
Collateral (a “Special Firm Collateral Realization”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in
connection with an Excess Holdback) is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided herein (i.e., cash contributed to the Trust Account or
an L/C in the Trust Account)), then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Special Firm Collateral Realization (which shall not include the amount of Firm Collateral that consists of a
Qualifying Fund or other asset and is being used in connection with an Excess Holdback) shall be paid into the Trust (and allocated to such Partner or Withdrawn Partner) to fully satisfy such Holdback and shall be deemed thereafter to be Trust
Amounts for purposes hereunder. Any net proceeds from such Special Firm Collateral Realization in excess of the amount necessary to satisfy such Holdback (excluding any Excess Holdback) shall be distributed to such Partner or Withdrawn Partner. To
the extent a Qualifying Fund distributes
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Securities to a Partner or Withdrawn Partner in connection with a Special Firm Collateral
Realization, such Partner or Withdrawn Partner shall be required to promptly fund such Partner’s or Withdrawn Partner’s deficiency with respect to his Holdback in cash or an L/C.
(C) Upon any valuation or revaluation of the Special Firm Collateral and/or any adjustment in the Applicable Collateral
Percentage applicable to a Qualifying Fund (as provided in the books and records of the Partnership), if such Partner’s or Withdrawn Partner’s Special Firm Collateral valued at less than such Partner’s Holdback (excluding any Excess
Holdback) as provided in the books and records of the Partnership, taking into account other permitted means of satisfying the Holdback hereunder, the Partnership shall provide notice of the foregoing to such Partner or Withdrawn Partner and, within
10 business days of receiving such notice, such Partner or Withdrawn Partner shall contribute cash or additional Special Firm Collateral to the Trust Account in an amount necessary to make up such deficiency. If any such Partner or Withdrawn Partner
defaults upon his obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable to such default; provided further, that for
purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such Section 5.8(d)(ii) shall be construed
as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution
Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(D) Upon a Partner becoming a Withdrawn Partner, at any time thereafter the General Partner may revoke the ability of such
Withdrawn Partner to use Special Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding anything else in this Section 4.1(d)(viii). In that case the provisions of clause (C) above shall apply to the Withdrawn
Partner’s obligation to satisfy the Holdback (except that 30 days’ notice of such revocation shall be given), given that the Special Firm Collateral is no longer available to satisfy any portion of the Holdback (excluding any Excess
Holdback).
(E) Nothing in this Section 4.1(d)(viii) shall prevent any Partner or Withdrawn Partner from using any
amount of such Partner’s interest in a Qualifying Fund as Firm Collateral; provided that at all times Section 4.1(d)(v) and this Section 4.1(d)(viii) are each satisfied.
Section 4.2. Interest. Interest on the balances of the Partners’ capital related to the Partners’ GP-Related Partner Interests (excluding capital invested in GP-Related Investments and, if deemed appropriate by the General Partner, capital invested in any other investment
of the Partnership) shall be credited to the Partners’ GP-Related Capital Accounts at the end of each accounting period pursuant to Section 5.2, or at any other time as determined by the General
Partner, at rates determined by the General Partner from time to time, and shall be charged as an expense of the Partnership.
Section 4.3. Withdrawals of Capital. No Partner may withdraw capital related to such Partner’s
GP-Related Partner Interest from the Partnership except (i) for distributions of cash or other property pursuant to Section 5.8, (ii) as otherwise expressly provided in this Agreement, or
(iii) as determined by the General Partner.
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ARTICLE V
PARTICIPATION IN PROFITS AND LOSSES
Section 5.1. General Accounting Matters.
(a) GP-Related Net Income (Loss) shall be determined by the General Partner at the end of each
accounting period and shall be allocated as described in Section 5.4.
(b) “GP-Related
Net Income (Loss)” from any activity of the Partnership related to the GP-Related SP RE VI Interest for any accounting period means (i) the gross income realized by the Partnership from such
activity during such accounting period less (ii) all expenses of the Partnership, and all other items that are deductible from gross income, for such accounting period that are allocable to such activity (determined as provided below).
“GP-Related Net Income (Loss)” from any GP-Related Investment
for any accounting period in which such GP-Related Investment has not been sold or otherwise disposed of means (i) the gross amount of dividends, interest or other income received by the Partnership from
such GP-Related Investment during such accounting period less (ii) all expenses of the Partnership for such accounting period that are allocable to such GP-Related
Investment (determined as provided below).
“GP-Related Net Income (Loss)” from any GP-Related Investment for the accounting period in which such GP-Related Investment is sold or otherwise disposed of means (i) the sum of the gross proceeds from the sale
or other disposition of such GP-Related Investment and the gross amount of dividends, interest or other income received by the Partnership from such GP-Related
Investment during such accounting period less (ii) the sum of the cost or other basis to the Partnership of such GP-Related Investment and all expenses of the Partnership for such accounting period that
are allocable to such GP- Related Investment.
GP-Related Net Income
(Loss) shall be determined in accordance with the accounting method used by the Partnership for Federal income tax purposes with the following adjustments: (i) any income of the Partnership that is exempt from Federal income taxation and not
otherwise taken into account in computing GP-Related Net Income (Loss) shall be added to such taxable income or loss; (ii) if any asset has a value on the books of the Partnership that differs from its
adjusted tax basis for Federal income tax purposes, any depreciation, amortization or gain resulting from a disposition of such asset shall be calculated with reference to such value; (iii) upon an adjustment to the value of any asset on the
books of the Partnership pursuant to Regulation Section 1.704-1(b)(2), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (iv) any expenditures
of the Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing GP-Related Net Income (Loss) pursuant to this definition
shall be treated as deductible items; (v) any income from a GP-Related Investment that is payable to Partnership employees in respect of “phantom interests” in such GP-Related Investment awarded by the General Partner to employees shall be included as an expense in the calculation of GP-Related Net Income (Loss) from such GP-Related Investment, and (vi) items of income and expense (including interest income and overhead and other indirect expenses) of the Partnership and Affiliates of the Partnership shall be allocated among the
Partnership and such Affiliates, among various Partnership activities and GP-Related Investments and between accounting periods, in each case as determined by the General Partner. Any adjustments to GP-Related Net Income (Loss) by the General Partner, including adjustments for items of income accrued but not yet received, unrealized gains, items of expense accrued but not yet paid, unrealized losses, reserves
(including reserves for taxes, bad debts, actual or threatened litigation, or any other expenses, contingencies or obligations) and other appropriate items, shall be made in accordance with U.S. generally accepted accounting principles
(“GAAP”); provided, that the General Partner shall not be required to make any such adjustment.
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(c) An accounting period shall be a Fiscal Year except that, at the option of the General
Partner, an accounting period will terminate and a new accounting period will begin on the admission date of an additional Partner or the Settlement Date of a Withdrawn Partner, if any such date is not the first day of a Fiscal Year. If any event
referred to in the preceding sentence occurs and the General Partner does not elect to terminate an accounting period and begin a new accounting period, then the General Partner may make such adjustments as it deems appropriate to the Partners’
GP-Related Profit Sharing Percentages for the accounting period in which such event occurs (prior to any allocations of GP-Related Unallocated Percentages or adjustments
to GP-Related Profit Sharing Percentages pursuant to Section 5.3) to reflect the Partners’ average GP-Related Profit Sharing Percentages during such accounting
period; provided, that the GP-Related Profit Sharing Percentages of Partners in GP-Related Net Income (Loss) from
GP-Related Investments acquired during such accounting period will be based on GP-Related Profit Sharing Percentages in effect when each such GP-Related Investment was acquired.
(d) In establishing
GP-Related Profit Sharing Percentages and allocating GP-Related Unallocated Percentages pursuant to Section 5.3, the General Partner may consider such factors as it
deems appropriate.
(e) All determinations, valuations and other matters of judgment required to be made for accounting purposes under this
Agreement shall be made by the General Partner and approved by the Partnership’s independent accountants. Such approved determinations, valuations and other accounting matters shall be conclusive and binding on all Partners, all Withdrawn
Partners, their successors, heirs, estates or legal representatives and any other person, and to the fullest extent permitted by law no such person shall have the right to an accounting or an appraisal of the assets of the Partnership or any
successor thereto.
Section 5.2. GP-Related Capital Accounts.
(a) There shall be established for each Partner on the books of the Partnership, to the extent and at such times as may be appropriate, one or
more capital accounts as the General Partner may deem to be appropriate for purposes of accounting for such Partner’s interests in the capital of the Partnership related to the GP-Related SP RE VI
Interest and the GP-Related Net Income (Loss) of the Partnership (each a “GP-Related Capital Account”).
(b) As of the end of each accounting period or, in the case of a contribution to the Partnership by one or more of the Partners with respect to
such Partner or Partners’ GP-Related Partner Interests or a distribution by the Partnership to one or more of the Partners with respect to such Partner or Partners’
GP-Related Partner Interests, at the time of such contribution or distribution, (i) the appropriate GP-Related Capital Accounts of each Partner shall be credited
with the following amounts: (A) the amount of cash and the value of any property contributed by such Partner to the capital of the Partnership related to the GP-Related SP RE VI Interest during such
accounting period, (B) the GP-Related Net Income allocated to such Partner for such accounting period and (C) the interest credited on the balance of such Partner’s capital related to such
Partner’s GP-Related Partner Interest for such accounting period pursuant to Section 4.2; and (ii) the appropriate GP-Related Capital Accounts of each
Partner shall be debited with the following amounts: (x) the amount of cash, the principal amount of any subordinated promissory note of the Partnership referred to in Section 6.5 (as such amount is paid) and the value of any property
distributed to such Partner during such accounting period with respect to such Partner’s GP- Related Partner Interest and (y) the GP-Related Net Loss allocated
to such Partner for such accounting period.
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Section 5.3. GP-Related Profit Sharing
Percentages.
(a) Prior to the beginning of each annual accounting period, the General Partner shall establish the profit sharing
percentage (the “GP-Related Profit Sharing Percentage”) of each Partner in each category of GP-Related Net Income (Loss) for such annual accounting
period pursuant to Section 5.1(a) taking into account such factors as the General Partner deems appropriate; provided, however, that (i) the General Partner may elect to establish GP-Related
Profit Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment acquired by the Partnership during such accounting period at the time such GP-Related Investment is acquired in accordance with paragraph (d) below and (ii) GP-Related Net Income (Loss) for such accounting period from any GP-Related Investment shall be allocated in accordance with the GP-Related Profit Sharing Percentages in such GP-Related Investment
established in accordance with paragraph (d) below. The General Partner may establish different GP- Related Profit Sharing Percentages for any Partner in different categories of GP-Related Net Income (Loss). In the case of the Withdrawal of a Partner, such former Partner’s GP-Related Profit Sharing Percentages shall be allocated by the General
Partner to one or more of the remaining Partners as the General Partner shall determine. In the case of the admission of any Partner to the Partnership as an additional Partner, the GP-Related Profit Sharing
Percentages of the other Partners shall be reduced by an amount equal to the GP-Related Profit Sharing Percentage allocated to such new Partner pursuant to Section 6.1(b); such reduction of each other
Partner’s GP-Related Profit Sharing Percentage shall be pro rata based upon such Partner’s GP-Related Profit Sharing Percentage as in effect immediately prior
to the admission of the new Partner. Notwithstanding the foregoing, the General Partner may also adjust the GP-Related Profit Sharing Percentage of any Partner for any annual accounting period at the end of
such annual accounting period in its sole discretion.
(b) The General Partner may elect to allocate to the Partners less than 100% of the GP-Related Profit Sharing Percentages of any category for any annual accounting period at the time specified in Section 5.3(a) for the annual fixing of GP-Related Profit
Sharing Percentages (any remainder of such GP-Related Profit Sharing Percentages being called a “GP-Related Unallocated Percentage”); provided,
that any GP-Related Unallocated Percentage in any category of GP-Related Net Income (Loss) for any annual accounting period that is not allocated by the General Partner
within 90 days after the end of such accounting period shall be deemed to be allocated among all the Partners (including the General Partner) in the manner determined by the General Partner in its sole discretion.
(c) Unless otherwise determined by the General Partner in a particular case, (i) GP- Related
Profit Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment shall be allocated in proportion to the Partners’ respective GP-Related Capital Contributions in respect of such GP-Related Investment and (ii) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from each GP-Related Investment shall be fixed at the time such GP-Related Investment is acquired and
shall not thereafter change, subject to any repurchase rights established by the General Partner pursuant to Section 5.7.
Section 5.4. Allocations of GP-Related Net Income (Loss).
(a) Except as provided in Section 5.4(d), GP-Related Net Income of the Partnership for each GP-Related Investment shall be allocated to the GP-Related Capital Accounts related to such GP-Related Investment of all the Partners
participating in such GP-Related Investment (including the General Partner): first, in proportion to and to the extent of the amount of Non-Carried Interest (other than
amounts representing a return of GP-Related Capital Contributions) or Carried Interest distributed to the Partners, second, to Partners that received Non-Carried
Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest in years prior to the years such GP- Related Net Income is
being allocated to the extent such Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest exceeded GP-Related Net Income allocated to such Partners in such earlier years; and third, to the Partners in the same manner that such Non-Carried Interest (other than amounts
representing a return of GP-Related Capital Contributions) or Carried Interest would have been distributed if cash were available to distribute with respect thereto.
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(b) GP-Related Net Loss of the Partnership shall be
allocated as follows: (i) GP- Related Net Loss relating to realized losses suffered by SP RE VI and allocated to the Partnership with respect to its pro rata share thereof (based on capital contributions
made by the Partnership to SP RE VI with respect to the GP-Related SP RE VI Interest) shall be allocated to the Partners in accordance with each Partner’s
Non-Carried Interest Sharing Percentage with respect to the GP-Related Investment giving rise to such loss suffered by SP RE VI and
(ii) GP-Related Net Loss relating to realized losses suffered by SP RE VI and allocated to the Partnership with respect to the Carried Interest shall be allocated in accordance with a Partner’s
(including a Withdrawn Partner’s) Carried Interest Give Back Percentage (as of the date of such loss) (subject to adjustment pursuant to Section 5.8(e)).
(c) Notwithstanding Section 5.4(a) above, GP-Related Net Income relating to Carried Interest
allocated after the allocation of a GP-Related Net Loss pursuant to clause (ii) of Section 5.4(b) shall be allocated in accordance with such Carried Interest Give Back Percentages until such time as
the Partners have been allocated GP-Related Net Income relating to Carried Interest equal to the aggregate amount of GP-Related Net Loss previously allocated in
accordance with clause (ii) of Section 5.4(b). Withdrawn Partners shall remain Partners for purposes of allocating such GP-Related Net Loss with respect to Carried Interest.
(d) To the extent the Partnership has any GP-Related Net Income (Loss) for any accounting period
unrelated to SP RE VI, such GP-Related Net Income (Loss) will be allocated in accordance with GP-Related Profit Sharing Percentages prevailing at the beginning of such
accounting period.
(e) The General Partner may authorize from time to time advances to Partners (including any additional Partner admitted
to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group L.P. or any Affiliate thereof) against their allocable shares of GP-Related
Net Income (Loss).
Section 5.5. Liability of General Partners. General Partners shall
have unlimited liability for the satisfaction and discharge of all losses, liabilities and expenses of the Partnership.
Section 5.6.
Liability of Limited Partners. Each Limited Partner and former Limited Partner shall be liable for the satisfaction and discharge of all losses, liabilities and expenses of the Partnership allocable to him pursuant to Section 5.4 or 7.3,
but only to the extent required by applicable law. Except as otherwise provided in the following sentence, in no event shall any Limited Partner or former Limited Partner be obligated to make any additional capital contribution to the Partnership in
excess of his aggregate GP-Related Capital Contributions and Capital Commitment-Related Capital Contributions pursuant to Sections 4.1 and 7.1, or have any liability in excess of such aggregate GP- Related Capital Contributions and Capital Commitment-Related Capital Contributions for the satisfaction and discharge of the losses, liabilities and expenses of the Partnership. In no way does any of the
foregoing limit any Partner’s obligations under Section 4.1(d), 5.8(d) or 7.4(g) or otherwise to make capital contributions as provided hereunder.
Section 5.7. Repurchase Rights, etc.. The General Partner may from time to time establish such repurchase rights and/or
other requirements with respect to the Partners’ GP-Related Partner Interests relating to GP-Related SP RE VI Investments as the General Partner may determine.
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The General Partner shall have authority to (a) withhold any distribution otherwise payable to any
Partner until any such repurchase rights have lapsed or any such requirements have been satisfied, (b) pay any distribution to any Partner that is Contingent as of the distribution date and require the refund of any portion of such distribution
that is Contingent as of the Withdrawal Date of such Partner, (c) amend any previously established repurchase rights or other requirements from time to time, and (d) make such exceptions thereto as it may determine on a case by case basis.
Section 5.8. Distributions.
(a) (i) The Partnership shall make distributions of available cash (subject to reserves and other adjustments as
provided herein) or other property to Partners with respect to such Partners’ GP-Related Partner Interests at such times and in such amounts as are determined by the General Partner. The General Partner
shall, if it deems it appropriate, determine the availability for distribution of, and distribute, cash or other property separately for each category of GP-Related Net Income (Loss) established pursuant to
Section 5.1(a). Distributions of cash or other property with respect to Non-Carried Interest shall be made among the Partners in accordance with their respective
Non-Carried Interest Sharing Percentages, and, subject to Sections 4.1(d) and 5.8(e), distributions of cash or other property with respect to Carried Interest shall be made among Partners in accordance with
their respective Carried Interest Sharing Percentages.
(ii) At any time that a sale, exchange, transfer or other disposition by SP RE VI
of a portion of a GP-Related Investment is being considered by the Partnership (a “GP-Related Disposable Investment”), at the election of the General
Partner each Partner’s GP-Related Partner Interest with respect to such GP- Related Investment shall be vertically divided into two separate GP-Related Partner Interests, a GP- Related Partner Interest attributable to the GP-Related Disposable Investment (a Partner’s
“GP-Related Class B Interest”), and a GP-Related Partner Interest attributable to such
GP-Related Investment excluding the GP-Related Disposable Investment (a Partner’s “GP-Related
Class A Interest”). Distributions (including those resulting from a sale, transfer, exchange or other disposition by SP RE VI) relating to a GP-Related Disposable Investment (with
respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of GP-Related Class B Interests with respect to such GP-Related Investment in accordance with their GP-Related Profit Sharing Percentages relating to such GP-Related Class B
Interests, and distributions (including those resulting from the sale, transfer, exchange or other disposition by SP RE VI) relating to a GP-Related Investment excluding such
GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of
GP-Related Class A Interests with respect to such GP-Related Investment in accordance with their respective GP-Related
Profit Sharing Percentages relating to such GP-Related Class A Interests. Except as provided above, distributions of cash or other property with respect to each category of
GP-Related Net Income (Loss) shall be allocated among the Partners in the same proportions as the allocations of GP- Related Net Income (Loss) of each such category.
(b) Subject to the Partnership’s having sufficient available cash in the reasonable judgment of the General Partner, the Partnership
shall make cash distributions to each Partner with respect to each Fiscal Year of the Partnership in an aggregate amount at least equal to the total Federal, New York State and New York City income and other taxes that would be payable by such
Partner with respect to all categories of GP-Related Net Income (Loss) allocated to such Partner for such Fiscal Year, the amount of which shall be calculated (i) on the assumption that each Partner is an
individual subject to the then prevailing maximum Federal, New York State and New York City income and other tax rates, (ii) taking into account the deductibility of State and local income and other taxes for Federal income tax purposes and
(iii) taking into account any differential in applicable rates due to the type and character of GP-Related Net Income (Loss) allocated to such Partner. Notwithstanding the provisions of the foregoing
sentence, the General Partner may refrain from making any distribution if, in the reasonable judgment of the General Partner, such distribution is prohibited by the Partnership Act.
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(c) The General Partner may provide that the
GP-Related Partner Interest of any Partner or employee (including such Partner’s or employee’s right to distributions and investments of the Partnership related thereto) may be subject to repurchase
by the Partnership during such period as the General Partner shall determine (a “Repurchase Period”). Any Contingent distributions from GP-Related Investments subject to repurchase rights will
be withheld by the Partnership and will be distributed to the recipient thereof (together with interest thereon at rates determined by the General Partner from time to time) as the recipient’s rights to such distributions become Non-Contingent (by virtue of the expiration of the applicable Repurchase Period or otherwise). The General Partner may elect in an individual case to have the Partnership distribute any Contingent distribution to
the applicable recipient thereof irrespective of whether the applicable Repurchase Period has lapsed. If a Partner Withdraws from the Partnership for any reason other than his death, Total Disability or Incompetence, the undistributed share of any GP- Related Investment that remains Contingent as of the applicable Withdrawal Date shall be repurchased by the Partnership at a purchase price determined at such time by the General Partner. Unless determined
otherwise by the General Partner, the repurchased portion thereof will be allocated among the remaining Partners with interests in such GP-Related Investment in proportion to their respective percentage
interests in such GP-Related Investment, or if no other Partner has a percentage interest in such specific GP-Related Investment, to the General Partner;
provided, that the General Partner may allocate the Withdrawn Partner’s share of unrealized investment income from a repurchased GP-Related Investment attributable to the period after the Withdrawn
Partner’s Withdrawal Date on any basis it may determine, including to existing or new Partners who did not previously have interests in such GP-Related Investment, except that, in any event, each Investor
Limited Partner shall be allocated a share of such unrealized investment income equal to its respective GP-Related Profit Sharing Percentage of such unrealized investment income.
(d) (i)(A) If the Partnership is obligated under the Clawback Provisions or Giveback Provisions to contribute to SP RE VI a Clawback Amount or
a Giveback Amount (other than a Capital Commitment Giveback Amount) in respect of the GP-Related SP RE VI Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount
being herein called a “GP-Related Giveback Amount”), the Partnership shall call for such amounts as are necessary to satisfy such obligations of the Partnership as determined by the General
Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the Partnership, such an amount of prior distributions by the Partnership (and the Other Fund GPs) with respect to Carried
Interest (and/or Non-Carried Interest in the case of a GP-Related Giveback Amount) (the “GP-Related
Recontribution Amount”) which equals (I) the product of (a) a Partner’s or Withdrawn Partner’s Carried Interest Give Back Percentage and (b) the aggregate Clawback Amount payable by the Partnership, in
the case of Clawback Amounts, and (II) with respect to a GP-Related Giveback Amount, such Partner’s pro rata share of prior distributions of Carried Interest and/or
Non-Carried Interest in connection with (a) the GP-Related SP RE VI Investment giving rise to the GP-Related Giveback
Amount, (b) if the amounts contributed pursuant to clause (II)(a) above are insufficient to satisfy such GP-Related Giveback Amount, GP-Related SP RE VI Investments
other than the one giving rise to such obligation, but only those amounts received by the Partners with an interest in the GP-Related SP RE VI Investment referred to in clause (II)(a) above, and (c) if
the GP-Related Giveback Amount is unrelated to a specific GP-Related SP RE VI Investment, all GP-Related SP RE VI Investments.
Each Partner and Withdrawn Partner shall promptly contribute to the Partnership, along with satisfying his comparable obligations to the Other Fund GPs, if any, upon such call, such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount, less the amount paid out of the Trust Account on behalf of such Partner or Withdrawn Partner by the Trustee(s) pursuant to written instructions from the Partnership, or if
applicable, any of the Other Fund GPs with respect to Carried Interest (and/or Non-Carried Interest in the case of GP-Related Giveback
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Amounts) (the “Net GP-Related Recontribution
Amount”), irrespective of the fact that the amounts in the Trust Account may be sufficient on an aggregate basis to satisfy the Partnership’s and the Other Fund GPs’ obligation under the Clawback Provisions and/or Giveback
Provisions; provided, that to the extent a Partner’s or Withdrawn Partner’s share of the amount paid with respect to the Clawback Amount and/or the GP-Related Giveback Amount exceeds his GP-Related Recontribution Amount, such excess shall be repaid to such Partner or Withdrawn Partner as promptly as reasonably practicable, subject to clause (ii) below; provided further, that such written
instructions from the Partnership shall specify each Partner’s and Withdrawn Partner’s GP-Related Recontribution Amount. Prior to such time, the Partnership may, in its discretion (but shall be under
no obligation to), provide notice that in the Partnership’s judgment, the potential obligations in respect of the Clawback Provisions or the Giveback Provisions will probably materialize (and an estimate of the aggregate amount of such
obligations); provided further, that any amount from a Partner’s Trust Account used to pay any part of any GP-Related Giveback Amount (or such lesser amount as may be required by the General
Partner) shall be contributed by such Partner to such Partner’s Trust Account no later than 30 days after the Net GP-Related Recontribution Amount is paid with respect to such GP-Related Giveback Amount. Solely to the extent required by the SP RE VI Agreements, each member of the General Partner shall have the same obligations as a Partner (which obligations shall be subject to the same
limitations as the obligations of a Partner) under this Section 5.8(d)(i)(A) and under Section 5.8(d)(ii)(A) solely with respect to such member’s pro rata share of any Clawback Amount (for purpose of this sentence, as defined in
section 11.3(b) of the SP RE VI Partnership Agreement) and solely to the extent the Partnership has insufficient funds to meet the Partnership’s obligations under section 11.3 of the SP RE VI Partnership Agreement and/or the corresponding
provisions under any other SP RE VI Agreement.
(B) To the extent any Partner or Withdrawn Partner has satisfied any Holdback obligation
with Firm Collateral, such Partner or Withdrawn Partner shall, within 10 days of the Partnership’s call for GP- Related Recontribution Amounts, make a cash payment into the Trust Account in an amount
equal to the amount of the Holdback obligation satisfied with such Firm Collateral, or such lesser amount such that the amount in the Trust Account allocable to such Partner or Withdrawn Partner equals the sum of (I) such Partner’s or
Withdrawn Partner’s GP-Related Recontribution Amount and (II) any similar amounts payable to any of the Other Fund GPs. Immediately upon receipt of such cash, the Trustee(s) shall take such steps as
are necessary to release such Firm Collateral of such Partner or Withdrawn Partner equal to the amount of such cash payment. If the amount of such cash payment is less than the amount of Firm Collateral of such Partner or Withdrawn Partner, the
balance of such Firm Collateral if any, shall be retained to secure the payment of GP-Related Deficiency Contributions, if any, and shall be fully released upon the satisfaction of the Partnership’s and
the Other Fund GPs’ obligation to pay the Clawback Amount. The failure of any Partner or Withdrawn Partner to make a cash payment in accordance with this clause (B) (to the extent applicable) shall constitute a default under
Section 5.8(d)(ii) as if such cash payment hereunder constitutes a Net GP-Related Recontribution Amount under Section 5.8(d)(ii).
(ii) (A) In the event any Partner or Withdrawn Partner (a “GP-Related
Defaulting Party”) fails to recontribute all or any portion of such GP-Related Defaulting Party’s Net GP- Related Recontribution Amount for any reason, the
Partnership shall require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Carried Interest Give Back Percentages in the case of Clawback Amounts, and GP-Related Profit Sharing Percentages in the case of GP-Related Giveback Amounts (as more fully described in clause (II) of Section 5.8(d)(i)(A) above)), such
amounts as are necessary to fulfill the GP- Related Defaulting Party’s obligation to pay such GP-Related Defaulting Party’s Net
GP-Related Recontribution Amount (a “GP-Related Deficiency Contribution”) if the General Partner determines in its good faith judgment that the
Partnership (or an Other Fund GP) will be unable to collect such amount in cash from such GP-Related Defaulting Party for payment of the Clawback Amount or GP-Related
Giveback Amount, as the case may be, at least 20 Business Days prior to the latest date that the Partnership, and the Other Fund GPs, if applicable, are permitted to pay the Clawback Amount or GP-Related
Giveback Amount, as the case may be; provided, that no Partner or Withdrawn Partner shall as a result of such GP-Related Deficiency Contribution be required to contribute an amount in excess of 150% of
the amount of the Net GP-Related Recontribution Amount initially requested from such Partner or Withdrawn Partner in respect of such default.
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(B) Thereafter, the General Partner shall determine in its good faith
judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General
Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership against the GP-Related Defaulting Party, the cost of which shall be a Partnership expense to the extent not
ultimately reimbursed by the GP-Related Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such GP-Related Defaulting Party
becoming a GP-Related Defaulting Party) to set-off as appropriate and apply against such GP- Related Defaulting Party’s Net GP-Related Recontribution Amount any amounts otherwise payable to the GP-Related Defaulting Party by the Partnership or any Affiliate thereof (including amounts unrelated to
Carried Interest, such as returns of capital and profit thereon). Each Partner and Withdrawn Partner hereby grants to the Partnership a security interest, effective upon such Partner or Withdrawn Partner becoming a
GP-Related Defaulting Party, in all accounts receivable and other rights to receive payment from any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the
Partnership may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner and Withdrawn Partner hereby appoints the Partnership as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or Withdrawn Partner or in the name of the Partnership, to take any actions which may be necessary to accomplish the
intent of the immediately preceding sentence. The Partnership shall be entitled to collect interest on the Net GP-Related Recontribution Amount of a GP-Related
Defaulting Party from the date such Net GP-Related Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(C) Any Partner’s or Withdrawn Partner’s failure to make a GP-Related
Deficiency Contribution shall cause such Partner or Withdrawn Partner to be a GP-Related Defaulting Party with respect to such amount. The Partnership shall first seek any remaining Trust Amounts (and Trust
Income thereon) allocated to such Partner or Withdrawn Partner to satisfy such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution before seeking cash
contributions from such Partner or Withdrawn Partner in satisfaction of such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution.
(iii) A Partner’s or Withdrawn Partner’s obligation to make contributions to the Partnership under this
Section 5.8(d) shall survive the termination of the Partnership.
(e) The Partners acknowledge that the General Partner will (and is
hereby authorized to) take such steps as it deems appropriate, in its good faith judgment, to further the objective of providing for the fair and equitable treatment of all Partners, including by allocating writedowns and losses (to be determined by
the General Partner in accordance with GAAP and as reported by SP RE VI) on GP- Related SP RE VI Investments that have been the subject of a writedown and/or losses (each, a “Loss Investment”)
to those Partners who participated in such Loss Investments based on their Carried Interest Sharing Percentage therein to the extent that such Partners receive or have received Carried Interest distributions from other
GP-Related SP RE VI Investments. Consequently and notwithstanding anything herein to the contrary, adjustments to Carried Interest distributions shall be made as set forth in this Section 5.8(e).
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(i) At the time the Partnership is making Carried Interest distributions in
connection with a GP-Related SP RE VI Investment (the “Subject Investment”) that have been reduced under any SP RE VI Agreement as a result of one or more Loss Investments, the General Partner
shall calculate amounts distributable to or due from each such Partner as follows:
(A) determine each Partner’s share
of each such Loss Investment based on his Carried Interest Sharing Percentage in each such Loss Investment (which may be zero) to the extent such Loss Investment has reduced the Carried Interest distributions otherwise available for distribution to
all Partners (indirectly through the Partnership from SP RE VI) from the Subject Investment (such reduction, the “Loss Amount”);
(B) determine the amount of Carried Interest distributions otherwise distributable to such Partner with respect to the Subject
Investment (indirectly through the Partnership from SP RE VI) before any reduction in respect of the amount determined in clause (A) above (the “Unadjusted Carried Interest Distributions”); and
(C) subtract (I) the Loss Amounts relating to all Loss Investments from (II) the Unadjusted Carried Interest
Distributions for such Partner, to determine the amount of Carried Interest distributions to actually be paid to such Partner (“Net Carried Interest Distribution”).
To the extent that the Net Carried Interest Distribution for a Partner as calculated in this clause (i) is a negative number, the General
Partner shall (I) notify such Partner, at or prior to the time such Carried Interest distributions are actually made to the Partners, of his obligation to recontribute to the Partnership prior Carried Interest distributions (a “Net
Carried Interest Distribution Recontribution Amount”), up to the amount of such negative Net Carried Interest Distribution, and (II) to the extent amounts recontributed pursuant to clause (I) are insufficient to satisfy such
negative Net Carried Interest Distribution amount, reduce future Carried Interest distributions otherwise due such Partner, up to the amount of such remaining negative Net Carried Interest Distribution. If a Partner’s (x) Net Carried
Interest Distribution Recontribution Amount exceeds (y) the aggregate amount of prior Carried Interest distributions less the amount of tax thereon, calculated based on the Assumed Tax Rate in effect in the Fiscal Years of such distributions
(the “Excess Tax-Related Amount”), then such Partner may, in lieu of paying such Partner’s Excess Tax-Related Amount, defer such amounts as set
forth below. Such deferred amount shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced and repaid by the amount of Carried Interest otherwise distributable to such Partner in connection with future Carried Interest
distributions until such balance is reduced to zero. Any deferred amounts shall be payable in full upon the earlier of (i) such time as the Clawback Amount is determined (as provided herein) and (ii) such time as the Partner becomes a
Withdrawn Partner.
To the extent there is an amount of negative Net Carried Interest Distribution with respect to a Partner remaining
after the application of this clause (i), notwithstanding clause (II) of the preceding paragraph, such remaining amount of negative Net Carried Interest Distribution shall be allocated to the other Partners pro rata based on each of their
Carried Interest Sharing Percentages in the Subject Investment.
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A Partner who fails to pay a Net Carried Interest Distribution Recontribution Amount
promptly upon notice from the General Partner (as provided above) shall be deemed a GP-Related Defaulting Party for all purposes hereof.
A Partner may satisfy in part any Net Carried Interest Distribution Recontribution Amount from cash that is then subject to a Holdback, to the
extent that the amounts that remain subject to a Holdback satisfy the Holdback requirements hereof as they relate to the reduced amount of aggregate Carried Interest distributions received by such Partner (taking into account any Net Carried
Interest Distribution Recontribution Amount contributed to the Partnership by such Partner).
Any Net Carried Interest Distribution
Recontribution Amount contributed by a Partner, including amounts of cash subject to a Holdback as provided above, shall increase the amount available for distribution to the other Partners as Carried Interest distributions with respect to the
Subject Investment; provided, that any such amounts then subject to a Holdback may be so distributed to the other Partners to the extent a Partner receiving such distribution has satisfied the Holdback requirements with respect to such
distribution (taken together with the other Carried Interest distributions received by such Partner to date).
(ii) In the
case of Clawback Amounts which are required to be contributed to the Partnership as otherwise provided herein, the obligation of the Partners with respect to any Clawback Amount shall be adjusted by the General Partner as follows:
(A) determine each Partner’s share of any Losses in any GP-Related SP RE VI
Investments which gave rise to the Clawback Amount (i.e., the Losses that followed the last GP-Related SP RE VI Investment with respect to which Carried Interest distributions were made), based on such
Partner’s Carried Interest Sharing Percentage in such GP-Related SP RE VI Investments;
(B) determine each Partner’s obligation with respect to the Clawback Amount based on such Partner’s Carried Interest
Give Back Percentage as otherwise provided herein; and
(C) subtract the amount determined in clause (B) above from
the amount determined in clause (A) above with respect to each Partner to determine the amount of adjustment to each Partner’s share of the Clawback Amount (a Partner’s “Clawback Adjustment Amount”).
A Partner’s share of the Clawback Amount shall for all purposes hereof be decreased by such Partner’s Clawback Adjustment Amount, to
the extent it is a negative number (except to the extent expressly provided below). A Partner’s share of the Clawback Amount shall for all purposes hereof be increased by such Partner’s Clawback Adjustment Amount (to the extent it is a
positive number); provided, that in no way shall a Partner’s aggregate obligation to satisfy a Clawback Amount as a result of this clause (ii) exceed the aggregate Carried Interest distributions received by such Partner. To the
extent a positive Clawback Adjustment Amount remains after the application of this clause (ii) with respect to a Partner, such remaining Clawback Adjustment Amount shall be allocated to the Partners (including any Partner whose Clawback Amount
was increased pursuant to this clause (ii)) pro rata based on their Carried Interest Give Back Percentages (determined without regard to this clause (ii)).
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Any distribution or contribution adjustments pursuant to this Section 5.8(e) by the
General Partner shall be based on its good faith judgment, and no Partner shall have any claim against the Partnership, the General Partner or any other Partners as a result of any adjustment made as set forth above. This Section 5.8(e) applies
to all Partners, including Withdrawn Partners.
It is agreed and acknowledged that this Section 5.8(e) is an agreement among the
Partners and in no way modifies the obligations of each Partner regarding the Clawback Amount as provided in the SP RE VI Agreements.
Section 5.9. Business Expenses. The Partnership shall reimburse the Partners for reasonable travel, entertainment and
miscellaneous expenses incurred by them in the conduct of the Partnership’s business in accordance with rules and regulations established by the General Partner from time to time.
Section 5.10. Tax Capital Accounts; Tax Allocations.
(a) For Federal income tax purposes, there shall be established for each Partner a single capital account combining such Partner’s Capital
Commitment Capital Account and GP-Related Capital Account, with such adjustments as the General Partner determines are appropriate so that such single capital account is maintained in compliance with the
principles and requirements of Section 704(b) of the Code and the Regulations thereunder.
(b) For Federal, State and local income tax
purposes only, Partnership income, gain, loss, deduction or expense (or any item thereof) for each fiscal year shall be allocated to and among the Partners in a manner corresponding to the manner in which corresponding items are allocated among the
Partners pursuant to clause (a) above, provided the General Partner may in its sole discretion make such allocations for tax purposes as it determines are appropriate so that allocations have substantial economic effect or are in accordance
with the interests of the Partners, within the meaning of the Code and the Regulations thereunder.
ARTICLE VI
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS;
SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
Section 6.1. Additional Partners.
(a) Effective on the first day of any month (or on such other date as shall be determined by the General Partner in its sole discretion), the
General Partner shall have the right to admit one or more additional or substitute persons into the Partnership as General Partners or Limited Partners. Each such person shall make the representations and certifications with respect to itself set
forth in Sections 3.7 and 3.8. The General Partner shall determine and negotiate with the additional Partner all terms of such additional Partner’s participation in the Partnership, including the additional Partner’s initial GP-Related Capital Contribution, Capital Commitment-Related Capital Contribution, GP-Related Profit Sharing Percentage and Capital Commitment Profit Sharing Percentage. Each
additional Partner shall have such voting rights as may be determined by the General Partner from time to time unless, upon the admission to the Partnership of any Limited Partner, the General Partner shall designate that such Limited Partner shall
not have such voting rights (any such Limited Partner being called a “Nonvoting Limited Partner”). Any additional Partner shall, as a condition to becoming a Partner, agree to become a party to, and be bound by the terms and
conditions of, the Trust Agreement. If Blackstone or another or subsequent holder of an Investor Note approved by the General Partner for purposes of this Section 6.1(a)
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shall foreclose upon a Limited Partner’s Investor Note issued to finance such Limited Partner’s
purchase of his Capital Commitment Interests, Blackstone or such other or subsequent holder shall succeed to such Limited Partner’s Capital Commitment Interests and shall be deemed to have become a Limited Partner to such extent. Any Additional
Partner may have a GP-Related Partner Interest or a Capital Commitment Partner Interest, without having the other such interest.
(b) The GP-Related Profit Sharing Percentages, if any, to be allocated to an additional Partner as of
the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’ GP-Related Profit Sharing Percentages as of such date, shall be established by the General
Partner pursuant to Section 5.3. The Capital Commitment Profit Sharing Percentages, if any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all
other Partners’ Capital Commitment Profit Sharing Percentages as of such date, shall be established by the General Partner.
(c) An
additional Partner shall be required to contribute to the Partnership his pro rata share of the Partnership’s total capital, excluding capital in respect of GP-Related Investments and Capital Commitment
Investments in which such Partner does not acquire any interests, at such times and in such amounts as shall be determined by the General Partner in accordance with Sections 4.1 and 7.1.
(d) The admission of an additional Partner will be evidenced by (i) the execution of a counterpart copy of, or counter-signature page with
respect to, this Agreement by such additional Partner, or (ii) the execution of an amendment to this Agreement by the General Partner and the additional Partner, as determined by the General Partner, or (iii) the execution by such
additional Partner of any other writing evidencing the intent of such person to become a substitute or additional Limited Partner and to be bound by the terms of this Agreement and such writing being accepted by the General Partner on behalf of the
Partnership. In addition, each additional Partner shall sign a counterpart copy of the Trust Agreement or any other writing evidencing the intent of such person to become a party to the Trust Agreement.
Section 6.2. Withdrawal of Partners.
(a) Any Partner may Withdraw voluntarily from the Partnership subject to the prior written consent of the General Partner. The General Partner
generally intends to permit voluntary Withdrawals on the last day of any calendar month (or on such other date as shall be determined by the General Partner in its sole discretion), on not less than 15 days’ prior written notice by such Partner
to the General Partner (or on such shorter notice period as may be mutually agreed upon between such Partner and the General Partner); provided, that a Partner may not voluntarily Withdraw without the consent of the General Partner if such
Withdrawal would (i) cause the Partnership to be in default under any of its contractual obligations or (ii) in the reasonable judgment of the General Partner, have a material adverse effect on the Partnership or its business; provided
further that a Partner may Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest without Withdrawing from the Partnership with respect to such Partner’s Capital
Commitment Partner Interest, and a Partner may Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest without Withdrawing from the Partnership with respect to such Partner’s GP-Related Partner Interest.
(b) Upon the Withdrawal of any Partner, including by the occurrence of any
withdrawal event under the Partnership Act with respect to any Partner, such Partner shall thereupon cease to be a Partner, except as expressly provided herein.
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(c) Upon the Total Disability of a Limited Partner, such Partner shall thereupon cease to be
a Limited Partner with respect to such Partner’s GP-Related Partner Interest; provided, however, that the General Partner may elect to admit such Withdrawn Partner to the Partnership as a
Nonvoting Limited Partner with respect to such Partner’s GP-Related Partner Interest, with such GP- Related Partner Interest as the General Partner may determine.
The determination of whether any Partner has suffered a Total Disability shall be made by the General Partner in its sole discretion after consultation with a qualified medical doctor. In the absence of agreement between the General Partner and such
Partner, each party shall nominate a qualified medical doctor and the two doctors shall select a third doctor, who shall make the determination as to Total Disability.
(d) If the General Partner determines that it shall be in the best interests of the Partnership for any Partner (including any Partner who has
given notice of voluntary Withdrawal pursuant to paragraph (a) above) to Withdraw from the Partnership (whether or not Cause exists) with respect to such Partner’s GP-Related Partner Interest and/or
with respect to such Partner’s Capital Commitment Partner Interest, such Partner, upon written notice by the General Partner to such Partner, shall be required to Withdraw with respect to such Partner’s
GP-Related Partner Interest and/or with respect to such Partner’s Capital Commitment Partner Interest, as of a date specified in such notice, which date shall be on or after the date of such notice. If
the General Partner requires any Partner to Withdraw for Cause with respect to such Partner’s GP-Related Partner Interest and/or with respect to such Partner’s Capital Commitment Partner Interest,
such notice shall state that it has been given for Cause and shall describe the particulars thereof in reasonable detail.
(e) The
Withdrawal from the Partnership of any Partner shall not, in and of itself, affect the obligations of the other Partners to continue the Partnership during the remainder of its term. A Withdrawn General Partner shall remain liable for all
obligations of the Partnership incurred while it was a General Partner and resulting from its acts or omissions as a General Partner to the fullest extent provided by law.
Section 6.3. GP-Related Partner Interests Not Transferable.
(a) No Partner may sell, assign, pledge or otherwise transfer or encumber all or any portion of such Partner’s GP-Related Partner Interest without the prior written consent of the General Partner; provided, that, subject to the Partnership Act, this Section 6.3 shall not impair transfers by operation of law,
transfers by will or by other testamentary instrument occurring by virtue of the death or dissolution of a Partner, or transfers required by trust agreements; provided further, that, subject to the prior written consent of the General
Partner, which shall not be unreasonably withheld, a Limited Partner may transfer, for estate planning purposes, up to 25% of his GP-Related Profit Sharing Percentage to any estate planning trust, limited
partnership or limited liability company with respect to which such Limited Partner controls investments related to any interest in the Partnership held therein (an “Estate Planning Vehicle”). Each Estate Planning Vehicle will be a
Nonvoting Limited Partner. Such Limited Partner and the Nonvoting Limited Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such Nonvoting Limited Partner with respect to the interest transferred
(including the obligation to make additional GP-Related Capital Contributions). The General Partner may at its sole option exercisable at any time require such Estate Planning Vehicle to Withdraw from the
Partnership on the terms of this Article VI. Except as provided in the second proviso to the first sentence of this Section 6.3(a), no assignee, legatee, distributee, heir or transferee (by conveyance, operation of law or otherwise) of the
whole or any portion of any Partner’s GP-Related Partner Interest shall have any right to be a General Partner or Limited Partner without the prior written consent of the General Partner (which consent
may be given or withheld in its sole discretion without giving any reason therefor). Notwithstanding the granting of a security interest in the entire partnership interest of any Partner, such Partner shall continue to be a partner of the
Partnership.
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(b) Notwithstanding any provision hereof to the contrary, no sale or transfer of any GP-Related Partner Interest in the Partnership may be made except in compliance with all Federal, State and other applicable laws, including Federal and State securities laws.
Section 6.4. General Partner Withdrawal; Transfer of General Partner’s Interest.
(a) The General Partner may not transfer or assign its interest as a General Partner in the Partnership or its right to manage the affairs of
the Partnership, except that the General Partner may, with the prior written approval of a Majority In Interest of the Partners admit another person as an additional or substitute General Partner who makes such representations with respect to itself
as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise); provided, however, that the General Partner may, in its sole discretion, transfer all or part of its interest in the
Partnership to a person who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise) and who owns, directly or indirectly, the principal part
of the business then conducted by the General Partner in connection with any liquidation, dissolution or reorganization of the General Partner, and, upon the assumption by such person of liability for all the obligations of the General Partner under
this Agreement, such person shall be admitted as the General Partner. A person who is so admitted as an additional or substitute General Partner shall thereby become a General Partner and shall have the right to manage the affairs of the Partnership
and to vote as a Partner to the extent of the interest in the Partnership so acquired. The General Partner shall not cease to be the general partner of the Partnership upon the collateral assignment of or the pledging or granting of a security
interest in its entire Interest in the Partnership.
(b) Except as contemplated by clause (a) above, Withdrawal by a General Partner
is not permitted. The Withdrawal of a General Partner shall not dissolve the Partnership if at the time of such Withdrawal there are one or more remaining General Partners and any one or more of such remaining General Partners continue the business
of the Partnership (any and all such remaining General Partners being hereby authorized to continue the business of the Partnership without dissolution and hereby agreeing to do so). If upon the Withdrawal of a General Partner there shall be no
remaining General Partner, the Partnership nonetheless shall not be dissolved and shall not be required to be wound up if, within 90 days after the occurrence of such event of Withdrawal, all remaining Limited Partners (excluding Withdrawn Partners)
agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such Withdrawal, of one or more General Partners.
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related
Partner Interest.
(a) The terms of this Section 6.5 shall apply to the
GP-Related Partner Interest of a Withdrawn Partner, but, except as otherwise expressly provided in this Section 6.5, shall not apply to the Capital Commitment Partner Interest of a Withdrawn Partner. For
purposes of this Section 6.5, the term “Settlement Date” means the date as of which a Withdrawn Partner’s GP-Related Partner Interest in the Partnership is settled as determined
under paragraph (b) below. Notwithstanding the foregoing, any Limited Partner who Withdraws from the Partnership, and all or any portion of whose GP-Related Partner Interest is retained as a Limited
Partner, shall be considered a Withdrawn Partner for all purposes hereof.
(b) Except where a later date for the settlement of a Withdrawn
Partner’s GP-Related Partner Interest in the Partnership may be agreed to by the General Partner and a Withdrawn Partner, a Withdrawn Partner’s Settlement Date shall be his Withdrawal Date;
provided, that if a Withdrawn Partner’s Withdrawal Date is not the last day of a month, then the General Partner may elect for such Withdrawn Partner’s Settlement Date to be the last day of the month in which his Withdrawal Date
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occurs. During the interval, if any, between a Withdrawn Partner’s Withdrawal Date and Settlement Date,
such Withdrawn Partner shall have the same rights and obligations with respect to GP-Related Capital Contributions, interest on capital, allocations of GP-Related Net
Income (Loss) and distributions as would have applied had such Withdrawn Partner remained a Partner of the Partnership during such period.
(c) In the event of the Withdrawal of a Partner with respect to such Withdrawn Partner’s
GP-Related Partner Interest, the General Partner shall, promptly after such Withdrawn Partner’s Settlement Date, (i) determine and allocate to the Withdrawn Partner’s GP-Related Capital Accounts such Withdrawn Partner’s allocable share of the GP-Related Net Income (Loss) of the Partnership for the period ending on such Settlement Date
in accordance with Article V and (ii) credit the Withdrawn Partner’s GP-Related Capital Accounts with interest in accordance with Section 5.2. In making the foregoing calculations, the General
Partner shall be entitled to establish such reserves (including reserves for taxes, bad debts, unrealized losses, actual or threatened litigation or any other expenses, contingencies or obligations) as it deems appropriate. Unless otherwise
determined by the General Partner in a particular case, a Withdrawn Partner shall not be entitled to receive any GP-Related Unallocated Percentage in respect of the accounting period during which such Partner
Withdraws from the Partnership (whether or not previously awarded or allocated) or any GP-Related Unallocated Percentage in respect of prior accounting periods that have not been paid or allocated (whether or
not previously awarded) as of such Withdrawn Partner’s Withdrawal Date.
(d) From and after the Settlement Date of the Withdrawn
Partner, the Withdrawn Partner’s GP-Related Profit Sharing Percentages shall, unless otherwise allocated by the General Partner pursuant to Section 5.3(a), be deemed to be GP-Related Unallocated Percentages (except for GP-Related Profit Sharing Percentages with respect to GP-Related Investments as provided
in paragraph (f) below).
(e) (i) Upon the Withdrawal from the Partnership of a Partner with respect to such Partner’s GP-Related Partner Interest, such Withdrawn Partner thereafter shall not, except as expressly provided in this Section 6.5, have any rights of a Partner (including voting rights) with respect to such
Partner’s GP-Related Partner Interest, and, except as expressly provided in this Section 6.5, such Withdrawn Partner shall not have any interest in the Partnership’s GP-Related Net Income (Loss) or in distributions related to such Partner’s GP-Related Partner Interest, GP-Related Investments or
other assets related to such Partner’s GP-Related Partner Interest. If a Partner Withdraws from the Partnership with respect to such Partner’s GP-Related
Partner Interest for any reason other than for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be entitled to receive, at the time or times specified in Section 6.5(i) below, in satisfaction and discharge in full of the
Withdrawn Partner’s GP-Related Partner Interest in the Partnership, (x) payment equal to the aggregate credit balance, if any, as of the Settlement Date of the Withdrawn Partner’s GP-Related Capital Accounts, (excluding any GP-Related Capital Account or portion thereof attributable to any GP-Related Investment)
and (y) the Withdrawn Partner’s percentage interest attributable to each GP-Related Investment in which the Withdrawn Partner has an interest as of the Settlement Date as provided in paragraph
(f) below (which shall be settled in accordance with paragraph (f) below), subject to all the terms and conditions of paragraphs (a)-(p) of this Section 6.5. If the amount determined pursuant to clause (x) above is an aggregate
negative balance, the Withdrawn Partner shall pay the amount thereof to the Partnership upon demand by the General Partner on or after the date of the statement referred to in Section 6.5(i) below; provided, that if the Withdrawn Partner
was solely a Limited Partner (other than a Special Limited Partner) on his Withdrawal Date, such payment shall be required only to the extent of any amounts payable to such Withdrawn Partner pursuant to this Section 6.5. Any aggregate negative
balance in the GP-Related Capital Accounts of a Withdrawn Partner who was solely a Limited Partner (other than a Special Limited Partner), upon the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5, shall be allocated among the other Partners’ GP-Related Capital Accounts in accordance
with their respective GP-
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Related Profit Sharing Percentages in the categories of GP-Related
Net Income (Loss) giving rise to such negative balance as determined by the General Partner as of such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn Partner’s GP-Related
Partner Interest in the Partnership, no value shall be ascribed to goodwill, the Partnership name or the anticipation of any value the Partnership or any successor thereto might have in the event the Partnership or any interest therein were to be
sold in whole or in part.
(ii) Notwithstanding clause (i) of this Section 6.5(e), in the case of a Partner whose
Withdrawal with respect to such Partner’s GP-Related Partner Interest resulted from such Partner’s death or Incompetence, such Partner’s estate or legal representative, as the case may be, may
elect, at the time described below, to receive a Nonvoting Limited Partner GP-Related Partner Interest and retain such Partner’s GP-Related Profit Sharing
Percentage in all (but not less than all) illiquid investments of the Partnership in lieu of a cash payment (or Note) in settlement of that portion of the Withdrawn Partner’s GP-Related Partner Interest.
The election referred to above shall be made within 60 days after the Withdrawn Partner’s Settlement Date, based on a statement of the settlement of such Withdrawn Partner’s GP-Related Partner
Interest in the Partnership pursuant to this Section 6.5.
(f) For purposes of clause (y) of paragraph (e)(i) above, a Withdrawn
Partner’s “percentage interest” means his GP-Related Profit Sharing Percentage as of the Settlement Date in the relevant GP-Related Investment. The
Withdrawn Partner shall retain his percentage interest in such GP- Related Investment and shall retain his GP-Related Capital Account or portion thereof attributable to
such GP-Related Investment, in which case such Withdrawn Partner (a “Retaining Withdrawn Partner”) shall become and remain a Limited Partner for such purpose (and, if the General Partner so
designates, such Limited Partner shall be a Nonvoting Limited Partner). The GP-Related Partner Interest of a Retaining Withdrawn Partner pursuant to this paragraph (f) shall be subject to the terms and
conditions applicable to GP-Related Partner Interests of any kind hereunder and such other terms and conditions as are established by the General Partner. At the option of the General Partner in its sole
discretion, the General Partner and the Retaining Withdrawn Partner may agree to have the Partnership acquire such GP-Related Partner Interest without the approval of the other Partners; provided, that
the General Partner shall reflect in the books and records of the Partnership the terms of any acquisition pursuant to this sentence.
(g)
The General Partner may elect, in lieu of payment in cash of any amount payable to a Withdrawn Partner pursuant to paragraph (e) above, to have the Partnership issue to the Withdrawn Partner a subordinated promissory note and/or to distribute
in kind to the Withdrawn Partner such Withdrawn Partner’s pro rata share (as determined by the General Partner) of any securities or other investments of the Partnership in relation to such Partner’s
GP-Related Partner Interest. If any securities or other investments are distributed in kind to a Withdrawn Partner under this paragraph (g), the amount described in clause (x) of paragraph (e)(i) shall be
reduced by the value of such distribution as valued on the latest balance sheet of the Partnership in accordance with generally accepted accounting principles or, if not appearing on such balance sheet, as reasonably determined by the General
Partner.
(h) [Intentionally omitted].
(i) Within 120 days after each Settlement Date, the General Partner shall submit to the Withdrawn Partner a statement of the settlement of such
Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5 together with any cash payment, subordinated promissory note and in kind distributions to be made to
such Partner as shall be determined by the General Partner. The General Partner shall submit to the Withdrawn Partner supplemental statements with respect to additional amounts payable to or by the Withdrawn Partner in respect of the settlement of
his GP-Related Partner Interest in the Partnership (e.g., payments in respect of GP-Related Investments
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pursuant to paragraph (f) above or adjustments to reserves pursuant to paragraph (j) below)
promptly after such amounts are determined by the General Partner. To the fullest extent permitted by law, such statements and the valuations on which they are based shall be accepted by the Withdrawn Partner without examination of the accounting
books and records of the Partnership or other inquiry. Any amounts payable by the Partnership to a Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in right of payment and subject to the prior payment or provision for payment
in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to the applicable date of payment or distribution; provided that such Withdrawn Partner shall otherwise
rank pari passu in right of payment (x) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year before the Withdrawal Date of the Withdrawn Partner in question and (y) with all persons who become
Withdrawn Partners and whose Withdrawal Date is within one year after the Withdrawal Date of the Withdrawn Partner in question.
(j) If the
aggregate reserves established by the General Partner as of the Settlement Date in making the foregoing calculations should prove, in the determination of the General Partner, to be excessive or inadequate, the General Partner may elect, but shall
not be obligated, to pay the Withdrawn Partner or his estate such excess, or to charge the Withdrawn Partner or his estate such deficiency, as the case may be.
(k) Any amounts owed by the Withdrawn Partner to the Partnership at any time on or after the Settlement Date (e.g., outstanding Partnership
loans or advances to such Withdrawn Partner) shall be offset against any amounts payable or distributable by the Partnership to the Withdrawn Partner at any time on or after the Settlement Date or shall be paid by the Withdrawn Partner to the
Partnership, in each case as determined by the General Partner. All cash amounts payable by a Withdrawn Partner to the Partnership under this Section 6.5 shall bear interest from the due date to the date of payment at a floating rate equal to
the lesser of (x) the rate of interest publicly announced from time to time by JPMorgan Chase Bank, N.A., as its prime rate or (y) the maximum rate of interest permitted by applicable law. The “due date” of amounts payable by a
Withdrawn Partner pursuant to Section 6.5(i) above shall be 120 days after a Withdrawn Partner’s Settlement Date. The “due date” of amounts payable to or by a Withdrawn Partner in respect of
GP-Related Investments for which the Withdrawn Partner has retained a percentage interest in accordance with paragraph (f) above shall be 120 days after realization with respect to such GP-Related Investment. The “due date” of any other amounts payable by a Withdrawn Partner shall be 60 days after the date such amounts are determined to be payable.
(l) At the time of the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the
Partnership pursuant to this Section 6.5, the General Partner may, to the fullest extent permitted by applicable law, impose any restrictions it deems appropriate on the assignment, pledge, encumbrance or other transfer by such Withdrawn
Partner of any interest in any GP-Related Investment retained by such Withdrawn Partner, any securities or other investments distributed in kind to such Withdrawn Partner or such Withdrawn Partner’s right
to any payment from the Partnership.
(m) If a Partner is required to Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest for Cause pursuant to Section 6.2(d), then his GP-Related Partner Interest shall be settled in accordance with paragraphs (a)-(r) of this
Section 6.5; provided, however, that the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) In settling the Withdrawn Partner’s interest in any GP-Related Investment in
which he has an interest as of his Settlement Date, the General Partner may elect to (A) determine the GP-Related Unrealized Net Income (Loss) attributable to each such
GP-Related Investment as of the Settlement Date and allocate to the appropriate GP-Related Capital Account
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of the Withdrawn Partner his allocable share of such
GP-Related Unrealized Net Income (Loss) for purposes of calculating the aggregate balance of such Withdrawn Partner’s GP-Related Capital Account pursuant to clause
(x) of paragraph (e)(i) above, (B) credit or debit, as applicable, the Withdrawn Partner with the balance of his GP-Related Capital Account or portion thereof attributable to each such GP-Related Investment as of his Settlement Date without giving effect to the GP-Related Unrealized Net Income (Loss) from such
GP-Related Investment as of his Settlement Date, which shall be forfeited by the Withdrawn Partner or (C) apply the provisions of paragraph (f) above, provided, that the maximum amount of GP-Related Net Income (Loss) allocable to such Withdrawn Partner with respect to any GP-Related Investment shall equal such Partner’s percentage interest of the GP-Related Unrealized Net Income, if any, attributable to such GP-Related Investment as of the Settlement Date (the balance of such
GP-Related Net Income (Loss), if any, shall be allocated as determined by the General Partner). The Withdrawn Partner shall not have any continuing interest in any
GP-Related Investment to the extent an election is made pursuant to (A) or (B) above.
(ii) Any amounts payable by the Partnership to the Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in
right of payment and subject to the prior payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to or on or after the applicable date of payment or
distribution.
(n) The payments to a Withdrawn Partner pursuant to this Section 6.5 may be conditioned on the compliance by such
Withdrawn Partner with any lawful and reasonable (under the circumstances) restrictions against engaging or investing in a business competitive with that of the Partnership or any of its subsidiaries and Affiliates for a period not exceeding two
years determined by the General Partner. Upon written notice to the General Partner, any Withdrawn Partner who is subject to noncompetition restrictions established by the General Partner pursuant to this paragraph (o) may elect to forfeit the
principal amount payable in the final installment of his subordinated promissory note, together with interest to be accrued on such installment after the date of forfeiture, in lieu of being bound by such restrictions.
(o) In addition to the foregoing, the General Partner shall have the right to pay a Withdrawn Partner (other than the General Partner) a
discretionary additional payment in an amount and based upon such circumstances and conditions as it determines to be relevant. The provisions of this Section 6.5 shall apply to any Investor Limited Partner relating to another Limited Partner,
and to any transferee of any GP-Related Partner Interest of such Partner pursuant to Section 6.3, if such Partner Withdraws from the Partnership.
(p) (i) The Partnership will assist a Withdrawn Partner or his estate or guardian, as the case may be, in the settlement of the Withdrawn
Partner’s GP-Related Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his estate.
(ii) The Partnership may reasonably determine in good faith to retain outside professionals to provide the assistance to Withdrawn Partners or
their estates or guardians, as referred to above. In such instances, the Partnership will obtain the prior approval of a Withdrawn Partner or his estate or guardian, as the case may be, prior to engaging such professionals. If the Withdrawn Partner
(or his estate or guardian) declines to incur such costs, the Partnership will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s
day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
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(q) Each Partner (other than the General Partner) hereby irrevocably appoints the General
Partner as such Partner’s true and lawful agent, representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make,
execute, sign and file, on behalf of such Partner, any and all agreements, instruments, consents, ratifications, documents and certificates which the General Partner deems necessary or advisable in connection with any transaction or matter
contemplated by or provided for in this Section 6.5, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is
coupled with an interest and shall survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 6.6. Termination of the Partnership. The General Partner may dissolve the Partnership at any time on not less than 60
days’ notice of the dissolution date given to the other Partners. Upon the dissolution of the Partnership, the Partners’ respective interests in the Partnership shall be valued and settled in accordance with the procedures set forth in
Sections, 6.5, which provide for allocations to the GP-Related Capital Accounts of the Partners and distributions in accordance with the capital account balances of the Partners.
Section 6.7. Certain Tax Matters. i. All items of income, gain, loss, deduction and credit of the Partnership shall be allocated
among the Partners for Federal, State and local income tax purposes in the same manner as such items of income, gain, loss, deduction and credit shall be allocated among the Partners pursuant to this Agreement, except as may otherwise be provided
herein or by the Code or other applicable law. To the extent U.S. Treasury Regulations promulgated pursuant to Subchapter K of the Code (including under Sections 704(b) and (c) of the Code) or other applicable law require allocations for tax
purposes that differ from the foregoing allocations, the General Partner may determine the manner in which such tax allocations shall be made so as to comply more fully with such Treasury Regulations or other applicable law and, at the same time,
preserve the economic relationships among the Partners as set forth in this Agreement. In the event there is a net decrease in partnership minimum gain or partner nonrecourse debt minimum gain (determined in accordance with the principles of
Regulations Sections 1.704-2(d) and 1.704-2(i)) during any taxable year of the Partnership, each Partner shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to its respective share of such net decrease during such year, determined pursuant to Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(f). In addition, this Agreement shall be considered to
contain a “qualified income offset” as provided in Regulations Section 1.704- 1(b)(2)(ii)(d).
(a) The General Partner shall cause to be prepared all Federal, State and local tax returns of the Partnership for each year for which such
returns are required to be filed and, after approval of such returns by the General Partner, shall cause such returns to be timely filed. The General Partner shall determine the appropriate treatment of each item of income, gain, loss, deduction and
credit of the Partnership and the accounting methods and conventions under the tax laws of the United States, the several States and other relevant jurisdictions as to the treatment of any such item or any other method or procedure related to the
preparation of such tax returns. The General Partner may cause the Partnership to make or refrain from making any and all elections permitted by such tax laws. Each Partner agrees that he shall not, unless he provides prior notice of such action to
the Partnership, (i) treat, on his individual income tax returns, any item of income, gain, loss, deduction or credit relating to his interest in the Partnership in a manner inconsistent with the treatment of such item by the Partnership as
reflected on the Form K-1 or other information statement furnished by the Partnership to such Partner for use in preparing his income tax returns or (ii) file any claim for refund relating to any such
item based on, or which would result in, such inconsistent treatment. In respect of an income tax audit of any tax return of the
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Partnership, the filing of any amended return or claim for refund in connection with any item of income,
gain, loss, deduction or credit reflected on any tax return of the Partnership, or any administrative or judicial proceedings arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, (A) the
Tax Matters Partner (as defined below) shall be authorized to act for, and his decision shall be final and binding upon, the Partnership and all Partners except to the extent a Partner shall properly elect to be excluded from such proceeding
pursuant to the Code, (B) all expenses incurred by the Tax Matters Partner in connection therewith (including, without limitation, attorneys’, accountants’ and other experts’ fees and disbursements) shall be expenses of the
Partnership and (C) no Partner shall have the right to (1) participate in the audit of any Partnership tax return, (2) file any amended return or claim for refund in connection with any item of income, gain, loss, deduction or credit
reflected on any tax return of the Partnership (unless he provides prior notice of such action to the Partnership as provided above), (3) participate in any administrative or judicial proceedings conducted by the Partnership or the Tax Matters
Partner arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, or (4) appeal, challenge or otherwise protest any adverse findings in any such audit conducted by the Partnership or the Tax
Matters Partner or with respect to any such amended return or claim for refund filed by the Partnership or the Tax Matters Partner or in any such administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner. The
Partnership and each Partner hereby designate any Partner selected by the General Partner as the “tax matters partner” for purposes of Section 6231(a)(7) of the Code (the “Tax Matters Partner”). To the fullest extent
permitted by applicable law, each Partner agrees to indemnify and hold harmless the Partnership and all other Partners from and against any and all liabilities, obligations, damages, deficiencies and expenses resulting from any breach or violation
by such Partner of the provisions of this Section 6.8 and from all actions, suits, proceedings, demands, assessments, judgments, costs and expenses, including reasonable attorneys’ fees and disbursements, incident to any such breach or
violation.
(b) Each individual Partner shall provide to the Partnership copies of each Federal, State and local income tax return of such
Partner (including any amendment thereof) within 30 days after filing such return.
Section 6.8. Special Basis Adjustments. In
connection with any assignment or transfer of a Partnership interest permitted by the terms of this Agreement, the General Partner may cause the Partnership, on behalf of the Partners and at the time and in the manner provided in Code Regulations Section 1.754-1(b), to make an election to adjust the basis of the Partnership’s property in the manner provided in Sections 734(b) and 743(b) of the Code.
ARTICLE VII
CAPITAL COMMITMENT
INTERESTS; CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
Section 7.1. Capital Commitment Interests, etc.
(a) (i) This Article VII and Article VIII hereof set forth certain terms and conditions with respect to the Capital
Commitment Partner Interests and the Capital Commitment SP RE VI Interest and matters related to the Capital Commitment Partner Interests and the Capital Commitment SP RE VI Interest. Except as otherwise expressly provided in this Article VII or in
Article VIII, the terms and provisions of this Article VII and Article VIII shall not apply to the GP-Related Partner Interests or the GP-Related SP RE VI Interest.
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(ii) Each Partner severally, agrees to make contributions of capital to the
Partnership (“Capital Commitment-Related Capital Contributions”) as required to fund the Partnership’s direct or indirect capital contributions to SP RE VI, in respect of the Capital Commitment SP RE VI Interest, if any, and
the related Capital Commitment SP RE VI Commitment, if any. No Partner shall be obligated to make Capital Commitment-Related Capital Contributions to the Partnership in an amount in excess of such Partner’s Capital Commitment- Related
Commitment. The Commitment Agreements and SMD Agreements, if any, of the Partners may include provisions with respect to the foregoing matters. It is understood that a Partner will not necessarily participate in each Capital Commitment Investment
(which may include additional amounts invested in an existing Capital Commitment Investment) nor will a Partner necessarily have the same Capital Commitment Profit Sharing Percentage with respect to (i) the Partnership’s portion of the
Capital Commitment SP RE VI Commitment, if any, or (ii) the making of each Capital Commitment Investment in which such Partner participates; provided, that this in no way limits the terms of any Commitment Agreement or SMD Agreement. In
addition, nothing contained herein shall be construed to give any Partner the right to obtain financing with respect to the purchase of any Capital Commitment Interest, and nothing contained herein shall limit or dictate the terms upon which the
General Partner and its Affiliates may provide such financing. The acquisition of a Capital Commitment Interest by a Partner shall be evidenced by receipt by the Partnership of funds equal to such Partner’s Capital Commitment-Related Commitment
then due with respect to such Capital Commitment Interest and such appropriate documentation as the General Partner may submit to the Partners from time to time.
(b) The General Partner or one of its Affiliates (in such capacity, the “Advancing Party”) may in its sole discretion advance
to any Limited Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are also executive officers of The Blackstone Group L.P. or any Affiliate thereof) all or any portion
of the Capital Commitment-Related Capital Contributions due to the Partnership from such Limited Partner with respect to any Capital Commitment Investment (“Firm Advances”). Each such Limited Partner shall pay to the Advancing Party
interest on each Firm Advance from the date of such Firm Advance until the repayment thereof by such Limited Partner. Each Firm Advance shall be repayable in full, including accrued interest to the date of such repayment, upon prior written notice
by the Advancing Party. The making and repayment of each Firm Advance shall be recorded in the books and records of the Partnership, and such recording shall be conclusive evidence of each such Firm Advance, binding on the Limited Partner and the
Advancing Party absent manifest error. Except as provided below, the interest rate applicable to a Firm Advance shall equal the cost of funds of the Advancing Party at the time of the making of such Firm Advance. The Advancing Party shall inform any
Limited Partner of such rate upon such Limited Partner’s request; provided, that such interest rate shall not exceed the maximum interest rate allowable by applicable law; provided further, that amounts that are otherwise payable
to such Limited Partner pursuant to Section 7.4(a) shall be used to repay such Firm Advance (including interest thereon). The Advancing Party may, in its sole discretion, change the terms of Firm Advances (including the terms contained herein)
and/or discontinue the making of Firm Advances; provided, that (i) the Advancing Party shall notify the relevant Limited Partners of any material changes to such terms and (ii) the interest rate applicable to such Firm Advances and
overdue amounts thereon shall not exceed the maximum interest rate allowable by applicable law.
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Section 7.2. Capital Commitment Capital Accounts.
(a) There shall be established for each Partner on the books of the Partnership as of the date of formation of the Partnership, or such later
date on which such Partner is admitted to the Partnership, and on each such other date as such Partner first acquires a Capital Commitment Interest in a particular Capital Commitment Investment, a Capital Commitment Capital Account for each Capital
Commitment Investment in which such Partner acquires a Capital Commitment Interest on such date. Each Capital Commitment-Related Capital Contribution of a Partner shall be credited to the appropriate Capital Commitment Capital Account of such
Partner on the date such Capital Commitment-Related Capital Contribution is paid to the Partnership. Capital Commitment Capital Accounts shall be adjusted to reflect any transfer of a Partner’s interest in the Partnership related to his Capital
Commitment Partner Interest, as provided in this Agreement.
(b) A Partner shall not have any obligation to the Partnership or to any other
Partner to restore any negative balance in the Capital Commitment Capital Account of such Partner. Until distribution of any such Partner’s interest in the Partnership with respect to a Capital Commitment Interest as a result of the disposition
by the Partnership of the related Capital Commitment Investment and in whole upon the dissolution of the Partnership, neither such Partner’s Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption
except with the consent of the General Partner.
Section 7.3. Allocations.
(a) Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be allocated to the related Capital
Commitment Capital Accounts of all the Partners (including the General Partner) participating in such Capital Commitment Investment in proportion to their respective Capital Commitment Profit Sharing Percentages for such Capital Commitment
Investment. Capital Commitment Net Income (Loss) on any Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion which such Partner’s aggregate Capital Commitment Capital Accounts bear to the aggregate
Capital Commitment Capital Accounts of all Partners; provided, that if any Partner makes the election provided for in Section 7.6, Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be
allocated to the related Capital Commitment Capital Accounts of all the Partners participating in such Capital Commitment Investment who do not make such election in proportion to their respective Capital Commitment Profit Sharing Percentages for
such Capital Commitment Investment.
(b) Any special costs relating to distributions pursuant to Section 7.6 or 7.7 shall be specially
allocated to the electing Limited Partner.
Section 7.4. Distributions.
(a) Each Limited Partner’s allocable portion of Capital Commitment Net Income received from his Capital Commitment Investments,
distributions to such Limited Partner that constitute returns of capital, and other Capital Commitment Net Income of the Partnership (including without limitation Capital Commitment Net Income attributable to Unallocated Capital Commitment
Interests) during a fiscal year of the Partnership will be credited to payment of the Investor Notes to the extent required below as of the last day of such fiscal year (or on such earlier date as related distributions are made in the sole
discretion of the General Partner) with any cash amount distributable to such Limited Partner pursuant to clauses (ii) and (vii) below to be distributed within 45 days after the end of each fiscal year of the Partnership (or in each case on
such earlier date as selected by the General Partner in its sole discretion) as follows (subject to Section 7.4(c) below):
(i) First, to the payment of interest then due on all Investor Notes (relating to Capital Commitment Investments or otherwise)
of such Limited Partner (to the extent Capital Commitment Net Income and distributions or payments from Other Sources do not equal or exceed all interest payments due, the selection of those of such Limited Partner’s Investor Notes upon which
interest is to be paid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor);
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(ii) Second, to distribution to the Limited Partner of an amount equal to
the Federal, State and local income taxes on income of the Partnership allocated to such Limited Partner for such year in respect of such Limited Partner’s Capital Commitment Partner Interest (the aggregate amount of any such distribution shall
be determined by the General Partner, subject to the limitation that the minimum aggregate amount of such distribution be the tax that would be payable if the taxable income of the Partnership related to all Partners’ Capital Commitment Partner
Interests were all allocated to an individual subject to the then-prevailing maximum Federal, New York State and New York City tax rates (taking into account the extent to which such taxable income allocated by the Partnership was composed of
long-term capital gains and the deductibility of State and local income taxes for Federal income tax purposes)); provided, that additional amounts shall be paid to the Limited Partner pursuant to this clause (ii) to the extent that such amount
reduces the amount otherwise distributable to the Limited Partner pursuant to a comparable provision in any other BCE Agreement and there are not sufficient amounts to fully satisfy such provision from the relevant partnership or other entity;
provided further, that amounts paid pursuant to the provisions in such other BCE Agreements comparable to the immediately preceding proviso shall reduce those amounts otherwise distributable to the Limited Partner pursuant to provisions in such
other BCE Agreements that are comparable to this clause (ii);
(iii) Third, to the payment in full of the principal amount
of the Investor Note financing (A) any Capital Commitment Investment disposed of during or prior to such fiscal year or (B) any BCE Investments (other than Capital Commitment Investments) disposed of during or prior to such fiscal year, to
the extent not repaid from Other Sources;
(iv) Fourth, to the return to such Limited Partner of (A) all Capital
Commitment-Related Capital Contributions made in respect of the Capital Commitment Interest to which any Capital Commitment Investment disposed of during or prior to such fiscal year relates or (B) all capital contributions made to any
Blackstone Collateral Entity (other than the Partnership) in respect of interests therein relating to BCE Investments (other than Capital Commitment Investments) disposed of during or prior to such fiscal year (including all principal paid on the
related Investor Notes), to the extent not repaid from amounts of Other Sources (other than amounts of CC Carried Interest);
(v) Fifth, to the payment of principal (including any previously deferred amounts) then owing under all other Investor Notes of
such Limited Partner (including those unrelated to the Partnership), the selection of those of such Limited Partner’s Investor Notes to be repaid and the division of payments among such Investor Notes to be determined by the Lender or
Guarantor;
(vi) Sixth, up to 50% of any Capital Commitment Net Income remaining after application pursuant to clauses
(i) through (v) above shall be applied pro rata to prepayment of principal of all remaining Investor Notes of such Limited Partner (including those unrelated to the Partnership), the selection of those of such Limited Partner’s Investor
Notes to be repaid, the division of payments among such Investor Notes and the percentage of remaining Capital Commitment Net Income to be applied thereto to be determined by the Lender or Guarantor; and
(vii) Seventh, to such Limited Partner to the extent of any amount of Capital Commitment Net Income remaining after making the
distributions in clauses (i) through (vi) above, and such amount is not otherwise required to be applied to Investor Notes pursuant to the terms thereof.
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To the extent there is a partial disposition of a Capital Commitment Investment or any other
BCE Investment, as applicable, the payments in clauses (iii) and (iv) above shall be based on that portion of the Capital Commitment Investment or other BCE Investment, as applicable, disposed of, and the principal amount and related interest
payments of such Investor Note shall be adjusted to reflect such partial payment so that there are equal payments over the remaining term of the related Investor Note. For a Limited Partner who is no longer an employee or officer of Blackstone,
distributions shall be made pursuant to clauses (i) through (iii) above, and then, unless the General Partner or its Affiliate has exercised its rights pursuant to Section 8.1 hereof, any remaining income or other distribution in respect
of such Limited Partner’s Capital Commitment Partner Interest shall be applied to the prepayment of the outstanding Investor Notes of such Limited Partner, until all such Limited Partner’s Investor Notes have been repaid in full, with any
such income or other distribution remaining thereafter distributed to such Limited Partner.
Distributions of Capital Commitment Net
Income may be made at any other time at the discretion of the General Partner. At the General Partner’s discretion, any amounts distributed to a Limited Partner in respect of such Limited Partner’s Capital Commitment Partner Interest will
be net of any interest and principal payable on his Investor Notes for the full period in respect of which the distribution is made. A distribution of Capital Commitment Net Income to the General Partner shall be made contemporaneously with each
distribution of Capital Commitment Net Income to or for the accounts of the Limited Partners.
(b) [Intentionally omitted]
(c) To the extent that the foregoing Partnership distributions and distributions and payments from Other Sources are insufficient to satisfy
any principal and/or interest due on Investor Notes, and to the extent that the General Partner in its sole discretion elects to apply this paragraph (c) to any individual payments due, such unpaid interest will be added to the remaining
principal amount of such Investor Notes and shall be payable on the next scheduled principal payment date (along with any deferred principal and any principal and interest due on such date); provided, that such deferral shall not apply to a
Limited Partner that is no longer an employee or officer of Blackstone. All unpaid interest on such Investor Notes shall accrue interest at the interest rate then in effect for such Investor Notes.
(d) [Intentionally omitted.]
(e)
The Capital Commitment Capital Account of each Partner shall be reduced by the amount of any distribution to such Partner pursuant to paragraph (a) of this Section 7.4.
(f) At any time that a sale, exchange, transfer or other disposition of a portion of a Capital Commitment Investment is being considered by the
Partnership or SP RE VI (a “Capital Commitment Disposable Investment”), at the election of the General Partner each Partner’s Capital Commitment Interest with respect to such Capital Commitment Investment shall be vertically
divided into two separate Capital Commitment Interests, a Capital Commitment Interest attributable to the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class B Interest”), and a
Capital Commitment Interest attributable to such Capital Commitment Investment excluding the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class A Interest”). Distributions
(including those resulting from a direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class B Interests
with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital
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Commitment Class B Interests, and distributions (including those resulting from the direct or indirect
sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Investment excluding such Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class A Interests with
respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class A Interests.
(g) (i) If the Partnership) is obligated under the Giveback Provisions to contribute to SP RE VI all or a portion of a Giveback Amount
with respect to the Capital Commitment SP RE VI Interest (the amount of any such obligation of the Partnership being herein called a “Capital Commitment Giveback Amount”), the Partnership shall call for such amounts as are necessary
to satisfy such obligation of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the Partnership, such an amount of prior
distributions by the Partnership with respect to the Capital Commitment SP RE VI Interest (the “Capital Commitment Recontribution Amount”) which equals such Partner’s pro rata share of prior distributions in
connection with (a) the Capital Commitment SP RE VI Investment giving rise to the Capital Commitment Giveback Amount, or (b) if the amounts contributed pursuant to clause (a) above are insufficient to satisfy such Capital Commitment
Giveback Amount, Capital Commitment SP RE VI Investments other than the one giving rise to such obligation. Each Partner shall promptly contribute to the Partnership upon notice thereof such Partner’s Capital Commitment Recontribution Amount.
Prior to such time, the Partnership may, in the General Partner’s discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of the Capital Commitment
Giveback Amount will probably materialize (and an estimate of the aggregate amount of such obligations).
(ii) (A)In the
event any Partner (a “Capital Commitment Defaulting Party”) fails to recontribute all or any portion of such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount for any reason, the Partnership shall
require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Capital Commitment Profit Sharing Percentages), such amounts as are necessary to fulfill the Capital Commitment Defaulting
Party’s obligation to pay such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount (a “Capital Commitment Deficiency Contribution”) if the General Partner determines in its good faith judgment
that the Partnership will be unable to collect such amount in cash from such Capital Commitment Defaulting Party for payment of the Capital Commitment Giveback Amount at least 20 Business Days prior to the latest date that the Partnership is
permitted to pay the Capital Commitment Giveback Amount; provided, that no Partner shall as a result of such Capital Commitment Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Capital
Commitment Recontribution Amount initially requested from such Partner in respect of such default. Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should either (1) not attempt to collect such
amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all remedies (at law or equity) available to the
Partnership against the Capital Commitment Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the Capital Commitment Defaulting Party. It is agreed that the Partnership shall have the right
(effective upon such Capital Commitment Defaulting Party becoming a Capital Commitment Defaulting Party) to set-off as appropriate and apply against such Capital Commitment Defaulting Party’s Capital
Commitment Recontribution Amount any amounts otherwise payable to the Capital Commitment Defaulting Party by the Partnership or any Affiliate thereof. Each Partner hereby grants to the Partnership a security interest, effective upon such Partner
becoming a Capital Commitment Defaulting Party, in
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all accounts receivable and other rights to receive payment from the Partnership or any
Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the Partnership may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner hereby appoints the
Partnership as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or in the name of the Partnership, to take any
actions which may be necessary to accomplish the intent of the immediately preceding sentence. The Partnership shall be entitled to collect interest on the Capital Commitment Recontribution Amount of a Capital Commitment Defaulting Party from the
date such Capital Commitment Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(B) Any Partner’s failure to make a Capital Commitment Deficiency Contribution shall cause such Partner to be a Capital
Commitment Defaulting Party with respect to such amount.
(iii) A Partner’s obligation to make contributions to the
Partnership under this Section 7.4(g) shall survive the termination of the Partnership.
Section 7.5. Valuations. Capital
Commitment Investments shall be valued annually as of the end of each year (and at such other times as deemed appropriate by the General Partner) in accordance with the principles utilized by the Partnership (or any Affiliate of the Partnership that
is a general partner of SP RE VI) in valuing investments of SP RE VI or, in the case of investments not held by SP RE VI, in the good faith judgment of the General Partner, subject in each case to the second proviso of the immediately succeeding
sentence. The value of any Capital Commitment Interest as of any date (the “Capital Commitment Value”) shall be based on the value of the underlying Capital Commitment Investment as set forth above; provided, that the Capital
Commitment Value may be determined as of an earlier date if determined appropriate by the General Partner in good faith; provided further, that such value may be adjusted by the General Partner to take into account factors relating
solely to the value of a Capital Commitment Interest (as compared to the value of the underlying Capital Commitment Investment), such as restrictions on transferability, the lack of a market for such Capital Commitment Interest and lack of control
of the underlying Capital Commitment Investment. To the full extent permitted by applicable law such valuations shall be final and binding on all Partners; provided further, that the immediately preceding proviso shall not apply to any
Capital Commitment Interests held by a person who is or was at any time a direct member of a General Partner.
Section 7.6.
Disposition Election.
(a) At any time prior to the date of the Partnership’s execution of a definitive agreement to dispose of
a Capital Commitment Investment, the General Partner may in its sole discretion permit a Partner to retain all or any portion of its pro rata share of such Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit
Sharing Percentage in such Capital Commitment Investment). If the General Partner so permits, such Partner shall instruct the General Partner in writing prior to such date (i) not to dispose of all or any portion of such Partner’s pro rata
share of such Capital Commitment Investment (the “Retained Portion”) and (ii) either to (A) distribute such Retained Portion to such Partner on the closing date of such disposition or (B) retain such Retained Portion
in the Partnership on behalf of such Partner until such time as such Partner shall instruct the General Partner upon 5 days notice to distribute such Retained Portion to such Partner. Such Partner’s Capital Commitment Capital Account shall not
be adjusted in any way to reflect the retention in the Partnership of such Retained Portion or the Partnership’s disposition of other Partners’ pro rata shares of such Capital Commitment Investment; provided, that such
Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Retained Portion to such Partner or upon distribution of proceeds with respect to a subsequent disposition thereof by the Partnership.
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(b) No distribution of such Retained Portion shall occur unless any Investor Notes relating
thereto shall have been paid in full prior to or simultaneously with such distribution.
Section 7.7. Capital Commitment Special
Distribution Election.
(a) From time to time during the term of this Agreement, the General Partner may in its sole discretion, upon
receipt of a written request from a Partner, distribute to such Partner any portion of its pro rata share of a Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such Capital Commitment
Investment) (a “Capital Commitment Special Distribution”). Such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Capital Commitment Special Distribution.
(b) No Capital Commitment Special Distributions shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or
simultaneously with such Capital Commitment Special Distribution.
ARTICLE VIII
WITHDRAWAL; ADMISSION OF NEW PARTNERS
Section 8.1. Limited Partner Withdrawal; Repurchase of Capital Commitment Interests.
(a) Capital Commitment Interests (or a portion thereof) that were financed by Investor Notes will be treated as not subject to repurchase for
purposes hereof based upon the proportion of (a) the sum of Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to each Capital Commitment Interest and principal payments on the related Investor Note
to (b) the sum of the Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to such Capital Commitment Interest, the original principal amount of such Investor Note and all deferred amounts of interest which
from time to time comprise part of the principal amount of the Investor Note. A Limited Partner may prepay a portion of any outstanding principal on the Investor Notes; provided, that in the event that a Limited Partner prepays all or any
portion of the principal amount of the Investor Notes within nine months prior to the date on which such Limited Partner is no longer an employee or officer of Blackstone, the Partnership (or its designee) shall have the right, in its sole
discretion, to purchase the Capital Commitment Interest that became Non-Contingent as a result of such prepayment; provided further, that the purchase price for such Capital Commitment Interest shall be
determined in accordance with the determination of the purchase price of a Limited Partner’s Contingent Capital Commitment Interests as set forth in paragraph (b) below. Prepayments made by a Limited Partner shall apply pro rata against
all of such Limited Partner’s Investor Notes; provided, that such Limited Partner may request that such prepayments be applied only to Investor Notes related to BCE Investments that are related to one or more Blackstone Collateral
Entities specified by such Limited Partner. Except as expressly provided herein, Capital Commitment Interests that were not financed in any respect with Investor Notes shall be treated as Non-Contingent
Capital Commitment Interests.
(b) Upon a Limited Partner ceasing to be an officer or employee of the General Partner or any of its
Affiliates, other than as a result of such Limited Partner dying or suffering a Total Disability, such Limited Partner (the “Withdrawn Partner”) and the Partnership or any other person designated by the General Partner shall each
have the right (exercisable by the Withdrawn Partner within 30 days and by the Partnership or its designee(s) within 45 days of such Limited Partner’s ceasing to be such an officer or employee) or any time thereafter, upon 30 days notice, but
not the obligation, to require
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the Partnership, subject to the Partnership Act, to buy (in the case of exercise of such right by such
Withdrawn Partner) or the Withdrawn Partner to sell (in the case of exercise of such right by the Partnership or its designee(s)) all (but not less than all) such Withdrawn Partner’s Contingent Capital Commitment Interests. The purchase price
for each such Contingent Capital Commitment Interest will be an amount equal to (i) the outstanding principal amount of the related Investor Note plus accrued interest thereon to the date of purchase (such portion of the purchase price to be
made in cash) and (ii) an additional amount (the “Adjustment Amount”) equal to (x) all interest paid by the Limited Partner on the portion of the principal amount of the Investor Note relating to the portion of the related
Capital Commitment Interest remaining Contingent plus (y) all Capital Commitment Net Losses allocated to the Withdrawn Partner on the Contingent portion of such Capital Commitment Interest minus (z) all Capital Commitment Net Income
allocated to the Withdrawn Partner on the Contingent portion of such Capital Commitment Interest; provided, that, if the Withdrawn Partner was terminated from employment or his position as an officer for Cause, the amounts referred to in
clause (x) or (y) of the Adjustment Amount, in the General Partner’s sole discretion, may be deemed to equal zero. The Adjustment Amount shall, if positive, be payable by the holders of the purchased Capital Commitment Interests to the
Withdrawn Partner from the next Capital Commitment Net Income received by such holders on the Contingent portion of such Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received. If the
Adjustment Amount resulting from an exchange is negative, it shall be payable to the holders of the purchased Capital Commitment Interest by the Withdrawn Partner at the time such Capital Commitment Net Income is received by the Withdrawn Partner
from the next Capital Commitment Net Income on the Non-Contingent portion of the Withdrawn Partner’s Capital Commitment Interests or, if the Partnership or its designee(s) elect to purchase such Withdrawn
Partner’s Non-Contingent Capital Commitment Interests, in cash by the Withdrawn Partner at the time of such purchase; provided, that the General Partner and its Affiliates may offset any amounts
otherwise owing to a Withdrawn Partner against any Adjustment Amount owed by such Withdrawn Partner. Until so paid, such remaining Adjustment Amount will not itself bear interest. At the time of such purchase of the Withdrawn Partner’s
Contingent Capital Commitment Interests, his related Investor Note shall be payable in full. If neither the Withdrawn Partner nor the Partnership nor its designee(s) exercise the right to require repurchase of such Contingent Capital Commitment
Interests, then the Withdrawn Partner shall retain the Contingent portion of his Capital Commitment Interests and the Investor Notes shall remain outstanding, shall become fully recourse to the Withdrawn Partner in his individual capacity, shall be
payable in accordance with their remaining original maturity schedules and shall be prepayable at any time by the Withdrawn Partner at his option, and the General Partner shall apply such prepayments against outstanding Investor Notes on a pro rata
basis. To the extent that another Partner purchases a portion of a Capital Commitment Interest of a Withdrawn Partner, the purchasing Partner’s Capital Commitment Capital Account and Capital Commitment Profit Sharing Percentage for such Capital
Commitment Investment shall be correspondingly increased.
(c) Upon the occurrence of a Final Event with respect to any Limited Partner,
such Limited Partner shall thereupon cease to be a Partner with respect to such Limited Partner’s Capital Commitment Partner Interest. If such a Final Event shall occur, no Successor in Interest to any such Limited Partner shall for any purpose
hereof become or be deemed to become a Partner. The sole right, as against the Partnership and the remaining Partners, acquired hereunder by, or resulting hereunder to, a Successor in Interest to any Partner shall be to receive any distributions and
allocations with respect to such Limited Partner’s Capital Commitment Partner Interest pursuant to Article VII and this Article VIII, subject to the right of the Partnership to purchase the Capital Commitment Interests of such former Partner
pursuant to Section 8.1(b) or Section 8.1(d)) to the extent, at the time, in the manner and in the amount otherwise payable to such Limited Partner had such a Final Event not occurred, and no other right shall be acquired hereunder by, or
shall result hereunder to, a Successor in Interest to such Partner, whether by operation of law or otherwise. Until distribution of any such Partner’s interest in the Partnership upon the dissolution of the Partnership as provided in
Section 9.2, neither his Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption without the consent of the General Partner. The Partnership shall be entitled to treat any Successor in Interest to
such Partner as the only person entitled to receive distributions and allocations hereunder with respect to such Partner’s Capital Commitment Partner Interest.
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(d) If a Limited Partner dies or suffers a Total Disability, all Contingent Capital
Commitment Interests of such Partner shall be purchased by the Partnership or its designee (within 30 days of the first date on which the Partnership knows or has reason to know of such Limited Partner’s death or Total Disability) as provided
in Section 8.1(b) (except that any Adjustment Amount shall be payable by or to the estate or personal representative in cash), and any Investor Notes financing such Contingent Capital Commitment Interests shall thereupon be prepaid as provided
in Section 8.1(b). In addition, in the case of the death or Total Disability of a Limited Partner, if the estate or personal representative of such Limited Partner so requests in writing within 180 days of the Limited Partner’s death or
ceasing to be an employee or member (directly or indirectly) of the General Partner or any of its Affiliates by reason of Total Disability (such requests shall not exceed one per calendar year), the Partnership or its designee may but is not
obligated to purchase for cash all (but not less than all) Non- Contingent Capital Commitment Interests of such Limited Partner as of the last day of the Partnership’s then current fiscal year at a price
equal to the Capital Commitment Value thereof. Each Limited Partner shall be required to include appropriate provisions in his will to reflect such provisions of this Agreement. In addition, the Partnership may, in the sole discretion of the General
Partner, upon notice to the estate or personal representative of such Limited Partner within 30 days of the first date on which the Partnership knows or has reason to know of such Limited Partner’s death or Total Disability, determine either
(i) to distribute Securities or other property to the estate or personal representative in exchange for such Non- Contingent Capital Commitment Interests as provided in Section 8.1(e) or (ii) to
require sale of such Non- Contingent Capital Commitment Interests to the Partnership or its designee as of the last day of any fiscal year of the Partnership (or earlier period, as determined by the General
Partner in its sole discretion) for an amount in cash equal to the Capital Commitment Value thereof.
(e) In lieu of retaining a Withdrawn
Partner as a Limited Partner with respect to any Non-Contingent Capital Commitment Interests, the General Partner may, in its sole discretion, by notice to such Withdrawn Partner within 45 days of his ceasing
to be an employee or officer of the General Partner or any of its Affiliates, or at any time thereafter, upon 30 days written notice, determine (1) to distribute to such Withdrawn Partner the pro rata portion of the Securities or other property
underlying such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, subject to any restrictions on distributions associated with the Securities or other property, in satisfaction of his Non-Contingent Capital Commitment Interests in the Partnership or (2) to cause, as of the last day of any fiscal year of the Partnership (or earlier period, as determined by the General Partner in its sole
discretion), the Partnership or another person designated by the General Partner (who may be itself another Limited Partner or another Affiliate of the General Partner) to purchase all (but not less than all) of such Withdrawn Partner’s Non-Contingent Capital Commitment Interests for a price equal to the Capital Commitment Value thereof. The General Partner shall condition any distribution or purchase of voting Securities pursuant to paragraph
(d) above or this paragraph (e) upon the Withdrawn Partner’s execution and delivery to the Partnership of an appropriate irrevocable proxy, in favor of the Partnership or its nominee, relating to such Securities.
(f) The Partnership may subsequently transfer any Unallocated Capital Commitment Interest or portion thereof which is purchased by it as
described above to any other person approved by the General Partner. In connection with such purchase or transfer or the purchase of a Capital Commitment Interest or portion thereof by the Partnership’s designee(s), Blackstone may loan all or a
portion of the purchase price of the transferred or purchased Capital Commitment Interest to the Partnership, the transferee or the designee-purchaser(s), as applicable (excluding any of the foregoing
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who is an executive officer of The Blackstone Group L.P. or any of its Affiliates). To the extent that a
Withdrawn Partner’s Capital Commitment Interests (or portions thereof) are repurchased by the Partnership and not transferred to or purchased by another person, all or any portion of such repurchased Capital Commitment Interests may, in the
sole discretion of the General Partner, (i) be allocated to each Partner already participating in the Capital Commitment Investment to which the repurchased Capital Commitment Interest relates, (ii) be allocated to each Partner in the
Partnership, whether or not already participating in such Capital Commitment Investment, and/or (iii) continue to be held by the Partnership itself as an unallocated Capital Commitment Investment (such Capital Commitment Interests being herein
called “Unallocated Capital Commitment Interests”). To the extent that a Capital Commitment Interest is allocated to Partners as provided in clause (i) and/or (ii) above, any indebtedness incurred by the Partnership to
finance such repurchase shall also be allocated to such Partners. All such Capital Commitment Interests allocated to Limited Partners shall be deemed to be Contingent and shall become Non-Contingent as and to
the extent that the principal amount of such related indebtedness is repaid. The Limited Partners receiving such allocations shall be responsible for such related indebtedness only on a nonrecourse basis to the extent appropriate as provided in this
Agreement, except as such Limited Partners and the General Partner shall otherwise agree. If the indebtedness financing such repurchased interests is not so limited, the Partnership may require an assumption by the Limited Partners of such
indebtedness on the terms thereof as a precondition to allocation of the related Capital Commitment Interests to such Limited Partners; provided, that a Limited Partner shall not, except as set forth in his Investor Note, be obligated to
accept any personally recourse obligation unless his prior consent is obtained. So long as the Partnership itself retains the Unallocated Capital Commitment Interests pursuant to clause (iii) above, such Unallocated Capital Commitment Interests
shall belong to the Partnership and any indebtedness financing the Unallocated Capital Commitment Interests shall be an obligation of the Partnership to which all income of the Partnership is subject except as otherwise agreed by the lender of such
indebtedness. Any Capital Commitment Net Income (Loss) on an Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion his aggregate Capital Commitment Capital Accounts bear to the aggregate Capital Commitment
Capital Accounts of all Partners; debt service on such related financing will be an expense of the Partnership allocable to all Partners in such proportions.
(g) If a Partner is required to Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest for
Cause, then his Capital Commitment Interest shall be settled in accordance with paragraphs (a)-(f) and (j) of this Section 8.1; provided, that if such Partner was not at any time a direct member of a General Partner, the General
Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) purchase for cash all of such Withdrawn Partner’s Non-Contingent Capital
Commitment Interests. The purchase price for each such Non-Contingent Capital Commitment Interest shall be the lower of (A) the original cost of such Non-Contingent
Capital Commitment Interest or (B) an amount equal to the Capital Commitment Value thereof;
(ii) allow the Withdrawn
Partner to retain such Non-Contingent Capital Commitment Interests; provided, that the maximum amount of Capital Commitment Net Income allocable to such Withdrawn Partner with respect to any Capital
Commitment Investment shall equal the amount of Capital Commitment Net Income that would have been allocated to such Withdrawn Partner if such Capital Commitment Investment had been sold as of the Settlement Date at the then prevailing Capital
Commitment Value thereof; or
(iii) in lieu of cash, purchase such Non-Contingent
Capital Commitment Interests by providing the Withdrawn Partner with a promissory note in the amount determined in (i) above. Such promissory note shall have a maximum term of ten (10) years with interest at the Federal Funds Rate.
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(h) The Partnership will assist a Withdrawn Partner or his estate or guardian, as the case
may be, in the settlement of the Withdrawn Partner’s Capital Commitment Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his estate.
(i) The Partnership may reasonably determine in good faith to retain outside professionals to provide the assistance to Withdrawn Partners or
their estates or guardians, as referred to above. In such instances, the Partnership will obtain the prior approval of a Withdrawn Partner or his estate or guardian, as the case may be, prior to engaging such professionals. If the Withdrawn Partner
(or his estate or guardian) declines to incur such costs, the Partnership will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s
day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(j) Each Limited Partner hereby irrevocably appoints each General Partner as such Limited Partner’s true and lawful agent, representative
and attorney-in-fact, each acting alone, in such Limited Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Limited Partner, any
and all agreements, instruments, documents and certificates which such General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this Section 8.1, including, without limitation,
the performance of any obligation of such Limited Partner or the Partnership or the exercise of any right of such Limited Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and
effect notwithstanding the Withdrawal from the Partnership of any Limited Partner for any reason and shall not be affected by the death, disability or incapacity of such Limited Partner.
Section 8.2. Transfer of Limited Partner’s Capital Commitment Interest. Without the prior written
consent of the General Partner, no Limited Partner or former Limited Partner shall have the right to sell, assign, mortgage, pledge or otherwise dispose of or transfer (“Transfer”) all or part of any such Partner’s Capital
Commitment Partner Interest in the Partnership; provided, that this Section 8.2 shall in no way impair (i) Transfers as permitted in Section 8.1 above, in the case of the purchase of a Withdrawn Partner’s or deceased or
Totally Disabled Limited Partner’s Capital Commitment Interests, (ii) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers by a Limited Partner to another Limited Partner of Non-Contingent Capital Commitment Interests, (iii) Transfers with the prior written consent of the General Partner, which consent may be granted or withheld in its sole discretion without giving any reason
therefor, and (iv) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers, for estate planning purposes, of up to 25% of a Limited Partner’s Capital Commitment Partner Interest to an
Estate Planning Vehicle. Each Estate Planning Vehicle will be a Nonvoting Limited Partner. Such Limited Partner and the Nonvoting Limited Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such
Nonvoting Limited Partner with respect to the interest transferred (including the obligation to make additional Capital Commitment-Related Capital Contributions). The General Partner may at its sole option exercisable at any time require such Estate
Planning Vehicle to Withdraw from the Partnership on the terms of Section 8.1 and Article VI. No person acquiring an interest in the Partnership pursuant to this Section 8.2 shall become a Limited Partner of the Partnership, or acquire
such Partner’s right to participate in the affairs of the Partnership, unless such person shall be admitted as a Limited Partner pursuant to Section 6.1. A Limited Partner shall not cease to be a limited partner of the Partnership upon the
collateral assignment of, or the pledging or granting of a security interest in, its entire limited partner interest in the Partnership in accordance with the provisions of this Agreement.
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Section 8.3. Compliance with Law. Notwithstanding any provision hereof to the
contrary, no Transfer of a Capital Commitment Interest in the Partnership may be made except in compliance with all Federal, State and other applicable laws, including Federal and State securities laws.
ARTICLE IX
DISSOLUTION
Section 9.1. Dissolution.
(a) The Partnership shall be dissolved and subsequently terminated:
(i) pursuant to Section 6.6;
(ii) upon the expiration of the Term; or
(iii) upon the occurrence of a Disabling Event with respect to the last remaining General Partner, provided that the
Partnership shall not be dissolved if, within 90 days after the Disabling Event, Limited Partners entitled to vote thereon as provided herein who, as of the last day of the most recent accounting period ending on or prior to the date of the
Disabling Event, have aggregate GP-Related Capital Account balances representing at least a majority in amount of the total GP-Related Capital Account balances of all
the persons who are Limited Partners entitled to vote thereon as provided herein agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of the Disabling Event, of another General Partner.
(b) When the Partnership is dissolved, the business and property of the Partnership shall be wound up and liquidated by the General Partner or,
in the event of the unavailability of the General Partner, such Limited Partner or other liquidating trustee as shall be named by the Designated Limited Partner (the General Partner, such Limited Partner or other liquidating trustee, as the case may
be, being hereinafter referred to as the “Liquidator”).
Section 9.2. Final Distribution. Within 120 calendar
days after the effective date of dissolution of the Partnership, the assets of the Partnership shall be distributed in the following manner and order:
(i) to the payment of the expenses of the winding-up, liquidation and dissolution of
the Partnership;
(ii) to pay all creditors of the Partnership, other than Partners, either by the payment thereof or the
making of reasonable provision therefor;
(iii) to establish reserves, in amounts established by the General Partner or the
Liquidator, to meet other liabilities of the Partnership; and
(iv) to pay, in accordance with the terms agreed among them
and otherwise on a pro rata basis, all creditors of the Partnership that are Partners, either by the payment thereof or the making of reasonable provision therefor.
(b) The remaining assets of the Partnership shall be applied and distributed among the Partners as follows:
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(i) With respect to each Partner’s
GP-Related Partner Interest, the remaining assets of the Partnership shall be applied and distributed to such Partner in accordance with the procedures set forth in Section 6.5 which provide for
allocations to the capital accounts of the Partners and distributions in accordance with the capital account balances of the Partners; and for purposes of the application of this Section 9.2 (b)(i), determining
GP-Related Capital Accounts on liquidation, all unrealized gains, losses and accrued income and deductions of the Partnership shall be treated as realized and recognized immediately before the date of
distribution; and
(ii) With respect to each Partner’s Capital Commitment Partner Interest, an amount shall be paid to
such Partner in cash or Securities in an amount equal to such Partner’s respective Capital Commitment Liquidating Share for each Capital Commitment Investment; provided, that if the remaining assets relating to any Capital Commitment
Investment shall not be equal to or exceed the aggregate Capital Commitment Liquidating Shares for such Capital Commitment Investment, to each Partner in proportion to its Capital Commitment Liquidating Share for such Capital Commitment Investment;
and the remaining assets of the Partnership related to the Partners’ Capital Commitment Partner Interests shall be paid to the Partners in cash or Securities in proportion to their respective Capital Commitment Profit Sharing Percentages for
each Capital Commitment Investment from which such cash or Securities are derived.
Section 9.3. Amounts Reserved Related to
Capital Commitment Partner Interests.If there are any Securities or other property or other investments or securities related to the Partners’ Capital Commitment Partner Interests which, in the judgment of the Liquidator,
cannot be sold, or properly distributed in kind in the case of dissolution, without sacrificing a significant portion of the value thereof, the value of a Partner’s interest in each such Security or other investment or security may be excluded
from the amount distributed to the Partners participating in the related Capital Commitment Investment pursuant to clause (ii) of Section 9.2(b). Any interest of a Partner, including his pro rata interest in any gains, losses or
distributions, in Securities or other property or other investments or securities so excluded shall not be paid or distributed until such time as the Liquidator shall determine.
(b) If there is any pending transaction, contingent liability or claim by or against the Partnership related to the Partners’ Capital
Commitment Partner Interests as to which the interest or obligation of any Partner therein cannot, in the judgment of the Liquidator, be then ascertained, the value thereof or probable loss therefrom may be deducted from the amount distributable to
such Partner pursuant to clause (ii) of Section 9.2(b). No amount shall be paid or charged to any such Partner on account of any such transaction or claim until its final settlement or such earlier time as the Liquidator shall determine.
The Partnership may meanwhile retain from other sums due such Partner in respect of such Partner’s Capital Commitment Partner Interest an amount which the Liquidator estimates to be sufficient to cover the share of such Partner in any probable
loss or liability on account of such transaction or claim.
(c) Upon determination by the Liquidator that circumstances no longer require
the exclusion of any Securities or other property or retention of sums as provided in paragraphs (a) and (b) of this Section 9.3, the Liquidator shall, at the earliest practicable time, distribute as provided in clause (ii) of
Section 9.2(b) such sums or such Securities or other property or the proceeds realized from the sale of such Securities or other property to each Partner from whom such sums or Securities or other property were withheld.
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ARTICLE X
MISCELLANEOUS
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be settled
amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement
(including the validity, scope and enforceability of this arbitration provision) shall be finally settled by arbitration conducted by a single arbitrator in New York , NY in accordance with the then-existing Rules of Arbitration of the International
Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The
arbitrator shall be a lawyer and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may cause the Partnership to bring, on behalf of the
General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an
arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of paragraph (c) of this Section 10.1 to any such action or proceeding,
(ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the General
Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon any such agent, who shall promptly advise such Partner of any such service of process, shall be
deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 10.1, OR ANY JUDICIAL PROCEEDING ANCILLARY TO
AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial
relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the forum(s) designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may
have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 10.1 and such parties agree not to plead or claim the same.
(d) Notwithstanding any provision of this Agreement to the contrary, this Section 10.1 shall be construed to the maximum extent possible to
comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be determined by a court of
competent jurisdiction that any provision or wording of this Section 10.1, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or other applicable law, such
invalidity shall not invalidate all of this Section 10.1. In that case, this Section 10.1 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act
or other applicable law, and, in the event such term or provision cannot be so limited, this Section 10.1 shall be construed to omit such invalid or unenforceable provision.
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Section 10.2. Ownership and Use of the Firm Name. The Partnership acknowledges
that Blackstone TM L.L.C. (“TM”), a Delaware limited liability company with a principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., (or its successors or assigns) is the sole and exclusive owner of the
mark and name BLACKSTONE and that the ownership of, and the right to use, sell or otherwise dispose of, the firm name or any abbreviation or modification thereof which consists of or includes BLACKSTONE, shall belong exclusively to TM, which company
(or its predecessors, successors or assigns) has licensed the Partnership to use BLACKSTONE in its name. The Partnership acknowledges that TM owns the service mark BLACKSTONE for various services and that the Partnership is using the BLACKSTONE mark
and name on a non-exclusive, non-sublicensable and non-assignable basis in connection with its business and authorized activities with the permission of TM. All services
rendered by the Partnership under the BLACKSTONE mark and name will be rendered in a manner and with quality levels that are consistent with the high reputation heretofore developed for the BLACKSTONE mark by TM and its Affiliates and licensees. The
Partnership understands that TM may terminate its right to use BLACKSTONE at any time in TM’s sole discretion by giving the Partnership written notice of termination. Promptly following any such termination, the Partnership will take all steps
necessary to change its partnership name to one which does not include BLACKSTONE or any confusingly similar term and cease all use of BLACKSTONE or any term confusingly similar thereto as a service mark or otherwise.
Section 10.3. Written Consent. Any action required or permitted to be taken by a vote of Partners at a meeting may be taken
without a meeting if a Majority in Interest of the Partners consent thereto in writing.
Section 10.4. Letter Agreements;
Schedules. The General Partner may, or may cause the Partnership to, enter or has previously entered, into separate letter agreements with individual Partners with respect to GP-Related Profit Sharing
Percentages, Capital Commitment Profit Sharing Percentages or any other matter. The General Partner may from time to time execute and deliver to the Partners Schedules which set forth the then current capital balances,
GP-Related Profit Sharing Percentages and Capital Commitment Profit Sharing Percentages of the Partners and any other matters deemed appropriate by the General Partner. Such Schedules shall be for information
purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever; provided that this in no way limits the effectiveness of any Commitment Agreement.
Section 10.5. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of
Delaware without regard to principles of conflict of laws. In particular, the Partnership has been formed pursuant to the Partnership Act, and the rights and liabilities of the Partners shall be as provided therein, except as herein otherwise
expressly provided. If any provision of this Agreement shall be held to be invalid, such provision shall be given its meaning to the maximum extent permitted by law and the remainder of this Agreement shall not be affected thereby.
Section 10.6. Successors and Assigns; Third Party Beneficiaries. This Agreement shall be binding upon and
shall, subject to the penultimate sentence of Section 6.3(a), inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any successor to a trustee of a trust which is or becomes a party hereto;
provided that no person claiming by, through or under a Partner (whether such Partner’s heir, personal representative or otherwise), as distinct from such Partner itself, shall have any rights as, or in respect to, a Partner (including the
right to approve or vote on any matter or to notice thereof) except the right to receive only those distributions expressly payable to such person pursuant to Articles VI and VIII. Any Partner or Withdrawn Partner shall remain liable for the
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obligations under this Agreement (including any Net GP-Related
Recontribution Amounts and any Capital Commitment Recontribution Amounts) of any transferee of all or any portion of such Partner’s or Withdrawn Partner’s interest in the Partnership, unless waived by the General Partner. The Partnership
shall, if the General Partner determines, in its good faith judgment, based on the standards set forth in Sections 5.8(d)(ii)(A) and 7.4(g)(ii)(A), to pursue such transferee, pursue payment (including any Net
GP-Related Recontribution Amounts and/or any Capital Commitment Recontribution Amounts) from the transferee with respect to any such obligations. Nothing in this Agreement is intended, nor shall anything
herein be construed, to confer any rights, legal or equitable, on any person other than the Partners and their respective legal representatives, heirs, successors and permitted assigns. Notwithstanding the foregoing, solely to the extent required by
the SP RE VI Agreements, the limited partners in SP RE VI shall be third-party beneficiaries of the provisions of Sections 5.8(d)(i)(A) and 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount (for
purpose of this sentence, as defined in section 11.3 (b) of the SP RE VI Partnership Agreement).
Section 10.7.
Partner’s Will. Each Limited Partner and Withdrawn Partner shall include in his or her will a provision that addresses certain matters in respect of his or her obligation relating to the Partnership that is satisfactory to
the General Partner, and each such Limited Partner and Withdrawn Partner shall confirm annually to the Partnership, in writing, that such provision remains in his or her current will. Where applicable, any estate planning trust of such Partner or
Withdrawn Partner to which a portion of such Limited Partner’s or Withdrawn Partner’s Interest is transferred shall include a provision substantially similar to such provision and the trustee of such trust shall confirm annually to the
Partnership, in writing, that such provision or its substantial equivalent remains in such trust. In the event any Limited Partner or Withdrawn Partner fails to comply with the provisions of this Section 10.7 after the Partnership has notified
such Limited Partner or Withdrawn Partner of his or her failure to so comply and such failure to so comply is not cured within 30 days of such notice, the Partnership may withhold any and all distributions to such Limited Partner or Withdrawn
Partner until the time at which such party complies with the requirements of this Section 10.7.
Section 10.8.
Confidentiality. By executing this Agreement, each Partner expressly agrees, at all times during the term of the Partnership and thereafter and whether or not at the time a Partner of the Partnership, to maintain the confidentiality of, and
not to disclose to any person other than the Partnership, another Partner or a person designated by the Partnership, any information relating to the business, financial structure, financial position or financial results, clients or affairs of the
Partnership that shall not be generally known to the public or the securities industry, except as otherwise required by law or by any regulatory or self-regulatory organization having jurisdiction; provided, however, that any corporate Partner may
disclose any such information it is required by law, rule, regulation or custom to disclose. Notwithstanding anything in this Agreement to the contrary, to comply with Treasury Regulation
Section 1.6011-4(b)(3)(i), each Partner (and any employee, representative or other agent of such Partner) may disclose to any and all persons, without limitation of any kind, the Federal income tax
treatment and tax structure of the Partnership, it being understood and agreed, for this purpose, (1) the name of, or any other identifying information regarding (a) the Partners or any existing or future investor (or any Affiliate
thereof) in any of the Partners, or (b) any investment or transaction entered into by the Partners; (2) any performance information relating to any of the Partners or their investments; and (3) any performance or other information
relating to previous funds or investments sponsored by any of the Partners, does not constitute such tax treatment or tax structure information.
Section 10.9. Notices. Whenever notice is required or permitted by this Agreement to be given, such notice shall be in writing
(including telecopy or similar writing) and shall be given by hand delivery (including any courier service) or telecopy to any Partner at its address or telecopy number shown in the books and records of the Partnership or, if given to the General
Partner or the Partnership, at the address or telecopy number of the Partnership in New York City. Each such notice shall be effective (i) if given by telecopy, upon dispatch, and (ii) if given by hand delivery, when delivered to the address of
such Partner or the General Partner or the Partnership specified as aforesaid.
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Section 10.10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together shall constitute a single instrument.
Section 10.11.
Power of Attorney. Each Partner hereby irrevocably appoints the General Partner as such Partner’s true and lawful representative and attorney-in-fact, each
acting alone, in such Partner’s name, place and stead, to make, execute, sign and file all instruments, documents and certificates which, from time to time, may be required to set forth any amendment to this Agreement or may be required by this
Agreement or by the laws of the United States of America, the State of Delaware or any other state in which the Partnership shall determine to do business, or any political subdivision or agency thereof, to execute, implement and continue the valid
and subsisting existence of the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and effect notwithstanding the subsequent Withdrawal from the Partnership of any Partner for any reason and
shall not be affected by the subsequent disability or incapacity of such Partner.
Section 10.12. Cumulative Remedies. Rights
and remedies under this Agreement are cumulative and do not preclude use of other rights and remedies available under applicable law.
Section 10.13. Legal Fees. Except as more specifically provided herein, in the event of a legal dispute (including litigation,
arbitration or mediation) between any Partner or Withdrawn Partner and the Partnership, arising in connection with any party seeking to enforce Section 4.1(d) or any other provision of this Agreement relating to the Holdback, the Clawback
Amount, the GP-Related Giveback Amount, the Capital Commitment Giveback Amount, the Net GP-Related Recontribution Amount or the Capital Commitment Recontribution Amount,
the “losing” party to such dispute shall promptly reimburse the “victorious party” for all reasonable legal fees and expenses incurred in connection with such dispute (such determination to be made by the relevant adjudicator).
Any amounts due under this Section 10.13 shall be paid within 30 days of the date upon which such amounts are due to be paid and such amounts remaining unpaid after such date shall accrue interest at the Default Interest Rate.
Section 10.14. Entire Agreement. This Agreement embodies the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. Subject to Section 10.4, this Agreement
supersedes all prior agreements and understandings between the parties with respect to such subject matter.
.
68
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first
above written. In the event that it is impracticable to obtain the signature of any one or more of the Partners to this Agreement, this Agreement shall be binding among the other Partners executing the same.
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GENERAL PARTNER:
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SPFSA VI L.L.C.
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By:
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/s/ Peter Song
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Name: Peter Song
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Title: Authorized Person
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INITIAL LIMITED PARTNER
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/s/ Peter Song
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Peter Song, as Initial Limited
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Partner, to reflect his withdrawal from the
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Partnership
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69
Exhibit 10.8
Execution Version
HIGHLY CONFIDENTIAL &
TRADE SECRET
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES REAL ESTATE VII L.P.
AMENDED AND RESTATED
LIMITED
PARTNERSHIP AGREEMENT
Dated November 4, 2020
Effective as of December 13, 2018
THE
LIMITED PARTNERSHIP INTERESTS (THE “INTERESTS”) OF STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES REAL ESTATE VII L.P. (THE “PARTNERSHIP”) HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), THE SECURITIES LAWS OF ANY STATE IN THE UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE
ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS, AND ANY OTHER APPLICABLE
SECURITIES LAWS; AND (II) THE TERMS AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE INTERESTS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS AMENDED AND RESTATED LIMITED PARTNERSHIP
AGREEMENT. THEREFORE, PURCHASERS OF SUCH INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
Table of Contents
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ARTICLE I DEFINITIONS
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1
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Section 1.1. Definitions
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1
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Section 1.2. Terms Generally
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16
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ARTICLE II GENERAL PROVISIONS
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16
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Section 2.1. General Partner, Limited Partner, Special Partner
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16
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Section 2.2. Formation; Name; Foreign Jurisdictions
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17
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Section 2.3. Term
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17
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Section 2.4. Purposes; Powers
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17
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Section 2.5. Place of Business
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20
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Section 2.6. Withdrawal of Initial Limited Partner
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20
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ARTICLE III MANAGEMENT
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20
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Section 3.1. General Partner
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20
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Section 3.2. Partner Voting, etc.
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21
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Section 3.3. Management
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21
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Section 3.4. Responsibilities of Partners
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23
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Section 3.5. Exculpation and Indemnification
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23
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Section 3.6. Representations of Partners
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26
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Section 3.7. Tax Representation and Further Assurances
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26
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ARTICLE IV CAPITAL OF THE PARTNERSHIP
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28
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Section 4.1. Capital Contributions by Partners
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28
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Section 4.2. Interest
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35
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Section 4.3. Withdrawals of Capital
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35
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ARTICLE V PARTICIPATION IN PROFITS AND LOSSES
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35
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Section 5.1. General Accounting Matters
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35
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Section 5.2. GP-Related Capital
Accounts
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37
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Section 5.3. GP-Related Profit Sharing
Percentages
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38
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Section 5.4. Allocations of GP-Related Net
Income (Loss)
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39
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Section 5.5. Liability of Partners
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40
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Section 5.6. [Intentionally Omitted]
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40
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Section 5.7. Repurchase Rights, etc.
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40
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Section 5.8. Distributions
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40
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Section 5.9. Business Expenses
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48
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Section 5.10. Tax Capital Accounts; Tax Allocations
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48
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ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND DISCHARGE OF PARTNERSHIP
INTERESTS; TERMINATION
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49
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Section 6.1. Additional Partners
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49
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Section 6.2. Withdrawal of Partners
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50
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Section 6.3. GP-Related Partner Interests Not
Transferable
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51
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Section 6.4. Consequences upon Withdrawal of a Partner
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52
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Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interests
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53
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Section 6.6. Dissolution of the Partnership
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58
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Section 6.7. Certain Tax Matters
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58
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Section 6.8. Special Basis Adjustments
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59
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ARTICLE VII CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS; ALLOCATIONS;
DISTRIBUTIONS
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60
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Section 7.1. Capital Commitment Interests, etc.
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60
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Section 7.2. Capital Commitment Capital Accounts
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61
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Section 7.3. Allocations
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61
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Section 7.4. Distributions
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62
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Section 7.5. Valuations
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66
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Section 7.6. Disposition Election
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67
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Section 7.7. Capital Commitment Special Distribution Election
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67
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ARTICLE VIII WITHDRAWAL; ADMISSION OF NEW PARTNERS
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67
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Section 8.1. Partner Withdrawal; Repurchase of Capital Commitment Interests
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67
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Section 8.2. Transfer of Partner’s Capital Commitment Interest
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73
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Section 8.3. Compliance with Law
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73
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ARTICLE IX DISSOLUTION
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74
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Section 9.1. Dissolution
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74
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Section 9.2. Final Distribution
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74
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Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests
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74
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ARTICLE X MISCELLANEOUS
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75
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Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial
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75
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Section 10.2. Ownership and Use of the Blackstone Name
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76
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Section 10.3. Written Consent
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77
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Section 10.4. Letter Agreements; Schedules
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77
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Section 10.5. Governing Law, Separability of Provisions
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77
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Section 10.6. Successors and Assigns; Third Party Beneficiaries
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77
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Section 10.7. Confidentiality
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78
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Section 10.8. Notices
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79
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Section 10.9. Counterparts
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79
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Section 10.10. Power of Attorney
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79
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Section 10.11. Partner’s Will
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80
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Section 10.12. Cumulative Remedies
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80
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Section 10.13. Legal Fees
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80
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Section 10.14. Entire Agreement; Modifications
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80
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Section 10.15. Section Titles
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80
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3
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES REAL ESTATE VII L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of Strategic Partners Fund Solutions Associates Real Estate VII L.P., a
Delaware limited partnership (the “Partnership”), dated November 4, 2020, and effective as of December 13, 2018, by and among SPFSA RE VII L.L.C., a Delaware limited liability company, as general partner of the Partnership
(in its capacity as general partner of the Partnership (the “General Partner”)), Peter Song (the “Initial Limited Partner”), as initial limited partner, and such other persons that are admitted to the Partnership as
partners after the date hereof in accordance herewith.
WITNESSETH
WHEREAS, the Partnership was formed pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101, et seq., as it may be amended from time to time (the “Partnership Act”), pursuant to a certificate of limited partnership filed in the office of the Secretary of State of the State of
Delaware on March 9, 2018;
WHEREAS, the General Partner and the Initial Limited Partner entered into a Limited
Partnership Agreement dated as of March 9, 2018 (the “Original Agreement”); and
WHEREAS, the
parties hereto desire to enter into this Agreement, and hereby amend and restate the Original Agreement in its entirety and reflect the withdrawal of the Initial Limited Partner, in each case effective on December 13, 2018;
NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby,
the parties hereto agree that the Original Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall have the following
meanings for purposes of this Agreement:
“Adjustment Amount” has the meaning set forth in
Section 8.1(b)(ii).
“Advancing Party” has the meaning set forth in
Section 7.1(b).
“Affiliate” when used with reference to another person means any
person (other than the Partnership), directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person, which may include, for greater certainty and as the context requires,
endowment funds, estate planning vehicles (including any trusts, family members, family investment vehicles, descendant, trusts and other related persons and entities), charitable programs and other similar and/or related vehicles or accounts
associated with or established by Blackstone and/or its affiliates, partners and current and/or former employees and/or related persons.
“Agreement” means this Amended and Restated
Limited Partnership Agreement, as it may be further amended, supplemented, restated or otherwise modified from time to time.
“Applicable Collateral Percentage” with respect to any Firm Collateral or Special Firm
Collateral, has the meaning set forth in the books and records of the Partnership with respect thereto.
“Bankruptcy” means, with respect to any person, the occurrence of any of the following events:
(i) the filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his or her assets; (ii) the filing by such person of a voluntary petition in Bankruptcy or the seeking of relief under Title
11 of the United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his or her inability to pay his or her debts as they become due; (iii) the failure of such person to
pay his or her debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of an answer admitting the material allegations of, or his or her consenting
to, or defaulting in answering, a Bankruptcy petition filed against him or her in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States Code, as now constituted or as hereafter amended; or (vi) the entry of an
order, judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a trustee or custodian of his or her assets and the continuance of such order,
judgment or decree unstayed and in effect for a period of 60 consecutive days.
“BE
Agreement” means the limited partnership agreement, limited liability company agreement or other governing document of any limited partnership, limited liability company or other entity referred to in the definition of “Blackstone
Entity,” as such limited partnership agreement, limited liability company agreement or other governing document may be amended, supplemented, restated or otherwise modified to date, and as such limited partnership agreement, limited liability
company agreement or other governing document may be further amended, supplemented, restated or otherwise modified from time to time.
“BE Investment” means any direct or indirect investment by any Blackstone Entity.
“Blackstone” means, collectively, The Blackstone Group Inc., a Delaware corporation, and any
predecessor or successor thereto, and any Affiliate thereof (excluding any natural persons and any portfolio companies, investments or similar entities of any Blackstone-sponsored fund (or any affiliate thereof that is not otherwise an Affiliate of
The Blackstone Group Inc.)).
“Blackstone Entity” means any partnership, limited liability
company or other entity (excluding any natural persons and any portfolio companies of any Blackstone-sponsored fund) that is an Affiliate of The Blackstone Group Inc., as designated by the General Partner in its sole discretion.
2
“Business Day” means any day other than a
Saturday, Sunday or other day on which banks are authorized or required by law to be closed in New York, New York.
“Capital Commitment Capital Account” means, with respect to each Capital Commitment Investment
for each Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such Capital Commitment Investment and any net income allocated to such Partner pursuant to
Section 7.3 with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment Investment to such Partner and any net losses allocated to such Partner with respect to such
Capital Commitment Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the related Capital Commitment Investment shall be adjusted as if the asset distributed had been
sold in a taxable transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners participating in such Capital Commitment Investment pursuant to Section 7.3.
“Capital Commitment Class A Interest” has the meaning set forth in
Section 7.4(f).
“Capital Commitment Class B Interest” has the
meaning set forth in Section 7.4(f).
“Capital Commitment Defaulting Party” has the
meaning set forth in Section 7.4(g)(ii)(A).
“Capital Commitment Deficiency
Contribution” has the meaning set forth in Section 7.4(g)(ii)(A).
“Capital
Commitment Disposable Investment” has the meaning set forth in Section 7.4(f).
“Capital Commitment Distributions” means, with respect to each Capital Commitment Investment,
all amounts of distributions, received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Capital Commitment SP RE VII Interest, if any, less any costs, fees and expenses of the Partnership with respect
thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of such Capital Commitment
Investment as it may determine in good faith is appropriate.
“Capital Commitment Giveback
Amount” has the meaning set forth in Section 7.4(g)(i).
“Capital Commitment
Interest” means the interest of a Partner in a specific Capital Commitment Investment as provided herein.
3
“Capital Commitment Investment” means any
Capital Commitment SP RE VII Investment, but shall exclude any GP-Related Investment.
“Capital Commitment Liquidating Share” means, with respect to each Capital Commitment
Investment, in the case of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with Section 9.3) immediately prior to dissolution.
“Capital Commitment Net Income (Loss)” means, with respect to each Capital Commitment
Investment, all amounts of income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition, in whole or in part, of such Capital Commitment Investment,
less any costs, fees and expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated thereto.
“Capital Commitment Partner Carried Interest” means, with respect to any Partner, the
aggregate amount of distributions or payments received by such Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest.” Capital Commitment Partner Carried Interest includes any amount
initially received by an Affiliate of the Partnership from any fund (including SP RE VII, any similar funds formed after the date hereof, and any Other Blackstone Funds (as defined in the SP RE VII Partnership Agreement), whether or not in existence
as of the date hereof) to which such Affiliate serves as general partner (or in another similar capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions thereto (or the capital
contributions to make the investment of such fund giving rise to such “carried interest”).
“Capital Commitment Partner Interest” means a Partner’s interest in the Partnership which
relates to the Capital Commitment SP RE VII Interest.
“Capital Commitment Profit Sharing
Percentage” means, with respect to each Capital Commitment Investment, the percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the
Partnership.
“Capital Commitment Recontribution Amount” has the meaning set forth in
Section 7.4(g)(i).
“Capital Commitment-Related Capital Contributions” has the
meaning set forth in Section 7.1(a)(ii).
“Capital Commitment-Related Commitment”
means, with respect to any Partner, such Partner’s commitment to the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any
such commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
4
“Capital Commitment SP RE VII Commitment”
means the Capital Commitment (as defined in the SP RE VII Partnership Agreement), if any, of the Partnership to SP RE VII that relates solely to the Capital Commitment SP RE VII Interest, if any.
“Capital Commitment SP RE VII Interest” means the Interest (as defined in the SP RE VII
Partnership Agreement), if any, of the Partnership as a capital partner of SP RE VII.
“Capital
Commitment SP RE VII Investment” means the Partnership’s interest in a specific investment of SP RE VII held by the Partnership through the Capital Commitment SP RE VII Interest.
“Capital Commitment Special Distribution” has the meaning set forth in Section 7.7(a).
“Capital Commitment Value” has the meaning set forth in Section 7.5.
“Carried Interest” means (i) “Carried Interest,” as defined in the SP RE VII
Partnership Agreement, and (ii) any other carried interest distribution to a Fund GP pursuant to any SP RE VII Agreement. In the case of each of (i) and (ii) above, except as determined by the General Partner, the amount shall not be less
any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto (in each case which the General Partner may
allocate among all or any portion of the GP-Related Investments as it determines in good faith is appropriate).
“Carried Interest Give Back Percentage” means, for any Partner or Withdrawn Partner, subject
to Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner from the Partnership or any Other Fund GPs or their Affiliates in respect of Carried Interest
by (B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership or any Other Fund GP or any of their Affiliates (in any capacity) in respect of Carried Interest. For purposes of
determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership or any Other Fund GPs on behalf of a Partner or Withdrawn Partner (but not the Trust Income thereon) shall be
deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as members, partners or other equity interest owners of the Partnership or any of the Other Fund GPs or their Affiliates.
“Carried Interest Sharing Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
“Cause” means the occurrence or existence of any of the following with respect to any Partner,
as determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any non-competition agreement, (x) any material
breach of this Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such
5
Partner’s deliberate failure to perform his or her duties to the Partnership or any of its Affiliates or (z) such Partner’s committing to or engaging in any conduct or behavior
that is or may be harmful to the Partnership or any of its Affiliates in a material way as determined by the General Partner; provided, that in the case of any of the foregoing clauses (w), (x), (y) and (z), the General Partner has given such
Partner written notice (a “Notice of Breach”) within 15 days after the General Partner becomes aware of such action and such Partner fails to cure such breach, failure to perform or conduct or behavior within 15 days after receipt
of such Notice of Breach from the General Partner (or such longer period, not to exceed an additional 15 days, as shall be reasonably required for such cure; provided, that such Partner is diligently pursuing such cure); (ii) any act of
fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Partnership or any of its Affiliates; or (iii) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony (under U.S. law
or its equivalent in any jurisdiction) or crime (including any misdemeanor charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of
competent jurisdiction, by a regulatory body or by a self-regulatory body having authority with respect to securities laws, rules or regulations of the applicable securities industry, that such Partner individually has violated any applicable
securities laws or any rules or regulations thereunder, or any rules of any such self-regulatory body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such
Partner’s ability to function as a Partner of the Partnership, taking into account the services required of such Partner and the nature of the business of the Partnership and its Affiliates or (B) the business of the Partnership and its
Affiliates or (iv) becoming subject to an event described in Rule 506(d)(1)(i)-(viii) of Regulation D under the Securities Act.
“Clawback Adjustment Amount” has the meaning set forth in Section 5.8(e)(ii)(C).
“Clawback Amount” means the “Clawback Amount”, as defined in the SP RE VII
Partnership Agreement, and any other clawback amount payable to the limited partners of SP RE VII or to SP RE VII pursuant to any SP RE VII Agreement, as applicable.
“Clawback Provisions” means Section 9.4 of the SP RE VII Partnership Agreement and any
other similar provisions in any other SP RE VII Agreement existing heretofore or hereafter entered into.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor
statute. Any reference herein to a particular provision of the Code means, where appropriate, the corresponding provision in any successor statute.
“Commitment Agreements” means the agreements between the Partnership or an Affiliate thereof
and Partners, pursuant to which each Partner undertakes certain obligations, including the obligation to make capital contributions pursuant to Section 4.1 and/or Section 7.1. Each Commitment Agreement is hereby incorporated by reference
as between the Partnership and the relevant Partner.
6
“Contingent” means subject to repurchase
rights and/or other requirements.
The term “control” when used with reference to any
person means the power to direct the management and policies of such person, directly or indirectly, by or through stock or other equity interest ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or
understanding (written or oral) with one or more other persons by or through stock or other equity interest ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings
correlative to the foregoing.
“Controlled Entity” when used with reference to another
person means any person controlled by such other person.
“Covered Person” has the meaning
set forth in Section 3.5(a).
“Deceased Partner” means any Partner or Withdrawn
Partner who has died or who suffers from Incompetence. For purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the case may
be, that have received such Deceased Partner’s interest in the Partnership.
“Default Interest
Rate” means the lower of (i) the sum of (a) the Prime Rate and (b) 5% or (ii) the highest rate of interest permitted under applicable law.
“Delaware Arbitration Act” has the meaning set forth in Section 10.1(d).
“Electronic Signature” has the meaning set forth in Section 10.9.
“Estate Planning Vehicle” has the meaning set forth in Section 6.3(a).
“Excess Holdback” has the meaning set forth in Section 4.1(d)(v)(A).
“Excess Holdback Percentage” has the meaning set forth in Section 4.1(d)(v)(A).
“Excess Tax-Related Amount” has the meaning set forth
in Section 5.8(e).
“Existing Partner” means any Partner who is neither a Retaining
Withdrawn Partner nor a Deceased Partner.
“Final Event” means the death, Total
Disability, Incompetence, Bankruptcy, liquidation, dissolution or Withdrawal from the Partnership of any person who is a Partner.
“Firm Advances” has the meaning set forth in Section 7.1(b).
7
“Firm Collateral” means a Partner’s or
Withdrawn Partner’s interest in one or more partnerships or limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been pledged or made
available to the Trustee(s) to satisfy all or any portion of the Excess Holdback of such Partner or Withdrawn Partner as more fully described in the Partnership’s books and records; provided, that for all purposes hereof (and any other
agreement (e.g., the Trust Agreement) that incorporates the meaning of the term “Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”, excluding references to
“Firm Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).
“Firm
Collateral Realization” has the meaning set forth in Section 4.1(d)(v)(B).
“Fiscal
Year” means a calendar year, or any other period chosen by the General Partner.
“Fund
GP” means the Partnership (only with respect to the GP-Related SP RE VII Interest) and the Other Fund GPs.
“GAAP” means U.S. generally accepted accounting principles.
“General Partner” means SPFSA RE VII L.L.C. and any person admitted to the Partnership as an
additional or substitute general partner of the Partnership in accordance with the provisions of this Agreement (until such time as such person ceases to be a general partner of the Partnership as provided herein or in the Partnership Act).
“Giveback Amount(s)” means the amount(s) payable by partners of SP RE VII pursuant to the
Giveback Provisions.
“Giveback Provisions” means Section 5.2(b) of the SP RE VII
Partnership Agreement and any other similar provisions in any other SP RE VII Agreement existing heretofore or hereafter entered into.
“Governmental Entity” has the meaning set forth in Section 10.7(b).
“GP Commitment” has the meaning set forth in the SP RE VII Partnership Agreement.
“GP-Related Capital Account” has the meaning set forth
in Section 5.2(a).
“GP-Related Capital
Contribution” has the meaning set forth in Section 4.1(a).
“GP-Related Class A Interest” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Class B Interest” has
the meaning set forth in Section 5.8(a)(ii).
“GP-Related Commitment”, with respect to any Partner,
means such Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any
such commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
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“GP-Related
Defaulting Party” has the meaning set forth in Section 5.8(d)(ii)(A).
“GP-Related Deficiency Contribution” has the meaning set forth in Section 5.8(d)(ii)(A).
“GP-Related Disposable Investment” has the meaning set
forth in Section 5.8(a)(ii).
“GP-Related Giveback
Amount” has the meaning set forth in Section 5.8(d)(i)(A).
“GP-Related Investment” means any investment (direct or indirect) of the Partnership in respect of the GP-Related SP RE VII Interest (including, without limitation,
any GP-Related SP RE VII Investment, but excluding any Capital Commitment Investment).
“GP-Related Net Income (Loss)” has the meaning set
forth in Section 5.1(b).
“GP-Related Partner
Interest” of a Partner means all interests of such Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect
to the GP-Related SP RE VII Interest and with respect to all GP-Related Investments.
“GP-Related Profit Sharing Percentage” means the
“Carried Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each Partner; provided, that any references in this Agreement to
GP-Related Profit Sharing Percentages made (i) in connection with voting or voting rights or (ii) GP-Related Capital Contributions with respect to GP-Related
Investments (including Section 5.3(b)) means the “Non-Carried Interest Sharing Percentage” of each Partner; provided further, that the term
“GP-Related Profit Sharing Percentage” shall not include any Capital Commitment Profit Sharing Percentage.
“GP-Related Recontribution Amount” has the meaning set
forth in Section 5.8(d)(i)(A).
“GP-Related Required
Amounts” has the meaning set forth in Section 4.1(a).
“GP-Related SP RE VII Interest” means the interest held by the Partnership in SP RE VII in the Partnership’s capacity as general partner of SP RE VII, excluding any Capital Commitment SP RE VII
Interest.
“GP-Related SP RE VII Investment” means
the Partnership’s interest in a Portfolio Investment (for purposes of this definition, as defined in the SP RE VII Partnership Agreement) in the Partnership’s capacity as the general partner of SP RE VII, but does not include any Capital
Commitment Investment.
“GP-Related Unallocated
Percentage” has the meaning set forth in Section 5.3(b).
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“GP-Related
Unrealized Net Income (Loss)” attributable to any GP-Related SP RE VII Investment as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related SP RE VII Investment if SP RE VII’s entire portfolio of investments were sold on such date for cash in an amount equal to their aggregate value on such date (determined in accordance with
Section 5.1(e)) and all distributions payable by SP RE VII to the Partnership (indirectly through the general partner of SP RE VII) pursuant to any SP RE VII Agreement with respect to such GP-Related SP
RE VII Investment were made on such date. “GP-Related Unrealized Net Income (Loss)” attributable to any other GP-Related Investment (other than any Capital
Commitment Investment) as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related Investment if such
GP-Related Investment were sold on such date for cash in an amount equal to its value on such date (determined in accordance with Section 5.1(e)).
“Holdback” has the meaning set forth in Section 4.1(d)(i).
“Holdback Percentage” has the meaning set forth in Section 4.1(d)(i).
“Holdback Vote” has the meaning set forth in Section 4.1(d)(iv)(A).
“Holdings” means Blackstone Holdings II L.P., a Delaware limited partnership.
“Incompetence” means, with respect to any Partner, the determination by the General Partner in
its sole discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his or her person or his or her property.
“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d)(i).
“Initial Limited Partner” has the meaning set forth in the preamble hereto.
“Interest” means a partnership interest (as defined in
§17-101(13) of the Partnership Act) in the Partnership, including any interest that is held by a Retaining Withdrawn Partner and including any Partner’s
GP-Related Partner Interest and Capital Commitment Partner Interest.
“Investment” means any investment (direct or indirect) of the Partnership designated by the
General Partner from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments, and (b) Capital Commitment Investments.
“Investor Note” means a promissory note of a Partner evidencing indebtedness incurred by such
Partner to purchase a Capital Commitment Interest, the terms of which were or are approved by the General Partner and which is secured by such Capital Commitment Interest, all other Capital Commitment Interests of such Partner and all other
interests of such Partner in Blackstone Entities; provided, that such promissory note may also evidence indebtedness relating to other interests of such Partner in Blackstone Entities, and such indebtedness shall be prepayable with Capital
Commitment Net
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Income (whether or not such indebtedness relates to Capital Commitment Investments) as set forth in this Agreement, the Investor Note, the other BE Agreements and any documentation relating to
Other Sources; provided further, that references to “Investor Notes” herein refer to multiple loans made pursuant to such note, whether made with respect to Capital Commitment Investments or other BE Investments, and
references to an “Investor Note” refer to one such loan as the context requires. In no way shall any indebtedness incurred to acquire Capital Commitment Interests or other interests in Blackstone Entities be considered part of the Investor
Notes for purposes hereof if the Lender or Guarantor is not the lender or guarantor with respect thereto.
“Investor Special Partner” means any Special Partner so designated at the time of its
admission by the General Partner as a Partner of the Partnership.
“Issuer” means the
issuer of any Security comprising part of an Investment.
“L/C” has the meaning set forth
in Section 4.1(d)(vi).
“L/C Partner” has the meaning set forth in
Section 4.1(d)(vi).
“Lender or Guarantor” means Blackstone Holdings I L.P. in its
capacity as lender or guarantor under the Investor Notes, or any other Affiliate of the Partnership that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests or other interests in Blackstone Entities.
“Limited Partner” means each of the parties listed as Limited Partners in the books and
records of the Partnership or any person that has been admitted to the Partnership as a substituted or additional Limited Partner in accordance with the terms of this Agreement, each in its capacity as a limited partner of the Partnership. For the
avoidance of doubt, the term “Limited Partner” does not include the General Partner or any Special Partners (notwithstanding the fact that Special Partners are limited partners of the Partnership).
“Loss Amount” has the meaning set forth in Section 5.8(e)(i)(A).
“Loss Investment” has the meaning set forth in Section 5.8(e).
“Losses” has the meaning set forth in Section 3.5(b)(i).
“Majority in Interest of the Partners” on any date (a “vote date”) means one
or more persons who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date and who, as of the last day of the most recent accounting period ending on or prior to the vote date (or as of such later date
on or prior to the vote date selected by the General Partner as of which the Partners’ capital account balances can be determined), have aggregate capital account balances representing at least a majority in amount of the total capital account
balances of all the persons who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date.
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“Moody’s” means Moody’s Investors
Service, Inc., or any successor thereto.
“Net Carried Interest Distribution” has the
meaning set forth in Section 5.8(e)(i)(C).
“Net Carried Interest Distribution Recontribution
Amount” has the meaning set forth in Section 5.8(e)(i)(C).
“Net GP-Related Recontribution Amount” has the meaning set forth in Section 5.8(d)(i)(A).
“Non-Carried Interest” means, with respect to each GP-Related Investment, all amounts of distributions, other than Carried Interest and other than Capital Commitment Distributions, received by the Partnership with respect to such
GP-Related Investment, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated
with respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments as it may determine in good faith is appropriate.
“Non-Carried Interest Sharing Percentage” means, with
respect to each GP-Related Investment, the percentage interest of a Partner in Non-Carried Interest from such GP-Related
Investment set forth in the books and records of the Partnership.
“Non-Contingent” means generally not subject to
repurchase rights or other requirements.
“Nonvoting Partner” has the meaning set forth in
Section 8.2.
“Nonvoting Special Partner” has the meaning set forth in
Section 6.1(a).
“Original Agreement” has the meaning set forth in the recitals.
“Other Fund GPs” means any other entity (other than the Partnership) through which any
Partner, Withdrawn Partner or any other person directly receives any amounts of Carried Interest, and any successor thereto; provided, that this includes any other entity which has in its organizational documents a provision which indicates
that it is a “Fund GP” or an “Other Fund GP”; provided further, that notwithstanding any of the foregoing, neither SPFSA RE VII L.L.C. nor Holdings nor any Estate Planning Vehicle established for the benefit of
family members of any Partner or of any member or partner of any Other Fund GP shall be considered an “Other Fund GP” for purposes hereof.
“Other Sources” means (i) distributions or payments of Capital Commitment Partner Carried
Interest (which shall include amounts of Capital Commitment Partner Carried Interest which are not distributed or paid to a Partner but are instead contributed to a trust (or similar arrangement) to satisfy any “holdback” obligation with
respect thereto) and (ii) distributions from Blackstone Entities (other than the Partnership) to such Partner.
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“Partner” means any person who is a partner
of the Partnership, including the Limited Partners, the General Partner and the Special Partners. Except as otherwise specifically provided herein, no group of Partners, including the Special Partners and any group of Partners in the same Partner
Category, shall have any right to vote as a class on any matter relating to the Partnership, including, but not limited to, any merger, reorganization, dissolution or liquidation.
“Partner Category” means the General Partner, Existing Partners, Retaining Withdrawn Partners
or Deceased Partners, each referred to as a group for purposes hereof.
“Partnership” has
the meaning set forth in the preamble hereto.
“Partnership Act” has the meaning set forth
in the preamble hereto.
“Partnership Affiliate” has the meaning set forth in
Section 3.3(b).
“Partnership Affiliate Governing Agreement” has the meaning set
forth in Section 3.3(b).
“Pledgable Blackstone Interests” has the meaning set forth
in Section 4.1(d)(v)(A).
“Prime Rate” means the rate of interest per annum publicly
announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate.
“Qualifying
Fund” means any fund designated by the General Partner as a “Qualifying Fund”.
“Repurchase Period” has the meaning set forth in Section 5.8(c).
“Required Rating” has the meaning set forth in Section 4.1(d)(vi).
“Retained Portion” has the meaning set forth in Section 7.6(a).
“Retaining Withdrawn Partner” means a Withdrawn Partner who has retained a GP-Related Partner Interest, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Nonvoting Special Partner for all purposes hereof.
“Securities” means any debt or equity securities of an Issuer and its subsidiaries and other
Controlled Entities constituting part of an Investment, including without limitation common and preferred stock, interests in limited partnerships and interests in limited liability companies (including warrants, rights, put and call options and
other options relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or interests commonly regarded as securities,
interests in real property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as
money-market investments, bank deposits and interests in personal property of all kinds, whether tangible or intangible.
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“Securities Act” means the U.S. Securities
Act of 1933, as amended from time to time, or any successor statute.
“Settlement Date”
has the meaning set forth in Section 6.5(a).
“SMD Agreements” means the agreements
between the Partnership and/or one or more of its Affiliates and certain of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby
incorporated by reference as between the Partnership and the relevant Partner.
“SP RE
VII” means (i) Strategic Partners Real Estate VII L.P., a Delaware limited partnership, (ii) any alternative investment vehicles relating to, or formed in connection with, any of the partnerships referred to in clauses
(i) and (iii) of this definition, (iii) any parallel fund, managed account or other capital vehicle relating to, or formed in connection with, the partnership referred to in clause (i) of this definition and (iv) any other
limited partnership, limited liability company or other entity (in each case, whether now or hereafter established) of which the Partnership or the General Partner serves, directly or indirectly, as the general partner, special general partner,
manager, managing member or in a similar capacity.
“SP RE VII Agreements” means the
collective reference to (i) the SP RE VII Partnership Agreement and (ii) any other SP RE VII partnership, limited liability company or other governing agreements, as each may be amended, supplemented, restated or otherwise modified from
time to time.
“SP RE VII Partnership Agreement” means the partnership agreement of the
limited partnership named in clause (i) of the definition of “SP RE VII,” as it may be amended, supplemented, restated or otherwise modified from time to time.
“Special Firm Collateral” means interests in a Qualifying Fund or other assets that have been
pledged to the Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the Partnership’s books and records.
“Special Firm Collateral Realization” has the meaning set forth in
Section 4.1(d)(viii)(B).
“Special Partner” means any person shown in the books and
records of the Partnership as a Special Partner of the Partnership, including any Nonvoting Special Partner and any Investor Special Partner.
“S&P” means Standard & Poor’s Ratings Group, and any successor thereto.
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“Subject Investment” has the meaning set
forth in Section 5.8(e)(i).
“Subject Partner” has the meaning set forth in
Section 4.1(d)(iv)(A).
“Successor in Interest” means any (i) shareholder of;
(ii) trustee, custodian, receiver or other person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or
receiver, or former officer, director or partner, or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or
assign of, any Partner, whether by operation of law or otherwise.
“Tax Advances” has the
meaning set forth in Section 6.7(d).
“Tax Matters Partner” has the meaning set forth
in Section 6.7(b).
“TM” has the meaning set forth in Section 10.2.
“Total Disability” means the inability of a Limited Partner substantially to perform the
services required of such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether
arising out of sickness, accident or otherwise.
“Transfer” has the meaning set forth in
Section 8.2.
“Trust Account” has the meaning set forth in the Trust Agreement.
“Trust Agreement” means the Trust Agreement dated as of the date set forth therein, as
amended, supplemented, restated or otherwise modified from time to time, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time to time.
“Trust Amount” has the meaning set forth in the Trust Agreement.
“Trust Income” has the meaning set forth in the Trust Agreement.
“Trustee(s)” has the meaning set forth in the Trust Agreement.
“Unadjusted Carried Interest Distributions” has the meaning set forth in
Section 5.8(e)(i)(B).
“Unallocated Capital Commitment Interests” has the meaning set
forth in Section 8.1(f).
“U.S.” means the United States of America.
“W-8BEN” has the meaning set forth in
Section 3.7.
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“W-8BEN-E” has the meaning set forth in Section 3.7.
“W-8IMY” has the meaning set forth in
Section 3.7.
“W-9” has the meaning set forth
in Section 3.7.
“Withdraw” or “Withdrawal” means, with respect to a
Partner, such Partner ceasing to be a partner of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary), unless the context
shall limit the type of withdrawal to a specific reason, and “Withdrawn” with respect to a Partner means, as aforesaid, such Partner ceasing to be a partner of the Partnership.
“Withdrawal Date” means the date of the Withdrawal from the Partnership of a Withdrawn
Partner.
“Withdrawn Partner” means a Limited Partner whose
GP-Related Partner Interest or Capital Commitment Partner Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include,
unless the context requires otherwise, the estate or legal representatives of any such Partner.
Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to both the singular
and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “person” includes individuals, partnerships (including limited liability
partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions thereof) and other associations and entities. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
ARTICLE II
GENERAL PROVISIONS
Section 2.1. General Partner, Limited Partner, Special Partner,. The Partners may be
General Partners, Limited Partners or Special Partners. The General Partner as of the date hereof is SPFSA RE VII L.L.C. and the Limited Partners as of the date hereof are those persons shown as Limited Partners in the books and records of the
Partnership and the Special Partners as of the date hereof are those persons shown as Special Partners in the books and records of the Partnership as of the date hereof. The books and records of the Partnership contain the GP-Related Profit Sharing Percentage and GP-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to the GP-Related Investments of the Partnership as of the date hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each
Partner (including, without limitation, the General Partner) with respect to the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to
time to reflect additional GP-
16
Related Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by the Partnership
of Capital Commitment Investments, the GP-Related Profit Sharing Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the Capital Commitment Profit
Sharing Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the admission of additional Partners, the Withdrawal of Partners, and the transfer or assignment of interests in the Partnership
pursuant to the terms of this Agreement. At the time of admission of each additional Partner, the General Partner shall determine in its sole discretion the GP-Related Investments and Capital Commitment
Investments in which such Partner shall participate and such Partner’s GP-Related Commitment, Capital Commitment-Related Commitment, GP-Related Profit Sharing
Percentage with respect to each such GP-Related Investment and Capital Commitment Profit Sharing Percentage with respect to each such Capital Commitment Investment. Each Partner may have a GP-Related Partner Interest and/or a Capital Commitment Partner Interest.
Section 2.2. Formation; Name; Foreign Jurisdictions. The Partnership is hereby continued as a limited
partnership pursuant to the Partnership Act and shall conduct its activities on and after the date hereof under the name of Strategic Partners Fund Solutions Associates VIII L.P. The certificate of limited partnership of the Partnership may be
amended and/or restated from time to time by the General Partner, as an “authorized person” (within the meaning of the Partnership Act). The General Partner is further authorized to execute and deliver and file any other certificates (and
any amendments and/or restatements thereof) necessary for the Partnership to qualify to do business in a jurisdiction in which the Partnership may wish to conduct business.
Section 2.3. Term. The term of the Partnership shall continue until December 31, 2068, unless earlier
dissolved and its affairs wound up in accordance with this Agreement and the Partnership Act.
Section 2.4. Purposes; Powers. (a) The purposes of the Partnership shall be, directly or indirectly through
subsidiaries or Affiliates:
(i) to serve as the general partner of SP RE VII and perform the functions of
a general partner of SP RE VII specified in the SP RE VII Agreements;
(ii) to serve as, and hold the
Capital Commitment SP RE VII Interest as, a capital partner (and, if applicable, a limited partner and/or a general partner) of SP RE VII and perform the functions of a capital partner (and, if applicable, a limited partner and/or a general partner)
of SP RE VII specified in the SP RE VII Agreements;
(iii) to invest in Capital Commitment Investments and/or GP-Related Investments and acquire and invest in Securities or other property directly or indirectly through SP RE VII;
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(iv) to make the GP Commitment or a portion thereof,
directly or indirectly, and to invest in GP-Related Investments, Capital Commitment Investments and other Investments and acquire and invest in Securities or other property either directly or indirectly
through another entity;
(v) to serve as a general partner or limited partner of SP RE VII and / or other
partnerships and perform the functions of a general partner or limited partner, member, shareholder or other equity interest owner specified in the respective partnership agreement, limited liability company agreement, charter or other governing
documents, as amended, supplemented, restated or otherwise modified from time to time, of any such partnership;
(vi) to serve as a member, shareholder or other equity interest owner of limited liability companies, other
companies, corporations or other entities and perform the functions of a member, shareholder or other equity interest owner specified in the respective limited liability company agreement, charter or other governing documents, as amended,
supplemented, restated or otherwise modified from time to time, of any such limited liability company, company, corporation or other entity;
(vii) to carry on such other businesses, perform such other services and make such other investments as are
deemed desirable by the General Partner and as are permitted under the Partnership Act, the SP RE VII Agreements, and any applicable partnership agreement, limited liability company agreement, charter or other governing document referred to in
clause (v) or (vi) above, in each case as the same may be amended, supplemented, restated or otherwise modified from time to time;
(viii) any other lawful purpose; and
(ix) to do all things necessary, desirable, convenient or incidental thereto.
(b) In furtherance of its purposes, the Partnership shall have all powers necessary, suitable or convenient for the
accomplishment of its purposes, alone or with others, as principal or agent, including the following:
(i)
to be and become a general partner or limited partner of partnerships, a member of limited liability companies, a holder of common and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with
the making of Investments or the acquisition, holding or disposition of Securities or other property or as otherwise deemed appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection
therewith;
(ii) to acquire and invest in general partner or limited partner interests, in limited
liability company interests, in common and preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or direct or indirect interests
therein, whether such Investments and Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company interests, stock, interests,
obligations, Investments or Securities or other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or short, options on futures
contracts;
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(iii) to buy, sell and otherwise acquire investments,
whether such investments are readily marketable or not;
(iv) to invest and reinvest the cash assets of the
Partnership in money-market or other short-term investments;
(v) to hold, receive, mortgage, pledge, grant security interests over, lease, transfer, exchange or otherwise
dispose of, grant options with respect to, and otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or owned by the Partnership;
(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by mortgage,
pledge, conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and to buy,
sell, pledge or otherwise dispose of any such instrument or evidence of indebtedness;
(vii) to lend any of
its property or funds, either with or without security, at any legal rate of interest or without interest;
(viii) to have and maintain one or more offices within or without the State of Delaware, and in connection
therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection with the maintenance of such office or offices;
(ix) to open, maintain and close accounts, including margin accounts, with brokers and futures commission
merchants;
(x) to open, maintain and close bank accounts and draw checks and other orders for the payment
of moneys;
(xi) to engage accountants, auditors, custodians, investment advisers, attorneys and any and
all other agents and assistants, both professional and nonprofessional, and to compensate any of them as may be necessary or advisable;
(xii) to form or cause to be formed and to own the stock of one or more corporations, whether foreign or
domestic, to form or cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic and to form or cause to be formed and be a member or manager or both of one or more limited liability companies;
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(xiii) to enter into, make and perform all contracts,
agreements and other undertakings as may be necessary, convenient, advisable or incident to carrying out its purposes;
(xiv) to sue and be sued, to prosecute, settle or compromise all claims against third parties, to compromise,
settle or accept judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection therewith;
(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to the Partners
cash or investments or other property of the Partnership, or any combination thereof; and (xvi) to take such other actions necessary, desirable, convenient or incidental thereto and to engage in such other businesses as may be permitted under
Delaware and other applicable law.
Section 2.5. Place of Business. The Partnership shall maintain a
registered office at c/o Intertrust Corporate Services Delaware Ltd., 200 Bellevue Parkway, Suite 210, Bellevue Park Corporate Center, Wilmington, Delaware 19809. The Partnership shall maintain an office and principal place of business at such place
or places as the General Partner specifies from time to time and as set forth in the books and records of the Partnership. The name and address of the Partnership’s registered agent is Intertrust Corporate Services Delaware Ltd., 200 Bellevue
Parkway, Suite 210, Bellevue Park Corporate Center, Wilmington, Delaware 19809. The General Partner may from time to time change the registered agent or office by an amendment to the certificate of limited partnership of the Partnership.
Section 2.6. Withdrawal of Initial Limited Partner. Upon the admission of one or more additional Limited
Partners to the Partnership, the Initial Limited Partner shall (a) Withdraw as the Initial Limited Partner of the Partnership, and (b) have no further right, interest or obligation of any kind whatsoever as a Partner in the Partnership;
provided, that the effective date of such Withdrawal shall be deemed as between the parties hereto to be December 13, 2018.
ARTICLE
III
MANAGEMENT
Section 3.1. General Partner.
(a) SPFSA RE VII L.L.C. is the General Partner as of the date hereof. The General Partner shall cease to be the General Partner
only if (i) it Withdraws from the Partnership for any reason, (ii) it consents in its sole discretion to resign as the General Partner, or (iii) a Final Event with respect to it occurs. The General Partner may not be removed without
its consent. There may be one or more General Partners. In the event that one or more other General Partners is admitted to the Partnership as such, all references herein to the “General Partner” in the singular form shall be deemed to
also refer to such other General Partners as may be appropriate. The relative rights and responsibilities of such General Partners will be as agreed upon from time to time between them.
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(b) Upon the Withdrawal from the Partnership or voluntary resignation of the
last remaining General Partner, all of the powers formerly vested therein pursuant to this Agreement and the Partnership Act shall be exercised by a Majority in Interest of the Partners.
Section 3.2. Partner Voting, etc.
(a) Except as otherwise expressly provided herein and except as may be expressly required by the Partnership Act, Partners
(including Special Partners), other than General Partners, as such shall have no right to, and shall not, take part in the management or control of the Partnership’s business or act for or bind the Partnership, and shall have only the rights
and powers granted to Partners of the applicable class herein.
(b) To the extent a Partner is entitled to vote with
respect to any matter relating to the Partnership, such Partner shall not be obligated to abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such Partner (or any Affiliate
thereof) in such matter.
(c) Meetings of the Partners may be called only by the General Partner.
(d) Notwithstanding any other provision of this Agreement, any Limited Partner or Withdrawn Partner that fails to respond to a
notice provided by the General Partner requesting the consent, approval or vote of such Limited Partner or Withdrawn Partner within 14 days after such notice is sent to such Limited Partner or Withdrawn Partner shall be deemed to have given its
affirmative consent or approval thereto.
Section 3.3. Management. (a) The management, control and
operation of the Partnership and the formulation and execution of business and investment policy shall be vested in the General Partner. The General Partner shall, in its discretion, exercise all powers necessary and convenient for the purposes of
the Partnership, including those enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the General Partner pursuant to this Agreement shall be made
in its sole discretion, subject only to the express terms and conditions of this Agreement.
(b) Notwithstanding any
provision in this Agreement to the contrary, the Partnership is hereby authorized, without the need for any further act, vote or consent of any person (directly or indirectly through one or more other entities, in the name and on behalf of the
Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP RE VII or as general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate or,
if applicable, in the Partnership’s capacity as a capital partner of SP RE VII or as general or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (i) to execute and deliver, and to perform the
Partnership’s obligations under, the SP RE VII Agreements, including, without limitation, serving as a general partner of SP RE VII and, if applicable, a capital partner of SP RE VII, (ii) if applicable, to execute and deliver, and to
perform the Partnership’s obligations under the governing agreement, as amended, supplemented, restated or otherwise modified (each a “Partnership Affiliate Governing Agreement”), of any other partnership, limited liability
company, other company, corporation or other entity (each a “Partnership Affiliate”) of which
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the Partnership is, or is to become, a general partner or limited partner, member, shareholder or other equity interest owner, including, without limitation, serving as a general partner or
limited partner, member, shareholder or other equity interest owner of each Partnership Affiliate, and (iii) to take any action, in the applicable capacity, contemplated by or arising out of this Agreement, the SP RE VII Agreements or each
Partnership Affiliate Governing Agreement (and any amendment, supplement, restatement and/or other modification of any of the foregoing).
(c) The General Partner and any other person designated by the General Partner, each acting individually, is hereby authorized
and empowered, as an authorized person of the Partnership within the meaning of the Partnership Act, or otherwise, or as an authorized representative of the General Partner (the General Partner hereby authorizing and ratifying any of the following
actions):
(i) to execute and deliver and/or file (including any such action, directly or indirectly
through one or more other entities, in the name and on behalf of the Partnership, on its own behalf, or in its capacity as general partner, capital partner and/or limited partner of SP RE VII, or as general partner or limited partner, member,
shareholder or other equity interest owner of any Partnership Affiliate), any of the following:
(A) any
agreement, certificate, instrument or other document of the Partnership, SP RE VII or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications thereof), including, without limitation, the following:
(I) the SP RE VII Agreements and each Partnership Affiliate Governing Agreement, (II) subscription agreements and documents on behalf of SP RE VII, (III) side letters issued in connection with investments in SP RE VII and
(IV) such other agreements, certificates, instruments and other documents as may be necessary or desirable in furtherance of the purposes of the Partnership, SP RE VII or any Partnership Affiliate (and any amendments, supplements, restatements
and/or other modifications of any of the foregoing referred to in (I) through (IV) above) and for the avoidance of doubt, this Agreement may be amended by the General Partner in its sole discretion;
(B) the certificates of formation, certificates of limited partnership and/or other organizational documents of
the Partnership, SP RE VII or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing); and
(C) any other certificates, notices, applications and other documents (and any amendments, supplements,
restatements and/or other modifications thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Partnership, SP RE VII or any Partnership Affiliate
to qualify to do business in a jurisdiction in which the Partnership, SP RE VII or such Partnership Affiliate desires to do business;
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(ii) to prepare or cause to be prepared, and to sign,
execute and deliver and/or file (including any such action, directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or
limited partner of SP RE VII or as a general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (A) any certificates, forms, notices, applications and other documents to be filed with any
government or governmental or regulatory body on behalf of the Partnership, SP RE VII and/or any Partnership Affiliate, (B) any certificates, forms, notices, applications and other documents that may be necessary or advisable in connection with
any bank account of the Partnership, SP RE VII or any Partnership Affiliate or any banking facilities or services that may be utilized by the Partnership, SP RE VII or any Partnership Affiliate, and all checks, notes, drafts and other documents of
the Partnership, SP RE VII or any Partnership Affiliate that may be required in connection with any such bank account or banking facilities or services and (C) resolutions with respect to any of the foregoing matters (which resolutions, when
executed by any person authorized as provided in this Section 3.3(c), each acting individually, shall be deemed to have been duly adopted by the General Partner, the Partnership, SP RE VII or any Partnership Affiliate, as applicable, for all
purposes).
(d) The authority granted to any person (other than the General Partner) in Section 3.3(c) may be revoked
at any time by the General Partner by an instrument in writing signed by the General Partner.
Section 3.4. Responsibilities of Partners.
(a) Unless otherwise determined by the General Partner in a particular case, each Limited Partner (other than a Special
Partner) shall devote substantially all of his or her time and attention to the businesses of the Partnership and its Affiliates, and each Special Partner shall not be required to devote any time or attention to the businesses of the Partnership or
its Affiliates.
(b) All outside business or investment activities of the Partners (including outside directorships or
trusteeships), shall be subject to such rules and regulations as are established by the General Partner from time to time.
(c) The General Partner may from time to time establish such other rules and regulations applicable to Partners or other
employees as the General Partner deems appropriate, including rules governing the authority of Partners or other employees to bind the Partnership to financial commitments or other obligations.
Section 3.5. Exculpation and Indemnification.
(a) Liability to Partners. Notwithstanding any other provision of this Agreement, whether express or implied, to the
fullest extent permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually, a
“Covered Person” and collectively, the “Covered Persons”) shall be liable to the Partnership or
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any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related document or any transaction or investment contemplated hereby or thereby) taken or omitted
by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable judicial determination and/or determination of an arbitrator that such Covered Person did not
act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority granted to such Covered Person by this Agreement. Each Covered Person shall be entitled
to rely in good faith on the advice of legal counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by any Covered Person in reliance on such advice shall in any event subject such person to any
liability to any Partner or the Partnership. To the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to another Partner, to the fullest extent permitted by
law, such Partner acting under this Agreement shall not be liable to the Partnership or to any such other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they expand or
restrict the duties and liabilities of a Partner otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by law, to modify to that extent such other duties and liabilities of such Partner. To the fullest
extent permitted by law, the parties hereto agree that the General Partner shall be held to have acted in good faith for the purposes of this Agreement and its duties under the Partnership Act if it believes that it has acted honestly and in
accordance with the specific terms of this Agreement.
(b) Indemnification. (i) To the fullest extent permitted
by law, the Partnership shall indemnify and hold harmless (but only to the extent of the Partnership’s assets (including, without limitation, the remaining capital commitments of the Partners)) each Covered Person from and against any and all
claims, damages, losses, costs, expenses and liabilities (including, without limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable expenses of
investigating or defending against any claim or alleged claim), joint and several, of any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, for purposes of this Section 3.5(b), “Losses”), arising
from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the Covered Person may be involved, or threatened to be involved, as a party or otherwise, by reason of such Covered
Person’s management of the affairs of the Partnership or which relate to or arise out of or in connection with the Partnership, its property, its business or affairs (other than claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, arising out of any act or omission of such Covered Person constituting Cause); provided, that a Covered Person shall not be entitled to indemnification under this Section 3.5(b) with respect to any claim,
issue or matter if there is a final and non-appealable judicial determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably
believed to be in, or not opposed to, the best interests of the Partnership and within the authority granted to such Covered Person by this Agreement; provided further, that if such Covered Person is a Partner or a Withdrawn Partner,
such Covered Person shall bear its share of such Losses in accordance with such Covered Person’s GP-Related Profit Sharing Percentage in the Partnership as of the time of the actions or omissions that
gave rise to such Losses. To the fullest extent permitted by law, expenses (including legal fees) incurred by a Covered Person (including, without limitation, the General Partner) in defending any claim, demand, action, suit or proceeding may, with
the approval of the General Partner, from time to time, be advanced by
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the Partnership prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Partnership of a written undertaking by or on behalf of the Covered Person to
repay such amount to the extent that it shall be subsequently determined that the Covered Person is not entitled to be indemnified as authorized in this Section 3.5(b), and the Partnership and its Affiliates shall have a continuing right of
offset against such Covered Person’s interests/investments in the Partnership and such Affiliates and shall have the right to withhold amounts otherwise distributable to such Covered Person to satisfy such repayment obligation. If a Partner
institutes litigation against a Covered Person which gives rise to an indemnity obligation hereunder, such Partner shall be responsible, up to the amount of such Partner’s Interests and remaining capital commitments, for such Partner’s
pro rata share of the Partnership’s expenses related to such indemnity obligation, as determined by the General Partner. The Partnership may purchase insurance, to the extent available at reasonable cost, to cover losses, claims, damages
or liabilities covered by the foregoing indemnification provisions. Partners will not be personally obligated with respect to indemnification pursuant to this Section 3.5(b). The General Partner shall have the authority to enter into separate
agreements with any Covered Person in order to give effect to the obligations to indemnify pursuant to this Section 3.5(b).
(ii) (A) Notwithstanding anything to the contrary herein, for greater certainty, it is understood and/or
agreed that the Partnership’s obligations hereunder are not intended to render the Partnership as a primary indemnitor for purposes of the indemnification, advancement of expenses and related provisions under applicable law governing SP RE VII
and/or a particular portfolio entity through which an Investment is indirectly held. It is further understood and/or agreed that a Covered Person shall first seek to be so indemnified and have such expenses advanced in the following order of
priority: first, out of proceeds available in respect of applicable insurance policies maintained by the applicable portfolio entity and/or SP RE VII; second, by the applicable portfolio entity through which such investment is
indirectly held; and third, by SP RE VII (only to the extent the foregoing sources are exhausted).
(B) The Partnership’s obligation, if any, to indemnify or advance expenses to any Covered Person shall be
reduced by any amount that such Covered Person may collect as indemnification or advancement from SP RE VII and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained thereby), and to the extent the
Partnership (or any Affiliate thereof) pays or causes to be paid any amounts that should have been paid by SP RE VII and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained thereby), it is agreed
among the Partners that the Partnership shall have a subrogation claim against SP RE VII and/or such portfolio entity in respect of such advancement or payments. The General Partner and the Partnership shall be specifically empowered to structure
any such advancement or payment as a loan or other arrangement (except for a loan to an executive officer of The Blackstone Group Inc. or any of its Affiliates, which shall not be permitted) as the General Partner may determine necessary or
advisable to give effect to or otherwise implement the foregoing.
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Section 3.6. Representations of Partners.
(a) Each Limited Partner and Special Partner by execution of this Agreement (or by otherwise becoming bound by the terms and
conditions hereof as provided herein or in the Partnership Act) represents and warrants to every other Partner and to the Partnership, except as may be waived by the General Partner, that such Partner is acquiring each of such Partner’s
Interests for such Partner’s own account for investment and not with a view to resell or distribute the same or any part hereof, and that no other person has any interest in any such Interest or in the rights of such Partner hereunder;
provided, that a Partner may choose to make transfers for estate and charitable planning purposes (pursuant to Section 6.3(a) and otherwise in accordance with the terms hereof). Each Limited Partner and Special Partner represents and
warrants that such Partner understands that the Interests have not been registered under the Securities Act, and therefore such Interests may not be resold without registration under the Securities Act or exemption from such registration, and that
accordingly such Partner must bear the economic risk of an investment in the Partnership for an indefinite period of time. Each Limited Partner and Special Partner represents that such Partner has such knowledge and experience in financial and
business matters that such Partner is capable of evaluating the merits and risks of an investment in the Partnership, and that such Partner is able to bear the economic risk of such investment. Each Limited Partner and Special Partner represents
that such Partner’s overall commitment to the Partnership and other investments which are not readily marketable is not disproportionate to the Partner’s net worth and the Partner has no need for liquidity in the Partner’s investment
in Interests. Each Limited Partner and Special Partner represents that to the full satisfaction of the Partner, the Partner has been furnished any materials that such Partner has requested relating to the Partnership, any Investment and the offering
of Interests and has been afforded the opportunity to ask questions of representatives of the Partnership concerning the terms and conditions of the offering of Interests and any matters pertaining to each Investment and to obtain any other
additional information relating thereto. Each Limited Partner and Special Partner represents that the Partner has consulted to the extent deemed appropriate by the Partner with the Partner’s own advisers as to the financial, tax, legal and
related matters concerning an investment in Interests and on that basis believes that an investment in the Interests is suitable and appropriate for the Partner.
(b) Each Limited Partner and Special Partner agrees that the representations and warranties contained in paragraph
(a) above shall be true and correct as of any date that such Partner (1) makes a capital contribution to the Partnership (whether as a result of Firm Advances made to such Partner or otherwise) with respect to any Investment, and such
Partner hereby agrees that such capital contribution shall serve as confirmation thereof and/or (2) repays any portion of the principal amount of a Firm Advance, and such Partner hereby agrees that such repayment shall serve as confirmation
thereof.
Section 3.7. Tax Representation and Further Assurances. (a) Each Limited Partner and
Special Partner, upon the request of the General Partner, agrees to perform all further acts and to execute, acknowledge and deliver any documents that may be reasonably necessary to comply with the General Partner’s or the Partnership’s
obligations under applicable law or to carry out the provisions of this Agreement.
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(b) Each Limited Partner and Special Partner certifies that (A) if the
Limited Partner or Special Partner is a United States person (as defined in the Code) (x) (i) the Limited Partner or Special Partner’s name, social security number (or, if applicable, employer identification number) and address provided to
the Partnership and its Affiliates pursuant to an IRS Form W 9, Request for Taxpayer Identification Number Certification (“W 9”) or otherwise are correct and (ii) the Limited Partner or Special Partner will complete and return a W 9
and (y) (i) the Limited Partner or Special Partner is a United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days of a change to foreign (non-United States) status or (B) if the Limited Partner or Special Partner is not a United States person (as defined in the Code) (x) (i) the information on the completed IRS Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) (“W-8BEN”), IRS Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)
(“W-8BEN-E”), or other applicable form, including but not limited to IRS Form W-8IMY, Certificate of Foreign
Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting (“W-8IMY”), or otherwise is correct and (ii) the Limited Partner or Special
Partner will complete and return the applicable IRS form, including but not limited to a W-8BEN, W-8BEN-E or W-8IMY, and (y) (i) the Limited Partner or Special Partner is not a United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days
of any change of such status. Each Limited Partner and Special Partner agrees to provide such cooperation and assistance, including but not limited to properly executing and providing to the Partnership in a timely manner any tax or other
documentation or information that may be reasonably requested by the Partnership or the General Partner.
(c) Each Limited
Partner and Special Partner acknowledges and agrees that the Partnership and the General Partner may release confidential information or other information about the Limited Partner or Special Partner or related to such Limited Partner or Special
Partner’s investment in the Partnership if the Partnership or the General Partner, in its or their sole discretion, determines that such disclosure is required by applicable law or regulation or in order to comply for an exception from, or
reduced tax rate of, tax or other tax benefit. Any such disclosure shall not be treated as a breach of any restriction upon the disclosure of information imposed on any such person by law or otherwise, and a Limited Partner or Special Partner shall
have no claim against the Partnership, the General Partner or any of their Affiliates for any form of damages or liability as a result of actions taken by the foregoing in order to comply with any disclosure obligations that the foregoing reasonably
believe are required by law, regulation or otherwise.
(d) Each Limited Partner and Special Partner acknowledges and agrees
that if it provides information that is in anyway materially misleading, or if it fails to provide the Partnership or its agents with any information requested hereunder, in either case in order to satisfy the Partnership’s obligations, the
General Partner reserves the right to take any action and pursue any remedies at its disposal, including (i) requiring such Limited Partner or Special Partner to Withdraw for Cause and (ii) withholding or deducting any costs caused by such
Limited Partner’s or Special Partner’s action or inaction from amounts otherwise distributable to such Limited Partner or Special Partner from the Partnership and its Affiliates.
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ARTICLE IV
CAPITAL OF THE PARTNERSHIP
Section 4.1. Capital Contributions by Partners. (a) Each Partner shall be required to make capital
contributions to the Partnership (“GP-Related Capital Contributions”) at such times and in such amounts (the “GP-Related Required
Amounts”) as are required to satisfy the Partnership’s obligation to make capital contributions to SP RE VII in respect of the GP-Related SP RE VII Interest with respect to any GP-Related SP RE VII Investment and as are otherwise determined by the General Partner from time to time or as may be set forth in such Limited Partner’s Commitment Agreement or SMD Agreement, if any, or
otherwise; provided, that additional GP-Related Capital Contributions in excess of the GP-Related Required Amounts may be made pro rata among the Partners based upon
each Partner’s Carried Interest Sharing Percentage. GP-Related Capital Contributions in excess of the GP-Related Required Amounts which are to be used for ongoing
business operations (as distinct from financing, legal or other specific liabilities of the Partnership (including those specifically set forth in Section 4.1(d) and Section 5.8(d))) shall be determined by the General Partner. Special
Partners shall not be required to make additional GP-Related Capital Contributions to the Partnership in excess of the GP-Related Required Amounts, except (i) as a
condition of an increase in such Special Partner’s GP-Related Profit Sharing Percentage or (ii) as specifically set forth in this Agreement; provided, that the General Partner and any Special Partner
may agree from time to time that such Special Partner shall make an additional GP-Related Capital Contribution to the Partnership; provided, further, that each Investor Special Partner shall maintain its GP-Related Capital Accounts at an aggregate level equal to the product of (i) its GP-Related Profit Sharing Percentage from time to time and (ii) the total capital
of the Partnership related to the GP-Related SP RE VII Interest.
(b) Each GP-Related Capital Contribution by a Partner shall be credited to the appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2, subject to
Section 5.10.
(c) The General Partner may elect on a case by case basis to (i) cause the Partnership to loan any
Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) the amount of any GP-Related Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any
Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) to make a required GP-Related Capital Contribution to the Partnership in installments, in each case on terms
determined by the General Partner.
(d) (i) The Partners and the Withdrawn Partners have entered into the Trust
Agreement, pursuant to which certain amounts of the distributions relating to Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account constituting a
“Holdback”). The General Partner shall determine, as set forth below, the percentage of each distribution of Carried Interest that shall be withheld for any General Partner and/or Holdings and each Partner Category (such withheld
percentage constituting the General Partner’s and such Partner Category’s “Holdback Percentage”). The applicable Holdback Percentages initially shall be 0% for any General Partner, 15% for Existing Partners (other than the
General Partner), 21% for Retaining Withdrawn Partners (other than the General Partner) and 24% for Deceased Partners (the “Initial Holdback Percentages”). Any provision of this Agreement to the contrary notwithstanding, the
Holdback Percentage for the General Partner and/or Holdings shall not be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).
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(ii) The Holdback Percentage may not be reduced for any
individual Partner as compared to the other Partners in his or her Partner Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner Categories on a proportionate basis.
For example, if the Holdback Percentage for Existing Partners is decreased to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any reduction in the Holdback
Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such reduction.
(iii) The Holdback Percentage may not be increased for any individual Partner as compared to the other Partners
in his or her Partner Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’ Holdback Percentage beyond 21% unless the General Partner concurrently increases the Existing
Partners’ Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the General Partner increases the Holdback Percentage for both Existing Partners and Retaining
Withdrawn Partners to 24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies equally to all Partner Categories. Any increase in the Holdback Percentage for any Partner shall
apply only to distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner from proportionately increasing the Holdback Percentage of any Partner Category (following a
reduction of the Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For example, if the General Partner reduces the Holdback Percentages for Existing Partners, Retaining
Withdrawn Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the Holdback Percentages to the Initial Holdback Percentages.
(iv) (A) Notwithstanding anything contained herein to the contrary, the General Partner may increase or
decrease the Holdback Percentage for any Partner in any Partner Category (in such capacity, the “Subject Partner”) pursuant to a majority vote of the Limited Partners (a “Holdback Vote”); provided, that,
notwithstanding anything to the contrary contained herein, the Holdback Percentage applicable to any General Partner shall not be increased or decreased without its prior written consent; provided further, that a Subject Partner’s
Holdback Percentage shall not be (I) increased prior to such time as such Subject Partner (x) is notified by the Partnership of the decision to increase such Subject Partner’s Holdback Percentage and (y) has, if requested by such
Subject Partner, been given 30 days to gather and provide information to the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) or (II) decreased unless such decrease occurs subsequent to an increase
in a Subject Partner’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv); provided further, that such decrease shall not exceed an amount such that such Subject Partner’s Holdback
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Percentage is less than the prevailing Holdback Percentage for the Partner Category of such Subject Partner; provided further, that a Partner shall not vote to increase a Subject
Partner’s Holdback Percentage unless such voting Partner determines, in such Partner’s good faith judgment, that the facts and circumstances indicate that it is reasonably likely that such Subject Partner, or any of such Subject
Partner’s successors or assigns (including such Subject Partner’s estate or heirs) who at the time of such vote holds the GP-Related Partner Interest or otherwise has the right to receive
distributions relating thereto, will not be capable of satisfying any GP-Related Recontribution Amounts that may become due.
(B) A Holdback Vote shall take place at a Partnership meeting. Each of the Limited Partners shall be entitled
to cast one vote with respect to the Holdback Vote regardless of such Limited Partner’s interest in the Partnership. Such vote may be cast by any such Partner in person or by proxy.
(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback Percentage,
such Subject Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided, that if the Partnership and the Subject Partner cannot agree upon a mutually
satisfactory arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates; provided further, that if
such candidates fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the arbitrator. Each Subject Partner that submits the
decision of the Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected out-of-pocket expenses
relating thereto, and each such party shall, to the satisfaction of the arbitrator and prior to any determination being made by the arbitrator, pay the total of such estimated expenses (i.e., both the Subject Partner’s and the
Partnership’s expenses) into an escrow account. The arbitrator shall direct the escrow agent to pay out of such escrow account all expenses associated with such arbitration (including costs leading thereto) and to return to the
“victorious” party the entire amount of funds such party paid into such escrow account. If the amount contributed to the escrow account by the losing party is insufficient to cover the expenses of such arbitration, such “losing”
party shall then provide any additional funds necessary to cover such costs to such “victorious” party. For purposes hereof, the “victorious” party shall be the Partnership if the Holdback Percentage ultimately determined by the
arbitrator is closer to the percentage determined in the second Holdback Vote than it is to the prevailing Holdback Percentage for the Subject Partner’s Partner Category; otherwise, the Subject Partner shall be the “victorious” party.
The party that is not the “victorious” party shall be the “losing” party.
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(D) In the event of a decrease in a Subject Partner’s
Holdback Percentage (1) pursuant to a Holdback Vote under this clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and distribute to such Subject Partner
any Trust Amounts (and the Trust Income thereon (except as expressly provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance with such Subject Partner’s
reduced Holdback Percentage) as though such reduced Holdback Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).
(v) (A) If a Partner’s Holdback Percentage exceeds 15% (such percentage in excess of 15% constituting
the “Excess Holdback Percentage”), such Partner may satisfy the portion of his or her Holdback obligation in respect of his or her Excess Holdback Percentage (such portion constituting such Partner’s “Excess
Holdback”), and such Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he or she was a Partner), to the extent his or her Excess Holdback obligation has previously been satisfied in cash, may
obtain the release of the Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback
obligation, by pledging, granting a security interest or otherwise making available to the General Partner, on a first priority basis (except as provided below), all or any portion of his or her Firm Collateral in satisfaction of his or her Excess
Holdback obligation. Any Partner seeking to satisfy all or any portion of the Excess Holdback utilizing Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the
General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Partnership to realize on (if required), such Firm Collateral; provided, that, in the case of entities listed in the Partnership’s
books and records in which Partners are permitted to pledge or grant a security interest over their interests therein to finance all or a portion of their capital contributions thereto (“Pledgable Blackstone Interests”), to the
extent a first priority security interest is unavailable because of an existing lien on such Firm Collateral, the Partner or Withdrawn Partner seeking to utilize such Firm Collateral shall grant the General Partner a second priority security
interest therein in the manner provided above; provided further, that (x) in the case of Pledgable Blackstone Interests, to the extent that neither a first priority nor a second priority security interest is available, or
(y) if the General Partner otherwise determines in its good faith judgment that a security interest in Firm Collateral (and the corresponding documents and actions) are not necessary or appropriate, the Partner or Withdrawn Partner shall (in
the case of either clause (x) or (y) above) irrevocably instruct in writing the relevant partnership, limited liability company or other entity listed in the Partnership’s books and records to remit any and all net proceeds resulting from
a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully provided in clause (B) below. The Partnership shall, at the request of any Partner or Withdrawn Partner, assist such Partner or Withdrawn Partner in taking
such action as is necessary to enable such Partner or Withdrawn Partner to use Firm Collateral as provided hereunder.
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(B) If upon a sale or other realization of all or any
portion of any Firm Collateral (a “Firm Collateral Realization”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds
otherwise distributable to such Partner or Withdrawn Partner from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust
Account to fully satisfy such Excess Holdback requirement (allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount
necessary to satisfy such Excess Holdback requirement shall be distributed to such Partner or Withdrawn Partner.
(C) Upon any valuation or revaluation of Firm Collateral that results in a decreased valuation of such Firm
Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including upon a Firm Collateral Realization, if net proceeds therefrom and the remaining Firm Collateral
are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the foregoing to such Partner or Withdrawn Partner and such Partner or Withdrawn Partner shall, within 30
days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his or her Excess Holdback requirement. If any such Partner or Withdrawn Partner defaults upon his or her
obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable to a default under this clause (C); provided further, that for purposes of
applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such Section 5.8(d)(ii) shall be construed as
“defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution
Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(vi) Any Partner or Withdrawn Partner may (A) obtain the release of any Trust Amounts (but not the Trust
Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such Partner or Withdrawn Partner or (B) require the
Partnership to distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit (an “L/C”) for the benefit of the Trustee(s) in such
amounts. Any Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall deliver to the Trustee(s) an unconditional and irrevocable L/C from a commercial bank whose
(x) short-term deposits are rated at least A-1 by S&P or P-1 by Moody’s (if the L/C is for a term of 1 year or less), or (y) long-term deposits are
rated at least A+ by S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more) (each a “Required Rating”). If the relevant rating of the commercial bank issuing such L/C drops below the relevant Required Rating, the
L/C Partner shall supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, in lieu of the insufficient L/C. In addition,
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if the L/C has a term expiring on a date earlier than the latest possible termination date of SP RE VII, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to
provide a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, at least 30 days prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to
drawing on any L/C. The Trustee(s) may (as directed by the Partnership in the case of clause (I) below) draw down on an L/C only if (I) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the
Partnership’s obligations under the Clawback Provisions or (II) an L/C Partner has not provided a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash
and/or Firm Collateral (to the extent permitted hereunder)), at least 30 days prior to the stated expiration of an existing L/C in accordance with this clause (vi). The Trustee(s), as directed by the Partnership, shall return to any L/C Partner his
or her L/C upon (1) the termination of the Trust Account and satisfaction of the Partnership’s obligations, if any, in respect of the Clawback Provisions, (2) an L/C Partner satisfying his or her entire Holdback obligation in cash and
Firm Collateral (to the extent permitted hereunder), or (3) the release, by the Trustee(s), as directed by the Partnership, of all amounts in the Trust Account to the Partners or Withdrawn Partners. If an L/C Partner satisfies a portion of his
or her Holdback obligation in cash and/or Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as directed by the Partnership, release a portion of the amounts in the Trust Account to the Partners or Withdrawn Partners in the
Partner Category of such L/C Partner, the L/C of an L/C Partner may be reduced by an amount corresponding to such portion satisfied in cash and/or Firm Collateral (to the extent permitted hereunder) or such portion released by the Trustee(s), as
directed by the Partnership; provided, that in no way shall the general release of any Trust Income cause an L/C Partner to be permitted to reduce the amount of an L/C by any amount.
(vii) (A) Any in-kind distributions by the Partnership relating to
Carried Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose of any in-kind distributions held in the Trust Account
at any time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.
(B) In lieu of the foregoing, any Existing Partner may pledge or grant a security interest with respect to any in-kind distribution the Special Firm Collateral referred to in the applicable category in the Partnership’s books and records; provided, that the initial contribution of such Special Firm Collateral shall
initially equal 130% of the required Holdback for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback. Sections 4.1(d)(viii)(C) and (D) shall apply to such Special Firm Collateral. To the extent such Special
Firm Collateral exceeds the applicable minimum percentage of the required Holdback specified in the first sentence of this clause (vii)(B), the related Partner may obtain a release of such excess amount from the Trust Account.
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(viii) (A) Any Limited Partner or Withdrawn Partner may
satisfy all or any portion of his or her Holdback (excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his or her Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by the use of
an L/C as provided herein, obtain a release of Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn Partner’s
Holdback (excluding any Excess Holdback) by pledging or otherwise granting a security interest to the Trustee(s) on a first priority basis all of his or her Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or
exceed the amount of the Holdback distributed to the Partner or Withdrawn Partner (as more fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise
take such other action as is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) to realize on (if required), such Special
Firm Collateral.
(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or
any portion of any Special Firm Collateral (a “Special Firm Collateral Realization”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in
connection with an Excess Holdback) is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided herein (i.e., cash contributed to the Trust Account or
an L/C in the Trust Account)), then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Special Firm Collateral Realization (which shall not include the amount of Firm Collateral that consists of a
Qualifying Fund or other asset and is being used in connection with an Excess Holdback) shall be paid into the Trust (and allocated to such Partner or Withdrawn Partner) to fully satisfy such Holdback and shall be deemed thereafter to be Trust
Amounts for purposes hereunder. Any net proceeds from such Special Firm Collateral Realization in excess of the amount necessary to satisfy such Holdback (excluding any Excess Holdback) shall be distributed to such Partner or Withdrawn Partner. To
the extent a Qualifying Fund distributes Securities to a Partner or Withdrawn Partner in connection with a Special Firm Collateral Realization, such Partner or Withdrawn Partner shall be required to promptly fund such Partner’s or Withdrawn
Partner’s deficiency with respect to his or her Holdback in cash or an L/C.
(C) Upon any valuation or
revaluation of the Special Firm Collateral and/or any adjustment in the Applicable Collateral Percentage applicable to a Qualifying Fund (as provided in the Partnership’s books and records), if such Partner’s or Withdrawn Partner’s
Special Firm Collateral is valued at less than such Partner’s Holdback (excluding any Excess Holdback) as provided in the Partnership’s books and records, taking into account other permitted means of satisfying the Holdback hereunder, the
Partnership shall provide notice of the foregoing to such Partner or Withdrawn Partner and, within 10 Business Days of receiving such notice, such Partner or Withdrawn Partner shall contribute cash or additional Special Firm Collateral to the Trust
Account in an amount necessary to make up such deficiency. If any such Partner or Withdrawn Partner defaults upon
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his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that the first sentence of Section 5.8(d)(ii)(A) shall be deemed inapplicable to
such default; provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such
Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and
“GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(D) Upon a Partner becoming a Withdrawn Partner, at any time thereafter the General Partner may revoke the
ability of such Withdrawn Partner to use Special Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding anything else in this Section 4.1(d)(viii). In that case the provisions of clause (C) above shall apply to the
Withdrawn Partner’s obligation to satisfy the Holdback (except that 30 days’ notice of such revocation shall be given), given that the Special Firm Collateral is no longer available to satisfy any portion of the Holdback (excluding any
Excess Holdback).
(E) Nothing in this Section 4.1(d)(viii) shall prevent any Partner or Withdrawn
Partner from using any amount of such Partner’s interest in a Qualifying Fund as Firm Collateral; provided, that at all times Section 4.1(d)(v) and this Section 4.1(d)(viii) are each satisfied.
Section 4.2. Interest. Interest on the balances of the Partners’ capital related to the Partners’ GP-Related Partner Interests (excluding capital invested in GP-Related Investments and, if deemed appropriate by the General Partner, capital invested in any other investment
of the Partnership) shall be credited to the Partners’ GP-Related Capital Accounts at the end of each accounting period pursuant to Section 5.2, or at any other time as determined by the General
Partner, at rates determined by the General Partner from time to time, and shall be charged as an expense of the Partnership.
Section 4.3. Withdrawals of Capital. No Partner may withdraw capital related to such Partner’s GP-Related Partner Interests from the Partnership except (i) for distributions of cash or other property pursuant to Section 5.8, (ii) as otherwise expressly provided in this Agreement or (iii) as
determined by the General Partner.
ARTICLE V
PARTICIPATION IN PROFITS AND LOSSES
Section 5.1. General Accounting Matters.
(a) GP-Related Net Income (Loss) shall be determined by the General Partner at the end
of each accounting period and shall be allocated as described in Section 5.4.
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(b) “GP-Related Net Income (Loss)”
means:
(i) from any activity of the Partnership related to the
GP-Related SP RE VII Interest for any accounting period (other than GP-Related Net Income (Loss) from GP-Related Investments
described below), (x) the gross income realized by the Partnership from such activity during such accounting period less (y) all expenses of the Partnership, and all other items that are deductible from gross income, for such accounting period
that are allocable to such activity (determined as provided below);
(ii) from any GP-Related Investment for any accounting period in which such GP-Related Investment has not been sold or otherwise disposed of, (x) the gross amount of dividends,
interest or other income received by the Partnership from such GP-Related Investment during such accounting period less (y) all expenses of the Partnership for such accounting period that are allocable to
such GP-Related Investment (determined as provided below); and
(iii) from any GP-Related Investment for the accounting period in which
such GP-Related Investment is sold or otherwise disposed of, (x) the sum of the gross proceeds from the sale or other disposition of such GP-Related Investment and
the gross amount of dividends, interest or other income received by the Partnership from such GP-Related Investment during such accounting period less (y) the sum of the cost or other basis to the
Partnership of such GP-Related Investment and all expenses of the Partnership for such accounting period that are allocable to such GP-Related Investment.
(c) GP-Related Net Income (Loss) shall be determined in accordance with the accounting
method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (i) any income of the Partnership that is exempt from U.S. federal income taxation and not otherwise taken into account in computing GP-Related Net Income (Loss) shall be added to such taxable income or loss; (ii) if any asset has a value in the books of the Partnership that differs from its adjusted tax basis for U.S. federal income tax
purposes, any depreciation, amortization or gain resulting from a disposition of such asset shall be calculated with reference to such value; (iii) upon an adjustment to the value of any asset in the books of the Partnership pursuant to
Treasury Regulations Section 1.704-1(b)(2), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (iv) any expenditures of the Partnership not
deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing GP-Related Net Income (Loss) pursuant to this definition shall be treated as
deductible items; (v) any income from a GP-Related Investment that is payable to Partnership employees in respect of “phantom interests” in such
GP-Related Investment awarded by the General Partner to employees shall be included as an expense in the calculation of GP-Related Net Income (Loss) from such GP-Related Investment, and (vi) items of income and expense (including interest income and overhead and other indirect expenses) of the Partnership, Holdings and other Affiliates of the Partnership shall be
allocated among the Partnership, Holdings and such Affiliates, among various Partnership activities and GP-Related Investments and between accounting periods, in each case as determined by the General Partner.
Any adjustments to GP-Related Net Income (Loss) by the General Partner, including adjustments for items of income accrued but not yet received, unrealized gains, items of expense accrued but not yet paid,
unrealized losses, reserves (including reserves for taxes, bad debts, actual or threatened litigation, or any other expenses, contingencies or obligations) and other appropriate items shall be made in accordance with GAAP; provided, that the
General Partner shall not be required to make any such adjustment.
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(d) An accounting period shall be a Fiscal Year, except that, at the option
of the General Partner, an accounting period will terminate and a new accounting period will begin on the admission date of an additional Partner or the Settlement Date of a Withdrawn Partner, if any such date is not the first day of a Fiscal Year.
If any event referred to in the preceding sentence occurs and the General Partner does not elect to terminate an accounting period and begin a new accounting period, then the General Partner may make such adjustments as it deems appropriate to the
Partners’ GP-Related Profit Sharing Percentages for the accounting period in which such event occurs (prior to any allocations of GP-Related Unallocated Percentages
or adjustments to GP-Related Profit Sharing Percentages pursuant to Section 5.3) to reflect the Partners’ average GP-Related Profit Sharing Percentages during
such accounting period; provided, that the GP-Related Profit Sharing Percentages of Partners in GP-Related Net Income (Loss) from
GP-Related Investments acquired during such accounting period will be based on GP-Related Profit Sharing Percentages in effect when each such GP-Related Investment was acquired.
(e) In establishing
GP-Related Profit Sharing Percentages and allocating GP-Related Unallocated Percentages pursuant to Section 5.3, the General Partner may consider such factors as it
deems appropriate.
(f) All determinations, valuations and other matters of judgment required to be made for accounting
purposes under this Agreement shall be made by the General Partner and approved by the Partnership’s independent accountants. Such approved determinations, valuations and other accounting matters shall be conclusive and binding on all Partners,
all Withdrawn Partners, their successors, heirs, estates or legal representatives and any other person, and to the fullest extent permitted by law no such person shall have the right to an accounting or an appraisal of the assets of the Partnership
or any successor thereto.
Section 5.2. GP-Related Capital
Accounts.
(a) There shall be established for each Partner in the books of the Partnership, to the extent and at such
times as may be appropriate, one or more capital accounts as the General Partner may deem to be appropriate for purposes of accounting for such Partner’s interests in the capital of the Partnership related to the
GP-Related SP RE VII Interest and the GP-Related Net Income (Loss) of the Partnership (each a “GP-Related Capital
Account”).
(b) As of the end of each accounting period or, in the case of a contribution to the Partnership by
one or more of the Partners with respect to such Partner or Partners’ GP-Related Partner Interests or a distribution by the Partnership to one or more of the Partners with respect to such Partner or
Partners’ GP-Related Partner Interests, at the time of such contribution or distribution, (i) the appropriate GP-Related Capital Accounts of each Partner shall
be credited with the following amounts: (A) the amount of cash and the value of any property contributed by such Partner to the capital of the Partnership related to such Partner’s GP-Related Partner
Interest during such accounting period, (B) the GP-Related Net Income allocated to such Partner for such accounting period and (C) the interest credited on the balance of such Partner’s capital
related to
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such Partner’s GP-Related Partner Interest for such accounting period pursuant to Section 4.2; and (ii) the appropriate GP-Related Capital Accounts of each Partner shall be debited with the following amounts: (x) the amount of cash, the principal amount of any subordinated promissory note of the Partnership referred to in
Section 6.5 (as such amount is paid) and the value of any property distributed to such Partner during such accounting period with respect to such Partner’s GP-Related Partner Interest and
(y) the GP-Related Net Loss allocated to such Partner for such accounting period.
Section 5.3. GP-Related Profit Sharing Percentages.
(a) Prior to the beginning of each annual accounting period, the General Partner shall establish the profit sharing percentage
(the “GP-Related Profit Sharing Percentage”) of each Partner in each category of GP-Related Net Income (Loss) for such annual accounting period pursuant
to Section 5.1(a) taking into account such factors as the General Partner deems appropriate; provided, that (i) the General Partner may elect to establish GP-Related Profit Sharing Percentages
in GP-Related Net Income (Loss) from any GP-Related Investment acquired by the Partnership during such accounting period at the time such
GP-Related Investment is acquired in accordance with paragraph (c) below and (ii) GP-Related Net Income (Loss) for such accounting period from any GP-Related Investment shall be allocated in accordance with the GP-Related Profit Sharing Percentages in such GP-Related Investment
established in accordance with paragraph (c) below. The General Partner may establish different GP-Related Profit Sharing Percentages for any Partner in different categories of GP-Related Net Income (Loss). In the case of the Withdrawal of a Partner, such former Partner’s GP-Related Profit Sharing Percentages shall be allocated by the General
Partner to one or more of the remaining Partners as the General Partner shall determine. In the case of the admission of any Partner to the Partnership as an additional Partner, the GP-Related Profit Sharing
Percentages of the other Partners shall be reduced by an amount equal to the GP-Related Profit Sharing Percentage allocated to such new Partner pursuant to Section 6.1(b); such reduction of each other
Partner’s GP-Related Profit Sharing Percentage shall be pro rata based upon such Partner’s GP-Related Profit Sharing Percentage as in effect immediately
prior to the admission of the new Partner. Notwithstanding the foregoing, the General Partner may also adjust the GP-Related Profit Sharing Percentage of any Partner for any annual accounting period at the end
of such annual accounting period in its sole discretion.
(b) The General Partner may elect to allocate to the Partners
less than 100% of the GP-Related Profit Sharing Percentages of any category for any annual accounting period at the time specified in Section 5.3(a) for the annual fixing of
GP-Related Profit Sharing Percentages (any remainder of such GP-Related Profit Sharing Percentages being called a
“GP-Related Unallocated Percentage”); provided, that any GP-Related Unallocated Percentage in any category of
GP-Related Net Income (Loss) for any annual accounting period that is not allocated by the General Partner within 90 days after the end of such accounting period shall be deemed to be allocated among all the
Partners (including the General Partner) in the manner determined by the General Partner in its sole discretion.
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(c) Unless otherwise determined by the General Partner in a particular case,
(i) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment shall be allocated
in proportion to the Partners’ respective GP-Related Capital Contributions in respect of such GP-Related Investment and
(ii) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from each GP-Related Investment shall be fixed at
the time such GP-Related Investment is acquired and shall not thereafter change, subject to any repurchase rights established by the General Partner pursuant to Section 5.7.
Section 5.4. Allocations of GP-Related Net Income (Loss) .
(a) Except as provided in Section 5.4(d), GP-Related Net Income of the
Partnership for each GP-Related Investment shall be allocated to the GP-Related Capital Accounts related to such GP-Related
Investment of all the Partners participating in such GP-Related Investment (including the General Partner): first, in proportion to and to the extent of the amount of
Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest distributed to the Partners; second, to Partners
that received Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest in years prior to the years such GP-Related Net Income is being allocated to the extent such Non-Carried Interest (other than amounts representing a return of
GP-Related Capital Contributions) or Carried Interest exceeded GP-Related Net Income allocated to such Partners in such earlier years; and third, to the Partners in the
same manner that such Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest would have been distributed
if cash were available to distribute with respect thereto.
(b) GP-Related Net Loss
of the Partnership shall be allocated as follows: (i) GP-Related Net Loss relating to realized losses suffered by SP RE VII and allocated to the Partnership with respect to its pro rata share
thereof (based on capital contributions made by the Partnership to SP RE VII with respect to the GP-Related SP RE VII Interest) shall be allocated to the Partners in accordance with each Partner’s Non-Carried Interest Sharing Percentage with respect to the GP-Related Investment giving rise to such loss suffered by SP RE VII and
(ii) GP-Related Net Loss relating to realized losses suffered by SP RE VII and allocated to the Partnership with respect to the Carried Interest shall be allocated in accordance with a Partner’s
(including a Withdrawn Partner’s) Carried Interest Give Back Percentage (as of the date of such loss) (subject to adjustment pursuant to Section 5.8(e)).
(c) Notwithstanding Section 5.4(a) above, GP-Related Net Income relating to
Carried Interest allocated after the allocation of a GP-Related Net Loss pursuant to clause (ii) of Section 5.4(b) shall be allocated in accordance with such Carried Interest Give Back Percentages
until such time as the Partners have been allocated GP-Related Net Income relating to Carried Interest equal to the aggregate amount of GP-Related Net Loss previously
allocated in accordance with clause (ii) of Section 5.4(b). Withdrawn Partners shall remain Partners for purposes of allocating such GP-Related Net Loss with respect to Carried Interest.
(d) To the extent the Partnership has any GP-Related Net Income (Loss) for any
accounting period unrelated to SP RE VII, such GP-Related Net Income (Loss) will be allocated in accordance with GP-Related Profit Sharing Percentages prevailing at the
beginning of such accounting period.
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(e) The General Partner may authorize from time to time advances to Partners
(including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) against their allocable shares of GP-Related Net Income (Loss).
(f) Notwithstanding the foregoing, the General Partner may
make such allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems reasonably necessary for this purpose.
Section 5.5. Liability of Partners. Except as otherwise provided in the Partnership Act or as expressly
provided in this Agreement, no Partner shall be personally obligated for any debt, obligation or liability of the Partnership or of any other Partner solely by reason of being a Partner. In no event shall any Partner or Withdrawn Partner (i) be
obligated to make any capital contribution or payment to or on behalf of the Partnership or (ii) have any liability to return distributions received by such Partner from the Partnership, in each case except as specifically provided in
Section 4.1(d) or Section 5.8 or otherwise in this Agreement, as such Partner shall otherwise expressly agree in writing or as may be required by applicable law.
Section 5.6. [Intentionally Omitted].
Section 5.7. Repurchase Rights, etc. The General Partner may from time to time establish such repurchase
rights and/or other requirements with respect to the Partners’ GP-Related Partner Interests relating to GP-Related SP RE VII Investments as the General Partner may
determine. The General Partner shall have authority to (a) withhold any distribution otherwise payable to any Partner until any such repurchase rights have lapsed or any such requirements have been satisfied, (b) pay any distribution to
any Partner that is Contingent as of the distribution date and require the refund of any portion of such distribution that is Contingent as of the Withdrawal Date of such Partner, (c) amend any previously established repurchase rights or other
requirements from time to time and (d) make such exceptions thereto as it may determine on a case by case basis.
Section 5.8. Distributions.
(a) (i) The Partnership shall make distributions of available cash (subject to reserves and other adjustments as provided
herein) or other property to Partners with respect to such Partners’ GP-Related Partner Interests at such times and in such amounts as are determined by the General Partner. The General Partner shall, if
it deems it appropriate, determine the availability for distribution of, and distribute, cash or other property separately for each category of GP-Related Net Income (Loss) established pursuant to
Section 5.1(a). Distributions of cash or other property with respect to Non-Carried Interest shall be made among the Partners in accordance with their respective
Non-Carried Interest Sharing Percentages, and, subject to Section 4.1(d) and Section 5.8(e), distributions of cash or other property with respect to Carried Interest shall be made among Partners in
accordance with their respective Carried Interest Sharing Percentages.
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(ii) At any time that a sale, exchange, transfer or other
disposition by SP RE VII of a portion of a GP-Related Investment is being considered by the Partnership (a “GP-Related Disposable Investment”), at the
election of the General Partner each Partner’s GP-Related Partner Interest with respect to such GP-Related Investment shall be vertically divided into two separate GP-Related Partner Interests, a GP-Related Partner Interest attributable to the GP-Related Disposable Investment (a Partner’s
“GP-Related Class B Interest”), and a GP-Related Partner Interest attributable to such
GP-Related Investment excluding the GP-Related Disposable Investment (a Partner’s “GP-Related
Class A Interest”). Distributions (including those resulting from a sale, transfer, exchange or other disposition by SP RE VII) relating to a GP-Related Disposable Investment (with
respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of GP-Related Class B Interests with respect to such GP-Related Investment in accordance with their GP-Related Profit Sharing Percentages relating to such GP-Related Class B
Interests, and distributions (including those resulting from the sale, transfer, exchange or other disposition by SP RE VII) relating to a GP-Related Investment excluding such
GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of
GP-Related Class A Interests with respect to such GP-Related Investment in accordance with their respective GP-Related
Profit Sharing Percentages relating to such GP-Related Class A Interests. Except as provided above, distributions of cash or other property with respect to each category of
GP-Related Net Income (Loss) shall be allocated among the Partners in the same proportions as the allocations of GP-Related Net Income (Loss) of each such category.
(b) Subject to the Partnership’s having sufficient available cash in the reasonable judgment of the General Partner, the
Partnership shall make cash distributions to each Partner with respect to each Fiscal Year of the Partnership in an aggregate amount at least equal to the total U.S. federal, New York State and New York City income and other taxes that would be
payable by such Partner with respect to all categories of GP-Related Net Income (Loss) allocated to such Partner for such Fiscal Year, the amount of which shall be calculated (i) on the assumption that
each Partner is an individual subject to the then prevailing maximum rate of U.S. federal, New York State and New York City and other income taxes (including, without limitation, taxes under Sections 1401 and 1411 of the Code), (ii) taking into
account (x) the limitations on the deductibility of expenses and other items for U.S. federal income tax purposes and (y) the character (e.g., long-term or short-term capital gain or ordinary or exempt) of the applicable income, and
(iii) taking into account any differential in applicable rates due to the type and character of GP-Related Net Income (Loss) allocated to such Partner. Notwithstanding the provisions of the foregoing
sentence, the General Partner may refrain from making any distribution if, in the reasonable judgment of the General Partner, such distribution is prohibited by applicable law.
(c) The General Partner may provide that the GP-Related Partner Interest of any Partner
or employee (including such Partner’s or employee’s right to distributions and investments of the Partnership related thereto) may be subject to repurchase by the Partnership during such period as the General Partner shall determine (a
“Repurchase Period”). Any Contingent distributions from GP-Related Investments subject to repurchase rights will be withheld by the Partnership and will be distributed to the recipient thereof
(together with interest
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thereon at rates determined by the General Partner from time to time) as the recipient’s rights to such distributions become Non-Contingent (by virtue
of the expiration of the applicable Repurchase Period or otherwise). The General Partner may elect in an individual case to have the Partnership distribute any Contingent distribution to the applicable recipient thereof irrespective of whether the
applicable Repurchase Period has lapsed. If a Partner Withdraws from the Partnership for any reason other than his or her death, Total Disability or Incompetence, the undistributed share of any GP-Related
Investment that remains Contingent as of the applicable Withdrawal Date shall be repurchased by the Partnership at a purchase price determined at such time by the General Partner. Unless determined otherwise by the General Partner, the repurchased
portion thereof will be allocated among the remaining Partners with interests in such GP-Related Investment in proportion to their respective percentage interests in such
GP-Related Investment, or if no other Partner has a percentage interest in such specific GP-Related Investment, to the General Partner; provided, that the General
Partner may allocate the Withdrawn Partner’s share of unrealized investment income from a repurchased GP-Related Investment attributable to the period after the Withdrawn Partner’s Withdrawal Date on
any basis it may determine, including to existing or new Partners who did not previously have interests in such GP-Related Investment, except that, in any event, each Investor Special Partner shall be
allocated a share of such unrealized investment income equal to its respective GP-Related Profit Sharing Percentage of such unrealized investment income.
(d) (i) (A) If the Partnership is obligated under the Clawback Provisions or Giveback Provisions to contribute to SP RE
VII a Clawback Amount or a Giveback Amount (other than a Capital Commitment Giveback Amount) in respect of the GP-Related SP RE VII Interest (the amount of any such obligation of the Partnership with respect
to such a Giveback Amount being herein called a “GP-Related Giveback Amount”), the General Partner shall call for such amounts as are necessary to satisfy such obligations of the Partnership
as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the General Partner, such an amount of prior distributions by the Partnership (and the Other
Fund GPs) with respect to Carried Interest (and/or Non-Carried Interest in the case of a GP-Related Giveback Amount) (the
“GP-Related Recontribution Amount”) which equals (I) the product of (a) a Partner’s or Withdrawn Partner’s Carried Interest Give Back Percentage and (b) the aggregate
Clawback Amount payable by the Partnership in the case of Clawback Amounts and (II) with respect to a GP-Related Giveback Amount, such Partner’s pro rata share of prior distributions of
Carried Interest and/or Non-Carried Interest in connection with (a) the GP-Related SP RE VII Investment giving rise to the
GP-Related Giveback Amount, (b) if the amounts contributed pursuant to clause (II)(a) above are insufficient to satisfy such GP-Related Giveback Amount, GP-Related SP RE VII Investments other than the one giving rise to such obligation, but only those amounts received by the Partners with an interest in the GP-Related SP RE
VII Investment referred to in clause (II)(a) above, and (c) if the GP-Related Giveback Amount pursuant to an applicable SP RE VII Agreement is unrelated to a specific
GP-Related SP RE VII Investment, all GP-Related SP RE VII Investments. Each Partner and Withdrawn Partner shall promptly contribute to the Partnership, along with
satisfying his or her comparable obligations to the Other Fund GPs, if any, upon such call such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount, less the amount paid out of the
Trust Account on behalf of such Partner or Withdrawn Partner by the Trustee(s) pursuant to written instructions from the Partnership, or if applicable, any of the Other Fund GPs with respect to Carried Interest (and/or
Non-Carried Interest in the case of GP-Related Giveback
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Amounts) (the “Net GP-Related Recontribution Amount”), irrespective of the fact that the amounts in the Trust Account may be sufficient on
an aggregate basis to satisfy the Partnership’s and the Other Fund GPs’ obligation under the Clawback Provisions and/or Giveback Provisions; provided, that to the extent a Partner’s or Withdrawn Partner’s share of the
amount paid with respect to the Clawback Amount or the GP-Related Giveback Amount exceeds his or her GP-Related Recontribution Amount, such excess shall be repaid to
such Partner or Withdrawn Partner as promptly as reasonably practicable, subject to clause (ii) below; provided further, that such written instructions from the General Partner shall specify each Partner’s and Withdrawn
Partner’s GP-Related Recontribution Amount. Prior to such time, the General Partner may, in its discretion (but shall be under no obligation to), provide notice that in the General Partner’s
judgment, the potential obligations in respect of the Clawback Provisions or the Giveback Provisions will probably materialize (and an estimate of the aggregate amount of such obligations); provided further, that any amount from a
Partner’s Trust Account used to pay any GP-Related Giveback Amount (or such lesser amount as may be required by the General Partner) shall be contributed by such Partner to such Partner’s Trust
Account no later than 30 days after the Net GP-Related Recontribution Amount is paid with respect to such GP-Related Giveback Amount.
(B) To the extent any Partner or Withdrawn Partner has satisfied any Holdback obligation with Firm Collateral,
such Partner or Withdrawn Partner shall, within 10 days of the General Partner’s call for GP-Related Recontribution Amounts, make a cash payment into the Trust Account in an amount equal to the amount of
the Holdback obligation satisfied with such Firm Collateral, or such lesser amount such that the amount in the Trust Account allocable to such Partner or Withdrawn Partner equals the sum of (I) such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount and (II) any similar amounts payable to any of the Other Fund GPs. Immediately upon receipt of such cash, the Trustee(s) shall take such steps as are necessary to release such
Firm Collateral of such Partner or Withdrawn Partner equal to the amount of such cash payment. If the amount of such cash payment is less than the amount of Firm Collateral of such Partner or Withdrawn Partner, the balance of such Firm Collateral if
any, shall be retained to secure the payment of GP-Related Deficiency Contributions, if any, and shall be fully released upon the satisfaction of the Partnership’s and the Other Fund GPs’ obligation
to pay the Clawback Amount. The failure of any Partner or Withdrawn Partner to make a cash payment in accordance with this clause (B) (to the extent applicable) shall constitute a default under Section 5.8(d)(ii) as if such cash payment
hereunder constitutes a Net GP-Related Recontribution Amount under Section 5.8(d)(ii). Solely to the extent required by the SP RE VII Partnership Agreement, each partner of the General Partner shall have
the same obligations as a Partner (which obligations shall be subject to the same limitations as the obligations of a Partner) under this Section 5.8(d)(i)(B) and under Section 5.8(d)(ii)(A) with respect to such partner’s pro
rata share of any Clawback Amount and solely to the extent that the Partnership has insufficient funds to meet the Partnership’s obligations under the SP RE VII Partnership Agreement.
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(ii) (A) In the event any Partner or Withdrawn Partner
(a “GP-Related Defaulting Party”) fails to recontribute all or any portion of such GP-Related Defaulting Party’s Net
GP-Related Recontribution Amount for any reason, the General Partner shall (i) use its reasonable efforts to collect any amounts from any such GP-Related Defaulting
Party and (ii) require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Carried Interest Give Back Percentages in the case of Clawback Amounts, and GP-Related Profit Sharing Percentages in the case of GP-Related Giveback Amounts (as more fully described in clause (II) of Section 5.8(d)(i)(A) above)), such
amounts as are necessary to fulfill the GP-Related Defaulting Party’s obligation to pay such GP-Related Defaulting Party’s Net
GP-Related Recontribution Amount (a “GP-Related Deficiency Contribution”) if the General Partner determines in its good faith judgment that the
Partnership (or an Other Fund GP) will be unable to collect such amount in cash from such GP-Related Defaulting Party for payment of the Clawback Amount or GP-Related
Giveback Amount, as the case may be, at least 20 Business Days prior to the latest date that the Partnership, and the Other Fund GPs, if applicable, are permitted to pay the Clawback Amount or GP-Related
Giveback Amount, as the case may be; provided, that, subject to Section 5.8(e), no Partner or Withdrawn Partner shall as a result of such GP-Related Deficiency Contribution be required to
contribute an amount in excess of 150% of the amount of the Net GP Related Recontribution Amount initially requested from such Partner or Withdrawn Partner in respect of such default.
(B) Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should
either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all
remedies (at law or equity) available to the Partnership against the GP-Related Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the GP-Related Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such GP-Related Defaulting Party becoming a
GP-Related Defaulting Party) to set-off as appropriate and apply against such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount any amounts otherwise payable to the GP-Related Defaulting Party by the Partnership or any Affiliate thereof (including amounts unrelated to
Carried Interest, such as returns of capital and profit thereon). Each Partner and Withdrawn Partner hereby grants to the General Partner a security interest, effective upon such Partner or Withdrawn Partner becoming a
GP-Related Defaulting Party, in all accounts receivable and other rights to receive payment from any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General
Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner and Withdrawn Partner hereby appoints the General Partner as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or Withdrawn Partner or in the name of the General Partner, to take any actions which may be necessary to accomplish the
intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the Net GP-Related Recontribution Amount of a GP-Related
Defaulting Party from the date such Net GP-Related Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
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(C) Any Partner’s or Withdrawn Partner’s failure
to make a GP-Related Deficiency Contribution shall cause such Partner or Withdrawn Partner to be a GP-Related Defaulting Party with respect to such amount. The
Partnership shall first seek any remaining Trust Amounts (and Trust Income thereon) allocated to such Partner or Withdrawn Partner to satisfy such Partner’s or Withdrawn Partner’s obligation to make a
GP-Related Deficiency Contribution before seeking cash contributions from such Partner or Withdrawn Partner in satisfaction of such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution.
(iii) In the event any Partner or
Withdrawn Partner initially fails to recontribute all or any portion of such Partner or Withdrawn Partner’s pro rata share of any Clawback Amount pursuant to Section 5.8(d)(i)(A), the Partnership shall use its reasonable efforts to collect
the amount which such Partner or Withdrawn Partner so fails to recontribute.
(iv) A Partner’s or
Withdrawn Partner’s obligation to make contributions to the Partnership under this Section 5.8(d) shall survive the termination of the Partnership.
(e) The Partners acknowledge that the General Partner will (and is hereby authorized to) take such steps as it deems
appropriate, in its good faith judgment, to further the objective of providing for the fair and equitable treatment of all Partners, including by allocating Losses (as defined in the SP RE VII Agreements) on
GP-Related SP RE VII Investments that have been the subject of a writedown and/or losses (each, a “Loss Investment”) to those Partners who participated in such Loss Investments based on their
Carried Interest Sharing Percentage therein to the extent that such Partners receive or have received Carried Interest distributions from other GP-Related SP RE VII Investments. Consequently and
notwithstanding anything herein to the contrary, adjustments to Carried Interest distributions shall be made as set forth in this Section 5.8(e).
(i) At the time the Partnership is making Carried Interest distributions in connection with a GP-Related SP RE VII Investment (the “Subject Investment”) that have been reduced under any SP RE VII Agreement as a result of one or more Loss Investments, the General Partner shall calculate
amounts distributable to or due from each such Partner as follows:
(A) determine each Partner’s share
of each such Loss Investment based on his or her Carried Interest Sharing Percentage in each such Loss Investment (which may be zero) to the extent such Loss Investment has reduced the Carried Interest distributions otherwise available for
distribution to all Partners (indirectly through the Partnership from SP RE VII) from the Subject Investment (such reduction, the “Loss Amount”);
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(B) determine the amount of Carried Interest distributions
otherwise distributable to such Partner with respect to the Subject Investment (indirectly through the Partnership from SP RE VII) before any reduction in respect of the amount determined in clause (A) above (the “Unadjusted Carried
Interest Distributions”); and
(C) subtract (I) the Loss Amounts relating to all Loss Investments
from (II) the Unadjusted Carried Interest Distributions for such Partner, to determine the amount of Carried Interest distributions to actually be paid to such Partner (“Net Carried Interest Distribution”).
To the extent that the Net Carried Interest Distribution for a Partner as calculated in this clause (i) is a negative
number, the General Partner shall (I) notify such Partner, at or prior to the time such Carried Interest distributions are actually made to the Partners, of his or her obligation to recontribute to the Partnership prior Carried Interest
distributions (a “Net Carried Interest Distribution Recontribution Amount”), up to the amount of such negative Net Carried Interest Distribution and (II) to the extent amounts recontributed pursuant to clause (I) are
insufficient to satisfy such negative Net Carried Interest Distribution amount, reduce future Carried Interest distributions otherwise due such Partner, up to the amount of such remaining negative Net Carried Interest Distribution. If a
Partner’s (x) Net Carried Interest Distribution Recontribution Amount exceeds (y) the aggregate amount of prior Carried Interest distributions less the amount of tax thereon, calculated based on the Assumed Income Tax Rate (as defined
in the SP RE VII Agreements) in effect in the Fiscal Years of such distributions (the “Excess Tax-Related Amount”), then such Partner may, in lieu of paying such Partner’s Excess Tax-Related Amount, defer such amounts as set forth below. Such deferred amount shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced and repaid by the amount of Carried Interest otherwise
distributable to such Partner in connection with future Carried Interest distributions until such balance is reduced to zero. Any deferred amounts shall be payable in full upon the earlier of (i) such time as the Clawback Amount is determined
(as provided herein) and (ii) such time as the Partner becomes a Withdrawn Partner.
To the extent there is an amount
of negative Net Carried Interest Distribution with respect to a Partner remaining after the application of this clause (i), notwithstanding clause (II) of the preceding paragraph, such remaining amount of negative Net Carried Interest
Distribution shall be allocated to the other Partners pro rata based on each of their Carried Interest Sharing Percentages in the Subject Investment.
A Partner who fails to pay a Net Carried Interest Distribution Recontribution Amount promptly upon notice from the General
Partner (as provided above) shall be deemed a GP-Related Defaulting Party for all purposes hereof.
A Partner may satisfy in part any Net Carried Interest Distribution Recontribution Amount from cash that is then subject to a
Holdback, to the extent that the amounts that remain subject to a Holdback satisfy the Holdback requirements hereof as they relate to the reduced amount of aggregate Carried Interest distributions received by such Partner (taking into account any
Net Carried Interest Distribution Recontribution Amount contributed to the Partnership by such Partner).
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Any Net Carried Interest Distribution Recontribution Amount contributed by a
Partner, including amounts of cash subject to a Holdback as provided above, shall increase the amount available for distribution to the other Partners as Carried Interest distributions with respect to the Subject Investment; provided, that
any such amounts then subject to a Holdback may be so distributed to the other Partners to the extent a Partner receiving such distribution has satisfied the Holdback requirements with respect to such distribution (taken together with the other
Carried Interest distributions received by such Partner to date).
(ii) In the case of Clawback Amounts
which are required to be contributed to the Partnership as otherwise provided herein, the obligation of the Partners with respect to any Clawback Amount shall be adjusted by the General Partner as follows:
(A) determine each Partner’s share of any Losses (as defined in the SP RE VII Agreements) in any GP-Related SP RE VII Investments which gave rise to the Clawback Amount (i.e., the Losses that followed the last GP-Related SP RE VII Investment with respect to which Carried
Interest distributions were made), based on such Partner’s Carried Interest Sharing Percentage in such GP-Related SP RE VII Investments;
(B) determine each Partner’s obligation with respect to the Clawback Amount based on such Partner’s
Carried Interest Give Back Percentage as otherwise provided herein; and
(C) subtract the amount determined
in clause (B) above from the amount determined in clause (A) above with respect to each Partner to determine the amount of adjustment to each Partner’s share of the Clawback Amount (a Partner’s “Clawback Adjustment
Amount”).
A Partner’s share of the Clawback Amount shall for all purposes hereof be decreased by such
Partner’s Clawback Adjustment Amount, to the extent it is a negative number (except to the extent expressly provided below). A Partner’s share of the Clawback Amount shall for all purposes hereof be increased by such Partner’s
Clawback Adjustment Amount (to the extent it is a positive number); provided, that in no way shall a Partner’s aggregate obligation to satisfy a Clawback Amount as a result of this clause (ii) exceed the aggregate Carried Interest
distributions received by such Partner. To the extent a positive Clawback Adjustment Amount remains after the application of this clause (ii) with respect to a Partner, such remaining Clawback Adjustment Amount shall be allocated to the
Partners (including any Partner whose Clawback Amount was increased pursuant to this clause (ii)) pro rata based on their Carried Interest Give Back Percentages (determined without regard to this clause (ii)).
Any distribution or contribution adjustments pursuant to this Section 5.8(e) by the General Partner shall be based on its
good faith judgment, and no Partner shall have any claim against the Partnership, the General Partner or any other Partners as a result of any adjustment made as set forth above. This Section 5.8(e) applies to all Partners, including Withdrawn
Partners.
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It is agreed and acknowledged that this Section 5.8(e) is an agreement
among the Partners and in no way modifies the obligations of each Partner regarding the Clawback Amount as provided in the SP RE VII Agreements.
Section 5.9. Business Expenses. The Partnership shall reimburse the Partners for reasonable travel,
entertainment and miscellaneous expenses incurred by them in the conduct of the Partnership’s business in accordance with rules and regulations established by the General Partner from time to time.
Section 5.10. Tax Capital Accounts; Tax Allocations.
(a) For U.S. federal income tax purposes, there shall be established for each Partner a single capital account combining such
Partner’s Capital Commitment Capital Account and GP-Related Capital Account, with such adjustments as the General Partner determines are appropriate so that such single capital account is maintained in
compliance with the principles and requirements of Section 704(b) of the Code and the Treasury Regulations thereunder.
(b) All items of income, gain, loss, deduction and credit of the Partnership shall be allocated among the Partners for U.S.
federal, state and local income tax purposes in the same manner as such items of income, gain, loss, deduction and credit shall be allocated among the Partners pursuant to this Agreement, except as may otherwise be provided herein or by the Code or
other applicable law. In the event there is a net decrease in partnership minimum gain or partner nonrecourse debt minimum gain (determined in accordance with the principles of Treasury Regulations Sections
1.704-2(d) and 1.704-2(i)) during any taxable year of the Partnership, each Partner shall be specially allocated items of Partnership income and gain for such year (and,
if necessary, subsequent years) in an amount equal to its respective share of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(f). In addition, this Agreement shall be
considered to contain a “qualified income offset” as provided in Treasury Regulations Section 1.704-1(b)(2)(ii)(d). Notwithstanding the foregoing, the General Partner in its sole discretion
shall make allocations for tax purposes as may be needed to ensure that allocations are in accordance with the interests of the Partners within the meaning of the Code and the Treasury Regulations.
(c) For U.S. federal, state and local income tax purposes only, Partnership income, gain, loss, deduction or expense (or any
item thereof) for each Fiscal Year shall be allocated to and among the Partners in a manner corresponding to the manner in which corresponding items are allocated among the Partners pursuant to the other provisions of this Section 5.10;
provided, that the General Partner may in its sole discretion make such allocations for tax purposes as it determines are appropriate so that allocations have substantial economic effect or are in accordance with the interests of the
Partners, within the meaning of the Code and the Treasury Regulations thereunder. To the extent there is an adjustment by a taxing authority to any item of income, gain, loss, deduction or credit of the Partnership (or an adjustment to any
Partner’s distributive share thereof), the General Partner may reallocate the adjusted items among each Partner or former Partner (as determined by the General Partner) in accordance with the final resolution of such audit adjustment.
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ARTICLE VI
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS;
SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
Section 6.1. Additional Partners.
(a) Effective on the first day of any month (or on such other date as shall be determined by the General Partner in its sole
discretion), the General Partner shall have the right to admit one or more additional or substitute persons into the Partnership as Limited Partners or Special Partners. Each such person shall make the representations and certifications with respect
to itself set forth in Section 3.6 and Section 3.7. The General Partner shall determine and negotiate with the additional Partner (which term shall include, without limitation, any substitute Partner) all terms of such additional
Partner’s participation in the Partnership, including the additional Partner’s initial GP-Related Capital Contribution, Capital Commitment-Related Capital Contribution,
GP-Related Profit Sharing Percentage and Capital Commitment Profit Sharing Percentage. Each additional Partner shall have such voting rights as may be determined by the General Partner from time to time
unless, upon the admission to the Partnership of any Special Partner, the General Partner shall designate that such Special Partner shall not have such voting rights (any such Special Partner being called a “Nonvoting Special Partner”).
Any additional Partner shall, as a condition to becoming a Partner, agree to become a party to, and be bound by the terms and conditions of, the Trust Agreement. If Blackstone or another or subsequent holder of an Investor Note approved by the
General Partner for purposes of this Section 6.1(a) shall foreclose upon a Limited Partner’s Investor Note issued to finance such Limited Partner’s purchase of his or her Capital Commitment Interests, Blackstone or such other or
subsequent holder shall succeed to such Limited Partner’s Capital Commitment Interests and shall be deemed to have become a Limited Partner to such extent. Any additional Partner may have a GP-Related
Partner Interest or a Capital Commitment Partner Interest, without having the other such interest.
(b) The GP-Related Profit Sharing Percentages, if any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’ GP-Related Profit Sharing Percentages as of such date, shall be established by the General Partner pursuant to Section 5.3. The Capital Commitment Profit Sharing Percentages, if any, to be allocated to an
additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’ Capital Commitment Profit Sharing Percentages as of such date, shall be established by the General
Partner. Notwithstanding any provision in this Agreement to the contrary, the General Partner is authorized, without the need for any further act, vote or consent of any person, to make adjustments to the
GP-Related Profit Sharing Percentages as it determines necessary in its sole discretion in connection with any additional Partners admitted to the Partnership, adjustments with respect to other Partners of the
Partnership and to give effect to other matters set forth herein, as applicable.
(c) An additional Partner shall be
required to contribute to the Partnership his or her pro rata share of the Partnership’s total capital, excluding capital in respect of GP-Related Investments and Capital Commitment Investments in which
such Partner does not acquire any interests, at such times and in such amounts as shall be determined by the General Partner in accordance with Section 4.1 and Section 7.1.
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(d) The admission of an additional Partner will be evidenced by (i) the
execution of a counterpart copy of this Agreement by such additional Partner, (ii) the execution of an amendment to this Agreement by the General Partner and the additional Partner, as determined by the General Partner and / or (iii) the
execution by such additional Partner of any other writing evidencing the intent of such person to become an additional Partner and to be bound by the terms of this Agreement and such writing being acceptable to the General Partner on behalf of the
Partnership. In addition, each additional Partner shall sign a counterpart copy of the Trust Agreement or any other writing evidencing the intent of such person to become a party to the Trust Agreement that is acceptable to the General Partner on
behalf of the Partnership.
Section 6.2. Withdrawal of Partners.
(a) Any Partner may Withdraw voluntarily from the Partnership subject to the prior written consent of the General Partner,
including if such Withdrawal would (i) cause the Partnership to be in default under any of its contractual obligations or (ii) in the reasonable judgment of the General Partner, have a material adverse effect on the Partnership or its
business. Without limiting the foregoing sentence, the General Partner generally intends to permit voluntary Withdrawals on the last day of any calendar month (or on such other date as shall be determined by the General Partner in its sole
discretion), on not less than 15 days’ prior written notice by such Partner to the General Partner (or on such shorter notice period as may be mutually agreed upon between such Partner and the General Partner); provided, that a Partner may
Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest without Withdrawing from the Partnership with respect to such Partner’s Capital Commitment Partner Interest,
and a Partner may Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest without Withdrawing from the Partnership with respect to such Partner’s GP-Related
Partner Interest.
(b) Upon the Withdrawal of any Partner, including by the occurrence of any withdrawal event under the
Partnership Act with respect to any Partner, such Partner shall thereupon cease to be a Partner, except as expressly provided herein.
(c) Upon the Total Disability of a Limited Partner, such Partner shall thereupon cease to be a Limited Partner with respect to
such person’s GP-Related Partner Interest; provided, that the General Partner may elect to admit such Withdrawn Partner to the Partnership as a Nonvoting Special Partner with respect to such person’s
GP-Related Partner Interest, with such GP-Related Partner Interest as the General Partner may determine. The determination of whether any Partner has suffered a Total
Disability shall be made by the General Partner in its sole discretion after consultation with a qualified medical doctor. In the absence of agreement between the General Partner and such Partner, each party shall nominate a qualified medical doctor
and the two doctors shall select a third doctor, who shall make the determination as to Total Disability.
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(d) If the General Partner determines that it shall be in the best interests
of the Partnership for any Partner (including any Partner who has given notice of voluntary Withdrawal pursuant to paragraph (a) above) to Withdraw from the Partnership (whether or not Cause exists) with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, such Partner, upon written notice by the General Partner to such Partner, shall be required to Withdraw with
respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, as of a date specified in such notice, which date shall be on or after
the date of such notice. If the General Partner requires any Partner to Withdraw for Cause with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital
Commitment Partner Interest, such notice shall state that it has been given for Cause and shall describe the particulars thereof in reasonable detail.
(e) The Withdrawal from the Partnership of any Partner shall not, in and of itself, affect the obligations of the other
Partners to continue the Partnership during the remainder of its term. A Withdrawn General Partner shall remain liable for all obligations of the Partnership incurred while it was a General Partner and resulting from its acts or omissions as a
General Partner to the fullest extent provided by law.
Section 6.3. GP-Related Partner Interests Not Transferable.
(a) No Partner may sell, assign, pledge, grant a security interest over or otherwise transfer or encumber all or any portion of
such Partner’s GP-Related Partner Interest other than as permitted by written agreement between such Partner and the Partnership; provided, that this Section 6.3 shall not impair transfers by
operation of law, transfers by will or by other testamentary instrument occurring by virtue of the death or dissolution of a Partner, or transfers required by trust agreements; provided further, that, subject to the prior written consent of the
General Partner, which shall not be unreasonably withheld, a Limited Partner may transfer, for estate planning purposes, up to 25% of his or her GP-Related Profit Sharing Percentage to any estate planning
trust, limited partnership, or limited liability company with respect to which a Limited Partner controls investments related to any interest in the Partnership held therein (an “Estate Planning Vehicle”). Each Estate Planning Vehicle will
be a Nonvoting Special Partner. Such Limited Partner and the Nonvoting Special Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such Nonvoting Special Partner with respect to the Partnership
(including the obligation to make additional GP-Related Capital Contributions), as the case may be. The General Partner may at its sole option exercisable at any time require any Estate Planning Vehicle to
Withdraw from the Partnership on the terms of this Article VI. Except as provided in the second proviso to the first sentence of this Section 6.3, no assignee, legatee, distributee, heir or transferee (by conveyance, operation of law or
otherwise) of the whole or any portion of any Partner’s GP-Related Partner Interest shall have any right to be a Partner without the prior written consent of the General Partner (which consent may be
given or withheld in its sole discretion without giving any reason therefor). Notwithstanding the granting of a security interest in the entire Interest of any Partner, such Partner shall continue to be a Partner of the Partnership.
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(b) Notwithstanding any provision hereof to the contrary, no sale or
transfer of any GP-Related Partner Interest in the Partnership may be made except in compliance with all federal, state and other applicable laws, including U.S. federal and state securities laws.
Section 6.4. Consequences upon Withdrawal of a Partner.
(a) Subject to the Partnership Act, the General Partner may not transfer or assign its interest as a General Partner in the
Partnership or its right to manage the affairs of the Partnership, except that the General Partner may, subject to the Partnership Act, with the prior written approval of a Majority in Interest of the Partners, admit another person as an additional
or substitute General Partner who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise); provided however, that the General Partner may,
in its sole discretion, transfer all or part of its interest in the Partnership to a person who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or
otherwise) and who owns, directly or indirectly, the principal part of the business then conducted by the General Partner in connection with any liquidation, dissolution or reorganization of the General Partner, and, upon the assumption by such
person of liability for all the obligations of the General Partner under this Agreement, such person shall be admitted as the General Partner. A person who is so admitted as an additional or substitute General Partner shall thereby become a General
Partner and shall have the right to manage the affairs of the Partnership and to vote as a Partner to the extent of the interest in the Partnership so acquired. The General Partner shall not cease to be the general partner of the Partnership upon
the collateral assignment of or the pledging or granting of a security interest in its entire Interest in the Partnership.
(b) Except as contemplated by Section 6.4(a) above, Withdrawal by a General Partner is not permitted. The Withdrawal of a
Partner shall not dissolve the Partnership if at the time of such Withdrawal there are one or more remaining Partners and any one or more of such remaining Partners continue the business of the Partnership (any and all such remaining Partners being
hereby authorized to continue the business of the Partnership without dissolution and hereby agreeing to do so). Notwithstanding Section 6.4(c), if upon the Withdrawal of a Partner there shall be no remaining Limited Partners, the Partnership
shall be dissolved and shall be wound up unless, within 90 days after the occurrence of such Withdrawal, all remaining Special Partners agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of
such Withdrawal, of one or more Limited Partners.
(c) The Partnership shall not be dissolved, in and of itself, by the
Withdrawal of any Partner, but shall continue with the surviving or remaining Partners as partners thereof in accordance with and subject to the terms and provisions of this Agreement.
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Section 6.5. Satisfaction and Discharge of a Withdrawn
Partner’s GP-Related Partner Interests.
(a) The terms of
this Section 6.5 shall apply to the GP-Related Partner Interest of a Withdrawn Partner, but, except as otherwise expressly provided in this Section 6.5, shall not apply to the Capital Commitment
Partner Interest of a Withdrawn Partner. For purposes of this Section 6.5, the term “Settlement Date” means the date as of which a Withdrawn Partner’s GP-Related Partner Interest in
the Partnership is settled as determined under paragraph (b) below. Notwithstanding the foregoing, any Limited Partner who Withdraws from the Partnership, and all or any portion of whose GP-Related
Partner Interest is retained as a Special Partner, shall be considered a Withdrawn Partner for all purposes hereof.
(b)
Except where a later date for the settlement of a Withdrawn Partner’s GP-Related Partner Interest in the Partnership may be agreed to by the General Partner and a Withdrawn Partner, a Withdrawn
Partner’s Settlement Date shall be his or her Withdrawal Date; provided, that if a Withdrawn Partner’s Withdrawal Date is not the last day of a month, then the General Partner may elect for such Withdrawn Partner’s Settlement
Date to be the last day of the month in which his or her Withdrawal Date occurs. During the interval, if any, between a Withdrawn Partner’s Withdrawal Date and Settlement Date, such Withdrawn Partner shall have the same rights and obligations
with respect to GP-Related Capital Contributions, interest on capital, allocations of GP-Related Net Income (Loss) and distributions as would have applied had such
Withdrawn Partner remained a Partner of the Partnership during such period.
(c) In the event of the Withdrawal of a
Partner, with respect to such Withdrawn Partner’s GP-Related Partner Interest, the General Partner shall promptly after such Withdrawn Partner’s Settlement Date (i) determine and allocate to the
Withdrawn Partner’s GP-Related Capital Accounts such Withdrawn Partner’s allocable share of the GP-Related Net Income (Loss) of the Partnership for the period
ending on such Settlement Date in accordance with Article V and (ii) credit the Withdrawn Partner’s GP-Related Capital Accounts with interest in accordance with Section 5.2. In making the
foregoing calculations, the General Partner shall be entitled to establish such reserves (including reserves for taxes, bad debts, unrealized losses, actual or threatened litigation or any other expenses, contingencies or obligations) as it deems
appropriate. Unless otherwise determined by the General Partner in a particular case, a Withdrawn Partner shall not be entitled to receive any GP-Related Unallocated Percentage in respect of the accounting
period during which such Partner Withdraws from the Partnership (whether or not previously awarded or allocated) or any GP-Related Unallocated Percentage in respect of prior accounting periods that have not
been paid or allocated (whether or not previously awarded) as of such Withdrawn Partner’s Withdrawal Date.
(d) From
and after the Settlement Date of the Withdrawn Partner, the Withdrawn Partner’s GP-Related Profit Sharing Percentages shall, unless otherwise allocated by the General Partner pursuant to
Section 5.3(a), be deemed to be GP-Related Unallocated Percentages (except for GP-Related Profit Sharing Percentages with respect to
GP-Related Investments as provided in paragraph (f) below).
(e) (i) Upon
the Withdrawal from the Partnership of a Partner with respect to such Partner’s GP-Related Partner Interest, such Withdrawn Partner thereafter shall not, except as expressly provided in this
Section 6.5, have any rights of a Partner (including voting rights) with respect to such Partner’s GP-Related Partner Interest, and, except as expressly provided in this Section 6.5, such
Withdrawn Partner shall not have any interest in the Partnership’s GP-Related Net Income (Loss), or in distributions related to such Partner’s GP-Related
Partner Interest, GP-Related Investments or other assets related to such Partner’s GP-Related Partner Interest. If a Partner Withdraws from the Partnership with
respect to such Partner’s GP-Related
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Partner Interest for any reason other than for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be entitled to receive, at the time or times specified in Section 6.5(i)
below, in satisfaction and discharge in full of the Withdrawn Partner’s GP-Related Partner Interest in the Partnership, (x) payment equal to the aggregate credit balance, if any, as of the Settlement
Date of the Withdrawn Partner’s GP-Related Capital Accounts, (excluding any GP-Related Capital Account or portion thereof attributable to any GP-Related Investment) and (y) the Withdrawn Partner’s percentage interest attributable to each GP-Related Investment in which the Withdrawn Partner has an interest
as of the Settlement Date as provided in paragraph (f) below (which shall be settled in accordance with paragraph (f) below), subject to all the terms and conditions of paragraphs (a)-(r) of this Section 6.5. If the amount determined
pursuant to clause (x) above is an aggregate negative balance, the Withdrawn Partner shall pay the amount thereof to the Partnership upon demand by the General Partner on or after the date of the statement referred to in Section 6.5(i)
below; provided, that if the Withdrawn Partner was solely a Special Partner on his or her Withdrawal Date, such payment shall be required only to the extent of any amounts payable to such Withdrawn Partner pursuant to this Section 6.5. Any
aggregate negative balance in the GP-Related Capital Accounts of a Withdrawn Partner who was solely a Special Partner, upon the settlement of such Withdrawn Partner’s
GP-Related Partner Interest in the Partnership pursuant to this Section 6.5, shall be allocated among the other Partners’ GP-Related Capital Accounts in
accordance with their respective GP-Related Profit Sharing Percentages in the categories of GP-Related Net Income (Loss) giving rise to such negative balance as
determined by the General Partner as of such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the Partnership, no value shall be
ascribed to goodwill, the Partnership name or the anticipation of any value the Partnership or any successor thereto might have in the event the Partnership or any interest therein were to be sold in whole or in part.
(ii) Notwithstanding clause (i) of this Section 6.5(e), in the case of a Partner whose Withdrawal
with respect to such Partner’s GP-Related Partner Interest resulted from such Partner’s death or Incompetence, such Partner’s estate or legal representative, as the case may be, may elect, at
the time described below, to receive a Nonvoting Special Partner GP-Related Partner Interest and retain such Partner’s GP-Related Profit Sharing Percentage in all
(but not less than all) illiquid investments of the Partnership in lieu of a cash payment (or Investor Note) in settlement of that portion of the Withdrawn Partner’s GP-Related Partner Interest. The
election referred to above shall be made within 60 days after the Withdrawn Partner’s Settlement Date, based on a statement of the settlement of such Withdrawn Partner’s GP-Related Partner Interest
in the Partnership pursuant to this Section 6.5.
(f) For purposes of clause (y) of paragraph (e)(i) above, a
Withdrawn Partner’s “percentage interest” means his or her GP-Related Profit Sharing Percentage as of the Settlement Date in the relevant GP-Related
Investment. The Withdrawn Partner shall retain his or her percentage interest in such GP-Related Investment and shall retain his or her GP-Related Capital Account or
portion thereof attributable to such GP-Related Investment, in which case such Withdrawn Partner (a “Retaining Withdrawn Partner”) shall become and remain a Special Partner for such purpose
(and, if the General Partner so designates, such Special Partner shall be a Nonvoting Special Partner). The GP-Related Partner Interest of a Retaining Withdrawn Partner pursuant to this paragraph
(f) shall be subject to the terms and conditions applicable to
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GP-Related Partner Interests of any kind hereunder and such other terms and conditions as are established by the General Partner. At the option of the
General Partner in its sole discretion, the General Partner and the Retaining Withdrawn Partner may agree to have the Partnership acquire such GP-Related Partner Interest without the approval of the other
Partners; provided, that the General Partner shall reflect in the books and records of the Partnership the terms of any acquisition pursuant to this sentence.
(g) The General Partner may elect, in lieu of payment in cash of any amount payable to a Withdrawn Partner pursuant to
paragraph (e) above, to (i) have the Partnership issue to the Withdrawn Partner a subordinated promissory note and/or to (ii) distribute in kind to the Withdrawn Partner such Withdrawn Partner’s pro rata share (as
determined by the General Partner) of any securities or other investments of the Partnership in relation to such Partner’s GP-Related Partner Interest. If any securities or other investments are
distributed in kind to a Withdrawn Partner under this paragraph (g), the amount described in clause (x) of paragraph (e)(i) shall be reduced by the value of such distribution as valued on the latest balance sheet of the Partnership in
accordance with generally accepted accounting principles or, if not appearing on such balance sheet, as reasonably determined by the General Partner.
(h) [Intentionally omitted].
(i) Within 120 days after each Settlement Date, the General Partner shall submit to the Withdrawn Partner a statement of the
settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5 together with any cash payment, subordinated promissory note and in kind
distributions to be made to such Partner as shall be determined by the General Partner. The General Partner shall submit to the Withdrawn Partner supplemental statements with respect to additional amounts payable to or by the Withdrawn Partner in
respect of the settlement of his or her GP-Related Partner Interest in the Partnership (e.g., payments in respect of GP-Related Investments pursuant to paragraph
(f) above or adjustments to reserves pursuant to paragraph (j) below) promptly after such amounts are determined by the General Partner. To the fullest extent permitted by law, such statements and the valuations on which they are based
shall be accepted by the Withdrawn Partner without examination of the accounting books and records of the Partnership or other inquiry. Any amounts payable by the Partnership to a Withdrawn Partner pursuant to this Section 6.5 shall be
subordinate in right of payment and subject to the prior payment or provision for payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to the applicable date
of payment or distribution; provided, that such Withdrawn Partner shall otherwise rank pari passu in right of payment (x) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year before the
Withdrawal Date of the Withdrawn Partner in question and (y) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year after the Withdrawal Date of the Withdrawn Partner in question.
(j) If the aggregate reserves established by the General Partner as of the Settlement Date in making the foregoing calculations
should prove, in the determination of the General Partner, to be excessive or inadequate, the General Partner may elect, but shall not be obligated, to pay the Withdrawn Partner or his or her estate such excess, or to charge the Withdrawn Partner or
his or her estate such deficiency, as the case may be.
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(k) Any amounts owed by the Withdrawn Partner to the Partnership at any time
on or after the Settlement Date (e.g., outstanding Partnership loans or advances to such Withdrawn Partner) shall be offset against any amounts payable or distributable by the Partnership to the Withdrawn Partner at any time on or after the
Settlement Date or shall be paid by the Withdrawn Partner to the Partnership, in each case as determined by the General Partner. All cash amounts payable by a Withdrawn Partner to the Partnership under this Section 6.5 shall bear interest from
the due date to the date of payment at a floating rate equal to the lesser of (x) the Prime Rate or (y) the maximum rate of interest permitted by applicable law. The “due date” of amounts payable by a Withdrawn Partner pursuant
to Section 6.5(i) above shall be 120 days after a Withdrawn Partner’s Settlement Date. The “due date” of amounts payable to or by a Withdrawn Partner in respect of GP-Related Investments
for which the Withdrawn Partner has retained a percentage interest in accordance with paragraph (f) above shall be 120 days after realization with respect to such GP-Related Investment. The “due
date” of any other amounts payable by a Withdrawn Partner shall be 60 days after the date such amounts are determined to be payable.
(l) At the time of the settlement of any Withdrawn Partner’s GP-Related Partner
Interest in the Partnership pursuant to this Section 6.5, the General Partner may, to the fullest extent permitted by applicable law, impose any restrictions it deems appropriate on the assignment, pledge, grant of a security interest,
encumbrance or other transfer by such Withdrawn Partner of any interest in any GP-Related Investment retained by such Withdrawn Partner, any securities or other investments distributed in kind to such
Withdrawn Partner or such Withdrawn Partner’s right to any payment from the Partnership.
(m) If a Partner is required
to Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest for Cause pursuant to Section 6.2(d), then his or her GP-Related
Partner Interest shall be settled in accordance with paragraphs (a)-(r) of this Section 6.5; provided, that the General Partner may elect (but shall not be required) to apply any or all the
following terms and conditions to such settlement:
(i) In settling the Withdrawn Partner’s interest
in any GP-Related Investment in which he or she has an interest as of his or her Settlement Date, the General Partner may elect to (A) determine the GP-Related
Unrealized Net Income (Loss) attributable to each such GP-Related Investment as of the Settlement Date and allocate to the appropriate GP-Related Capital Account of the
Withdrawn Partner his or her allocable share of such GP-Related Unrealized Net Income (Loss) for purposes of calculating the aggregate balance of such Withdrawn Partner’s
GP-Related Capital Account pursuant to clause (x) of paragraph (e)(i) above, (B) credit or debit, as applicable, the Withdrawn Partner with the balance of his or her
GP-Related Capital Account or portion thereof attributable to each such GP-Related Investment as of his or her Settlement Date without giving effect to the GP-Related Unrealized Net Income (Loss) from such GP-Related Investment as of his or her Settlement Date, which shall be forfeited by the Withdrawn Partner or (C) apply
the provisions of paragraph (f) above; provided, that the maximum amount of GP-Related Net Income (Loss) allocable to such Withdrawn Partner with respect to any
GP-Related Investment shall equal such Partner’s percentage interest of the GP-Related Unrealized Net Income, if any, attributable to such GP-Related Investment as of the Settlement Date (the balance of such GP-Related Net Income (Loss), if any, shall be allocated as determined by the General Partner). The
Withdrawn Partner shall not have any continuing interest in any GP-Related Investment to the extent an election is made pursuant to (A) or (B) above.
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(ii) Any amounts payable by the Partnership to the Withdrawn
Partner pursuant to this Section 6.5 shall be subordinate in right of payment and subject to the prior payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring
prior to or on or after the applicable date of payment or distribution.
(n) The payments to a Withdrawn Partner pursuant
to this Section 6.5 may be conditioned on the compliance by such Withdrawn Partner with any lawful and reasonable (under the circumstances) restrictions against engaging or investing in a business competitive with that of the Partnership or any
of its subsidiaries and Affiliates for a period not exceeding two years determined by the General Partner. Upon written notice to the General Partner, any Withdrawn Partner who is subject to noncompetition restrictions established by the General
Partner pursuant to this paragraph (n) may elect to forfeit the principal amount payable in the final installment of his or her subordinated promissory note, together with interest to be accrued on such installment after the date of forfeiture,
in lieu of being bound by such restrictions.
(o) In addition to the foregoing, the General Partner shall have the right to
pay a Withdrawn Partner (other than the General Partner) a discretionary additional payment in an amount and based upon such circumstances and conditions as it determines to be relevant.
(p) The provisions of this Section 6.5 shall apply to any Investor Special Partner relating to a Limited Partner or
Special Partner and to any transferee of any GP-Related Partner Interest of such Partner pursuant to Section 6.3 if such Partner Withdraws from the Partnership.
(q) (i) The Partnership will assist a Withdrawn Partner or his or her estate or guardian, as the case may be, in the
settlement of the Withdrawn Partner’s GP-Related Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or
his or her estate.
(ii) The General Partner may reasonably determine in good faith to retain outside
professionals to provide the assistance to Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the
case may be, prior to engaging such professionals. If the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with
the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
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(r) Each Partner (other than the General Partner) hereby irrevocably
appoints the General Partner as such Partner’s true and lawful agent, representative and attorney-in-fact, each acting alone, in such Partner’s name, place and
stead, to make, execute, sign and file, on behalf of such Partner, any and all agreements, instruments, consents, ratifications, documents and certificates which the General Partner deems necessary or advisable in connection with any transaction or
matter contemplated by or provided for in this Section 6.5, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of
attorney is coupled with an interest and shall survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such
Partner.
Section 6.6. Dissolution of the Partnership. The General Partner may dissolve the Partnership
prior to the expiration of its term at any time on not less than 60 days’ notice of the dissolution date given to the other Partners. Upon the dissolution of the Partnership, the Partners’ respective interests in the Partnership shall be
valued and settled in accordance with the procedures set forth in Section 6.5.
Section 6.7. Certain Tax
Matters. (a) The General Partner shall determine all matters concerning allocations for tax purposes not expressly provided for herein in its sole discretion.
(b) The General Partner shall cause to be prepared all federal, state and local tax returns of the Partnership for each year
for which such returns are required to be filed and, after approval of such returns by the General Partner, shall cause such returns to be timely filed. The General Partner shall determine the appropriate treatment of each item of income, gain,
loss, deduction and credit of the Partnership and the accounting methods and conventions under the tax laws of the United States, the several States and other relevant jurisdictions as to the treatment of any such item or any other method or
procedure related to the preparation of such tax returns. The General Partner may cause the Partnership to make or refrain from making any and all elections permitted by such tax laws. Each Partner agrees that he or she shall not, unless he or she
provides prior notice of such action to the Partnership, (i) treat, on his or her individual income tax returns, any item of income, gain, loss, deduction or credit relating to his or her interest in the Partnership in a manner inconsistent
with the treatment of such item by the Partnership as reflected on the Form K-1 or other information statement furnished by the Partnership to such Partner for use in preparing his or her income tax returns or
(ii) file any claim for refund relating to any such item based on, or which would result in, such inconsistent treatment. In respect of an income tax audit of any tax return of the Partnership, the filing of any amended return or claim for
refund in connection with any item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership, or any administrative or judicial proceedings arising out of or in connection with any such audit, amended return, claim
for refund or denial of such claim, (A) the Tax Matters Partner (as defined below) shall be authorized to act for, and his or her decision shall be final and binding upon, the Partnership and all Partners except to the extent a Partner shall
properly elect to be excluded from such proceeding pursuant to the Code, (B) all expenses incurred by the Tax Matters Partner in connection therewith (including, without limitation, attorneys’, accountants’ and other experts’
fees and disbursements) shall be expenses of the Partnership and (C) no Partner shall have the right to (1) participate in the audit of any Partnership tax return, (2) file any amended return or claim for refund in connection with any
item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership (unless he or she provides prior notice of such action to the Partnership
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as provided above), (3) participate in any administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner arising out of or in connection with any such audit,
amended return, claim for refund or denial of such claim, or (4) appeal, challenge or otherwise protest any adverse findings in any such audit conducted by the Partnership or the Tax Matters Partner or with respect to any such amended return or
claim for refund filed by the Partnership or the Tax Matters Partner or in any such administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner. The Partnership and each Partner hereby designate any Partner
selected by the General Partner as the “partnership representative” (as defined under the Code) (the “Tax Matters Partner”). To the fullest extent permitted by applicable law, each Partner agrees to indemnify and hold harmless
the Partnership and all other Partners from and against any and all liabilities, obligations, damages, deficiencies and expenses resulting from any breach or violation by such Partner of the provisions of this Section 6.7 and from all actions,
suits, proceedings, demands, assessments, judgments, costs and expenses, including reasonable attorneys’ fees and disbursements, incident to any such breach or violation.
(c) Each individual Partner shall provide to the Partnership copies of each federal, state and local income tax return of such
Partner (including any amendment thereof) within 30 days after filing such return.
(d) To the extent the General Partner
reasonably determines that the Partnership (or any entity in which the Partnership holds an interest) is or may be required by law to withhold or to make tax payments, including interest and penalties on such amounts, on behalf of or with respect to
any Partner, including pursuant to Section 6225 of the Code (“Tax Advances”), the General Partner may withhold or escrow such amounts or make such tax payments as so required. All Tax Advances made on behalf of a Partner shall, at the
option of the General Partner, (i) be promptly paid to the Partnership by the Partner on whose behalf such Tax Advances were made or (ii) be repaid by reducing the amount of the current or next succeeding distribution or distributions
which would otherwise have been made to such Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds upon dissolution of the Partnership otherwise payable to such Partner. Whenever the General Partner
selects option (ii) pursuant to the preceding sentence for repayment of a Tax Advance by a Partner, for all other purposes of this Agreement such Partner shall be treated as having received all distributions (whether before or upon dissolution
of the Partnership) unreduced by the amount of such Tax Advance. To the fullest extent permitted by law, each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including,
without limitation, any liability for taxes, penalties, additions to tax or interest) with respect to income attributable to or distributions or other payments to such Partner. The obligations of a Partner set forth in this Section 6.7(d) shall
survive the Withdrawal of any Partner from the Partnership or any Transfer of a Partner’s interest.
Section 6.8. Special Basis Adjustments. In connection with any assignment or transfer of a Partnership
interest permitted by the terms of this Agreement, the General Partner may cause the Partnership, on behalf of the Partners and at the time and in the manner provided in Treasury Regulations
Section 1.754-1(b), to make an election to adjust the basis of the Partnership’s property in the manner provided in Sections 734(b) and 743(b) of the Code.
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ARTICLE VII
CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
Section 7.1. Capital Commitment Interests, etc.
(a) (i) This Article VII and Article VIII hereof set forth certain terms and conditions with respect to the Capital
Commitment Partner Interests and the Capital Commitment SP RE VII Interest and matters related to the Capital Commitment Partner Interests and the Capital Commitment SP RE VII Interest. Except as otherwise expressly provided in this Article VII or
in Article VIII, the terms and provisions of this Article VII and Article VIII shall not apply to the GP-Related Partner Interests or the GP-Related SP RE VII Interest.
(ii) Each Partner severally, agrees to make contributions of capital to the Partnership (“Capital
Commitment-Related Capital Contributions”) as required to fund the Partnership’s capital contributions to SP RE VII in respect of the Capital Commitment SP RE VII Interest, if any, and the related Capital Commitment SP RE VII
Commitment, if any (including, without limitation, funding all or a portion of the Blackstone Capital Commitment). No Partner shall be obligated to make Capital Commitment-Related Capital Contributions to the Partnership in an amount in excess of
such Partner’s Capital Commitment-Related Commitment. The Commitment Agreements and SMD Agreements, if any, of the Partners may include provisions with respect to the foregoing matters. It is understood that a Partner will not necessarily
participate in each Capital Commitment Investment (which may include additional amounts invested in an existing Capital Commitment Investment) nor will a Partner necessarily have the same Capital Commitment Profit Sharing Percentage with respect to
(i) the Partnership’s portion of the Blackstone Capital Commitment, or (ii) the making of each Capital Commitment Investment in which such Partner participates; provided, that this in no way limits the terms of any Commitment
Agreement or SMD Agreement. In addition, nothing contained herein shall be construed to give any Partner the right to obtain financing with respect to the purchase of any Capital Commitment Interest, and nothing contained herein shall limit or
dictate the terms upon which the Partnership and its Affiliates may provide such financing. The acquisition of a Capital Commitment Interest by a Partner shall be evidenced by receipt by the Partnership of funds equal to such Partner’s Capital
Commitment-Related Commitment then due with respect to such Capital Commitment Interest and such appropriate documentation as the General Partner may submit to the Partners from time to time.
(b) The Partnership or one of its Affiliates (in such capacity, the “Advancing Party”) may in its sole
discretion advance to any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are also executive officers of Blackstone) all or any portion of the Capital
Commitment-Related Capital Contributions due to the Partnership from such Partner with respect to any Capital Commitment Investment (“Firm Advances”). Each such Partner shall pay interest to the Advancing Party on each Firm Advance
from the date of such Firm Advance until the repayment thereof by such Partner. Each Firm Advance shall be repayable in full, including accrued interest to the date of
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such repayment, upon prior written notice by the Advancing Party. The making and repayment of each Firm Advance shall be recorded in the books and records of the Partnership, and such recording
shall be conclusive evidence of each such Firm Advance, binding on the Partner and the Advancing Party absent manifest error. Except as provided below, the interest rate applicable to a Firm Advance shall equal the cost of funds of the Advancing
Party at the time of the making of such Firm Advance. The Advancing Party shall inform any Partner of such rate upon such Partner’s request; provided, that such interest rate shall not exceed the maximum interest rate allowable by
applicable law; provided further, that amounts that are otherwise payable to such Partner pursuant to Section 7.4(a) shall be used to repay such Firm Advance (including interest thereon). The Advancing Party may, in its sole
discretion, change the terms of Firm Advances (including the terms contained herein) and/or discontinue the making of Firm Advances; provided, that (i) the Advancing Party shall notify the relevant Partners of any material changes to
such terms and (ii) the interest rate applicable to such Firm Advances and overdue amounts thereon shall not exceed the maximum interest rate allowable by applicable law.
Section 7.2. Capital Commitment Capital Accounts.
(a) There shall be established for each Partner in the books of the Partnership as of the date of formation of the Partnership,
or such later date on which such Partner is admitted to the Partnership, and on each such other date as such Partner first acquires a Capital Commitment Interest in a particular Capital Commitment Investment, a Capital Commitment Capital Account for
each Capital Commitment Investment in which such Partner acquires a Capital Commitment Interest on such date. Each Capital Commitment-Related Capital Contribution of a Partner shall be credited to the appropriate Capital Commitment Capital Account
of such Partner on the date such Capital Commitment-Related Capital Contribution is paid to the Partnership. Capital Commitment Capital Accounts shall be adjusted to reflect any transfer of a Partner’s interest in the Partnership related to his
or her Capital Commitment Partner Interest as provided in this Agreement.
(b) A Partner shall not have any obligation to
the Partnership or to any other Partner to restore any negative balance in the Capital Commitment Capital Account of such Partner. Until distribution of any such Partner’s interest in the Partnership with respect to a Capital Commitment
Interest as a result of the disposition by the Partnership of the related Capital Commitment Investment and in whole upon the dissolution of the Partnership, neither such Partner’s Capital Commitment Capital Accounts nor any part thereof shall
be subject to withdrawal or redemption except with the consent of the General Partner.
Section 7.3. Allocations.
(a) Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be allocated to the
related Capital Commitment Capital Accounts of all the Partners (including the General Partner) participating in such Capital Commitment Investment in proportion to their respective Capital Commitment Profit Sharing Percentages for such Capital
Commitment Investment. Capital Commitment Net Income (Loss) on any Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion which such Partner’s aggregate Capital Commitment Capital Accounts bear to the
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aggregate Capital Commitment Capital Accounts of all Partners; provided, that if any Partner makes the election provided for in Section 7.6, Capital Commitment Net Income (Loss) of
the Partnership for each Capital Commitment Investment shall be allocated to the related Capital Commitment Capital Accounts of all the Partners participating in such Capital Commitment Investment who do not make such election in proportion to their
respective Capital Commitment Profit Sharing Percentages for such Capital Commitment Investment.
(b) Any special costs
relating to distributions pursuant to Section 7.6 or Section 7.7 shall be specially allocated to the electing Partner.
(c) Notwithstanding the foregoing, the General Partner may make such allocations as it deems reasonably necessary to give
economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems reasonably necessary for this purpose.
Section 7.4. Distributions.
(a) Each Partner’s allocable portion of Capital Commitment Net Income received from his or her Capital Commitment
Investments, distributions to such Partner that constitute returns of capital, and other Capital Commitment Net Income of the Partnership (including, without limitation, Capital Commitment Net Income attributable to Unallocated Capital Commitment
Interests) during a Fiscal Year of the Partnership will be credited to payment of the Investor Notes to the extent required below as of the last day of such Fiscal Year (or on such earlier date as related distributions are made in the sole
discretion of the General Partner) with any cash amount distributable to such Partner pursuant to clauses (ii) and (vii) below to be distributed within 45 days after the end of each Fiscal Year of the Partnership (or in each case on such
earlier date as selected by the General Partner in its sole discretion) as follows (subject to Section 7.4(c) below):
(i) First, to the payment of interest then due on all Investor Notes (relating to Capital Commitment
Investments or otherwise) of such Partner (to the extent Capital Commitment Net Income and distributions or payments from Other Sources do not equal or exceed all interest payments due, the selection of those of such Partner’s Investor Notes
upon which interest is to be paid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor);
(ii) Second, to distribution to the Partner of an amount equal to the U.S. federal, state and local income
taxes on income of the Partnership allocated to such Partner for such year in respect of such Partner’s Capital Commitment Partner Interest (the aggregate amount of any such distribution shall be determined by the General Partner, subject to
the limitation that the minimum aggregate amount of such distribution be the tax that would be payable if the taxable income of the Partnership related to all Partners’ Capital Commitment Partner Interests were all allocated to an individual
subject to the then-prevailing maximum rate of U.S. federal, New York State and New York City taxes (including, without limitation, taxes imposed under Section 1411 of the Code), taking into account the character of such taxable income
allocated by the Partnership and the limitations on deductibility of expenses and other items for U.S. federal income tax
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purposes); provided, that additional amounts shall be paid to the Partner pursuant to this clause (ii) to the extent that such amount reduces the amount otherwise distributable to the
Partner pursuant to a comparable provision in any other BE Agreement and there are not sufficient amounts to fully satisfy such provision from the relevant partnership or other entity; provided further, that amounts paid pursuant to the provisions
in such other BE Agreements comparable to the immediately preceding proviso shall reduce those amounts otherwise distributable to the Partner pursuant to provisions in such other BE Agreements that are comparable to this clause (ii);
(iii) Third, to the payment in full of the principal amount of the Investor Note financing (A) any Capital
Commitment Investment disposed of during or prior to such Fiscal Year or (B) any BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal Year, to the extent not repaid from Other Sources;
(iv) Fourth, to the return to such Partner of (A) all Capital Commitment-Related Capital Contributions
made in respect of the Capital Commitment Interest to which any Capital Commitment Investment disposed of during or prior to such Fiscal Year relates or (B) all capital contributions made to any Blackstone Entity (other than the Partnership) in
respect of interests therein relating to BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal Year (including all principal paid on the related Investor Notes), to the extent not repaid from amounts
of Other Sources (other than amounts of Capital Commitment Partner Carried Interest);
(v) Fifth, to the
payment of principal (including any previously deferred amounts) then owing under all other Investor Notes of such Partner (including those unrelated to the Partnership), the selection of those of such Partner’s Investor Notes to be repaid and
the division of payments among such Investor Notes to be determined by the Lender or Guarantor;
(vi)
Sixth, up to 50% of any Capital Commitment Net Income remaining after application pursuant to clauses (i) through (v) above shall be applied pro rata to prepayment of principal of all remaining Investor Notes of such Partner (including
those unrelated to the Partnership), the selection of those of such Partner’s Investor Notes to be repaid, the division of payments among such Investor Notes and the percentage of remaining Capital Commitment Net Income to be applied thereto to
be determined by the Lender or Guarantor; and
(vii) Seventh, to such Partner to the extent of any amount
of Capital Commitment Net Income remaining after making the distributions in clauses (i) through (vi) above, and such amount is not otherwise required to be applied to Investor Notes pursuant to the terms thereof.
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To the extent there is a partial disposition of a Capital Commitment
Investment or any other BE Investment, as applicable, the payments in clauses (iii) and (iv) above shall be based on that portion of the Capital Commitment Investment or other BE Investment, as applicable, disposed of, and the principal amount
and related interest payments of such Investor Note shall be adjusted to reflect such partial payment so that there are equal payments over the remaining term of the related Investor Note. For a Partner who is no longer an employee or officer of
Holdings or an Affiliate thereof, distributions shall be made pursuant to clauses (i) through (iii) above, and then, unless the Partnership or its Affiliate has exercised its rights pursuant to Section 8.1 hereof, any remaining income or
other distribution in respect of such Partner’s Capital Commitment Partner Interest shall be applied to the prepayment of the outstanding Investor Notes of such Partner, until all such Partner’s Investor Notes have been repaid in full,
with any such income or other distribution remaining thereafter distributed to such Partner.
Distributions of Capital
Commitment Net Income may be made at any other time at the discretion of the General Partner. At the General Partner’s discretion, any amounts distributed to a Partner in respect of such Partner’s Capital Commitment Partner Interest will
be net of any interest and principal payable on his or her Investor Notes for the full period in respect of which the distribution is made.
(b) [Intentionally omitted.]
(c) To the extent that the foregoing Partnership distributions and distributions and payments from Other Sources are
insufficient to satisfy any principal and/or interest due on Investor Notes, and to the extent that the General Partner in its sole discretion elects to apply this paragraph (c) to any individual payments due, such unpaid interest will be added
to the remaining principal amount of such Investor Notes and shall be payable on the next scheduled principal payment date (along with any deferred principal and any principal and interest due on such date); provided, that such deferral shall
not apply to a Partner that is no longer an employee or officer of Holdings or its Affiliates. All unpaid interest on such Investor Notes shall accrue interest at the interest rate then in effect for such Investor Notes.
(d) [Intentionally omitted.]
(e) The Capital Commitment Capital Account of each Partner shall be reduced by the amount of any distribution to such Partner
pursuant to Section 7.4(a).
(f) At any time that a sale, exchange, transfer or other disposition of a portion of a
Capital Commitment Investment is being considered by the Partnership or SP RE VII (a “Capital Commitment Disposable Investment”), at the election of the General Partner each Partner’s Capital Commitment Interest with respect to
such Capital Commitment Investment shall be vertically divided into two separate Capital Commitment Interests, a Capital Commitment Interest attributable to the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment
Class B Interest”), and a Capital Commitment Interest attributable to such Capital Commitment Investment excluding the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment
Class A Interest”). Distributions (including those resulting from a direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Disposable Investment shall be made
only to holders of Capital Commitment Class B Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class B
Interests, and distributions (including those resulting from the
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direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Investment excluding such Capital Commitment Disposable Investment shall be
made only to holders of Capital Commitment Class A Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class A
Interests.
(g) (i) If the Partnership is obligated under the Giveback Provisions to contribute to SP RE VII a
Giveback Amount with respect to any Capital Commitment SP RE VII Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount being herein called a “Capital Commitment Giveback Amount”), the
General Partner shall call for such amounts as are necessary to satisfy such obligation of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and
as called by the General Partner, such an amount of prior distributions by the Partnership with respect to the Capital Commitment SP RE VII Interest (the “Capital Commitment Recontribution Amount”) which equals such Partner’s
pro rata share of prior distributions in connection with (a) the Capital Commitment SP RE VII Investment giving rise to the Capital Commitment Giveback Amount, (b) if the amounts contributed pursuant to clause (a) above are
insufficient to satisfy such Capital Commitment Giveback Amount, Capital Commitment SP RE VII Investments other than the one giving rise to such obligation and (c) if the Capital Commitment Giveback Amount pursuant to an applicable SP RE VII
Agreement is unrelated to a specific Capital Commitment SP RE VII Investment, all Capital Commitment SP RE VII Investments. Each Partner shall promptly contribute to the Partnership upon notice thereof such Partner’s Capital Commitment
Recontribution Amount. Prior to such time, the General Partner may, at the General Partner’s discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of
the Capital Commitment Giveback Amount will probably materialize (and an estimate of the aggregate amount of such obligations).
(ii) (A) In the event any Partner (a “Capital Commitment Defaulting Party”) fails to
recontribute all or any portion of such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount for any reason, the General Partner shall (i) use its reasonable efforts to collect any amounts from any such GP-Related Defaulting Party and (ii) require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Capital Commitment Profit Sharing
Percentages), such amounts as are necessary to fulfill the Capital Commitment Defaulting Party’s obligation to pay such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount (a “Capital Commitment
Deficiency Contribution”) if the General Partner determines in its good faith judgment that the Partnership will be unable to collect such amount in cash from such Capital Commitment Defaulting Party for payment of the Capital Commitment
Giveback Amount at least 20 Business Days prior to the latest date that the Partnership is permitted to pay the Capital Commitment Giveback Amount; provided, that no Partner shall as a result of such Capital Commitment Deficiency Contribution
be required to contribute an amount in excess of 150% of the amount of the Capital Commitment Recontribution Amount initially requested from such Partner’s in respect of such default. Thereafter, the General Partner shall determine in its good
faith judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of
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recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership
against the Capital Commitment Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the Capital Commitment Defaulting Party. It is agreed that the Partnership shall have the right (effective
upon such Capital Commitment Defaulting Party becoming a Capital Commitment Defaulting Party) to set-off as appropriate and apply against such Capital Commitment Defaulting Party’s Capital Commitment
Recontribution Amount any amounts otherwise payable to the Capital Commitment Defaulting Party by the Partnership or any Affiliate thereof. Each Partner hereby grants to the General Partner a security interest, effective upon such Partner becoming a
Capital Commitment Defaulting Party, in all accounts receivable and other rights to receive payment from the Partnership or any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General Partner may
sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner hereby appoints the General Partner as its true and lawful
attorney-in-fact with full irrevocable power and authority, in the name of such Partner or in the name of the Partnership, to take any actions which may be necessary to
accomplish the intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the Capital Commitment Recontribution Amount of a Capital Commitment Defaulting Party from the date such Capital Commitment
Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(B) Any Partner’s failure to make a Capital Commitment Deficiency Contribution shall cause such Partner to
be a Capital Commitment Defaulting Party with respect to such amount.
(iii) A Partner’s obligation to
make contributions to the Partnership under this Section 7.4(g) shall survive the termination of the Partnership.
Section 7.5. Valuations. Capital Commitment Investments shall be valued annually as of the end of each year
(and at such other times as deemed appropriate by the General Partner) in accordance with the principles utilized by the Partnership (or any other Affiliate of the Partnership that is a general partner of SP RE VII) in valuing investments of SP RE
VII or, in the case of investments not held by SP RE VII, in the good faith judgment of the General Partner, subject in each case to the second proviso of the immediately succeeding sentence. The value of any Capital Commitment Interest as of any
date (the “Capital Commitment Value”) shall be based on the value of the underlying Capital Commitment Investment as set forth above; provided, that the Capital Commitment Value may be determined as of an earlier date if determined
appropriate by the General Partner in good faith; provided further, that such value may be adjusted by the General Partner to take into account factors relating solely to the value of a Capital Commitment Interest (as compared to the value of the
underlying Capital Commitment Investment), such as restrictions on transferability, the lack of a market for such Capital Commitment Interest and lack of control of the underlying Capital Commitment Investment. To the full extent permitted by
applicable law such valuations shall be final and binding on all Partners; provided further, that the immediately preceding proviso shall not apply to any Capital Commitment Interests held by a person who is or was at any time a direct member or
partner of a General Partner of the Partnership.
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Section 7.6. Disposition Election.
(a) At any time prior to the date of the Partnership’s execution of a definitive agreement to dispose of a Capital
Commitment Investment, the General Partner may in its sole discretion permit a Partner to retain all or any portion of its pro rata share of such Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit
Sharing Percentage in such Capital Commitment Investment). If the General Partner so permits, such Partner shall instruct the General Partner in writing prior to such date (i) not to dispose of all or any portion of such Partner’s pro
rata share of such Capital Commitment Investment (the “Retained Portion”) and (ii) either to (A) distribute such Retained Portion to such Partner on the closing date of such disposition or (B) retain such Retained
Portion in the Partnership on behalf of such Partner until such time as such Partner shall instruct the General Partner upon 5 days’ notice to distribute such Retained Portion to such Partner. Such Partner’s Capital Commitment Capital
Account shall not be adjusted in any way to reflect the retention in the Partnership of such Retained Portion or the Partnership’s disposition of other Partners’ pro rata shares of such Capital Commitment Investment;
provided, that such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Retained Portion to such Partner or upon distribution of proceeds with respect to a subsequent disposition thereof by the
Partnership.
(b) No distribution of such Retained Portion shall occur unless any Investor Notes relating thereto shall
have been paid in full prior to or simultaneously with such distribution.
Section 7.7. Capital Commitment
Special Distribution Election.
(a) From time to time during the term of this Agreement, the General Partner may in its
sole discretion, upon receipt of a written request from a Partner, distribute to such Partner any portion of its pro rata share of a Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing
Percentage in such Capital Commitment Investment) (a “Capital Commitment Special Distribution”). Such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Capital Commitment Special
Distribution.
(b) No Capital Commitment Special Distributions shall occur unless any Investor Notes relating thereto shall
have been paid in full prior to or simultaneously with such Capital Commitment Special Distribution.
ARTICLE VIII
WITHDRAWAL; ADMISSION OF NEW PARTNERS
Section 8.1. Partner Withdrawal; Repurchase of Capital Commitment Interests.
(a) Capital Commitment Interests (or a portion thereof) that were financed by Investor Notes will be treated as Non-Contingent for purposes hereof based upon the proportion of (a) the sum of Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to each Capital Commitment Interest
and principal payments on the related Investor Note to (b) the sum of the Capital Commitment-Related Capital Contributions not
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financed by an Investor Note with respect to such Capital Commitment Interest, the original principal amount of such Investor Note and all deferred amounts of interest which from time to time
comprise part of the principal amount of the Investor Note. A Partner may prepay a portion of any outstanding principal on the Investor Notes; provided, that in the event that a Partner prepays all or any portion of the principal amount of the
Investor Notes within nine months prior to the date on which such Partner is no longer an employee or officer of Holdings or an Affiliate thereof, the Partnership (or its designee) shall have the right, in its sole discretion, to purchase the
Capital Commitment Interest that became Non-Contingent as a result of such prepayment; provided further, that the purchase price for such Capital Commitment Interest shall be determined in accordance with the
determination of the purchase price of a Partner’s Contingent Capital Commitment Interests as set forth in paragraph (b) below. Prepayments made by a Partner shall apply pro rata against all of such Partner’s Investor Notes; provided,
that such Partner may request that such prepayments be applied only to Investor Notes related to BE Investments that are related to one or more Blackstone Entities specified by such Partner. Except as expressly provided herein, Capital Commitment
Interests that were not financed in any respect with Investor Notes shall be treated as Non-Contingent Capital Commitment Interests.
(b) (i) Upon a Partner ceasing to be an officer or employee of the Partnership or any of its Affiliates, other than as a
result of such Partner dying or suffering a Total Disability, such Partner and the Partnership or any other person designated by the General Partner shall each have the right (exercisable by the Withdrawn Partner within 30 days and by the
Partnership or its designee(s) within 45 days after such Partner’s ceasing to be such an officer or employee) or any time thereafter, upon 30 days’ notice, but not the obligation, to require the Partnership (subject to the prior consent of
the General Partner, such consent not to be unreasonably withheld or delayed), subject to the Partnership Act, to buy (in the case of exercise of such right by such Withdrawn Partner) or the Withdrawn Partner to sell (in the case of exercise of such
right by the Partnership or its designee(s)) all (but not less than all) such Withdrawn Partner’s Contingent Capital Commitment Interests.
(ii) The purchase price for each such Contingent Capital Commitment Interest shall be an amount equal to
(A) the outstanding principal amount of the related Investor Note plus accrued interest thereon to the date of purchase (such portion of the purchase price to be paid in cash) and (B) an additional amount (the “Adjustment
Amount”) equal to (x) all interest paid by the Partner on the portion of the principal amount of such Investor Note(s) relating to the portion of the related Capital Commitment Interest remaining Contingent and to be repurchased, plus
(y) all Capital Commitment Net Losses allocated to the Withdrawn Partner on such Contingent portion of such Capital Commitment Interest, minus (z) all Capital Commitment Net Income allocated to the Withdrawn Partner on the Contingent
portion of such Capital Commitment Interest; provided, that, if the Withdrawn Partner was terminated from employment or his or her position as an officer for Cause, all amounts referred to in clause (x) or (y) of the Adjustment Amount, in the
General Partner’s sole discretion, may be deemed to equal zero. The Adjustment Amount shall, if positive, be payable by the holders of the purchased Capital Commitment Interests to the Withdrawn Partner from the next Capital Commitment Net
Income received by such holders on the Contingent portion of such Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received. If the Adjustment Amount is negative, it
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shall be payable to the holders of the purchased Capital Commitment Interest by the Withdrawn Partner (A) from the next Capital Commitment Net Income on the
Non-Contingent portion of the Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received by the Withdrawn Partner, or (B) if the Partnership or its
designee(s) elect to purchase such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, in cash by the Withdrawn Partner at the time of such purchase; provided, that the Partnership and its
Affiliates may offset any amounts otherwise owing to a Withdrawn Partner against any Adjustment Amount owed by such Withdrawn Partner. Until so paid, such remaining Adjustment Amount will not itself bear interest. At the time of such purchase of the
Withdrawn Partner’s Contingent Capital Commitment Interests, his or her related Investor Note shall be payable in full.
(iii) Upon such Partner ceasing to be such an officer or employee, all Investor Notes shall become fully
recourse to the Withdrawn Partner in his or her individual capacity (whether or not the Withdrawn Partner or the Partnership or its designee(s) exercises the right to require repurchase of the Withdrawn Partner’s Contingent Capital Commitment
Interests).
(iv) If neither the Withdrawn Partner nor the Partnership nor its designee(s) exercises the
right to require repurchase of such Contingent Capital Commitment Interests, then the Withdrawn Partner shall retain the Contingent portion of his or her Capital Commitment Interests and the Investor Notes shall remain outstanding, shall become
fully recourse to the Withdrawn Partner in his or her individual capacity, shall be payable in accordance with their remaining original maturity schedules and shall be prepayable at any time by the Withdrawn Partner at his or her option, and the
Partnership shall apply such prepayments against outstanding Investor Notes on a pro rata basis.
(v) To
the extent that another Partner purchases a portion of a Capital Commitment Interest of a Withdrawn Partner, the purchasing Partner’s Capital Commitment Capital Account and Capital Commitment Profit Sharing Percentage for such Capital
Commitment Investment shall be correspondingly increased.
(c) Upon the occurrence of a Final Event with respect to any
Partner, such Partner shall thereupon cease to be a Partner with respect to such Partner’s Capital Commitment Partner Interest. If such a Final Event shall occur, no Successor in Interest to any such Partner shall for any purpose hereof become
or be deemed to become a Partner. The sole right, as against the Partnership and the remaining Partners, acquired hereunder by, or resulting hereunder to, a Successor in Interest to any Partner shall be to receive any distributions and allocations
with respect to such Partner’s Capital Commitment Partner Interest pursuant to Article VII and this Article VIII (subject to the right of the Partnership to purchase the Capital Commitment Interests of such former Partner pursuant to
Section 8.1(b) or Section 8.1(d)), to the extent, at the time, in the manner and in the amount otherwise payable to such Partner had such a Final Event not occurred, and no other right shall be acquired hereunder by, or shall result
hereunder to, a Successor in Interest to such Partner, whether by operation of law or otherwise and the Partnership shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and
allocations hereunder. Until distribution of any such
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Partner’s interest in the Partnership upon the dissolution of the Partnership as provided in Section 9.2, neither his or her Capital Commitment Capital Accounts nor any part thereof
shall be subject to withdrawal or redemption without the consent of the General Partner. The General Partner shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations
hereunder with respect to such Partner’s Capital Commitment Partner Interest.
(d) If a Partner dies or suffers a
Total Disability, all Contingent Capital Commitment Interests of such Partner shall be purchased by the Partnership or its designee (within 30 days of the first date on which the Partnership knows or has reason to know of such Partner’s death
or Total Disability) (and the purchase price for such Contingent Capital Commitment Interests shall be determined in accordance with Section 8.1(b) (except that any Adjustment Amount shall be payable by or to such Partner’s estate,
personal representative or other Successor in Interest, in cash)), and any Investor Notes financing such Contingent Capital Commitment Interests shall thereupon be prepaid as provided in Section 8.1(b). Upon such Partner’s death or Total
Disability, any Investor Note(s) financing such Contingent Capital Commitment Interests shall become fully recourse. In addition, in the case of the death or Total Disability of a Partner, if the estate, personal representative or other Successor in
Interest of such Partner, so requests in writing within 180 days after the Partner’s death or ceasing to be an employee or member (directly or indirectly) of the Partnership or any of its Affiliates by reason of Total Disability (such requests
shall not exceed one per calendar year), the Partnership or its designee may but is not obligated to purchase for cash all (but not less than all) Non-Contingent Capital Commitment Interests of such Partner as
of the last day of the Partnership’s then current Fiscal Year at a price equal to the Capital Commitment Value thereof as of the most recent valuation prior to the date of purchase. Each Partner shall be required to include appropriate
provisions in his or her will to reflect such provisions of this Agreement. In addition, the Partnership may, in the sole discretion of the General Partner, upon notice to the estate, personal representative or other Successor in Interest of such
Partner, within 30 days of the first date on which the General Partner knows or has reason to know of such Partner’s death or Total Disability, determine either (i) to distribute Securities or other property to the estate, personal
representative or other Successor in Interest, in exchange for such Non-Contingent Capital Commitment Interests as provided in Section 8.1(e) or (ii) to require sale of such Non-Contingent Capital Commitment Interests to the Partnership or its designee as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by the General Partner in its sole
discretion) for an amount in cash equal to the Capital Commitment Value thereof.
(e) In lieu of retaining a Withdrawn
Partner as a Partner with respect to any Non-Contingent Capital Commitment Interests, the General Partner may, in its sole discretion, by notice to such Withdrawn Partner within 45 days of his or her ceasing
to be an employee or officer of the Partnership or any of its Affiliates, or at any time thereafter, upon 30 days written notice, determine (1) to distribute to such Withdrawn Partner the pro rata portion of the Securities or other property
underlying such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, subject to any restrictions on distributions associated with the Securities or other property, in satisfaction of his or
her Non-Contingent Capital Commitment Interests in the Partnership or (2) to cause, as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by the General Partner in its
sole discretion), the Partnership or another person designated by the General Partner (who may be itself another Partner or another Affiliate
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of the Partnership) to purchase all (but not less than all) of such Withdrawn Partner’s Non-Contingent Capital Commitment Interests for a price equal
to the Capital Commitment Value thereof (determined in good faith by the General Partner as of the most recent valuation prior to the date of purchase). The General Partner shall condition any distribution or purchase of voting Securities pursuant
to paragraph (d) above or this paragraph (e) upon the Withdrawn Partner’s execution and delivery to the Partnership of an appropriate irrevocable proxy, in favor of the General Partner or its nominee, relating to such Securities.
(f) The Partnership may subsequently transfer any Unallocated Capital Commitment Interest or portion thereof which is purchased
by it as described above to any other person approved by the General Partner. In connection with such purchase or transfer or the purchase of a Capital Commitment Interest or portion thereof by the General Partner’s designee(s), Holdings may
loan all or a portion of the purchase price of the transferred or purchased Capital Commitment Interest to the Partnership, the transferee or the designee-purchaser(s), as applicable (excluding any of the foregoing who is an executive officer of The
Blackstone Group Inc. or any Affiliate thereof). To the extent that a Withdrawn Partner’s Capital Commitment Interests (or portions thereof) are repurchased by the Partnership and not transferred to or purchased by another person, all or any
portion of such repurchased Capital Commitment Interests may, in the sole discretion of the General Partner, (i) be allocated to each Partner already participating in the Capital Commitment Investment to which the repurchased Capital Commitment
Interest relates, (ii) be allocated to each Partner in the Partnership, whether or not already participating in such Capital Commitment Investment, and/or (iii) continue to be held by the Partnership itself as an unallocated Capital
Commitment Investment (such Capital Commitment Interests being herein called “Unallocated Capital Commitment Interests”). To the extent that a Capital Commitment Interest is allocated to Partners as provided in clause (i) and/or
(ii) above, any indebtedness incurred by the Partnership to finance such repurchase shall also be allocated to such Partners. All such Capital Commitment Interests allocated to Partners shall be deemed to be Contingent and shall become Non-Contingent as and to the extent that the principal amount of such related indebtedness is repaid. The Partners receiving such allocations shall be responsible for such related indebtedness only on a nonrecourse
basis to the extent appropriate as provided in this Agreement, except as otherwise provided in this Section 8.1 and except as such Partners and the General Partner shall otherwise agree; provided, that such indebtedness shall become fully
recourse to the extent and at the time provided in this Section 8.1. If the indebtedness financing such repurchased interests is not to be non-recourse or so limited, the Partnership may require an
assumption by the Partners of such indebtedness on the terms thereof as a precondition to allocation of the related Capital Commitment Interests to such Partners; provided, that a Partner shall not, except as set forth in his or her Investor
Note(s), be obligated to accept any obligation that is personally recourse (except as provided in this Section 8.1), unless his or her prior consent is obtained. So long as the Partnership itself retains the Unallocated Capital Commitment
Interests pursuant to clause (iii) above, such Unallocated Capital Commitment Interests shall belong to the Partnership and any indebtedness financing the Unallocated Capital Commitment Interests shall be an obligation of the Partnership to
which all income of the Partnership is subject except as otherwise agreed by the lender of such indebtedness. Any Capital Commitment Net Income (Loss) on an Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion
his or her aggregate Capital Commitment Capital Accounts bear to the aggregate Capital Commitment Capital Accounts of all Partners; debt service on such related financing will be an expense of the Partnership allocable to all Partners in such
proportions.
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(g) If a Partner is required to Withdraw from the Partnership with respect
to such Partner’s Capital Commitment Partner Interest for Cause, then his or her Capital Commitment Interest shall be settled in accordance with paragraphs (a)-(f) and (j) of this Section 8.1;
provided, that if such Partner was not at any time a direct partner of a General Partner of the Partnership, the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) purchase for cash all of such Withdrawn Partner’s
Non-Contingent Capital Commitment Interests. The purchase price for each such Non-Contingent Capital Commitment Interest shall be the lower of (A) the original cost
of such Non-Contingent Capital Commitment Interest or (B) an amount equal to the Capital Commitment Value thereof (determined as of the most recent valuation prior to the date of the purchase of such Non-Contingent Capital Commitment Interest);
(ii) allow the Withdrawn
Partner to retain such Non-Contingent Capital Commitment Interests; provided, that the maximum amount of Capital Commitment Net Income allocable to such Withdrawn Partner with respect to any Capital
Commitment Investment shall equal the amount of Capital Commitment Net Income that would have been allocated to such Withdrawn Partner if such Capital Commitment Investment had been sold as of the Settlement Date at the then prevailing Capital
Commitment Value thereof; or (iii) in lieu of cash, purchase such Non-Contingent Capital Commitment Interests by providing the Withdrawn Partner with a promissory note in the amount determined in
(i) above. Such promissory note shall have a maximum term of ten (10) years with interest at the Federal Funds Rate.
(h) The Partnership will assist a Withdrawn Partner or his or her estate or guardian, as the case may be, in the settlement of
the Withdrawn Partner’s Capital Commitment Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his or her estate.
(i) The General Partner may reasonably determine in good faith to retain outside professionals to provide the assistance to
Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the case may be, prior to engaging such
professionals. If the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(j) Each Partner hereby irrevocably appoints the General Partner as such Partner’s true and lawful agent, representative
and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Partner, any and all
agreements, instruments, consents, ratifications, documents and certificates which such General Partner deems necessary or advisable in connection with any transaction or matter
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contemplated by or provided for in this Section 8.1, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such
Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the
death, disability or incapacity of such Partner.
Section 8.2. Transfer of Partner’s
Capital Commitment Interest. Except as otherwise agreed by the General Partner, no Partner or former Partner shall have the right to sell, assign, mortgage, pledge, grant a security interest over, or otherwise dispose of or transfer
(“Transfer”) all or part of any such Partner’s Capital Commitment Partner Interest in the Partnership; provided, that this Section 8.2 shall in no way impair (i) Transfers as permitted in Section 8.1 above, in the case
of the purchase of a Withdrawn Partner’s or Deceased or Totally Disabled Partner’s Capital Commitment Interests, (ii) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers by a
Partner to another Partner of Non-Contingent Capital Commitment Interests, (iii) Transfers with the prior written consent of the General Partner (which consent may be granted or withheld in its sole
discretion without giving any reason therefor) and (iv) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers of up to 25% of a Limited Partner’s Capital Commitment Partner Interest to
an Estate Planning Vehicle (it being understood that it shall not be unreasonable for the General Partner to condition any Transfer of an Interest pursuant to this clause (iv) on the satisfaction of certain conditions and/or requirements
imposed by the General Partner in connection with any such Transfer, including, for example, a requirement that any transferee of an Interest hold such Interest as a passive, non-voting interest in the
Partnership). The General Partner shall designate that each Estate Planning Vehicle shall not have voting rights (any such Partner being called a “Nonvoting Partner”). Such Partner shall be jointly and severally liable for all obligations
of both such Partner and such Nonvoting Partner with respect to the interest transferred (including the obligation to make additional Capital Commitment-Related Capital Contributions). The General Partner may at its sole option exercisable at any
time require such Estate Planning Vehicle to Withdraw from the Partnership on the terms of Section 8.1 and Article VI. No person acquiring an interest in the Partnership pursuant to this Section 8.2 shall become a Partner of the
Partnership, or acquire such Partner’s right to participate in the affairs of the Partnership, unless such person shall be admitted as a Partner pursuant to Section 6.1. A Partner shall not cease to be a Partner of the Partnership upon the
collateral assignment of, or the pledging or granting of a security interest in, its entire Interest in the Partnership in accordance with the provisions of this Agreement.
Section 8.3. Compliance with Law. Notwithstanding any provision hereof to the contrary, no sale or Transfer
of a Capital Commitment Interest in the Partnership may be made except in compliance with all U.S. federal, state and other applicable laws, including U.S. federal and state securities laws.
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ARTICLE IX
DISSOLUTION
Section 9.1. Dissolution. The Partnership shall be dissolved and subsequently terminated:
(a) pursuant to Section 6.6; or
(b) upon the expiration of the term of the Partnership.
Section 9.2. Final Distribution. Upon the dissolution of the Partnership, and following the payment of
creditors of the Partnership and the making of provisions for the payment of any contingent, conditional or unmatured claims known to the Partnership as required under the Partnership Act:
(a) The Partners’ respective interests in the Partnership shall be valued and settled in accordance with the procedures
set forth in Section 6.5 which provide for allocations to the GP-Related Capital Accounts of the Partners and distributions in accordance with the GP-Related
Capital Account balances of the Partners; and
(b) With respect to each Partner’s Capital Commitment Partner Interest,
an amount shall be paid to such Partner in cash or Securities in an amount equal to such Partner’s respective Capital Commitment Liquidating Share for each Capital Commitment Investment; provided, that if the remaining assets relating to
any Capital Commitment Investment shall not be equal to or exceed the aggregate Capital Commitment Liquidating Shares for such Capital Commitment Investment, to each Partner in proportion to its Capital Commitment Liquidating Share for such Capital
Commitment Investment; and the remaining assets of the Partnership related to the Partners’ Capital Commitment Partner Interests shall be paid to the Partners in cash or Securities in proportion to their respective Capital Commitment Profit
Sharing Percentages for each Capital Commitment Investment from which such cash or Securities are derived.
The General
Partner shall be the liquidator. In the event that the General Partner is unable to serve as liquidator, a liquidating trustee shall be chosen by the affirmative vote of a Majority in Interest of the Partners voting at a meeting of Partners
(excluding Nonvoting Special Partners).
Section 9.3. Amounts Reserved Related to Capital Commitment Partner
Interests.
(a) If there are any Securities or other property or other investments or securities related to the
Partners’ Capital Commitment Partner Interests which, in the judgment of the liquidator, cannot be sold, or properly distributed in kind in the case of dissolution, without sacrificing a significant portion of the value thereof, the value of a
Partner’s interest in each such Security or other investment or security may be excluded from the amount distributed to the Partners participating in the related Capital Commitment Investment pursuant to Section 9.2(b). Any interest of a
Partner, including his or her pro rata interest in any gains, losses or distributions, in Securities or other property or other investments or securities so excluded shall not be paid or distributed until such time as the liquidator shall
determine.
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(b) If there is any pending transaction, contingent liability or claim by or
against the Partnership related to the Partners’ Capital Commitment Partner Interests as to which the interest or obligation of any Partner therein cannot, in the judgment of the liquidator, be then ascertained, the value thereof or probable
loss therefrom may be deducted from the amount distributable to such Partner pursuant to Section 9.2(b). No amount shall be paid or charged to any such Partner on account of any such transaction or claim until its final settlement or such
earlier time as the liquidator shall determine. The Partnership may meanwhile retain from other sums due such Partner in respect of such Partner’s Capital Commitment Partner Interest an amount which the liquidator estimates to be sufficient to
cover the share of such Partner in any probable loss or liability on account of such transaction or claim.
(c) Upon
determination by the liquidator that circumstances no longer require the exclusion of any Securities or other property or retention of sums as provided in paragraphs (a) and (b) of this Section 9.3, the liquidator shall, at the earliest
practicable time, distribute as provided in Section 9.2(b) such sums or such Securities or other property or the proceeds realized from the sale of such Securities or other property to each Partner from whom such sums or Securities or other
property were withheld.
ARTICLE X
MISCELLANEOUS
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be
settled amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this
Agreement (including the validity, scope and enforceability of this arbitration provision as well as any and all disputes arising out of, relating to or in connection with the termination, liquidation or winding up of the Partnership), whether
arising during the existence of the Partnership or at or after its termination or during or after the liquidation or winding up of the Partnership, shall be finally settled by arbitration conducted by a single arbitrator in New York, New York
U.S.A., in accordance with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) days of the receipt of the request for
arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during
any arbitration proceedings.
(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may
cause the Partnership to bring, on behalf of the General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate,
seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of paragraph (c) of this
Section 10.1 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate,
and (iii) irrevocably appoints the General Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon any such agent, who shall promptly advise such
Partner of any such service of process, shall be deemed in every respect effective service of process upon the Partner in any such action or proceeding.
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(c) (i) EACH PARTNER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 10.1, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION
ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an
arbitration award. The parties acknowledge that the forum(s) designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now
or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 10.1 and such parties agree not to plead or claim the
same.
(d) Notwithstanding any provision of this Agreement to the contrary, this Section 10.1 shall be construed to
the maximum extent possible to comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be
determined by a court of competent jurisdiction that any provision or wording of this Section 10.1, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or other
applicable law, such invalidity shall not invalidate all of this Section 10.1. In that case, this Section 10.1 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the
Delaware Arbitration Act or other applicable law, and, in the event such term or provision cannot be so limited, this Section 10.1 shall be construed to omit such invalid or unenforceable provision.
Section 10.2. Ownership and Use of the Blackstone Name. The Partnership acknowledges that Blackstone TM
L.L.C. (“TM”), a Delaware limited liability company with a principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., (or its successors or assigns) is the sole and exclusive owner of the mark and name
BLACKSTONE and that the ownership of, and the right to use, sell or otherwise dispose of, the firm name or any abbreviation or modification thereof which consists of or includes BLACKSTONE, shall belong exclusively to TM, which company (or its
predecessors, successors or assigns) has licensed the Partnership to use BLACKSTONE in its name. The Partnership acknowledges that TM owns the service mark BLACKSTONE for various services and that the Partnership is using the BLACKSTONE mark and
name on a non-exclusive, non-sublicensable and non-assignable basis in connection with its business and authorized activities
with the permission of TM. All services rendered by the Partnership under the BLACKSTONE mark and name will be rendered in a manner and with quality levels that are consistent with the high reputation heretofore developed for the BLACKSTONE mark by
TM and its Affiliates and licensees. The Partnership understands that TM may terminate its right to use BLACKSTONE at any time in TM’s sole discretion by giving the Partnership written notice of termination. Promptly following any such
termination, the Partnership will take all steps necessary to change its partnership name to one which does not include BLACKSTONE or any confusingly similar term and cease all use of BLACKSTONE or any term confusingly similar thereto as a service
mark or otherwise.
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Section 10.3. Written Consent. Any action required or
permitted to be taken by a vote of Partners at a meeting may be taken without a meeting if a Majority in Interest of the Partners consent thereto in writing.
Section 10.4. Letter Agreements; Schedules. The General Partner may, or may cause the Partnership to, enter
or has previously entered, into separate letter agreements with individual Partners, officers or employees with respect to GP-Related Profit Sharing Percentages, Capital Commitment Profit Sharing Percentages,
benefits or any other matter, which letter agreements have the effect of establishing rights under, or altering or supplementing, the terms of this Agreement with respect to any such Partner and such matters. The parties hereto agree that any rights
established, or any terms of this Agreement altered or supplemented, in any such separate letter agreement, including any Commitment Agreement or SMD Agreement, shall govern solely with respect to such Partner notwithstanding any other provision of
this Agreement. The General Partner may from time to time execute and deliver to the Partners schedules which set forth the then current capital balances, GP-Related Profit Sharing Percentages and Capital
Commitment Profit Sharing Percentages of the Partners and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose
whatsoever; provided, that this in no way limits the effectiveness of any Commitment Agreement or SMD Agreement.
Section 10.5. Governing Law, Separability of Provisions. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law. In particular, the Partnership has been formed pursuant to the Partnership Act, and the rights and liabilities of the Partners
shall be as provided therein, except as herein otherwise expressly provided. If any provision of this Agreement shall be held to be invalid, such provision shall be given its meaning to the maximum extent permitted by law and the remainder of this
Agreement shall not be affected thereby.
Section 10.6. Successors and Assigns; Third Party
Beneficiaries. This Agreement shall be binding upon and shall, subject to the penultimate sentence of Section 6.3(a), inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any successor to a
trustee of a trust which is or becomes a party hereto; provided, that no person claiming by, through or under a Partner (whether such Partner’s heir, personal representative or otherwise), as distinct from such Partner itself, shall have any
rights as, or in respect to, a Partner (including the right to approve or vote on any matter or to notice thereof) except the right to receive only those distributions expressly payable to such person pursuant to Article VI and Article VIII. Any
Partner or Withdrawn Partner shall remain liable for the obligations under this Agreement (including any Net GP-Related Recontribution Amounts and any Capital Commitment Recontribution Amounts) of any
transferee of all or any portion of such Partner’s or Withdrawn Partner’s interest in the Partnership, unless waived by the General Partner. The Partnership shall, if the General Partner determines, in its good faith judgment, based on the
standards set forth in Section 5.8(d)(ii)(A) and Section 7.4(g)(ii)(A), to pursue such transferee, pursue payment (including any Net GP-Related Recontribution Amounts and/or Capital
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Commitment Recontribution Amounts) from the transferee with respect to any such obligations. Nothing in this Agreement is intended, nor shall anything herein be construed, to confer any rights,
legal or equitable, on any person other than the Partners and their respective legal representatives, heirs, successors and permitted assigns. Notwithstanding the foregoing, solely to the extent required by the SP RE VII Agreements, (x) the
limited partners in SP RE VII shall be third-party beneficiaries of the provisions of Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount (for purpose of this
sentence, as defined in Section 9.4(a) of the SP RE VII Partnership Agreement) and (y) the amendment of the provisions of Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they
relate to any Clawback Amount (for purpose of this sentence, as defined in Section 9.4(a) of the SP RE VII Partnership Agreement), in a manner materially adverse to such limited partners shall be effective against such limited partners only
with the 662⁄3% Combined Limited Partner Consent (as such term is used in the SP RE VII Partnership Agreement).
Section 10.7. Confidentiality.
(a) By executing this Agreement, each Partner expressly agrees, at all times during the term of the Partnership and thereafter
and whether or not at the time a Partner of the Partnership, to maintain the confidentiality of, and not to disclose to any person other than the Partnership, another Partner or a person designated by the Partnership, any information relating to the
business, financial structure, financial position or financial results, clients or affairs of the Partnership that shall not be generally known to the public or the securities industry, except as otherwise required by law or by any regulatory or self-regulatory organization having jurisdiction; provided, that any corporate Partner may disclose any such information it is required by law, rule, regulation or custom to disclose. Notwithstanding anything
in this Agreement to the contrary, to comply with Treasury Regulations Section 1.6011-4(b)(3)(i), each Partner (and any employee, representative or other agent of such Partner) may disclose to any and all
persons, without limitation of any kind, the U.S. federal income tax treatment and tax structure of the Partnership, it being understood and agreed, for this purpose, (1) the name of, or any other identifying information regarding (a) the
Partners or any existing or future investor (or any Affiliate thereof) in any of the Partners, or (b) any investment or transaction entered into by the Partners; (2) any performance information relating to any of the Partners or their
investments; and (3) any performance or other information relating to previous funds or investments sponsored by any of the Partners, does not constitute such tax treatment or tax structure information.
(b) Nothing in this Agreement shall prohibit or impede any Partner from communicating, cooperating or filing a complaint on
possible violations of U.S. federal, state or local law or regulation to or with any governmental agency or regulatory authority (collectively, a “Governmental Entity”), including, but not limited to, the SEC, FINRA, EEOC or NLRB,
or from making other disclosures to any Governmental Entity that are protected under the whistleblower provisions of U.S. federal, state or local law or regulation; provided, that in each case such communications and disclosures are consistent with
applicable law. Each Partner understands and acknowledges that (a) an individual shall not be held criminally or civilly liable under any U.S. federal or state trade secret law for the disclosure of a trade secret that is made (i) in
confidence to a U.S. federal, state, or local government official or to an attorney solely for the
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purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal, and
(b) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the
individual files any document containing the trade secret under seal; and does not disclose the trade secret, except pursuant to court order. Moreover, a Partner shall not be required to give prior notice to (or get prior authorization from)
Blackstone regarding any such communication or disclosure. Except as otherwise provided in this paragraph or under applicable law, under no circumstance is any Partner authorized to disclose any information covered by Blackstone or its
affiliates’ attorney-client privilege or attorney work product or Blackstone’s trade secrets without the prior written consent of Blackstone.
Section 10.8. Notices. Whenever notice is required or permitted by this Agreement to be given, such notice
shall be in writing (including telecopy or similar writing) and shall be given by hand delivery (including any courier service) or telecopy to any Partner at its address or telecopy number shown in the Partnership’s books and records or, if
given to the General Partner, at the address or telecopy number of the Partnership in New York City. Each such notice shall be effective (i) if given by telecopy, upon dispatch and (ii) if given by hand delivery, when delivered to the
address of such Partner, the General Partner or the Partnership specified as aforesaid.
Section 10.9. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall
be an original and all of which together shall constitute a single instrument. For the avoidance of doubt, a Person’s execution and delivery of this Agreement by electronic signature and electronic transmission (jointly, an “Electronic
Signature”), including via DocuSign or other similar method, shall constitute the execution and delivery of a counterpart of this Agreement by or on behalf of such Person and shall bind such Person to the terms of this Agreement. The parties
hereto agree that this Agreement and any additional information incidental hereto may be maintained as electronic records. Any Person executing and delivering this Agreement by an Electronic Signature further agrees to take any and all reasonable
additional actions, if any, evidencing its intent to be bound by the terms of this Agreement, as may be reasonably requested by the General Partner.
Section 10.10. Power of Attorney. Each Partner hereby irrevocably appoints the General Partner as such
Partner’s true and lawful representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and
file all instruments, documents and certificates which, from time to time, may be required to set forth any amendment to this Agreement or may be required by this Agreement or by the laws of the United States of America, the State of Delaware or any
other state in which the Partnership shall determine to do business, or any political subdivision or agency thereof, to execute, implement and continue the valid and subsisting existence of the Partnership. Such power of attorney is coupled with an
interest and shall survive and continue in full force and effect notwithstanding the subsequent Withdrawal from the Partnership of any Partner for any reason and shall survive and shall not be affected by the subsequent disability or incapacity of
such Partner.
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Section 10.11. Partner’s Will. Each
Partner and Withdrawn Partner shall include in his or her will a provision that addresses certain matters in respect of his or her obligations relating to the Partnership that is satisfactory to the General Partner and each such Partner and
Withdrawn Partner shall confirm annually to the Partnership, in writing, that such provision remains in his or her current will. Where applicable, any estate planning trust of such Partner or Withdrawn Partner to which a portion of such
Partner’s or Withdrawn Partner’s Interest is transferred shall include a provision substantially similar to such provision and the trustee of such trust shall confirm annually to the Partnership, in writing, that such provision or its
substantial equivalent remains in such trust. In the event any Partner or Withdrawn Partner fails to comply with the provisions of this Section 10.11 after the Partnership has notified such Partner or Withdrawn Partner of his or her failure to
so comply and such failure to so comply is not cured within 30 days of such notice, the Partnership may withhold any and all distributions to such Partner until the time at which such party complies with the requirements of this Section 10.11.
Section 10.12. Cumulative Remedies. Rights and remedies under this Agreement are cumulative and do not
preclude use of other rights and remedies available under applicable law.
Section 10.13. Legal Fees.
Except as more specifically provided herein, in the event of a legal dispute (including litigation, arbitration or mediation) between any Partner or Withdrawn Partner and the Partnership, arising in connection with any party seeking to enforce
Section 4.1(d) or any other provision of this Agreement relating to the Holdback, the Clawback Amount, the GP-Related Giveback Amount, the Capital Commitment Giveback Amount, the Net GP-Related Recontribution Amount or the Capital Commitment Recontribution Amount, the “losing” party to such dispute shall promptly reimburse the “victorious party” for all reasonable legal fees
and expenses incurred in connection with such dispute (such determination to be made by the relevant adjudicator). Any amounts due under this Section 10.13 shall be paid within 30 days of the date upon which such amounts are due to be paid and
such amounts remaining unpaid after such date shall accrue interest at the Default Interest Rate.
Section 10.14. Entire Agreement; Modifications. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. Subject
to Section 10.4, this Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. Except as provided herein, this Agreement may be amended or modified at any time by the General Partner
in its sole discretion, upon notification thereof to the Limited Partners.
Section 10.15. Section
Titles. The headings contained in this Agreement are for convenience and reference purposes only and shall not be deemed to alter or affect in any way the meaning or interpretation of any provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of
the day and year first above written.
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GENERAL PARTNER:
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SPFSA RE VII L.L.C.
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By:
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/s/ Peter Song
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Name: Peter Song
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Title: Authorized Person
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LIMITED PARTNERS AND SPECIAL PARTNERS:
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Limited Partners and Special Partners now admitted pursuant to the power of attorney now and hereafter granted to SPFSA RE VII L.L.C.
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SPFSA RE VII L.L.C.
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By:
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Blackstone Holdings II L.P., its sole member
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By:
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Blackstone Holdings I/II GP L.L.C., its general partner
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By:
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/s/ John G. Finley
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Name: John G. Finley
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Title: Chief Legal Officer and Secretary
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INITIAL LIMITED PARTNER, solely to reflect his Withdrawal from the Partnership:
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/s/ Peter Song
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Name: Peter Song
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Title: Initial Limited Partner
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Exhibit 10.9
Execution Version
HIGHLY CONFIDENTIAL &
TRADE SECRET
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES INFRASTRUCTURE III L.P.
AMENDED AND RESTATED
LIMITED
PARTNERSHIP AGREEMENT
Dated November 4, 2020
Effective as of December 24, 2019
THE
LIMITED PARTNERSHIP INTERESTS (THE “INTERESTS”) OF STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES INFRASTRUCTURE III L.P. (THE “PARTNERSHIP”) HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), THE SECURITIES LAWS OF ANY STATE IN THE UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE
ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS, AND ANY OTHER APPLICABLE
SECURITIES LAWS; AND (II) THE TERMS AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE INTERESTS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS AMENDED AND RESTATED LIMITED PARTNERSHIP
AGREEMENT. THEREFORE, PURCHASERS OF SUCH INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
Table of Contents
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ARTICLE I DEFINITIONS
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1
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Section 1.1. Definitions
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1
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Section 1.2. Terms Generally
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16
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ARTICLE II GENERAL PROVISIONS
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17
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Section 2.1. General Partner, Limited Partner, Special Partner
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17
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Section 2.2. Formation; Name; Foreign Jurisdictions
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17
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Section 2.3. Term
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17
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Section 2.4. Purposes; Powers
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17
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Section 2.5. Place of Business
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20
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Section 2.6. Withdrawal of Initial Limited Partner
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20
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ARTICLE III MANAGEMENT
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21
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Section 3.1. General Partner
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21
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Section 3.2. Partner Voting, etc.
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21
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Section 3.3. Management
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21
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Section 3.4. Responsibilities of Partners
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23
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Section 3.5. Exculpation and Indemnification
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24
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Section 3.6. Representations of Partners
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26
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Section 3.7. Tax Representation and Further Assurances
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27
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ARTICLE IV CAPITAL OF THE PARTNERSHIP
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28
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Section 4.1. Capital Contributions by Partners
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28
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Section 4.2. Interest
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35
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Section 4.3. Withdrawals of Capital
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36
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ARTICLE V PARTICIPATION IN PROFITS AND LOSSES
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36
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Section 5.1. General Accounting Matters
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36
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Section 5.2. GP-Related Capital
Accounts
|
|
|
38
|
|
|
Section 5.3. GP-Related Profit Sharing
Percentages
|
|
|
38
|
|
|
Section 5.4. Allocations of GP-Related Net
Income (Loss)
|
|
|
39
|
|
|
Section 5.5. Liability of Partners
|
|
|
40
|
|
|
Section 5.6. [Intentionally Omitted]
|
|
|
40
|
|
|
Section 5.7. Repurchase Rights, etc.
|
|
|
40
|
|
|
Section 5.8. Distributions
|
|
|
41
|
|
|
Section 5.9. Business Expenses
|
|
|
48
|
|
|
Section 5.10. Tax Capital Accounts; Tax Allocations
|
|
|
48
|
|
|
|
|
|
ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND DISCHARGE OF PARTNERSHIP
INTERESTS; TERMINATION
|
|
|
49
|
|
|
Section 6.1. Additional Partners
|
|
|
49
|
|
|
Section 6.2. Withdrawal of Partners
|
|
|
50
|
|
|
Section 6.3. GP-Related Partner Interests Not
Transferable
|
|
|
51
|
|
|
Section 6.4. Consequences upon Withdrawal of a Partner
|
|
|
52
|
|
|
|
|
|
|
|
|
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interests
|
|
|
53
|
|
|
Section 6.6. Dissolution of the Partnership
|
|
|
58
|
|
|
Section 6.7. Certain Tax Matters
|
|
|
58
|
|
|
Section 6.8. Special Basis Adjustments
|
|
|
60
|
|
|
|
|
|
ARTICLE VII CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS; ALLOCATIONS;
DISTRIBUTIONS
|
|
|
60
|
|
|
Section 7.1. Capital Commitment Interests, etc.
|
|
|
60
|
|
|
Section 7.2. Capital Commitment Capital Accounts
|
|
|
61
|
|
|
Section 7.3. Allocations
|
|
|
62
|
|
|
Section 7.4. Distributions
|
|
|
62
|
|
|
Section 7.5. Valuations
|
|
|
67
|
|
|
Section 7.6. Disposition Election
|
|
|
67
|
|
|
Section 7.7. Capital Commitment Special Distribution Election
|
|
|
67
|
|
|
|
|
|
ARTICLE VIII WITHDRAWAL; ADMISSION OF NEW PARTNERS
|
|
|
68
|
|
|
Section 8.1. Partner Withdrawal; Repurchase of Capital Commitment Interests
|
|
|
68
|
|
|
Section 8.2. Transfer of Partner’s Capital Commitment Interest
|
|
|
73
|
|
|
Section 8.3. Compliance with Law
|
|
|
74
|
|
|
|
|
|
ARTICLE IX DISSOLUTION
|
|
|
74
|
|
|
Section 9.1. Dissolution
|
|
|
74
|
|
|
Section 9.2. Final Distribution
|
|
|
74
|
|
|
Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests
|
|
|
75
|
|
|
|
|
|
ARTICLE X MISCELLANEOUS
|
|
|
75
|
|
|
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial
|
|
|
75
|
|
|
Section 10.2. Ownership and Use of the Blackstone Name
|
|
|
77
|
|
|
Section 10.3. Written Consent
|
|
|
77
|
|
|
Section 10.4. Letter Agreements; Schedules
|
|
|
77
|
|
|
Section 10.5. Governing Law, Separability of Provisions
|
|
|
78
|
|
|
Section 10.6. Successors and Assigns; Third Party Beneficiaries
|
|
|
78
|
|
|
Section 10.7. Confidentiality
|
|
|
78
|
|
|
Section 10.8. Notices
|
|
|
79
|
|
|
Section 10.9. Counterparts
|
|
|
80
|
|
|
Section 10.10. Power of Attorney
|
|
|
80
|
|
|
Section 10.11. Partner’s Will
|
|
|
80
|
|
|
Section 10.12. Cumulative Remedies
|
|
|
80
|
|
|
Section 10.13. Legal Fees
|
|
|
80
|
|
|
Section 10.14. Entire Agreement; Modifications
|
|
|
81
|
|
|
Section 10.15. Section Titles
|
|
|
81
|
|
3
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES INFRASTRUCTURE III L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of Strategic Partners Fund Solutions Associates Infrastructure III L.P., a
Delaware limited partnership (the “Partnership”), dated November 4, 2020, and effective as of December 24, 2019, by and among SPFSA Infrastructure III L.L.C., a Delaware limited liability company, as general partner of the
Partnership (in its capacity as general partner of the Partnership (the “General Partner”)), Peter Song (the “Initial Limited Partner”), as initial limited partner, and such other persons that are admitted to the
Partnership as partners after the date hereof in accordance herewith.
WITNESSETH
WHEREAS, the Partnership was formed pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101, et seq., as it may be amended from time to time (the “Partnership Act”), pursuant to a certificate of limited partnership filed in the office of the Secretary of State of the State of
Delaware on June 11, 2020;
WHEREAS, the General Partner and the Initial Limited Partner entered into a Limited
Partnership Agreement dated as of June 7, 2019 (the “Original Agreement”); and
WHEREAS, the parties
hereto desire to enter into this Agreement, and hereby amend and restate the Original Agreement in its entirety and reflect the withdrawal of the Initial Limited Partner, in each case effective on December 24, 2019;
NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby,
the parties hereto agree that the Original Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall have the following
meanings for purposes of this Agreement:
“Adjustment Amount” has the meaning set forth in
Section 8.1(b)(ii).
“Advancing Party” has the meaning set forth in
Section 7.1(b).
“Affiliate” when used with reference to another person means any
person (other than the Partnership), directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person, which may include, for greater certainty and as the context requires,
endowment funds, estate planning vehicles (including any trusts, family members, family investment vehicles, descendant, trusts and other related persons and entities), charitable programs and other similar and/or related vehicles or accounts
associated with or established by Blackstone and/or its affiliates, partners and current and/or former employees and/or related persons.
“Agreement” means this Amended and Restated
Limited Partnership Agreement, as it may be further amended, supplemented, restated or otherwise modified from time to time.
“Applicable Collateral Percentage” with respect to any Firm Collateral or Special Firm
Collateral, has the meaning set forth in the books and records of the Partnership with respect thereto.
“Bankruptcy” means, with respect to any person, the occurrence of any of the following events:
(i) the filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his or her assets; (ii) the filing by such person of a voluntary petition in Bankruptcy or the seeking of relief under Title
11 of the United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his or her inability to pay his or her debts as they become due; (iii) the failure of such person to
pay his or her debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of an answer admitting the material allegations of, or his or her consenting
to, or defaulting in answering, a Bankruptcy petition filed against him or her in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States Code, as now constituted or as hereafter amended; or (vi) the entry of an
order, judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a trustee or custodian of his or her assets and the continuance of such order,
judgment or decree unstayed and in effect for a period of 60 consecutive days.
“BE
Agreement” means the limited partnership agreement, limited liability company agreement or other governing document of any limited partnership, limited liability company or other entity referred to in the definition of “Blackstone
Entity,” as such limited partnership agreement, limited liability company agreement or other governing document may be amended, supplemented, restated or otherwise modified to date, and as such limited partnership agreement, limited liability
company agreement or other governing document may be further amended, supplemented, restated or otherwise modified from time to time.
“BE Investment” means any direct or indirect investment by any Blackstone Entity.
“Blackstone” means, collectively, The Blackstone Group Inc., a Delaware corporation, and any
predecessor or successor thereto, and any Affiliate thereof (excluding any natural persons and any portfolio companies, investments or similar entities of any Blackstone-sponsored fund (or any affiliate thereof that is not otherwise an Affiliate of
The Blackstone Group Inc.)).
“Blackstone Entity” means any partnership, limited liability
company or other entity (excluding any natural persons and any portfolio companies of any Blackstone-sponsored fund) that is an Affiliate of The Blackstone Group Inc., as designated by the General Partner in its sole discretion.
2
“Business Day” means any day other than a
Saturday, Sunday or other day on which banks are authorized or required by law to be closed in New York, New York.
“Capital Commitment Capital Account” means, with respect to each Capital Commitment Investment
for each Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such Capital Commitment Investment and any net income allocated to such Partner pursuant to
Section 7.3 with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment Investment to such Partner and any net losses allocated to such Partner with respect to such
Capital Commitment Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the related Capital Commitment Investment shall be adjusted as if the asset distributed had been
sold in a taxable transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners participating in such Capital Commitment Investment pursuant to Section 7.3.
“Capital Commitment Class A Interest” has the meaning set forth in
Section 7.4(f).
“Capital Commitment Class B Interest” has the
meaning set forth in Section 7.4(f).
“Capital Commitment Defaulting Party” has the
meaning set forth in Section 7.4(g)(ii)(A).
“Capital Commitment Deficiency
Contribution” has the meaning set forth in Section 7.4(g)(ii)(A).
“Capital
Commitment Disposable Investment” has the meaning set forth in Section 7.4(f).
“Capital Commitment Distributions” means, with respect to each Capital Commitment Investment,
all amounts of distributions, received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Capital Commitment SP Infrastructure III Interest, if any, less any costs, fees and expenses of the Partnership
with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of such Capital
Commitment Investment as it may determine in good faith is appropriate.
“Capital Commitment
Giveback Amount” has the meaning set forth in Section 7.4(g)(i).
“Capital Commitment
Interest” means the interest of a Partner in a specific Capital Commitment Investment as provided herein.
3
“Capital Commitment Investment” means any
Capital Commitment SP Infrastructure III Investment, but shall exclude any GP-Related Investment.
“Capital Commitment Liquidating Share” means, with respect to each Capital Commitment
Investment, in the case of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with Section 9.3) immediately prior to dissolution.
“Capital Commitment Net Income (Loss)” means, with respect to each Capital Commitment
Investment, all amounts of income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition, in whole or in part, of such Capital Commitment Investment,
less any costs, fees and expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated thereto.
“Capital Commitment Partner Carried Interest” means, with respect to any Partner, the
aggregate amount of distributions or payments received by such Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest.” Capital Commitment Partner Carried Interest includes any amount
initially received by an Affiliate of the Partnership from any fund (including SP Infrastructure III, any similar funds formed after the date hereof, and any Other Blackstone Funds (as defined in the SP Infrastructure III Partnership Agreement),
whether or not in existence as of the date hereof) to which such Affiliate serves as general partner (or in another similar capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions
thereto (or the capital contributions to make the investment of such fund giving rise to such “carried interest”).
“Capital Commitment Partner Interest” means a Partner’s interest in the Partnership which
relates to the Capital Commitment SP Infrastructure III Interest.
“Capital Commitment Profit
Sharing Percentage” means, with respect to each Capital Commitment Investment, the percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the
Partnership.
“Capital Commitment Recontribution Amount” has the meaning set forth in
Section 7.4(g)(i).
“Capital Commitment-Related Capital Contributions” has the
meaning set forth in Section 7.1(a)(ii).
“Capital Commitment-Related Commitment”
means, with respect to any Partner, such Partner’s commitment to the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any
such commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
4
“Capital Commitment SP Infrastructure III
Commitment” means the Capital Commitment (as defined in the SP Infrastructure III Partnership Agreement), if any, of the Partnership to SP Infrastructure III that relates solely to the Capital Commitment SP Infrastructure III Interest, if
any.
“Capital Commitment SP Infrastructure III Interest” means the Interest (as defined
in the SP Infrastructure III Partnership Agreement), if any, of the Partnership as a capital partner of SP Infrastructure III.
“Capital Commitment SP Infrastructure III Investment” means the Partnership’s interest in
a specific investment of SP Infrastructure III held by the Partnership through the Capital Commitment SP Infrastructure III Interest.
“Capital Commitment Special Distribution” has the meaning set forth in Section 7.7(a).
“Capital Commitment Value” has the meaning set forth in Section 7.5.
“Carried Interest” means (i) “Carried Interest,” as defined in the SP Infrastructure
III Partnership Agreement, and (ii) any other carried interest distribution to a Fund GP pursuant to any SP Infrastructure III Agreement. In the case of each of (i) and (ii) above, except as determined by the General Partner, the amount
shall not be less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto (in each case which the General
Partner may allocate among all or any portion of the GP-Related Investments as it determines in good faith is appropriate).
“Carried Interest Give Back Percentage” means, for any Partner or Withdrawn Partner, subject
to Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner from the Partnership or any Other Fund GPs or their Affiliates in respect of Carried Interest
by (B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership or any Other Fund GP or any of their Affiliates (in any capacity) in respect of Carried Interest. For purposes of
determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership or any Other Fund GPs on behalf of a Partner or Withdrawn Partner (but not the Trust Income thereon) shall be
deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as members, partners or other equity interest owners of the Partnership or any of the Other Fund GPs or their Affiliates.
“Carried Interest Sharing Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
5
“Cause” means the occurrence or existence
of any of the following with respect to any Partner, as determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any
non-competition agreement, (x) any material breach of this Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such Partner’s
deliberate failure to perform his or her duties to the Partnership or any of its Affiliates or (z) such Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Partnership or any of its Affiliates in
a material way as determined by the General Partner; provided, that in the case of any of the foregoing clauses (w), (x), (y) and (z), the General Partner has given such Partner written notice (a “Notice of Breach”) within 15
days after the General Partner becomes aware of such action and such Partner fails to cure such breach, failure to perform or conduct or behavior within 15 days after receipt of such Notice of Breach from the General Partner (or such longer period,
not to exceed an additional 15 days, as shall be reasonably required for such cure; provided, that such Partner is diligently pursuing such cure); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against
the Partnership or any of its Affiliates; or (iii) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony (under U.S. law or its equivalent in any jurisdiction) or crime (including any misdemeanor
charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of competent jurisdiction, by a regulatory body or by a self-regulatory body
having authority with respect to securities laws, rules or regulations of the applicable securities industry, that such Partner individually has violated any applicable securities laws or any rules or regulations thereunder, or any rules of any such
self-regulatory body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such Partner’s ability to function as a Partner of the Partnership, taking into
account the services required of such Partner and the nature of the business of the Partnership and its Affiliates or (B) the business of the Partnership and its Affiliates or (iv) becoming subject to an event described in Rule
506(d)(1)(i)-(viii) of Regulation D under the Securities Act.
“Clawback Adjustment
Amount” has the meaning set forth in Section 5.8(e)(ii)(C).
“Clawback
Amount” means the “Clawback Amount”, as defined in the SP Infrastructure III Partnership Agreement, and any other clawback amount payable to the limited partners of SP Infrastructure III or to SP Infrastructure III pursuant to any
SP Infrastructure III Agreement, as applicable.
“Clawback Provisions” means
Section 9.4 of the SP Infrastructure III Partnership Agreement and any other similar provisions in any other SP Infrastructure III Agreement existing heretofore or hereafter entered into.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor
statute. Any reference herein to a particular provision of the Code means, where appropriate, the corresponding provision in any successor statute.
“Commitment Agreements” means the agreements between the Partnership or an Affiliate thereof
and Partners, pursuant to which each Partner undertakes certain obligations, including the obligation to make capital contributions pursuant to Section 4.1 and/or Section 7.1. Each Commitment Agreement is hereby incorporated by reference
as between the Partnership and the relevant Partner.
6
“Contingent” means subject to repurchase
rights and/or other requirements.
The term “control” when used with reference to any
person means the power to direct the management and policies of such person, directly or indirectly, by or through stock or other equity interest ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or
understanding (written or oral) with one or more other persons by or through stock or other equity interest ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings
correlative to the foregoing.
“Controlled Entity” when used with reference to another
person means any person controlled by such other person.
“Covered Person” has the meaning
set forth in Section 3.5(a).
“Deceased Partner” means any Partner or Withdrawn
Partner who has died or who suffers from Incompetence. For purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the case may
be, that have received such Deceased Partner’s interest in the Partnership.
“Default Interest
Rate” means the lower of (i) the sum of (a) the Prime Rate and (b) 5% or (ii) the highest rate of interest permitted under applicable law.
“Delaware Arbitration Act” has the meaning set forth in Section 10.1(d).
“Electronic Signature” has the meaning set forth in Section 10.9.
“Estate Planning Vehicle” has the meaning set forth in Section 6.3(a).
“Excess Holdback” has the meaning set forth in Section 4.1(d)(v)(A).
“Excess Holdback Percentage” has the meaning set forth in Section 4.1(d)(v)(A).
“Excess Tax-Related Amount” has the meaning set forth
in Section 5.8(e).
“Existing Partner” means any Partner who is neither a Retaining
Withdrawn Partner nor a Deceased Partner.
“Final Event” means the death, Total
Disability, Incompetence, Bankruptcy, liquidation, dissolution or Withdrawal from the Partnership of any person who is a Partner.
“Firm Advances” has the meaning set forth in Section 7.1(b).
7
“Firm Collateral” means a Partner’s or
Withdrawn Partner’s interest in one or more partnerships or limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been pledged or made
available to the Trustee(s) to satisfy all or any portion of the Excess Holdback of such Partner or Withdrawn Partner as more fully described in the Partnership’s books and records; provided, that for all purposes hereof (and any other
agreement (e.g., the Trust Agreement) that incorporates the meaning of the term “Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”, excluding references to
“Firm Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).
“Firm
Collateral Realization” has the meaning set forth in Section 4.1(d)(v)(B).
“Fiscal
Year” means a calendar year, or any other period chosen by the General Partner.
“Fund
GP” means the Partnership (only with respect to the GP-Related SP Infrastructure III Interest) and the Other Fund GPs.
“GAAP” means U.S. generally accepted accounting principles.
“General Partner” means SPFSA Infrastructure III L.L.C. and any person admitted to the
Partnership as an additional or substitute general partner of the Partnership in accordance with the provisions of this Agreement (until such time as such person ceases to be a general partner of the Partnership as provided herein or in the
Partnership Act).
“Giveback Amount(s)” means the amount(s) payable by partners of SP
Infrastructure III pursuant to the Giveback Provisions.
“Giveback Provisions” means
Section 5.2(b) of the SP Infrastructure III Partnership Agreement and any other similar provisions in any other SP Infrastructure III Agreement existing heretofore or hereafter entered into.
“Governmental Entity” has the meaning set forth in Section 10.7(b).
“GP Commitment” has the meaning set forth in the SP Infrastructure III Partnership Agreement.
“GP-Related Capital Account” has the meaning set
forth in Section 5.2(a).
“GP-Related Capital
Contribution” has the meaning set forth in Section 4.1(a).
“GP-Related Class A Interest” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Class B Interest” has
the meaning set forth in Section 5.8(a)(ii).
8
“GP-Related
Commitment”, with respect to any Partner, means such Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of
the Partnership, including, without limitation, any such commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“GP-Related Defaulting Party” has the meaning set
forth in Section 5.8(d)(ii)(A).
“GP-Related
Deficiency Contribution” has the meaning set forth in Section 5.8(d)(ii)(A).
“GP-Related Disposable Investment” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Giveback Amount” has the meaning set forth
in Section 5.8(d)(i)(A).
“GP-Related
Investment” means any investment (direct or indirect) of the Partnership in respect of the GP-Related SP Infrastructure III Interest (including, without limitation, any
GP-Related SP Infrastructure III Investment, but excluding any Capital Commitment Investment).
“GP-Related Net Income (Loss)” has the meaning set
forth in Section 5.1(b).
“GP-Related Partner
Interest” of a Partner means all interests of such Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect
to the GP-Related SP Infrastructure III Interest and with respect to all GP-Related Investments.
“GP-Related Profit Sharing Percentage” means the
“Carried Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each Partner; provided, that any references in this Agreement to
GP-Related Profit Sharing Percentages made (i) in connection with voting or voting rights or (ii) GP-Related Capital Contributions with respect to GP-Related
Investments (including Section 5.3(b)) means the “Non-Carried Interest Sharing Percentage” of each Partner; provided further, that the term
“GP-Related Profit Sharing Percentage” shall not include any Capital Commitment Profit Sharing Percentage.
“GP-Related Recontribution Amount” has the meaning set
forth in Section 5.8(d)(i)(A).
“GP-Related Required
Amounts” has the meaning set forth in Section 4.1(a).
“GP-Related SP Infrastructure III Interest” means the interest held by the Partnership in SP Infrastructure III in the Partnership’s capacity as general partner of SP Infrastructure III, excluding any
Capital Commitment SP Infrastructure III Interest.
“GP-Related SP Infrastructure III Investment” means
the Partnership’s interest in a Portfolio Investment (for purposes of this definition, as defined in the SP Infrastructure III Partnership Agreement) in the Partnership’s capacity as the general partner of SP Infrastructure III, but does
not include any Capital Commitment Investment.
9
“GP-Related
Unallocated Percentage” has the meaning set forth in Section 5.3(b).
“GP-Related Unrealized Net Income (Loss)” attributable to any GP-Related SP Infrastructure III Investment as of any date means the GP-Related Net Income (Loss) that
would be realized by the Partnership with respect to such GP-Related SP Infrastructure III Investment if SP Infrastructure III’s entire portfolio of investments were sold on such date for cash in an
amount equal to their aggregate value on such date (determined in accordance with Section 5.1(e)) and all distributions payable by SP Infrastructure III to the Partnership (indirectly through the general partner of SP Infrastructure III)
pursuant to any SP Infrastructure III Agreement with respect to such GP-Related SP Infrastructure III Investment were made on such date. “GP-Related Unrealized Net
Income (Loss)” attributable to any other GP-Related Investment (other than any Capital Commitment Investment) as of any date means the GP-Related Net Income (Loss)
that would be realized by the Partnership with respect to such GP-Related Investment if such GP-Related Investment were sold on such date for cash in an amount equal to
its value on such date (determined in accordance with Section 5.1(e)).
“Holdback”
has the meaning set forth in Section 4.1(d)(i).
“Holdback Percentage” has the
meaning set forth in Section 4.1(d)(i).
“Holdback Vote” has the meaning set forth in
Section 4.1(d)(iv)(A).
“Holdings” means Blackstone Holdings II L.P., a Delaware
limited partnership.
“Incompetence” means, with respect to any Partner, the determination
by the General Partner in its sole discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his or her person or his or her property.
“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d)(i).
“Initial Limited Partner” has the meaning set forth in the preamble hereto.
“Interest” means a partnership interest (as defined in
§17-101(13) of the Partnership Act) in the Partnership, including any interest that is held by a Retaining Withdrawn Partner and including any Partner’s
GP-Related Partner Interest and Capital Commitment Partner Interest.
“Investment” means any investment (direct or indirect) of the Partnership designated by the
General Partner from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments, and (b) Capital Commitment Investments.
10
“Investor Note” means a promissory note of
a Partner evidencing indebtedness incurred by such Partner to purchase a Capital Commitment Interest, the terms of which were or are approved by the General Partner and which is secured by such Capital Commitment Interest, all other Capital
Commitment Interests of such Partner and all other interests of such Partner in Blackstone Entities; provided, that such promissory note may also evidence indebtedness relating to other interests of such Partner in Blackstone Entities, and
such indebtedness shall be prepayable with Capital Commitment Net Income (whether or not such indebtedness relates to Capital Commitment Investments) as set forth in this Agreement, the Investor Note, the other BE Agreements and any documentation
relating to Other Sources; provided further, that references to “Investor Notes” herein refer to multiple loans made pursuant to such note, whether made with respect to Capital Commitment Investments or other BE Investments,
and references to an “Investor Note” refer to one such loan as the context requires. In no way shall any indebtedness incurred to acquire Capital Commitment Interests or other interests in Blackstone Entities be considered part of the
Investor Notes for purposes hereof if the Lender or Guarantor is not the lender or guarantor with respect thereto.
“Investor Special Partner” means any Special Partner so designated at the time of its
admission by the General Partner as a Partner of the Partnership.
“Issuer” means the
issuer of any Security comprising part of an Investment.
“L/C” has the meaning set forth
in Section 4.1(d)(vi).
“L/C Partner” has the meaning set forth in
Section 4.1(d)(vi).
“Lender or Guarantor” means Blackstone Holdings I L.P. in its
capacity as lender or guarantor under the Investor Notes, or any other Affiliate of the Partnership that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests or other interests in Blackstone Entities.
“Limited Partner” means each of the parties listed as Limited Partners in the books and
records of the Partnership or any person that has been admitted to the Partnership as a substituted or additional Limited Partner in accordance with the terms of this Agreement, each in its capacity as a limited partner of the Partnership. For the
avoidance of doubt, the term “Limited Partner” does not include the General Partner or any Special Partners (notwithstanding the fact that Special Partners are limited partners of the Partnership).
“Loss Amount” has the meaning set forth in Section 5.8(e)(i)(A).
“Loss Investment” has the meaning set forth in Section 5.8(e).
“Losses” has the meaning set forth in Section 3.5(b)(i).
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“Majority in Interest of the Partners” on
any date (a “vote date”) means one or more persons who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date and who, as of the last day of the most recent accounting period ending on
or prior to the vote date (or as of such later date on or prior to the vote date selected by the General Partner as of which the Partners’ capital account balances can be determined), have aggregate capital account balances representing at
least a majority in amount of the total capital account balances of all the persons who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
“Net Carried Interest Distribution” has the meaning set forth in Section 5.8(e)(i)(C).
“Net Carried Interest Distribution Recontribution Amount” has the meaning set forth in
Section 5.8(e)(i)(C).
“Net GP-Related Recontribution
Amount” has the meaning set forth in Section 5.8(d)(i)(A).
“Non-Carried Interest” means, with respect to each GP-Related Investment, all amounts of distributions, other than Carried Interest and other than Capital Commitment
Distributions, received by the Partnership with respect to such GP-Related Investment, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of
costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments as it may
determine in good faith is appropriate.
“Non-Carried
Interest Sharing Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Non-Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
“Non-Contingent” means generally not subject to
repurchase rights or other requirements.
“Nonvoting Partner” has the meaning set forth in
Section 8.2.
“Nonvoting Special Partner” has the meaning set forth in
Section 6.1(a).
“Original Agreement” has the meaning set forth in the recitals.
“Other Fund GPs” means any other entity (other than the Partnership) through which any
Partner, Withdrawn Partner or any other person directly receives any amounts of Carried Interest, and any successor thereto; provided, that this includes any other entity which has in its organizational documents a provision which indicates
that it is a “Fund GP” or an “Other Fund GP”; provided further, that notwithstanding any of the foregoing, neither SPFSA Infrastructure III L.L.C. nor Holdings nor any Estate Planning Vehicle established for the
benefit of family members of any Partner or of any member or partner of any Other Fund GP shall be considered an “Other Fund GP” for purposes hereof.
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“Other Sources” means
(i) distributions or payments of Capital Commitment Partner Carried Interest (which shall include amounts of Capital Commitment Partner Carried Interest which are not distributed or paid to a Partner but are instead contributed to a trust (or
similar arrangement) to satisfy any “holdback” obligation with respect thereto) and (ii) distributions from Blackstone Entities (other than the Partnership) to such Partner.
“Partner” means any person who is a partner of the Partnership, including the Limited
Partners, the General Partner and the Special Partners. Except as otherwise specifically provided herein, no group of Partners, including the Special Partners and any group of Partners in the same Partner Category, shall have any right to vote as a
class on any matter relating to the Partnership, including, but not limited to, any merger, reorganization, dissolution or liquidation.
“Partner Category” means the General Partner, Existing Partners, Retaining Withdrawn Partners
or Deceased Partners, each referred to as a group for purposes hereof.
“Partnership” has
the meaning set forth in the preamble hereto.
“Partnership Act” has the meaning set forth
in the preamble hereto.
“Partnership Affiliate” has the meaning set forth in
Section 3.3(b).
“Partnership Affiliate Governing Agreement” has the meaning set
forth in Section 3.3(b).
“Pledgable Blackstone Interests” has the meaning set forth
in Section 4.1(d)(v)(A).
“Prime Rate” means the rate of interest per annum publicly
announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate.
“Qualifying
Fund” means any fund designated by the General Partner as a “Qualifying Fund”.
“Repurchase Period” has the meaning set forth in Section 5.8(c).
“Required Rating” has the meaning set forth in Section 4.1(d)(vi).
“Retained Portion” has the meaning set forth in Section 7.6(a).
“Retaining Withdrawn Partner” means a Withdrawn Partner who has retained a GP-Related Partner Interest, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Nonvoting Special Partner for all purposes hereof.
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“Securities” means any debt or equity
securities of an Issuer and its subsidiaries and other Controlled Entities constituting part of an Investment, including without limitation common and preferred stock, interests in limited partnerships and interests in limited liability companies
(including warrants, rights, put and call options and other options relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other
property or interests commonly regarded as securities, interests in real property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly
regarded as money-market investments, bank deposits and interests in personal property of all kinds, whether tangible or intangible.
“Securities Act” means the U.S. Securities Act of 1933, as amended from time to time, or any
successor statute.
“Settlement Date” has the meaning set forth in Section 6.5(a).
“SMD Agreements” means the agreements between the Partnership and/or one or more of its
Affiliates and certain of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby incorporated by reference as between the Partnership and
the relevant Partner.
“SP Infrastructure III” means (i) Strategic Partners
Infrastructure III L.P., a Delaware limited partnership, (ii) any alternative investment vehicles relating to, or formed in connection with, any of the partnerships referred to in clauses (i) and (iii) of this definition, (iii) any
parallel fund, managed account or other capital vehicle relating to, or formed in connection with, the partnership referred to in clause (i) of this definition and (iv) any other limited partnership, limited liability company or other
entity (in each case, whether now or hereafter established) of which the Partnership or the General Partner serves, directly or indirectly, as the general partner, special general partner, manager, managing member or in a similar capacity.
“SP Infrastructure III Agreements” means the collective reference to (i) the SP
Infrastructure III Partnership Agreement and (ii) any other SP Infrastructure III partnership, limited liability company or other governing agreements, as each may be amended, supplemented, restated or otherwise modified from time to time.
“SP Infrastructure III Partnership Agreement” means the partnership agreement of the limited
partnership named in clause (i) of the definition of “SP Infrastructure III,” as it may be amended, supplemented, restated or otherwise modified from time to time.
“Special Firm Collateral” means interests in a Qualifying Fund or other assets that have been
pledged to the Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the Partnership’s books and records.
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“Special Firm Collateral Realization” has
the meaning set forth in Section 4.1(d)(viii)(B).
“Special Partner” means any person
shown in the books and records of the Partnership as a Special Partner of the Partnership, including any Nonvoting Special Partner and any Investor Special Partner.
“S&P” means Standard & Poor’s Ratings Group, and any successor thereto.
“Subject Investment” has the meaning set forth in Section 5.8(e)(i).
“Subject Partner” has the meaning set forth in Section 4.1(d)(iv)(A).
“Successor in Interest” means any (i) shareholder of; (ii) trustee, custodian,
receiver or other person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or receiver, or former officer,
director or partner, or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or assign of, any Partner, whether
by operation of law or otherwise.
“Tax Advances” has the meaning set forth in
Section 6.7(d).
“Tax Matters Partner” has the meaning set forth in
Section 6.7(b).
“TM” has the meaning set forth in Section 10.2.
“Total Disability” means the inability of a Limited Partner substantially to perform the
services required of such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether
arising out of sickness, accident or otherwise.
“Transfer” has the meaning set forth in
Section 8.2.
“Trust Account” has the meaning set forth in the Trust Agreement.
“Trust Agreement” means the Trust Agreement dated as of the date set forth therein, as
amended, supplemented, restated or otherwise modified from time to time, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time to time.
“Trust Amount” has the meaning set forth in the Trust Agreement.
“Trust Income” has the meaning set forth in the Trust Agreement.
“Trustee(s)” has the meaning set forth in the Trust Agreement.
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“Unadjusted Carried Interest Distributions”
has the meaning set forth in Section 5.8(e)(i)(B).
“Unallocated Capital Commitment
Interests” has the meaning set forth in Section 8.1(f).
“U.S.” means the
United States of America.
“W-8BEN” has the
meaning set forth in Section 3.7.
“W-8BEN-E” has the meaning set forth in Section 3.7.
“W-8IMY” has the meaning set forth in
Section 3.7.
“W-9” has the meaning set forth
in Section 3.7.
“Withdraw” or “Withdrawal” means, with respect to a
Partner, such Partner ceasing to be a partner of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary), unless the context
shall limit the type of withdrawal to a specific reason, and “Withdrawn” with respect to a Partner means, as aforesaid, such Partner ceasing to be a partner of the Partnership.
“Withdrawal Date” means the date of the Withdrawal from the Partnership of a Withdrawn
Partner.
“Withdrawn Partner” means a Limited Partner whose
GP-Related Partner Interest or Capital Commitment Partner Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include,
unless the context requires otherwise, the estate or legal representatives of any such Partner.
Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to both the singular
and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “person” includes individuals, partnerships (including limited liability
partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions thereof) and other associations and entities. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
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ARTICLE II
GENERAL PROVISIONS
Section 2.1. General Partner, Limited Partner, Special Partner,. The Partners may be
General Partners, Limited Partners or Special Partners. The General Partner as of the date hereof is SPFSA Infrastructure III L.L.C. and the Limited Partners as of the date hereof are those persons shown as Limited Partners in the books and records
of the Partnership and the Special Partners as of the date hereof are those persons shown as Special Partners in the books and records of the Partnership as of the date hereof. The books and records of the Partnership contain the GP-Related Profit Sharing Percentage and GP-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to the GP-Related Investments of the Partnership as of the date hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each
Partner (including, without limitation, the General Partner) with respect to the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to
time to reflect additional GP-Related Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by
the Partnership of Capital Commitment Investments, the GP-Related Profit Sharing Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the Capital
Commitment Profit Sharing Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the admission of additional Partners, the Withdrawal of Partners, and the transfer or assignment of interests
in the Partnership pursuant to the terms of this Agreement. At the time of admission of each additional Partner, the General Partner shall determine in its sole discretion the GP-Related Investments and
Capital Commitment Investments in which such Partner shall participate and such Partner’s GP-Related Commitment, Capital Commitment-Related Commitment, GP-Related
Profit Sharing Percentage with respect to each such GP-Related Investment and Capital Commitment Profit Sharing Percentage with respect to each such Capital Commitment Investment. Each Partner may have a GP-Related Partner Interest and/or a Capital Commitment Partner Interest.
Section 2.2. Formation; Name; Foreign Jurisdictions. The Partnership is hereby continued as a limited
partnership pursuant to the Partnership Act and shall conduct its activities on and after the date hereof under the name of Strategic Partners Fund Solutions Associates VIII L.P. The certificate of limited partnership of the Partnership may be
amended and/or restated from time to time by the General Partner, as an “authorized person” (within the meaning of the Partnership Act). The General Partner is further authorized to execute and deliver and file any other certificates (and
any amendments and/or restatements thereof) necessary for the Partnership to qualify to do business in a jurisdiction in which the Partnership may wish to conduct business.
Section 2.3. Term. The term of the Partnership shall continue until December 31, 2068, unless earlier
dissolved and its affairs wound up in accordance with this Agreement and the Partnership Act.
Section 2.4. Purposes; Powers. (a) The purposes of the Partnership shall be, directly
or indirectly through subsidiaries or Affiliates:
(i) to serve as the general partner of SP Infrastructure
III and perform the functions of a general partner of SP Infrastructure III specified in the SP Infrastructure III Agreements;
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(ii) to serve as, and hold the Capital Commitment SP
Infrastructure III Interest as, a capital partner (and, if applicable, a limited partner and/or a general partner) of SP Infrastructure III and perform the functions of a capital partner (and, if applicable, a limited partner and/or a general
partner) of SP Infrastructure III specified in the SP Infrastructure III Agreements;
(iii) to invest in
Capital Commitment Investments and/or GP-Related Investments and acquire and invest in Securities or other property directly or indirectly through SP Infrastructure III;
(iv) to make the GP Commitment or a portion thereof, directly or indirectly, and to invest in GP-Related Investments, Capital Commitment Investments and other Investments and acquire and invest in Securities or other property either directly or indirectly through another entity;
(v) to serve as a general partner or limited partner of SP Infrastructure III and / or other partnerships and
perform the functions of a general partner or limited partner, member, shareholder or other equity interest owner specified in the respective partnership agreement, limited liability company agreement, charter or other governing documents, as
amended, supplemented, restated or otherwise modified from time to time, of any such partnership;
(vi) to
serve as a member, shareholder or other equity interest owner of limited liability companies, other companies, corporations or other entities and perform the functions of a member, shareholder or other equity interest owner specified in the
respective limited liability company agreement, charter or other governing documents, as amended, supplemented, restated or otherwise modified from time to time, of any such limited liability company, company, corporation or other entity;
(vii) to carry on such other businesses, perform such other services and make such other investments as are
deemed desirable by the General Partner and as are permitted under the Partnership Act, the SP Infrastructure III Agreements, and any applicable partnership agreement, limited liability company agreement, charter or other governing document referred
to in clause (v) or (vi) above, in each case as the same may be amended, supplemented, restated or otherwise modified from time to time;
(viii) any other lawful purpose; and
(ix) to do all things necessary, desirable, convenient or incidental thereto.
(b) In furtherance of its purposes, the Partnership shall have all powers necessary, suitable or convenient for the
accomplishment of its purposes, alone or with others, as principal or agent, including the following:
(i)
to be and become a general partner or limited partner of partnerships, a member of limited liability companies, a holder of common and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with
the making of Investments or the acquisition, holding or disposition of Securities or other property or as otherwise deemed appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection
therewith;
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(ii) to acquire and invest in general partner or limited
partner interests, in limited liability company interests, in common and preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or
direct or indirect interests therein, whether such Investments and Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company
interests, stock, interests, obligations, Investments or Securities or other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or
short, options on futures contracts;
(iii) to buy, sell and otherwise acquire investments, whether such
investments are readily marketable or not;
(iv) to invest and reinvest the cash assets of the Partnership
in money-market or other short-term investments;
(v) to hold, receive, mortgage, pledge, grant security interests over, lease, transfer, exchange or otherwise
dispose of, grant options with respect to, and otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or owned by the Partnership;
(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by mortgage,
pledge, conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and to buy,
sell, pledge or otherwise dispose of any such instrument or evidence of indebtedness;
(vii) to lend any of
its property or funds, either with or without security, at any legal rate of interest or without interest;
(viii) to have and maintain one or more offices within or without the State of Delaware, and in connection
therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection with the maintenance of such office or offices;
(ix) to open, maintain and close accounts, including margin accounts, with brokers and futures commission
merchants;
(x) to open, maintain and close bank accounts and draw checks and other orders for the payment
of moneys;
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(xi) to engage accountants, auditors, custodians, investment
advisers, attorneys and any and all other agents and assistants, both professional and nonprofessional, and to compensate any of them as may be necessary or advisable;
(xii) to form or cause to be formed and to own the stock of one or more corporations, whether foreign or
domestic, to form or cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic and to form or cause to be formed and be a member or manager or both of one or more limited liability companies;
(xiii) to enter into, make and perform all contracts, agreements and other undertakings as may be necessary,
convenient, advisable or incident to carrying out its purposes;
(xiv) to sue and be sued, to prosecute,
settle or compromise all claims against third parties, to compromise, settle or accept judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection therewith;
(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to the Partners
cash or investments or other property of the Partnership, or any combination thereof; and (xvi) to take such other actions necessary, desirable, convenient or incidental thereto and to engage in such other businesses as may be permitted under
Delaware and other applicable law.
Section 2.5. Place of Business. The Partnership shall maintain a
registered office at c/o Intertrust Corporate Services Delaware Ltd., 200 Bellevue Parkway, Suite 210, Bellevue Park Corporate Center, Wilmington, Delaware 19809. The Partnership shall maintain an office and principal place of business at such place
or places as the General Partner specifies from time to time and as set forth in the books and records of the Partnership. The name and address of the Partnership’s registered agent is Intertrust Corporate Services Delaware Ltd., 200 Bellevue
Parkway, Suite 210, Bellevue Park Corporate Center, Wilmington, Delaware 19809. The General Partner may from time to time change the registered agent or office by an amendment to the certificate of limited partnership of the Partnership.
Section 2.6. Withdrawal of Initial Limited Partner. Upon the admission of one or more additional Limited
Partners to the Partnership, the Initial Limited Partner shall (a) Withdraw as the Initial Limited Partner of the Partnership, and (b) have no further right, interest or obligation of any kind whatsoever as a Partner in the Partnership;
provided, that the effective date of such Withdrawal shall be deemed as between the parties hereto to be December 24, 2019.
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ARTICLE III
MANAGEMENT
Section 3.1. General Partner.
(a) SPFSA Infrastructure III L.L.C. is the General Partner as of the date hereof. The General Partner shall cease to be the
General Partner only if (i) it Withdraws from the Partnership for any reason, (ii) it consents in its sole discretion to resign as the General Partner, or (iii) a Final Event with respect to it occurs. The General Partner may not be
removed without its consent. There may be one or more General Partners. In the event that one or more other General Partners is admitted to the Partnership as such, all references herein to the “General Partner” in the singular form shall
be deemed to also refer to such other General Partners as may be appropriate. The relative rights and responsibilities of such General Partners will be as agreed upon from time to time between them.
(b) Upon the Withdrawal from the Partnership or voluntary resignation of the last remaining General Partner, all of the powers
formerly vested therein pursuant to this Agreement and the Partnership Act shall be exercised by a Majority in Interest of the Partners.
Section 3.2. Partner Voting, etc.
(a) Except as otherwise expressly provided herein and except as may be expressly required by the Partnership Act, Partners
(including Special Partners), other than General Partners, as such shall have no right to, and shall not, take part in the management or control of the Partnership’s business or act for or bind the Partnership, and shall have only the rights
and powers granted to Partners of the applicable class herein.
(b) To the extent a Partner is entitled to vote with
respect to any matter relating to the Partnership, such Partner shall not be obligated to abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such Partner (or any Affiliate
thereof) in such matter.
(c) Meetings of the Partners may be called only by the General Partner.
(d) Notwithstanding any other provision of this Agreement, any Limited Partner or Withdrawn Partner that fails to respond to a
notice provided by the General Partner requesting the consent, approval or vote of such Limited Partner or Withdrawn Partner within 14 days after such notice is sent to such Limited Partner or Withdrawn Partner shall be deemed to have given its
affirmative consent or approval thereto.
Section 3.3. Management. (a) The management, control and
operation of the Partnership and the formulation and execution of business and investment policy shall be vested in the General Partner. The General Partner shall, in its discretion, exercise all powers necessary and convenient for the purposes of
the Partnership, including those enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the General Partner pursuant to this Agreement shall be made
in its sole discretion, subject only to the express terms and conditions of this Agreement.
(b) Notwithstanding any
provision in this Agreement to the contrary, the Partnership is hereby authorized, without the need for any further act, vote or consent of any person (directly or indirectly through one or more other entities, in the name and on behalf of the
Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP Infrastructure III or as general partner or limited partner, member,
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shareholder or other equity interest owner of any Partnership Affiliate or, if applicable, in the Partnership’s capacity as a capital partner of SP Infrastructure III or as general or
limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (i) to execute and deliver, and to perform the Partnership’s obligations under, the SP Infrastructure III Agreements, including, without
limitation, serving as a general partner of SP Infrastructure III and, if applicable, a capital partner of SP Infrastructure III, (ii) if applicable, to execute and deliver, and to perform the Partnership’s obligations under the governing
agreement, as amended, supplemented, restated or otherwise modified (each a “Partnership Affiliate Governing Agreement”), of any other partnership, limited liability company, other company, corporation or other entity (each a
“Partnership Affiliate”) of which the Partnership is, or is to become, a general partner or limited partner, member, shareholder or other equity interest owner, including, without limitation, serving as a general partner or limited
partner, member, shareholder or other equity interest owner of each Partnership Affiliate, and (iii) to take any action, in the applicable capacity, contemplated by or arising out of this Agreement, the SP Infrastructure III Agreements or each
Partnership Affiliate Governing Agreement (and any amendment, supplement, restatement and/or other modification of any of the foregoing).
(c) The General Partner and any other person designated by the General Partner, each acting individually, is hereby authorized
and empowered, as an authorized person of the Partnership within the meaning of the Partnership Act, or otherwise, or as an authorized representative of the General Partner (the General Partner hereby authorizing and ratifying any of the following
actions):
(i) to execute and deliver and/or file (including any such action, directly or indirectly
through one or more other entities, in the name and on behalf of the Partnership, on its own behalf, or in its capacity as general partner, capital partner and/or limited partner of SP Infrastructure III, or as general partner or limited partner,
member, shareholder or other equity interest owner of any Partnership Affiliate), any of the following:
(A) any agreement, certificate, instrument or other document of the Partnership, SP Infrastructure III or any
Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications thereof), including, without limitation, the following: (I) the SP Infrastructure III Agreements and each Partnership Affiliate Governing Agreement,
(II) subscription agreements and documents on behalf of SP Infrastructure III, (III) side letters issued in connection with investments in SP Infrastructure III and (IV) such other agreements, certificates, instruments and other
documents as may be necessary or desirable in furtherance of the purposes of the Partnership, SP Infrastructure III or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing
referred to in (I) through (IV) above) and for the avoidance of doubt, this Agreement may be amended by the General Partner in its sole discretion;
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(B) the certificates of formation, certificates of limited
partnership and/or other organizational documents of the Partnership, SP Infrastructure III or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing); and
(C) any other certificates, notices, applications and other documents (and any amendments, supplements,
restatements and/or other modifications thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Partnership, SP Infrastructure III or any Partnership
Affiliate to qualify to do business in a jurisdiction in which the Partnership, SP Infrastructure III or such Partnership Affiliate desires to do business;
(ii) to prepare or cause to be prepared, and to sign, execute and deliver and/or file (including any such
action, directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP Infrastructure III or as a
general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (A) any certificates, forms, notices, applications and other documents to be filed with any government or governmental or
regulatory body on behalf of the Partnership, SP Infrastructure III and/or any Partnership Affiliate, (B) any certificates, forms, notices, applications and other documents that may be necessary or advisable in connection with any bank account
of the Partnership, SP Infrastructure III or any Partnership Affiliate or any banking facilities or services that may be utilized by the Partnership, SP Infrastructure III or any Partnership Affiliate, and all checks, notes, drafts and other
documents of the Partnership, SP Infrastructure III or any Partnership Affiliate that may be required in connection with any such bank account or banking facilities or services and (C) resolutions with respect to any of the foregoing matters
(which resolutions, when executed by any person authorized as provided in this Section 3.3(c), each acting individually, shall be deemed to have been duly adopted by the General Partner, the Partnership, SP Infrastructure III or any Partnership
Affiliate, as applicable, for all purposes).
(d) The authority granted to any person (other than the General Partner) in
Section 3.3(c) may be revoked at any time by the General Partner by an instrument in writing signed by the General Partner.
Section 3.4. Responsibilities of Partners.
(a) Unless otherwise determined by the General Partner in a particular case, each Limited Partner (other than a Special
Partner) shall devote substantially all of his or her time and attention to the businesses of the Partnership and its Affiliates, and each Special Partner shall not be required to devote any time or attention to the businesses of the Partnership or
its Affiliates.
(b) All outside business or investment activities of the Partners (including outside directorships or
trusteeships), shall be subject to such rules and regulations as are established by the General Partner from time to time.
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(c) The General Partner may from time to time establish such other rules and
regulations applicable to Partners or other employees as the General Partner deems appropriate, including rules governing the authority of Partners or other employees to bind the Partnership to financial commitments or other obligations.
Section 3.5. Exculpation and Indemnification.
(a) Liability to Partners. Notwithstanding any other provision of this Agreement, whether express or implied, to the
fullest extent permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually, a
“Covered Person” and collectively, the “Covered Persons”) shall be liable to the Partnership or any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related document or any
transaction or investment contemplated hereby or thereby) taken or omitted by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable judicial
determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority
granted to such Covered Person by this Agreement. Each Covered Person shall be entitled to rely in good faith on the advice of legal counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by any
Covered Person in reliance on such advice shall in any event subject such person to any liability to any Partner or the Partnership. To the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities relating
thereto to the Partnership or to another Partner, to the fullest extent permitted by law, such Partner acting under this Agreement shall not be liable to the Partnership or to any such other Partner for its good faith reliance on the provisions of
this Agreement. The provisions of this Agreement, to the extent that they expand or restrict the duties and liabilities of a Partner otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by law, to
modify to that extent such other duties and liabilities of such Partner. To the fullest extent permitted by law, the parties hereto agree that the General Partner shall be held to have acted in good faith for the purposes of this Agreement and its
duties under the Partnership Act if it believes that it has acted honestly and in accordance with the specific terms of this Agreement.
(b) Indemnification. (i) To the fullest extent permitted by law, the Partnership shall indemnify and hold harmless
(but only to the extent of the Partnership’s assets (including, without limitation, the remaining capital commitments of the Partners)) each Covered Person from and against any and all claims, damages, losses, costs, expenses and liabilities
(including, without limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable expenses of investigating or defending against any claim or alleged claim),
joint and several, of any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, for purposes of this Section 3.5(b), “Losses”), arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, in which the Covered Person may be involved, or threatened to be involved, as a party or otherwise, by reason of such Covered Person’s management of the affairs of the Partnership or which
relate to or arise out of or in connection with the Partnership, its property, its business or affairs (other than claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, arising out of any
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act or omission of such Covered Person constituting Cause); provided, that a Covered Person shall not be entitled to indemnification under this Section 3.5(b) with respect to any
claim, issue or matter if there is a final and non-appealable judicial determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person
reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority granted to such Covered Person by this Agreement; provided further, that if such Covered Person is a Partner or a Withdrawn
Partner, such Covered Person shall bear its share of such Losses in accordance with such Covered Person’s GP-Related Profit Sharing Percentage in the Partnership as of the time of the actions or omissions
that gave rise to such Losses. To the fullest extent permitted by law, expenses (including legal fees) incurred by a Covered Person (including, without limitation, the General Partner) in defending any claim, demand, action, suit or proceeding may,
with the approval of the General Partner, from time to time, be advanced by the Partnership prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Partnership of a written undertaking by or on behalf of
the Covered Person to repay such amount to the extent that it shall be subsequently determined that the Covered Person is not entitled to be indemnified as authorized in this Section 3.5(b), and the Partnership and its Affiliates shall have a
continuing right of offset against such Covered Person’s interests/investments in the Partnership and such Affiliates and shall have the right to withhold amounts otherwise distributable to such Covered Person to satisfy such repayment
obligation. If a Partner institutes litigation against a Covered Person which gives rise to an indemnity obligation hereunder, such Partner shall be responsible, up to the amount of such Partner’s Interests and remaining capital commitments,
for such Partner’s pro rata share of the Partnership’s expenses related to such indemnity obligation, as determined by the General Partner. The Partnership may purchase insurance, to the extent available at reasonable cost, to cover
losses, claims, damages or liabilities covered by the foregoing indemnification provisions. Partners will not be personally obligated with respect to indemnification pursuant to this Section 3.5(b). The General Partner shall have the authority
to enter into separate agreements with any Covered Person in order to give effect to the obligations to indemnify pursuant to this Section 3.5(b).
(ii) (A) Notwithstanding anything to the contrary herein, for greater certainty, it is understood and/or
agreed that the Partnership’s obligations hereunder are not intended to render the Partnership as a primary indemnitor for purposes of the indemnification, advancement of expenses and related provisions under applicable law governing SP
Infrastructure III and/or a particular portfolio entity through which an Investment is indirectly held. It is further understood and/or agreed that a Covered Person shall first seek to be so indemnified and have such expenses advanced in the
following order of priority: first, out of proceeds available in respect of applicable insurance policies maintained by the applicable portfolio entity and/or SP Infrastructure III; second, by the applicable portfolio entity through
which such investment is indirectly held; and third, by SP Infrastructure III (only to the extent the foregoing sources are exhausted).
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(B) The Partnership’s obligation, if any, to indemnify
or advance expenses to any Covered Person shall be reduced by any amount that such Covered Person may collect as indemnification or advancement from SP Infrastructure III and/or the applicable portfolio entity (including by virtue of any applicable
insurance policies maintained thereby), and to the extent the Partnership (or any Affiliate thereof) pays or causes to be paid any amounts that should have been paid by SP Infrastructure III and/or the applicable portfolio entity (including by
virtue of any applicable insurance policies maintained thereby), it is agreed among the Partners that the Partnership shall have a subrogation claim against SP Infrastructure III and/or such portfolio entity in respect of such advancement or
payments. The General Partner and the Partnership shall be specifically empowered to structure any such advancement or payment as a loan or other arrangement (except for a loan to an executive officer of The Blackstone Group Inc. or any of its
Affiliates, which shall not be permitted) as the General Partner may determine necessary or advisable to give effect to or otherwise implement the foregoing.
Section 3.6. Representations of Partners.
(a) Each Limited Partner and Special Partner by execution of this Agreement (or by otherwise becoming bound by the terms and
conditions hereof as provided herein or in the Partnership Act) represents and warrants to every other Partner and to the Partnership, except as may be waived by the General Partner, that such Partner is acquiring each of such Partner’s
Interests for such Partner’s own account for investment and not with a view to resell or distribute the same or any part hereof, and that no other person has any interest in any such Interest or in the rights of such Partner hereunder;
provided, that a Partner may choose to make transfers for estate and charitable planning purposes (pursuant to Section 6.3(a) and otherwise in accordance with the terms hereof). Each Limited Partner and Special Partner represents and
warrants that such Partner understands that the Interests have not been registered under the Securities Act, and therefore such Interests may not be resold without registration under the Securities Act or exemption from such registration, and that
accordingly such Partner must bear the economic risk of an investment in the Partnership for an indefinite period of time. Each Limited Partner and Special Partner represents that such Partner has such knowledge and experience in financial and
business matters that such Partner is capable of evaluating the merits and risks of an investment in the Partnership, and that such Partner is able to bear the economic risk of such investment. Each Limited Partner and Special Partner represents
that such Partner’s overall commitment to the Partnership and other investments which are not readily marketable is not disproportionate to the Partner’s net worth and the Partner has no need for liquidity in the Partner’s investment
in Interests. Each Limited Partner and Special Partner represents that to the full satisfaction of the Partner, the Partner has been furnished any materials that such Partner has requested relating to the Partnership, any Investment and the offering
of Interests and has been afforded the opportunity to ask questions of representatives of the Partnership concerning the terms and conditions of the offering of Interests and any matters pertaining to each Investment and to obtain any other
additional information relating thereto. Each Limited Partner and Special Partner represents that the Partner has consulted to the extent deemed appropriate by the Partner with the Partner’s own advisers as to the financial, tax, legal and
related matters concerning an investment in Interests and on that basis believes that an investment in the Interests is suitable and appropriate for the Partner.
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(b) Each Limited Partner and Special Partner agrees that the representations
and warranties contained in paragraph (a) above shall be true and correct as of any date that such Partner (1) makes a capital contribution to the Partnership (whether as a result of Firm Advances made to such Partner or otherwise) with
respect to any Investment, and such Partner hereby agrees that such capital contribution shall serve as confirmation thereof and/or (2) repays any portion of the principal amount of a Firm Advance, and such Partner hereby agrees that such
repayment shall serve as confirmation thereof.
Section 3.7. Tax Representation and Further Assurances.
(a) Each Limited Partner and Special Partner, upon the request of the General Partner, agrees to perform all further acts and to execute, acknowledge and deliver any documents that may be reasonably necessary to comply with the General
Partner’s or the Partnership’s obligations under applicable law or to carry out the provisions of this Agreement.
(b) Each Limited Partner and Special Partner certifies that (A) if the Limited Partner or Special Partner is a United
States person (as defined in the Code) (x) (i) the Limited Partner or Special Partner’s name, social security number (or, if applicable, employer identification number) and address provided to the Partnership and its Affiliates pursuant to
an IRS Form W 9, Request for Taxpayer Identification Number Certification (“W 9”) or otherwise are correct and (ii) the Limited Partner or Special Partner will complete and return a W 9 and (y) (i) the Limited Partner or Special
Partner is a United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days of a change to foreign (non-United States) status or
(B) if the Limited Partner or Special Partner is not a United States person (as defined in the Code) (x) (i) the information on the completed IRS Form W-8BEN, Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding and Reporting (Individuals) (“W-8BEN”), IRS Form W-8BEN-E,
Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities) (“W-8BEN-E”), or other applicable form, including but not
limited to IRS Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting
(“W-8IMY”), or otherwise is correct and (ii) the Limited Partner or Special Partner will complete and return the applicable IRS form, including but not limited to a W-8BEN, W-8BEN-E or W-8IMY, and (y) (i) the Limited Partner or Special Partner is not a
United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days of any change of such status. Each Limited Partner and Special Partner agrees to provide such cooperation
and assistance, including but not limited to properly executing and providing to the Partnership in a timely manner any tax or other documentation or information that may be reasonably requested by the Partnership or the General Partner.
(c) Each Limited Partner and Special Partner acknowledges and agrees that the Partnership and the General Partner may release
confidential information or other information about the Limited Partner or Special Partner or related to such Limited Partner or Special Partner’s investment in the Partnership if the Partnership or the General Partner, in its or their sole
discretion, determines that such disclosure is required by applicable law or regulation or in order to comply for an exception from, or reduced tax rate of, tax or other tax benefit. Any such disclosure shall not be treated as a breach of any
restriction upon the disclosure of information imposed on any such person by law or otherwise, and a Limited Partner or Special Partner shall have no claim against the Partnership, the General Partner or any of their Affiliates for any form of
damages or liability as a result of actions taken by the foregoing in order to comply with any disclosure obligations that the foregoing reasonably believe are required by law, regulation or otherwise.
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(d) Each Limited Partner and Special Partner acknowledges and agrees that if
it provides information that is in anyway materially misleading, or if it fails to provide the Partnership or its agents with any information requested hereunder, in either case in order to satisfy the Partnership’s obligations, the General
Partner reserves the right to take any action and pursue any remedies at its disposal, including (i) requiring such Limited Partner or Special Partner to Withdraw for Cause and (ii) withholding or deducting any costs caused by such Limited
Partner’s or Special Partner’s action or inaction from amounts otherwise distributable to such Limited Partner or Special Partner from the Partnership and its Affiliates.
ARTICLE IV
CAPITAL OF THE
PARTNERSHIP
Section 4.1. Capital Contributions by Partners. (a) Each Partner shall be required to
make capital contributions to the Partnership (“GP-Related Capital Contributions”) at such times and in such amounts (the “GP-Related Required
Amounts”) as are required to satisfy the Partnership’s obligation to make capital contributions to SP Infrastructure III in respect of the GP-Related SP Infrastructure III Interest with respect
to any GP-Related SP Infrastructure III Investment and as are otherwise determined by the General Partner from time to time or as may be set forth in such Limited Partner’s Commitment Agreement or SMD
Agreement, if any, or otherwise; provided, that additional GP-Related Capital Contributions in excess of the GP-Related Required Amounts may be made pro rata among the
Partners based upon each Partner’s Carried Interest Sharing Percentage. GP-Related Capital Contributions in excess of the GP-Related Required Amounts which are to
be used for ongoing business operations (as distinct from financing, legal or other specific liabilities of the Partnership (including those specifically set forth in Section 4.1(d) and Section 5.8(d))) shall be determined by the General
Partner. Special Partners shall not be required to make additional GP-Related Capital Contributions to the Partnership in excess of the GP-Related Required Amounts,
except (i) as a condition of an increase in such Special Partner’s GP-Related Profit Sharing Percentage or (ii) as specifically set forth in this Agreement; provided, that the General Partner
and any Special Partner may agree from time to time that such Special Partner shall make an additional GP-Related Capital Contribution to the Partnership; provided, further, that each Investor Special Partner
shall maintain its GP-Related Capital Accounts at an aggregate level equal to the product of (i) its GP-Related Profit Sharing Percentage from time to time and
(ii) the total capital of the Partnership related to the GP-Related SP Infrastructure III Interest.
(b) Each GP-Related Capital Contribution by a Partner shall be credited to the
appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2, subject to Section 5.10.
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(c) The General Partner may elect on a case by case basis to (i) cause
the Partnership to loan any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) the
amount of any GP-Related Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but
excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) to make a required GP-Related Capital Contribution to the Partnership in installments, in each case
on terms determined by the General Partner.
(d) (i) The Partners and the Withdrawn Partners have entered into the
Trust Agreement, pursuant to which certain amounts of the distributions relating to Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account
constituting a “Holdback”). The General Partner shall determine, as set forth below, the percentage of each distribution of Carried Interest that shall be withheld for any General Partner and/or Holdings and each Partner Category
(such withheld percentage constituting the General Partner’s and such Partner Category’s “Holdback Percentage”). The applicable Holdback Percentages initially shall be 0% for any General Partner, 15% for Existing Partners
(other than the General Partner), 21% for Retaining Withdrawn Partners (other than the General Partner) and 24% for Deceased Partners (the “Initial Holdback Percentages”). Any provision of this Agreement to the contrary
notwithstanding, the Holdback Percentage for the General Partner and/or Holdings shall not be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).
(ii) The Holdback Percentage may not be reduced for any individual Partner as compared to the other Partners in
his or her Partner Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner Categories on a proportionate basis. For example, if the Holdback Percentage for Existing
Partners is decreased to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any reduction in the Holdback Percentage for any Partner shall apply only to
distributions relating to Carried Interest made after the date of such reduction.
(iii) The Holdback
Percentage may not be increased for any individual Partner as compared to the other Partners in his or her Partner Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’
Holdback Percentage beyond 21% unless the General Partner concurrently increases the Existing Partners’ Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the
General Partner increases the Holdback Percentage for both Existing Partners and Retaining Withdrawn Partners to 24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies
equally to all Partner Categories. Any increase in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner
from proportionately increasing the Holdback Percentage of any Partner Category (following a reduction of the Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For
example, if the General Partner reduces the Holdback Percentages for Existing Partners, Retaining Withdrawn Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the
Holdback Percentages to the Initial Holdback Percentages.
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(iv) (A) Notwithstanding anything contained herein to
the contrary, the General Partner may increase or decrease the Holdback Percentage for any Partner in any Partner Category (in such capacity, the “Subject Partner”) pursuant to a majority vote of the Limited Partners (a
“Holdback Vote”); provided, that, notwithstanding anything to the contrary contained herein, the Holdback Percentage applicable to any General Partner shall not be increased or decreased without its prior written consent;
provided further, that a Subject Partner’s Holdback Percentage shall not be (I) increased prior to such time as such Subject Partner (x) is notified by the Partnership of the decision to increase such Subject
Partner’s Holdback Percentage and (y) has, if requested by such Subject Partner, been given 30 days to gather and provide information to the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) or
(II) decreased unless such decrease occurs subsequent to an increase in a Subject Partner’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv); provided further, that such decrease shall not exceed an
amount such that such Subject Partner’s Holdback Percentage is less than the prevailing Holdback Percentage for the Partner Category of such Subject Partner; provided further, that a Partner shall not vote to increase a Subject
Partner’s Holdback Percentage unless such voting Partner determines, in such Partner’s good faith judgment, that the facts and circumstances indicate that it is reasonably likely that such Subject Partner, or any of such Subject
Partner’s successors or assigns (including such Subject Partner’s estate or heirs) who at the time of such vote holds the GP-Related Partner Interest or otherwise has the right to receive
distributions relating thereto, will not be capable of satisfying any GP-Related Recontribution Amounts that may become due.
(B) A Holdback Vote shall take place at a Partnership meeting. Each of the Limited Partners shall be entitled
to cast one vote with respect to the Holdback Vote regardless of such Limited Partner’s interest in the Partnership. Such vote may be cast by any such Partner in person or by proxy.
(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback Percentage,
such Subject Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided, that if the Partnership and the Subject Partner cannot agree upon a mutually
satisfactory arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates; provided further, that if
such candidates fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the arbitrator. Each Subject Partner that submits the
decision of the Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected out-of-pocket expenses
relating thereto, and each such party shall, to the satisfaction of the arbitrator and prior to any determination being made by the arbitrator, pay the total of such estimated
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expenses (i.e., both the Subject Partner’s and the Partnership’s expenses) into an escrow account. The arbitrator shall direct the escrow agent to pay out of such escrow account all
expenses associated with such arbitration (including costs leading thereto) and to return to the “victorious” party the entire amount of funds such party paid into such escrow account. If the amount contributed to the escrow account by the
losing party is insufficient to cover the expenses of such arbitration, such “losing” party shall then provide any additional funds necessary to cover such costs to such “victorious” party. For purposes hereof, the
“victorious” party shall be the Partnership if the Holdback Percentage ultimately determined by the arbitrator is closer to the percentage determined in the second Holdback Vote than it is to the prevailing Holdback Percentage for the
Subject Partner’s Partner Category; otherwise, the Subject Partner shall be the “victorious” party. The party that is not the “victorious” party shall be the “losing” party.
(D) In the event of a decrease in a Subject Partner’s Holdback Percentage (1) pursuant to a Holdback
Vote under this clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and distribute to such Subject Partner any Trust Amounts (and the Trust Income thereon
(except as expressly provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance with such Subject Partner’s reduced Holdback Percentage) as though such
reduced Holdback Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).
(v) (A) If a Partner’s Holdback Percentage exceeds 15% (such percentage in excess of 15% constituting
the “Excess Holdback Percentage”), such Partner may satisfy the portion of his or her Holdback obligation in respect of his or her Excess Holdback Percentage (such portion constituting such Partner’s “Excess
Holdback”), and such Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he or she was a Partner), to the extent his or her Excess Holdback obligation has previously been satisfied in cash, may
obtain the release of the Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback
obligation, by pledging, granting a security interest or otherwise making available to the General Partner, on a first priority basis (except as provided below), all or any portion of his or her Firm Collateral in satisfaction of his or her Excess
Holdback obligation. Any Partner seeking to satisfy all or any portion of the Excess Holdback utilizing Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the
General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Partnership to realize on (if required), such Firm Collateral; provided, that, in the case of entities listed in the Partnership’s
books and records in which Partners are permitted to pledge or grant a security interest over their interests therein to finance all or a portion of their capital contributions thereto (“Pledgable Blackstone Interests”), to the
extent a first priority security interest is
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unavailable because of an existing lien on such Firm Collateral, the Partner or Withdrawn Partner seeking to utilize such Firm Collateral shall grant the General Partner a second priority
security interest therein in the manner provided above; provided further, that (x) in the case of Pledgable Blackstone Interests, to the extent that neither a first priority nor a second priority security interest is available, or
(y) if the General Partner otherwise determines in its good faith judgment that a security interest in Firm Collateral (and the corresponding documents and actions) are not necessary or appropriate, the Partner or Withdrawn Partner shall (in
the case of either clause (x) or (y) above) irrevocably instruct in writing the relevant partnership, limited liability company or other entity listed in the Partnership’s books and records to remit any and all net proceeds resulting from
a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully provided in clause (B) below. The Partnership shall, at the request of any Partner or Withdrawn Partner, assist such Partner or Withdrawn Partner in taking
such action as is necessary to enable such Partner or Withdrawn Partner to use Firm Collateral as provided hereunder.
(B) If upon a sale or other realization of all or any portion of any Firm Collateral (a “Firm Collateral
Realization”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner
from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust Account to fully satisfy such Excess Holdback requirement
(allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount necessary to satisfy such Excess Holdback requirement
shall be distributed to such Partner or Withdrawn Partner.
(C) Upon any valuation or revaluation of Firm
Collateral that results in a decreased valuation of such Firm Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including upon a Firm Collateral Realization,
if net proceeds therefrom and the remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the foregoing to such Partner or Withdrawn
Partner and such Partner or Withdrawn Partner shall, within 30 days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his or her Excess Holdback requirement. If any such
Partner or Withdrawn Partner defaults upon his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable to a default under this
clause (C); provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such
Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and
“GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
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(vi) Any Partner or Withdrawn Partner may (A) obtain
the release of any Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such
Partner or Withdrawn Partner or (B) require the Partnership to distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit (an
“L/C”) for the benefit of the Trustee(s) in such amounts. Any Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall deliver to the Trustee(s) an
unconditional and irrevocable L/C from a commercial bank whose (x) short-term deposits are rated at least A-1 by S&P or P-1 by Moody’s (if the L/C is for a
term of 1 year or less), or (y) long-term deposits are rated at least A+ by S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more) (each a “Required Rating”). If the relevant rating of the commercial bank
issuing such L/C drops below the relevant Required Rating, the L/C Partner shall supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating,
in lieu of the insufficient L/C. In addition, if the L/C has a term expiring on a date earlier than the latest possible termination date of SP Infrastructure III, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to
provide a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, at least 30 days prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to
drawing on any L/C. The Trustee(s) may (as directed by the Partnership in the case of clause (I) below) draw down on an L/C only if (I) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the
Partnership’s obligations under the Clawback Provisions or (II) an L/C Partner has not provided a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash
and/or Firm Collateral (to the extent permitted hereunder)), at least 30 days prior to the stated expiration of an existing L/C in accordance with this clause (vi). The Trustee(s), as directed by the Partnership, shall return to any L/C Partner his
or her L/C upon (1) the termination of the Trust Account and satisfaction of the Partnership’s obligations, if any, in respect of the Clawback Provisions, (2) an L/C Partner satisfying his or her entire Holdback obligation in cash and
Firm Collateral (to the extent permitted hereunder), or (3) the release, by the Trustee(s), as directed by the Partnership, of all amounts in the Trust Account to the Partners or Withdrawn Partners. If an L/C Partner satisfies a portion of his
or her Holdback obligation in cash and/or Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as directed by the Partnership, release a portion of the amounts in the Trust Account to the Partners or Withdrawn Partners in the
Partner Category of such L/C Partner, the L/C of an L/C Partner may be reduced by an amount corresponding to such portion satisfied in cash and/or Firm Collateral (to the extent permitted hereunder) or such portion released by the Trustee(s), as
directed by the Partnership; provided, that in no way shall the general release of any Trust Income cause an L/C Partner to be permitted to reduce the amount of an L/C by any amount.
(vii) (A) Any in-kind distributions by the Partnership relating to
Carried Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose of any in-kind distributions held in the Trust Account
at any time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.
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(B) In lieu of the foregoing, any Existing Partner may
pledge or grant a security interest with respect to any in-kind distribution the Special Firm Collateral referred to in the applicable category in the Partnership’s books and records; provided, that the
initial contribution of such Special Firm Collateral shall initially equal 130% of the required Holdback for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback. Sections 4.1(d)(viii)(C) and (D) shall apply to
such Special Firm Collateral. To the extent such Special Firm Collateral exceeds the applicable minimum percentage of the required Holdback specified in the first sentence of this clause (vii)(B), the related Partner may obtain a release of such
excess amount from the Trust Account.
(viii) (A) Any Limited Partner or Withdrawn Partner may satisfy
all or any portion of his or her Holdback (excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his or her Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by the use of an L/C
as provided herein, obtain a release of Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn Partner’s Holdback
(excluding any Excess Holdback) by pledging or otherwise granting a security interest to the Trustee(s) on a first priority basis all of his or her Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or exceed the
amount of the Holdback distributed to the Partner or Withdrawn Partner (as more fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise take such
other action as is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) to realize on (if required), such Special Firm
Collateral.
(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or any
portion of any Special Firm Collateral (a “Special Firm Collateral Realization”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in
connection with an Excess Holdback) is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided herein (i.e., cash contributed to the Trust Account or
an L/C in the Trust Account)), then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Special Firm Collateral Realization (which shall not include the amount of Firm Collateral that consists of a
Qualifying Fund or other asset and is being used in connection with an Excess Holdback) shall be paid into the Trust (and allocated to such Partner or Withdrawn Partner) to fully satisfy such Holdback and shall be deemed thereafter to be Trust
Amounts for purposes hereunder. Any net proceeds from such Special Firm Collateral Realization in excess of the amount necessary to satisfy such Holdback (excluding any Excess Holdback) shall be distributed to such Partner or Withdrawn Partner. To
the extent a Qualifying Fund distributes Securities to a Partner or Withdrawn Partner in connection with a Special Firm Collateral Realization, such Partner or Withdrawn Partner shall be required to promptly fund such Partner’s or Withdrawn
Partner’s deficiency with respect to his or her Holdback in cash or an L/C.
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(C) Upon any valuation or revaluation of the Special Firm
Collateral and/or any adjustment in the Applicable Collateral Percentage applicable to a Qualifying Fund (as provided in the Partnership’s books and records), if such Partner’s or Withdrawn Partner’s Special Firm Collateral is valued
at less than such Partner’s Holdback (excluding any Excess Holdback) as provided in the Partnership’s books and records, taking into account other permitted means of satisfying the Holdback hereunder, the Partnership shall provide notice
of the foregoing to such Partner or Withdrawn Partner and, within 10 Business Days of receiving such notice, such Partner or Withdrawn Partner shall contribute cash or additional Special Firm Collateral to the Trust Account in an amount necessary to
make up such deficiency. If any such Partner or Withdrawn Partner defaults upon his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that the first sentence of Section 5.8(d)(ii)(A) shall be
deemed inapplicable to such default; provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such
term appears in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(D) Upon a Partner becoming a Withdrawn Partner, at any time thereafter the General Partner may revoke the
ability of such Withdrawn Partner to use Special Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding anything else in this Section 4.1(d)(viii). In that case the provisions of clause (C) above shall apply to the
Withdrawn Partner’s obligation to satisfy the Holdback (except that 30 days’ notice of such revocation shall be given), given that the Special Firm Collateral is no longer available to satisfy any portion of the Holdback (excluding any
Excess Holdback).
(E) Nothing in this Section 4.1(d)(viii) shall prevent any Partner or Withdrawn
Partner from using any amount of such Partner’s interest in a Qualifying Fund as Firm Collateral; provided, that at all times Section 4.1(d)(v) and this Section 4.1(d)(viii) are each satisfied.
Section 4.2. Interest. Interest on the balances of the Partners’ capital related to the Partners’ GP-Related Partner Interests (excluding capital invested in GP-Related Investments and, if deemed appropriate by the General Partner, capital invested in any other investment
of the Partnership) shall be credited to the Partners’ GP-Related Capital Accounts at the end of each accounting period pursuant to Section 5.2, or at any other time as determined by the General
Partner, at rates determined by the General Partner from time to time, and shall be charged as an expense of the Partnership.
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Section 4.3. Withdrawals of Capital. No Partner may
withdraw capital related to such Partner’s GP-Related Partner Interests from the Partnership except (i) for distributions of cash or other property pursuant to Section 5.8, (ii) as otherwise
expressly provided in this Agreement or (iii) as determined by the General Partner.
ARTICLE V
PARTICIPATION IN PROFITS AND LOSSES
Section 5.1. General Accounting Matters.
(a) GP-Related Net Income (Loss) shall be determined by the General Partner at the end
of each accounting period and shall be allocated as described in Section 5.4.
(b) “GP-Related Net Income (Loss)” means:
(i) from any activity of
the Partnership related to the GP-Related SP Infrastructure III Interest for any accounting period (other than GP-Related Net Income (Loss) from GP-Related Investments described below), (x) the gross income realized by the Partnership from such activity during such accounting period less (y) all expenses of the Partnership, and all other items that are
deductible from gross income, for such accounting period that are allocable to such activity (determined as provided below);
(ii) from any GP-Related Investment for any accounting period in which
such GP-Related Investment has not been sold or otherwise disposed of, (x) the gross amount of dividends, interest or other income received by the Partnership from such
GP-Related Investment during such accounting period less (y) all expenses of the Partnership for such accounting period that are allocable to such GP-Related
Investment (determined as provided below); and
(iii) from any
GP-Related Investment for the accounting period in which such GP-Related Investment is sold or otherwise disposed of, (x) the sum of the gross proceeds from the
sale or other disposition of such GP-Related Investment and the gross amount of dividends, interest or other income received by the Partnership from such GP-Related
Investment during such accounting period less (y) the sum of the cost or other basis to the Partnership of such GP-Related Investment and all expenses of the Partnership for such accounting period that
are allocable to such GP-Related Investment.
(c)
GP-Related Net Income (Loss) shall be determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (i) any income of the
Partnership that is exempt from U.S. federal income taxation and not otherwise taken into account in computing GP-Related Net Income (Loss) shall be added to such taxable income or loss; (ii) if any asset
has a value in the books of the Partnership that differs from its adjusted tax basis for U.S. federal income tax purposes, any depreciation, amortization or gain resulting from a disposition of such asset shall be calculated
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with reference to such value; (iii) upon an adjustment to the value of any asset in the books of the Partnership pursuant to Treasury Regulations
Section 1.704-1(b)(2), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (iv) any expenditures of the Partnership not deductible in computing
taxable income or loss, not properly capitalizable and not otherwise taken into account in computing GP-Related Net Income (Loss) pursuant to this definition shall be treated as deductible items; (v) any
income from a GP-Related Investment that is payable to Partnership employees in respect of “phantom interests” in such GP-Related Investment awarded by the
General Partner to employees shall be included as an expense in the calculation of GP-Related Net Income (Loss) from such GP-Related Investment, and (vi) items of
income and expense (including interest income and overhead and other indirect expenses) of the Partnership, Holdings and other Affiliates of the Partnership shall be allocated among the Partnership, Holdings and such Affiliates, among various
Partnership activities and GP-Related Investments and between accounting periods, in each case as determined by the General Partner. Any adjustments to GP-Related Net
Income (Loss) by the General Partner, including adjustments for items of income accrued but not yet received, unrealized gains, items of expense accrued but not yet paid, unrealized losses, reserves (including reserves for taxes, bad debts, actual
or threatened litigation, or any other expenses, contingencies or obligations) and other appropriate items shall be made in accordance with GAAP; provided, that the General Partner shall not be required to make any such adjustment.
(d) An accounting period shall be a Fiscal Year, except that, at the option of the General Partner, an accounting period will
terminate and a new accounting period will begin on the admission date of an additional Partner or the Settlement Date of a Withdrawn Partner, if any such date is not the first day of a Fiscal Year. If any event referred to in the preceding sentence
occurs and the General Partner does not elect to terminate an accounting period and begin a new accounting period, then the General Partner may make such adjustments as it deems appropriate to the Partners’
GP-Related Profit Sharing Percentages for the accounting period in which such event occurs (prior to any allocations of GP-Related Unallocated Percentages or adjustments
to GP-Related Profit Sharing Percentages pursuant to Section 5.3) to reflect the Partners’ average GP-Related Profit Sharing Percentages during such accounting
period; provided, that the GP-Related Profit Sharing Percentages of Partners in GP-Related Net Income (Loss) from GP-Related Investments acquired during such
accounting period will be based on GP-Related Profit Sharing Percentages in effect when each such GP-Related Investment was acquired.
(e) In establishing GP-Related Profit Sharing Percentages and allocating GP-Related Unallocated Percentages pursuant to Section 5.3, the General Partner may consider such factors as it deems appropriate.
(f) All determinations, valuations and other matters of judgment required to be made for accounting purposes under this
Agreement shall be made by the General Partner and approved by the Partnership’s independent accountants. Such approved determinations, valuations and other accounting matters shall be conclusive and binding on all Partners, all Withdrawn
Partners, their successors, heirs, estates or legal representatives and any other person, and to the fullest extent permitted by law no such person shall have the right to an accounting or an appraisal of the assets of the Partnership or any
successor thereto.
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Section 5.2. GP-Related
Capital Accounts.
(a) There shall be established for each Partner in the books of the Partnership, to the extent and
at such times as may be appropriate, one or more capital accounts as the General Partner may deem to be appropriate for purposes of accounting for such Partner’s interests in the capital of the Partnership related to the GP-Related SP Infrastructure III Interest and the GP-Related Net Income (Loss) of the Partnership (each a “GP-Related Capital
Account”).
(b) As of the end of each accounting period or, in the case of a contribution to the Partnership by
one or more of the Partners with respect to such Partner or Partners’ GP-Related Partner Interests or a distribution by the Partnership to one or more of the Partners with respect to such Partner or
Partners’ GP-Related Partner Interests, at the time of such contribution or distribution, (i) the appropriate GP-Related Capital Accounts of each Partner shall
be credited with the following amounts: (A) the amount of cash and the value of any property contributed by such Partner to the capital of the Partnership related to such Partner’s GP-Related Partner
Interest during such accounting period, (B) the GP-Related Net Income allocated to such Partner for such accounting period and (C) the interest credited on the balance of such Partner’s capital
related to such Partner’s GP-Related Partner Interest for such accounting period pursuant to Section 4.2; and (ii) the appropriate GP-Related Capital
Accounts of each Partner shall be debited with the following amounts: (x) the amount of cash, the principal amount of any subordinated promissory note of the Partnership referred to in Section 6.5 (as such amount is paid) and the value of
any property distributed to such Partner during such accounting period with respect to such Partner’s GP-Related Partner Interest and (y) the GP-Related Net
Loss allocated to such Partner for such accounting period.
Section 5.3. GP-Related Profit Sharing Percentages.
(a) Prior to the beginning of each annual accounting period, the General Partner shall establish the profit sharing percentage
(the “GP-Related Profit Sharing Percentage”) of each Partner in each category of GP-Related Net Income (Loss) for such annual accounting period pursuant
to Section 5.1(a) taking into account such factors as the General Partner deems appropriate; provided, that (i) the General Partner may elect to establish GP-Related Profit Sharing Percentages
in GP-Related Net Income (Loss) from any GP-Related Investment acquired by the Partnership during such accounting period at the time such
GP-Related Investment is acquired in accordance with paragraph (c) below and (ii) GP-Related Net Income (Loss) for such accounting period from any GP-Related Investment shall be allocated in accordance with the GP-Related Profit Sharing Percentages in such GP-Related Investment
established in accordance with paragraph (c) below. The General Partner may establish different GP-Related Profit Sharing Percentages for any Partner in different categories of GP-Related Net Income (Loss). In the case of the Withdrawal of a Partner, such former Partner’s GP-Related Profit Sharing Percentages shall be allocated by the General
Partner to one or more of the remaining Partners as the General Partner shall determine. In the case of the admission of any Partner to the Partnership as an additional Partner, the GP-Related Profit Sharing
Percentages of the other Partners shall be reduced by an amount equal to the GP-Related Profit Sharing Percentage allocated to such new Partner pursuant to Section 6.1(b); such reduction of each other
Partner’s GP-Related Profit Sharing Percentage shall be pro rata based upon such Partner’s GP-Related Profit Sharing Percentage as in effect immediately prior to the admission of the new
Partner. Notwithstanding the foregoing, the General Partner may also adjust the GP-Related Profit Sharing Percentage of any Partner for any annual accounting period at the end of such annual accounting period
in its sole discretion.
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(b) The General Partner may elect to allocate to the Partners less than 100%
of the GP-Related Profit Sharing Percentages of any category for any annual accounting period at the time specified in Section 5.3(a) for the annual fixing of
GP-Related Profit Sharing Percentages (any remainder of such GP-Related Profit Sharing Percentages being called a
“GP-Related Unallocated Percentage”); provided, that any GP-Related Unallocated Percentage in any category of
GP-Related Net Income (Loss) for any annual accounting period that is not allocated by the General Partner within 90 days after the end of such accounting period shall be deemed to be allocated among all the
Partners (including the General Partner) in the manner determined by the General Partner in its sole discretion.
(c)
Unless otherwise determined by the General Partner in a particular case, (i) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment shall be allocated in proportion to the Partners’ respective GP-Related Capital Contributions in respect of such
GP-Related Investment and (ii) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from each GP-Related Investment shall be fixed at the time such GP-Related Investment is acquired and shall not thereafter change, subject to any repurchase rights established by the
General Partner pursuant to Section 5.7.
Section 5.4. Allocations of
GP-Related Net Income (Loss) .
(a) Except as provided in
Section 5.4(d), GP-Related Net Income of the Partnership for each GP-Related Investment shall be allocated to the GP-Related
Capital Accounts related to such GP-Related Investment of all the Partners participating in such GP-Related Investment (including the General Partner): first, in
proportion to and to the extent of the amount of Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest
distributed to the Partners; second, to Partners that received Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or
Carried Interest in years prior to the years such GP-Related Net Income is being allocated to the extent such Non-Carried Interest (other than amounts representing a
return of GP-Related Capital Contributions) or Carried Interest exceeded GP-Related Net Income allocated to such Partners in such earlier years; and third, to the
Partners in the same manner that such Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest would have
been distributed if cash were available to distribute with respect thereto.
(b)
GP-Related Net Loss of the Partnership shall be allocated as follows: (i) GP-Related Net Loss relating to realized losses suffered by SP Infrastructure III and
allocated to the Partnership with respect to its pro rata share thereof (based on capital contributions made by the Partnership to SP Infrastructure III with respect to the GP-Related SP Infrastructure
III Interest) shall be allocated to the Partners in accordance with each Partner’s Non-Carried Interest Sharing Percentage with respect to the GP-Related Investment
giving rise to such loss suffered by SP Infrastructure III and (ii) GP-Related Net Loss relating to realized losses suffered by SP Infrastructure III and allocated to the Partnership with respect to the
Carried Interest shall be allocated in accordance with a Partner’s (including a Withdrawn Partner’s) Carried Interest Give Back Percentage (as of the date of such loss) (subject to adjustment pursuant to Section 5.8(e)).
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(c) Notwithstanding Section 5.4(a) above, GP-Related Net Income relating to Carried Interest allocated after the allocation of a GP-Related Net Loss pursuant to clause (ii) of Section 5.4(b) shall be
allocated in accordance with such Carried Interest Give Back Percentages until such time as the Partners have been allocated GP-Related Net Income relating to Carried Interest equal to the aggregate amount of GP-Related Net Loss previously allocated in accordance with clause (ii) of Section 5.4(b). Withdrawn Partners shall remain Partners for purposes of allocating such
GP-Related Net Loss with respect to Carried Interest.
(d) To the extent the
Partnership has any GP-Related Net Income (Loss) for any accounting period unrelated to SP Infrastructure III, such GP-Related Net Income (Loss) will be allocated in
accordance with GP-Related Profit Sharing Percentages prevailing at the beginning of such accounting period.
(e) The General Partner may authorize from time to time advances to Partners (including any additional Partner admitted to the
Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) against their allocable shares of GP-Related Net
Income (Loss).
(f) Notwithstanding the foregoing, the General Partner may make such allocations as it deems reasonably
necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems reasonably necessary for this purpose.
Section 5.5. Liability of Partners. Except as otherwise provided in the Partnership Act or as expressly
provided in this Agreement, no Partner shall be personally obligated for any debt, obligation or liability of the Partnership or of any other Partner solely by reason of being a Partner. In no event shall any Partner or Withdrawn Partner (i) be
obligated to make any capital contribution or payment to or on behalf of the Partnership or (ii) have any liability to return distributions received by such Partner from the Partnership, in each case except as specifically provided in
Section 4.1(d) or Section 5.8 or otherwise in this Agreement, as such Partner shall otherwise expressly agree in writing or as may be required by applicable law.
Section 5.6. [Intentionally Omitted].
Section 5.7. Repurchase Rights, etc. The General Partner may from time to time establish such repurchase
rights and/or other requirements with respect to the Partners’ GP-Related Partner Interests relating to GP-Related SP Infrastructure III Investments as the General
Partner may determine. The General Partner shall have authority to (a) withhold any distribution otherwise payable to any Partner until any such repurchase rights have lapsed or any such requirements have been satisfied, (b) pay any
distribution to any Partner that is Contingent as of the distribution date and require the refund of any portion of such distribution that is Contingent as of the Withdrawal Date of such Partner, (c) amend any previously established repurchase
rights or other requirements from time to time and (d) make such exceptions thereto as it may determine on a case by case basis.
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Section 5.8. Distributions.
(a) (i) The Partnership shall make distributions of available cash (subject to reserves and other adjustments as provided
herein) or other property to Partners with respect to such Partners’ GP-Related Partner Interests at such times and in such amounts as are determined by the General Partner. The General Partner shall, if
it deems it appropriate, determine the availability for distribution of, and distribute, cash or other property separately for each category of GP-Related Net Income (Loss) established pursuant to
Section 5.1(a). Distributions of cash or other property with respect to Non-Carried Interest shall be made among the Partners in accordance with their respective
Non-Carried Interest Sharing Percentages, and, subject to Section 4.1(d) and Section 5.8(e), distributions of cash or other property with respect to Carried Interest shall be made among Partners in
accordance with their respective Carried Interest Sharing Percentages.
(ii) At any time that a sale,
exchange, transfer or other disposition by SP Infrastructure III of a portion of a GP-Related Investment is being considered by the Partnership (a “GP-Related
Disposable Investment”), at the election of the General Partner each Partner’s GP-Related Partner Interest with respect to such GP-Related Investment shall
be vertically divided into two separate GP-Related Partner Interests, a GP-Related Partner Interest attributable to the
GP-Related Disposable Investment (a Partner’s “GP-Related Class B Interest”), and a
GP-Related Partner Interest attributable to such GP-Related Investment excluding the GP-Related Disposable Investment (a
Partner’s “GP-Related Class A Interest”). Distributions (including those resulting from a sale, transfer, exchange or other disposition by SP Infrastructure III)
relating to a GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of GP-Related Class B Interests with respect to such GP-Related Investment in accordance with their GP-Related Profit Sharing
Percentages relating to such GP-Related Class B Interests, and distributions (including those resulting from the sale, transfer, exchange or other disposition by SP Infrastructure III) relating to a GP-Related Investment excluding such GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest)
shall be made only to holders of GP-Related Class A Interests with respect to such GP-Related Investment in accordance with their respective GP-Related Profit Sharing Percentages relating to such GP-Related Class A Interests. Except as provided above, distributions of cash or other property with respect to
each category of GP-Related Net Income (Loss) shall be allocated among the Partners in the same proportions as the allocations of GP-Related Net Income (Loss) of each
such category.
(b) Subject to the Partnership’s having sufficient available cash in the reasonable judgment of the
General Partner, the Partnership shall make cash distributions to each Partner with respect to each Fiscal Year of the Partnership in an aggregate amount at least equal to the total U.S. federal, New York State and New York City income and other
taxes that would be payable by such Partner with respect to all categories of GP-Related Net Income (Loss) allocated to such Partner for such Fiscal Year, the amount of which shall be calculated (i) on
the
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assumption that each Partner is an individual subject to the then prevailing maximum rate of U.S. federal, New York State and New York City and other income taxes (including, without limitation,
taxes under Sections 1401 and 1411 of the Code), (ii) taking into account (x) the limitations on the deductibility of expenses and other items for U.S. federal income tax purposes and (y) the character (e.g., long-term or short-term
capital gain or ordinary or exempt) of the applicable income, and (iii) taking into account any differential in applicable rates due to the type and character of GP-Related Net Income (Loss) allocated to
such Partner. Notwithstanding the provisions of the foregoing sentence, the General Partner may refrain from making any distribution if, in the reasonable judgment of the General Partner, such distribution is prohibited by applicable law.
(c) The General Partner may provide that the GP-Related Partner Interest of any Partner
or employee (including such Partner’s or employee’s right to distributions and investments of the Partnership related thereto) may be subject to repurchase by the Partnership during such period as the General Partner shall determine (a
“Repurchase Period”). Any Contingent distributions from GP-Related Investments subject to repurchase rights will be withheld by the Partnership and will be distributed to the recipient thereof
(together with interest thereon at rates determined by the General Partner from time to time) as the recipient’s rights to such distributions become Non-Contingent (by virtue of the expiration of the
applicable Repurchase Period or otherwise). The General Partner may elect in an individual case to have the Partnership distribute any Contingent distribution to the applicable recipient thereof irrespective of whether the applicable Repurchase
Period has lapsed. If a Partner Withdraws from the Partnership for any reason other than his or her death, Total Disability or Incompetence, the undistributed share of any GP-Related Investment that remains
Contingent as of the applicable Withdrawal Date shall be repurchased by the Partnership at a purchase price determined at such time by the General Partner. Unless determined otherwise by the General Partner, the repurchased portion thereof will be
allocated among the remaining Partners with interests in such GP-Related Investment in proportion to their respective percentage interests in such GP-Related Investment,
or if no other Partner has a percentage interest in such specific GP-Related Investment, to the General Partner; provided, that the General Partner may allocate the Withdrawn Partner’s share of
unrealized investment income from a repurchased GP-Related Investment attributable to the period after the Withdrawn Partner’s Withdrawal Date on any basis it may determine, including to existing or new
Partners who did not previously have interests in such GP-Related Investment, except that, in any event, each Investor Special Partner shall be allocated a share of such unrealized investment income equal to
its respective GP-Related Profit Sharing Percentage of such unrealized investment income.
(d) (i) (A) If the Partnership is obligated under the Clawback Provisions or Giveback Provisions to contribute to SP
Infrastructure III a Clawback Amount or a Giveback Amount (other than a Capital Commitment Giveback Amount) in respect of the GP-Related SP Infrastructure III Interest (the amount of any such obligation of the
Partnership with respect to such a Giveback Amount being herein called a “GP-Related Giveback Amount”), the General Partner shall call for such amounts as are necessary to satisfy such
obligations of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the General Partner, such an amount of prior distributions by
the Partnership (and the Other Fund GPs) with respect to Carried Interest (and/or Non-Carried Interest in the case of a GP-Related Giveback Amount) (the
“GP-
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Related Recontribution Amount”) which equals (I) the product of (a) a Partner’s or Withdrawn Partner’s Carried Interest Give Back Percentage and (b) the
aggregate Clawback Amount payable by the Partnership in the case of Clawback Amounts and (II) with respect to a GP-Related Giveback Amount, such Partner’s pro rata share of prior distributions
of Carried Interest and/or Non-Carried Interest in connection with (a) the GP-Related SP Infrastructure III Investment giving rise to the GP-Related Giveback Amount, (b) if the amounts contributed pursuant to clause (II)(a) above are insufficient to satisfy such GP-Related Giveback Amount, GP-Related SP Infrastructure III Investments other than the one giving rise to such obligation, but only those amounts received by the Partners with an interest in the
GP-Related SP Infrastructure III Investment referred to in clause (II)(a) above, and (c) if the GP-Related Giveback Amount pursuant to an applicable SP
Infrastructure III Agreement is unrelated to a specific GP-Related SP Infrastructure III Investment, all GP-Related SP Infrastructure III Investments. Each Partner and
Withdrawn Partner shall promptly contribute to the Partnership, along with satisfying his or her comparable obligations to the Other Fund GPs, if any, upon such call such Partner’s or Withdrawn Partner’s
GP-Related Recontribution Amount, less the amount paid out of the Trust Account on behalf of such Partner or Withdrawn Partner by the Trustee(s) pursuant to written instructions from the Partnership, or if
applicable, any of the Other Fund GPs with respect to Carried Interest (and/or Non-Carried Interest in the case of GP-Related Giveback Amounts) (the “Net GP-Related Recontribution Amount”), irrespective of the fact that the amounts in the Trust Account may be sufficient on an aggregate basis to satisfy the Partnership’s and the Other Fund GPs’
obligation under the Clawback Provisions and/or Giveback Provisions; provided, that to the extent a Partner’s or Withdrawn Partner’s share of the amount paid with respect to the Clawback Amount or the
GP-Related Giveback Amount exceeds his or her GP-Related Recontribution Amount, such excess shall be repaid to such Partner or Withdrawn Partner as promptly as
reasonably practicable, subject to clause (ii) below; provided further, that such written instructions from the General Partner shall specify each Partner’s and Withdrawn Partner’s
GP-Related Recontribution Amount. Prior to such time, the General Partner may, in its discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential
obligations in respect of the Clawback Provisions or the Giveback Provisions will probably materialize (and an estimate of the aggregate amount of such obligations); provided further, that any amount from a Partner’s Trust Account
used to pay any GP-Related Giveback Amount (or such lesser amount as may be required by the General Partner) shall be contributed by such Partner to such Partner’s Trust Account no later than 30 days
after the Net GP-Related Recontribution Amount is paid with respect to such GP-Related Giveback Amount.
(B) To the extent any Partner or Withdrawn Partner has satisfied any Holdback obligation with Firm Collateral,
such Partner or Withdrawn Partner shall, within 10 days of the General Partner’s call for GP-Related Recontribution Amounts, make a cash payment into the Trust Account in an amount equal to the amount of
the Holdback obligation satisfied with such Firm Collateral, or such lesser amount such that the amount in the Trust Account allocable to such Partner or Withdrawn Partner equals the sum of (I) such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount and (II) any similar amounts payable to any of the Other Fund GPs. Immediately upon receipt of such cash, the Trustee(s) shall take such steps as are necessary to release such
Firm Collateral of such Partner or Withdrawn Partner equal to the amount of such cash payment. If the
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amount of such cash payment is less than the amount of Firm Collateral of such Partner or Withdrawn Partner, the balance of such Firm Collateral if any, shall be retained to secure the payment of
GP-Related Deficiency Contributions, if any, and shall be fully released upon the satisfaction of the Partnership’s and the Other Fund GPs’ obligation to pay the Clawback Amount. The failure of any
Partner or Withdrawn Partner to make a cash payment in accordance with this clause (B) (to the extent applicable) shall constitute a default under Section 5.8(d)(ii) as if such cash payment hereunder constitutes a Net GP-Related Recontribution Amount under Section 5.8(d)(ii). Solely to the extent required by the SP Infrastructure III Partnership Agreement, each partner of the General Partner shall have the same obligations
as a Partner (which obligations shall be subject to the same limitations as the obligations of a Partner) under this Section 5.8(d)(i)(B) and under Section 5.8(d)(ii)(A) with respect to such partner’s pro rata share of any
Clawback Amount and solely to the extent that the Partnership has insufficient funds to meet the Partnership’s obligations under the SP Infrastructure III Partnership Agreement.
(ii) (A) In the event any Partner or Withdrawn Partner (a
“GP-Related Defaulting Party”) fails to recontribute all or any portion of such GP-Related Defaulting Party’s Net
GP-Related Recontribution Amount for any reason, the General Partner shall (i) use its reasonable efforts to collect any amounts from any such GP-Related Defaulting
Party and (ii) require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Carried Interest Give Back Percentages in the case of Clawback Amounts, and GP-Related Profit Sharing Percentages in the case of GP-Related Giveback Amounts (as more fully described in clause (II) of Section 5.8(d)(i)(A) above)), such
amounts as are necessary to fulfill the GP-Related Defaulting Party’s obligation to pay such GP-Related Defaulting Party’s Net
GP-Related Recontribution Amount (a “GP-Related Deficiency Contribution”) if the General Partner determines in its good faith judgment that the
Partnership (or an Other Fund GP) will be unable to collect such amount in cash from such GP-Related Defaulting Party for payment of the Clawback Amount or GP-Related
Giveback Amount, as the case may be, at least 20 Business Days prior to the latest date that the Partnership, and the Other Fund GPs, if applicable, are permitted to pay the Clawback Amount or GP-Related
Giveback Amount, as the case may be; provided, that, subject to Section 5.8(e), no Partner or Withdrawn Partner shall as a result of such GP-Related Deficiency Contribution be required to
contribute an amount in excess of 150% of the amount of the Net GP Related Recontribution Amount initially requested from such Partner or Withdrawn Partner in respect of such default.
(B) Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should
either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all
remedies (at law or equity) available to the Partnership against the GP-Related Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the GP-Related Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such
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GP-Related Defaulting Party becoming a GP-Related Defaulting Party) to
set-off as appropriate and apply against such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount any amounts
otherwise payable to the GP-Related Defaulting Party by the Partnership or any Affiliate thereof (including amounts unrelated to Carried Interest, such as returns of capital and profit thereon). Each Partner
and Withdrawn Partner hereby grants to the General Partner a security interest, effective upon such Partner or Withdrawn Partner becoming a GP-Related Defaulting Party, in all accounts receivable and other
rights to receive payment from any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each
Partner and Withdrawn Partner hereby appoints the General Partner as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such
Partner or Withdrawn Partner or in the name of the General Partner, to take any actions which may be necessary to accomplish the intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the Net GP-Related Recontribution Amount of a GP-Related Defaulting Party from the date such Net GP-Related Recontribution Amount was required
to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(C) Any Partner’s
or Withdrawn Partner’s failure to make a GP-Related Deficiency Contribution shall cause such Partner or Withdrawn Partner to be a GP-Related Defaulting Party with
respect to such amount. The Partnership shall first seek any remaining Trust Amounts (and Trust Income thereon) allocated to such Partner or Withdrawn Partner to satisfy such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution before seeking cash contributions from such Partner or Withdrawn Partner in satisfaction of such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution.
(iii) In the event any Partner or
Withdrawn Partner initially fails to recontribute all or any portion of such Partner or Withdrawn Partner’s pro rata share of any Clawback Amount pursuant to Section 5.8(d)(i)(A), the Partnership shall use its reasonable efforts to collect
the amount which such Partner or Withdrawn Partner so fails to recontribute.
(iv) A Partner’s or
Withdrawn Partner’s obligation to make contributions to the Partnership under this Section 5.8(d) shall survive the termination of the Partnership.
(e) The Partners acknowledge that the General Partner will (and is hereby authorized to) take such steps as it deems
appropriate, in its good faith judgment, to further the objective of providing for the fair and equitable treatment of all Partners, including by allocating Losses (as defined in the SP Infrastructure III Agreements) on GP-Related SP Infrastructure III Investments that have been the subject of a writedown and/or losses (each, a “Loss Investment”) to those Partners who participated in such Loss Investments based on
their Carried Interest Sharing Percentage therein to the extent that such Partners receive or have received Carried Interest distributions from other GP-Related SP Infrastructure III Investments. Consequently
and notwithstanding anything herein to the contrary, adjustments to Carried Interest distributions shall be made as set forth in this Section 5.8(e).
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(i) At the time the Partnership is making Carried Interest
distributions in connection with a GP-Related SP Infrastructure III Investment (the “Subject Investment”) that have been reduced under any SP Infrastructure III Agreement as a result of one or
more Loss Investments, the General Partner shall calculate amounts distributable to or due from each such Partner as follows:
(A) determine each Partner’s share of each such Loss Investment based on his or her Carried Interest
Sharing Percentage in each such Loss Investment (which may be zero) to the extent such Loss Investment has reduced the Carried Interest distributions otherwise available for distribution to all Partners (indirectly through the Partnership from SP
Infrastructure III) from the Subject Investment (such reduction, the “Loss Amount”);
(B)
determine the amount of Carried Interest distributions otherwise distributable to such Partner with respect to the Subject Investment (indirectly through the Partnership from SP Infrastructure III) before any reduction in respect of the amount
determined in clause (A) above (the “Unadjusted Carried Interest Distributions”); and
(C)
subtract (I) the Loss Amounts relating to all Loss Investments from (II) the Unadjusted Carried Interest Distributions for such Partner, to determine the amount of Carried Interest distributions to actually be paid to such Partner
(“Net Carried Interest Distribution”).
To the extent that the Net Carried Interest Distribution for a Partner as
calculated in this clause (i) is a negative number, the General Partner shall (I) notify such Partner, at or prior to the time such Carried Interest distributions are actually made to the Partners, of his or her obligation to recontribute
to the Partnership prior Carried Interest distributions (a “Net Carried Interest Distribution Recontribution Amount”), up to the amount of such negative Net Carried Interest Distribution and (II) to the extent amounts
recontributed pursuant to clause (I) are insufficient to satisfy such negative Net Carried Interest Distribution amount, reduce future Carried Interest distributions otherwise due such Partner, up to the amount of such remaining negative Net
Carried Interest Distribution. If a Partner’s (x) Net Carried Interest Distribution Recontribution Amount exceeds (y) the aggregate amount of prior Carried Interest distributions less the amount of tax thereon, calculated based on the
Assumed Income Tax Rate (as defined in the SP Infrastructure III Agreements) in effect in the Fiscal Years of such distributions (the “Excess Tax-Related Amount”), then such Partner may, in
lieu of paying such Partner’s Excess Tax-Related Amount, defer such amounts as set forth below. Such deferred amount shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced and
repaid by the amount of Carried Interest otherwise distributable to such Partner in connection with future Carried Interest distributions until such balance is reduced to zero. Any deferred amounts shall be payable in full upon the earlier of
(i) such time as the Clawback Amount is determined (as provided herein) and (ii) such time as the Partner becomes a Withdrawn Partner.
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To the extent there is an amount of negative Net Carried Interest
Distribution with respect to a Partner remaining after the application of this clause (i), notwithstanding clause (II) of the preceding paragraph, such remaining amount of negative Net Carried Interest Distribution shall be allocated to the
other Partners pro rata based on each of their Carried Interest Sharing Percentages in the Subject Investment.
A
Partner who fails to pay a Net Carried Interest Distribution Recontribution Amount promptly upon notice from the General Partner (as provided above) shall be deemed a GP-Related Defaulting Party for all
purposes hereof.
A Partner may satisfy in part any Net Carried Interest Distribution Recontribution Amount from cash that
is then subject to a Holdback, to the extent that the amounts that remain subject to a Holdback satisfy the Holdback requirements hereof as they relate to the reduced amount of aggregate Carried Interest distributions received by such Partner
(taking into account any Net Carried Interest Distribution Recontribution Amount contributed to the Partnership by such Partner).
Any Net Carried Interest Distribution Recontribution Amount contributed by a Partner, including amounts of cash subject to a
Holdback as provided above, shall increase the amount available for distribution to the other Partners as Carried Interest distributions with respect to the Subject Investment; provided, that any such amounts then subject to a Holdback may be
so distributed to the other Partners to the extent a Partner receiving such distribution has satisfied the Holdback requirements with respect to such distribution (taken together with the other Carried Interest distributions received by such Partner
to date).
(ii) In the case of Clawback Amounts which are required to be contributed to the Partnership as
otherwise provided herein, the obligation of the Partners with respect to any Clawback Amount shall be adjusted by the General Partner as follows:
(A) determine each Partner’s share of any Losses (as defined in the SP Infrastructure III Agreements) in
any GP-Related SP Infrastructure III Investments which gave rise to the Clawback Amount (i.e., the Losses that followed the last GP-Related SP Infrastructure III
Investment with respect to which Carried Interest distributions were made), based on such Partner’s Carried Interest Sharing Percentage in such GP-Related SP Infrastructure III Investments;
(B) determine each Partner’s obligation with respect to the Clawback Amount based on such Partner’s
Carried Interest Give Back Percentage as otherwise provided herein; and
(C) subtract the amount determined
in clause (B) above from the amount determined in clause (A) above with respect to each Partner to determine the amount of adjustment to each Partner’s share of the Clawback Amount (a Partner’s “Clawback Adjustment
Amount”).
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A Partner’s share of the Clawback Amount shall for all purposes hereof
be decreased by such Partner’s Clawback Adjustment Amount, to the extent it is a negative number (except to the extent expressly provided below). A Partner’s share of the Clawback Amount shall for all purposes hereof be increased by such
Partner’s Clawback Adjustment Amount (to the extent it is a positive number); provided, that in no way shall a Partner’s aggregate obligation to satisfy a Clawback Amount as a result of this clause (ii) exceed the aggregate
Carried Interest distributions received by such Partner. To the extent a positive Clawback Adjustment Amount remains after the application of this clause (ii) with respect to a Partner, such remaining Clawback Adjustment Amount shall be
allocated to the Partners (including any Partner whose Clawback Amount was increased pursuant to this clause (ii)) pro rata based on their Carried Interest Give Back Percentages (determined without regard to this clause (ii)).
Any distribution or contribution adjustments pursuant to this Section 5.8(e) by the General Partner shall be based on its
good faith judgment, and no Partner shall have any claim against the Partnership, the General Partner or any other Partners as a result of any adjustment made as set forth above. This Section 5.8(e) applies to all Partners, including Withdrawn
Partners.
It is agreed and acknowledged that this Section 5.8(e) is an agreement among the Partners and in no way
modifies the obligations of each Partner regarding the Clawback Amount as provided in the SP Infrastructure III Agreements.
Section 5.9. Business Expenses. The Partnership shall reimburse the Partners for reasonable travel,
entertainment and miscellaneous expenses incurred by them in the conduct of the Partnership’s business in accordance with rules and regulations established by the General Partner from time to time.
Section 5.10. Tax Capital Accounts; Tax Allocations.
(a) For U.S. federal income tax purposes, there shall be established for each Partner a single capital account combining such
Partner’s Capital Commitment Capital Account and GP-Related Capital Account, with such adjustments as the General Partner determines are appropriate so that such single capital account is maintained in
compliance with the principles and requirements of Section 704(b) of the Code and the Treasury Regulations thereunder.
(b) All items of income, gain, loss, deduction and credit of the Partnership shall be allocated among the Partners for U.S.
federal, state and local income tax purposes in the same manner as such items of income, gain, loss, deduction and credit shall be allocated among the Partners pursuant to this Agreement, except as may otherwise be provided herein or by the Code or
other applicable law. In the event there is a net decrease in partnership minimum gain or partner nonrecourse debt minimum gain (determined in accordance with the principles of Treasury Regulations Sections
1.704-2(d) and 1.704-2(i)) during any taxable year of the Partnership, each Partner shall be specially allocated items of Partnership income and gain for such year (and,
if necessary, subsequent years) in an amount equal to its respective share of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(f). In addition, this Agreement shall be
considered to contain a “qualified income offset” as provided in Treasury Regulations Section 1.704-1(b)(2)(ii)(d). Notwithstanding the foregoing, the General Partner in its sole discretion
shall make allocations for tax purposes as may be needed to ensure that allocations are in accordance with the interests of the Partners within the meaning of the Code and the Treasury Regulations.
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(c) For U.S. federal, state and local income tax purposes only, Partnership
income, gain, loss, deduction or expense (or any item thereof) for each Fiscal Year shall be allocated to and among the Partners in a manner corresponding to the manner in which corresponding items are allocated among the Partners pursuant to the
other provisions of this Section 5.10; provided, that the General Partner may in its sole discretion make such allocations for tax purposes as it determines are appropriate so that allocations have substantial economic effect or are in
accordance with the interests of the Partners, within the meaning of the Code and the Treasury Regulations thereunder. To the extent there is an adjustment by a taxing authority to any item of income, gain, loss, deduction or credit of the
Partnership (or an adjustment to any Partner’s distributive share thereof), the General Partner may reallocate the adjusted items among each Partner or former Partner (as determined by the General Partner) in accordance with the final
resolution of such audit adjustment.
ARTICLE VI
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS;
SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
Section 6.1. Additional Partners.
(a) Effective on the first day of any month (or on such other date as shall be determined by the General Partner in its sole
discretion), the General Partner shall have the right to admit one or more additional or substitute persons into the Partnership as Limited Partners or Special Partners. Each such person shall make the representations and certifications with respect
to itself set forth in Section 3.6 and Section 3.7. The General Partner shall determine and negotiate with the additional Partner (which term shall include, without limitation, any substitute Partner) all terms of such additional
Partner’s participation in the Partnership, including the additional Partner’s initial GP-Related Capital Contribution, Capital Commitment-Related Capital Contribution,
GP-Related Profit Sharing Percentage and Capital Commitment Profit Sharing Percentage. Each additional Partner shall have such voting rights as may be determined by the General Partner from time to time
unless, upon the admission to the Partnership of any Special Partner, the General Partner shall designate that such Special Partner shall not have such voting rights (any such Special Partner being called a “Nonvoting Special Partner”).
Any additional Partner shall, as a condition to becoming a Partner, agree to become a party to, and be bound by the terms and conditions of, the Trust Agreement. If Blackstone or another or subsequent holder of an Investor Note approved by the
General Partner for purposes of this Section 6.1(a) shall foreclose upon a Limited Partner’s Investor Note issued to finance such Limited Partner’s purchase of his or her Capital Commitment Interests, Blackstone or such other or
subsequent holder shall succeed to such Limited Partner’s Capital Commitment Interests and shall be deemed to have become a Limited Partner to such extent. Any additional Partner may have a GP-Related
Partner Interest or a Capital Commitment Partner Interest, without having the other such interest.
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(b) The GP-Related Profit Sharing
Percentages, if any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’ GP-Related Profit
Sharing Percentages as of such date, shall be established by the General Partner pursuant to Section 5.3. The Capital Commitment Profit Sharing Percentages, if any, to be allocated to an additional Partner as of the date such Partner is
admitted to the Partnership, together with the pro rata reduction in all other Partners’ Capital Commitment Profit Sharing Percentages as of such date, shall be established by the General Partner. Notwithstanding any provision in this Agreement
to the contrary, the General Partner is authorized, without the need for any further act, vote or consent of any person, to make adjustments to the GP-Related Profit Sharing Percentages as it determines
necessary in its sole discretion in connection with any additional Partners admitted to the Partnership, adjustments with respect to other Partners of the Partnership and to give effect to other matters set forth herein, as applicable.
(c) An additional Partner shall be required to contribute to the Partnership his or her pro rata share of the
Partnership’s total capital, excluding capital in respect of GP-Related Investments and Capital Commitment Investments in which such Partner does not acquire any interests, at such times and in such
amounts as shall be determined by the General Partner in accordance with Section 4.1 and Section 7.1.
(d) The
admission of an additional Partner will be evidenced by (i) the execution of a counterpart copy of this Agreement by such additional Partner, (ii) the execution of an amendment to this Agreement by the General Partner and the additional
Partner, as determined by the General Partner and / or (iii) the execution by such additional Partner of any other writing evidencing the intent of such person to become an additional Partner and to be bound by the terms of this Agreement and
such writing being acceptable to the General Partner on behalf of the Partnership. In addition, each additional Partner shall sign a counterpart copy of the Trust Agreement or any other writing evidencing the intent of such person to become a party
to the Trust Agreement that is acceptable to the General Partner on behalf of the Partnership.
Section 6.2. Withdrawal of Partners.
(a) Any Partner may Withdraw voluntarily from the Partnership subject to the prior written consent of the General Partner,
including if such Withdrawal would (i) cause the Partnership to be in default under any of its contractual obligations or (ii) in the reasonable judgment of the General Partner, have a material adverse effect on the Partnership or its
business. Without limiting the foregoing sentence, the General Partner generally intends to permit voluntary Withdrawals on the last day of any calendar month (or on such other date as shall be determined by the General Partner in its sole
discretion), on not less than 15 days’ prior written notice by such Partner to the General Partner (or on such shorter notice period as may be mutually agreed upon between such Partner and the General Partner); provided, that a Partner may
Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest without Withdrawing from the Partnership with respect to such Partner’s Capital Commitment Partner Interest,
and a Partner may Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest without Withdrawing from the Partnership with respect to such Partner’s GP-Related
Partner Interest.
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(b) Upon the Withdrawal of any Partner, including by the occurrence of any
withdrawal event under the Partnership Act with respect to any Partner, such Partner shall thereupon cease to be a Partner, except as expressly provided herein.
(c) Upon the Total Disability of a Limited Partner, such Partner shall thereupon cease to be a Limited Partner with respect to
such person’s GP-Related Partner Interest; provided, that the General Partner may elect to admit such Withdrawn Partner to the Partnership as a Nonvoting Special Partner with respect to such person’s
GP-Related Partner Interest, with such GP-Related Partner Interest as the General Partner may determine. The determination of whether any Partner has suffered a Total
Disability shall be made by the General Partner in its sole discretion after consultation with a qualified medical doctor. In the absence of agreement between the General Partner and such Partner, each party shall nominate a qualified medical doctor
and the two doctors shall select a third doctor, who shall make the determination as to Total Disability.
(d) If the
General Partner determines that it shall be in the best interests of the Partnership for any Partner (including any Partner who has given notice of voluntary Withdrawal pursuant to paragraph (a) above) to Withdraw from the Partnership (whether
or not Cause exists) with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, such Partner, upon written notice by the
General Partner to such Partner, shall be required to Withdraw with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, as
of a date specified in such notice, which date shall be on or after the date of such notice. If the General Partner requires any Partner to Withdraw for Cause with respect to such person’s GP-Related
Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, such notice shall state that it has been given for Cause and shall describe the particulars thereof in reasonable detail.
(e) The Withdrawal from the Partnership of any Partner shall not, in and of itself, affect the obligations of the other
Partners to continue the Partnership during the remainder of its term. A Withdrawn General Partner shall remain liable for all obligations of the Partnership incurred while it was a General Partner and resulting from its acts or omissions as a
General Partner to the fullest extent provided by law.
Section 6.3. GP-Related Partner Interests Not Transferable.
(a) No Partner may sell, assign, pledge, grant a security interest over or otherwise transfer or encumber all or any portion of
such Partner’s GP-Related Partner Interest other than as permitted by written agreement between such Partner and the Partnership; provided, that this Section 6.3 shall not impair transfers by
operation of law, transfers by will or by other testamentary instrument occurring by virtue of the death or dissolution of a Partner, or transfers required by trust agreements; provided further, that, subject to the prior written consent of the
General Partner, which shall not be unreasonably withheld, a Limited Partner may transfer, for estate planning purposes, up to 25% of his or her GP-Related Profit Sharing
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Percentage to any estate planning trust, limited partnership, or limited liability company with respect to which a Limited Partner controls investments related to any interest in the Partnership
held therein (an “Estate Planning Vehicle”). Each Estate Planning Vehicle will be a Nonvoting Special Partner. Such Limited Partner and the Nonvoting Special Partner shall be jointly and severally liable for all obligations of both such
Limited Partner and such Nonvoting Special Partner with respect to the Partnership (including the obligation to make additional GP-Related Capital Contributions), as the case may be. The General Partner may at
its sole option exercisable at any time require any Estate Planning Vehicle to Withdraw from the Partnership on the terms of this Article VI. Except as provided in the second proviso to the first sentence of this Section 6.3, no assignee,
legatee, distributee, heir or transferee (by conveyance, operation of law or otherwise) of the whole or any portion of any Partner’s GP-Related Partner Interest shall have any right to be a Partner
without the prior written consent of the General Partner (which consent may be given or withheld in its sole discretion without giving any reason therefor). Notwithstanding the granting of a security interest in the entire Interest of any Partner,
such Partner shall continue to be a Partner of the Partnership.
(b) Notwithstanding any provision hereof to the contrary,
no sale or transfer of any GP-Related Partner Interest in the Partnership may be made except in compliance with all federal, state and other applicable laws, including U.S. federal and state securities laws.
Section 6.4. Consequences upon Withdrawal of a Partner.
(a) Subject to the Partnership Act, the General Partner may not transfer or assign its interest as a General Partner in the
Partnership or its right to manage the affairs of the Partnership, except that the General Partner may, subject to the Partnership Act, with the prior written approval of a Majority in Interest of the Partners, admit another person as an additional
or substitute General Partner who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise); provided however, that the General Partner may,
in its sole discretion, transfer all or part of its interest in the Partnership to a person who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or
otherwise) and who owns, directly or indirectly, the principal part of the business then conducted by the General Partner in connection with any liquidation, dissolution or reorganization of the General Partner, and, upon the assumption by such
person of liability for all the obligations of the General Partner under this Agreement, such person shall be admitted as the General Partner. A person who is so admitted as an additional or substitute General Partner shall thereby become a General
Partner and shall have the right to manage the affairs of the Partnership and to vote as a Partner to the extent of the interest in the Partnership so acquired. The General Partner shall not cease to be the general partner of the Partnership upon
the collateral assignment of or the pledging or granting of a security interest in its entire Interest in the Partnership.
(b) Except as contemplated by Section 6.4(a) above, Withdrawal by a General Partner is not permitted. The Withdrawal of a
Partner shall not dissolve the Partnership if at the time of such Withdrawal there are one or more remaining Partners and any one or more of such remaining Partners continue the business of the Partnership (any and all such remaining Partners being
hereby authorized to continue the business of the Partnership without dissolution and
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hereby agreeing to do so). Notwithstanding Section 6.4(c), if upon the Withdrawal of a Partner there shall be no remaining Limited Partners, the Partnership shall be dissolved and shall be
wound up unless, within 90 days after the occurrence of such Withdrawal, all remaining Special Partners agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such Withdrawal, of one or more
Limited Partners.
(c) The Partnership shall not be dissolved, in and of itself, by the Withdrawal of any Partner, but
shall continue with the surviving or remaining Partners as partners thereof in accordance with and subject to the terms and provisions of this Agreement.
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interests.
(a) The terms of this Section 6.5 shall apply to
the GP-Related Partner Interest of a Withdrawn Partner, but, except as otherwise expressly provided in this Section 6.5, shall not apply to the Capital Commitment Partner Interest of a Withdrawn Partner.
For purposes of this Section 6.5, the term “Settlement Date” means the date as of which a Withdrawn Partner’s GP-Related Partner Interest in the Partnership is settled as determined
under paragraph (b) below. Notwithstanding the foregoing, any Limited Partner who Withdraws from the Partnership, and all or any portion of whose GP-Related Partner Interest is retained as a Special
Partner, shall be considered a Withdrawn Partner for all purposes hereof.
(b) Except where a later date for the settlement
of a Withdrawn Partner’s GP-Related Partner Interest in the Partnership may be agreed to by the General Partner and a Withdrawn Partner, a Withdrawn Partner’s Settlement Date shall be his or her
Withdrawal Date; provided, that if a Withdrawn Partner’s Withdrawal Date is not the last day of a month, then the General Partner may elect for such Withdrawn Partner’s Settlement Date to be the last day of the month in which his or
her Withdrawal Date occurs. During the interval, if any, between a Withdrawn Partner’s Withdrawal Date and Settlement Date, such Withdrawn Partner shall have the same rights and obligations with respect to
GP-Related Capital Contributions, interest on capital, allocations of GP-Related Net Income (Loss) and distributions as would have applied had such Withdrawn Partner
remained a Partner of the Partnership during such period.
(c) In the event of the Withdrawal of a Partner, with respect to
such Withdrawn Partner’s GP-Related Partner Interest, the General Partner shall promptly after such Withdrawn Partner’s Settlement Date (i) determine and allocate to the Withdrawn Partner’s
GP-Related Capital Accounts such Withdrawn Partner’s allocable share of the GP-Related Net Income (Loss) of the Partnership for the period ending on such Settlement
Date in accordance with Article V and (ii) credit the Withdrawn Partner’s GP-Related Capital Accounts with interest in accordance with Section 5.2. In making the foregoing calculations, the
General Partner shall be entitled to establish such reserves (including reserves for taxes, bad debts, unrealized losses, actual or threatened litigation or any other expenses, contingencies or obligations) as it deems appropriate. Unless otherwise
determined by the General Partner in a particular case, a Withdrawn Partner shall not be entitled to receive any GP-Related Unallocated Percentage in respect of the accounting period during which such Partner
Withdraws from the Partnership (whether or not previously awarded or allocated) or any GP-Related Unallocated Percentage in respect of prior accounting periods that have not been paid or allocated (whether or
not previously awarded) as of such Withdrawn Partner’s Withdrawal Date.
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(d) From and after the Settlement Date of the Withdrawn Partner, the
Withdrawn Partner’s GP-Related Profit Sharing Percentages shall, unless otherwise allocated by the General Partner pursuant to Section 5.3(a), be deemed to be
GP-Related Unallocated Percentages (except for GP-Related Profit Sharing Percentages with respect to GP-Related Investments as
provided in paragraph (f) below).
(e) (i) Upon the Withdrawal from the Partnership of a Partner with respect to
such Partner’s GP-Related Partner Interest, such Withdrawn Partner thereafter shall not, except as expressly provided in this Section 6.5, have any rights of a Partner (including voting rights) with
respect to such Partner’s GP-Related Partner Interest, and, except as expressly provided in this Section 6.5, such Withdrawn Partner shall not have any interest in the Partnership’s GP-Related Net Income (Loss), or in distributions related to such Partner’s GP-Related Partner Interest, GP-Related Investments or
other assets related to such Partner’s GP-Related Partner Interest. If a Partner Withdraws from the Partnership with respect to such Partner’s GP-Related
Partner Interest for any reason other than for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be entitled to receive, at the time or times specified in Section 6.5(i) below, in satisfaction and discharge in full of the
Withdrawn Partner’s GP-Related Partner Interest in the Partnership, (x) payment equal to the aggregate credit balance, if any, as of the Settlement Date of the Withdrawn Partner’s GP-Related Capital Accounts, (excluding any GP-Related Capital Account or portion thereof attributable to any GP-Related Investment)
and (y) the Withdrawn Partner’s percentage interest attributable to each GP-Related Investment in which the Withdrawn Partner has an interest as of the Settlement Date as provided in paragraph
(f) below (which shall be settled in accordance with paragraph (f) below), subject to all the terms and conditions of paragraphs (a)-(r) of this Section 6.5. If the amount determined pursuant to clause (x) above is an aggregate
negative balance, the Withdrawn Partner shall pay the amount thereof to the Partnership upon demand by the General Partner on or after the date of the statement referred to in Section 6.5(i) below; provided, that if the Withdrawn Partner was
solely a Special Partner on his or her Withdrawal Date, such payment shall be required only to the extent of any amounts payable to such Withdrawn Partner pursuant to this Section 6.5. Any aggregate negative balance in the GP-Related Capital Accounts of a Withdrawn Partner who was solely a Special Partner, upon the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the
Partnership pursuant to this Section 6.5, shall be allocated among the other Partners’ GP-Related Capital Accounts in accordance with their respective
GP-Related Profit Sharing Percentages in the categories of GP-Related Net Income (Loss) giving rise to such negative balance as determined by the General Partner as of
such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the Partnership, no value shall be ascribed to goodwill, the Partnership name or
the anticipation of any value the Partnership or any successor thereto might have in the event the Partnership or any interest therein were to be sold in whole or in part.
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(ii) Notwithstanding clause (i) of this
Section 6.5(e), in the case of a Partner whose Withdrawal with respect to such Partner’s GP-Related Partner Interest resulted from such Partner’s death or Incompetence, such Partner’s
estate or legal representative, as the case may be, may elect, at the time described below, to receive a Nonvoting Special Partner GP-Related Partner Interest and retain such Partner’s GP-Related Profit Sharing Percentage in all (but not less than all) illiquid investments of the Partnership in lieu of a cash payment (or Investor Note) in settlement of that portion of the Withdrawn Partner’s GP-Related Partner Interest. The election referred to above shall be made within 60 days after the Withdrawn Partner’s Settlement Date, based on a statement of the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5.
(f)
For purposes of clause (y) of paragraph (e)(i) above, a Withdrawn Partner’s “percentage interest” means his or her GP-Related Profit Sharing Percentage as of the Settlement Date in the
relevant GP-Related Investment. The Withdrawn Partner shall retain his or her percentage interest in such GP-Related Investment and shall retain his or her GP-Related Capital Account or portion thereof attributable to such GP-Related Investment, in which case such Withdrawn Partner (a “Retaining Withdrawn
Partner”) shall become and remain a Special Partner for such purpose (and, if the General Partner so designates, such Special Partner shall be a Nonvoting Special Partner). The GP-Related Partner
Interest of a Retaining Withdrawn Partner pursuant to this paragraph (f) shall be subject to the terms and conditions applicable to GP-Related Partner Interests of any kind hereunder and such other terms
and conditions as are established by the General Partner. At the option of the General Partner in its sole discretion, the General Partner and the Retaining Withdrawn Partner may agree to have the Partnership acquire such GP-Related Partner Interest without the approval of the other Partners; provided, that the General Partner shall reflect in the books and records of the Partnership the terms of any acquisition pursuant to
this sentence.
(g) The General Partner may elect, in lieu of payment in cash of any amount payable to a Withdrawn Partner
pursuant to paragraph (e) above, to (i) have the Partnership issue to the Withdrawn Partner a subordinated promissory note and/or to (ii) distribute in kind to the Withdrawn Partner such Withdrawn Partner’s pro rata share
(as determined by the General Partner) of any securities or other investments of the Partnership in relation to such Partner’s GP-Related Partner Interest. If any securities or other investments are
distributed in kind to a Withdrawn Partner under this paragraph (g), the amount described in clause (x) of paragraph (e)(i) shall be reduced by the value of such distribution as valued on the latest balance sheet of the Partnership in
accordance with generally accepted accounting principles or, if not appearing on such balance sheet, as reasonably determined by the General Partner.
(h) [Intentionally omitted].
(i) Within 120 days after each Settlement Date, the General Partner shall submit to the Withdrawn Partner a statement of the
settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5 together with any cash payment, subordinated promissory note and in kind
distributions to be made to such Partner as shall be determined by the General Partner. The General Partner shall submit to the Withdrawn Partner supplemental statements with respect to additional amounts payable to or by the Withdrawn Partner in
respect of the settlement of his or her GP-Related Partner Interest in the Partnership (e.g., payments in respect of GP-Related Investments pursuant to paragraph
(f) above or adjustments to reserves pursuant to paragraph (j) below) promptly after such amounts are determined by the General Partner. To the fullest extent permitted by law, such statements and
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the valuations on which they are based shall be accepted by the Withdrawn Partner without examination of the accounting books and records of the Partnership or other inquiry. Any amounts payable
by the Partnership to a Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in right of payment and subject to the prior payment or provision for payment in full of claims of all present or future creditors of the Partnership or
any successor thereto arising out of matters occurring prior to the applicable date of payment or distribution; provided, that such Withdrawn Partner shall otherwise rank pari passu in right of payment (x) with all persons who
become Withdrawn Partners and whose Withdrawal Date is within one year before the Withdrawal Date of the Withdrawn Partner in question and (y) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year after the
Withdrawal Date of the Withdrawn Partner in question.
(j) If the aggregate reserves established by the General Partner as
of the Settlement Date in making the foregoing calculations should prove, in the determination of the General Partner, to be excessive or inadequate, the General Partner may elect, but shall not be obligated, to pay the Withdrawn Partner or his or
her estate such excess, or to charge the Withdrawn Partner or his or her estate such deficiency, as the case may be.
(k)
Any amounts owed by the Withdrawn Partner to the Partnership at any time on or after the Settlement Date (e.g., outstanding Partnership loans or advances to such Withdrawn Partner) shall be offset against any amounts payable or distributable
by the Partnership to the Withdrawn Partner at any time on or after the Settlement Date or shall be paid by the Withdrawn Partner to the Partnership, in each case as determined by the General Partner. All cash amounts payable by a Withdrawn Partner
to the Partnership under this Section 6.5 shall bear interest from the due date to the date of payment at a floating rate equal to the lesser of (x) the Prime Rate or (y) the maximum rate of interest permitted by applicable law. The
“due date” of amounts payable by a Withdrawn Partner pursuant to Section 6.5(i) above shall be 120 days after a Withdrawn Partner’s Settlement Date. The “due date” of amounts payable to or by a Withdrawn Partner in
respect of GP-Related Investments for which the Withdrawn Partner has retained a percentage interest in accordance with paragraph (f) above shall be 120 days after realization with respect to such GP-Related Investment. The “due date” of any other amounts payable by a Withdrawn Partner shall be 60 days after the date such amounts are determined to be payable.
(l) At the time of the settlement of any Withdrawn Partner’s GP-Related Partner
Interest in the Partnership pursuant to this Section 6.5, the General Partner may, to the fullest extent permitted by applicable law, impose any restrictions it deems appropriate on the assignment, pledge, grant of a security interest,
encumbrance or other transfer by such Withdrawn Partner of any interest in any GP-Related Investment retained by such Withdrawn Partner, any securities or other investments distributed in kind to such
Withdrawn Partner or such Withdrawn Partner’s right to any payment from the Partnership.
(m) If a Partner is required
to Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest for Cause pursuant to Section 6.2(d), then his or her GP-Related
Partner Interest shall be settled in accordance with paragraphs (a)-(r) of this Section 6.5; provided, that the General Partner may elect (but shall not be required) to apply any or all the
following terms and conditions to such settlement:
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(i) In settling the Withdrawn Partner’s interest in any
GP-Related Investment in which he or she has an interest as of his or her Settlement Date, the General Partner may elect to (A) determine the GP-Related Unrealized
Net Income (Loss) attributable to each such GP-Related Investment as of the Settlement Date and allocate to the appropriate GP-Related Capital Account of the Withdrawn
Partner his or her allocable share of such GP-Related Unrealized Net Income (Loss) for purposes of calculating the aggregate balance of such Withdrawn Partner’s
GP-Related Capital Account pursuant to clause (x) of paragraph (e)(i) above, (B) credit or debit, as applicable, the Withdrawn Partner with the balance of his or her
GP-Related Capital Account or portion thereof attributable to each such GP-Related Investment as of his or her Settlement Date without giving effect to the GP-Related Unrealized Net Income (Loss) from such GP-Related Investment as of his or her Settlement Date, which shall be forfeited by the Withdrawn Partner or (C) apply
the provisions of paragraph (f) above; provided, that the maximum amount of GP-Related Net Income (Loss) allocable to such Withdrawn Partner with respect to any
GP-Related Investment shall equal such Partner’s percentage interest of the GP-Related Unrealized Net Income, if any, attributable to such GP-Related Investment as of the Settlement Date (the balance of such GP-Related Net Income (Loss), if any, shall be allocated as determined by the General Partner). The
Withdrawn Partner shall not have any continuing interest in any GP-Related Investment to the extent an election is made pursuant to (A) or (B) above.
(ii) Any amounts payable by the Partnership to the Withdrawn Partner pursuant to this Section 6.5 shall be
subordinate in right of payment and subject to the prior payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to or on or after the applicable date of payment
or distribution.
(n) The payments to a Withdrawn Partner pursuant to this Section 6.5 may be conditioned on the
compliance by such Withdrawn Partner with any lawful and reasonable (under the circumstances) restrictions against engaging or investing in a business competitive with that of the Partnership or any of its subsidiaries and Affiliates for a period
not exceeding two years determined by the General Partner. Upon written notice to the General Partner, any Withdrawn Partner who is subject to noncompetition restrictions established by the General Partner pursuant to this paragraph (n) may
elect to forfeit the principal amount payable in the final installment of his or her subordinated promissory note, together with interest to be accrued on such installment after the date of forfeiture, in lieu of being bound by such restrictions.
(o) In addition to the foregoing, the General Partner shall have the right to pay a Withdrawn Partner (other than the
General Partner) a discretionary additional payment in an amount and based upon such circumstances and conditions as it determines to be relevant.
(p) The provisions of this Section 6.5 shall apply to any Investor Special Partner relating to a Limited Partner or
Special Partner and to any transferee of any GP-Related Partner Interest of such Partner pursuant to Section 6.3 if such Partner Withdraws from the Partnership.
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(q) (i) The Partnership will assist a Withdrawn Partner or his or her
estate or guardian, as the case may be, in the settlement of the Withdrawn Partner’s GP-Related Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this
assistance will be borne by the Withdrawn Partner or his or her estate.
(ii) The General Partner may
reasonably determine in good faith to retain outside professionals to provide the assistance to Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a
Withdrawn Partner or his or her estate or guardian, as the case may be, prior to engaging such professionals. If the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable
assistance as and when it can so as not to interfere with the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the
Partnership and the Partners.
(r) Each Partner (other than the General Partner) hereby irrevocably appoints the General
Partner as such Partner’s true and lawful agent, representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make,
execute, sign and file, on behalf of such Partner, any and all agreements, instruments, consents, ratifications, documents and certificates which the General Partner deems necessary or advisable in connection with any transaction or matter
contemplated by or provided for in this Section 6.5, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is
coupled with an interest and shall survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 6.6. Dissolution of the Partnership. The General Partner may dissolve the Partnership prior to the
expiration of its term at any time on not less than 60 days’ notice of the dissolution date given to the other Partners. Upon the dissolution of the Partnership, the Partners’ respective interests in the Partnership shall be valued and
settled in accordance with the procedures set forth in Section 6.5.
Section 6.7. Certain Tax
Matters. (a) The General Partner shall determine all matters concerning allocations for tax purposes not expressly provided for herein in its sole discretion.
(b) The General Partner shall cause to be prepared all federal, state and local tax returns of the Partnership for each year
for which such returns are required to be filed and, after approval of such returns by the General Partner, shall cause such returns to be timely filed. The General Partner shall determine the appropriate treatment of each item of income, gain,
loss, deduction and credit of the Partnership and the accounting methods and conventions under the tax laws of the United States, the several States and other relevant jurisdictions as to the treatment of any such item or any other method or
procedure related to the preparation of such tax returns. The General Partner may cause the Partnership to make or refrain from making any and all elections permitted by such tax laws. Each Partner agrees that he or she shall not, unless he or she
provides prior notice of such action to the Partnership, (i) treat, on his or her individual
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income tax returns, any item of income, gain, loss, deduction or credit relating to his or her interest in the Partnership in a manner inconsistent with the treatment of such item by the
Partnership as reflected on the Form K-1 or other information statement furnished by the Partnership to such Partner for use in preparing his or her income tax returns or (ii) file any claim for refund
relating to any such item based on, or which would result in, such inconsistent treatment. In respect of an income tax audit of any tax return of the Partnership, the filing of any amended return or claim for refund in connection with any item of
income, gain, loss, deduction or credit reflected on any tax return of the Partnership, or any administrative or judicial proceedings arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim,
(A) the Tax Matters Partner (as defined below) shall be authorized to act for, and his or her decision shall be final and binding upon, the Partnership and all Partners except to the extent a Partner shall properly elect to be excluded from
such proceeding pursuant to the Code, (B) all expenses incurred by the Tax Matters Partner in connection therewith (including, without limitation, attorneys’, accountants’ and other experts’ fees and disbursements) shall be
expenses of the Partnership and (C) no Partner shall have the right to (1) participate in the audit of any Partnership tax return, (2) file any amended return or claim for refund in connection with any item of income, gain, loss,
deduction or credit reflected on any tax return of the Partnership (unless he or she provides prior notice of such action to the Partnership as provided above), (3) participate in any administrative or judicial proceedings conducted by the
Partnership or the Tax Matters Partner arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, or (4) appeal, challenge or otherwise protest any adverse findings in any such audit conducted
by the Partnership or the Tax Matters Partner or with respect to any such amended return or claim for refund filed by the Partnership or the Tax Matters Partner or in any such administrative or judicial proceedings conducted by the Partnership or
the Tax Matters Partner. The Partnership and each Partner hereby designate any Partner selected by the General Partner as the “partnership representative” (as defined under the Code) (the “Tax Matters Partner”). To the fullest
extent permitted by applicable law, each Partner agrees to indemnify and hold harmless the Partnership and all other Partners from and against any and all liabilities, obligations, damages, deficiencies and expenses resulting from any breach or
violation by such Partner of the provisions of this Section 6.7 and from all actions, suits, proceedings, demands, assessments, judgments, costs and expenses, including reasonable attorneys’ fees and disbursements, incident to any such
breach or violation.
(c) Each individual Partner shall provide to the Partnership copies of each federal, state and local
income tax return of such Partner (including any amendment thereof) within 30 days after filing such return.
(d) To the
extent the General Partner reasonably determines that the Partnership (or any entity in which the Partnership holds an interest) is or may be required by law to withhold or to make tax payments, including interest and penalties on such amounts, on
behalf of or with respect to any Partner, including pursuant to Section 6225 of the Code (“Tax Advances”), the General Partner may withhold or escrow such amounts or make such tax payments as so required. All Tax Advances made on
behalf of a Partner shall, at the option of the General Partner, (i) be promptly paid to the Partnership by the Partner on whose behalf such Tax Advances were made or (ii) be repaid by reducing the amount of the current or next succeeding
distribution or distributions which would otherwise have been made to such Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds upon
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dissolution of the Partnership otherwise payable to such Partner. Whenever the General Partner selects option (ii) pursuant to the preceding sentence for repayment of a Tax Advance by a
Partner, for all other purposes of this Agreement such Partner shall be treated as having received all distributions (whether before or upon dissolution of the Partnership) unreduced by the amount of such Tax Advance. To the fullest extent permitted
by law, each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including, without limitation, any liability for taxes, penalties, additions to tax or interest) with respect to
income attributable to or distributions or other payments to such Partner. The obligations of a Partner set forth in this Section 6.7(d) shall survive the Withdrawal of any Partner from the Partnership or any Transfer of a Partner’s
interest.
Section 6.8. Special Basis Adjustments. In connection with any assignment or transfer of a
Partnership interest permitted by the terms of this Agreement, the General Partner may cause the Partnership, on behalf of the Partners and at the time and in the manner provided in Treasury Regulations
Section 1.754-1(b), to make an election to adjust the basis of the Partnership’s property in the manner provided in Sections 734(b) and 743(b) of the Code.
ARTICLE VII
CAPITAL COMMITMENT
INTERESTS; CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
Section 7.1. Capital Commitment Interests, etc.
(a) (i) This Article VII and Article VIII hereof set forth certain terms and conditions with respect to the Capital
Commitment Partner Interests and the Capital Commitment SP Infrastructure III Interest and matters related to the Capital Commitment Partner Interests and the Capital Commitment SP Infrastructure III Interest. Except as otherwise expressly provided
in this Article VII or in Article VIII, the terms and provisions of this Article VII and Article VIII shall not apply to the GP-Related Partner Interests or the
GP-Related SP Infrastructure III Interest.
(ii) Each Partner
severally, agrees to make contributions of capital to the Partnership (“Capital Commitment-Related Capital Contributions”) as required to fund the Partnership’s capital contributions to SP Infrastructure III in respect of the
Capital Commitment SP Infrastructure III Interest, if any, and the related Capital Commitment SP Infrastructure III Commitment, if any (including, without limitation, funding all or a portion of the Blackstone Capital Commitment). No Partner shall
be obligated to make Capital Commitment-Related Capital Contributions to the Partnership in an amount in excess of such Partner’s Capital Commitment-Related Commitment. The Commitment Agreements and SMD Agreements, if any, of the Partners may
include provisions with respect to the foregoing matters. It is understood that a Partner will not necessarily participate in each Capital Commitment Investment (which may include additional amounts invested in an existing Capital Commitment
Investment) nor will a Partner necessarily have the same Capital Commitment Profit Sharing Percentage with respect to (i) the Partnership’s portion of the Blackstone Capital Commitment, or (ii) the making of each Capital Commitment
Investment in which such Partner participates;
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provided, that this in no way limits the terms of any Commitment Agreement or SMD Agreement. In addition, nothing contained herein shall be construed to give any Partner the right to
obtain financing with respect to the purchase of any Capital Commitment Interest, and nothing contained herein shall limit or dictate the terms upon which the Partnership and its Affiliates may provide such financing. The acquisition of a Capital
Commitment Interest by a Partner shall be evidenced by receipt by the Partnership of funds equal to such Partner’s Capital Commitment-Related Commitment then due with respect to such Capital Commitment Interest and such appropriate
documentation as the General Partner may submit to the Partners from time to time.
(b) The Partnership or one of its
Affiliates (in such capacity, the “Advancing Party”) may in its sole discretion advance to any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are
also executive officers of Blackstone) all or any portion of the Capital Commitment-Related Capital Contributions due to the Partnership from such Partner with respect to any Capital Commitment Investment (“Firm Advances”). Each
such Partner shall pay interest to the Advancing Party on each Firm Advance from the date of such Firm Advance until the repayment thereof by such Partner. Each Firm Advance shall be repayable in full, including accrued interest to the date of such
repayment, upon prior written notice by the Advancing Party. The making and repayment of each Firm Advance shall be recorded in the books and records of the Partnership, and such recording shall be conclusive evidence of each such Firm Advance,
binding on the Partner and the Advancing Party absent manifest error. Except as provided below, the interest rate applicable to a Firm Advance shall equal the cost of funds of the Advancing Party at the time of the making of such Firm Advance. The
Advancing Party shall inform any Partner of such rate upon such Partner’s request; provided, that such interest rate shall not exceed the maximum interest rate allowable by applicable law; provided further, that amounts
that are otherwise payable to such Partner pursuant to Section 7.4(a) shall be used to repay such Firm Advance (including interest thereon). The Advancing Party may, in its sole discretion, change the terms of Firm Advances (including the terms
contained herein) and/or discontinue the making of Firm Advances; provided, that (i) the Advancing Party shall notify the relevant Partners of any material changes to such terms and (ii) the interest rate applicable to such Firm
Advances and overdue amounts thereon shall not exceed the maximum interest rate allowable by applicable law.
Section 7.2. Capital Commitment Capital Accounts.
(a) There shall be established for each Partner in the books of the Partnership as of the date of formation of the Partnership,
or such later date on which such Partner is admitted to the Partnership, and on each such other date as such Partner first acquires a Capital Commitment Interest in a particular Capital Commitment Investment, a Capital Commitment Capital Account for
each Capital Commitment Investment in which such Partner acquires a Capital Commitment Interest on such date. Each Capital Commitment-Related Capital Contribution of a Partner shall be credited to the appropriate Capital Commitment Capital Account
of such Partner on the date such Capital Commitment-Related Capital Contribution is paid to the Partnership. Capital Commitment Capital Accounts shall be adjusted to reflect any transfer of a Partner’s interest in the Partnership related to his
or her Capital Commitment Partner Interest as provided in this Agreement.
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(b) A Partner shall not have any obligation to the Partnership or to any
other Partner to restore any negative balance in the Capital Commitment Capital Account of such Partner. Until distribution of any such Partner’s interest in the Partnership with respect to a Capital Commitment Interest as a result of the
disposition by the Partnership of the related Capital Commitment Investment and in whole upon the dissolution of the Partnership, neither such Partner’s Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or
redemption except with the consent of the General Partner.
Section 7.3. Allocations.
(a) Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be allocated to the
related Capital Commitment Capital Accounts of all the Partners (including the General Partner) participating in such Capital Commitment Investment in proportion to their respective Capital Commitment Profit Sharing Percentages for such Capital
Commitment Investment. Capital Commitment Net Income (Loss) on any Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion which such Partner’s aggregate Capital Commitment Capital Accounts bear to the
aggregate Capital Commitment Capital Accounts of all Partners; provided, that if any Partner makes the election provided for in Section 7.6, Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment
shall be allocated to the related Capital Commitment Capital Accounts of all the Partners participating in such Capital Commitment Investment who do not make such election in proportion to their respective Capital Commitment Profit Sharing
Percentages for such Capital Commitment Investment.
(b) Any special costs relating to distributions pursuant to
Section 7.6 or Section 7.7 shall be specially allocated to the electing Partner.
(c) Notwithstanding the
foregoing, the General Partner may make such allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems reasonably necessary for
this purpose.
Section 7.4. Distributions.
(a) Each Partner’s allocable portion of Capital Commitment Net Income received from his or her Capital Commitment
Investments, distributions to such Partner that constitute returns of capital, and other Capital Commitment Net Income of the Partnership (including, without limitation, Capital Commitment Net Income attributable to Unallocated Capital Commitment
Interests) during a Fiscal Year of the Partnership will be credited to payment of the Investor Notes to the extent required below as of the last day of such Fiscal Year (or on such earlier date as related distributions are made in the sole
discretion of the General Partner) with any cash amount distributable to such Partner pursuant to clauses (ii) and (vii) below to be distributed within 45 days after the end of each Fiscal Year of the Partnership (or in each case on such
earlier date as selected by the General Partner in its sole discretion) as follows (subject to Section 7.4(c) below):
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(i) First, to the payment of interest then due on all
Investor Notes (relating to Capital Commitment Investments or otherwise) of such Partner (to the extent Capital Commitment Net Income and distributions or payments from Other Sources do not equal or exceed all interest payments due, the selection of
those of such Partner’s Investor Notes upon which interest is to be paid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor);
(ii) Second, to distribution to the Partner of an amount equal to the U.S. federal, state and local income
taxes on income of the Partnership allocated to such Partner for such year in respect of such Partner’s Capital Commitment Partner Interest (the aggregate amount of any such distribution shall be determined by the General Partner, subject to
the limitation that the minimum aggregate amount of such distribution be the tax that would be payable if the taxable income of the Partnership related to all Partners’ Capital Commitment Partner Interests were all allocated to an individual
subject to the then-prevailing maximum rate of U.S. federal, New York State and New York City taxes (including, without limitation, taxes imposed under Section 1411 of the Code), taking into account the character of such taxable income
allocated by the Partnership and the limitations on deductibility of expenses and other items for U.S. federal income tax purposes); provided, that additional amounts shall be paid to the Partner pursuant to this clause (ii) to the extent that
such amount reduces the amount otherwise distributable to the Partner pursuant to a comparable provision in any other BE Agreement and there are not sufficient amounts to fully satisfy such provision from the relevant partnership or other entity;
provided further, that amounts paid pursuant to the provisions in such other BE Agreements comparable to the immediately preceding proviso shall reduce those amounts otherwise distributable to the Partner pursuant to provisions in such other BE
Agreements that are comparable to this clause (ii);
(iii) Third, to the payment in full of the principal
amount of the Investor Note financing (A) any Capital Commitment Investment disposed of during or prior to such Fiscal Year or (B) any BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal
Year, to the extent not repaid from Other Sources;
(iv) Fourth, to the return to such Partner of
(A) all Capital Commitment-Related Capital Contributions made in respect of the Capital Commitment Interest to which any Capital Commitment Investment disposed of during or prior to such Fiscal Year relates or (B) all capital contributions
made to any Blackstone Entity (other than the Partnership) in respect of interests therein relating to BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal Year (including all principal paid on the
related Investor Notes), to the extent not repaid from amounts of Other Sources (other than amounts of Capital Commitment Partner Carried Interest);
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(v) Fifth, to the payment of principal (including any
previously deferred amounts) then owing under all other Investor Notes of such Partner (including those unrelated to the Partnership), the selection of those of such Partner’s Investor Notes to be repaid and the division of payments among such
Investor Notes to be determined by the Lender or Guarantor;
(vi) Sixth, up to 50% of any Capital
Commitment Net Income remaining after application pursuant to clauses (i) through (v) above shall be applied pro rata to prepayment of principal of all remaining Investor Notes of such Partner (including those unrelated to the
Partnership), the selection of those of such Partner’s Investor Notes to be repaid, the division of payments among such Investor Notes and the percentage of remaining Capital Commitment Net Income to be applied thereto to be determined by the
Lender or Guarantor; and
(vii) Seventh, to such Partner to the extent of any amount of Capital Commitment
Net Income remaining after making the distributions in clauses (i) through (vi) above, and such amount is not otherwise required to be applied to Investor Notes pursuant to the terms thereof.
To the extent there is a partial disposition of a Capital Commitment Investment or any other BE Investment, as applicable, the
payments in clauses (iii) and (iv) above shall be based on that portion of the Capital Commitment Investment or other BE Investment, as applicable, disposed of, and the principal amount and related interest payments of such Investor Note shall
be adjusted to reflect such partial payment so that there are equal payments over the remaining term of the related Investor Note. For a Partner who is no longer an employee or officer of Holdings or an Affiliate thereof, distributions shall be made
pursuant to clauses (i) through (iii) above, and then, unless the Partnership or its Affiliate has exercised its rights pursuant to Section 8.1 hereof, any remaining income or other distribution in respect of such Partner’s Capital
Commitment Partner Interest shall be applied to the prepayment of the outstanding Investor Notes of such Partner, until all such Partner’s Investor Notes have been repaid in full, with any such income or other distribution remaining thereafter
distributed to such Partner.
Distributions of Capital Commitment Net Income may be made at any other time at the
discretion of the General Partner. At the General Partner’s discretion, any amounts distributed to a Partner in respect of such Partner’s Capital Commitment Partner Interest will be net of any interest and principal payable on his or her
Investor Notes for the full period in respect of which the distribution is made.
(b) [Intentionally omitted.]
(c) To the extent that the foregoing Partnership distributions and distributions and payments from Other Sources are
insufficient to satisfy any principal and/or interest due on Investor Notes, and to the extent that the General Partner in its sole discretion elects to apply this paragraph (c) to any individual payments due, such unpaid interest will be added
to the remaining principal amount of such Investor Notes and shall be payable on the next scheduled principal payment date (along with any deferred principal and any principal and interest due on such date); provided, that such deferral shall
not apply to a Partner that is no longer an employee or officer of Holdings or its Affiliates. All unpaid interest on such Investor Notes shall accrue interest at the interest rate then in effect for such Investor Notes.
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(d) [Intentionally omitted.]
(e) The Capital Commitment Capital Account of each Partner shall be reduced by the amount of any distribution to such Partner
pursuant to Section 7.4(a).
(f) At any time that a sale, exchange, transfer or other disposition of a portion of a
Capital Commitment Investment is being considered by the Partnership or SP Infrastructure III (a “Capital Commitment Disposable Investment”), at the election of the General Partner each Partner’s Capital Commitment Interest
with respect to such Capital Commitment Investment shall be vertically divided into two separate Capital Commitment Interests, a Capital Commitment Interest attributable to the Capital Commitment Disposable Investment (a Partner’s
“Capital Commitment Class B Interest”), and a Capital Commitment Interest attributable to such Capital Commitment Investment excluding the Capital Commitment Disposable Investment (a Partner’s
“Capital Commitment Class A Interest”). Distributions (including those resulting from a direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment
Disposable Investment shall be made only to holders of Capital Commitment Class B Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such
Capital Commitment Class B Interests, and distributions (including those resulting from the direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Investment excluding such Capital
Commitment Disposable Investment shall be made only to holders of Capital Commitment Class A Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating
to such Capital Commitment Class A Interests.
(g) (i) If the Partnership is obligated under the Giveback
Provisions to contribute to SP Infrastructure III a Giveback Amount with respect to any Capital Commitment SP Infrastructure III Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount being herein
called a “Capital Commitment Giveback Amount”), the General Partner shall call for such amounts as are necessary to satisfy such obligation of the Partnership as determined by the General Partner, in which case each Partner and
Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the General Partner, such an amount of prior distributions by the Partnership with respect to the Capital Commitment SP Infrastructure III Interest (the
“Capital Commitment Recontribution Amount”) which equals such Partner’s pro rata share of prior distributions in connection with (a) the Capital Commitment SP Infrastructure III Investment giving rise to the Capital
Commitment Giveback Amount, (b) if the amounts contributed pursuant to clause (a) above are insufficient to satisfy such Capital Commitment Giveback Amount, Capital Commitment SP Infrastructure III Investments other than the one giving
rise to such obligation and (c) if the Capital Commitment Giveback Amount pursuant to an applicable SP Infrastructure III Agreement is unrelated to a specific Capital Commitment SP Infrastructure III Investment, all Capital Commitment SP
Infrastructure III Investments. Each Partner shall promptly contribute to the Partnership upon notice thereof such Partner’s Capital Commitment Recontribution Amount. Prior to such time, the General Partner may, at the General Partner’s
discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of the Capital Commitment Giveback Amount will probably materialize (and an estimate of the aggregate
amount of such obligations).
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(ii) (A) In the event any Partner (a “Capital
Commitment Defaulting Party”) fails to recontribute all or any portion of such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount for any reason, the General Partner shall (i) use its reasonable efforts
to collect any amounts from any such GP-Related Defaulting Party and (ii) require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective
Capital Commitment Profit Sharing Percentages), such amounts as are necessary to fulfill the Capital Commitment Defaulting Party’s obligation to pay such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount (a
“Capital Commitment Deficiency Contribution”) if the General Partner determines in its good faith judgment that the Partnership will be unable to collect such amount in cash from such Capital Commitment Defaulting Party for payment
of the Capital Commitment Giveback Amount at least 20 Business Days prior to the latest date that the Partnership is permitted to pay the Capital Commitment Giveback Amount; provided, that no Partner shall as a result of such Capital
Commitment Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Capital Commitment Recontribution Amount initially requested from such Partner’s in respect of such default. Thereafter, the General
Partner shall determine in its good faith judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the
good faith judgment of the General Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership against the Capital Commitment Defaulting Party, the cost of which shall be a Partnership expense to the extent not
ultimately reimbursed by the Capital Commitment Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such Capital Commitment Defaulting Party becoming a Capital Commitment Defaulting Party) to set-off as appropriate and apply against such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount any amounts otherwise payable to the Capital Commitment Defaulting Party by the
Partnership or any Affiliate thereof. Each Partner hereby grants to the General Partner a security interest, effective upon such Partner becoming a Capital Commitment Defaulting Party, in all accounts receivable and other rights to receive payment
from the Partnership or any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each
Partner hereby appoints the General Partner as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or in the name
of the Partnership, to take any actions which may be necessary to accomplish the intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the Capital Commitment Recontribution Amount of a Capital
Commitment Defaulting Party from the date such Capital Commitment Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(B) Any Partner’s failure to make a Capital Commitment Deficiency Contribution shall cause such Partner to
be a Capital Commitment Defaulting Party with respect to such amount.
(iii) A Partner’s obligation to
make contributions to the Partnership under this Section 7.4(g) shall survive the termination of the Partnership.
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Section 7.5. Valuations. Capital Commitment Investments
shall be valued annually as of the end of each year (and at such other times as deemed appropriate by the General Partner) in accordance with the principles utilized by the Partnership (or any other Affiliate of the Partnership that is a general
partner of SP Infrastructure III) in valuing investments of SP Infrastructure III or, in the case of investments not held by SP Infrastructure III, in the good faith judgment of the General Partner, subject in each case to the second proviso of the
immediately succeeding sentence. The value of any Capital Commitment Interest as of any date (the “Capital Commitment Value”) shall be based on the value of the underlying Capital Commitment Investment as set forth above; provided,
that the Capital Commitment Value may be determined as of an earlier date if determined appropriate by the General Partner in good faith; provided further, that such value may be adjusted by the General Partner to take into account factors relating
solely to the value of a Capital Commitment Interest (as compared to the value of the underlying Capital Commitment Investment), such as restrictions on transferability, the lack of a market for such Capital Commitment Interest and lack of control
of the underlying Capital Commitment Investment. To the full extent permitted by applicable law such valuations shall be final and binding on all Partners; provided further, that the immediately preceding proviso shall not apply to any Capital
Commitment Interests held by a person who is or was at any time a direct member or partner of a General Partner of the Partnership.
Section 7.6. Disposition Election.
(a) At any time prior to the date of the Partnership’s execution of a definitive agreement to dispose of a Capital
Commitment Investment, the General Partner may in its sole discretion permit a Partner to retain all or any portion of its pro rata share of such Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit
Sharing Percentage in such Capital Commitment Investment). If the General Partner so permits, such Partner shall instruct the General Partner in writing prior to such date (i) not to dispose of all or any portion of such Partner’s pro
rata share of such Capital Commitment Investment (the “Retained Portion”) and (ii) either to (A) distribute such Retained Portion to such Partner on the closing date of such disposition or (B) retain such Retained
Portion in the Partnership on behalf of such Partner until such time as such Partner shall instruct the General Partner upon 5 days’ notice to distribute such Retained Portion to such Partner. Such Partner’s Capital Commitment Capital
Account shall not be adjusted in any way to reflect the retention in the Partnership of such Retained Portion or the Partnership’s disposition of other Partners’ pro rata shares of such Capital Commitment Investment;
provided, that such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Retained Portion to such Partner or upon distribution of proceeds with respect to a subsequent disposition thereof by the
Partnership.
(b) No distribution of such Retained Portion shall occur unless any Investor Notes relating thereto shall
have been paid in full prior to or simultaneously with such distribution.
Section 7.7. Capital Commitment
Special Distribution Election.
(a) From time to time during the term of this Agreement, the General Partner may in its
sole discretion, upon receipt of a written request from a Partner, distribute to such Partner any portion of its pro rata share of a Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing
Percentage in such Capital Commitment Investment) (a “Capital Commitment Special Distribution”). Such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Capital Commitment Special
Distribution.
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(b) No Capital Commitment Special Distributions shall occur unless any
Investor Notes relating thereto shall have been paid in full prior to or simultaneously with such Capital Commitment Special Distribution.
ARTICLE VIII
WITHDRAWAL;
ADMISSION OF NEW PARTNERS
Section 8.1. Partner Withdrawal; Repurchase of Capital Commitment Interests.
(a) Capital Commitment Interests (or a portion thereof) that were financed by Investor Notes will be treated as Non-Contingent for purposes hereof based upon the proportion of (a) the sum of Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to each Capital Commitment Interest
and principal payments on the related Investor Note to (b) the sum of the Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to such Capital Commitment Interest, the original principal amount of such
Investor Note and all deferred amounts of interest which from time to time comprise part of the principal amount of the Investor Note. A Partner may prepay a portion of any outstanding principal on the Investor Notes; provided, that in the event
that a Partner prepays all or any portion of the principal amount of the Investor Notes within nine months prior to the date on which such Partner is no longer an employee or officer of Holdings or an Affiliate thereof, the Partnership (or its
designee) shall have the right, in its sole discretion, to purchase the Capital Commitment Interest that became Non-Contingent as a result of such prepayment; provided further, that the purchase price for such
Capital Commitment Interest shall be determined in accordance with the determination of the purchase price of a Partner’s Contingent Capital Commitment Interests as set forth in paragraph (b) below. Prepayments made by a Partner shall
apply pro rata against all of such Partner’s Investor Notes; provided, that such Partner may request that such prepayments be applied only to Investor Notes related to BE Investments that are related to one or more Blackstone Entities specified
by such Partner. Except as expressly provided herein, Capital Commitment Interests that were not financed in any respect with Investor Notes shall be treated as Non-Contingent Capital Commitment Interests.
(b) (i) Upon a Partner ceasing to be an officer or employee of the Partnership or any of its Affiliates, other than
as a result of such Partner dying or suffering a Total Disability, such Partner and the Partnership or any other person designated by the General Partner shall each have the right (exercisable by the Withdrawn Partner within 30 days and by the
Partnership or its designee(s) within 45 days after such Partner’s ceasing to be such an officer or employee) or any time thereafter, upon 30 days’ notice, but not the obligation, to require the Partnership (subject to the prior consent of
the General Partner, such consent not to be unreasonably withheld or delayed), subject to the Partnership Act, to buy (in the case of exercise of such right by such Withdrawn Partner) or the Withdrawn Partner to sell (in the case of exercise of such
right by the Partnership or its designee(s)) all (but not less than all) such Withdrawn Partner’s Contingent Capital Commitment Interests.
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(ii) The purchase price for each such Contingent Capital
Commitment Interest shall be an amount equal to (A) the outstanding principal amount of the related Investor Note plus accrued interest thereon to the date of purchase (such portion of the purchase price to be paid in cash) and (B) an
additional amount (the “Adjustment Amount”) equal to (x) all interest paid by the Partner on the portion of the principal amount of such Investor Note(s) relating to the portion of the related Capital Commitment Interest remaining
Contingent and to be repurchased, plus (y) all Capital Commitment Net Losses allocated to the Withdrawn Partner on such Contingent portion of such Capital Commitment Interest, minus (z) all Capital Commitment Net Income allocated to the
Withdrawn Partner on the Contingent portion of such Capital Commitment Interest; provided, that, if the Withdrawn Partner was terminated from employment or his or her position as an officer for Cause, all amounts referred to in clause (x) or
(y) of the Adjustment Amount, in the General Partner’s sole discretion, may be deemed to equal zero. The Adjustment Amount shall, if positive, be payable by the holders of the purchased Capital Commitment Interests to the Withdrawn Partner from
the next Capital Commitment Net Income received by such holders on the Contingent portion of such Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received. If the Adjustment Amount is negative,
it shall be payable to the holders of the purchased Capital Commitment Interest by the Withdrawn Partner (A) from the next Capital Commitment Net Income on the Non-Contingent portion of the Withdrawn
Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received by the Withdrawn Partner, or (B) if the Partnership or its designee(s) elect to purchase such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, in cash by the Withdrawn Partner at the time of such purchase; provided, that the Partnership and its Affiliates may offset any amounts otherwise owing to a Withdrawn
Partner against any Adjustment Amount owed by such Withdrawn Partner. Until so paid, such remaining Adjustment Amount will not itself bear interest. At the time of such purchase of the Withdrawn Partner’s Contingent Capital Commitment
Interests, his or her related Investor Note shall be payable in full.
(iii) Upon such Partner ceasing to
be such an officer or employee, all Investor Notes shall become fully recourse to the Withdrawn Partner in his or her individual capacity (whether or not the Withdrawn Partner or the Partnership or its designee(s) exercises the right to require
repurchase of the Withdrawn Partner’s Contingent Capital Commitment Interests).
(iv) If neither the
Withdrawn Partner nor the Partnership nor its designee(s) exercises the right to require repurchase of such Contingent Capital Commitment Interests, then the Withdrawn Partner shall retain the Contingent portion of his or her Capital Commitment
Interests and the Investor Notes shall remain outstanding, shall become fully recourse to the Withdrawn Partner in his or her individual capacity, shall be payable in accordance with their remaining original maturity schedules and shall be
prepayable at any time by the Withdrawn Partner at his or her option, and the Partnership shall apply such prepayments against outstanding Investor Notes on a pro rata basis.
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(v) To the extent that another Partner purchases a portion
of a Capital Commitment Interest of a Withdrawn Partner, the purchasing Partner’s Capital Commitment Capital Account and Capital Commitment Profit Sharing Percentage for such Capital Commitment Investment shall be correspondingly increased.
(c) Upon the occurrence of a Final Event with respect to any Partner, such Partner shall thereupon cease to be a Partner
with respect to such Partner’s Capital Commitment Partner Interest. If such a Final Event shall occur, no Successor in Interest to any such Partner shall for any purpose hereof become or be deemed to become a Partner. The sole right, as against
the Partnership and the remaining Partners, acquired hereunder by, or resulting hereunder to, a Successor in Interest to any Partner shall be to receive any distributions and allocations with respect to such Partner’s Capital Commitment Partner
Interest pursuant to Article VII and this Article VIII (subject to the right of the Partnership to purchase the Capital Commitment Interests of such former Partner pursuant to Section 8.1(b) or Section 8.1(d)), to the extent, at the time,
in the manner and in the amount otherwise payable to such Partner had such a Final Event not occurred, and no other right shall be acquired hereunder by, or shall result hereunder to, a Successor in Interest to such Partner, whether by operation of
law or otherwise and the Partnership shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations hereunder. Until distribution of any such Partner’s interest in the
Partnership upon the dissolution of the Partnership as provided in Section 9.2, neither his or her Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption without the consent of the General Partner.
The General Partner shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations hereunder with respect to such Partner’s Capital Commitment Partner Interest.
(d) If a Partner dies or suffers a Total Disability, all Contingent Capital Commitment Interests of such Partner shall be
purchased by the Partnership or its designee (within 30 days of the first date on which the Partnership knows or has reason to know of such Partner’s death or Total Disability) (and the purchase price for such Contingent Capital Commitment
Interests shall be determined in accordance with Section 8.1(b) (except that any Adjustment Amount shall be payable by or to such Partner’s estate, personal representative or other Successor in Interest, in cash)), and any Investor Notes
financing such Contingent Capital Commitment Interests shall thereupon be prepaid as provided in Section 8.1(b). Upon such Partner’s death or Total Disability, any Investor Note(s) financing such Contingent Capital Commitment Interests
shall become fully recourse. In addition, in the case of the death or Total Disability of a Partner, if the estate, personal representative or other Successor in Interest of such Partner, so requests in writing within 180 days after the
Partner’s death or ceasing to be an employee or member (directly or indirectly) of the Partnership or any of its Affiliates by reason of Total Disability (such requests shall not exceed one per calendar year), the Partnership or its designee
may but is not obligated to purchase for cash all (but not less than all) Non-Contingent Capital Commitment Interests of such Partner as of the last day of the Partnership’s then current Fiscal Year at a
price equal to the Capital Commitment Value thereof as of the most recent valuation prior to the date of purchase. Each Partner shall be required to include appropriate
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provisions in his or her will to reflect such provisions of this Agreement. In addition, the Partnership may, in the sole discretion of the General Partner, upon notice to the estate, personal
representative or other Successor in Interest of such Partner, within 30 days of the first date on which the General Partner knows or has reason to know of such Partner’s death or Total Disability, determine either (i) to distribute
Securities or other property to the estate, personal representative or other Successor in Interest, in exchange for such Non-Contingent Capital Commitment Interests as provided in Section 8.1(e) or
(ii) to require sale of such Non-Contingent Capital Commitment Interests to the Partnership or its designee as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by
the General Partner in its sole discretion) for an amount in cash equal to the Capital Commitment Value thereof.
(e) In
lieu of retaining a Withdrawn Partner as a Partner with respect to any Non-Contingent Capital Commitment Interests, the General Partner may, in its sole discretion, by notice to such Withdrawn Partner within
45 days of his or her ceasing to be an employee or officer of the Partnership or any of its Affiliates, or at any time thereafter, upon 30 days written notice, determine (1) to distribute to such Withdrawn Partner the pro rata portion of the
Securities or other property underlying such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, subject to any restrictions on distributions associated with the Securities or other property,
in satisfaction of his or her Non-Contingent Capital Commitment Interests in the Partnership or (2) to cause, as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by
the General Partner in its sole discretion), the Partnership or another person designated by the General Partner (who may be itself another Partner or another Affiliate of the Partnership) to purchase all (but not less than all) of such Withdrawn
Partner’s Non-Contingent Capital Commitment Interests for a price equal to the Capital Commitment Value thereof (determined in good faith by the General Partner as of the most recent valuation prior to
the date of purchase). The General Partner shall condition any distribution or purchase of voting Securities pursuant to paragraph (d) above or this paragraph (e) upon the Withdrawn Partner’s execution and delivery to the Partnership
of an appropriate irrevocable proxy, in favor of the General Partner or its nominee, relating to such Securities.
(f) The
Partnership may subsequently transfer any Unallocated Capital Commitment Interest or portion thereof which is purchased by it as described above to any other person approved by the General Partner. In connection with such purchase or transfer or the
purchase of a Capital Commitment Interest or portion thereof by the General Partner’s designee(s), Holdings may loan all or a portion of the purchase price of the transferred or purchased Capital Commitment Interest to the Partnership, the
transferee or the designee-purchaser(s), as applicable (excluding any of the foregoing who is an executive officer of The Blackstone Group Inc. or any Affiliate thereof). To the extent that a Withdrawn Partner’s Capital Commitment Interests (or
portions thereof) are repurchased by the Partnership and not transferred to or purchased by another person, all or any portion of such repurchased Capital Commitment Interests may, in the sole discretion of the General Partner, (i) be allocated
to each Partner already participating in the Capital Commitment Investment to which the repurchased Capital Commitment Interest relates, (ii) be allocated to each Partner in the Partnership, whether or not already participating in such Capital
Commitment Investment, and/or (iii) continue to be held by the Partnership itself as an unallocated Capital Commitment Investment (such Capital Commitment Interests being herein called “Unallocated Capital Commitment Interests”). To
the extent that a Capital Commitment Interest is allocated to Partners as provided in clause (i) and/or
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(ii) above, any indebtedness incurred by the Partnership to finance such repurchase shall also be allocated to such Partners. All such Capital Commitment Interests allocated to Partners shall be
deemed to be Contingent and shall become Non-Contingent as and to the extent that the principal amount of such related indebtedness is repaid. The Partners receiving such allocations shall be responsible for
such related indebtedness only on a nonrecourse basis to the extent appropriate as provided in this Agreement, except as otherwise provided in this Section 8.1 and except as such Partners and the General Partner shall otherwise agree; provided,
that such indebtedness shall become fully recourse to the extent and at the time provided in this Section 8.1. If the indebtedness financing such repurchased interests is not to be non-recourse or so
limited, the Partnership may require an assumption by the Partners of such indebtedness on the terms thereof as a precondition to allocation of the related Capital Commitment Interests to such Partners; provided, that a Partner shall not, except as
set forth in his or her Investor Note(s), be obligated to accept any obligation that is personally recourse (except as provided in this Section 8.1), unless his or her prior consent is obtained. So long as the Partnership itself retains the
Unallocated Capital Commitment Interests pursuant to clause (iii) above, such Unallocated Capital Commitment Interests shall belong to the Partnership and any indebtedness financing the Unallocated Capital Commitment Interests shall be an
obligation of the Partnership to which all income of the Partnership is subject except as otherwise agreed by the lender of such indebtedness. Any Capital Commitment Net Income (Loss) on an Unallocated Capital Commitment Interest shall be allocated
to each Partner in the proportion his or her aggregate Capital Commitment Capital Accounts bear to the aggregate Capital Commitment Capital Accounts of all Partners; debt service on such related financing will be an expense of the Partnership
allocable to all Partners in such proportions.
(g) If a Partner is required to Withdraw from the Partnership with respect
to such Partner’s Capital Commitment Partner Interest for Cause, then his or her Capital Commitment Interest shall be settled in accordance with paragraphs (a)-(f) and (j) of this Section 8.1;
provided, that if such Partner was not at any time a direct partner of a General Partner of the Partnership, the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) purchase for cash all of such Withdrawn Partner’s
Non-Contingent Capital Commitment Interests. The purchase price for each such Non-Contingent Capital Commitment Interest shall be the lower of (A) the original cost
of such Non-Contingent Capital Commitment Interest or (B) an amount equal to the Capital Commitment Value thereof (determined as of the most recent valuation prior to the date of the purchase of such Non-Contingent Capital Commitment Interest);
(ii) allow the Withdrawn
Partner to retain such Non-Contingent Capital Commitment Interests; provided, that the maximum amount of Capital Commitment Net Income allocable to such Withdrawn Partner with respect to any Capital
Commitment Investment shall equal the amount of Capital Commitment Net Income that would have been allocated to such Withdrawn Partner if such Capital Commitment Investment had been sold as of the Settlement Date at the then prevailing Capital
Commitment Value thereof; or (iii) in lieu of cash, purchase such Non-Contingent Capital Commitment Interests by providing the Withdrawn Partner with a promissory note in the amount determined in
(i) above. Such promissory note shall have a maximum term of ten (10) years with interest at the Federal Funds Rate.
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(h) The Partnership will assist a Withdrawn Partner or his or her estate or
guardian, as the case may be, in the settlement of the Withdrawn Partner’s Capital Commitment Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner
or his or her estate.
(i) The General Partner may reasonably determine in good faith to retain outside professionals to
provide the assistance to Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the case may be,
prior to engaging such professionals. If the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with the
Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(j) Each Partner hereby irrevocably appoints the General Partner as such Partner’s true and lawful agent, representative
and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Partner, any and all
agreements, instruments, consents, ratifications, documents and certificates which such General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this Section 8.1, including,
without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force
and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 8.2. Transfer of Partner’s Capital Commitment Interest. Except as otherwise agreed
by the General Partner, no Partner or former Partner shall have the right to sell, assign, mortgage, pledge, grant a security interest over, or otherwise dispose of or transfer (“Transfer”) all or part of any such Partner’s Capital
Commitment Partner Interest in the Partnership; provided, that this Section 8.2 shall in no way impair (i) Transfers as permitted in Section 8.1 above, in the case of the purchase of a Withdrawn Partner’s or Deceased or Totally
Disabled Partner’s Capital Commitment Interests, (ii) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers by a Partner to another Partner of
Non-Contingent Capital Commitment Interests, (iii) Transfers with the prior written consent of the General Partner (which consent may be granted or withheld in its sole discretion without giving any
reason therefor) and (iv) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers of up to 25% of a Limited Partner’s Capital Commitment Partner Interest to an Estate Planning Vehicle (it
being understood that it shall not be unreasonable for the General Partner to condition any Transfer of an Interest pursuant to this clause (iv) on the satisfaction of certain conditions and/or requirements imposed by the General Partner in
connection with any such Transfer, including, for example, a requirement that any transferee of an Interest hold such Interest as a passive, non-voting interest in the Partnership). The General Partner shall
designate that each Estate Planning Vehicle shall not have voting
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rights (any such Partner being called a “Nonvoting Partner”). Such Partner shall be jointly and severally liable for all obligations of both such Partner and such Nonvoting Partner with
respect to the interest transferred (including the obligation to make additional Capital Commitment-Related Capital Contributions). The General Partner may at its sole option exercisable at any time require such Estate Planning Vehicle to Withdraw
from the Partnership on the terms of Section 8.1 and Article VI. No person acquiring an interest in the Partnership pursuant to this Section 8.2 shall become a Partner of the Partnership, or acquire such Partner’s right to participate
in the affairs of the Partnership, unless such person shall be admitted as a Partner pursuant to Section 6.1. A Partner shall not cease to be a Partner of the Partnership upon the collateral assignment of, or the pledging or granting of a
security interest in, its entire Interest in the Partnership in accordance with the provisions of this Agreement.
Section 8.3. Compliance with Law. Notwithstanding any provision hereof to the contrary, no sale or Transfer
of a Capital Commitment Interest in the Partnership may be made except in compliance with all U.S. federal, state and other applicable laws, including U.S. federal and state securities laws.
ARTICLE IX
DISSOLUTION
Section 9.1. Dissolution. The Partnership shall be dissolved and subsequently terminated:
(a) pursuant to Section 6.6; or
(b) upon the expiration of the term of the Partnership.
Section 9.2. Final Distribution. Upon the dissolution of the Partnership, and following the payment of
creditors of the Partnership and the making of provisions for the payment of any contingent, conditional or unmatured claims known to the Partnership as required under the Partnership Act:
(a) The Partners’ respective interests in the Partnership shall be valued and settled in accordance with the procedures
set forth in Section 6.5 which provide for allocations to the GP-Related Capital Accounts of the Partners and distributions in accordance with the GP-Related
Capital Account balances of the Partners; and
(b) With respect to each Partner’s Capital Commitment Partner Interest,
an amount shall be paid to such Partner in cash or Securities in an amount equal to such Partner’s respective Capital Commitment Liquidating Share for each Capital Commitment Investment; provided, that if the remaining assets relating to
any Capital Commitment Investment shall not be equal to or exceed the aggregate Capital Commitment Liquidating Shares for such Capital Commitment Investment, to each Partner in proportion to its Capital Commitment Liquidating Share for such Capital
Commitment Investment; and the remaining assets of the Partnership related to the Partners’ Capital Commitment Partner Interests shall be paid to the Partners in cash or Securities in proportion to their respective Capital Commitment Profit
Sharing Percentages for each Capital Commitment Investment from which such cash or Securities are derived.
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The General Partner shall be the liquidator. In the event that the General
Partner is unable to serve as liquidator, a liquidating trustee shall be chosen by the affirmative vote of a Majority in Interest of the Partners voting at a meeting of Partners (excluding Nonvoting Special Partners).
Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests.
(a) If there are any Securities or other property or other investments or securities related to the Partners’ Capital
Commitment Partner Interests which, in the judgment of the liquidator, cannot be sold, or properly distributed in kind in the case of dissolution, without sacrificing a significant portion of the value thereof, the value of a Partner’s interest
in each such Security or other investment or security may be excluded from the amount distributed to the Partners participating in the related Capital Commitment Investment pursuant to Section 9.2(b). Any interest of a Partner, including his or
her pro rata interest in any gains, losses or distributions, in Securities or other property or other investments or securities so excluded shall not be paid or distributed until such time as the liquidator shall determine.
(b) If there is any pending transaction, contingent liability or claim by or against the Partnership related to the
Partners’ Capital Commitment Partner Interests as to which the interest or obligation of any Partner therein cannot, in the judgment of the liquidator, be then ascertained, the value thereof or probable loss therefrom may be deducted from the
amount distributable to such Partner pursuant to Section 9.2(b). No amount shall be paid or charged to any such Partner on account of any such transaction or claim until its final settlement or such earlier time as the liquidator shall
determine. The Partnership may meanwhile retain from other sums due such Partner in respect of such Partner’s Capital Commitment Partner Interest an amount which the liquidator estimates to be sufficient to cover the share of such Partner in
any probable loss or liability on account of such transaction or claim.
(c) Upon determination by the liquidator that
circumstances no longer require the exclusion of any Securities or other property or retention of sums as provided in paragraphs (a) and (b) of this Section 9.3, the liquidator shall, at the earliest practicable time, distribute as
provided in Section 9.2(b) such sums or such Securities or other property or the proceeds realized from the sale of such Securities or other property to each Partner from whom such sums or Securities or other property were withheld.
ARTICLE X
MISCELLANEOUS
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be
settled amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this
Agreement (including the validity, scope and enforceability of this arbitration provision as well as any and all disputes arising out of, relating to or in connection with the termination, liquidation or winding up of the Partnership), whether
arising during the existence of the Partnership or at or after its termination or during or after the liquidation or winding up of the Partnership, shall be finally settled by arbitration conducted by a
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single arbitrator in New York, New York U.S.A., in accordance with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the dispute fail to agree on
the selection of an arbitrator within thirty (30) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the
English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may cause the Partnership to bring, on
behalf of the General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief
in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of paragraph (c) of this Section 10.1 to any such action or
proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the
General Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon any such agent, who shall promptly advise such Partner of any such service of process, shall
be deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i)
EACH PARTNER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 10.1, OR ANY JUDICIAL
PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or
preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the forum(s) designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’
relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by
applicable law, any objection which they now or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 10.1 and
such parties agree not to plead or claim the same.
(d) Notwithstanding any provision of this Agreement to the contrary,
this Section 10.1 shall be construed to the maximum extent possible to comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration
Act”). If, nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of this Section 10.1, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable
under the Delaware Arbitration Act, or other applicable law, such invalidity shall not invalidate all of this Section 10.1. In that case, this Section 10.1 shall be construed so as to limit any term or provision so as to make it valid or
enforceable within the requirements of the Delaware Arbitration Act or other applicable law, and, in the event such term or provision cannot be so limited, this Section 10.1 shall be construed to omit such invalid or unenforceable provision.
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Section 10.2. Ownership and Use of the Blackstone Name. The
Partnership acknowledges that Blackstone TM L.L.C. (“TM”), a Delaware limited liability company with a principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., (or its successors or assigns) is the sole and
exclusive owner of the mark and name BLACKSTONE and that the ownership of, and the right to use, sell or otherwise dispose of, the firm name or any abbreviation or modification thereof which consists of or includes BLACKSTONE, shall belong
exclusively to TM, which company (or its predecessors, successors or assigns) has licensed the Partnership to use BLACKSTONE in its name. The Partnership acknowledges that TM owns the service mark BLACKSTONE for various services and that the
Partnership is using the BLACKSTONE mark and name on a non-exclusive, non-sublicensable and non-assignable basis in connection
with its business and authorized activities with the permission of TM. All services rendered by the Partnership under the BLACKSTONE mark and name will be rendered in a manner and with quality levels that are consistent with the high reputation
heretofore developed for the BLACKSTONE mark by TM and its Affiliates and licensees. The Partnership understands that TM may terminate its right to use BLACKSTONE at any time in TM’s sole discretion by giving the Partnership written notice of
termination. Promptly following any such termination, the Partnership will take all steps necessary to change its partnership name to one which does not include BLACKSTONE or any confusingly similar term and cease all use of BLACKSTONE or any term
confusingly similar thereto as a service mark or otherwise.
Section 10.3. Written Consent. Any action
required or permitted to be taken by a vote of Partners at a meeting may be taken without a meeting if a Majority in Interest of the Partners consent thereto in writing.
Section 10.4. Letter Agreements; Schedules. The General Partner may, or may cause the Partnership to, enter
or has previously entered, into separate letter agreements with individual Partners, officers or employees with respect to GP-Related Profit Sharing Percentages, Capital Commitment Profit Sharing Percentages,
benefits or any other matter, which letter agreements have the effect of establishing rights under, or altering or supplementing, the terms of this Agreement with respect to any such Partner and such matters. The parties hereto agree that any rights
established, or any terms of this Agreement altered or supplemented, in any such separate letter agreement, including any Commitment Agreement or SMD Agreement, shall govern solely with respect to such Partner notwithstanding any other provision of
this Agreement. The General Partner may from time to time execute and deliver to the Partners schedules which set forth the then current capital balances, GP-Related Profit Sharing Percentages and Capital
Commitment Profit Sharing Percentages of the Partners and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose
whatsoever; provided, that this in no way limits the effectiveness of any Commitment Agreement or SMD Agreement.
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Section 10.5. Governing Law, Separability of
Provisions. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law. In particular, the Partnership has been formed pursuant to the
Partnership Act, and the rights and liabilities of the Partners shall be as provided therein, except as herein otherwise expressly provided. If any provision of this Agreement shall be held to be invalid, such provision shall be given its meaning to
the maximum extent permitted by law and the remainder of this Agreement shall not be affected thereby.
Section 10.6. Successors and Assigns; Third Party Beneficiaries. This Agreement shall be binding upon and
shall, subject to the penultimate sentence of Section 6.3(a), inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any successor to a trustee of a trust which is or becomes a party hereto;
provided, that no person claiming by, through or under a Partner (whether such Partner’s heir, personal representative or otherwise), as distinct from such Partner itself, shall have any rights as, or in respect to, a Partner (including the
right to approve or vote on any matter or to notice thereof) except the right to receive only those distributions expressly payable to such person pursuant to Article VI and Article VIII. Any Partner or Withdrawn Partner shall remain liable for the
obligations under this Agreement (including any Net GP-Related Recontribution Amounts and any Capital Commitment Recontribution Amounts) of any transferee of all or any portion of such Partner’s or
Withdrawn Partner’s interest in the Partnership, unless waived by the General Partner. The Partnership shall, if the General Partner determines, in its good faith judgment, based on the standards set forth in Section 5.8(d)(ii)(A) and
Section 7.4(g)(ii)(A), to pursue such transferee, pursue payment (including any Net GP-Related Recontribution Amounts and/or Capital Commitment Recontribution Amounts) from the transferee with respect to
any such obligations. Nothing in this Agreement is intended, nor shall anything herein be construed, to confer any rights, legal or equitable, on any person other than the Partners and their respective legal representatives, heirs, successors and
permitted assigns. Notwithstanding the foregoing, solely to the extent required by the SP Infrastructure III Agreements, (x) the limited partners in SP Infrastructure III shall be third-party beneficiaries of the provisions of
Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount (for purpose of this sentence, as defined in Section 9.4(a) of the SP Infrastructure III Partnership
Agreement) and (y) the amendment of the provisions of Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount (for purpose of this sentence, as defined in
Section 9.4(a) of the SP Infrastructure III Partnership Agreement), in a manner materially adverse to such limited partners shall be effective against such limited partners only with the 662⁄3% Combined Limited Partner Consent (as such term is used in the SP Infrastructure III Partnership Agreement).
Section 10.7. Confidentiality.
(a) By executing this Agreement, each Partner expressly agrees, at all times during the term of the Partnership and thereafter
and whether or not at the time a Partner of the Partnership, to maintain the confidentiality of, and not to disclose to any person other than the Partnership, another Partner or a person designated by the Partnership, any information relating to the
business, financial structure, financial position or financial results, clients or affairs of the Partnership that shall not be generally known to the public or the securities industry, except as otherwise required by law or by any regulatory or self-regulatory organization having jurisdiction; provided, that any corporate Partner may disclose any such information it is required by law, rule, regulation or custom to disclose. Notwithstanding anything
in this Agreement to
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the contrary, to comply with Treasury Regulations Section 1.6011-4(b)(3)(i), each Partner (and any employee, representative or other agent of such
Partner) may disclose to any and all persons, without limitation of any kind, the U.S. federal income tax treatment and tax structure of the Partnership, it being understood and agreed, for this purpose, (1) the name of, or any other
identifying information regarding (a) the Partners or any existing or future investor (or any Affiliate thereof) in any of the Partners, or (b) any investment or transaction entered into by the Partners; (2) any performance
information relating to any of the Partners or their investments; and (3) any performance or other information relating to previous funds or investments sponsored by any of the Partners, does not constitute such tax treatment or tax structure
information.
(b) Nothing in this Agreement shall prohibit or impede any Partner from communicating, cooperating or filing
a complaint on possible violations of U.S. federal, state or local law or regulation to or with any governmental agency or regulatory authority (collectively, a “Governmental Entity”), including, but not limited to, the SEC, FINRA,
EEOC or NLRB, or from making other disclosures to any Governmental Entity that are protected under the whistleblower provisions of U.S. federal, state or local law or regulation; provided, that in each case such communications and disclosures are
consistent with applicable law. Each Partner understands and acknowledges that (a) an individual shall not be held criminally or civilly liable under any U.S. federal or state trade secret law for the disclosure of a trade secret that is made
(i) in confidence to a U.S. federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or
other proceeding, if such filing is made under seal, and (b) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the
trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal; and does not disclose the trade secret, except pursuant to court order. Moreover, a Partner shall not be required to give
prior notice to (or get prior authorization from) Blackstone regarding any such communication or disclosure. Except as otherwise provided in this paragraph or under applicable law, under no circumstance is any Partner authorized to disclose any
information covered by Blackstone or its affiliates’ attorney-client privilege or attorney work product or Blackstone’s trade secrets without the prior written consent of Blackstone.
Section 10.8. Notices. Whenever notice is required or permitted by this Agreement to be given, such notice
shall be in writing (including telecopy or similar writing) and shall be given by hand delivery (including any courier service) or telecopy to any Partner at its address or telecopy number shown in the Partnership’s books and records or, if
given to the General Partner, at the address or telecopy number of the Partnership in New York City. Each such notice shall be effective (i) if given by telecopy, upon dispatch and (ii) if given by hand delivery, when delivered to the
address of such Partner, the General Partner or the Partnership specified as aforesaid.
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Section 10.9. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an original and all of which together shall constitute a single instrument. For the avoidance of doubt, a Person’s execution and delivery of this Agreement by electronic signature and
electronic transmission (jointly, an “Electronic Signature”), including via DocuSign or other similar method, shall constitute the execution and delivery of a counterpart of this Agreement by or on behalf of such Person and shall bind such
Person to the terms of this Agreement. The parties hereto agree that this Agreement and any additional information incidental hereto may be maintained as electronic records. Any Person executing and delivering this Agreement by an Electronic
Signature further agrees to take any and all reasonable additional actions, if any, evidencing its intent to be bound by the terms of this Agreement, as may be reasonably requested by the General Partner.
Section 10.10. Power of Attorney. Each Partner hereby irrevocably appoints the General Partner as such
Partner’s true and lawful representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file all instruments, documents and certificates which, from time to time, may be
required to set forth any amendment to this Agreement or may be required by this Agreement or by the laws of the United States of America, the State of Delaware or any other state in which the Partnership shall determine to do business, or any
political subdivision or agency thereof, to execute, implement and continue the valid and subsisting existence of the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and effect
notwithstanding the subsequent Withdrawal from the Partnership of any Partner for any reason and shall survive and shall not be affected by the subsequent disability or incapacity of such Partner.
Section 10.11. Partner’s Will. Each Partner and Withdrawn Partner shall include in his or
her will a provision that addresses certain matters in respect of his or her obligations relating to the Partnership that is satisfactory to the General Partner and each such Partner and Withdrawn Partner shall confirm annually to the Partnership,
in writing, that such provision remains in his or her current will. Where applicable, any estate planning trust of such Partner or Withdrawn Partner to which a portion of such Partner’s or Withdrawn Partner’s Interest is transferred shall
include a provision substantially similar to such provision and the trustee of such trust shall confirm annually to the Partnership, in writing, that such provision or its substantial equivalent remains in such trust. In the event any Partner or
Withdrawn Partner fails to comply with the provisions of this Section 10.11 after the Partnership has notified such Partner or Withdrawn Partner of his or her failure to so comply and such failure to so comply is not cured within 30 days of
such notice, the Partnership may withhold any and all distributions to such Partner until the time at which such party complies with the requirements of this Section 10.11.
Section 10.12. Cumulative Remedies. Rights and remedies under this Agreement are cumulative and do not
preclude use of other rights and remedies available under applicable law.
Section 10.13. Legal Fees.
Except as more specifically provided herein, in the event of a legal dispute (including litigation, arbitration or mediation) between any Partner or Withdrawn Partner and the Partnership, arising in connection with any party seeking to enforce
Section 4.1(d) or any other provision of this Agreement relating to the Holdback, the Clawback Amount, the GP-Related Giveback Amount, the Capital Commitment Giveback Amount, the Net GP-Related Recontribution Amount or the Capital Commitment Recontribution Amount, the “losing” party to such dispute shall promptly reimburse the “victorious party” for all reasonable legal fees
and expenses incurred in connection with such dispute (such determination to be made by the relevant adjudicator). Any amounts due under this Section 10.13 shall be paid within 30 days of the date upon which such amounts are due to be paid and
such amounts remaining unpaid after such date shall accrue interest at the Default Interest Rate.
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Section 10.14. Entire Agreement; Modifications. This
Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. Subject to Section 10.4, this Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. Except as provided herein, this Agreement may be
amended or modified at any time by the General Partner in its sole discretion, upon notification thereof to the Limited Partners.
Section 10.15. Section Titles. The headings contained in this Agreement are for convenience and reference
purposes only and shall not be deemed to alter or affect in any way the meaning or interpretation of any provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the day and
year first above written.
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GENERAL PARTNER:
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SPFSA INFRASTRUCTURE III L.L.C.
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By:
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/s/ Peter Song
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Name:
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Peter Song
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Title:
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Authorized Person
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LIMITED PARTNERS AND SPECIAL PARTNERS:
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Limited Partners and Special Partners now admitted pursuant to the power of attorney now and hereafter granted to SPFSA INFRASTRUCTURE III L.L.C.
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SPFSA INFRASTRUCTURE III L.L.C.
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By: Blackstone Holdings II L.P., its sole member
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By: Blackstone Holdings I/II GP L.L.C., its general partner
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By:
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/s/ John G. Finley
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Name:
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John G. Finley
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Title:
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Chief Legal Officer and Secretary
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INITIAL LIMITED PARTNER, solely to reflect his Withdrawal from the Partnership:
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/s/ Peter Song
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Name:
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Peter Song
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Title:
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Initial Limited Partner
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Exhibit 10.10
Execution Version
HIGHLY CONFIDENTIAL & TRADE SECRET
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES RA II L.P.
AMENDED AND RESTATED
AGREEMENT OF
LIMITED PARTNERSHIP
Dated November 4, 2020
Effective as of April 3, 2017
THE LIMITED PARTNERSHIP INTERESTS (THE “INTERESTS”) OF STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES RA II L.P. (THE
“PARTNERSHIP”) HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), THE SECURITIES LAWS OF ANY STATE IN THE UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN
COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS, AND ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS AND CONDITIONS OF THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP. THE INTERESTS MAY NOT
BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP. THEREFORE, PURCHASERS OF SUCH INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.
Table of Contents
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ARTICLE I DEFINITIONS
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1
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Section 1.1. Definitions
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1
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Section 1.2. Terms Generally
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21
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ARTICLE II GENERAL PROVISIONS
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22
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Section 2.1. General Partner and Limited Partners
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22
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Section 2.2. Formation; Name; Foreign Jurisdictions
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22
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Section 2.3. Term
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22
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Section 2.4. Purpose; Powers
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23
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Section 2.5. Registered Office; Place of Business
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25
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Section 2.6. Withdrawal of Initial Limited Partner
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25
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ARTICLE III MANAGEMENT
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26
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Section 3.1. General Partners
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26
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Section 3.2. Limitations on Limited Partners
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26
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Section 3.3. Partner Voting
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26
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Section 3.4. Management
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26
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Section 3.5. Responsibilities of Partners
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28
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Section 3.6. Exculpation and Indemnification
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28
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Section 3.7. Representations of Limited Partners
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31
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Section 3.8. Tax Representation and Further Assurances
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31
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ARTICLE IV CAPITAL OF THE PARTNERSHIP
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32
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Section 4.1. Capital Contributions by Partners
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32
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Section 4.2. Interest
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40
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Section 4.3. Withdrawals of Capital
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40
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ARTICLE V PARTICIPATION IN PROFITS AND LOSSES
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40
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Section 5.1. General Accounting Matters
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40
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Section 5.2. GP-Related Capital
Accounts
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42
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Section 5.3. GP-Related Profit Sharing
Percentages
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42
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Section 5.4. Allocations of GP-Related Net
Income (Loss)
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43
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Section 5.5. Liability of General Partners
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44
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Section 5.6. Liability of Limited Partners
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44
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Section 5.7. Repurchase Rights, etc.
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44
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Section 5.8. Distributions
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45
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Section 5.9. Business Expenses
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52
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Section 5.10. Tax Capital Accounts; Tax Allocations
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52
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ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND DISCHARGE OF PARTNERSHIP
INTERESTS; TERMINATION
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52
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Section 6.1. Additional Partners
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52
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Section 6.2. Withdrawal of Partners
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53
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Section 6.3. GP-Related Partner Interests Not
Transferable
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55
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Section 6.4. General Partner Withdrawal; Transfer of General Partner’s
Interest
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55
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Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interest
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56
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Section 6.6. Termination of the Partnership
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61
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Section 6.7. Certain Tax Matters
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61
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Section 6.8. Special Basis Adjustments
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63
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ARTICLE VII CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS; ALLOCATIONS;
DISTRIBUTIONS
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63
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Section 7.1. Capital Commitment Interests, etc.
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63
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Section 7.2. Capital Commitment Capital Accounts
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64
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Section 7.3. Allocations
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65
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Section 7.4. Distributions
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65
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Section 7.5. Valuations
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69
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Section 7.6. Disposition Election
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70
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Section 7.7. Capital Commitment Special Distribution Election
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70
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ARTICLE VIII WITHDRAWAL; ADMISSION OF NEW PARTNERS
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71
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Section 8.1. Limited Partner Withdrawal; Repurchase of Capital Commitment
Interests
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71
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Section 8.2. Transfer of Limited Partner’s Capital Commitment Interest
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76
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Section 8.3. Compliance with Law
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76
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ARTICLE IX DISSOLUTION
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76
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Section 9.1. Dissolution
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76
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Section 9.2. Final Distribution
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77
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Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests
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78
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ARTICLE X MISCELLANEOUS
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78
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Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial
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78
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Section 10.2. Ownership and Use of the Firm Name
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80
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Section 10.3. Written Consent
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80
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Section 10.4. Letter Agreements; Schedules
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80
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Section 10.5. Governing Law
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80
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Section 10.6. Successors and Assigns; Third Party Beneficiaries
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80
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Section 10.7. Partner’s Will
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81
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Section 10.8. Confidentiality
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81
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Section 10.9. Notices
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82
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Section 10.10. Counterparts
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82
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Section 10.11. Power of Attorney
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82
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Section 10.12. Cumulative Remedies
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82
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Section 10.13. Legal Fees
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82
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Section 10.14. Entire Agreement
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83
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3
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES RA II L.P.
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated November 4, 2020, and effective as of April 3, 2017, of Strategic
Partners Fund Solutions Associates RA II L.P., a Delaware limited partnership (the “Partnership”), by and between SPFSA RA II L.L.C., a Delaware limited liability company (the “General Partner”) and the limited
partners listed in the books and records of the Partnership, as limited partners.
WITNESSETH
WHEREAS, Strategic Partners Fund Solutions Associates RA II L.P. was formed as a Delaware limited partnership on September 16, 2016;
WHEREAS, the General Partner and the Initial Limited Partner entered into a Limited Partnership Agreement dated as of September 16, 2016
(the “Original Agreement”);
WHEREAS, in order to amend the Partnership’s Original Agreement to reflect certain
changes thereto and to reflect the withdrawal of the Initial Limited Partner, the parties hereto now wish to amend and restate the Original Agreement in its entirety as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein made and intending to be legally bound, the parties hereto
hereby agree that the Original Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for
purposes of this Agreement:
“Advancing Party” has the meaning set forth in Section 7.1(b).
“Affiliate” when used with reference to another person means any person (other than the Partnership), directly
or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person.
“Agreement” means this Amended and Restated Agreement of Limited Partnership, as it may be further amended,
supplemented, restated or otherwise modified from time to time.
“Alternative Vehicle” means any
“Alternative Investment Vehicle” (as defined in section 2.9 of the SP RA II Partnership Agreement.
“Applicable Collateral Percentage,” with respect to any Firm Collateral or Special Firm Collateral, has the
meaning set forth in the books and records of the Partnership with respect thereto.
“Assumed Income Tax Rate” shall mean the highest effective
marginal combined U.S. federal, state and local income tax rate for a Fiscal Year prescribed for an individual resident in New York, New York.
“Bankruptcy” means, with respect to any person, the occurrence of any of the following events: (i) the
filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his or her assets; (ii) the filing by such person of a voluntary petition in Bankruptcy or the seeking of relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his or her inability to pay his or her debts as they become due; (iii) the failure of such person to pay his or
her debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of an answer admitting the material allegations of, or his or her consenting to, or
defaulting in answering, a Bankruptcy petition filed against him or her in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States Code, as now constituted or as hereafter amended; or (vi) the entry of an order,
judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a trustee or custodian of his or her assets and the continuance of such order, judgment
or decree unstayed and in effect for a period of 60 consecutive days.
“BCE Agreement” means the limited
partnership agreement, limited liability company agreement or other governing document of any limited partnership, limited liability company or other entity named or referred to in the definition of any of “BFREP,” “BFIP,”
“BFGSO,” “BFCOMP” or “Other Blackstone Collateral Entity,” as such limited partnership agreement, limited liability company agreement or other governing document may be amended, supplemented, restated or otherwise
modified to date, and as such limited partnership agreement, limited liability company agreement or other governing document may be further amended, supplemented, restated or otherwise modified from time to time, and any Other Blackstone Collateral
Entity limited partnership agreement, limited liability company agreement or other governing document.
“BCE
Investment” means any direct or indirect investment by any Blackstone Collateral Entity.
“BCEP”
means the collective reference to (i) Blackstone Core Equity Partners L.P., a Delaware limited partnership and (ii) any Alternative Investment Vehicles or Parallel Funds (each as defined in the partnership agreement for the partnership
referred to in clause (i) above).
“BCOM” is the collective reference to (i) Blackstone
Communications Partners I L.P., a Delaware limited partnership and (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above.
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“BCP Asia” is the collective reference to
(i) Blackstone Capital Partners Asia L.P., a Cayman Islands exempted limited partnership and (ii) any Alternative Investment Vehicles or Parallel Funds (each as defined in the partnership agreement for the partnership referred to in clause
(i) above).
“BCP VI” is the collective reference to (i) Blackstone Capital Partners VI L.P., a
Delaware limited partnership and (ii) any Alternative Investment Vehicles or Parallel Funds (each as defined in the partnership agreement for the partnership referred to in clause (i) above).
“BCP VII” is the collective reference to (i) Blackstone Capital Partners VII L.P. and Blackstone Capital
Partners VII.2 L.P, each a Delaware limited partnership and (ii) any Alternative Investment Vehicles or Parallel Funds (each as defined in the partnership agreements for the partnerships referred to in clause (i) above).
“BCTP” means (i) Blackstone Clean Technology Partners L.P., a Delaware limited partnership and
(ii) any other Alternative Investment Vehicles or Parallel Funds (each as defined in the partnership agreement for the partnership referred to in clause (i) above).
“BEP” means (i) Blackstone Energy Partners L.P. and Blackstone Energy Partners Q L.P., each a Delaware
limited partnership and (ii) any other Alternative Investment Vehicles or Parallel Funds (each as defined in the partnership agreement for the partnership referred to in clause (i) above).
“BEP II” means (i) Blackstone Energy Partners II L.P. and Blackstone Energy Partners II.F L.P., each a
Delaware limited partnership and (ii) any other Alternative Investment Vehicles or Parallel Funds (each as defined in the partnership agreement for the partnership referred to in clause (i) above).
“BFCOMP” means Blackstone Family Communications Partnership I L.P., Blackstone Family Communications
Partnership I-SMD L.P. and any other entity that is an Affiliate thereof and has terms substantially similar to those of the foregoing partnerships and is formed in connection with the participation by one or
more partners thereof directly or indirectly in investments in securities also purchased by BCOM or any other funds with substantially similar investment objectives to BCOM and that are sponsored or managed by an Affiliate of the General Partner
(which includes serving as general partner of such funds).
“BFGSO” means any entity formed to invest side-by-side with any GSO Fund and any other entity that is an Affiliate thereof and that has terms substantially similar to those of the foregoing partnerships or other
entities and is formed in connection with the participation by one or more partners or other equity owners thereof directly or indirectly in investments in securities also purchased by any GSO Fund or any other funds with substantially similar
investment objectives to any GSO Fund and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).
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“BFIP” means Blackstone Capital Associates II L.P.,
Blackstone Capital Associates III L.P., Blackstone Family Investment Partnership II L.P., Blackstone Family Investment Partnership III L.P., Blackstone Family Investment Partnership IV-A L.P., Blackstone
Family Investment Partnership IV-A—SMD L.P., Blackstone Family Investment Partnership V L.P., Blackstone Family Investment Partnership V- SMD L.P., Blackstone
Family Investment Partnership VI L.P., Blackstone Family Investment Partnership VI-SMD L.P., Blackstone Family Investment Partnership VII—ESC L.P., Blackstone Family Cleantech Investment Partnership L.P.,
Blackstone Family Cleantech Investment Partnership—SMD L.P., Blackstone Energy Family Investment Partnership L.P., Blackstone Energy Family Investment Partnership—SMD L.P., Blackstone Family Tactical Opportunities Investment Partnership
L.P., Blackstone Family Tactical Opportunities Investment Partnership—SMD L.P., Blackstone Family Tactical Opportunities Investment Partnership (Cayman) L.P., Blackstone Family Tactical Opportunities Investment Partnership (Cayman)—SMD
L.P., Blackstone Energy Family Investment Partnership II L.P., and any other entity that is an Affiliate thereof and has terms similar to those of the foregoing partnerships and is formed in connection with the participation by one or more of the
partners thereof in investments in securities also purchased by BCP VI, BCP VII, BCP Asia, BCEP, BCTP, BEP, BEP II, BTO, BTORO, BUMO or any other fund with substantially similar investment objectives to BCP VI, BCP VII, BCP Asia, BCEP, BCTP, BEP,
BEP II, BTO, BTORO or BUMO and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).
“BFREP” means Blackstone Real Estate Capital Associates L.P., Blackstone Real Estate Capital Associates II
L.P., Blackstone Real Estate Capital Associates III L.P., Blackstone Family Real Estate Partnership L.P., Blackstone Family Real Estate Partnership II L.P., Blackstone Family Real Estate Partnership III L.P., Blackstone Family Real Estate
Partnership International-A-SMD L.P., Blackstone Family Real Estate Partnership IV-SMD L.P., Blackstone Family Real Estate
Partnership International II-SMD L.P., Blackstone Family Real Estate Partnership V-SMD L.P., Blackstone Family Real Estate Partnership
VI-SMD L.P., Blackstone Family Real Estate Partnership VII-SMD L.P., Blackstone Family Real Estate Partnership VIII-SMD L.P.,
Blackstone Family Real Estate Partnership Europe III-SMD L.P., Blackstone Family Real Estate Special Situations Partnership—SMD L.P., Blackstone Family Real Estate Special Situations Partnership
Europe—SMD L.P., Blackstone Real Estate Holdings L.P., Blackstone Real Estate Holdings II L.P., Blackstone Real Estate Holdings III L.P., Blackstone Real Estate Holdings International—A L.P., Blackstone Real Estate Holdings IV L.P.,
Blackstone Real Estate Holdings International II L.P., Blackstone Real Estate Holdings V L.P., Blackstone Real Estate Holdings VI L.P., Blackstone Real Estate Holdings VII L.P., Blackstone Real Estate Holdings Europe III L.P., Blackstone Real Estate
Holdings Europe IV L.P., Blackstone Real Estate Special Situations Holdings II L.P., Blackstone Real Estate Special Situations Holdings Europe L.P., Blackstone Family Real Estate Partnership Europe IV SMD L.P., Blackstone Real Estate Holdings Europe
IV ESC L.P., Blackstone Family Real Estate Partnership Europe V SMD L.P., Blackstone Real Estate Holdings Europe V ESC L.P., Blackstone Family Real Estate Partnership Asia—SMD L.P., Blackstone Real Estate Holdings Asia—ESC L.P., Blackstone
Real Estate Holdings VII-ESC L.P., Blackstone Real Estate Holdings VIII-ESC L.P.,
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and any other entity that is an Affiliate thereof and that has terms substantially similar to those of the foregoing partnerships and is formed in connection with the participation by one or more
partners thereof in real estate and real estate-related investments also purchased by BREP VII, BREP VIII, the BREDS Funds, BREP Europe IV, BREP Europe V or BREP Asia and any other funds with substantially similar investment objectives to BREP VII,
BREP VIII, the BREDS Funds, BREP Europe IV, BREP Europe V, BREP Asia or BPP and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).
“Blackstone Capital Commitment” has the meaning set forth in the SP RA II Partnership Agreement.
“Blackstone Collateral Entity” means any limited partnership, limited liability company or other entity named
or referred to in the definition of any of “BFREP,” “BFIP,” “BFGSO,” “BFCOMP” or “Other Blackstone Collateral Entity.”
“Blackstone Entity” means any partnership, limited liability company or other entity (excluding any natural
persons and any portfolio companies of any Blackstone-sponsored fund) that is an Affiliate of The Blackstone Group L.P. For the avoidance of doubt, any partnership, limited liability company or other entity that comprise the Strategic Partners Fund
Solutions Business shall be considered a Blackstone Entity.
“BPP” means (i) Blackstone Property
Partners L.P., a Delaware limited partnership, and Blackstone Property Partners Europe L.P., a Cayman Islands exempted limited partnership, (ii) any other Alternative Vehicles or Parallel Funds (each as defined in the partnership agreements for
the partnerships referred to in clause (i) above) or (iii) any other investment vehicle established pursuant to Article 2 of the partnership agreements for the partnerships referred to in clause (i) above.
“BREDS Funds” means the investment funds, vehicles and/or managed accounts managed on a day-to-day basis primarily by personnel in the Blackstone Real Estate Debt Strategies Group (including, without limitation, Blackstone Real Estate Special Situations Fund II
L.P., Blackstone Real Estate Special Situations Fund II.1 L.P., Blackstone Real Estate Special Situations Fund II.2 L.P., Blackstone Real Estate Debt Strategies II L.P. Blackstone Real Estate Debt Strategies II – AC L.P., Blackstone Real Estate
Debt Strategies II – Gaussian L.P., Blackstone Real Estate Debt Strategies III – Gaussian L.P., Blackstone Real Estate Debt Strategies III L.P., Blackstone Real Estate Debt Strategies II – A L.P., Blackstone Real Estate Debt
Strategies III – N L.P., Blackstone Real Estate CMBS Fund L.P., Blackstone Real Estate Special Situations Europe L.P., Blackstone Real Estate Special Situations Europe 1 L.P., Blackstone Real Estate Special Situations Europe 2 L.P., Blackstone
Commercial Real Estate Debt Fund L.P., Blackstone Real Estate Special Situations Fund L.P. and, in each case, any alternative vehicles, feeder vehicles or subsidiaries formed in connection therewith, any successor funds, any supplemental capital
vehicles or other vehicles formed in connection therewith (or are otherwise related thereto) or in connection with any investments made thereby, and, in each case, any vehicles formed in connection with Blackstone’s side-by-side or additional general partner investments relating thereto).
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“BREP VII” means (i) Blackstone Real Estate Partners
VII L.P., Blackstone Real Estate Partners VII.TE.1 L.P., Blackstone Real Estate Partners VII.TE.2 L.P., Blackstone Real Estate Partners VII.TE.3 L.P., Blackstone Real Estate Partners VII.TE.4 L.P., Blackstone Real Estate Partners VII.TE.5 L.P.,
Blackstone Real Estate Partners VII.TE.6 L.P., Blackstone Real Estate Partners VII.TE.7 L.P., Blackstone Real Estate Partners VII.TE.8 L.P. and Blackstone Real Estate Partners VII.F L.P., each a Delaware limited partnership, (ii) any other
Alternative Vehicles, Parallel Funds or other Supplemental Capital Vehicles (each as defined in the respective partnership agreements for the partnerships referred to in clause (i) above) or (iii) any other investment vehicle established
pursuant to Article 2 of the respective partnership agreements for any of the partnerships referred to in clause (i) above.
“BREP VIII” means (i) Blackstone Real Estate Partners VIII L.P., Blackstone Real Estate Partners
VIII.TE.1 L.P., Blackstone Real Estate Partners VIII.TE.2 L.P. and Blackstone Real Estate Partners VIII.F L.P., each a Delaware limited partnership, (ii) any other Alternative Vehicles, Parallel Funds or other Supplemental Capital Vehicles
(each as defined in the respective partnership agreements for the partnerships referred to in clause (i) above), or (iii) any other investment vehicle established pursuant to Article 2 of the respective partnership agreements for any of
the partnerships referred to in clause (i) above.
“BREP Asia” is the collective reference to
(i) Blackstone Real Estate Partners Asia L.P., a Cayman Islands exempted limited partnership, Blackstone Real Estate Partners Asia.F L.P., a Delaware limited partnership, and Blackstone Real Estate Partners Asia II L.P., a Cayman Islands
exempted limited partnership, (ii) any other Alternative Vehicles, Parallel Funds or other Supplemental Capital Vehicles (each as defined in the partnership agreement for the partnership referred to in clause (i) above) or (iii) any
other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above.
“BREP Europe IV” is the collective reference to (i) Blackstone Real Estate Partners Europe IV L.P. and
Blackstone Real Estate Partners Europe IV.2 L.P., each a Cayman Islands exempted limited partnership, (ii) Blackstone Real Estate Partners Europe IV.F L.P., a Delaware limited partnership, (iii) any other Alternative Investment Vehicles,
Parallel Funds or other Supplemental Capital Vehicles (each as defined in the partnership agreements for the partnerships referred to in clause (i) or (ii) above), or (iv) any other investment vehicle established pursuant to Article 2 of
the partnership agreements for the partnerships referred to in clause (i) or (ii) above.
“BREP Europe
V” is the collective reference to (i) Blackstone Real Estate Partners Europe V L.P., a Cayman Islands exempted limited partnership, (ii) any other Alternative Investment Vehicles, Parallel Funds or other Supplemental Capital
Vehicles (each as defined in the partnership agreement for the partnership referred to in clause (i) above) or (iii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred
to in clause (i) above.
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“BTO” means (i) the investment funds, vehicles and/or
managed accounts managed on a day-to-day basis primarily by personnel in the Blackstone Tactical Opportunities Program (including, without limitation, Blackstone
Tactical Opportunities Fund L.P. and Blackstone Tactical Opportunities Fund II L.P., each a Delaware limited partnership, and Blackstone Tactical Opportunities Fund II.F L.P., a Cayman Islands exempted limited partnership), (ii) any alternative
investment vehicles relating to, or formed in connection with, any of the partnerships referred to in clause (i) of this definition, (iii) any parallel fund, managed account or other capital vehicle relating to, or formed in connection
with, any of the partnerships referred to in clause (i) of this definition and (iv) any other limited partnership, limited liability company or other entity (in each case, whether now or hereafter established) of which the Blackstone
Tactical Opportunities Program (including, without limitation, Blackstone Tactical Opportunities Associates L.L.C., Blackstone Tactical Opportunities Associates II L.L.C., BTOA L.L.C. and BTOA II L.L.C.) or its personnel serves, directly or
indirectly, as the general partner, manager or managing member or in a similar capacity.
“BTORO” means
(i) the investment funds, vehicles and/or managed accounts managed on a day-to-day basis primarily by personnel in the Tac Opps Residential Program (including,
without limitation, Blackstone TORO Fund-A L.P., a Delaware limited partnership, and TORO Holdings, L.P. a Delaware limited partnership), (ii) any alternative investment vehicles relating to, or formed in
connection with, any of the partnerships referred to in clause (i) of this definition, (iii) any parallel fund, managed account or other capital vehicle relating to, or formed in connection with, any of the partnerships referred to in
clause (i) of this definition, and (iv) any other limited partnership, limited liability company or other entity (in each case, whether now or hereafter established) of which the Tac Opps Residential Program (including, without limitation,
Blackstone TORO Fund-A L.P. and TORO Holdings, L.P.) or its personnel serves, directly or indirectly, as the general partner, manager or managing member or in a similar capacity.
“BUMO” means (i) the investment funds, vehicles and/or managed accounts managed on a day-to-day basis primarily by personnel in the Blackstone UK Mortgage Opportunities Program (including, without limitation, Blackstone UK Mortgage Opportunities Fund L.P., a
Cayman exempted limited partnership), (ii) any alternative investment vehicles relating to, or formed in connection with, any of the partnerships referred to in clause (i) of this definition, (iii) any parallel fund, managed account or
other capital vehicle relating to, or formed in connection with, any of the partnerships referred to in clause (i) of this definition, and (iv) any other exempted limited partnership, limited liability company or other entity (in each
case, whether now or hereafter established) of which the Blackstone UK Mortgage Opportunities Program (including, without limitation, Blackstone UK Mortgage Opportunities Fund L.P.) or its personnel serves, directly or indirectly, as the general
partner, manager or managing member or in a similar capacity.
“Business Day” means any day other than a
Saturday, Sunday or other day on which banks are authorized or required by law to be closed in New York, New York, United States.
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“Capital Commitment SP RA II Commitment” means the Capital
Commitment (as defined in the SP RA II Partnership Agreement), if any, of the Partnership to SP RA II that relates solely to the Capital Commitment SP RA II Interest, if any.
“Capital Commitment SP RA II Interest” means the Interest (as defined in the SP RA II Partnership
Agreement), if any, of the Partnership as a capital partner of SP RA II.
“Capital Commitment SP RA II
Investment” means the Partnership’s interest in a specific investment of SP RA II held by the Partnership through the Capital Commitment SP RA II Interest.
“Capital Commitment Capital Account” means, with respect to each Capital Commitment Investment for each
Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such Capital Commitment Investment and any net income allocated to such Partner pursuant to Section 7.3
with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment Investment to such Partner and any net losses allocated to such Partner with respect to such Capital Commitment
Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the related Capital Commitment Investment shall be adjusted as if the asset distributed had been sold in a taxable
transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners participating in such Capital Commitment Investment pursuant to Section 7.3.
“Capital Commitment Class A Interest” has the meaning set forth in Section 7.4(f).
“Capital Commitment Class B Interest” has the meaning set forth in
Section 7.4(f).
“Capital Commitment Defaulting Party” has the meaning specified in
Section 7.4(g)(ii)(A).
“Capital Commitment Deficiency Contribution” has the meaning specified in
Section 7.4(g)(ii)(A).
“Capital Commitment Disposable Investment” has the meaning set forth in
Section 7.4(f).
“Capital Commitment Distributions” means, with respect to each Capital Commitment
Investment, all amounts of distributions, received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Capital Commitment SP RA II Interest, if any, less any costs, fees and expenses of the Partnership with
respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of such Capital Commitment
Investment as it may determine in good faith is appropriate.
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“Capital Commitment Giveback Amount” has the meaning set
forth in Section 7.4(g)(i).
“Capital Commitment Interest” means the interest of a Partner in a
specific Capital Commitment Investment as provided herein.
“Capital Commitment Investment” means any
Capital Commitment SP RA II Investment, but shall exclude any GP-Related Investment.
“Capital Commitment Liquidating Share” with respect to each Capital Commitment Investment means, in the case
of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with Section 9.3) as of the close of business on the effective date of dissolution.
“Capital Commitment Net Income (Loss)” with respect to each Capital Commitment Investment means all amounts of
income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition, in whole or in part, of such Capital Commitment Investment, less any costs, fees and
expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated thereto.
“Capital Commitment Partner Interest” means a Partner’s partnership interest in the Partnership with
respect to the Capital Commitment SP RA II Interest.
“Capital Commitment Profit Sharing Percentage” with
respect to each Capital Commitment Investment means the percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the Partnership.
“Capital Commitment Recontribution Amount” has the meaning set forth in Section 7.4(g)(i).
“Capital Commitment-Related Capital Contributions” has the meaning set forth in Section 7.1(a)(ii).
“Capital Commitment-Related Commitment”, with respect to any Partner, means such Partner’s commitment to
the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such commitment that may be set forth in such Partner’s Commitment
Agreement or SMD Agreement, if any.
“Capital Commitment Special Distribution” has the meaning set forth
in Section 7.7(a).
“Capital Commitment Value” has the meaning set forth in Section 7.5.
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“Carried Interest” means “Carried Interest ,” as
defined in the SP RA II Partnership Agreement. In the case of each of (i) and (ii) above, except as determined by the General Partner, the amount shall not be less any costs, fees and expenses of the Partnership with respect thereto and less
reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto (in each case which the General Partner may allocate among all or any portion of the
GP-Related Investments as it determines in good faith is appropriate).
“Carried Interest Give Back Percentage” means, for any Partner or Withdrawn Partner, subject to
Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner from the Partnership or any Other Fund GPs or their Affiliates in respect of Carried Interest by
(B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership or any Other Fund GP or any of their Affiliates (in any capacity) in respect of Carried Interest. For purposes of
determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership or any Other Fund GPs on behalf of a Partner or Withdrawn Partner (but not the Trust Income thereon) shall be
deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as members, partners or other equity owners of the Partnership or any of the Other Fund GPs or their Affiliates.
“Carried Interest Sharing Percentage” means, with respect to each
GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
“Cause” means the occurrence or existence of any of the following with respect to any Partner, as
determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any non-competition agreement, (x) any material
breach of this Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such Partner’s deliberate failure to perform his or her duties to the Partnership or any of its Affiliates or
(z) such Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Partnership or any of its Affiliates in a material way as determined by the General Partner; provided, that in the case of any
of the foregoing clauses (w), (x), (y) and (z), the General Partner has given such Partner written notice (a “Notice of Breach”) within fifteen days after the General Partner becomes aware of such action and such Partner fails to
cure such breach, failure to perform or conduct or behavior within fifteen days after receipt of such Notice of Breach from the General Partner (or such longer period, not to exceed an additional fifteen days, as shall be reasonably required for
such cure; provided, that such Partner is diligently pursuing such cure); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Partnership or any of its Affiliates; (iii) conviction (on the
basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony or crime (including any misdemeanor charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or
bribery), or a determination by a court of competent jurisdiction, by a regulatory body or by a self-regulatory body having authority with respect to securities laws, rules or regulations of
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the applicable securities industry, that such Partner individually has violated any applicable securities laws or any rules or regulations thereunder, or any rules of any such self-regulatory
body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such Partner’s ability to function as a Partner of the Partnership, taking into account the services
required of such Partner and the nature of the business of the Partnership and its Affiliates or (B) the business of the Partnership and its Affiliates or (iv) becoming subject to an event described in Rule 506(d)(1)(i)-(viii) of
Regulation D under the Securities Act.
“CC Carried Interest” means, with respect to any Partner, the
aggregate amount of distributions or payments received by such Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest”, including the amount of any bonuses received by a Partner as an
employee of an Affiliate of the Partnership that relate to the amount of “carried interest” received by an Affiliate of the Partnership. “CC Carried Interest” includes any amount initially received by an Affiliate of the
Partnership from any fund (including SP RA II, any similar funds formed after the date hereof, and any other private equity merchant banking, secondary, real estate or debt funds, whether or not in existence as of the date hereof) to which such
Affiliate serves as general partner (or other similar capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions thereto (or the capital contributions to make the investment of
such fund giving rise to such “carried interest”).
“Clawback Adjustment Amount” has the meaning
set forth in Section 5.8(e).
“Clawback Amount” means the “Clawback Amount” as defined in
Article One of the SP RA II Partnership Agreement, and any other clawback amount pursuant to any SP RA II Agreement, as applicable.
“Clawback Provisions” means Section 9.4 of the SP RA II Partnership Agreement and any other similar
provisions in any other SP RA II Partnership Agreement existing heretofore or hereafter entered into.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute. Any
reference herein to a particular provision of the Code means, where appropriate, the corresponding provision in any successor statute.
“Commitment Agreement” means the agreement between the Partnership or an Affiliate thereof and a Partner,
pursuant to which such Partner undertakes certain obligations, including the obligation to make capital contributions pursuant to Section 4.1 and/or Section 7.1. Each Commitment Agreement is hereby incorporated by reference as between the
Partnership and the relevant Partner.
“Contingent” means subject to repurchase rights and/or other
requirements.
The term “control” when used with reference to any person means the power to direct the
management and policies of such person, directly or indirectly, by or through stock or other equity ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with one or more
other persons by or through stock or other equity ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing.
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“Controlled Entity” when used with reference to another
person means any person controlled by such other person.
“Covered Person” has the meaning set forth in
Section 3.6(a).
“Deceased Partner” means any Partner or Withdrawn Partner who has died or who
suffers from Incompetence. For purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the case may be, that have received such
Deceased Partner’s interest in the Partnership.
“Default Interest Rate” means the lower of
(i) the sum of (a) the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate and (b) 5%, or (ii) the highest rate of interest permitted under applicable law.
“Delaware Arbitration Act” has the meaning set forth in Section 10.1(d).
“Disabling Event” means (a) the withdrawal of the General Partner, other than in accordance with
Section 6.4(a) or (b) the General Partner (i) makes an assignment for the benefit of its creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent or has entered against it an order
for relief in any bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or
regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in a proceeding described in clause (iv) or (vi) seeks, consents to, or acquiesces in, the
appointment of a trustee, receiver or liquidator of the General Partner or of all or substantially all of its properties.
“Estate Planning Vehicle” has the meaning set forth in Section 6.3(a).
“Excess Holdback” has the meaning set forth in Section 4.1(d)(v)(A).
“Excess Holdback Percentage” has the meaning set forth in Section 4.1(d)(v)(A).
“Excess Tax-Related Amount” has the meaning set forth in
Section 5.8(e).
“Existing Partner” means any Partner who is neither a Retaining Withdrawn Partner
nor a Deceased Partner.
“Final Event” means the death, Total Disability, Incompetence, Bankruptcy,
liquidation, dissolution or Withdrawal from the Partnership of any person who is a Partner.
“Firm
Advances” has the meaning set forth in Section 7.1(b).
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“Firm Collateral” means a Partner’s or Withdrawn
Partner’s interest in one or more partnerships or limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been pledged or made available
to the Trustee(s) to satisfy all or any portion of the Excess Holdback of such Partner or Withdrawn Partner as more fully described in the books and records of the Partnership; provided, that for all purposes hereof (and any other agreement
(e.g., the Trust Agreement) that incorporates the meaning of the term “Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”, excluding references to “Firm
Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).
“Firm Collateral Realization”
has the meaning set forth in Section 4.1(d)(v)(B).
“Fiscal Year” means a calendar year, or any other
period chosen by the General Partner.
“Fund GP” means the Partnership (only with respect to the GP-Related SP RA II Interest) and the Other Fund GPs.
“GAAP” means U.S.
generally accepted accounting principles.
“General Partner” means SPFSA RA II L.L.C. and any person
admitted to the Partnership as an additional general partner in accordance with the provisions of this Agreement until such time as such person ceases to be a general partner of the Partnership as provided herein or in the Partnership Act.
“Giveback” means obligations to return distributions to satisfy certain fund-related obligations and
liabilities pursuant to section 9.4(a) of SP RA II Partnership Agreement.
“Giveback Amount” means the
amounts required to satisfy Giveback.
“Giveback Provisions” means Section 9.4(a) of the SP RA II
Partnership Agreement and any other similar provisions in any other SP RA II Agreement existing heretofore or hereafter entered into.
“GP-Related SP RA II Interest” means the interest held by the
Partnership in SP RA II in the Partnership’s capacity as general partner of SP RA II, excluding any Capital Commitment SP RA II Interest.
“GP-Related SP RA II Investment” means the Partnership’s interest
in a Portfolio Investment (for purposes of this definition, as defined in the SP RA II Partnership Agreement) in the Partnership’s capacity as the general partner of SP RA II, but does not include any Capital Commitment Investment.
“GP-Related Capital Account” has the meaning set forth in
Section 5.2(a).
“GP-Related Capital Contribution” has the
meaning set forth in Section 4.1(a).
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“GP-Related
Class A Interest” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Class B Interest” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Commitment”, with respect to any Partner, means such
Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such
commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“GP-Related Defaulting Party” has the meaning set forth in Section 5.8(d)(ii)(A).
“GP-Related Deficiency Contribution” has the meaning set forth in
Section 5.8(d)(ii)(A).
“GP-Related Disposable Investment”
has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Giveback
Amount” has the meaning set forth in Section 5.8(d)(i)(A).
“GP-Related Investment” means any investment (direct or indirect) of
the Partnership in respect of the GP-Related SP RA II Interest (including, without limitation, any GP-Related SP RA II Investment, but excluding any Capital Commitment
Investment).
“GP-Related Net Income (Loss)” has the meaning set
forth in Section 5.1(b).
“GP-Related Partner Interest” of a
Partner means all interests of such Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect to the GP-Related SP RA II Interest and with respect to all GP-Related Investments.
“GP-Related Profit Sharing Percentage” means the “Carried
Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each Partner; provided, that any references in this Agreement to
GP-Related Profit Sharing Percentages made (i) in connection with voting or voting rights or (ii) GP-Related Capital Contributions with respect to GP-Related
Investments (including Section 5.3(b)) means the “Non-Carried Interest Sharing Percentage” of each Partner; provided further, that the term
“GP-Related Profit Sharing Percentage” shall not include any Capital Commitment Profit Sharing Percentage.
“GP-Related Recontribution Amount” has the meaning set forth in
Section 5.8(d)(i)(A).
“GP-Related Required Amounts” has the
meaning set forth in Section 4.1(a).
“GP-Related Unallocated
Percentage” has the meaning set forth in Section 5.3(b).
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“GP-Related Unrealized Net
Income (Loss)” attributable to any GP-Related SP RA II Investment as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related SP RA II Investment if SP RA II’s entire portfolio of investments were sold on such date for cash in an amount equal to their aggregate value on such date (determined in accordance with
Section 5.1(e)) and all distributions payable by SP RA II to the Partnership (indirectly through the general partner of SP RA II) pursuant to any SP RA II Agreement with respect to such GP-Related SP RA
II Investment were made on such date. “GP-Related Unrealized Net Income (Loss)” attributable to any other GP-Related Investment (other than any Capital
Commitment Investment) as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related Investment if such
GP-Related Investment were sold on such date for cash in an amount equal to its value on such date (determined in accordance with Section 5.1(h)).
“GSO Fund” means (i) any of GSO Capital Opportunities Fund LP, GSO Capital Opportunities Overseas Fund
L.P., GSO Capital Opportunities Overseas Master Fund L.P., GSO Liquidity Partners LP, GSO Liquidity Overseas Partners LP, Blackstone / GSO Capital Solutions Fund LP, Blackstone / GSO Capital Solutions Overseas Fund L.P., Blackstone / GSO Capital
Solutions Overseas Master Fund L.P., GSO Capital Solutions Fund II LP, GSO Capital Solutions Overseas Feeder Fund II LP, GSO European Senior Debt Fund LP, GSO European Senior Debt Feeder Fund LP, GSO Targeted Opportunity Partners LP, GSO Targeted
Opportunity Overseas Partners L.P., GSO Targeted Opportunity Overseas Intermediate Partners L.P., GSO Targeted Opportunity Master Partners L.P., GSO SJ Partners LP, GSO Capital Opportunities Fund II LP, GSO Capital Opportunities Cayman Overseas Fund
II LP, GSO NMERB LP, GSO Energy Partners-A LP, GSO Palmetto Opportunistic Investment Partners LP, GSO Foreland Co-Invest Holdings LP, GSO Bakken Holdings I LP or GSO
Churchill Partners LP, or (ii) any alternative vehicle or parallel fund relating to any of the partnerships referred to in clause (i) above.
“Holdback” has the meaning set forth in Section 4.1(d)(i).
“Holdback Percentage” has the meaning set forth in Section 4.1(d)(i).
“Holdback Vote” has the meaning set forth in Section 4.1(d)(iv)(A).
“Holdings” means Blackstone Holdings II L.P., a Delaware limited partnership.
“Incompetence” means, with respect to any Partner, the determination by the General Partner in its sole
discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his or her person or his or her property.
“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d)(i).
“Initial Limited Partner” means Peter Song.
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“Interest” means a Partner’s interest in the
Partnership, including any interest that is held by a Retaining Withdrawn Partner, and including any Partner’s GP-Related Partner Interest and Capital Commitment Partner Interest.
“Investment” means any investment (direct or indirect) of the Partnership designated by the General Partner
from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments and (b) Capital Commitment Investments.
“Investor Limited Partner” means any Limited Partner so designated at the time of its admission as a partner
of the Partnership.
“Investor Note” means a promissory note of a Partner evidencing indebtedness incurred
by such Partner to purchase a Capital Commitment Interest, the terms of which were or are approved by the General Partner and which is secured by such Capital Commitment Interest, all other Capital Commitment Interests of such Partner and all other
interests of such Partner in Blackstone Collateral Entities; provided, that such promissory note may also evidence indebtedness relating to other interests of such Partner in Blackstone Collateral Entities, and such indebtedness shall be
prepayable with Capital Commitment Net Income (whether or not such indebtedness relates to Capital Commitment Investments) as set forth in this Agreement, the Investor Note, the other BCE Agreements and any documentation relating to Other Sources;
provided further, that references to “Investor Notes” herein refer to multiple loans made pursuant to such note, whether made with respect to Capital Commitment Investments or other BCE Investments, and references to an
“Investor Note” refer to one such loan as the context requires. In no way shall any indebtedness incurred to acquire Capital Commitment Interests or other interests in Blackstone Collateral Entities be considered part of the Investor Notes
for purposes hereof if the Lender or Guarantor is not the lender or guarantor with respect thereto.
“Issuer” means the issuer of any Security comprising part of an Investment.
“L/C” has the meaning set forth in Section 4.1(d)(vi).
“L/C Partner” has the meaning set forth in Section 4.1(d)(vi).
“Lender or Guarantor” means Blackstone Holdings I L.P. in its capacity as lender or guarantor under the
Investor Notes, or any other Affiliate of the Partnership that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests or other interests in Blackstone Collateral Entities.
“Limited Partner” means any person who is shown on the books and records of the Partnership as a Limited
Partner of the Partnership, including any Special Limited Partner, any Investor Limited Partner and any Nonvoting Limited Partner.
“Liquidator” has the meaning set forth in Section 9.1(b).
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“Loss Amount” has the meaning set forth in
Section 5.8(e)(i)(A).
“Loss Investment” has the meaning set forth in Section 5.8(e).
“Majority in Interest of the Partners” on any date (a “vote date”) means one or more persons
who are Partners (including the General Partner and the Limited Partners but excluding Nonvoting Limited Partners) on the vote date and who, as of the last day of the most recent accounting period ending on or prior to the vote date (or as of such
later date on or prior to the vote date selected by the General Partner as of which the Partners’ capital account balances can be determined), have aggregate capital account balances representing at least a majority in amount of the total
capital account balances of all the persons who are Partners (including the General Partner and the Limited Partners but excluding Nonvoting Limited Partners) on the vote date.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
“Net Carried Interest Distribution” has the meaning set forth in Section 5.8(e)(i)(C).
“Net Carried Interest Distribution Recontribution Amount” has the meaning set forth in
Section 5.8(e)(i)(C).
“Net GP-Related Recontribution Amount”
has the meaning set forth in Section 5.8(d)(i)(A).
“Non-Carried
Interest” means, with respect to each GP-Related Investment, all amounts of distributions, other than Carried Interest (and other than Capital Commitment Distributions) received by the Partnership
with respect to such GP-Related Investment, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership
that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments as it may determine in good faith is appropriate.
“Non-Carried Interest Sharing Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Non-Carried Interest from such GP-Related Investment set forth in the
books and records of the Partnership.
“Non-Contingent” means
generally not subject to repurchase rights or other requirements.
“Nonvoting Limited Partner” has the
meaning set forth in Section 6.1(a).
“Original Agreement” has the meaning set forth in the recitals.
“Other Blackstone Collateral Entity” means any Blackstone Entity (other than any limited partnership,
limited liability company or other entity named or referred to in the definition of any of “BFIP,” “BFREP,” “BFGSO” or “BFCOMP”) in which any limited partner interest, limited liability company interest, unit
or other interest is pledged to secure any Investor Note.
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“Other Fund GPs” means the General Partner (only with
respect to the General Partner’s GP-Related Partner Interest in the Partnership) and any other entity (other than the Partnership) through which any Partner, Withdrawn Partner or any other person directly
receives any amounts of Carried Interest, and any successor thereto; provided, that this includes any other entity which has in its organizational documents a provision which indicates that it is a “Fund GP” or an “Other Fund
GP”; provided further, that notwithstanding any of the foregoing, neither Holdings nor any estate planning vehicle established for the benefit of family members of any Partner or of any member or partner of any Other Fund GP shall
be considered an “Other Fund GP” for purposes hereof.
“Other Sources” means
(i) distributions or payments of CC Carried Interest (which shall include amounts of CC Carried Interest which are not distributed or paid to a Partner but are instead contributed to a trust (or similar arrangement) to satisfy any
“holdback” obligation with respect thereto) and (ii) distributions from Blackstone Collateral Entities (other than the Partnership) to such Partner.
“Parallel Fund” has the meaning set forth in Section 2.10 of the SP RA II Partnership Agreement.
“Partner” means any person who is a partner of the Partnership, whether a General Partner or a Limited Partner
in whatsoever Partner Category.
“Partner Category” means the Existing Partners, Retaining Withdrawn
Partners or Deceased Partners, each referred to as a group for purposes hereof.
“Partnership” means
Strategic Partners Fund Solutions Associates RA II L.P., a Delaware limited partnership.
“Partnership
Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101, et seq., as it may be amended from time to time, and any successor to such statute.
“Pledgable Blackstone Interests” has the meaning set forth in Section 4.1(d)(v)(A).
“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank,
N.A. as its prime rate.
“Qualifying Fund” means any fund designated by the General Partner as a
“Qualifying Fund.”
“Repurchase Period” has the meaning set forth in Section 5.8(c).
“Required Rating” has the meaning set forth in Section 4.1(d)(vi).
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“Retained Portion” has the meaning set forth in
Section 7.6(a).
“Retaining Withdrawn Partner” means a Withdrawn Partner who has retained a GP-Related Partner Interest, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Nonvoting Limited Partner for all purposes hereof.
“Securities” means any debt or equity securities of an Issuer and its subsidiaries and other Controlled
Entities constituting part of an Investment, including without limitation common and preferred stock, interests in limited partnerships and interests in limited liability companies (including warrants, rights, put and call options and other options
relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or interests commonly regarded as securities, interests in real
property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as money-market
investments, bank deposits and interests in personal property of all kinds, whether tangible or intangible.
“Securities Act” means the U.S. Securities Act of 1933, as amended from time to time, or any successor
statute.
“Settlement Date” has the meaning set forth in Section 6.5(a).
“SMD Agreements” means the agreements between the Partnership and/or one or more of its Affiliates and certain
of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby incorporated by reference as between the Partnership and the relevant Partner.
“SP RA II” means (i) Strategic Partners Real Assets II L.P., a Delaware limited partnership,
(ii) any other Alternative Vehicles or Parallel Funds (each as defined in the respective partnership agreements for the partnerships referred to in clause (i) above) and/or related vehicles, (iii) any other investment vehicle
established pursuant to Article 2 or Section 4.5(a) of the respective partnership agreements for any of the partnerships referred to in clause (i) above and (iv) any investment vehicle formed to
co-invest with any of the partnerships referred to in clause (i) above using third party capital and that potentially pays Carried Interest (as such term is used in such partnership agreements).
“SP RA II Agreements” is the collective reference to the SP RA II Partnership Agreement and any governing
agreement of any of the partnerships or other entities referred to in clauses (ii) or (iii) of the definition of “SP RA II.”
“SP RA II Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership of SP RA II,
dated as of the respective dates set forth therein, as each may be amended, supplemented, restated or otherwise modified from time to time.
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“Special Firm Collateral” means interests in a Qualifying
Fund or other assets that have been pledged to the Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the books and records of the
Partnership.
“Special Firm Collateral Realization” has the meaning set forth in
Section 4.1(d)(viii)(B).
“Special Limited Partner” means any of the persons shown in the books and
records of the Partnership as a Special Limited Partner and any person admitted to the Partnership as an additional Special Limited Partner in accordance with the provisions of this Agreement.
“S&P” means Standard & Poor’s Ratings Group, and any successor thereto.
“Strategic Partners Fund Solutions Business” shall mean Blackstone’s business line responsible for
managing SP RA II and any predecessor and successor funds thereto, including Strategic Partners Fund, L.P., Strategic Partners Fund II, L.P., Strategic Partners Fund III, L.P., Strategic Partners Fund IV, L.P., Strategic Partners Fund V, L.P.,
Strategic Partners Fund VI, L.P. Strategic Partners Fund VII, L.P. and their respective parallel vehicles.
“Subject Investment” has the meaning set forth in Section 5.8(e)(i).
“Subject Partner” has the meaning set forth in Section 4.1(d)(iv)(A).
“Successor in Interest” means any (i) shareholder of; (ii) trustee, custodian, receiver or other
person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or receiver, or former officer, director or partner,
or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or assign of, any Partner, whether by operation of law or
otherwise.
“Tax Matters Partner” has the meaning set forth in Section 6.7(b).
“TM” has the meaning set forth in Section 10.2.
“Total Disability” means the inability of a Limited Partner substantially to perform the services required of
such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether arising out of
sickness, accident or otherwise.
“Transfer” has the meaning set forth in Section 8.2.
“Trust Account” has the meaning set forth in the Trust Agreement.
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“Trust Agreement” means the Trust Agreement dated as of the
date set forth therein, as amended, supplemented, restated or otherwise modified from time to time, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time
to time.
“Trust Amount” has the meaning set forth in the Trust Agreement.
“Trust Income” has the meaning set forth in the Trust Agreement.
“Trustee(s)” has the meaning set forth in the Trust Agreement.
“Unadjusted Carried Interest Distributions” has the meaning set forth in Section 5.8(e)(i)(B).
“Unallocated Capital Commitment Interests” has the meaning set forth in Section 8.1(f).
“Withdraw” or “Withdrawal” with respect to a Partner means a Partner ceasing to be a partner
of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary), unless the context shall limit the type of withdrawal to a
specific reason, and “Withdrawn” with respect to a Partner means, as aforesaid, a Partner who has ceased to be a partner of the Partnership.
“Withdrawal Date” means the date of the Withdrawal from the Partnership of a Withdrawn Partner.
“Withdrawn Partner” means a Limited Partner whose GP-Related Partner
Interest or Capital Commitment Partner Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include, unless the context requires otherwise, the estate or legal
representatives of any such Partner.
“W-8BEN” has the meaning set
forth in Section 3.8.
“W-8BEN-E” has the meaning set
forth in Section 3.8.
“W-8IMY” has the meaning set forth in
Section 3.8.
“W-9” has the meaning set forth in
Section 3.8.
Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “person” includes individuals, partnerships (including limited
liability partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions thereof) and other associations and entities. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
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ARTICLE II
GENERAL PROVISIONS
Section 2.1. General Partner and Limited Partners. The Partners may be General Partners or Limited Partners. The General
Partner as of the date hereof is SPFSA RA II L.L.C. The Limited Partners shall be as shown on the books and records of the Partnership. The books and records of the Partnership contain the GP-Related Profit
Sharing Percentage and GP-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to the GP-Related Investments of the
Partnership as of the date hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each Partner (including, without limitation, the General Partner) with
respect to the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to time to reflect additional
GP-Related Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by the Partnership of Capital
Commitment Investments, the GP-Related Profit Sharing Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the Capital Commitment Profit Sharing
Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the admission of additional Partners, the Withdrawal of Partners, and the transfer or assignment of interests in the Partnership pursuant
to the terms of this Agreement. At the time of admission of each additional Partner, the General Partner shall determine in its sole discretion the GP-Related Investments and Capital Commitment Investments in
which such Partner shall participate and such Partner’s GP-Related Commitment, Capital Commitment-Related Commitment, GP-Related Profit Sharing Percentage with
respect to each such GP-Related Investment and Capital Commitment Profit Sharing Percentage with respect to each such Capital Commitment Investment. Each Partner may have a
GP-Related Partner Interest and/or a Capital Commitment Partner Interest.
Section 2.2. Formation; Name; Foreign Jurisdictions. The Partnership is hereby continued as a limited partnership pursuant to
the Partnership Act and shall conduct its activities on and after the date hereof under the name of Strategic Partners Fund Solutions Associates RA II L.P. The certificate of limited partnership of the Partnership may be amended and/or restated from
time to time by the General Partner. The General Partner is further authorized to execute and deliver and file any other certificates (and any amendments and/or restatements thereof) necessary for the Partnership to qualify to do business in a
jurisdiction in which the Partnership may wish to conduct business.
Section 2.3. Term. The term of the Partnership shall
continue until December 31, 2068, unless earlier dissolved and terminated in accordance with this Agreement and the Partnership Act.
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Section 2.4. Purpose; Powers. (a) The purposes of the Partnership shall be,
directly or indirectly through subsidiaries or Affiliates:
(i) to serve as the general partner of SP RA II (including any
Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP RA II”) and perform the functions of a general partner of SP RA II (including any Alternative Vehicle, Parallel Fund or other partnership included in
the definition of “SP RA II”) specified in the SP RA II Agreements,
(ii) to serve as, and hold the Capital
Commitment SP RA II Interest as, a capital partner (and, if applicable, a limited partner and/or a general partner) of SP RA II (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP RA
II”) and perform the functions of a capital partner (and, if applicable, a limited partner and/or a general partner) of SP RA II (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP RA
II”) specified in the SP RA II Agreements,
(iii) to make the Blackstone Commitment or a portion thereof, either
directly or indirectly through another entity,
(iv) to serve as a general partner or limited partner of other partnerships
and perform the functions of a general partner or limited partner specified in the respective partnership agreements, as amended, supplemented, restated or otherwise modified from time to time, of any such partnership,
(v) to serve as a member of limited liability companies and perform the functions of a member specified in the respective
limited liability company agreements, as amended, supplemented, restated or otherwise modified from time to time, of any such limited liability company,
(vi) to invest in Capital Commitment Investments and/or GP-Related Investments and
acquire and invest in Securities or other property (directly or indirectly through SP RA II (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP RA II”), including, without limitation, in
connection with any action referred to in any of clauses (i) through (v) above,
(vii) to carry on such other
businesses, perform such other services and make such other investments as are deemed desirable by the General Partner and as are permitted under the Partnership Act and SP RA II Agreements, and the respective partnership agreement of any
partnership referred to in clause (iv) above and the respective limited liability company agreement of any limited liability company referred to in clause (v) above, in the case of each of the foregoing, as amended, supplemented, restated
or otherwise modified from time to time,
(viii) any other lawful purpose, and
(ix) to do all things necessary, desirable, convenient or incidental thereto.
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(b) In furtherance of its purposes, the General Partner on behalf of the Partnership shall
have all powers necessary, suitable or convenient for the accomplishment of its purposes, alone or with others, as principal or agent, including the following:
(i) to be and become a general partner or limited partner of partnerships, a member of limited liability companies, a holder of
common and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with the making of Investments or the acquisition, holding or disposition of Securities or other property or as otherwise deemed
appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection therewith;
(ii) to acquire and invest in general partner or limited partner interests, in limited liability company interests, in common
and preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or direct or indirect interests therein, whether such Investments and
Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company interests, stock, interests, obligations, Investments or Securities or
other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or short, options on futures contracts;
(iii) to buy, sell and otherwise acquire investments, whether such investments are readily marketable or not;
(iv) to invest and reinvest the cash assets of the Partnership in money-market or other
short-term investments;
(v) to hold, receive, mortgage, pledge, grant security
interests over, lease, transfer, exchange or otherwise dispose of, grant options with respect to, and otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or
owned by the Partnership;
(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by
mortgage, pledge, conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and
to buy, sell, pledge or otherwise dispose of any such instrument or evidence of indebtedness;
(vii) to lend any of its
property or funds, either with or without security, at any legal rate of interest or without interest;
(viii) to have and
maintain one or more offices within or without the State of Delaware, and in connection therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection
with the maintenance of such office or offices;
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(ix) to open, maintain and close accounts, including margin accounts, with
brokers;
(x) to open, maintain and close bank accounts and draw checks and other orders for the payment of moneys;
(xi) to engage accountants, auditors, custodians, investment advisers, attorneys and any and all other agents and assistants,
both professional and nonprofessional, and to compensate any of them as may be necessary or advisable;
(xii) to form or
cause to be formed and to own the stock of one or more corporations, whether foreign or domestic, to form or cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic, and to form or cause to be formed and
be a member or manager or both of one or more limited liability companies;
(xiii) to enter into, make and perform all
contracts, agreements and other undertakings as may be necessary, convenient or advisable or incident to carrying out its purposes;
(xiv) to sue and be sued, to prosecute, settle or compromise all claims against third parties, to compromise, settle or accept
judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection therewith;
(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to the Partners cash or
investments or other property of the Partnership, or any combination thereof; and (xvi) to take such other actions necessary, desirable, convenient or incidental thereto and to engage in such other businesses as may be permitted under Delaware
and other applicable law.
Section 2.5. Registered Office; Place of Business. The registered office of the Partnership in
the State of Delaware shall be located at c/o Corporation Services Company, 2711 Centerville Road, Suite 400, City of Wilmington, County of New Castle, Delaware 19809. The name and address of the registered agent of the Partnership for service of
process on the Partnership in the State of Delaware shall be Corporation Services Company, 2711 Centerville Road, Suite 400, City of Wilmington, County of New Castle, Delaware 19809. The General Partner may from time to time change the registered
agent or office by an amendment to the certificate of limited partnership of the Partnership.
Section 2.6. Withdrawal of
Initial Limited Partner. Upon the admission of one or more Limited Partners to the Partnership, the Initial Limited Partner shall Withdraw as the Initial Limited Partner of the Partnership and have no further right, interest or obligation of any
kind whatsoever as a Partner in the Partnership; provided, that the effective date of such Withdrawal shall be deemed as between the parties hereto to be April 3, 2018.
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ARTICLE III
MANAGEMENT
Section 3.1. General Partners. The General Partner shall be the general partner of the Partnership. The General Partner may
not be removed without its consent.
Section 3.2. Limitations on Limited Partners. Except as may be expressly required or
permitted by the Partnership Act, Limited Partners as such shall have no right to, and shall not, take part in the management, conduct or control of the Partnership’s business or act for or bind the Partnership, and shall have only the rights
and powers granted to Limited Partners herein.
Section 3.3. Partner Voting.
(a) To the extent a Partner is entitled to vote with respect to any matter relating to the Partnership, such Partner shall not be obligated to
abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such Partner (or any Affiliate thereof) in such matter.
(b) Meetings of the Partners may be called only by the General Partner.
Section 3.4. Management. (a) The management, control and operation of the Partnership and the formulation and execution
of business and investment policy shall be vested in the General Partner, and the General Partner shall have full control over the business and affairs of the Partnership. The General Partner shall, in the General Partner’s discretion, exercise
all powers necessary and convenient for the purposes of the Partnership, including those enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the
General Partner pursuant to this Agreement shall be made in the General Partner’s discretion, subject only to the express terms and conditions of this Agreement.
(b) All outside business or investment activities of the Partners (including outside directorships or trusteeships) shall be subject to such
rules and regulations as are established by the General Partner from time to time.
(c) Notwithstanding any provision in this Agreement to
the contrary, the General Partner on behalf of the Partnership is hereby authorized, without the need for any further act, vote or consent of any person directly or indirectly through one or more other entities, in the name and on behalf of the
Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP RA II, or in the Partnership’s capacity as a general partner or limited partner, member or other equity owner of any
Partnership Affiliate (as hereinafter defined), (i) to execute and deliver, and to perform the Partnership’s obligations under, the SP RA II Agreements, including, without limitation, serving as a general partner of SP RA II, (ii) to
execute and deliver, and to perform the Partnership’s obligations under, the governing agreement, as amended, supplemented, restated or otherwise modified (each a “Partnership Affiliate Governing Agreement”), of any other
partnership, limited liability company, other company, corporation or other entity (each a “Partnership Affiliate”) of which
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the Partnership is to become a general partner or limited partner, member, shareholder or other equity interest owner, including, without limitation, serving as a general partner or limited
partner, member, shareholder or other equity interest owner of each Partnership Affiliate and (iii) to take any action, in the applicable capacity, contemplated by or arising out of this Agreement, the SP RA II Agreements or any Partnership
Affiliate Governing Agreement (and any amendment, supplement, restatement and/or other modification of any of the foregoing).
(d) The
General Partner and any other person designated by the General Partner, each acting individually, is hereby authorized and empowered, as an authorized representative of the Partnership or as an authorized person of the General Partner (within the
meaning of the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq., as amended, or otherwise) (the General Partner hereby authorizing and ratifying any of the following
actions):
(i) to execute and deliver and/or file (including any such action, directly or indirectly through one or more
other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as general partner, capital partner and/or limited partner of SP RA II, or in the Partnership’s capacity as general partner or limited partner,
member, shareholder or other equity owner of any Partnership Affiliate, any of the following):
(A) any agreement,
certificate, instrument or other document of the Partnership, SP RA II or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications thereof), including, without limitation, the following: (I) the SP RA
II Agreements and each Partnership Affiliate Governing Agreement, (II) subscription agreements and documents on behalf of SP RA II and/or the Partnership, (III) side letters issued in connection with investments in SP RA II on behalf of SP
RA II and/or the Partnership and (IV) such other agreements, certificates, instruments and other documents as may be necessary or desirable in furtherance of the purposes of the Partnership, SP RA II or any Partnership Affiliate (and any
amendments, supplements, restatements and/or other modifications of any of the foregoing referred to in (I) through (IV) hereof);
(B) the certificates of formation, certificates of limited partnership and/or other organizational documents of the
Partnership, SP RA II or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications thereof); and
(C) any other certificates, notices, applications or other documents (and any amendments, supplements, restatements and/or
other modifications thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Partnership, SP RA II or any Partnership Affiliate to qualify to do
business in a jurisdiction in which the Partnership, SP RA II or such Partnership Affiliate desires to do business;
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(ii) to prepare or cause to be prepared, and to sign, execute and deliver
and/or file (including any such action, directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP
RA II or in the Partnership’s capacity as a general partner or limited partner, member, shareholder or other equity owner of any Partnership Affiliate): (A) any certificates, forms, notices, applications or other documents to be filed with any
government or governmental or regulatory body on behalf of the Partnership, SP RA II and/or any Partnership Affiliate, (B) any certificates, forms, notices, applications or other documents that may be necessary or advisable in connection with
any bank account of the Partnership, SP RA II or any Partnership Affiliate or any banking facilities or services that may be utilized by the Partnership, SP RA II or any Partnership Affiliate, and all checks, notes, drafts or other documents of the
Partnership, SP RA II or any Partnership Affiliate that may be required in connection with any such bank account, banking facilities or services and (C) resolutions with respect to any of the foregoing matters (which resolutions, when executed
by any person authorized as provided in this Section 3.4(d), each acting individually, shall be deemed to have been duly adopted by the General Partner, the Partnership, SP RA II or any Partnership Affiliate, as applicable, for all purposes).
The authority granted to any person (other than the General Partner) in this Section 3.4(d) may be revoked at any time by the
General Partner by an instrument in writing signed by the General Partner.
Section 3.5. Responsibilities of Partners.
(a) Unless otherwise determined by the General Partner in a particular case, each Limited Partner shall devote substantially all his or
her time and attention to the businesses of the Partnership and its Affiliates.
(b) All outside business or investment activities of the
Partners (including outside directorships or trusteeships), shall be subject to such rules and regulations as are established by the General Partner from time to time.
(c) The General Partner may from time to time establish such other rules and regulations applicable to Partners or other employees as the
General Partner deems appropriate, including rules governing the authority of Partners or other employees to bind the Partnership to financial commitments or other obligations.
Section 3.6. Exculpation and Indemnification.
(a) Liability to Partners. Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent
permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually, a
“Covered Person” and collectively, the “Covered Persons”) shall be liable to the Partnership or any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related document or any
transaction or investment contemplated hereby or thereby) taken or
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omitted by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable judicial determination and/or
determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority granted to such Covered
Person by this Agreement, and, with respect to any criminal act or proceeding, had reasonable cause to believe that such Covered Person’s conduct was unlawful. Each Covered Person shall be entitled to rely in good faith on the advice of legal
counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by any Covered Person in reliance on such advice shall in any event subject such person to any liability to any Partner or the Partnership. To
the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to another Partner, to the fullest extent permitted by law, such Partner acting under this Agreement shall
not be liable to the Partnership or to any such other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they expand or restrict the duties and liabilities of a Partner
otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by law, to modify to that extent such other duties and liabilities of such Partner.
(b) Indemnification. (i) To the fullest extent permitted by law, the Partnership shall indemnify and hold harmless (but only to the
extent of the Partnership’s assets (including, without limitation, the remaining capital commitments of the Partners)) each Covered Person from and against any and all claims, damages, losses, costs, expenses and liabilities (including, without
limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable expenses of investigating or defending against any claim or alleged claim), joint and several, of
any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, for purposes of this Section 3.6, “Losses”), arising from any and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which the Covered Person may be involved, or threatened to be involved, as a party or otherwise, by reason of such Covered Person’s management of the affairs of the Partnership or which relate to or arise out
of or in connection with the Partnership, its property, its business or affairs (other than claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, arising out of any act or omission of such Covered Person
constituting Cause); provided, that a Covered Person shall not be entitled to indemnification under this Section 3.6(b) with respect to any claim, issue or matter if there is a final and
non-appealable judicial determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to,
the best interest of the Partnership and within the authority granted to such Covered Person by this Agreement, and, with respect to any criminal act or proceeding, had reasonable cause to believe that such Covered Person’s conduct was
unlawful; provided further, that if such Covered Person is a Partner or a Withdrawn Partner, such Covered Person shall bear its share of such Losses in accordance with such Covered Person’s
GP-Related Profit Sharing Percentage in the Partnership as of the time of the actions or omissions that gave rise to such Losses. To the fullest extent permitted by law, expenses (including legal fees)
incurred by a Covered Person (including, without limitation, the General Partner) in defending any claim, demand, action, suit or proceeding may, with the approval of the General Partner, from time to time, be advanced by the Partnership prior to
the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Partnership of a written undertaking by or
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on behalf of the Covered Person to repay such amount to the extent that it shall be subsequently determined that the Covered Person is not entitled to be indemnified as authorized in this
Section 3.6(b), and the Partnership and its Affiliates shall have a continuing right of offset against such Covered Person’s interests/investments in the Partnership and such Affiliates and shall have the right to withhold amounts
otherwise distributable to such Covered Person to satisfy such repayment obligation. If a Partner institutes litigation against a Covered Person which gives rise to an indemnity obligation hereunder, such Partner shall be responsible, up to the
amount of such Partner’s Interests and remaining capital commitments, for such Partner’s pro rata share of the Partnership’s expenses related to such indemnity obligation, as determined by the General Partner. The Partnership
may purchase insurance, to the extent available at reasonable cost, to cover losses, claims, damages or liabilities covered by the foregoing indemnification provisions. Partners will not be personally obligated with respect to indemnification
pursuant to this Section 3.6(b). The General Partner shall have the authority to enter into separate agreements with any Covered Person in order to give effect to the obligations to indemnify pursuant to this Section 3.6(b).
(ii) (A) Notwithstanding anything to the contrary herein, for greater certainty, it is understood and/or agreed that the
Partnership’s obligations hereunder are not intended to render the Partnership as a primary indemnitor for purposes of the indemnification, advancement of expenses and related provisions under applicable law governing SP RA II and/or a
particular portfolio entity through which an Investment is indirectly held. It is further understood and/or agreed that a Covered Person shall first seek to be so indemnified and have such expenses advanced in the following order of priority:
first, out of proceeds available in respect of applicable insurance policies maintained by the applicable portfolio entity and/or SP RA II; second, by the applicable portfolio entity through which such investment is indirectly held and
third, by SP RA II (only to the extent the foregoing sources are exhausted).
(B) The Partnership’s obligation,
if any, to indemnify or advance expenses to any Covered Person shall be reduced by any amount that such Covered Person may collect as indemnification or advancement from SP RA II and/or the applicable portfolio entity (including by virtue of any
applicable insurance policies maintained thereby), and to the extent the Partnership (or any Affiliate thereof) pays or causes to be paid any amounts that should have been paid by SP RA II and/or the applicable portfolio entity (including by virtue
of any applicable insurance policies maintained thereby), it is agreed among the Partners that the Partnership shall have a subrogation claim against SP RA II and/or such portfolio entity in respect of such advancement or payments. The General
Partner and the Partnership shall be specifically empowered to structure any such advancement or payment as a loan or other arrangement (except for a loan to an executive officer of The Blackstone Group L.P. or any of its Affiliates, which shall not
be permitted) as the General Partner may determine necessary or advisable to give effect to or otherwise implement the foregoing.
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Section 3.7. Representations of Limited Partners.
(a) Each Limited Partner by execution of this Agreement (or by otherwise becoming bound by the terms and conditions hereof as provided herein
or in the Partnership Act) represents and warrants to every other Partner and to the Partnership, except as may be waived by the General Partner, that such Limited Partner is acquiring each of such Limited Partner’s Interests for such Limited
Partner’s own account for investment and not with a view to resell or distribute the same or any part hereof, and that no other person has any interest in any such Interest or in the rights of such Limited Partner hereunder; provided,
that a Partner may choose to make transfers for estate and charitable planning purposes (in accordance with the terms hereof). Each Limited Partner represents and warrants that such Limited Partner understands that the Interests have not been
registered under the Securities Act, and therefore such Interests may not be resold without registration under the Securities Act or exemption from such registration, and that accordingly such Limited Partner must bear the economic risk of an
investment in the Partnership for an indefinite period of time. Each Limited Partner represents that such Limited Partner has such knowledge and experience in financial and business matters that such Limited Partner is capable of evaluating the
merits and risks of an investment in the Partnership, and that such Limited Partner is able to bear the economic risk of such investment. Each Limited Partner represents that such Limited Partner’s overall commitment to the Partnership and
other investments which are not readily marketable is not disproportionate to the Limited Partner’s net worth and the Limited Partner has no need for liquidity in the Limited Partner’s investment in Interests. Each Limited Partner
represents that to the full satisfaction of the Limited Partner, the Limited Partner has been furnished any materials that such Limited Partner has requested relating to the Partnership, any Investment and the offering of Interests and has been
afforded the opportunity to ask questions of representatives of the Partnership concerning the terms and conditions of the offering of Interests and any matters pertaining to each Investment and to obtain any other additional information relating
thereto. Each Limited Partner represents that the Limited Partner has consulted to the extent deemed appropriate by the Limited Partner with the Limited Partner’s own advisers as to the financial, tax, legal and related matters concerning an
investment in Interests and on that basis believes that an investment in the Interests is suitable and appropriate for the Limited Partner.
(b) Each Partner agrees that the representations and warranties contained in paragraph (a) above shall be true and correct as of any date
that such Partner (1) makes a capital contribution to the Partnership (whether as a result of Firm Advances made to such Partner or otherwise) with respect to any Investment, and such Partner hereby agrees that such capital contribution shall
serve as confirmation thereof and/or (2) repays any portion of the principal amount of a Firm Advance, and such Partner hereby agrees that such repayment shall serve as confirmation thereof.
Section 3.8. Tax Representation. Each Limited Partner certifies that (A) if the Limited Partner is a United States
person (as defined in the Code) (x) (i) the Limited Partner’s name, social security number (or, if applicable, employer identification number) and address provided to the Partnership and its Affiliates pursuant to an IRS Form W 9,
Payer’s Request for Taxpayer Identification Number Certification (“W 9”) or otherwise are correct and (ii) the Limited Partner will complete and return a W 9, and (y) (i) the Limited Partner is a United States person (as
defined in the Code) and (ii) the Limited Partner will notify the Partnership within 60 days of a change to foreign (non-United States) status or (B) if the Limited Partner is not a United States
person (as defined in the Code) (x) (i) the information on the completed IRS Form
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W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (“W-8BEN”) or
other applicable form, including but not limited to IRS Form W-8IMY, Certificate of Foreign Intermediary, Foreign Partnership, or Certain U.S. Branches for United States Tax Withholding (“W-8IMY”), or otherwise is correct and (ii) the Limited Partner will complete and return the applicable IRS form, including but not limited to a W-8BEN or W-8IMY, and (y) (i) the Limited Partner is not a United States person (as defined in the Code) and (ii) the Limited Partner will notify the Partnership within 60 days of any change of such status. The
Limited Partner agrees to properly execute and provide to the Partnership in a timely manner any tax documentation that may be reasonably required by the Partnership or the General Partner.
ARTICLE IV
CAPITAL OF THE
PARTNERSHIP
Section 4.1. Capital Contributions by Partners. (a) Each Partner shall be required to make capital
contributions to the Partnership (“GP-Related Capital Contributions”) at such times and in such amounts (the “GP-Related Required
Amounts”) as are required to satisfy the Partnership’s obligation to make capital contributions to SP RA II in respect of the GP-Related SP RA II Interest with respect to any GP-Related SP RA II Investment and as are otherwise determined by the General Partner from time to time or as may be set forth in such Limited Partner’s Commitment Agreement or SMD Agreement, if any; provided,
that additional GP-Related Capital Contributions in excess of the GP-Related Required Amounts may be made pro rata among the Partners based upon each
Partner’s Carried Interest Sharing Percentage. GP-Related Capital Contributions in excess of the GP-Related Required Amounts which are to be used for ongoing
business operations as distinct from financing, legal or other specific liabilities of the Partnership (including those specifically set forth in Section 4.1(d) and Section 5.8(d)) shall be determined by the General Partner. Limited
Partners shall not be required to make additional GP-Related Capital Contributions to the Partnership in excess of the GP-Related Required Amounts, except (i) as a
condition of an increase in such Limited Partner’s GP-Related Profit Sharing Percentage or (ii) as specifically set forth in this Agreement; provided, that the General Partner and any Limited Partner
may agree from time to time that such Limited Partner shall make an additional GP-Related Capital Contribution to the Partnership; provided, further, that each Investor Limited Partner shall maintain its GP-Related Capital Accounts at an aggregate level equal to the product of (i) its GP-Related Profit Sharing Percentage from time to time and (ii) the total capital
of the Partnership related to the GP-Related SP RA II Interest.
(b) The General Partner may elect
on a case by case basis to (i) cause the Partnership to loan any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone
Group L.P. or any Affiliate thereof) the amount of any GP-Related Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the
Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group L.P. or any Affiliate thereof) to make a required GP-Related Capital Contribution to
the Partnership in installments, in each case on terms determined by the General Partner.
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(c) Each GP-Related Capital Contribution by a
Partner shall be credited to the appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2, subject to Section 5.10.
(d) The Partners and the Withdrawn Partners have entered into the Trust Agreement, pursuant to which certain amounts of distributions relating
to Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account constituting a “Holdback”).
(i) The General Partner shall determine, as set forth below, the percentage of each distribution of Carried Interest that shall
be withheld for any General Partner (including, without limitation, the General Partner) and each Partner Category (such withheld percentage constituting a General Partner’s and such Partner Category’s “Holdback
Percentage”). The applicable Holdback Percentages initially shall be 0% for any General Partner, 15% for Existing Partners (other than any General Partner), 21% for Retaining Withdrawn Partners (other than any General Partner) and 24% for
Deceased Partners (the “Initial Holdback Percentages”). Any provision of this Agreement to the contrary notwithstanding, the Holdback Percentage for any General Partner (including, without limitation, the General Partner) shall not
be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).
(ii) The Holdback Percentage
may not be reduced for any individual Partner as compared to the other Partners in his or her Partner Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner Categories
on a proportionate basis. For example, if the Holdback Percentage for Existing Partners is decreased to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any
reduction in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such reduction.
(iii) The Holdback Percentage may not be increased for any individual Partner as compared to the other Partners in his or her
Partner Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’ Holdback Percentage beyond 21% unless the General Partner concurrently increases the Existing Partners’
Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the General Partner increases the Holdback Percentage for both Existing Partners and Retaining Withdrawn Partners to
24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies equally to all Partner Categories. Any increase in the Holdback Percentage for any Partner shall apply only to
distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner from proportionately increasing the Holdback Percentage of any Partner Category (following a reduction of the
Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For example, if the General Partner reduces the Holdback Percentages for Existing Partners, Retaining Withdrawn
Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the Holdback Percentages to the Initial Holdback Percentages.
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(iv) (A) Notwithstanding anything contained herein to the contrary, the
General Partner may increase or decrease the Holdback Percentage for any Partner in any Partner Category (in such capacity, the “Subject Partner”) pursuant to the a majority vote of the Limited Partners and the General Partner (a
“Holdback Vote”); provided, that, notwithstanding anything to the contrary contained herein, the Holdback Percentage applicable to any General Partner shall not be increased or decreased without its prior written consent;
provided further, that a Subject Partner’s Holdback Percentage shall not be (I) increased prior to such time as such Subject Partner (x) is notified by the Partnership of the decision to increase such Subject
Partner’s Holdback Percentage and (y) has, if requested by such Subject Partner, been given 30 days to gather and provide information to the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) or
(II) decreased unless such decrease occurs subsequent to an increase in a Subject Partner’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv); provided further, that such decrease shall not exceed an
amount such that such Subject Partner’s Holdback Percentage is less than the prevailing Holdback Percentage for such Subject Partner’s Partner Category; provided further, that a Partner shall not vote to increase a Subject
Partner’s Holdback Percentage unless such voting Partner determines, in such Partner’s good faith judgment, that the facts and circumstances indicate that it is reasonably likely that such Subject Partner, or any of such Subject
Partner’s successors or assigns (including such Subject Partner’s estate or heirs) who at the time of such vote holds the GP-Related Partner Interest or otherwise has the right to receive
distributions relating thereto, will not be capable of satisfying any GP-Related Recontribution Amounts that may become due.
(B) A Holdback Vote shall take place at a Partnership meeting. Each of the Limited Partners and the General Partner shall be
entitled to cast one vote with respect to the Holdback Vote regardless of such Partner’s interest in the Partnership. Such vote may be cast by any such Partner in person or by proxy.
(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback Percentage, such Subject
Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided, that if the Partnership and the Subject Partner cannot agree upon a mutually satisfactory
arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates; provided further, that if such candidates
fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the arbitrator. Each Subject Partner that submits the decision of the
Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected out-of-pocket expenses relating thereto and
each such party shall, to the satisfaction of the arbitrator and prior to any
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determination being made by the arbitrator, pay the total of such estimated expenses (i.e., both the Subject Partner’s and the Partnership’s expenses) into an escrow account to be
controlled by Simpson Thacher & Bartlett LLP, as escrow agent (or such other comparable law firm as the Partnership and the Subject Partner shall agree). The arbitrator shall direct the escrow agent to pay out of such escrow account all
expenses associated with such arbitration (including costs leading thereto) and to return to the “victorious” party the entire amount of funds such party paid into such escrow account. If the amount contributed to the escrow account by the
losing party is insufficient to cover the expenses of such arbitration, such “losing” party shall then provide any additional funds necessary to cover such costs to such “victorious” party. For purposes hereof, the
“victorious” party shall be the Partnership, if the Holdback Percentage ultimately determined by the arbitrator is closer to the percentage determined in the second Holdback Vote than it is to the prevailing Holdback Percentage for the
Subject Partner’s Partner Category; otherwise, the Subject Partner shall be the “victorious” party. The party that is not the “victorious” party shall be the “losing” party.
(D) In the event of a decrease in a Subject Partner’s Holdback Percentage (1) pursuant to a Holdback Vote under this
clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and distribute to such Subject Partner any Trust Amounts (and the Trust Income thereon (except as expressly
provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance with such Subject Partner’s reduced Holdback Percentage) as though such reduced Holdback
Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).
(v) (A) If a Partner’s Holdback Percentage exceeds 15% (such percentage in excess of 15% constituting the
“Excess Holdback Percentage”), such Partner may satisfy the portion of his or her Holdback obligation in respect of his or her Excess Holdback Percentage (such portion constituting such Partner’s “Excess
Holdback”), and such Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he or she was a Partner), to the extent his or her Excess Holdback obligation has previously been satisfied in cash, may
obtain the release of the Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback
obligation, by pledging, granting a security interest or otherwise making available to the General Partner, on a first priority basis (except as provided below), all or any portion of his or her Firm Collateral in satisfaction of his or her Excess
Holdback obligation. Any Partner seeking to satisfy all or any portion of the Excess Holdback utilizing Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the
General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Partnership to realize on (if required), such Firm Collateral; provided, that in the case of entities listed in the books and records
of the
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Partnership, in which Partners/members are permitted to pledge or grant a security interest over their interests therein to finance all or a portion of their capital contributions thereto
(“Pledgable Blackstone Interests”), to the extent a first priority security interest is unavailable because of an existing lien on such Firm Collateral, the Partner or Withdrawn Partner seeking to utilize such Firm Collateral shall
grant the General Partner a second priority security interest therein in the manner provided above; provided further, that (x) in the case of Pledgable Blackstone Interests, to the extent that neither a first priority nor a second
priority security interest is available or (y) if the General Partner otherwise determines in its good faith judgment that a security interest in Firm Collateral (and the corresponding documents and actions) are not necessary or appropriate,
the Partner or Withdrawn Partner shall (in the case of either clause (x) or (y) above) irrevocably instruct in writing the relevant partnership, limited liability company or other entity listed in the books and records of the Partnership to
remit any and all net proceeds resulting from a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully provided in clause (B) below. The Partnership shall, at the request of any Partner or Withdrawn Partner, assist
such Partner or Withdrawn Partner in taking such action as is necessary to enable such Partner or Withdrawn Partner to use Firm Collateral as provided hereunder.
(B) If upon a sale or other realization of all or any portion of any Firm Collateral (a “Firm Collateral
Realization”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner
from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust Account to fully satisfy such Excess Holdback requirement
(allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount necessary to satisfy such Excess Holdback requirement
shall be distributed to such Partner or Withdrawn Partner.
(C) Upon any valuation or revaluation of Firm Collateral that
results in a decreased valuation of such Firm Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including upon a Firm Collateral Realization, if net proceeds
therefrom and the remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the foregoing to such Partner or Withdrawn Partner and such
Partner or Withdrawn Partner shall, within 30 days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his or her Excess Holdback requirement. If any such Partner or
Withdrawn Partner defaults upon his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable to a default under this clause
(C); provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such
Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and
“GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
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(vi) Any Limited Partner or Withdrawn Partner may (A) obtain the
release of any Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such Partner or
Withdrawn Partner or (B) require the Partnership to distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit (an “L/C”) for
the benefit of the Trustee(s) in such amounts. Any Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall deliver to the Trustee(s) an unconditional and irrevocable L/C
from a commercial bank whose (x) short-term deposits are rated at least A-1 by S&P and P-1 by Moody’s (if the L/C is for a term of 1 year or less) or
(y) long-term deposits are rated at least A+ by S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more) (each a “Required Rating”). If the relevant rating of the commercial bank issuing such L/C drops below
the relevant Required Rating, the L/C Partner shall supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, in lieu of the insufficient
L/C. In addition, if the L/C has a term expiring on a date earlier than the latest possible termination date of SP RA II, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to provide a new L/C from a commercial bank
whose relevant rating is at least equal to the relevant Required Rating, at least 30 days prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to drawing on any L/C. The Trustee(s) may
(as directed by the Partnership in the case of clause (I) below) draw down on an L/C only if (I) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the Partnership’s obligations under the Clawback
Provisions or (II) an L/C Partner has not provided a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash and/or Firm Collateral (to the extent permitted
hereunder)), at least 30 days prior to the stated expiration of an existing L/C in accordance with this clause (vi). The Trustee(s), as directed by the Partnership, shall return to any L/C Partner his or her L/C upon (1) the termination of the
Trust Account and satisfaction of the Partnership’s obligations, if any, in respect of the Clawback Provisions, (2) an L/C Partner satisfying his or her entire Holdback obligation in cash and Firm Collateral (to the extent permitted
hereunder); or (3) the release, by the Trustee(s), as directed by the Partnership, of all amounts in the Trust Account to the Partners or Withdrawn Partners. If an L/C Partner satisfies a portion of his or her Holdback obligation in cash and/or
Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as directed by the Partnership, release a portion of the amounts in the Trust Account to the Partners or Withdrawn Partners in the Partner Category of such L/C Partner, the
L/C of an L/C Partner may be reduced by an amount corresponding to such portion satisfied in cash and/or Firm Collateral (to the extent permitted hereunder) or such portion released by the Trustee(s), as directed by the Partnership; provided,
that in no way shall the general release of any Trust Income cause an L/C Partner to be permitted to reduce the amount of an L/C by any amount.
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(vii) (A) Any in-kind
distributions by the Partnership relating to Carried Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose of any
in-kind distributions held in the Trust Account at any time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.
(B) In lieu of the foregoing, any Existing Partner may pledge with respect to any
in-kind distribution the Special Firm Collateral referred to in the applicable category in the books and records of the Partnership; provided, that the initial contribution of such Special Firm Collateral
shall initially equal 130% of the required Holdback Amount for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback Amount. Paragraphs 4.1(d)(viii)(C) and (D) shall apply to such Special Firm Collateral. To the
extent such Special Firm Collateral exceeds the applicable minimum percentage of the required Holdback Amount specified in the first sentence of this clause (vii)(B), the related Partner may obtain a release of such excess amount from the Trust
Account.
(viii) (A) Any Limited Partner or Withdrawn Partner may satisfy all or any portion of his or her Holdback
(excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his or her Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by the use of an L/C as provided herein, obtain a release of
Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn Partner’s Holdback (excluding any Excess Holdback) by
pledging or granting a security interest to the Trustee(s) on a first priority basis all of his or her Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or exceed the amount of the Holdback distributed to the
Partner or Withdrawn Partner (as more fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate
(in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) to realize on (if required), such Special Firm Collateral.
(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or any portion of any Special Firm
Collateral (a “Special Firm Collateral Realization”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in connection with an Excess Holdback)
is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided herein (i.e., cash contributed to the Trust Account or an L/C in the Trust Account)), then
up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Special Firm Collateral Realization (which shall not include the amount of Firm
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Collateral that consists of a Qualifying Fund or other asset and is being used in connection with an Excess Holdback) shall be paid into the Trust (and allocated to such Partner or Withdrawn
Partner) to fully satisfy such Holdback and shall be deemed thereafter to be Trust Amounts for purposes hereunder. Any net proceeds from such Special Firm Collateral Realization in excess of the amount necessary to satisfy such Holdback (excluding
any Excess Holdback) shall be distributed to such Partner or Withdrawn Partner. To the extent a Qualifying Fund distributes Securities to a Partner or Withdrawn Partner in connection with a Special Firm Collateral Realization, such Partner or
Withdrawn Partner shall be required to promptly fund such Partner’s or Withdrawn Partner’s deficiency with respect to his or her Holdback in cash or an L/C.
(C) Upon any valuation or revaluation of the Special Firm Collateral and/or any adjustment in the Applicable Collateral
Percentage applicable to a Qualifying Fund (as provided in the books and records of the Partnership), if such Partner’s or Withdrawn Partner’s Special Firm Collateral valued at less than such Partner’s Holdback (excluding any Excess
Holdback) as provided in the books and records of the Partnership, taking into account other permitted means of satisfying the Holdback hereunder, the Partnership shall provide notice of the foregoing to such Partner or Withdrawn Partner and, within
10 Business Days of receiving such notice, such Partner or Withdrawn Partner shall contribute cash or additional Special Firm Collateral to the Trust Account in an amount necessary to make up such deficiency. If any such Partner or Withdrawn Partner
defaults upon his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable to such default; provided further, that for purposes
of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such Section 5.8(d)(ii) shall be construed as
“defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution Amount” where such terms appear in such
Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(D) Upon a Partner becoming a
Withdrawn Partner, at any time thereafter the General Partner may revoke the ability of such Withdrawn Partner to use Special Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding anything else in this
Section 4.1(d)(viii). In that case the provisions of clause (C) above shall apply to the Withdrawn Partner’s obligation to satisfy the Holdback (except that 30 days’ notice of such revocation shall be given), given that the
Special Firm Collateral is no longer available to satisfy any portion of the Holdback (excluding any Excess Holdback).
(E)
Nothing in this Section 4.1(d)(viii) shall prevent any Partner or Withdrawn Partner from using any amount of such Partner’s interest in a Qualifying Fund as Firm Collateral; provided, that at all times Section 4.1(d)(v) and this
Section 4.1(d)(viii) are each satisfied.
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Section 4.2. Interest. Interest on the balances of the Partners’
capital related to the Partners’ GP-Related Partner Interests (excluding capital invested in GP-Related Investments and, if deemed appropriate by the General
Partner, capital invested in any other investment of the Partnership) shall be credited to the Partners’ GP-Related Capital Accounts at the end of each accounting period pursuant to Section 5.2, or
at any other time as determined by the General Partner, at rates determined by the General Partner from time to time, and shall be charged as an expense of the Partnership.
Section 4.3. Withdrawals of Capital. No Partner may withdraw capital related to such Partner’s GP-Related Partner Interests from the Partnership except (i) for distributions of cash or other property pursuant to Section 5.8, (ii) as otherwise expressly provided in this Agreement or (iii) as
determined by the General Partner.
ARTICLE V
PARTICIPATION IN PROFITS AND LOSSES
Section 5.1. General Accounting Matters.
(a) GP-Related Net Income (Loss) shall be determined by the General Partner at the end of each
accounting period and shall be allocated as described in Section 5.4.
(b) “GP-Related
Net Income (Loss)” from any activity of the Partnership related to the GP-Related SP RA II Interest for any accounting period means (i) the gross income realized by the Partnership from such
activity during such accounting period less (ii) all expenses of the Partnership, and all other items that are deductible from gross income, for such accounting period that are allocable to such activity (determined as provided below).
(c) “GP-Related Net Income (Loss)” from any
GP-Related Investment for any accounting period in which such GP-Related Investment has not been sold or otherwise disposed of means (i) the gross amount of
dividends, interest or other income received by the Partnership from such GP-Related Investment during such accounting period less (ii) all expenses of the Partnership for such accounting period that are
allocable to such GP-Related Investment (determined as provided below).
(d) “GP-Related Net Income (Loss)” from any GP-Related Investment for the accounting period in which such GP-Related Investment is
sold or otherwise disposed of means (i) the sum of the gross proceeds from the sale or other disposition of such GP-Related Investment and the gross amount of dividends, interest or other income received
by the Partnership from such GP-Related Investment during such accounting period less (ii) the sum of the cost or other basis to the Partnership of such GP-Related
Investment and all expenses of the Partnership for such accounting period that are allocable to such GP-Related Investment.
GP-Related Net Income (Loss) shall be determined in accordance with the accounting method used by the Partnership for
Federal income tax purposes with the following adjustments: (i) any income of the Partnership that is exempt from Federal income taxation and not otherwise taken into account in computing GP-Related Net
Income (Loss) shall be added to such taxable income or loss; (ii) if any asset has a value on the books of the Partnership that differs from its adjusted
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tax basis for Federal income tax purposes, any depreciation, amortization or gain resulting from a disposition of such asset shall be calculated with reference to such value; (iii) upon an
adjustment to the value of any asset on the books of the Partnership pursuant to Treasury Regulations Section 1.704-1(b)(2), the amount of the adjustment shall be included as gain or loss in computing
such taxable income or loss; (iv) any expenditures of the Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing
GP-Related Net Income (Loss) pursuant to this definition shall be treated as deductible items; (v) any income from a GP-Related Investment that is payable to
Partnership employees in respect of “phantom interests” in such GP-Related Investment awarded by the General Partner to employees shall be included as an expense in the calculation of GP-Related Net Income (Loss) from such GP-Related Investment and (vi) items of income and expense (including interest income and overhead and other indirect expenses) of
the Partnership and Affiliates of the Partnership shall be allocated among the Partnership and such Affiliates, among various Partnership activities and GP-Related Investments and between accounting periods,
in each case as determined by the General Partner. Any adjustments to GP-Related Net Income (Loss) by the General Partner, including adjustments for items of income accrued but not yet received, unrealized
gains, items of expense accrued but not yet paid, unrealized losses, reserves (including reserves for taxes, bad debts, actual or threatened litigation, or any other expenses, contingencies or obligations) and other appropriate items, shall be made
in accordance with GAAP; provided, that the General Partner shall not be required to make any such adjustment.
(e) An accounting
period shall be a Fiscal Year except that, at the option of the General Partner, an accounting period will terminate and a new accounting period will begin on the admission date of an additional Partner or the Settlement Date of a Withdrawn Partner,
if any such date is not the first day of a Fiscal Year. If any event referred to in the preceding sentence occurs and the General Partner does not elect to terminate an accounting period and begin a new accounting period, then the General Partner
may make such adjustments as it deems appropriate to the Partners’ GP-Related Profit Sharing Percentages for the accounting period in which such event occurs (prior to any allocations of GP-Related Unallocated Percentages or adjustments to GP-Related Profit Sharing Percentages pursuant to Section 5.3) to reflect the Partners’ average GP-Related Profit Sharing Percentages during such accounting period; provided, that the GP-Related Profit Sharing Percentages of Partners in GP-Related Net Income (Loss) from GP-Related Investments acquired during such accounting period will be based on GP-Related Profit
Sharing Percentages in effect when each such GP-Related Investment was acquired.
(f) In
establishing GP-Related Profit Sharing Percentages and allocating GP-Related Unallocated Percentages pursuant to Section 5.3, the General Partner may consider such
factors as it deems appropriate.
(g) All determinations, valuations and other matters of judgment required to be made for accounting
purposes under this Agreement shall be made by the General Partner and approved by the Partnership’s independent accountants. Such approved determinations, valuations and other accounting matters shall be conclusive and binding on all Partners,
all Withdrawn Partners, their successors, heirs, estates or legal representatives and any other person, and to the fullest extent permitted by law no such person shall have the right to an accounting or an appraisal of the assets of the Partnership
or any successor thereto.
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Section 5.2. GP-Related Capital
Accounts.
(a) There shall be established for each Partner on the books of the Partnership, to the extent and at such times as may be
appropriate, one or more capital accounts as the General Partner may deem to be appropriate for purposes of accounting for such Partner’s interests in the capital of the Partnership related to the
GP-Related SP RA II Interest and the GP-Related Net Income (Loss) of the Partnership (each a “GP-Related Capital
Account”).
(b) As of the end of each accounting period or, in the case of a contribution to the Partnership by one or more of the
Partners with respect to such Partner or Partners’ GP-Related Partner Interests or a distribution by the Partnership to one or more of the Partners with respect to such Partner or Partners’ GP-Related Partner Interests, at the time of such contribution or distribution, (i) the appropriate GP-Related Capital Accounts of each Partner shall be credited with the
following amounts: (A) the amount of cash and the value of any property contributed by such Partner to the capital of the Partnership related to the GP-Related SP RA II Interest during such accounting
period, (B) the GP-Related Net Income allocated to such Partner for such accounting period and (C) the interest credited on the balance of such Partner’s capital related to such Partner’s GP-Related Partner Interest for such accounting period pursuant to Section 4.2; and (ii) the appropriate GP-Related Capital Accounts of each Partner shall be debited
with the following amounts: (x) the amount of cash, the principal amount of any subordinated promissory note of the Partnership referred to in Section 6.5 (as such amount is paid) and the value of any property distributed to such Partner
during such accounting period with respect to such Partner’s GP-Related Partner Interest and (y) the GP-Related Net Loss allocated to such Partner for such
accounting period.
Section 5.3. GP-Related Profit Sharing Percentages.
(a) Prior to the beginning of each annual accounting period, the General Partner shall establish the profit sharing percentage (the “GP-Related Profit Sharing Percentage”) of each Partner in each category of GP-Related Net Income (Loss) for such annual accounting period pursuant to
Section 5.1(a) taking into account such factors as the General Partner deems appropriate; provided, however, that (i) the General Partner may elect to establish GP-Related Profit
Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment acquired by the Partnership during such accounting period at the time such GP-Related Investment is acquired in accordance with paragraph (b) below and (ii) GP-Related Net Income (Loss) for such accounting period from any GP-Related Investment shall be allocated in accordance with the GP-Related Profit Sharing Percentages in such GP-Related Investment
established in accordance with paragraph (b) below. The General Partner may establish different GP-Related Profit Sharing Percentages for any Partner in different categories of GP-Related Net Income (Loss). In the case of the Withdrawal of a Partner, such former Partner’s GP-Related Profit Sharing Percentages shall be allocated by the General
Partner to one or more of the remaining Partners as the General Partner shall determine. In the case of the admission of any Partner to the Partnership as an additional Partner, the GP-Related Profit Sharing
Percentages of the other Partners shall be reduced by an amount equal to the GP-Related Profit Sharing Percentage allocated to such new Partner pursuant to Section 6.1(b); such reduction of each other
Partner’s GP-Related Profit Sharing Percentage shall be pro rata based upon such Partner’s GP-Related Profit Sharing Percentage as in effect immediately
prior to the admission of the new Partner. Notwithstanding the foregoing, the General Partner may also adjust the GP-Related Profit Sharing Percentage of any Partner for any annual accounting period at the end
of such annual accounting period in its sole discretion.
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(b) The General Partner may elect to allocate to the Partners less than 100% of the GP-Related Profit Sharing Percentages of any category for any annual accounting period at the time specified in Section 5.3(a) for the annual fixing of GP-Related Profit
Sharing Percentages (any remainder of such GP-Related Profit Sharing Percentages being called a “GP-Related Unallocated Percentage”); provided,
that any GP-Related Unallocated Percentage in any category of GP-Related Net Income (Loss) for any annual accounting period that is not allocated by the General Partner
within 90 days after the end of such accounting period shall be deemed to be allocated among all the Partners (including the General Partner) in the manner determined by the General Partner in its sole discretion.
(c) Unless otherwise determined by the General Partner in a particular case, (i) GP-Related Profit
Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment shall be allocated in proportion to the Partners’ respective GP-Related Capital Contributions in respect of such GP-Related Investment and (ii) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from each GP-Related Investment shall be fixed at the time such GP-Related Investment is acquired and
shall not thereafter change, subject to any repurchase rights established by the General Partner pursuant to Section 5.7.
Section 5.4. Allocations of GP-Related Net Income (Loss) .
(a) Except as provided in Section 5.4(d), GP-Related Net Income of the Partnership for each GP-Related Investment shall be allocated to the GP-Related Capital Accounts related to such GP-Related Investment of all the Partners
participating in such GP-Related Investment (including the General Partner): first, in proportion to and to the extent of the amount of Non-Carried Interest (other than
amounts representing a return of GP-Related Capital Contributions) or Carried Interest distributed to the Partners, second, to Partners that received Non-Carried
Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest in years prior to the years such GP-Related Net Income is
being allocated to the extent such Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest exceeded GP-Related Net Income allocated to such Partners in such earlier years; and third, to the Partners in the same manner that such Non-Carried Interest (other than amounts
representing a return of GP-Related Capital Contributions) or Carried Interest would have been distributed if cash were available to distribute with respect thereto.
(b) GP-Related Net Loss of the Partnership shall be allocated as follows: (i) GP-Related Net Loss relating to realized losses suffered by SP RA II and allocated to the Partnership with respect to its pro rata share thereof (based on capital contributions made by the
Partnership to SP RA II with respect to the GP-Related SP RA II Interest) shall be allocated to the Partners in accordance with each Partner’s Non-Carried Interest
Sharing Percentage with respect to the GP-Related Investment giving rise to such loss suffered by SP RA II and (ii) GP-Related Net Loss relating to realized losses
suffered by SP RA II and allocated to the Partnership with respect to the Carried Interest shall be allocated in accordance with a Partner’s (including a Withdrawn Partner’s) Carried Interest Give Back Percentage (as of the date of such
loss) (subject to adjustment pursuant to Section 5.8(e)).
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(c) Notwithstanding Section 5.4(a) above,
GP-Related Net Income relating to Carried Interest allocated after the allocation of a GP-Related Net Loss pursuant to clause (ii) of Section 5.4(b) shall be
allocated in accordance with such Carried Interest Give Back Percentages until such time as the Partners have been allocated GP-Related Net Income relating to Carried Interest equal to the aggregate amount of GP-Related Net Loss previously allocated in accordance with clause (ii) of Section 5.4(b). Withdrawn Partners shall remain Partners for purposes of allocating such
GP-Related Net Loss with respect to Carried Interest.
(d) To the extent the Partnership has any GP-Related Net Income (Loss) for any accounting period unrelated to SP RA II, such GP-Related Net Income (Loss) will be allocated in accordance with GP-Related Profit Sharing Percentages prevailing at the beginning of such accounting period.
(e) The
General Partner may authorize from time to time advances to Partners (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group L.P.
or any Affiliate thereof) against their allocable shares of GP-Related Net Income (Loss).
Section 5.5. Liability of General Partners. General Partners shall have unlimited liability for the satisfaction and
discharge of all losses, liabilities and expenses of the Partnership.
Section 5.6. Liability of Limited Partners. Each
Limited Partner and former Limited Partner shall be liable for the satisfaction and discharge of all losses, liabilities and expenses of the Partnership allocable to him or her pursuant to Section 5.4 or Section 7.3, but only to the extent
required by applicable law. Except as otherwise provided in the following sentence, in no event shall any Limited Partner or former Limited Partner be obligated to make any additional capital contribution to the Partnership in excess of his or her
aggregate GP-Related Capital Contributions and Capital Commitment-Related Capital Contributions pursuant to Section 4.1 and Section 7.1, or have any liability in excess of such aggregate GP-Related Capital Contributions and Capital Commitment-Related Capital Contributions for the satisfaction and discharge of the losses, liabilities and expenses of the Partnership. In no way does any of the
foregoing limit any Partner’s obligations under Section 4.1(d), Section 5.8(d) or Section 7.4(g) or otherwise to make capital contributions as provided hereunder.
Section 5.7. Repurchase Rights, etc. The General Partner may from time to time establish such repurchase rights and/or other
requirements with respect to the Partners’ GP-Related Partner Interests relating to GP-Related SP RA II Investments as the General Partner may determine. The
General Partner shall have authority to (a) withhold any distribution otherwise payable to any Partner until any such repurchase rights have lapsed or any such requirements have been satisfied, (b) pay any distribution to any Partner that
is Contingent as of the distribution date and require the refund of any portion of such distribution that is Contingent as of the Withdrawal Date of such Partner, (c) amend any previously established repurchase rights or other requirements from
time to time and (d) make such exceptions thereto as it may determine on a case by case basis.
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Section 5.8. Distributions.
(a) (i) The Partnership shall make distributions of available cash (subject to reserves and other adjustments as provided herein) or other
property to Partners with respect to such Partners’ GP-Related Partner Interests at such times and in such amounts as are determined by the General Partner. The General Partner shall, if it deems it
appropriate, determine the availability for distribution of, and distribute, cash or other property separately for each category of GP-Related Net Income (Loss) established pursuant to Section 5.1(a).
Distributions of cash or other property with respect to Non-Carried Interest shall be made among the Partners in accordance with their respective Non-Carried Interest
Sharing Percentages, and, subject to Section 4.1(d) and Section 5.8(e), distributions of cash or other property with respect to Carried Interest shall be made among Partners in accordance with their respective Carried Interest Sharing
Percentages.
(ii) At any time that a sale, exchange, transfer or other disposition by SP RA II of a portion of a GP-Related Investment is being considered by the Partnership (a “GP-Related Disposable Investment”), at the election of the General Partner each
Partner’s GP-Related Partner Interest with respect to such GP-Related Investment shall be vertically divided into two separate
GP-Related Partner Interests, a GP-Related Partner Interest attributable to the GP-Related Disposable Investment (a
Partner’s “GP-Related Class B Interest”), and a GP-Related Partner Interest attributable to such
GP-Related Investment excluding the GP-Related Disposable Investment (a Partner’s “GP-Related
Class A Interest”). Distributions (including those resulting from a sale, transfer, exchange or other disposition by SP RA II) relating to a GP-Related Disposable Investment (with
respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of GP-Related Class B Interests with respect to such GP-Related Investment in accordance with their GP-Related Profit Sharing Percentages relating to such GP-Related Class B
Interests, and distributions (including those resulting from the sale, transfer, exchange or other disposition by SP RA II) relating to a GP-Related Investment excluding such
GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of
GP-Related Class A Interests with respect to such GP-Related Investment in accordance with their respective GP-Related
Profit Sharing Percentages relating to such GP-Related Class A Interests. Except as provided above, distributions of cash or other property with respect to each category of
GP-Related Net Income (Loss) shall be allocated among the Partners in the same proportions as the allocations of GP-Related Net Income (Loss) of each such category.
(b) Subject to the Partnership’s having sufficient available cash in the reasonable judgment of the General Partner, the Partnership shall
make cash distributions to each Partner with respect to each Fiscal Year of the Partnership in an aggregate amount at least equal to the total Federal, New York State and New York City income and other taxes that would be payable by such Partner
with respect to all categories of GP-Related Net Income (Loss) allocated to such Partner for such Fiscal Year, the amount of which shall be calculated (i) on the assumption that each Partner is an
individual subject to the then prevailing maximum rate of federal, New York State and New York City income and other tax rates, (ii) taking into account the deductibility of State and local income and other taxes for Federal income tax purposes
and
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(iii) taking into account any differential in applicable rates due to the type and character of GP-Related Net Income (Loss) allocated to such Partner. Notwithstanding the provisions of the foregoing sentence, the General Partner may refrain from making any distribution if, in the reasonable judgment of the
General Partner, such distribution is prohibited by the Partnership Act.
(c) The General Partner may provide that the GP-Related Partner Interest of any Partner or employee (including such Partner’s or employee’s right to distributions and investments of the Partnership related thereto) may be subject to repurchase by the
Partnership during such period as the General Partner shall determine (a “Repurchase Period”). Any Contingent distributions from GP-Related Investments subject to repurchase rights will be
withheld by the Partnership and will be distributed to the recipient thereof (together with interest thereon at rates determined by the General Partner from time to time) as the recipient’s rights to such distributions become Non-Contingent (by virtue of the expiration of the applicable Repurchase Period or otherwise). The General Partner may elect in an individual case to have the Partnership distribute any Contingent distribution to
the applicable recipient thereof irrespective of whether the applicable Repurchase Period has lapsed. If a Partner Withdraws from the Partnership for any reason other than his or her death, Total Disability or Incompetence, the undistributed share
of any GP-Related Investment that remains Contingent as of the applicable Withdrawal Date shall be repurchased by the Partnership at a purchase price determined at such time by the General Partner. Unless
determined otherwise by the General Partner, the repurchased portion thereof will be allocated among the remaining Partners with interests in such GP-Related Investment in proportion to their respective
percentage interests in such GP-Related Investment, or if no other Partner has a percentage interest in such specific GP-Related Investment, to the General Partner;
provided, that the General Partner may allocate the Withdrawn Partner’s share of unrealized investment income from a repurchased GP-Related Investment attributable to the period after the Withdrawn
Partner’s Withdrawal Date on any basis it may determine, including to existing or new Partners who did not previously have interests in such GP-Related Investment, except that, in any event, each Investor
Special Limited Partner shall be allocated a share of such unrealized investment income equal to its respective GP-Related Profit Sharing Percentage of such unrealized investment income.
(d) (i) (A) If the Partnership is obligated under the Clawback Provisions or Giveback Provisions to contribute to SP RA II a Clawback
Amount or a Giveback Amount (other than a Capital Commitment Giveback Amount) in respect of the GP-Related SP RA II Interest (the amount of any such obligation of the Partnership with respect to such a
Giveback Amount being herein called a “GP-Related Giveback Amount”), the General Partner shall call for such amounts as are necessary to satisfy such obligations of the Partnership, as
determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the General Partner, such an amount of prior distributions by the Partnership (and the Other Fund
GPs) with respect to Carried Interest (and/or Non-Carried Interest in the case of a GP-Related Giveback Amount) (the
“GP-Related Recontribution Amount”) which equals (I) the product of (a) a Partner’s or Withdrawn Partner’s Carried Interest Give Back Percentage and (b) the aggregate
Clawback Amount payable by the Partnership, in the case of Clawback Amounts and (II) with respect to a GP-Related Giveback Amount, such Partner’s pro rata share of prior distributions of
Carried Interest and/or Non-Carried Interest in connection with (a) the GP-Related SP RA II Investment giving rise to the
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GP-Related Giveback Amount, (b) if the amounts contributed pursuant to clause (II)(a) above are insufficient to satisfy such GP-Related Giveback Amount, GP-Related SP RA II Investments other than the one giving rise to such obligation, but only those amounts received by the Partners with an interest
in the GP-Related SP RA II Investment referred to in clause (II)(a) above and (c) if the GP-Related Giveback Amount is unrelated to a specific GP-Related SP RA II Investment, all GP-Related SP RA II Investments. Each Partner and Withdrawn Partner shall promptly contribute to the Partnership, along with satisfying his
or her comparable obligations to the Other Fund GPs, if any, upon such call, such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount, less the amount paid out of the Trust Account on
behalf of such Partner or Withdrawn Partner by the Trustee(s) pursuant to written instructions from the General Partner, or if applicable, any of the Other Fund GPs with respect to Carried Interest (and/or
Non-Carried Interest in the case of GP-Related Giveback Amounts) (the “Net GP-Related Recontribution Amount”),
irrespective of the fact that the amounts in the Trust Account may be sufficient on an aggregate basis to satisfy the Partnership’s and the Other Fund GPs’ obligation under the Clawback Provisions and/or Giveback Provisions;
provided, that to the extent a Partner’s or Withdrawn Partner’s share of the amount paid with respect to the Clawback Amount and/or the GP-Related Giveback Amount exceeds his or her GP-Related Recontribution Amount, such excess shall be repaid to such Partner or Withdrawn Partner as promptly as reasonably practicable, subject to clause (ii) below; provided further, that such
written instructions from the General Partner shall specify each Partner’s and Withdrawn Partner’s GP-Related Recontribution Amount. Prior to such time, the General Partner may, in its discretion
(but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of the Clawback Provisions or the Giveback Provisions will probably materialize (and an estimate of the aggregate
amount of such obligations); provided further, that any amount from a Partner’s Trust Account used to pay any part of any GP-Related Giveback Amount (or such lesser amount as may be required
by the General Partner) shall be contributed by such Partner to such Partner’s Trust Account no later than 30 days after the Net GP-Related Recontribution Amount is paid with respect to such GP-Related Giveback Amount. Solely to the extent required by the SP RA II Agreements, each member of the General Partner shall have the same obligations as a Partner (which obligations shall be subject to the same
limitations as the obligations of a Partner) under this Section 5.8(d)(i)(A) and under Section 5.8(d)(ii)(A) solely with respect to such member’s pro rata share of any Clawback Amount (for purposes of this sentence, as defined
in the SP RA II Partnership Agreement) and solely to the extent that the Partnership has insufficient funds to meet the Partnership’s obligations under the SP RA II Partnership Agreements (and/or the corresponding provisions under any other SP
RA II Agreement).
(B) To the extent any Partner or Withdrawn Partner has satisfied any Holdback obligation with Firm
Collateral, such Partner or Withdrawn Partner shall, within 10 days of the General Partner’s call for GP-Related Recontribution Amounts, make a cash payment into the Trust Account in an amount equal to
the amount of the Holdback obligation satisfied with such Firm Collateral, or such lesser amount such that the amount in the Trust Account allocable to such Partner or Withdrawn Partner equals the sum of (I) such Partner’s or Withdrawn
Partner’s GP-Related Recontribution Amount and (II) any similar amounts payable to any of the Other Fund GPs. Immediately upon receipt of such cash, the Trustee(s) shall take such steps as are
necessary to release such Firm Collateral of such
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Partner or Withdrawn Partner equal to the amount of such cash payment. If the amount of such cash payment is less than the amount of Firm Collateral of such Partner or Withdrawn Partner, the
balance of such Firm Collateral if any, shall be retained to secure the payment of GP-Related Deficiency Contributions, if any, and shall be fully released upon the satisfaction of the Partnership’s and
the Other Fund GPs’ obligation to pay the Clawback Amount. The failure of any Partner or Withdrawn Partner to make a cash payment in accordance with this clause (B) (to the extent applicable) shall constitute a default under
Section 5.8(d)(ii) as if such cash payment hereunder constitutes a Net GP-Related Recontribution Amount under Section 5.8(d)(ii).
(ii) (A) In the event any Partner or Withdrawn Partner (a “GP-Related
Defaulting Party”) fails to recontribute all or any portion of such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount for any reason, the
General Partner shall (i) use its reasonable efforts to collect any amounts from any such GP-Related Defaulting Party and (ii) require all other Partners and Withdrawn Partners to contribute, on a
pro rata basis (based on each of their respective Carried Interest Give Back Percentages in the case of Clawback Amounts, and GP-Related Profit Sharing Percentages in the case of GP-Related Giveback Amounts (as more fully described in clause (II) of Section 5.8(d)(i)(A) above)), such amounts as are necessary to fulfill the GP-Related
Defaulting Party’s obligation to pay such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount (a
“GP-Related Deficiency Contribution”) if the General Partner determines in its good faith judgment that the Partnership (or an Other Fund GP) will be unable to collect such amount in cash from
such GP-Related Defaulting Party for payment of the Clawback Amount or GP-Related Giveback Amount, as the case may be, at least 20 Business Days prior to the latest date
that the Partnership, and the Other Fund GPs, if applicable, are permitted to pay the Clawback Amount or GP-Related Giveback Amount, as the case may be; provided, that no Partner or Withdrawn Partner
shall as a result of such GP-Related Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Net GP-Related Recontribution
Amount initially requested from such Partner or Withdrawn Partner in respect of such default.
(B) Thereafter, the General
Partner shall determine in its good faith judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the
good faith judgment of the General Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership against the GP-Related Defaulting Party, the cost of which shall be a
Partnership expense to the extent not ultimately reimbursed by the GP-Related Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such
GP-Related Defaulting Party becoming a GP-Related Defaulting Party) to set-off as appropriate and apply against such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount any amounts otherwise payable to the GP-Related Defaulting
Party by the Partnership or any Affiliate thereof (including amounts unrelated to Carried Interest, such as returns of capital and profit thereon). Each Partner and Withdrawn Partner hereby grants to the General Partner a security interest,
effective upon such Partner or Withdrawn Partner
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becoming a GP-Related Defaulting Party, in all accounts receivable and other rights to receive payment from any Affiliate of the Partnership and agrees
that, upon the effectiveness of such security interest, the General Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner and Withdrawn Partner hereby appoints the General Partner as its
true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or Withdrawn Partner or in the name of the General Partner, to
take any actions which may be necessary to accomplish the intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the Net GP-Related Recontribution Amount of
a GP-Related Defaulting Party from the date such Net GP-Related Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default
Interest Rate.
(C) Any Partner’s or Withdrawn Partner’s failure to make a
GP-Related Deficiency Contribution shall cause such Partner or Withdrawn Partner to be a GP-Related Defaulting Party with respect to such amount. The Partnership shall
first seek any remaining Trust Amounts (and Trust Income thereon) allocated to such Partner or Withdrawn Partner to satisfy such Partner’s or Withdrawn Partner’s obligation to make a GP-Related
Deficiency Contribution before seeking cash contributions from such Partner or Withdrawn Partner in satisfaction of such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency
Contribution.
(iii) A Partner’s or Withdrawn Partner’s obligation to make contributions to the Partnership under
this Section 5.8(d) shall survive the termination of the Partnership.
(e) The Partners acknowledge that the General Partner will (and
is hereby authorized to) take such steps as it deems appropriate, in its good faith judgment, to further the objective of providing for the fair and equitable treatment of all Partners, including by allocating writedowns and losses (to be determined
by the General Partner in accordance with GAAP and as reported by SP RA II) on GP-Related SP RA II Investments that have been the subject of a writedown and/or losses (each, a “Loss
Investment”) to those Partners who participated in such Loss Investments based on their Carried Interest Sharing Percentage therein to the extent that such Partners receive or have received Carried Interest distributions from other GP-Related SP RA II Investments. Consequently and notwithstanding anything herein to the contrary, adjustments to Carried Interest distributions shall be made as set forth in this Section 5.8(e).
(i) At the time the Partnership is making Carried Interest distributions in connection with a
GP-Related SP RA II Investment (the “Subject Investment”) that have been reduced under any SP RA II Agreement as a result of one or more Loss Investments, the General Partner shall calculate
amounts distributable to or due from each such Partner as follows:
(A) determine each Partner’s share of each such
Loss Investment based on his or her Carried Interest Sharing Percentage in each such Loss Investment (which may be zero) to the extent such Loss Investment has reduced the Carried Interest distributions otherwise available for distribution to all
Partners (indirectly through the Partnership from SP RA II) from the Subject Investment (such reduction, the “Loss Amount”);
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(B) determine the amount of Carried Interest distributions otherwise
distributable to such Partner with respect to the Subject Investment (indirectly through the Partnership from SP RA II) before any reduction in respect of the amount determined in clause (A) above (the “Unadjusted Carried Interest
Distributions”); and
(C) subtract (I) the Loss Amounts relating to all Loss Investments from (II) the
Unadjusted Carried Interest Distributions for such Partner, to determine the amount of Carried Interest distributions to actually be paid to such Partner (“Net Carried Interest Distribution”).
To the extent that the Net Carried Interest Distribution for a Partner as calculated in this clause (i) is a negative number, the General
Partner shall (I) notify such Partner, at or prior to the time such Carried Interest distributions are actually made to the Partners, of his or her obligation to recontribute to the Partnership prior Carried Interest distributions (a
“Net Carried Interest Distribution Recontribution Amount”), up to the amount of such negative Net Carried Interest Distribution and (II) to the extent amounts recontributed pursuant to clause (I) are insufficient to
satisfy such negative Net Carried Interest Distribution amount, reduce future Carried Interest distributions otherwise due such Partner, up to the amount of such remaining negative Net Carried Interest Distribution. If a Partner’s (x) Net
Carried Interest Distribution Recontribution Amount exceeds (y) the aggregate amount of prior Carried Interest distributions less the amount of tax thereon, calculated based on the Assumed Income Tax Rate in effect in the Fiscal Years of such
distributions (the “Excess Tax-Related Amount”), then such Partner may, in lieu of paying such Partner’s Excess Tax-Related Amount, defer such
amounts as set forth below. Such deferred amount shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced and repaid by the amount of Carried Interest otherwise distributable to such Partner in connection with future Carried
Interest distributions until such balance is reduced to zero. Any deferred amounts shall be payable in full upon the earlier of (i) such time as the Clawback Amount is determined (as provided herein) and (ii) such time as the Partner
becomes a Withdrawn Partner.
To the extent there is an amount of negative Net Carried Interest Distribution with respect to a Partner
remaining after the application of this clause (i), notwithstanding clause (II) of the preceding paragraph, such remaining amount of negative Net Carried Interest Distribution shall be allocated to the other Partners pro rata based on
each of their Carried Interest Sharing Percentages in the Subject Investment.
A Partner who fails to pay a Net Carried Interest
Distribution Recontribution Amount promptly upon notice from the General Partner (as provided above) shall be deemed a GP-Related Defaulting Party for all purposes hereof.
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A Partner may satisfy in part any Net Carried Interest Distribution Recontribution Amount
from cash that is then subject to a Holdback, to the extent that the amounts that remain subject to a Holdback satisfy the Holdback requirements hereof as they relate to the reduced amount of aggregate Carried Interest distributions received by such
Partner (taking into account any Net Carried Interest Distribution Recontribution Amount contributed to the Partnership by such Partner).
Any Net Carried Interest Distribution Recontribution Amount contributed by a Partner, including amounts of cash subject to a Holdback as
provided above, shall increase the amount available for distribution to the other Partners as Carried Interest distributions with respect to the Subject Investment; provided, that any such amounts then subject to a Holdback may be so
distributed to the other Partners to the extent a Partner receiving such distribution has satisfied the Holdback requirements with respect to such distribution (taken together with the other Carried Interest distributions received by such Partner to
date).
(ii) In the case of Clawback Amounts which are required to be contributed to the Partnership as otherwise provided
herein, the obligation of the Partners with respect to any Clawback Amount shall be adjusted by the General Partner as follows:
(A) determine each Partner’s share of any Losses in any GP-Related SP RA II
Investments which gave rise to the Clawback Amount (i.e., the Losses that followed the last GP-Related SP RA II Investment with respect to which Carried Interest distributions were made), based on such
Partner’s Carried Interest Sharing Percentage in such GP-Related SP RA II Investments;
(B) determine each Partner’s obligation with respect to the Clawback Amount based on such Partner’s Carried Interest
Give Back Percentage as otherwise provided herein; and
(C) subtract the amount determined in clause (B) above from
the amount determined in clause (A) above with respect to each Partner to determine the amount of adjustment to each Partner’s share of the Clawback Amount (a Partner’s “Clawback Adjustment Amount”).
A Partner’s share of the Clawback Amount shall for all purposes hereof be decreased by such Partner’s Clawback Adjustment Amount, to
the extent it is a negative number (except to the extent expressly provided below). A Partner’s share of the Clawback Amount shall for all purposes hereof be increased by such Partner’s Clawback Adjustment Amount (to the extent it is a
positive number); provided, that in no way shall a Partner’s aggregate obligation to satisfy a Clawback Amount as a result of this clause (ii) exceed the aggregate Carried Interest distributions received by such Partner. To the
extent a positive Clawback Adjustment Amount remains after the application of this clause (ii) with respect to a Partner, such remaining Clawback Adjustment Amount shall be allocated to the Partners (including any Partner whose Clawback Amount
was increased pursuant to this clause (ii)) pro rata based on their Carried Interest Give Back Percentages (determined without regard to this clause (ii)).
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Any distribution or contribution adjustments pursuant to this Section 5.8(e) by the
General Partner shall be based on its good faith judgment, and no Partner shall have any claim against the Partnership, the General Partner or any other Partners as a result of any adjustment made as set forth above. This Section 5.8(e) applies
to all Partners, including Withdrawn Partners.
It is agreed and acknowledged that this Section 5.8(e) is an agreement among the
Partners and in no way modifies the obligations of each Partner regarding the Clawback Amount as provided in the SP RA II Agreements.
Section 5.9. Business Expenses. The Partnership shall reimburse the Partners for reasonable travel, entertainment and
miscellaneous expenses incurred by them in the conduct of the Partnership’s business in accordance with rules and regulations established by the General Partner from time to time.
Section 5.10. Tax Capital Accounts; Tax Allocations.
(a) For federal income tax purposes, there shall be established for each Partner a single capital account combining such Partner’s Capital
Commitment Capital Account and GP-Related Capital Account, with such adjustments as the General Partner determines are appropriate so that such single capital account is maintained in compliance with the
principles and requirements of Section 704(b) of the Code and the Treasury Regulations thereunder.
(b) For Federal, State and local
income tax purposes only, Partnership income, gain, loss, deduction or expense (or any item thereof) for each fiscal year shall be allocated to and among the Partners in a manner corresponding to the manner in which corresponding items are allocated
among the Partners pursuant to clause (a) above; provided, that the General Partner may in its sole discretion make such allocations for tax purposes as it determines are appropriate so that allocations have substantial economic effect
or are in accordance with the interests of the Partners, within the meaning of the Code and the Treasury Regulations thereunder.
ARTICLE
VI
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS;
SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
Section 6.1. Additional Partners.
(a) Effective on the first day of any month (or on such other date as shall be determined by the General Partner in its sole discretion), the
General Partner shall have the right to admit one or more additional or substitute persons into the Partnership as General Partners or Limited Partners. Each such person shall make the representations and certifications with respect to itself set
forth in Section 3.7 and Section 3.8. The General Partner shall determine and negotiate with the additional Partner all terms of such additional Partner’s participation in the Partnership, including the additional Partner’s
initial GP-Related Capital Contribution, Capital Commitment-Related Capital Contribution, GP-Related Profit Sharing Percentage and Capital
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Commitment Profit Sharing Percentage. Each additional Partner shall have such voting rights as may be determined by the General Partner from time to time unless, upon the admission to the
Partnership of any Limited Partner, the General Partner shall designate that such Limited Partner shall not have such voting rights (any such Limited Partner being called a “Nonvoting Limited Partner”). Any additional Partner shall,
as a condition to becoming a Partner, agree to become a party to, and be bound by the terms and conditions of, the Trust Agreement. If Blackstone or another or subsequent holder of an Investor Note approved by the General Partner for purposes of
this Section 6.1(a) shall foreclose upon a Limited Partner’s Investor Note issued to finance such Limited Partner’s purchase of his or her Capital Commitment Interests, Blackstone or such other or subsequent holder shall succeed to
such Limited Partner’s Capital Commitment Interests and shall be deemed to have become a Limited Partner to such extent. Any additional Partner may have a GP-Related Partner Interest or a Capital
Commitment Partner Interest, without having the other such interest.
(b) The GP-Related Profit
Sharing Percentages, if any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’
GP-Related Profit Sharing Percentages as of such date, shall be established by the General Partner pursuant to Section 5.3. The Capital Commitment Profit Sharing Percentages, if any, to be allocated to an
additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’ Capital Commitment Profit Sharing Percentages as of such date, shall be established by the General
Partner.
(c) An additional Partner shall be required to contribute to the Partnership his or her pro rata share of the
Partnership’s total capital, excluding capital in respect of GP-Related Investments and Capital Commitment Investments in which such Partner does not acquire any interests, at such times and in such
amounts as shall be determined by the General Partner in accordance with Section 4.1 and Section 7.1.
(d) The admission of an
additional Partner will be evidenced by (i) the execution of a counterpart copy of, or counter-signature page with respect to, this Agreement by such additional Partner, (ii) the execution of an amendment to this Agreement by the General
Partner and the additional Partner, as determined by the General Partner or (iii) the execution by such additional Partner of any other writing evidencing the intent of such person to become a substitute or additional Limited Partner and to be
bound by the terms of this Agreement and such writing being accepted by the General Partner on behalf of the Partnership. In addition, each additional Partner shall sign a counterpart copy of the Trust Agreement or any other writing evidencing the
intent of such person to become a party to the Trust Agreement.
Section 6.2. Withdrawal of Partners.
(a) Any Partner may Withdraw voluntarily from the Partnership subject to the prior written consent of the General Partner. The General Partner
generally intends to permit voluntary Withdrawals on the last day of any calendar month (or on such other date as shall be determined by the General Partner in its sole discretion), on not less than 15 days’ prior written notice by such Partner
to the General Partner (or on such shorter notice period as may be mutually agreed upon between such Partner and the General Partner); provided, that a Partner
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may not voluntarily Withdraw without the consent of the General Partner if such Withdrawal would (i) cause the Partnership to be in default under any of its contractual obligations or
(ii) in the reasonable judgment of the General Partner, have a material adverse effect on the Partnership or its business; provided further, that a Partner may Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest without Withdrawing from the Partnership with respect to such Partner’s Capital Commitment Partner Interest, and a Partner may Withdraw from the Partnership with respect to such
Partner’s Capital Commitment Partner Interest without Withdrawing from the Partnership with respect to such Partner’s GP-Related Partner Interest.
(b) Upon the Withdrawal of any Partner, including by the occurrence of any withdrawal event under the Partnership Act with respect to any
Partner, such Partner shall thereupon cease to be a Partner, except as expressly provided herein.
(c) Upon the Total Disability of a
Limited Partner, such Partner shall thereupon cease to be a Limited Partner with respect to such Partner’s GP-Related Partner Interest; provided, however, that the General Partner may elect
to admit such Withdrawn Partner to the Partnership as a Nonvoting Limited Partner with respect to such Partner’s GP-Related Partner Interest, with such GP-Related
Partner Interest as the General Partner may determine. The determination of whether any Partner has suffered a Total Disability shall be made by the General Partner in its sole discretion after consultation with a qualified medical doctor. In the
absence of agreement between the General Partner and such Partner, each party shall nominate a qualified medical doctor and the two doctors shall select a third doctor, who shall make the determination as to Total Disability.
(d) If the General Partner determines that it shall be in the best interests of the Partnership for any Partner (including any Partner who has
given notice of voluntary Withdrawal pursuant to paragraph (a) above) to Withdraw from the Partnership (whether or not Cause exists) with respect to such Partner’s GP-Related Partner Interest and/or
with respect to such Partner’s Capital Commitment Partner Interest, such Partner, upon written notice by the General Partner to such Partner, shall be required to Withdraw with respect to such Partner’s
GP-Related Partner Interest and/or with respect to such Partner’s Capital Commitment Partner Interest, as of a date specified in such notice, which date shall be on or after the date of such notice. If
the General Partner requires any Partner to Withdraw for Cause with respect to such Partner’s GP-Related Partner Interest and/or with respect to such Partner’s Capital Commitment Partner Interest,
such notice shall state that it has been given for Cause and shall describe the particulars thereof in reasonable detail.
(e) The
Withdrawal from the Partnership of any Partner shall not, in and of itself, affect the obligations of the other Partners to continue the Partnership during the remainder of its term. A Withdrawn General Partner shall remain liable for all
obligations of the Partnership incurred while it was a General Partner and resulting from its acts or omissions as a General Partner to the fullest extent provided by law.
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Section 6.3. GP-Related Partner
Interests Not Transferable.
(a) No Partner may sell, assign, pledge, grant a security interest over or otherwise transfer or encumber
all or any portion of such Partner’s GP-Related Partner Interest without the prior written consent of the General Partner; provided, that, subject to the Partnership Act, this Section 6.3
shall not impair transfers by operation of law, transfers by will or by other testamentary instrument occurring by virtue of the death or dissolution of a Partner, or transfers required by trust agreements; provided further, that,
subject to the prior written consent of the General Partner, which shall not be unreasonably withheld, a Limited Partner may transfer, for estate planning purposes, up to 25% of his or her GP-Related Profit
Sharing Percentage to any estate planning trust, limited partnership or limited liability company with respect to which such Limited Partner controls investments related to any interest in the Partnership held therein (an “Estate Planning
Vehicle”). Each Estate Planning Vehicle will be a Nonvoting Limited Partner. Such Limited Partner and the Nonvoting Limited Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such Nonvoting
Limited Partner with respect to the interest transferred (including the obligation to make additional GP-Related Capital Contributions). The General Partner may at its sole option exercisable at any time
require such Estate Planning Vehicle to Withdraw from the Partnership on the terms of this Article VI. Except as provided in the second proviso to the first sentence of this Section 6.3(a), no assignee, legatee, distributee, heir or transferee
(by conveyance, operation of law or otherwise) of the whole or any portion of any Partner’s GP-Related Partner Interest shall have any right to be a General Partner or Limited Partner without the prior
written consent of the General Partner (which consent may be given or withheld in its sole discretion without giving any reason therefor). Notwithstanding the granting of a security interest in the entire partnership interest of any Partner, such
Partner shall continue to be a partner of the Partnership.
(b) Notwithstanding any provision hereof to the contrary, no sale or transfer
of any GP-Related Partner Interest in the Partnership may be made except in compliance with all federal, state and other applicable laws, including Federal and State securities laws.
Section 6.4. General Partner Withdrawal; Transfer of General Partner’s Interest.
(a) The General Partner may not transfer or assign its interest as a General Partner in the Partnership or its right to manage the affairs of
the Partnership, except that the General Partner may, with the prior written approval of a Majority In Interest of the Partners, admit another person as an additional or substitute General Partner who makes such representations with respect to
itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise); provided, however, that the General Partner may, in its sole discretion, transfer all or part of its interest in
the Partership to a person who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise) and who owns, directly or indirectly, the principal
part of the business then conducted by the General Partner in connection with any liquidation, dissolution or reorganization of the General Partner, and, upon the assumption by such person of liability for all the obligations of the General Partner
under this Agreement, such person shall be admitted as the General Partner. A person who is so admitted as an additional or substitute General Partner shall thereby become a General Partner and shall have the right to manage the affairs of the
Partnership and to vote as a Partner to the extent of the interest in the Partnership so acquired. The General Partner shall not cease to be the general partner of the Partnership upon the collateral assignment of or the pledging or granting of a
security interest in its entire Interest in the Partnership.
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(b) Except as contemplated by Section 6.4(a) above, Withdrawal by a General Partner is
not permitted. The Withdrawal of a General Partner shall not dissolve the Partnership if at the time of such Withdrawal there are one or more remaining General Partners, and any one or more of such remaining General Partners continue the business of
the Partnership (any and all such remaining General Partners being hereby authorized to continue the business of the Partnership without dissolution and hereby agreeing to do so). If upon the Withdrawal of a General Partner there shall be no
remaining General Partner, the Partnership nonetheless shall not be dissolved and shall not be required to be wound up if, within 90 days after the occurrence of such event of Withdrawal, all remaining Limited Partners (excluding Withdrawn Partners)
agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such Withdrawal, of one or more General Partners.
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s
GP-Related Partner Interest.
(a) The terms of this Section 6.5 shall apply to the GP-Related Partner Interest of a Withdrawn Partner, but, except as otherwise expressly provided in this Section 6.5, shall not apply to the Capital Commitment Partner Interest of a Withdrawn Partner. For
purposes of this Section 6.5, the term “Settlement Date” means the date as of which a Withdrawn Partner’s GP-Related Partner Interest in the Partnership is settled as determined
under paragraph (b) below. Notwithstanding the foregoing, any Limited Partner who Withdraws from the Partnership, and all or any portion of whose GP-Related Partner Interest is retained as a Limited
Partner, shall be considered a Withdrawn Partner for all purposes hereof.
(b) Except where a later date for the settlement of a Withdrawn
Partner’s GP-Related Partner Interest in the Partnership may be agreed to by the General Partner and a Withdrawn Partner, a Withdrawn Partner’s Settlement Date shall be his or her Withdrawal Date;
provided, that if a Withdrawn Partner’s Withdrawal Date is not the last day of a month, then the General Partner may elect for such Withdrawn Partner’s Settlement Date to be the last day of the month in which his or her Withdrawal
Date occurs. During the interval, if any, between a Withdrawn Partner’s Withdrawal Date and Settlement Date, such Withdrawn Partner shall have the same rights and obligations with respect to GP-Related
Capital Contributions, interest on capital, allocations of GP-Related Net Income (Loss) and distributions as would have applied had such Withdrawn Partner remained a Partner of the Partnership during such
period.
(c) In the event of the Withdrawal of a Partner with respect to such Withdrawn Partner’s
GP-Related Partner Interest, the General Partner shall, promptly after such Withdrawn Partner’s Settlement Date, (i) determine and allocate to the Withdrawn Partner’s GP-Related Capital Accounts such Withdrawn Partner’s allocable share of the GP-Related Net Income (Loss) of the Partnership for the period ending on such Settlement Date
in accordance with Article V and (ii) credit the Withdrawn Partner’s GP-Related Capital Accounts with interest in accordance with Section 5.2. In making the foregoing calculations, the General
Partner shall be entitled to establish such reserves (including reserves for taxes, bad debts, unrealized losses, actual or threatened litigation or any other expenses, contingencies or obligations) as it deems appropriate. Unless otherwise
determined by the General Partner in a particular case, a Withdrawn Partner shall not be entitled to receive any GP-Related Unallocated Percentage in respect of the accounting period during which such Partner
Withdraws from the Partnership (whether or not previously awarded or allocated) or any GP-Related Unallocated Percentage in respect of prior accounting periods that have not been paid or allocated (whether or
not previously awarded) as of such Withdrawn Partner’s Withdrawal Date.
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(d) From and after the Settlement Date of the Withdrawn Partner, the Withdrawn
Partner’s GP-Related Profit Sharing Percentages shall, unless otherwise allocated by the General Partner pursuant to Section 5.3(a), be deemed to be GP-Related
Unallocated Percentages (except for GP-Related Profit Sharing Percentages with respect to GP-Related Investments as provided in paragraph (f) below).
(e) (i) Upon the Withdrawal from the Partnership of a Partner with respect to such Partner’s
GP-Related Partner Interest, such Withdrawn Partner thereafter shall not, except as expressly provided in this Section 6.5, have any rights of a Partner (including voting rights) with respect to such
Partner’s GP-Related Partner Interest, and, except as expressly provided in this Section 6.5, such Withdrawn Partner shall not have any interest in the Partnership’s GP-Related Net Income (Loss) or in distributions related to such Partner’s GP-Related Partner Interest, GP-Related Investments or
other assets related to such Partner’s GP-Related Partner Interest. If a Partner Withdraws from the Partnership with respect to such Partner’s GP-Related
Partner Interest for any reason other than for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be entitled to receive, at the time or times specified in Section 6.5(i) below, in satisfaction and discharge in full of the
Withdrawn Partner’s GP-Related Partner Interest in the Partnership, (x) payment equal to the aggregate credit balance, if any, as of the Settlement Date of the Withdrawn Partner’s GP-Related Capital Accounts, (excluding any GP-Related Capital Account or portion thereof attributable to any GP-Related Investment)
and (y) the Withdrawn Partner’s percentage interest attributable to each GP-Related Investment in which the Withdrawn Partner has an interest as of the Settlement Date as provided in paragraph
(f) below (which shall be settled in accordance with paragraph (f) below), subject to all the terms and conditions of paragraphs (a)-(p) of this Section 6.5. If the amount determined pursuant to clause (x) above is an aggregate
negative balance, the Withdrawn Partner shall pay the amount thereof to the Partnership upon demand by the General Partner on or after the date of the statement referred to in Section 6.5(i) below; provided, that if the Withdrawn Partner
was solely a Limited Partner (other than a Special Limited Partner) on his or her Withdrawal Date, such payment shall be required only to the extent of any amounts payable to such Withdrawn Partner pursuant to this Section 6.5. Any aggregate
negative balance in the GP-Related Capital Accounts of a Withdrawn Partner who was solely a Limited Partner (other than a Special Limited Partner), upon the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5, shall be allocated among the other Partners’ GP-Related Capital Accounts in accordance
with their respective GP-Related Profit Sharing Percentages in the categories of GP-Related Net Income (Loss) giving rise to such negative balance as determined by the
General Partner as of such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the Partnership, no value shall be ascribed to goodwill,
the Partnership name or the anticipation of any value the Partnership or any successor thereto might have in the event the Partnership or any interest therein were to be sold in whole or in part.
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(ii) Notwithstanding clause (i) of this Section 6.5(e), in the
case of a Partner whose Withdrawal with respect to such Partner’s GP-Related Partner Interest resulted from such Partner’s death or Incompetence, such Partner’s estate or legal representative,
as the case may be, may elect, at the time described below, to receive a Nonvoting Limited Partner GP-Related Partner Interest and retain such Partner’s GP-Related
Profit Sharing Percentage in all (but not less than all) illiquid investments of the Partnership in lieu of a cash payment (or Note) in settlement of that portion of the Withdrawn Partner’s GP-Related
Partner Interest. The election referred to above shall be made within 60 days after the Withdrawn Partner’s Settlement Date, based on a statement of the settlement of such Withdrawn Partner’s
GP-Related Partner Interest in the Partnership pursuant to this Section 6.5.
(f) For purposes
of clause (y) of paragraph (e)(i) above, a Withdrawn Partner’s “percentage interest” means his or her GP-Related Profit Sharing Percentage as of the Settlement Date in the relevant GP-Related Investment. The Withdrawn Partner shall retain his or her percentage interest in such GP-Related Investment and shall retain his or her GP-Related Capital Account or portion thereof attributable to such GP-Related Investment, in which case such Withdrawn Partner (a “Retaining Withdrawn
Partner”) shall become and remain a Limited Partner for such purpose (and, if the General Partner so designates, such Limited Partner shall be a Nonvoting Limited Partner). The GP-Related Partner
Interest of a Retaining Withdrawn Partner pursuant to this paragraph (f) shall be subject to the terms and conditions applicable to GP-Related Partner Interests of any kind hereunder and such other terms
and conditions as are established by the General Partner. At the option of the General Partner in its sole discretion, the General Partner and the Retaining Withdrawn Partner may agree to have the Partnership acquire such GP-Related Partner Interest without the approval of the other Partners; provided, that the General Partner shall reflect in the books and records of the Partnership the terms of any acquisition pursuant to
this sentence.
(g) The General Partner may elect, in lieu of payment in cash of any amount payable to a Withdrawn Partner pursuant to
paragraph (e) above, (i) to have the Partnership issue to the Withdrawn Partner a subordinated promissory note and/or (ii) to distribute in kind to the Withdrawn Partner such Withdrawn Partner’s pro rata share (as determined by
the General Partner) of any securities or other investments of the Partnership in relation to such Partner’s GP-Related Partner Interest. If any securities or other investments are distributed in kind to
a Withdrawn Partner under this paragraph (g), the amount described in clause (x) of paragraph (e)(i) shall be reduced by the value of such distribution as valued on the latest balance sheet of the Partnership in accordance with generally
accepted accounting principles or, if not appearing on such balance sheet, as reasonably determined by the General Partner.
(h)
[Intentionally omitted].
(i) Within 120 days after each Settlement Date, the General Partner shall submit to the Withdrawn Partner a
statement of the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5 together with any cash payment, subordinated promissory note and in
kind distributions to be made to such Partner as shall be determined by the General Partner. The General Partner shall submit to the Withdrawn Partner supplemental statements with respect to additional amounts payable to or by the Withdrawn Partner
in respect of the settlement of his or her GP-Related Partner Interest in the Partnership (e.g., payments in respect of GP-Related Investments pursuant to
paragraph (f) above
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or adjustments to reserves pursuant to paragraph (j) below) promptly after such amounts are determined by the General Partner. To the fullest extent permitted by law, such statements and the
valuations on which they are based shall be accepted by the Withdrawn Partner without examination of the accounting books and records of the Partnership or other inquiry. Any amounts payable by the Partnership to a Withdrawn Partner pursuant to this
Section 6.5 shall be subordinate in right of payment and subject to the prior payment or provision for payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring
prior to the applicable date of payment or distribution; provided, that such Withdrawn Partner shall otherwise rank pari passu in right of payment (x) with all persons who become Withdrawn Partners and whose Withdrawal Date is
within one year before the Withdrawal Date of the Withdrawn Partner in question and (y) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year after the Withdrawal Date of the Withdrawn Partner in question.
(j) If the aggregate reserves established by the General Partner as of the Settlement Date in making the foregoing calculations should
prove, in the determination of the General Partner, to be excessive or inadequate, the General Partner may elect, but shall not be obligated, to pay the Withdrawn Partner or his or her estate such excess, or to charge the Withdrawn Partner or his or
her estate such deficiency, as the case may be.
(k) Any amounts owed by the Withdrawn Partner to the Partnership at any time on or after
the Settlement Date (e.g., outstanding Partnership loans or advances to such Withdrawn Partner) shall be offset against any amounts payable or distributable by the Partnership to the Withdrawn Partner at any time on or after the Settlement
Date or shall be paid by the Withdrawn Partner to the Partnership, in each case as determined by the General Partner. All cash amounts payable by a Withdrawn Partner to the Partnership under this Section 6.5 shall bear interest from the due
date to the date of payment at a floating rate equal to the lesser of (x) the rate of interest publicly announced from time to time by JPMorgan Chase Bank, N.A., as its prime rate or (y) the maximum rate of interest permitted by applicable
law. The “due date” of amounts payable by a Withdrawn Partner pursuant to Section 6.5(i) above shall be 120 days after a Withdrawn Partner’s Settlement Date. The “due date” of amounts payable to or by a Withdrawn
Partner in respect of GP-Related Investments for which the Withdrawn Partner has retained a percentage interest in accordance with paragraph (f) above shall be 120 days after realization with respect to
such GP-Related Investment. The “due date” of any other amounts payable by a Withdrawn Partner shall be 60 days after the date such amounts are determined to be payable.
(l) At the time of the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the
Partnership pursuant to this Section 6.5, the General Partner may, to the fullest extent permitted by applicable law, impose any restrictions it deems appropriate on the assignment, pledge, grant of a security interest, encumbrance or other
transfer by such Withdrawn Partner of any interest in any GP-Related Investment retained by such Withdrawn Partner, any securities or other investments distributed in kind to such Withdrawn Partner or such
Withdrawn Partner’s right to any payment from the Partnership.
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(m) If a Partner is required to Withdraw from the Partnership with respect to such
Partner’s GP-Related Partner Interest for Cause pursuant to Section 6.2(d), then his or her GP-Related Partner Interest shall be settled in accordance with
paragraphs (a)-(q) of this Section 6.5; provided, however, that the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such
settlement:
(i) In settling the Withdrawn Partner’s interest in any
GP-Related Investment in which he or she has an interest as of his or her Settlement Date, the General Partner may elect to (A) determine the GP-Related Unrealized
Net Income (Loss) attributable to each such GP-Related Investment as of the Settlement Date and allocate to the appropriate GP-Related Capital Account of the Withdrawn
Partner his or her allocable share of such GP-Related Unrealized Net Income (Loss) for purposes of calculating the aggregate balance of such Withdrawn Partner’s
GP-Related Capital Account pursuant to clause (x) of paragraph (e)(i) above, (B) credit or debit, as applicable, the Withdrawn Partner with the balance of his or her
GP-Related Capital Account or portion thereof attributable to each such GP-Related Investment as of his or her Settlement Date without giving effect to the GP-Related Unrealized Net Income (Loss) from such GP-Related Investment as of his or her Settlement Date, which shall be forfeited by the Withdrawn Partner or (C) apply
the provisions of paragraph (f) above; provided, that the maximum amount of GP-Related Net Income (Loss) allocable to such Withdrawn Partner with respect to any
GP-Related Investment shall equal such Partner’s percentage interest of the GP-Related Unrealized Net Income, if any, attributable to such GP-Related Investment as of the Settlement Date (the balance of such GP-Related Net Income (Loss), if any, shall be allocated as determined by the General Partner). The
Withdrawn Partner shall not have any continuing interest in any GP-Related Investment to the extent an election is made pursuant to (A) or (B) above.
(ii) Any amounts payable by the Partnership to the Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in
right of payment and subject to the prior payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to or on or after the applicable date of payment or
distribution.
(n) The payments to a Withdrawn Partner pursuant to this Section 6.5 may be conditioned on the compliance by such
Withdrawn Partner with any lawful and reasonable (under the circumstances) restrictions against engaging or investing in a business competitive with that of the Partnership or any of its subsidiaries and Affiliates for a period not exceeding two
years determined by the General Partner. Upon written notice to the General Partner, any Withdrawn Partner who is subject to noncompetition restrictions established by the General Partner pursuant to this paragraph (n) may elect to forfeit the
principal amount payable in the final installment of his or her subordinated promissory note, together with interest to be accrued on such installment after the date of forfeiture, in lieu of being bound by such restrictions.
(o) In addition to the foregoing, the General Partner shall have the right to pay a Withdrawn Partner (other than the General Partner) a
discretionary additional payment in an amount and based upon such circumstances and conditions as it determines to be relevant. The provisions of this Section 6.5 shall apply to any Investor Limited Partner relating to another Limited Partner,
and to any transferee of any GP-Related Partner Interest of such Partner pursuant to Section 6.3, if such Partner Withdraws from the Partnership.
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(p) (i) The Partnership will assist a Withdrawn Partner or his or her estate or
guardian, as the case may be, in the settlement of the Withdrawn Partner’s GP-Related Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will
be borne by the Withdrawn Partner or his or her estate.
(ii) The General Partner may reasonably determine in good faith to
retain outside professionals to provide the assistance to Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or
guardian, as the case may be, prior to engaging such professionals. If the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to
interfere with the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(q) Each Partner (other than the General Partner) hereby irrevocably appoints the General Partner as such Partner’s true and lawful agent,
representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Partner, any and
all agreements, instruments, consents, ratifications, documents and certificates which the General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this Section 6.5, including,
without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force
and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 6.6. Termination of the Partnership. The General Partner may dissolve the Partnership at any time on not less than 60
days’ notice of the dissolution date given to the other Partners. Upon the dissolution of the Partnership, the Partners’ respective interests in the Partnership shall be valued and settled in accordance with the procedures set forth in
Section 6.5, which provides for allocations to the GP-Related Capital Accounts of the Partners and distributions in accordance with the capital account balances of the Partners.
Section 6.7. Certain Tax Matters. (a) All items of income, gain, loss, deduction and credit of the Partnership shall be
allocated among the Partners for Federal, State and local income tax purposes in the same manner as such items of income, gain, loss, deduction and credit shall be allocated among the Partners pursuant to this Agreement, except as may otherwise be
provided herein or by the Code or other applicable law. To the extent U.S. Treasury Regulations promulgated pursuant to Subchapter K of the Code (including under Sections 704(b) and (c) of the Code) or other applicable law require allocations
for tax purposes that differ from the foregoing allocations, the General Partner may determine the manner in which such tax allocations shall be made so as to comply more fully with such Treasury Regulations or other applicable law and, at the same
time, preserve the economic relationships among the Partners as set forth in this Agreement. In the event there is a net decrease in partnership minimum gain or partner nonrecourse debt minimum gain (determined in accordance with the principles of
Regulations Sections 1.704 2(d) and 1.704 2(i)) during any taxable year of the Partnership, each
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Partner shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to its respective share of such net decrease
during such year, determined pursuant to Regulations Sections 1.704 2(g) and 1.704 2(i)(5). The items to be so allocated shall be determined in accordance with Regulations Section 1.704 2(f). In addition, this Agreement shall be considered to
contain a “qualified income offset” as provided in Regulations Section 1.704-1(b)(2)(ii)(d).
(b) The General Partner shall cause to be prepared all Federal, State and local tax returns of the Partnership for each year for which such
returns are required to be filed and, after approval of such returns by the General Partner, shall cause such returns to be timely filed. The General Partner shall determine the appropriate treatment of each item of income, gain, loss, deduction and
credit of the Partnership and the accounting methods and conventions under the tax laws of the United States, the several States and other relevant jurisdictions as to the treatment of any such item or any other method or procedure related to the
preparation of such tax returns. The General Partner may cause the Partnership to make or refrain from making any and all elections permitted by such tax laws. Each Partner agrees that he or she shall not, unless he or she provides prior notice of
such action to the Partnership, (i) treat, on his or her individual income tax returns, any item of income, gain, loss, deduction or credit relating to his or her interest in the Partnership in a manner inconsistent with the treatment of such
item by the Partnership as reflected on the Form K-1 or other information statement furnished by the Partnership to such Partner for use in preparing his or her income tax returns or (ii) file any claim
for refund relating to any such item based on, or which would result in, such inconsistent treatment. In respect of an income tax audit of any tax return of the Partnership, the filing of any amended return or claim for refund in connection with any
item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership, or any administrative or judicial proceedings arising out of or in connection with any such audit, amended return, claim for refund or denial of such
claim, (A) the Tax Matters Partner (as defined below) shall be authorized to act for, and his or her decision shall be final and binding upon, the Partnership and all Partners except to the extent a Partner shall properly elect to be excluded
from such proceeding pursuant to the Code, (B) all expenses incurred by the Tax Matters Partner in connection therewith (including, without limitation, attorneys’, accountants’ and other experts’ fees and disbursements) shall be
expenses of the Partnership and (C) no Partner shall have the right to (1) participate in the audit of any Partnership tax return, (2) file any amended return or claim for refund in connection with any item of income, gain, loss,
deduction or credit reflected on any tax return of the Partnership (unless he or she provides prior notice of such action to the Partnership as provided above), (3) participate in any administrative or judicial proceedings conducted by the
Partnership or the Tax Matters Partner arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim or (4) appeal, challenge or otherwise protest any adverse findings in any such audit conducted
by the Partnership or the Tax Matters Partner or with respect to any such amended return or claim for refund filed by the Partnership or the Tax Matters Partner or in any such administrative or judicial proceedings conducted by the Partnership or
the Tax Matters Partner. The Partnership and each Partner hereby designate any Partner selected by the General Partner as the “tax matters partner” for purposes of Section 6231(a)(7) of the Code (the “Tax Matters
Partner”). To the fullest extent permitted by applicable law, each Partner agrees to indemnify and hold harmless the Partnership and all other Partners from and against any and all liabilities, obligations, damages, deficiencies and
expenses resulting from any breach or violation by such Partner of the provisions of this Section 6.7 and from all actions, suits, proceedings, demands, assessments, judgments, costs and expenses, including reasonable attorneys’ fees and
disbursements, incident to any such breach or violation.
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(c) Each individual Partner shall provide to the Partnership copies of each Federal, State
and local income tax return of such Partner (including any amendment thereof) within 30 days after filing such return.
Section 6.8. Special Basis Adjustments. In connection with any assignment or transfer of a Partnership interest permitted by
the terms of this Agreement, the General Partner may cause the Partnership, on behalf of the Partners and at the time and in the manner provided in Treasury Regulations Section 1.754-1(b), to make an
election to adjust the basis of the Partnership’s property in the manner provided in Sections 734(b) and 743(b) of the Code.
ARTICLE
VII
CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
Section 7.1. Capital Commitment Interests, etc.
(a) (i) This Article VII and Article VIII hereof set forth certain terms and conditions with respect to the Capital Commitment Partner
Interests and the Capital Commitment SP RA II Interest and matters related to the Capital Commitment Partner Interests and the Capital Commitment SP RA II Interest. Except as otherwise expressly provided in this Article VII or in Article VIII, the
terms and provisions of this Article VII and Article VIII shall not apply to the GP-Related Partner Interests or the GP-Related SP RA II Interest.
(ii) Each Partner severally, agrees to make contributions of capital to the Partnership (“Capital Commitment-Related
Capital Contributions”) as required to fund the Partnership’s direct or indirect capital contributions to SP RA II, in respect of the Capital Commitment SP RA II Interest, if any, and the related Capital Commitment SP RA II Commitment,
if any. No Partner shall be obligated to make Capital Commitment-Related Capital Contributions to the Partnership in an amount in excess of such Partner’s Capital Commitment-Related Commitment. The Commitment Agreements and SMD Agreements, if
any, of the Partners may include provisions with respect to the foregoing matters. It is understood that a Partner will not necessarily participate in each Capital Commitment Investment (which may include additional amounts invested in an existing
Capital Commitment Investment) nor will a Partner necessarily have the same Capital Commitment Profit Sharing Percentage with respect to (i) the Partnership’s portion of the Capital Commitment SP RA II Commitment, if any or (ii) the
making of each Capital Commitment Investment in which such Partner participates; provided, that this in no way limits the terms of any Commitment Agreement or SMD Agreement. In addition, nothing contained herein shall be construed to give any
Partner the right to obtain financing with respect to the purchase of any Capital Commitment Interest, and nothing contained herein shall limit or dictate the terms upon which the General Partner and its Affiliates may provide such financing. The
acquisition of a Capital Commitment Interest by a Partner shall be evidenced by receipt by the Partnership of funds equal to such Partner’s Capital Commitment-Related Commitment then due with respect to such Capital Commitment Interest and such
appropriate documentation as the General Partner may submit to the Partners from time to time.
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(b) The General Partner or one of its Affiliates (in such capacity, the “Advancing
Party”) may in its sole discretion advance to any Limited Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are also executive officers of The Blackstone Group
L.P. or any Affiliate thereof) all or any portion of the Capital Commitment-Related Capital Contributions due to the Partnership from such Limited Partner with respect to any Capital Commitment Investment (“Firm Advances”). Each
such Limited Partner shall pay to the Advancing Party interest on each Firm Advance from the date of such Firm Advance until the repayment thereof by such Limited Partner. Each Firm Advance shall be repayable in full, including accrued interest to
the date of such repayment, upon prior written notice by the Advancing Party. The making and repayment of each Firm Advance shall be recorded in the books and records of the Partnership, and such recording shall be conclusive evidence of each such
Firm Advance, binding on the Limited Partner and the Advancing Party absent manifest error. Except as provided below, the interest rate applicable to a Firm Advance shall equal the cost of funds of the Advancing Party at the time of the making of
such Firm Advance. The Advancing Party shall inform any Limited Partner of such rate upon such Limited Partner’s request; provided, that such interest rate shall not exceed the maximum interest rate allowable by applicable law;
provided further, that amounts that are otherwise payable to such Limited Partner pursuant to Section 7.4(a) shall be used to repay such Firm Advance (including interest thereon). The Advancing Party may, in its sole discretion,
change the terms of Firm Advances (including the terms contained herein) and/or discontinue the making of Firm Advances; provided, that (i) the Advancing Party shall notify the relevant Limited Partners of any material changes to such
terms and (ii) the interest rate applicable to such Firm Advances and overdue amounts thereon shall not exceed the maximum interest rate allowable by applicable law.
Section 7.2. Capital Commitment Capital Accounts.
(a) There shall be established for each Partner on the books of the Partnership as of the date of formation of the Partnership, or such later
date on which such Partner is admitted to the Partnership, and on each such other date as such Partner first acquires a Capital Commitment Interest in a particular Capital Commitment Investment, a Capital Commitment Capital Account for each Capital
Commitment Investment in which such Partner acquires a Capital Commitment Interest on such date. Each Capital Commitment-Related Capital Contribution of a Partner shall be credited to the appropriate Capital Commitment Capital Account of such
Partner on the date such Capital Commitment-Related Capital Contribution is paid to the Partnership. Capital Commitment Capital Accounts shall be adjusted to reflect any transfer of a Partner’s interest in the Partnership related to his or her
Capital Commitment Partner Interest, as provided in this Agreement.
(b) A Partner shall not have any obligation to the Partnership or to
any other Partner to restore any negative balance in the Capital Commitment Capital Account of such Partner. Until distribution of any such Partner’s interest in the Partnership with respect to a Capital Commitment Interest as a result of the
disposition by the Partnership of the related Capital Commitment Investment and in whole upon the dissolution of the Partnership, neither such Partner’s Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or
redemption except with the consent of the General Partner.
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Section 7.3. Allocations.
(a) Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be allocated to the related Capital
Commitment Capital Accounts of all the Partners (including the General Partner) participating in such Capital Commitment Investment in proportion to their respective Capital Commitment Profit Sharing Percentages for such Capital Commitment
Investment. Capital Commitment Net Income (Loss) on any Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion which such Partner’s aggregate Capital Commitment Capital Accounts bear to the aggregate
Capital Commitment Capital Accounts of all Partners; provided, that if any Partner makes the election provided for in Section 7.6, Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be
allocated to the related Capital Commitment Capital Accounts of all the Partners participating in such Capital Commitment Investment who do not make such election in proportion to their respective Capital Commitment Profit Sharing Percentages for
such Capital Commitment Investment.
(b) Any special costs relating to distributions pursuant to Section 7.6 or Section 7.7 shall
be specially allocated to the electing Limited Partner.
Section 7.4. Distributions.
(a) Each Limited Partner’s allocable portion of Capital Commitment Net Income received from his or her Capital Commitment Investments,
distributions to such Limited Partner that constitute returns of capital, and other Capital Commitment Net Income of the Partnership (including without limitation Capital Commitment Net Income attributable to Unallocated Capital Commitment
Interests) during a fiscal year of the Partnership will be credited to payment of the Investor Notes to the extent required below as of the last day of such fiscal year (or on such earlier date as related distributions are made in the sole
discretion of the General Partner) with any cash amount distributable to such Limited Partner pursuant to clauses (ii) and (vii) below to be distributed within 45 days after the end of each fiscal year of the Partnership (or in each case on
such earlier date as selected by the General Partner in its sole discretion) as follows (subject to Section 7.4(c) below):
(i) First, to the payment of interest then due on all Investor Notes (relating to Capital Commitment Investments or otherwise)
of such Limited Partner (to the extent Capital Commitment Net Income and distributions or payments from Other Sources do not equal or exceed all interest payments due, the selection of those of such Limited Partner’s Investor Notes upon which
interest is to be paid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor);
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(ii) Second, to distribution to the Limited Partner of an amount equal to
the Federal, State and local income taxes on income of the Partnership allocated to such Limited Partner for such year in respect of such Limited Partner’s Capital Commitment Partner Interest (the aggregate amount of any such distribution shall
be determined by the General Partner, subject to the limitation that the minimum aggregate amount of such distribution be the tax that would be payable if the taxable income of the Partnership related to all Partners’ Capital Commitment Partner
Interests were all allocated to an individual subject to the then-prevailing maximum Federal, New York State and New York City tax rates (taking into account the extent to which such taxable income allocated
by the Partnership was composed of long-term capital gains and the deductibility of State and local income taxes for Federal income tax purposes)); provided, that additional amounts shall be paid to the
Limited Partner pursuant to this clause (ii) to the extent that such amount reduces the amount otherwise distributable to the Limited Partner pursuant to a comparable provision in any other BCE Agreement and there are not sufficient amounts to
fully satisfy such provision from the relevant partnership or other entity; provided further, that amounts paid pursuant to the provisions in such other BCE Agreements comparable to the immediately preceding proviso shall reduce those
amounts otherwise distributable to the Limited Partner pursuant to provisions in such other BCE Agreements that are comparable to this clause (ii);
(iii) Third, to the payment in full of the principal amount of the Investor Note financing (A) any Capital Commitment
Investment disposed of during or prior to such fiscal year or (B) any BCE Investments (other than Capital Commitment Investments) disposed of during or prior to such fiscal year, to the extent not repaid from Other Sources;
(iv) Fourth, to the return to such Limited Partner of (A) all Capital Commitment-Related Capital Contributions made in
respect of the Capital Commitment Interest to which any Capital Commitment Investment disposed of during or prior to such fiscal year relates or (B) all capital contributions made to any Blackstone Collateral Entity (other than the Partnership)
in respect of interests therein relating to BCE Investments (other than Capital Commitment Investments) disposed of during or prior to such fiscal year (including all principal paid on the related Investor Notes), to the extent not repaid from
amounts of Other Sources (other than amounts of CC Carried Interest);
(v) Fifth, to the payment of principal (including
any previously deferred amounts) then owing under all other Investor Notes of such Limited Partner (including those unrelated to the Partnership), the selection of those of such Limited Partner’s Investor Notes to be repaid and the division of
payments among such Investor Notes to be determined by the Lender or Guarantor;
(vi) Sixth, up to 50% of any Capital
Commitment Net Income remaining after application pursuant to clauses (i) through (v) above shall be applied pro rata to prepayment of principal of all remaining Investor Notes of such Limited Partner (including those unrelated to the
Partnership), the selection of those of such Limited Partner’s Investor Notes to be repaid, the division of payments among such Investor Notes and the percentage of remaining Capital Commitment Net Income to be applied thereto to be determined
by the Lender or Guarantor; and
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(vii) Seventh, to such Limited Partner to the extent of any amount of
Capital Commitment Net Income remaining after making the distributions in clauses (i) through (vi) above, and such amount is not otherwise required to be applied to Investor Notes pursuant to the terms thereof.
To the extent there is a partial disposition of a Capital Commitment Investment or any other BCE Investment, as applicable, the payments in
clauses (iii) and (iv) above shall be based on that portion of the Capital Commitment Investment or other BCE Investment, as applicable, disposed of, and the principal amount and related interest payments of such Investor Note shall be adjusted
to reflect such partial payment so that there are equal payments over the remaining term of the related Investor Note. For a Limited Partner who is no longer an employee or officer of Blackstone, distributions shall be made pursuant to clauses
(i) through (iii) above, and then, unless the General Partner or its Affiliate has exercised its rights pursuant to Section 8.1 hereof, any remaining income or other distribution in respect of such Limited Partner’s Capital Commitment
Partner Interest shall be applied to the prepayment of the outstanding Investor Notes of such Limited Partner, until all such Limited Partner’s Investor Notes have been repaid in full, with any such income or other distribution remaining
thereafter distributed to such Limited Partner.
Distributions of Capital Commitment Net Income may be made at any other time at the
discretion of the General Partner. At the General Partner’s discretion, any amounts distributed to a Limited Partner in respect of such Limited Partner’s Capital Commitment Partner Interest will be net of any interest and principal payable
on his or her Investor Notes for the full period in respect of which the distribution is made. A distribution of Capital Commitment Net Income to the General Partner shall be made contemporaneously with each distribution of Capital Commitment Net
Income to or for the accounts of the Limited Partners.
(b) [Intentionally omitted.]
(c) To the extent that the foregoing Partnership distributions and distributions and payments from Other Sources are insufficient to satisfy
any principal and/or interest due on Investor Notes, and to the extent that the General Partner in its sole discretion elects to apply this paragraph (c) to any individual payments due, such unpaid interest will be added to the remaining
principal amount of such Investor Notes and shall be payable on the next scheduled principal payment date (along with any deferred principal and any principal and interest due on such date); provided, that such deferral shall not apply to a
Limited Partner that is no longer an employee or officer of Blackstone. All unpaid interest on such Investor Notes shall accrue interest at the interest rate then in effect for such Investor Notes.
(d) [Intentionally omitted.]
(e)
The Capital Commitment Capital Account of each Partner shall be reduced by the amount of any distribution to such Partner pursuant to Section 7.4(a).
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(f) At any time that a sale, exchange, transfer or other disposition of a portion of a
Capital Commitment Investment is being considered by the Partnership or SP RA II (a “Capital Commitment Disposable Investment”), at the election of the General Partner each Partner’s Capital Commitment Interest with respect to
such Capital Commitment Investment shall be vertically divided into two separate Capital Commitment Interests, a Capital Commitment Interest attributable to the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment
Class B Interest”), and a Capital Commitment Interest attributable to such Capital Commitment Investment excluding the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment
Class A Interest”). Distributions (including those resulting from a direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Disposable Investment shall be made
only to holders of Capital Commitment Class B Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class B
Interests, and distributions (including those resulting from the direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Investment excluding such Capital Commitment Disposable Investment
shall be made only to holders of Capital Commitment Class A Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment
Class A Interests.
(g) (i) If the Partnership is obligated under the Giveback Provisions to contribute to SP RA II all or a
portion of a Giveback Amount with respect to the Capital Commitment SP RA II Interest (the amount of any such obligation of the Partnership being herein called a “Capital Commitment Giveback Amount”), the General Partner shall call
for such amounts as are necessary to satisfy such obligation of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the General
Partner, such an amount of prior distributions by the Partnership with respect to the Capital Commitment SP RA II Interest (the “Capital Commitment Recontribution Amount”) which equals such Partner’s pro rata share of
prior distributions in connection with (a) the Capital Commitment SP RA II Investment giving rise to the Capital Commitment Giveback Amount, or (b) if the amounts contributed pursuant to clause (a) above are insufficient to satisfy
such Capital Commitment Giveback Amount, Capital Commitment SP RA II Investments other than the one giving rise to such obligation. Each Partner shall promptly contribute to the Partnership upon notice thereof such Partner’s Capital Commitment
Recontribution Amount. Prior to such time, the General Partner may, in the General Partner’s discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of
the Capital Commitment Giveback Amount will probably materialize (and an estimate of the aggregate amount of such obligations).
(ii) (A) In the event any Partner (a “Capital Commitment Defaulting Party”) fails to recontribute all or
any portion of such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount for any reason, the General Partner shall (i) use its reasonable efforts to collect any amounts from any such
GP-Related Defaulting Party and (ii) require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Capital Commitment Profit Sharing
Percentages), such amounts as are necessary to fulfill the Capital Commitment Defaulting Party’s obligation to pay such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount (a “Capital Commitment
Deficiency Contribution”) if the General Partner determines in its good faith judgment that the Partnership will be
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unable to collect such amount in cash from such Capital Commitment Defaulting Party for payment of the Capital Commitment Giveback Amount at least 20 Business Days prior to the latest date that
the Partnership is permitted to pay the Capital Commitment Giveback Amount; provided, that no Partner shall as a result of such Capital Commitment Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of
the Capital Commitment Recontribution Amount initially requested from such Partner in respect of such default. Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should either (1) not attempt to
collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all remedies (at law or equity)
available to the Partnership against the Capital Commitment Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the Capital Commitment Defaulting Party. It is agreed that the Partnership
shall have the right (effective upon such Capital Commitment Defaulting Party becoming a Capital Commitment Defaulting Party) to set-off as appropriate and apply against such Capital Commitment Defaulting
Party’s Capital Commitment Recontribution Amount any amounts otherwise payable to the Capital Commitment Defaulting Party by the Partnership or any Affiliate thereof. Each Partner hereby grants to the General Partner a security interest,
effective upon such Partner becoming a Capital Commitment Defaulting Party, in all accounts receivable and other rights to receive payment from the Partnership or any Affiliate of the Partnership and agrees that, upon the effectiveness of such
security interest, the General Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner hereby appoints the General Partner as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or in the name of the Partnership, to take any actions which may be necessary to accomplish the intent of the
immediately preceding sentence. The General Partner shall be entitled to collect interest on the Capital Commitment Recontribution Amount of a Capital Commitment Defaulting Party from the date such Capital Commitment Recontribution Amount was
required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(B) Any Partner’s failure
to make a Capital Commitment Deficiency Contribution shall cause such Partner to be a Capital Commitment Defaulting Party with respect to such amount.
(iii) A Partner’s obligation to make contributions to the Partnership under this Section 7.4(g) shall survive the
termination of the Partnership.
Section 7.5. Valuations. Capital Commitment Investments shall be valued annually as of
the end of each year (and at such other times as deemed appropriate by the General Partner) in accordance with the principles utilized by the Partnership (or any Affiliate of the Partnership that is a general partner of SP RA II) in valuing
investments of SP RA II or, in the case of investments not held by SP RA II, in the good faith judgment of the General Partner, subject in each case to the second proviso of the immediately succeeding sentence. The value of any Capital Commitment
Interest as of any date (the “Capital Commitment Value”) shall be based on the value of the underlying Capital Commitment Investment as set forth above; provided, that the Capital Commitment Value may be determined as of an earlier
date if
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determined appropriate by the General Partner in good faith; provided further, that such value may be adjusted by the General Partner to take into account factors relating solely to the value of
a Capital Commitment Interest (as compared to the value of the underlying Capital Commitment Investment), such as restrictions on transferability, the lack of a market for such Capital Commitment Interest and lack of control of the underlying
Capital Commitment Investment. To the full extent permitted by applicable law such valuations shall be final and binding on all Partners; provided further, that the immediately preceding proviso shall not apply to any Capital Commitment Interests
held by a person who is or was at any time a direct member of a General Partner.
Section 7.6. Disposition Election.
(a) At any time prior to the date of the Partnership’s execution of a definitive agreement to dispose of a Capital Commitment Investment,
the General Partner may in its sole discretion permit a Partner to retain all or any portion of its pro rata share of such Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such
Capital Commitment Investment). If the General Partner so permits, such Partner shall instruct the General Partner in writing prior to such date (i) not to dispose of all or any portion of such Partner’s pro rata share of such
Capital Commitment Investment (the “Retained Portion”) and (ii) either to (A) distribute such Retained Portion to such Partner on the closing date of such disposition or (B) retain such Retained Portion in the
Partnership on behalf of such Partner until such time as such Partner shall instruct the General Partner upon 5 days’ notice to distribute such Retained Portion to such Partner. Such Partner’s Capital Commitment Capital Account shall not
be adjusted in any way to reflect the retention in the Partnership of such Retained Portion or the Partnership’s disposition of other Partners’ pro rata shares of such Capital Commitment Investment; provided, that such
Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Retained Portion to such Partner or upon distribution of proceeds with respect to a subsequent disposition thereof by the Partnership.
(b) No distribution of such Retained Portion shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or
simultaneously with such distribution.
Section 7.7. Capital Commitment Special Distribution Election.
(a) From time to time during the term of this Agreement, the General Partner may in its sole discretion, upon receipt of a written request from
a Partner, distribute to such Partner any portion of its pro rata share of a Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such Capital Commitment Investment) (a
“Capital Commitment Special Distribution”). Such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Capital Commitment Special Distribution.
(b) No Capital Commitment Special Distributions shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or
simultaneously with such Capital Commitment Special Distribution.
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ARTICLE VIII
WITHDRAWAL; ADMISSION OF NEW PARTNERS
Section 8.1. Limited Partner Withdrawal; Repurchase of Capital Commitment Interests.
(a) Capital Commitment Interests (or a portion thereof) that were financed by Investor Notes will be treated as not subject to repurchase for
purposes hereof based upon the proportion of (a) the sum of Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to each Capital Commitment Interest and principal payments on the related Investor Note
to (b) the sum of the Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to such Capital Commitment Interest, the original principal amount of such Investor Note and all deferred amounts of interest
which from time to time comprise part of the principal amount of the Investor Note. A Limited Partner may prepay a portion of any outstanding principal on the Investor Notes; provided, that in the event that a Limited Partner prepays all or
any portion of the principal amount of the Investor Notes within nine months prior to the date on which such Limited Partner is no longer an employee or officer of Blackstone, the Partnership (or its designee) shall have the right, in its sole
discretion, to purchase the Capital Commitment Interest that became Non-Contingent as a result of such prepayment; provided further, that the purchase price for such Capital Commitment Interest
shall be determined in accordance with the determination of the purchase price of a Limited Partner’s Contingent Capital Commitment Interests as set forth in paragraph (b) below. Prepayments made by a Limited Partner shall apply pro
rata against all of such Limited Partner’s Investor Notes; provided, that such Limited Partner may request that such prepayments be applied only to Investor Notes related to BCE Investments that are related to one or more Blackstone
Collateral Entities specified by such Limited Partner. Except as expressly provided herein, Capital Commitment Interests that were not financed in any respect with Investor Notes shall be treated as
Non-Contingent Capital Commitment Interests.
(b) Upon a Limited Partner ceasing to be an officer
or employee of the General Partner or any of its Affiliates, other than as a result of such Limited Partner dying or suffering a Total Disability, such Limited Partner (the “Withdrawn Partner”) and the Partnership or any other
person designated by the General Partner shall each have the right (exercisable by the Withdrawn Partner within 30 days and by the Partnership or its designee(s) within 45 days of such Limited Partner’s ceasing to be such an officer or
employee) or any time thereafter, upon 30 days’ notice, but not the obligation, to require the Partnership, subject to the Partnership Act, to buy (in the case of exercise of such right by such Withdrawn Partner) or the Withdrawn Partner to
sell (in the case of exercise of such right by the Partnership or its designee(s)) all (but not less than all) such Withdrawn Partner’s Contingent Capital Commitment Interests. The purchase price for each such Contingent Capital Commitment
Interest will be an amount equal to (i) the outstanding principal amount of the related Investor Note plus accrued interest thereon to the date of purchase (such portion of the purchase price to be made in cash) and (ii) an additional
amount (the “Adjustment Amount”) equal to (x) all interest paid by the Limited Partner on the portion of the principal amount of the Investor Note relating to the portion of the related Capital Commitment Interest remaining Contingent
plus (y) all Capital Commitment Net Losses allocated to the Withdrawn Partner on the Contingent portion of such Capital Commitment
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Interest minus (z) all Capital Commitment Net Income allocated to the Withdrawn Partner on the Contingent portion of such Capital Commitment Interest; provided, that, if the Withdrawn
Partner was terminated from employment or his or her position as an officer for Cause, the amounts referred to in clause (x) or (y) of the Adjustment Amount, in the General Partner’s sole discretion, may be deemed to equal zero. The
Adjustment Amount shall, if positive, be payable by the holders of the purchased Capital Commitment Interests to the Withdrawn Partner from the next Capital Commitment Net Income received by such holders on the Contingent portion of such Withdrawn
Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received. If the Adjustment Amount resulting from an exchange is negative, it shall be payable to the holders of the purchased Capital Commitment Interest
by the Withdrawn Partner at the time such Capital Commitment Net Income is received by the Withdrawn Partner from the next Capital Commitment Net Income on the Non-Contingent portion of the Withdrawn
Partner’s Capital Commitment Interests or, if the Partnership or its designee(s) elect to purchase such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, in cash by the Withdrawn
Partner at the time of such purchase; provided, that the General Partner and its Affiliates may offset any amounts otherwise owing to a Withdrawn Partner against any Adjustment Amount owed by such Withdrawn Partner. Until so paid, such remaining
Adjustment Amount will not itself bear interest. At the time of such purchase of the Withdrawn Partner’s Contingent Capital Commitment Interests, his or her related Investor Note shall be payable in full. If neither the Withdrawn Partner nor
the Partnership nor its designee(s) exercise the right to require repurchase of such Contingent Capital Commitment Interests, then the Withdrawn Partner shall retain the Contingent portion of his or her Capital Commitment Interests and the Investor
Notes shall remain outstanding, shall become fully recourse to the Withdrawn Partner in his or her individual capacity, shall be payable in accordance with their remaining original maturity schedules and shall be prepayable at any time by the
Withdrawn Partner at his or her option, and the General Partner shall apply such prepayments against outstanding Investor Notes on a pro rata basis. To the extent that another Partner purchases a portion of a Capital Commitment Interest of a
Withdrawn Partner, the purchasing Partner’s Capital Commitment Capital Account and Capital Commitment Profit Sharing Percentage for such Capital Commitment Investment shall be correspondingly increased.
(c) Upon the occurrence of a Final Event with respect to any Limited Partner, such Limited Partner shall thereupon cease to be a Partner with
respect to such Limited Partner’s Capital Commitment Partner Interest. If such a Final Event shall occur, no Successor in Interest to any such Limited Partner shall for any purpose hereof become or be deemed to become a Partner. The sole right,
as against the Partnership and the remaining Partners, acquired hereunder by, or resulting hereunder to, a Successor in Interest to any Partner shall be to receive any distributions and allocations with respect to such Limited Partner’s Capital
Commitment Partner Interest pursuant to Article VII and this Article VIII (subject to the right of the Partnership to purchase the Capital Commitment Interests of such former Partner pursuant to Section 8.1(b) or Section 8.1(d)), to the
extent, at the time, in the manner and in the amount otherwise payable to such Limited Partner had such a Final Event not occurred, and no other right shall be acquired hereunder by, or shall result hereunder to, a Successor in Interest to such
Partner, whether by operation of law or otherwise. Until distribution of any such Partner’s interest in the Partnership upon the dissolution of the Partnership as provided in Section 9.2, neither his or her Capital Commitment Capital
Accounts nor any part thereof shall be subject to withdrawal or redemption without the consent of the General Partner. The General Partner shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive
distributions and allocations hereunder with respect to such Partner’s Capital Commitment Partner Interest.
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(d) If a Limited Partner dies or suffers a Total Disability, all Contingent Capital
Commitment Interests of such Partner shall be purchased by the Partnership or its designee (within 30 days of the first date on which the Partnership knows or has reason to know of such Limited Partner’s death or Total Disability) as provided
in Section 8.1(b) (except that any Adjustment Amount shall be payable by or to the estate or personal representative in cash), and any Investor Notes financing such Contingent Capital Commitment Interests shall thereupon be prepaid as provided
in Section 8.1(b). In addition, in the case of the death or Total Disability of a Limited Partner, if the estate or personal representative of such Limited Partner so requests in writing within 180 days of the Limited Partner’s death or
ceasing to be an employee or member (directly or indirectly) of the General Partner or any of its Affiliates by reason of Total Disability (such requests shall not exceed one per calendar year), the Partnership or its designee may but is not
obligated to purchase for cash all (but not less than all) Non-Contingent Capital Commitment Interests of such Limited Partner as of the last day of the Partnership’s then current fiscal year at a price
equal to the Capital Commitment Value thereof. Each Limited Partner shall be required to include appropriate provisions in his will to reflect such provisions of this Agreement. In addition, the Partnership may, in the sole discretion of the General
Partner, upon notice to the estate or personal representative of such Limited Partner within 30 days of the first date on which the Partnership knows or has reason to know of such Limited Partner’s death or Total Disability, determine either
(i) to distribute Securities or other property to the estate or personal representative in exchange for such Non-Contingent Capital Commitment Interests as provided in Section 8.1(e) or (ii) to
require sale of such Non-Contingent Capital Commitment Interests to the Partnership or its designee as of the last day of any fiscal year of the Partnership (or earlier period, as determined by the General
Partner in its sole discretion) for an amount in cash equal to the Capital Commitment Value thereof.
(e) In lieu of retaining a Withdrawn
Partner as a Limited Partner with respect to any Non-Contingent Capital Commitment Interests, the General Partner may, in its sole discretion, by notice to such Withdrawn Partner within 45 days of his or her
ceasing to be an employee or officer of the General Partner or any of its Affiliates, or at any time thereafter, upon 30 days written notice, determine (1) to distribute to such Withdrawn Partner the pro rata portion of the Securities or
other property underlying such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, subject to any restrictions on distributions associated with the Securities or other property, in
satisfaction of his or her Non-Contingent Capital Commitment Interests in the Partnership or (2) to cause, as of the last day of any fiscal year of the Partnership (or earlier period, as determined by the
General Partner in its sole discretion), the Partnership or another person designated by the General Partner (who may be itself another Limited Partner or another Affiliate of the General Partner) to purchase all (but not less than all) of such
Withdrawn Partner’s Non-Contingent Capital Commitment Interests for a price equal to the Capital Commitment Value thereof. The General Partner shall condition any distribution or purchase of voting
Securities pursuant to paragraph (d) above or this paragraph (e) upon the Withdrawn Partner’s execution and delivery to the Partnership of an appropriate irrevocable proxy, in favor of the General Partner or its nominee, relating to
such Securities.
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(f) The Partnership may subsequently transfer any Unallocated Capital Commitment Interest or
portion thereof which is purchased by it as described above to any other person approved by the General Partner. In connection with such purchase or transfer or the purchase of a Capital Commitment Interest or portion thereof by the General
Partner’s designee(s), Blackstone may loan all or a portion of the purchase price of the transferred or purchased Capital Commitment Interest to the Partnership, the transferee or the
designee-purchaser(s), as applicable (excluding any of the foregoing who is an executive officer of The Blackstone Group L.P. or any of its Affiliates). To the extent that a Withdrawn Partner’s Capital
Commitment Interests (or portions thereof) are repurchased by the Partnership and not transferred to or purchased by another person, all or any portion of such repurchased Capital Commitment Interests may, in the sole discretion of the General
Partner, (i) be allocated to each Partner already participating in the Capital Commitment Investment to which the repurchased Capital Commitment Interest relates, (ii) be allocated to each Partner in the Partnership, whether or not already
participating in such Capital Commitment Investment and/or (iii) continue to be held by the Partnership itself as an unallocated Capital Commitment Investment (such Capital Commitment Interests being herein called “Unallocated Capital
Commitment Interests”). To the extent that a Capital Commitment Interest is allocated to Partners as provided in clause (i) and/or (ii) above, any indebtedness incurred by the Partnership to finance such repurchase shall also be
allocated to such Partners. All such Capital Commitment Interests allocated to Limited Partners shall be deemed to be Contingent and shall become Non-Contingent as and to the extent that the principal amount
of such related indebtedness is repaid. The Limited Partners receiving such allocations shall be responsible for such related indebtedness only on a nonrecourse basis to the extent appropriate as provided in this Agreement, except as such Limited
Partners and the General Partner shall otherwise agree. If the indebtedness financing such repurchased interests is not so limited, the Partnership may require an assumption by the Limited Partners of such indebtedness on the terms thereof as a
precondition to allocation of the related Capital Commitment Interests to such Limited Partners; provided, that a Limited Partner shall not, except as set forth in his or her Investor Note, be obligated to accept any personally recourse obligation
unless his or her prior consent is obtained. So long as the Partnership itself retains the Unallocated Capital Commitment Interests pursuant to clause (iii) above, such Unallocated Capital Commitment Interests shall belong to the Partnership
and any indebtedness financing the Unallocated Capital Commitment Interests shall be an obligation of the Partnership to which all income of the Partnership is subject except as otherwise agreed by the lender of such indebtedness. Any Capital
Commitment Net Income (Loss) on an Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion his or her aggregate Capital Commitment Capital Accounts bear to the aggregate Capital Commitment Capital Accounts of all
Partners; debt service on such related financing will be an expense of the Partnership allocable to all Partners in such proportions.
(g)
If a Partner is required to Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest for Cause, then his or her Capital Commitment Interests shall be settled in accordance with paragraphs (a)-(f) and (j) of this Section 8.1; provided, that if such Partner was not at any time a direct member of a General Partner, the General Partner may elect (but shall not be required) to apply any
or all the following terms and conditions to such settlement:
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(i) purchase for cash all of such Withdrawn Partner’s Non-Contingent Capital Commitment Interests. The purchase price for each such Non-Contingent Capital Commitment Interest shall be the lower of (A) the original cost of
such Non-Contingent Capital Commitment Interest or (B) an amount equal to the Capital Commitment Value thereof;
(ii) allow the Withdrawn Partner to retain such Non-Contingent Capital Commitment
Interests; provided, that the maximum amount of Capital Commitment Net Income allocable to such Withdrawn Partner with respect to any Capital Commitment Investment shall equal the amount of Capital Commitment Net Income that would have been
allocated to such Withdrawn Partner if such Capital Commitment Investment had been sold as of the Settlement Date at the then prevailing Capital Commitment Value thereof; or (iii) in lieu of cash, purchase such
Non-Contingent Capital Commitment Interests by providing the Withdrawn Partner with a promissory note in the amount determined in (i) above. Such promissory note shall have a maximum term of ten
(10) years with interest at the Federal Funds Rate.
(h) The Partnership will assist a Withdrawn Partner or his or her estate or
guardian, as the case may be, in the settlement of the Withdrawn Partner’s Capital Commitment Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner
or his or her estate.
(i) The General Partner may reasonably determine in good faith to retain outside professionals to provide the
assistance to Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the case may be, prior to
engaging such professionals. If the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(j) Each Limited Partner hereby irrevocably appoints each General Partner as such Limited Partner’s true and lawful agent, representative
and attorney-in-fact, each acting alone, in such Limited Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Limited Partner, any
and all agreements, instruments, consents, ratifications, documents and certificates which such General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this Section 8.1,
including, without limitation, the performance of any obligation of such Limited Partner or the Partnership or the exercise of any right of such Limited Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive
and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Limited Partner for any reason and shall not be affected by the death, disability or incapacity of such Limited Partner.
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Section 8.2. Transfer of Limited Partner’s Capital
Commitment Interest. Without the prior written consent of the General Partner, no Limited Partner or former Limited Partner shall have the right to sell, assign, mortgage, pledge, grant a security interest over or otherwise dispose of or
transfer (“Transfer”) all or part of any such Partner’s Capital Commitment Partner Interest in the Partnership; provided, that this Section 8.2 shall in no way impair (i) Transfers as permitted in Section 8.1
above, in the case of the purchase of a Withdrawn Partner’s or deceased or Totally Disabled Limited Partner’s Capital Commitment Interests, (ii) with the prior written consent of the General Partner, which shall not be unreasonably
withheld, Transfers by a Limited Partner to another Limited Partner of Non-Contingent Capital Commitment Interests, (iii) Transfers with the prior written consent of the General Partner, which consent may
be granted or withheld in its sole discretion without giving any reason therefor and (iv) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers, for estate planning purposes, of up to 25% of
a Limited Partner’s Capital Commitment Partner Interest to an Estate Planning Vehicle. Each Estate Planning Vehicle will be a Nonvoting Limited Partner. Such Limited Partner and the Nonvoting Limited Partner shall be jointly and severally
liable for all obligations of both such Limited Partner and such Nonvoting Limited Partner with respect to the interest transferred (including the obligation to make additional Capital Commitment-Related Capital Contributions). The General Partner
may at its sole option exercisable at any time require such Estate Planning Vehicle to Withdraw from the Partnership on the terms of Section 8.1 and Article VI. No person acquiring an interest in the Partnership pursuant to this
Section 8.2 shall become a Limited Partner of the Partnership, or acquire such Partner’s right to participate in the affairs of the Partnership, unless such person shall be admitted as a Limited Partner pursuant to Section 6.1. A
Limited Partner shall not cease to be a limited partner of the Partnership upon the collateral assignment of, or the pledging or granting of a security interest in, its entire limited partner interest in the Partnership in accordance with the
provisions of this Agreement.
Section 8.3. Compliance with Law. Notwithstanding any provision hereof to the contrary, no
Transfer of a Capital Commitment Interest in the Partnership may be made except in compliance with all Federal, State and other applicable laws, including Federal and State securities laws.
ARTICLE IX
DISSOLUTION
Section 9.1. Dissolution.
(a) The Partnership shall be dissolved and subsequently terminated:
(i) pursuant to Section 6.6;
(ii) upon the expiration of the Term; or
(iii) upon the occurrence of a Disabling Event with respect to the last remaining General Partner; provided, that the
Partnership shall not be dissolved if, within 90 days after the Disabling Event, Limited Partners entitled to vote thereon as provided herein who, as of the last day of the most recent accounting period ending on or prior to the date of the
Disabling Event, have aggregate GP-Related Capital Account balances representing at least a majority in amount of the total GP-Related Capital Account balances of all
the persons who are Limited Partners entitled to vote thereon as provided herein agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of the Disabling Event, of another General Partner.
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(b) When the Partnership is dissolved, the business and property of the Partnership shall be
wound up and liquidated by the General Partner or, in the event of the unavailability of the General Partner, such Limited Partner or other liquidating trustee as shall be named by the Designated Limited Partner (the General Partner, such Limited
Partner or other liquidating trustee, as the case may be, being hereinafter referred to as the “Liquidator”).
Section 9.2. Final Distribution.
(a) Within 120 calendar days after the effective date of dissolution of the Partnership, the assets of the Partnership shall be distributed in
the following manner and order:
(i) to the payment of the expenses of the
winding-up, liquidation and dissolution of the Partnership;
(ii) to pay all
creditors of the Partnership, other than Partners, either by the payment thereof or the making of reasonable provision therefor;
(iii) to establish reserves, in amounts established by the General Partner or the Liquidator, to meet other liabilities of the
Partnership; and (iv) to pay, in accordance with the terms agreed among them and otherwise on a pro rata basis, all creditors of the Partnership that are Partners, either by the payment thereof or the making of reasonable provision
therefor.
(b) The remaining assets of the Partnership shall be applied and distributed among the Partners as follows:
(i) With respect to each Partner’s GP-Related Partner Interest, the remaining
assets of the Partnership shall be applied and distributed to such Partner in accordance with the procedures set forth in Section 6.5 which provide for allocations to the capital accounts of the Partners and distributions in accordance with the
capital account balances of the Partners; and for purposes of the application of this Section 9.2(b)(i), determining GP-Related Capital Accounts on liquidation, all unrealized gains, losses and accrued
income and deductions of the Partnership shall be treated as realized and recognized immediately before the date of distribution; and (ii) With respect to each Partner’s Capital Commitment Partner Interest, an amount shall be paid to such
Partner in cash or Securities in an amount equal to such Partner’s respective Capital Commitment Liquidating Share for each Capital Commitment Investment; provided, that if the remaining assets relating to any Capital Commitment
Investment shall not be equal to or exceed the aggregate Capital Commitment Liquidating Shares for such Capital Commitment Investment, to each Partner in proportion to its Capital Commitment Liquidating Share for such Capital Commitment Investment;
and the remaining assets of the Partnership related to the Partners’ Capital Commitment Partner Interests shall be paid to the Partners in cash or Securities in proportion to their respective Capital Commitment Profit Sharing Percentages for
each Capital Commitment Investment from which such cash or Securities are derived.
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Section 9.3. Amounts Reserved Related to Capital Commitment Partner
Interests.
(a) If there are any Securities or other property or other investments or securities related to the Partners’ Capital
Commitment Partner Interests which, in the judgment of the Liquidator, cannot be sold, or properly distributed in kind in the case of dissolution, without sacrificing a significant portion of the value thereof, the value of a Partner’s interest
in each such Security or other investment or security may be excluded from the amount distributed to the Partners participating in the related Capital Commitment Investment pursuant to clause (ii) of Section 9.2(b). Any interest of a
Partner, including his or her pro rata interest in any gains, losses or distributions, in Securities or other property or other investments or securities so excluded shall not be paid or distributed until such time as the Liquidator shall
determine.
(b) If there is any pending transaction, contingent liability or claim by or against the Partnership related to the
Partners’ Capital Commitment Partner Interests as to which the interest or obligation of any Partner therein cannot, in the judgment of the Liquidator, be then ascertained, the value thereof or probable loss therefrom may be deducted from the
amount distributable to such Partner pursuant to clause (ii) of Section 9.2(b). No amount shall be paid or charged to any such Partner on account of any such transaction or claim until its final settlement or such earlier time as the
Liquidator shall determine. The Partnership may meanwhile retain from other sums due such Partner in respect of such Partner’s Capital Commitment Partner Interest an amount which the Liquidator estimates to be sufficient to cover the share of
such Partner in any probable loss or liability on account of such transaction or claim.
(c) Upon determination by the Liquidator that
circumstances no longer require the exclusion of any Securities or other property or retention of sums as provided in paragraphs (a) and (b) of this Section 9.3, the Liquidator shall, at the earliest practicable time, distribute as
provided in clause (ii) of Section 9.2(b) such sums or such Securities or other property or the proceeds realized from the sale of such Securities or other property to each Partner from whom such sums or Securities or other property were
withheld.
ARTICLE X
MISCELLANEOUS
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be settled
amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement
(including the validity, scope and enforceability of this arbitration provision), shall be finally settled by arbitration conducted by a single arbitrator in New York, New York U.S.A. in accordance with the
then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) days of the receipt of the
request for arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably
possible during any arbitration proceedings.
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(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may
cause the Partnership to bring, on behalf of the General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate,
seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of paragraph (c) of this
Section 10.1 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate
and (iii) irrevocably appoints the General Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon any such agent, who shall promptly advise such
Partner of any such service of process, shall be deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY
JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 10.1, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT.
Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the forum(s)
designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may
have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 10.1 and such parties agree not to plead or claim the same.
(d) Notwithstanding any provision of this Agreement to the contrary, this Section 10.1 shall be construed to the maximum extent possible
to comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be determined by a court of
competent jurisdiction that any provision or wording of this Section 10.1, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or other applicable law, such
invalidity shall not invalidate all of this Section 10.1. In that case, this Section 10.1 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act
or other applicable law, and, in the event such term or provision cannot be so limited, this Section 10.1 shall be construed to omit such invalid or unenforceable provision.
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Section 10.2. Ownership and Use of the Firm Name. The Partnership
acknowledges that Blackstone TM L.L.C. (“TM”), a Delaware limited liability company with a principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., (or its successors or assigns) is the sole and exclusive
owner of the mark and name BLACKSTONE and that the ownership of, and the right to use, sell or otherwise dispose of, the firm name or any abbreviation or modification thereof which consists of or includes BLACKSTONE, shall belong exclusively to TM,
which company (or its predecessors, successors or assigns) has licensed the Partnership to use BLACKSTONE in its name. The Partnership acknowledges that TM owns the service mark BLACKSTONE for various services and that the Partnership is using the
BLACKSTONE mark and name on a non-exclusive, non-sublicensable and non-assignable basis in connection with its business and
authorized activities with the permission of TM. All services rendered by the Partnership under the BLACKSTONE mark and name will be rendered in a manner and with quality levels that are consistent with the high reputation heretofore developed for
the BLACKSTONE mark by TM and its Affiliates and licensees. The Partnership understands that TM may terminate its right to use BLACKSTONE at any time in TM’s sole discretion by giving the Partnership written notice of termination. Promptly
following any such termination, the Partnership will take all steps necessary to change its partnership name to one which does not include BLACKSTONE or any confusingly similar term and cease all use of BLACKSTONE or any term confusingly similar
thereto as a service mark or otherwise.
Section 10.3. Written Consent. Any action required or permitted to be taken by a
vote of Partners at a meeting may be taken without a meeting if a Majority in Interest of the Partners consent thereto in writing.
Section 10.4. Letter Agreements; Schedules. The General Partner may, or may cause the Partnership to, enter or has previously
entered, into separate letter agreements with individual Partners with respect to GP-Related Profit Sharing Percentages, Capital Commitment Profit Sharing Percentages or any other matter. The General Partner
may from time to time execute and deliver to the Partners Schedules which set forth the then current capital balances, GP-Related Profit Sharing Percentages and Capital Commitment Profit Sharing Percentages of
the Partners and any other matters deemed appropriate by the General Partner. Such Schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever; provided that this in no way limits
the effectiveness of any Commitment Agreement.
Section 10.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law. In particular, the Partnership has been formed pursuant to the Partnership Act, and the rights and liabilities of the Partners
shall be as provided therein, except as herein otherwise expressly provided. If any provision of this Agreement shall be held to be invalid, such provision shall be given its meaning to the maximum extent permitted by law and the remainder of this
Agreement shall not be affected thereby.
Section 10.6. Successors and Assigns; Third Party Beneficiaries. This Agreement
shall be binding upon and shall, subject to the penultimate sentence of Section 6.3(a), inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any successor to a trustee of a trust which is or
becomes a party hereto; provided, that no person claiming by, through or under a Partner (whether such Partner’s heir, personal representative or otherwise), as distinct from such Partner itself, shall have any rights as, or in respect to, a
Partner (including the right to approve or vote on any matter or to notice thereof) except the right to
80
receive only those distributions expressly payable to such person pursuant to Article VI and Article VIII. Any Partner or Withdrawn Partner shall remain liable for the obligations under this
Agreement (including any Net GP-Related Recontribution Amounts and any Capital Commitment Recontribution Amounts) of any transferee of all or any portion of such Partner’s or Withdrawn Partner’s
interest in the Partnership, unless waived by the General Partner. The Partnership shall, if the General Partner determines, in its good faith judgment, based on the standards set forth in Section 5.8(d)(ii)(A) and Section 7.4(g)(ii)(A),
to pursue such transferee, pursue payment (including any Net GP-Related Recontribution Amounts and/or Capital Commitment Recontribution Amounts) from the transferee with respect to any such obligations.
Nothing in this Agreement is intended, nor shall anything herein be construed, to confer any rights, legal or equitable, on any person other than the Partners and their respective legal representatives, heirs, successors and permitted assigns.
Notwithstanding the foregoing, solely to the extent required by the SP RA II Agreements, (x) the limited partners in SP VIII shall be third-party beneficiaries of the provisions of Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and
the definitions relating thereto), solely as they relate to any Clawback Amount (for purpose of this sentence, as defined in Section 9.4(a) of the SP RA II Partnership Agreement) and (y) the amendment of the provisions of
Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount (for purpose of this sentence, as defined in Section 9.4(a) of the SP RA II Partnership Agreement), in
a manner materially adverse to such limited partners shall be effective against such limited partners only with the 662⁄3% Combined Limited Partner Consent (as such
term is used in the SP RA II Partnership Agreement).
Section 10.7. Partner’s Will. Each Limited
Partner and Withdrawn Partner shall include in his or her will a provision that addresses certain matters in respect of his or her obligation relating to the Partnership that is satisfactory to the General Partner, and each such Limited Partner and
Withdrawn Partner shall confirm annually to the Partnership, in writing, that such provision remains in his or her current will. Where applicable, any estate planning trust of such Partner or Withdrawn Partner to which a portion of such Limited
Partner’s or Withdrawn Partner’s Interest is transferred shall include a provision substantially similar to such provision and the trustee of such trust shall confirm annually to the Partnership, in writing, that such provision or its
substantial equivalent remains in such trust. In the event any Limited Partner or Withdrawn Partner fails to comply with the provisions of this Section 10.7 after the Partnership has notified such Limited Partner or Withdrawn Partner of his or
her failure to so comply and such failure to so comply is not cured within 30 days of such notice, the Partnership may withhold any and all distributions to such Limited Partner or Withdrawn Partner until the time at which such party complies with
the requirements of this Section 10.7.
Section 10.8. Confidentiality.
(a) By executing this Agreement, each Partner expressly agrees, at all times during the term of the Partnership and thereafter and whether or
not at the time a Partner of the Partnership, to maintain the confidentiality of, and not to disclose to any person other than the Partnership, another Partner or a person designated by the Partnership, any information relating to the business,
financial structure, financial position or financial results, clients or affairs of the Partnership that shall not be generally known to the public or the securities industry, except as otherwise required by law or by any regulatory or self-regulatory organization having
81
jurisdiction; provided, however, that any corporate Partner may disclose any such information it is required by law, rule, regulation or custom to disclose. Notwithstanding anything
in this Agreement to the contrary, to comply with Treasury Regulations Section 1.6011-4(b)(3)(i), each Partner (and any employee, representative or other agent of such Partner) may disclose to any and all
persons, without limitation of any kind, the Federal income tax treatment and tax structure of the Partnership, it being understood and agreed, for this purpose, (1) the name of, or any other identifying information regarding (a) the
Partners or any existing or future investor (or any Affiliate thereof) in any of the Partners, or (b) any investment or transaction entered into by the Partners; (2) any performance information relating to any of the Partners or their
investments; and (3) any performance or other information relating to previous funds or investments sponsored by any of the Partners, does not constitute such tax treatment or tax structure information.
Section 10.9. Notices. Whenever notice is required or permitted by this Agreement to be given, such notice shall be in
writing (including telecopy or similar writing) and shall be given by hand delivery (including any courier service) or telecopy to any Partner at its address or telecopy number shown in the books and records of the Partnership or, if given to the
General Partner or the Partnership, at the address or telecopy number of the Partnership in New York City. Each such notice shall be effective (i) if given by telecopy, upon dispatch and (ii) if given by hand delivery, when delivered to
the address of such Partner or the General Partner or the Partnership specified as aforesaid.
Section 10.10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original
and all of which together shall constitute a single instrument.
Section 10.11. Power of Attorney. Each Partner hereby
irrevocably appoints the General Partner as such Partner’s true and lawful representative and attorney-in-fact, each acting alone, in such Partner’s name,
place and stead, to make, execute, sign and file all instruments, documents and certificates which, from time to time, may be required to set forth any amendment to this Agreement or may be required by this Agreement or by the laws of the United
States of America, the State of Delaware or any other state in which the Partnership shall determine to do business, or any political subdivision or agency thereof, to execute, implement and continue the valid and subsisting existence of the
Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and effect notwithstanding the subsequent Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the
subsequent disability or incapacity of such Partner.
Section 10.12. Cumulative Remedies. Rights and remedies under this
Agreement are cumulative and do not preclude use of other rights and remedies available under applicable law.
Section 10.13. Legal Fees. Except as more specifically provided herein, in the event of a legal dispute (including
litigation, arbitration or mediation) between any Partner or Withdrawn Partner and the Partnership, arising in connection with any party seeking to enforce Section 4.1(d) or any other provision of this Agreement relating to the Holdback, the
Clawback Amount, the GP-Related Giveback Amount, the Capital Commitment Giveback Amount, the Net
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GP-Related Recontribution Amount or the Capital Commitment Recontribution Amount, the “losing” party to such dispute shall promptly reimburse the
“victorious party” for all reasonable legal fees and expenses incurred in connection with such dispute (such determination to be made by the relevant adjudicator). Any amounts due under this Section 10.13 shall be paid within 30 days
of the date upon which such amounts are due to be paid and such amounts remaining unpaid after such date shall accrue interest at the Default Interest Rate.
Section 10.14. Entire Agreement. This Agreement embodies the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. Subject to Section 10.4, this Agreement
supersedes all prior agreements and understandings between the parties with respect to such subject matter.
83
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first
above written. In the event that it is impracticable to obtain the signature of any one or more of the Partners to this Agreement, this Agreement shall be binding among the other Partners executing the same.
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GENERAL PARTNER:
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SPFSA RA II L.L.C.
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By:
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/s/ Peter Song
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Name: Peter Song
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Title: Authorized Person
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INITIAL LIMITED PARTNER:
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/s/ Peter Song
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Name: Peter Song
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Title: Initial Limited Partner
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Exhibit 10.11
HIGHLY CONFIDENTIAL & TRADE SECRET
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES VI L.P.
AMENDED AND RESTATED
AGREEMENT OF
LIMITED PARTNERSHIP
Dated as of December 19, 2013
Table of Contents
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Page
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ARTICLE I DEFINITIONS
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1
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Section 1.1.
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Definitions
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1
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Section 1.2.
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Terms Generally
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16
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ARTICLE II GENERAL PROVISIONS
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16
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Section 2.1.
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General Partner and Limited Partners
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16
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Section 2.2.
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Formation; Name
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17
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Section 2.3.
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Term
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17
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Section 2.4.
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Purpose; Powers
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17
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Section 2.5.
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Place of Business
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19
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Section 2.6.
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Withdrawal of Initial Limited Partner
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20
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ARTICLE III MANAGEMENT
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20
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Section 3.1.
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General Partners
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20
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Section 3.2.
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Limitations on Limited Partners
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20
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Section 3.3.
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Partner Voting
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20
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Section 3.4.
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Management
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20
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Section 3.5.
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Responsibilities of Partners
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22
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Section 3.6.
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Exculpation and Indemnification
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22
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Section 3.7.
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Representations of Limited Partners
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24
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Section 3.8.
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Tax Representation
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25
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ARTICLE IV CAPITAL OF THE PARTNERSHIP
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25
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Section 4.1.
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Capital Contributions by Partners
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25
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Section 4.2.
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Interest
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32
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Section 4.3.
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Withdrawals of Capital
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32
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ARTICLE V PARTICIPATION IN PROFITS AND LOSSES
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32
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Section 5.1.
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General Accounting Matters
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32
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Section 5.2.
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GP-Related Capital Accounts
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33
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Section 5.3.
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GP-Related Profit Sharing Percentages
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34
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Section 5.4.
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Allocations of GP-Related Net Income (Loss)
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35
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Section 5.5.
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Liability of General Partners
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35
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Section 5.6.
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Liability of Limited Partners
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35
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Section 5.7.
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Repurchase Rights, etc.
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36
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Section 5.8.
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Distributions
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36
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Section 5.9.
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Business Expenses
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42
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Section 5.10.
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Tax Capital Accounts; Tax Allocations
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42
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ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
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42
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Section 6.1.
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Additional Partners
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42
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Section 6.2.
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Withdrawal of Partners
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43
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Section 6.3.
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GP-Related Partner Interests Not Transferable
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44
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Section 6.4.
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General Partner Withdrawal; Transfer of General Partner’s Interest
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45
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Section 6.5.
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Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interest
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45
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Section 6.6.
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Termination of the Partnership
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50
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Section 6.7.
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Certain Tax Matters
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50
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Section 6.8.
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Special Basis Adjustments
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51
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ARTICLE VII Capital Commitment Interests; Capital Contributions; Allocations;
Distributions
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51
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Section 7.1.
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Capital Commitment Interests, etc.
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51
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Section 7.2.
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Capital Commitment Capital Accounts
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53
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Section 7.3.
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Allocations
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53
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Section 7.4.
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Distributions
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53
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Section 7.5.
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Valuations
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57
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Section 7.6.
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Disposition Election
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57
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Section 7.7.
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Capital Commitment Special Distribution Election
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58
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ARTICLE VIII Withdrawal; Admission of New Partners
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58
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Section 8.1.
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Limited Partner Withdrawal; Repurchase of Capital Commitment Interests
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58
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Section 8.2.
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Transfer of Limited Partner’s Capital Commitment Interest
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62
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Section 8.3.
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Compliance with Law
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63
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ARTICLE IX DISSOLUTION
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63
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Section 9.1.
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Dissolution
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63
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Section 9.2.
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Final Distribution
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63
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Section 9.3.
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Amounts Reserved Related to Capital Commitment Partner Interests
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64
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ARTICLE X MISCELLANEOUS
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65
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Section 10.1.
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Submission to Jurisdiction; Waiver of Jury Trial
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65
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Section 10.2.
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Ownership and Use of the Firm Name
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66
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Section 10.3.
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Written Consent
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66
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Section 10.4.
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Letter Agreements; Schedules
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66
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Section 10.5.
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Governing Law
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66
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Section 10.6.
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Successors and Assigns; Third Party Beneficiaries
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66
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Section 10.7.
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Partner’s Will
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67
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Section 10.8.
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Confidentiality
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67
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Section 10.9.
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Notices
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67
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Section 10.10.
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Counterparts
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68
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Section 10.11.
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Power of Attorney
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68
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Section 10.12.
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Cumulative Remedies
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68
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Section 10.13.
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Legal Fees
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68
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Section 10.14.
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Entire Agreement
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68
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STRATEGIC PARTNERS FUND ASSOCIATES VI L.P.
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of December 19, 2013, of Strategic Partners Fund Solutions Associates VI
L.P., a Delaware limited partnership (the “Partnership”), by and between SPFSA VI L.L.C., a Delaware limited liability company (the “General Partner”), and the limited partners listed in the books and records of the
Partnership, as limited partners.
WITNESSETH
WHEREAS, the Limited Partnership Agreement of Strategic Partners Fund Solutions Associates VI L.P., dated as of August 27, 2013,
constitutes the existing partnership agreement of the Partnership (the “Original Agreement”); and
WHEREAS, in order to
amend the Partnership’s Original Agreement to reflect certain changes thereto and to reflect the withdrawal of the Initial Limited Partner, the parties hereto wish to amend and restate the Original Agreement in its entirety as hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein made and intending to be legally bound, the parties
hereto hereby agree that the Original Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1.
Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for purposes of this Agreement:
“Advancing Party” has the meaning set forth in Section 7.1(b).
“Affiliate” when used with reference to another person means any person (other than the Partnership), directly
or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person.
“Agreement” means this Amended and Restated Agreement of Limited Partnership, as it may be further amended,
supplemented, restated or otherwise modified from time to time.
“Alternative Vehicle” means any
“Alternative Investment Fund” (as defined in section 4.7(a) of the SP VI Partnership Agreement).
“Applicable Collateral Percentage,” with respect to any Firm Collateral or Special Firm Collateral, has the
meaning set forth in the books and records of the Partnership with respect thereto.
“Assumed Income Tax
Rate” shall mean the highest effective marginal combined U.S. federal, state and local income tax rate for a Fiscal Year prescribed for an individual resident in New York, New York.
“Bankruptcy” means, with respect to any person, the
occurrence of any of the following events: (i) the filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his assets; (ii) the filing by such person of a voluntary petition in Bankruptcy
or the seeking of relief under Title 11 of the United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his inability to pay his debts as they become due; (iii) the
failure of such person to pay his debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of an answer admitting the material allegations of, or his
consenting to, or defaulting in answering, a Bankruptcy petition filed against him in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States Code, as now constituted or as hereafter amended; or (vi) the entry
of an order, judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a trustee or custodian of his assets and the continuance of such order,
judgment or decree unstayed and in effect for a period of 60 consecutive days.
“BCE Agreement” means the
limited partnership agreement, limited liability company agreement or other governing document of any limited partnership, limited liability company or other entity named or referred to in the definition of any of “BFREP,”
“BFIP,” “BFMEZP,” “BFCOMP” or “Other Blackstone Collateral Entity,” as such limited partnership agreement, limited liability company agreement or other governing document may be amended, supplemented, restated
or otherwise modified to date, and as such limited partnership agreement, limited liability company agreement or other governing document may be further amended, supplemented, restated or otherwise modified from time to time, and any other
Blackstone Collateral Entity limited partnership agreement, limited liability company agreement or other governing document.
“BCE Investment” means any direct or indirect investment by any Blackstone Collateral Entity.
“BCOM” is the collective reference to (i) Blackstone Communications Partners I L.P., a Delaware limited
partnership, and (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above.
“BCP VI” is the collective reference to (i) Blackstone Capital Partners VI L.P., a Delaware limited
partnership, and (ii) any alternative investment vehicle relating thereto and any parallel fund.
“BCTP” means (i) Blackstone Clean Technology Partners L.P., a Delaware limited partnership, and
(ii) any alternative vehicle relating thereto and any parallel fund.
“BEP” means“(i) Blackstone
Energy Partners L.P. and Blackstone Energy Partners Q L.P., each a Delaware limited partnership, and (ii) any alternative investment vehicle relating thereto and any parallel fund.
“BFCOMP” means Blackstone Family Communications Partnership I L.P., Blackstone Family Communications
Partnership I-SMD L.P. and any other entity that is an Affiliate thereof and has terms substantially similar to those of the foregoing partnerships and is formed in connection with the participation by one or
more partners thereof directly or indirectly in investments in securities also purchased by BCOM or any other funds with substantially similar investment objectives to BCOM and that are sponsored or managed by an Affiliate of the General Partner
(which includes serving as general partner of such funds).
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“BFIP” means Blackstone Capital Associates II L.P.,
Blackstone Capital Associates III L.P., Blackstone Family Investment Partnership II L.P., Blackstone Family Investment Partnership III L.P., Blackstone Family Investment Partnership IV-A L.P., Blackstone
Family Investment Partnership IV-A -SMD L.P., Blackstone Family Investment Partnership V L.P., Blackstone Family Investment Partnership
V- SMD L.P., Blackstone Family Investment Partnership VI L.P., Blackstone Family Investment Partnership VI-SMD L.P., Blackstone Family Cleantech Investment Partnership
L.P., Blackstone Family Cleantech Investment Partnership—SMD L.P., Blackstone Family Energy Investment Partnership L.P., Blackstone Family Energy Investment Partnership—SMD L.P. and any other entity that is an Affiliate thereof and has
terms similar to those of the foregoing partnerships and is formed in connection with the participation by one or more of the partners thereof in investments in securities also purchased by BCP VI, BCTP, BEP or any other fund with substantially
similar investment objectives to BCP VI, BCTP or BEP and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).
“BFMEZP” means Blackstone Family Mezzanine Partnership-SMD L.P.,
Blackstone Family Mezzanine Partnership II-SMD L.P., Blackstone Mezzanine Holdings L.P., Blackstone Mezzanine Holdings II L.P., any entity formed to invest side-by-side with any GSO Fund and any other entity that is an Affiliate thereof and that has terms substantially similar to those of the foregoing partnerships or other entities and is formed in connection
with the participation by one or more partners or other equity owners thereof directly or indirectly in investments in securities also purchased by BMEZP I, BMEZP II, any GSO Fund or any other funds with substantially similar investment objectives
to BMEZP I, BMEZP II or any GSO Fund and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).
“BFREP” means Blackstone Real Estate Capital Associates L.P., Blackstone Real Estate Capital Associates II
L.P., Blackstone Real Estate Capital Associates III L.P., Blackstone Family Real Estate Partnership L.P., Blackstone Family Real Estate Partnership II L.P., Blackstone Family Real Estate Partnership III L.P., Blackstone Family Real Estate
Partnership International- A-SMD L.P., Blackstone Family Real Estate Partnership IV-SMD L.P., Blackstone Family Real Estate Partnership International II-SMD L.P., Blackstone Family Real Estate Partnership V-SMD L.P., Blackstone Family Real Estate Partnership VI-SMD L.P., Blackstone
Family Real Estate Partnership VII-SMD L.P., Blackstone Family Real Estate Partnership Europe III-SMD L.P., Blackstone Family Real Estate Partnership Europe IV-SMD L.P, Blackstone Family Real Estate Partnership Asia-SMD L.P., Blackstone Family Real Estate Special Situations Partnership—SMD L.P., Blackstone Family Real Estate
Special Situations Partnership Europe—SMD L.P., Blackstone Real Estate Debt Strategies II-SMD L.P., Blackstone Real Estate Holdings L.P., Blackstone Real Estate Holdings II L.P., Blackstone Real Estate
Holdings III L.P., Blackstone Real Estate Holdings International—A L.P., Blackstone Real Estate Holdings IV L.P., Blackstone Real Estate Holdings International II L.P., Blackstone Real Estate Holdings V L.P., Blackstone Real Estate Holdings VI
L.P., , Blackstone Real Estate Holdings VII L.P. , Blackstone Real Estate Holdings Europe III L.P., Blackstone Real Estate Special Situations Holdings II L.P., Blackstone Real Estate Special Situations Holdings Europe L.P., and any other entity that
is an Affiliate thereof and that has terms substantially similar to those of the foregoing partnerships and/or is formed in connection with Blackstone’s
side-by-side investment program with respect to investments made by real estate and real estate-related investment funds that are sponsored or managed by an Affiliate of
the General Partner (which includes serving as general partner of such funds).
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“Blackstone Co-Investment
Rights” has the meaning set forth in section 5.2(e) of the SP VI Partnership Agreement.
“Blackstone
Collateral Entity” means any limited partnership, limited liability company or other entity named or referred to in the definition of any of “BFREP,” “BFIP,” “BFMEZP,” “BFCOMP” or “Other
Blackstone Collateral Entity.”
“Blackstone Commitment” has the meaning set forth in the SP VI
Partnership Agreement.
“Blackstone Entity” means any partnership, limited liability company or other
entity (excluding any natural persons and any portfolio companies of any Blackstone—sponsored fund) that is an Affiliate of The Blackstone Group L.P. For the avoidance of doubt, any partnership, limited liability company or other entity that
comprise the Strategic Partners Fund Solutions Business shall be considered a Blackstone Entity.
“BMEZP
I” means (i) Blackstone Mezzanine Partners L.P., a Delaware limited partnership, and (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause
(i) above.
“BMEZP II” means (i) Blackstone Mezzanine Partners II L.P., a Delaware limited
partnership, and (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above.
“BSSF Europe” means (i) Blackstone Real Estate Special Situations Europe L.P., Blackstone Real Estate
Special Situations Europe.1 L.P. and Blackstone Real Estate Special Situations Europe.2 L.P., each a limited partnership formed or to be formed under the laws of the United Kingdom pursuant to the Limited Partnerships Act 1907 of the United Kingdom,
(ii) any alternative vehicle, parallel fund or other investment vehicle established pursuant to Article 2 of the partnership agreements for the partnerships referred to in clause (i) above, and (iii) any investment vehicle formed to co-invest with any of the partnerships referred to in clause (i) above using third party capital and that potentially pays Carried Interest Distributions (as such term is used in such partnership agreements).
“BSSF II” means (i) Blackstone Real Estate Special Situations Fund II L.P., a Delaware limited
partnership, Blackstone Real Estate Special Situations Fund II.1 L.P., a Delaware limited partnership, and Blackstone Real Estate Special Situations Fund II.2 L.P., a Delaware limited partnership, and (ii) any alternative vehicles of or
parallel funds formed in connection with, any of the limited partnerships referred to in clause (i) above.
“Capital Commitment SP VI Commitment” means the Capital Commitment (as defined in the SP VI Partnership
Agreement), if any, of the Partnership to SP VI that relates solely to the Capital Commitment SP VI Interest, if any.
“Capital Commitment SP VI Interest” means the Interest (as used in the SP VI Partnership Agreement), if any,
of the Partnership as a capital partner of SP VI.
“Capital Commitment SP VI Investment” means the
Partnership’s interest in a specific investment of SP VI held by the Partnership through the Capital Commitment SP VI Interest.
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“Capital Commitment Capital Account” means, with respect to
each Capital Commitment Investment for each Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such Capital Commitment Investment and any net income allocated
to such Partner pursuant to Section 7.3 with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment Investment to such Partner and any net losses allocated to such
Partner with respect to such Capital Commitment Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the related Capital Commitment Investment shall be adjusted as if the
asset distributed had been sold in a taxable transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners participating in such Capital Commitment Investment pursuant to
Section 7.3.
“Capital Commitment Class A Interest” has the meaning set forth in
Section 7.4(f).
“Capital Commitment Class B Interest” has the meaning set forth
in Section 7.4(f).
“Capital Commitment Defaulting Party” has the meaning specified in
Section 7.4(g).
“Capital Commitment Deficiency Contribution” has the meaning specified in Section
7.4(g).
“Capital Commitment Disposable Investment” has the meaning set forth in Section 7.4(f).
“Capital Commitment Distributions” means, with respect to each Capital Commitment Investment, all amounts of
distributions, received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Capital Commitment SP VI Interest, if any, less any costs, fees and expenses of the Partnership with respect thereto and less
reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of such Capital Commitment Investment as it may
determine in good faith is appropriate.
“Capital Commitment Giveback Amount” has the meaning set forth in
Section 7.4(g).
“Capital Commitment Interest” means the interest of a Partner in a specific Capital
Commitment Investment as provided herein.
“Capital Commitment Investment” means any Capital Commitment SP
VI Investment, but shall exclude any GP-Related Investment.
“Capital
Commitment Liquidating Share” with respect to each Capital Commitment Investment means, in the case of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with
Section 9.3) as of the close of business on the effective date of dissolution.
“Capital Commitment Net Income
(Loss)” with respect to each Capital Commitment Investment means all amounts of income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition,
in whole or in part, of such Capital Commitment Investment, less any costs, fees and expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated
thereto.
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“Capital Commitment Partner Interest” means a
Partner’s partnership interest in the Partnership with respect to the Capital Commitment SP VI Interest.
“Capital Commitment Profit Sharing Percentage” with respect to each Capital Commitment Investment means the
percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the Partnership.
“Capital Commitment Recontribution Amount” has the meaning set forth in Section 7.4(g).
“Capital Commitment-Related Capital Contributions” has the meaning set forth in Section 7.1(a).
“Capital Commitment-Related Commitment”, with respect to any Partner, means such Partner’s commitment to
the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such commitment that may be set forth in such Partner’s Commitment
Agreement or SMD Agreement, if any.
“Capital Commitment Special Distribution” has the meaning set forth
in Section 7.7(a).
“Capital Commitment Value” has the meaning set forth in Section 7.5.
“Carried Interest” means “Carried Interest Distributions,” as defined in the SP VI Partnership
Agreement,. In the case of each of (i) and (ii) above, except as determined by the General Partner, the amount shall not be less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of
costs, fees and expenses of the Partnership that are anticipated with respect thereto (in each case which the General Partner may allocate among all or any portion of the GP-Related Investments as it
determines in good faith is appropriate).
“Carried Interest Give Back Percentage” means, for any Partner
or Withdrawn Partner, subject to Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner from the Partnership or any Other Fund GPs or their Affiliates
in respect of Carried Interest by (B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership or any Other Fund GP or any of their Affiliates (in any capacity) in respect of Carried
Interest. For purposes of determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership or any Other Fund GPs on behalf of a Partner or Withdrawn Partner (but not the Trust
Income thereon) shall be deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as members, partners or other equity owners of the Partnership or any of the Other Fund GPs or their Affiliates.
“Carried Interest Sharing Percentage” means, with respect to each
GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
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“Cause” means the occurrence or existence of any of the
following with respect to any Partner, as determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any
non-competition agreement, (x) any material breach of this Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such Partner’s deliberate
failure to perform his or her duties to the Partnership or any of its Affiliates, or (z) such Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Partnership or any of its Affiliates in a
material way as determined by the General Partner; provided, that in the case of any of the foregoing clauses (w), (x), (y) and (z), the General Partner has given such Partner written notice (a “Notice of Breach”) within
fifteen days after the General Partner becomes aware of such action and such Partner fails to cure such breach, failure to perform or conduct or behavior within fifteen days after receipt of such Notice of Breach from the General Partner (or such
longer period, not to exceed an additional fifteen days, as shall be reasonably required for such cure, provided that such Partner is diligently pursuing such cure); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar
conduct against the Partnership or any of its Affiliates; (iii) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony or crime (including any misdemeanor charge involving moral turpitude, false
statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of competent jurisdiction, by a regulatory body or by a self-regulatory body having authority with respect to securities
laws, rules or regulations of the applicable securities industry, that such Partner individually has violated any applicable securities laws or any rules or regulations thereunder, or any rules of any such self-regulatory body (including, without
limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such Partner’s ability to function as a Partner of the Partnership, taking into account the services required of such Partner
and the nature of the business of the Partnership and its Affiliates or (B) the business of the Partnership and its Affiliates; or (iv) becoming subject to an event described in Rule 506(d)(1)(i)-(viii) of Regulation D under the Securities
Act of 1933 (the “Securities Act”).
“CC Carried Interest” means, with respect to any
Partner, the aggregate amount of distributions or payments received by such Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest”, including the amount of any bonuses received by a
Partner as an employee of an Affiliate of the Partnership that relate to the amount of “carried interest” received by an Affiliate of the Partnership. “CC Carried Interest” includes any amount initially received by an
Affiliate of the Partnership from any fund (including SP VI, any similar funds formed after the date hereof, and any other private equity merchant banking, secondary, real estate or debt funds, whether or not in existence as of the date hereof) to
which such Affiliate serves as general partner (or other similar capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions thereto (or the capital contributions to make the
investment of such fund giving rise to such “carried interest”).
“Clawback Adjustment Amount”
has the meaning set forth in Section 5.8(e).
“Clawback Amount” means the “Overdistribution
Amount,” as defined in the SP VI Partnership Agreement, and any other clawback amount payable pursuant to any SP VI Agreement, as applicable.
“Clawback Provisions” means sections 2.7(d)(iii) and 11.3 of the SP VI Partnership Agreement and any other
similar provisions in any other SP VI Agreement existing heretofore or hereafter entered into.
“Code”
means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute. Any reference herein to a particular provision of the Code means, where appropriate, the corresponding provision in any successor statute.
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“Commitment Agreement” means the agreement between the
Partnership or an Affiliate thereof and a Partner, pursuant to which such Partner undertakes certain obligations, including the obligation to make capital contributions pursuant to Sections 4.1 and/or 7.1. Each Commitment Agreement is hereby
incorporated by reference as between the Partnership and the relevant Partner.
“Contingent” means subject
to repurchase rights and/or other requirements.
“Covered Person” has the meaning set forth in
Section 3.6(a).
The term “control” when used with reference to any person means the power to direct
the management and policies of such person, directly or indirectly, by or through stock or other equity ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with one or
more other persons by or through stock or other equity ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing.
“Controlled Entity” when used with reference to another person means any person controlled by such other
person.
“Deceased Partner” means any Partner or Withdrawn Partner who has died or who suffers from
Incompetence. For purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the case may be, that have received such Deceased
Partner’s interest in the Partnership.
“Default Interest Rate” means the lower of (i) the sum
of (a) the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate and (b) 5%, or (ii) the highest rate of interest permitted under applicable law.
“Disabling Event” means (a) the withdrawal of the General Partner, other than in accordance with
Section 6.4(a) or (b) if the General Partner (i) makes an assignment for the benefit of its creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent or has entered against it an
order for relief in any bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or
regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in a proceeding described in clause (iv), or (v) seeks consents to or acquiesces in the appointment
of a trustee, receiver or liquidator of the General Partner or of all or substantially all of its properties.
“Estate Planning Vehicle” has the meaning set forth in Section 6.3.
“Excess Holdback” has the meaning set forth in Section 4.1(d).
“Excess Holdback Percentage” has the meaning set forth in Section 4.1(d).
“Excess Tax-Related Amount” has the meaning set forth in
Section 5.8(e).
“Existing Partner” means any Partner who is neither a Retaining Withdrawn Partner
nor a Deceased Partner.
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“Final Event” means the death, Total Disability,
Incompetence, Bankruptcy, liquidation, dissolution or Withdrawal from the Partnership of any person who is a Partner.
“Firm Advances” has the meaning set forth in Section 7.1.
“Firm Collateral” means a Partner’s or Withdrawn Partner’s interest in one or more partnerships or
limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been pledged or made available to the Trustee(s) to satisfy all or any portion of the
Excess Holdback of such Partner or Withdrawn Partner as more fully described in the books and records of the Partnership; provided, that for all purposes hereof (and any other agreement (e.g., the Trust Agreement) that incorporates the
meaning of the term “Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”, excluding references to “Firm Collateral” in Section 4.1(d)(v) and
Section 4.1(d)(viii).
“Firm Collateral Realization” has the meaning set forth in
Section 4.1(d).
“Fiscal Year” means a calendar year, or any other period chosen by the General
Partner.
“Fund GP” means the Partnership (only with respect to the
GP-Related SP VI Interest) and the Other Fund GPs.
“GAAP” has the
meaning specified in Section 5.1(b).
“General Partner” means SPFSA VI L.L.C. and any person admitted
to the Partnership as an additional General Partner in accordance with the provisions of this Agreement, until such time as such person ceases to be a general partner of the Partnership as provided herein or in the Partnership Act.
“Giveback” means obligations to return distributions to satisfy certain fund-related obligations and
liabilities pursuant to section 9.2 of SP VI Partnership Agreement.
“Giveback Amount” means the amounts
required to satisfy Giveback.
“Giveback Provisions” means section 9.2 of the SP VI Partnership Agreement
and any other similar provisions in any other SP VI Agreement existing heretofore or hereafter entered into.
“GP-Related SP VI Interest” means the interest held by the Partnership in SP VI in the Partnership’s capacity as general partner of SP VI, excluding any Capital Commitment SP VI Interest.
“GP-Related SP VI Investment” means the Partnership’s interest in
a Portfolio Investment (for purposes of this definition, as defined in the SP VI Partnership Agreement) in the Partnership’s capacity as the general partner of SP VI, but does not include any Capital Commitment Investment.
“GP-Related Capital Account” has the meaning set forth in
Section 5.2.
“GP-Related Capital Contribution” has the
meaning set forth in Section 4.1(a).
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“GP-Related
Class A Interest” has the meaning set forth in Section 5.8(a).
“GP-Related Class B Interest” has the meaning set forth in Section 5.8(a).
“GP-Related Commitment”, with respect to any Partner, means such
Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such
commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“GP-Related Defaulting Party” has the meaning set forth in Section 5.8(d).
“GP-Related Deficiency Contribution” has the meaning set forth in
Section 5.8(d).
“GP-Related Disposable Investment” has the
meaning set forth in Section 5.8(a).
“GP-Related Giveback
Amount” has the meaning set forth in Section 5.8(d).
“GP-Related Investment” means any investment (direct or indirect) of
the Partnership in respect of the GP-Related SP VI Interest (including, without limitation, any GP-Related SP VI Investment, but excluding any Capital
Commitment Investment).
“GP-Related Net Income (Loss)” has the
meaning set forth in Section 5.1(b).
“GP-Related Partner
Interest” of a Partner means all interests of such Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect
to the GP-Related SP VI Interest and with respect to all GP-Related Investments.
“GP-Related Profit Sharing Percentage” means the “Carried
Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each Partner; provided that any references in this Agreement to
GP-Related Profit Sharing Percentages made (i) in connection with voting or voting rights or (ii) GP-Related Capital Contributions with respect to GP-Related Investments (including Section 5.3(b)) means the “Non-Carried Interest Sharing Percentage” of each Partner; provided further that, the term “GP-Related Profit Sharing Percentage” shall not include any Capital Commitment Profit Sharing Percentage.
“GP-Related Recontribution Amount” has the meaning set forth in
Section 5.8(d).
“GP-Related Required Amounts” has the
meaning set forth in Section 4.1(a).
“GP-Related Unallocated
Percentage” has the meaning set forth in Section 5.3(b).
“GP-Related Unrealized Net Income (Loss)” attributable to any GP-Related SP VI Investment as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such
GP-Related SP VI Investment if SP VI’s entire portfolio of investments were sold on such date for cash in an amount equal to their aggregate value on such date (determined in accordance with
Section 5.1(e)) and all distributions payable by SP VI to the Partnership (indirectly through the general partner of SP VI) pursuant to any SP VI Agreement with respect to such GP-Related SP VI Investment
were made on such date. “GP-Related Unrealized Net Income (Loss)” attributable to any other GP-Related Investment (other than any Capital Commitment
Investment) as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related Investment if such GP- Related Investment were sold on such date for cash in an amount equal to its value on such date (determined in accordance with Section 5.1(e)).
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“GSO Fund” means (i) any of GSO Capital Opportunities
Fund LP, GSO Capital Opportunities Overseas Fund L.P., GSO Capital Opportunities Overseas Master Fund L.P., GSO Liquidity Partners LP, GSO Liquidity Overseas Partners LP, Blackstone / GSO Capital Solutions Fund LP, Blackstone / GSO Capital Solutions
Overseas Fund L.P., Blackstone / GSO Capital Solutions Overseas Master Fund L.P., GSO Targeted Opportunity Partners LP, GSO Targeted Opportunity Overseas Partners L.P., GSO Targeted Opportunity Overseas Intermediate Partners L.P., GSO Targeted
Opportunity Master Partners L.P., GSO SJ Partners LP, GSO Capital Opportunities Fund II LP, GSO Capital Opportunities Cayman Overseas Fund II LP or GSO NMERB LP, or (ii) any alternative vehicle or parallel fund relating to any of the
partnerships referred to in clause (i) above.
“Holdback” has the meaning set forth in
Section 4.1(d).
“Holdback Percentage” has the meaning set forth in Section 4.1(d).
“Holdback Vote” has the meaning set forth in Section 4.1(d).
“Holdings” means Blackstone Holdings II L.P., a Delaware limited partnership.
“Incompetence” means, with respect to any Partner, the determination by the General Partner in its sole
discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his or her person or his or her property.
“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d).
“Initial Limited Partner” means Peter Song.
“Interest” means a Partner’s interest in the Partnership, including any interest that is held by a
Retaining Withdrawn Partner, and including any Partner’s GP-Related Partner Interest and Capital Commitment Partner Interest.
“Investment” means any investment (direct or indirect) of the Partnership designated by the General Partner
from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments, and (b) Capital Commitment Investments.
“Investor Limited Partner” means any Limited Partner so designated at the time of its admission as a partner
of the Partnership.
“Investor Note” means a promissory note of a Partner evidencing indebtedness incurred
by such Partner to purchase a Capital Commitment Interest, the terms of which were or are approved by the General Partner and which is secured by such Capital Commitment Interest, all other Capital Commitment Interests of such Partner and all other
interests of such Partner in Blackstone Collateral Entities; provided, that such promissory note may also evidence indebtedness relating to other interests of such Partner in Blackstone Collateral Entities, and such indebtedness shall be
prepayable with Capital Commitment Net Income (whether or not such
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indebtedness relates to Capital Commitment Investments) as set forth in this Agreement, the Investor Note, the other BCE Agreements and any documentation relating to Other Sources;
provided further, that references to “Investor Notes” herein refer to multiple loans made pursuant to such note, whether made with respect to Capital Commitment Investments or other BCE Investments, and references to an
“Investor Note” refer to one such loan as the context requires. In no way shall any indebtedness incurred to acquire Capital Commitment Interests or other interests in Blackstone Collateral Entities be considered part of the Investor Notes
for purposes hereof if the Lender or Guarantor is not the lender or guarantor with respect thereto.
“Issuer” means the issuer of any Security comprising part of an Investment.
“L/C” has the meaning set forth in Section 4.1(d).
“L/C Partner” has the meaning set forth in Section 4.1(d).
“Lender or Guarantor” means Blackstone Holdings I L.P., in its capacity as lender or guarantor under the
Investor Notes, or any other Affiliate of the Partnership that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests or other interests in Blackstone Collateral Entities.
“Limited Partner” means any person who is shown on the books and records of the Partnership as a Limited
Partner of the Partnership, including any Special Limited Partner and any Nonvoting Limited Partner.
“Liquidator” has the meaning set forth in Section 9.1(b).
“Loss Amount” has the meaning set forth in Section 5.8(e).
“Loss Investment” has the meaning set forth in Section 5.8(e).
“Majority in Interest of the Partners” on any date (a “vote date”) means one or more persons
who are Partners (including the General Partner and the Limited Partners but excluding Nonvoting Limited Partners) on the vote date and who, as of the last day of the most recent accounting period ending on or prior to the vote date (or as of such
later date on or prior to the vote date selected by the General Partner as of which the Partners’ capital account balances can be determined), have aggregate capital account balances representing at least a majority in amount of the total
capital account balances of all the persons who are Partners (including the General Partner and the Limited Partners but excluding Nonvoting Limited Partners) on the vote date.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
“Net Carried Interest Distribution” has the meaning set forth in Section 5.8(e).
“Net Carried Interest Distribution Recontribution Amount” has the meaning set forth in Section 5.8(e).
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“Net GP-Related
Recontribution Amount” has the meaning set forth in Section 5.8(d).
“Non-Carried Interest” means, with respect to each GP-Related Investment, all amounts of distributions, other than Carried Interest (and other than Capital Commitment Distributions) received by the Partnership with respect to such
GP-Related Investment, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated
with respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments as it may determine in good faith is appropriate.
“Non-Carried Interest Sharing Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Non-Carried Interest from such GP-Related Investment set forth in the
books and records of the Partnership.
“Non-Contingent” means
generally not subject to repurchase rights or other requirements.
“Nonvoting Limited Partner” has the
meaning set forth in Section 6.1(a).
“Other Blackstone Collateral Entity” means any Blackstone
Entity (other than any limited partnership, limited liability company or other entity named or referred to in the definition of any of “BFIP,” “BFREP,” “BFMEZP” or “BFCOMP”) in which any limited partner
interest, limited liability company interest, unit or other interest is pledged to secure any Investor Note.
“Other Fund GPs” means the General Partner (only with respect to the General Partner’s GP-Related SP VI Partner Interest in the Partnership) and any other entity (other than the Partnership) through which any Partner, Withdrawn Partner or any other person directly receives any amounts of Carried
Interest, and any successor thereto; provided, that this includes any other entity which has in its organizational documents a provision which indicates that it is a “Fund GP” or an “Other Fund GP”; provided
further, that notwithstanding any of the foregoing, neither Holdings nor any estate planning vehicle established for the benefit of family members of any Partner or of any member or partner of any Other Fund GP shall be considered an “Other
Fund GP” for purposes hereof.
“Other Sources” means (i) distributions or payments of CC Carried
Interest (which shall include amounts of CC Carried Interest which are not distributed or paid to a Partner but are instead contributed to a trust (or similar arrangement) to satisfy any “holdback” obligation with respect thereto), and
(ii) distributions from Blackstone Collateral Entities (other than the Partnership) to such Partner.
“Parallel Fund” has the meaning set forth in section 4.6(a) of the SP VI Partnership Agreement.
“Partner” means any person who is a partner of the Partnership, whether a General Partner or a Limited Partner
in whatsoever Partner Category.
“Partner Category” means the Existing Partners, Retaining Withdrawn
Partners or Deceased Partners, each referred to as a group for purposes hereof.
“Partnership” means
Strategic Partners Fund Solutions Associates VI L.P., a Delaware limited partnership.
“Partnership Act”
means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101, et seq., as it may be amended from time to time, and any successor to such statute.
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“Pledgable Blackstone Interests” has the meaning set forth
in Section 4.1(d).
“Prime Rate” means the rate of interest per annum publicly announced from time to
time by JPMorgan Chase Bank, N.A. as its prime rate.
“Qualifying Fund” means any fund designated by the
General Partner as a “Qualifying
Fund.”
“Repurchase Period” has the meaning set forth in Section 5.8.
“Required Rating” has the meaning set forth in Section 4.1(d).
“Retained Portion” has the meaning set forth in Section 7.6.
“Retaining Withdrawn Partner” means a Withdrawn Partner who has retained a
GP- Related Partner Interest, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Nonvoting Limited Partner for all purposes hereof.
“Securities” means any debt or equity securities of an Issuer and its subsidiaries and other Controlled
Entities constituting part of an Investment, including without limitation common and preferred stock, interests in limited partnerships and interests in limited liability companies (including warrants, rights, put and call options and other options
relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or interests commonly regarded as securities, interests in real
property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as money-market investments, bank deposits and interests in personal property of all kinds, whether
tangible or intangible.
“Settlement Date” has the meaning set forth in Section 6.5(a).
“SMD Agreements” means the agreements between the Partnership and/or one or more of its Affiliates and certain
of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby incorporated by reference as between the Partnership and the relevant Partner.
“SP VI” means (i) Strategic Partners Fund VI, L.P., a Delaware limited partnership, (ii) any
alternative vehicle, parallel fund or other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above, and (iii) any investment vehicle formed to co-invest with any of the partnerships referred to in clause (i) above using third party capital and that potentially pays Carried Interest Distributions (as such term is used in such partnership agreements).
“SP VI Agreements” means (i) the SP VI Partnership Agreement and (ii) any other SP VI
partnership agreements, as each may be amended, supplemented, restated or otherwise modified from time to time.
“SP VI Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership of Strategic
Partners Fund VI, L.P., dated as of December 19, 2013, as may be amended, supplemented, restated or otherwise modified from time to time.
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“Special Firm Collateral” means interests in a Qualifying
Fund or other assets that have been pledged to the Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the books and records of the
Partnership.
“Special Firm Collateral Realization” has the meaning set forth in Section 4.1(d).
“Special Limited Partner” means any of the persons shown in the books and records of the Partnership as a Special Limited Partner and any person admitted to the Partnership as an additional Special Limited Partner in accordance with
the provisions of this Agreement.
“S&P” means Standard & Poor’s Ratings Group, and any
successor thereto.
“Strategic Partners Fund Solutions Business” shall mean Blackstone’s business
line responsible for managing SP VI and any predecessor and successor funds thereto, including Strategic Partners Fund, L.P., Strategic Partners Fund II, L.P., Strategic Partners Fund III, L.P., Strategic Partners Fund IV, L.P., Strategic Partners
Fund V, L.P. and their respective parallel vehicles.
“Subject Investment” has the meaning set forth in
Section 5.8(e).
“Subject Partner” has the meaning set forth in Section 4.1(d).
“Successor in Interest” means any (i) shareholder of; (ii) trustee, custodian, receiver or other
person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or receiver, or former officer, director or partner,
or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or assign of, any Partner, whether by operation of law or
otherwise.
“Tax Matters Partner” has the meaning set forth in Section 6.7(b).
“TM” has the meaning set forth in Section 10.2
“Total Disability” means the inability of a Limited Partner substantially to perform the services required of
such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether arising out of
sickness, accident or otherwise.
“Transfer” has the meaning set forth in Section 8.2.
“Trust Account” has the meaning set forth in the Trust Agreement.
“Trust Agreement” means the Trust Agreement dated as of the date set forth therein, as amended, supplemented,
restated or otherwise modified from time to time, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time to time.
“Trust Amount” has the meaning set forth in the Trust Agreement. “Trust Income” has the
meaning set forth in the Trust Agreement.
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“Trustee(s)” has the meaning set forth in the Trust
Agreement.
“Unadjusted Carried Interest Distributions” has the meaning set forth in Section 5.8(e).
“Unallocated Capital Commitment Interests” has the meaning set forth in Section 8.1(f).
“Withdraw” or “Withdrawal” with respect to a Partner means a Partner ceasing to be a partner
of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary), unless the context shall limit the type of withdrawal to a
specific reason, and “Withdrawn” with respect to a Partner means, as aforesaid, a Partner who has ceased to be a partner of the Partnership.
“Withdrawal Date” means the date of the Withdrawal from the Partnership of a Withdrawn Partner.
“Withdrawn Partner” means a Limited Partner whose GP-Related Partner
Interest or Capital Commitment Partner Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include, unless the context requires otherwise, the estate or legal
representatives of any such Partner.
“W-8BEN” has the meaning set
forth in Section 3.8.
“W-8IMY” has the meaning set forth in
Section 3.8.
“W-9” has the meaning set forth in
Section 3.8
Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to both the singular
and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “person” includes individuals, partnerships (including limited
liability partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions thereof) and other associations and entities. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
ARTICLE II
GENERAL PROVISIONS
Section 2.1. General Partner and Limited Partners. The Partners may be General Partners or Limited Partners. The General Partner
as of the date hereof is SPFSA VI L.L.C.. The Limited Partners shall be as shown on the books and records of the Partnership. The books and records of the Partnership contain the GP-Related Profit Sharing
Percentage and GP-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to the GP-Related Investments of the Partnership
as of the date hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to
the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to time to reflect additional GP-Related
Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by the Partnership of Capital Commitment Investments, the GP-Related Profit Sharing Percentages of the
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Partners (including, without limitation, the General Partner) as modified from time to time, the Capital Commitment Profit Sharing Percentages of the Partners (including, without limitation, the
General Partner) as modified from time to time, the admission of additional Partners, the Withdrawal of Partners, and the transfer or assignment of interests in the Partnership pursuant to the terms of this Agreement. At the time of admission of
each additional Partner, the General Partner shall determine in its sole discretion the GP-Related Investments and Capital Commitment Investments in which such Partner shall participate and such Partner’s
GP-Related Commitment, Capital Commitment-Related Commitment, GP-Related Profit Sharing Percentage with respect to each such
GP-Related Investment and Capital Commitment Profit Sharing Percentage with respect to each such Capital Commitment Investment. Each Partner may have a GP-Related
Partner Interest and/or a Capital Commitment Partner Interest.
Section 2.2. Formation; Name Foreign Jurisdictions The
Partnership is hereby continued as a limited partnership pursuant to the Partnership Act and shall conduct its activities on and after the date hereof under the name of Strategic Partners Fund Solutions Associates VI L.P. The certificate of limited
partnership of the Partnership may be amended and/or restated from time to time by the General Partner The General Partner is further authorized to execute and deliver and file any other certificates (and any amendments and/or restatements thereof)
necessary for the Partnership to qualify to do business in a jurisdiction in which the Partnership may wish to conduct business.
Section 2.3. Term. The term of the Partnership shall continue until December 31, 2061, unless earlier dissolved and
terminated in accordance with this Agreement and the Act.
Section 2.4. Purpose; Powers. (a) The purposes of the
Partnership shall be, directly or indirectly through subsidiaries or Affiliates:
(i) to serve as the general partner of SP VI (including
any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP VI”) and perform the functions of a general partner of SP VI (including any Alternative Vehicle, Parallel Fund or other partnership included in
the definition of “SP VI”) specified in the SP VI Agreements,
(ii) to serve as, and hold the Capital Commitment SP VI Interest
as, a capital partner (and, if applicable, a limited partner and/or a general partner) of SP VI (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP VI”) and perform the functions of a
capital partner (and, if applicable, a limited partner and/or a general partner) of SP VI (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP VI”) specified in the SP VI Agreements,
(iii) to make the Blackstone Commitment or a portion thereof, either directly or indirectly through another entity,
(iv) to serve as a general partner or limited partner of other partnerships and perform the functions of a general partner or limited partner
specified in the respective partnership agreements, as amended, supplemented, restated or otherwise modified from time to time, of any such partnership,
(v) to serve as a member of limited liability companies and perform the functions of a member specified in the respective limited liability
company agreements, as amended, supplemented, restated or otherwise modified from time to time, of any such limited liability company,
(vi) to invest in Capital Commitment Investments and/or GP-Related Investments and acquire and invest
in Securities or other property (directly or indirectly through SP VI (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP VI”), including, without limitation, in connection with any
action referred to in any of clauses (i) through (v) above,
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(vii) to carry on such other businesses, perform such other services and make such other
investments as are deemed desirable by the General Partner and as are permitted under the Partnership Act and SP VI Agreements, and the respective partnership agreement of any partnership referred to in clause (iv) above and the respective
limited liability company agreement of any limited liability company referred to in clause (v) above, in the case of each of the foregoing, as amended, supplemented, restated or otherwise modified from time to time,
(viii) any other lawful purpose, and
(ix) to do all things necessary, desirable, convenient or incidental thereto.
(b) In furtherance of its purposes, the Partnership shall have all powers necessary, suitable or convenient for the accomplishment of its
purposes, alone or with others, as principal or agent, including the following:
(i) to be and become a general or limited
partner of partnerships, a member of limited liability companies, a holder of common and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with the making of Investments or the acquisition,
holding or disposition of Securities or other property or as otherwise deemed appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection therewith;
(ii) to acquire and invest in general or limited partner interests, in limited liability company interests, in common and
preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or direct or indirect interests therein, whether such Investments and
Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company interests, stock, interests, obligations, Investments or Securities or
other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or short, options on futures contracts;
(iii) to buy, sell and otherwise acquire investments, whether such investments are readily marketable or not;
(iv) to invest and reinvest the cash assets of the Partnership in money-market or other short-term investments;
(v) to hold, receive, mortgage, pledge, lease, transfer, exchange or otherwise dispose of, grant options with respect to, and
otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or owned by the Partnership;
(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by mortgage, pledge,
conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and to buy, sell,
pledge or otherwise dispose of any such instrument or evidence of indebtedness;
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(vii) to lend any of its property or funds, either with or without security,
at any legal rate of interest or without interest;
(viii) to have and maintain one or more offices within or without the
State of Delaware, and in connection therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection with the maintenance of such office or offices;
(ix) to open, maintain and close accounts, including margin accounts, with brokers;
(x) to open, maintain and close bank accounts and draw checks and other orders for the payment of moneys;
(xi) to engage accountants, auditors, custodians, investment advisers, attorneys and any and all other agents and assistants,
both professional and nonprofessional, and to compensate any of them as may be necessary or advisable;
(xii) to form or
cause to be formed and to own the stock of one or more corporations, whether foreign or domestic, to form or cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic, and to form or cause to be formed and
be a member or manager or both of one or more limited liability companies;
(xiii) to enter into, make and perform all
contracts, agreements and other undertakings as may be necessary, convenient or advisable or incident to carrying out its purposes;
(xiv) to sue and be sued, to prosecute, settle or compromise all claims against third parties, to compromise, settle or accept
judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection therewith;
(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to the Partners cash or
investments or other property of the Partnership, or any combination thereof; and
(xvi) to take such other actions
necessary, desirable, convenient or incidental thereto and to engage in such other businesses as may be permitted under Delaware and other applicable law.
Section 2.5. Place of Business. The Partnership shall maintain a registered office at The Corporation Trust Company, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801. The Partnership shall maintain an office and principal place of business at such place or places as the General Partner specifies from time to time and as set forth in the books and records of
the Partnership. The name and address of the Partnership’s registered agent is The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The General Partner may from time to time change the registered
agent or office by an amendment to the certificate of limited partnership of the Partnership.
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Section 2.6. Withdrawal of Initial Limited Partner. Upon the admission of one or
more Limited Partners to the Partnership, the Initial Limited Partner shall Withdraw as the Initial Limited Partner of the Partnership and have no further right, interest or obligation of any kind whatsoever as a Partner in the Partnership.
ARTICLE III
MANAGEMENT
Section 3.1. General Partners. The General Partner shall be the general partner of the Partnership. The General Partner may not be
removed without its consent.
Section 3.2. Limitations on Limited Partners. Except as may be expressly required or permitted
by the Partnership Act, Limited Partners as such shall have no right to, and shall not, take part in the management, conduct or control of the Partnership’s business or act for or bind the Partnership, and shall have only the rights and powers
granted to Limited Partners herein.
Section 3.3. Partner Voting.
(a) To the extent a Partner is entitled to vote with respect to any matter relating to the Partnership, such Partner shall not be obligated to
abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such Partner (or any Affiliate thereof) in such matter.
(b) Meetings of the Partners may be called only by the General Partner.
Section 3.4. Management. (a) The management, control and operation of the Partnership and the formulation and execution of
business and investment policy shall be vested in the General Partner, and the General Partner shall have full control over the business and affairs of the Partnership. The General Partner shall, in the General Partner’s discretion, exercise
all powers necessary and convenient for the purposes of the Partnership, including those enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the
General Partner pursuant to this Agreement shall be made in the General Partner’s discretion, subject only to the express terms and conditions of this Agreement.
(b) All outside business or investment activities of the Partners (including outside directorships or trusteeships) shall be subject to such
rules and regulations as are established by the General Partner from time to time.
(c) Notwithstanding any provision in this Agreement to
the contrary, the Partnership is hereby authorized, without the need for any further act, vote or consent of any person (directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in
its capacity as a general partner, capital partner and/or limited partner of SP VI, or in the Partnership’s capacity as a general or limited partner, member or other equity owner of any Partnership Affiliate (as hereinafter defined), (i) to
execute and deliver, and to perform the Partnership’s obligations under, the SP VI Agreements, including, without limitation, serving as a general partner of SP VI, (ii) to execute and deliver, and to perform the Partnership’s
obligations under, the governing agreement, as amended, supplemented, restated or otherwise modified (each a “Partnership Affiliate Governing Agreement”), of any other partnership, limited liability company or other entity (each a
“Partnership Affiliate”) of which the Partnership is to become a general or limited partner, member or other equity
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owner, including, without limitation, serving as a general or limited partner, member or other equity owner of each Partnership Affiliate, and (iii) to take any action, in the applicable
capacity, contemplated by or arising out of this Agreement, the SP VI Agreements or any Partnership Affiliate Governing Agreement (and any amendment, supplement, restatement and/or other modification of any of the foregoing).
(d) Each of Stephen A. Schwarzman, Hamilton E. James, John G. Finley, Laurence A. Tosi, John A. Magliano, Kathleen Skero, Matthew Skurbe,
Christopher J. James, Peter Song, Stephen H. Can, Verdun Perry and any other person designated by the General Partner, each acting individually, is hereby authorized and empowered, as an authorized representative of the Partnership or as an
authorized person of the General Partner (within the meaning of the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq., as amended, or otherwise) (the General Partner hereby
authorizing and ratifying any of the following actions):
(i) (i) to execute and deliver and/or file (including any
such action, directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP VI, or in the
Partnership’s capacity as a general or limited partner, member or other equity owner of any Partnership Affiliate, any of the following:
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(A)
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any agreement, certificate, instrument or other document of the Partnership, SP VI or any Partnership Affiliate
(and any amendments, supplements, restatements and/or other modifications thereof), including, without limitation, the following: (I) the SP VI Agreements and each Partnership Affiliate Governing Agreement, (II) Subscription Agreements on
behalf of SP VI and/or the Partnership, (III) side letters issued in connection with investments in SP VI on behalf of SP VI and/or the Partnership, and (IV) such other agreements, certificates, instruments and other documents as may be
necessary or desirable in furtherance of the purposes of the Partnership, SP VI or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing referred to in (I) through (IV)
hereof);
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(B)
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the certificates of formation, certificates of limited partnership and/or other organizational documents of the
Partnership, SP VI or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications thereof); and
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(C)
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any other certificates, notices, applications or other documents (and any amendments, supplements, restatements
and/or other modifications thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Partnership, SP VI or any Partnership Affiliate to qualify to do
business in a jurisdiction in which the Partnership, SP VI or such Partnership Affiliate desires to do business;
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(ii) to prepare or cause to be prepared, and to sign, execute and deliver and/or file (including any such action, directly or
indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP VI or in the Partnership’s capacity as a
general or limited partner, member or other equity owner of any Partnership Affiliate): (A) any certificates, forms, notices, applications or other documents to be filed with any government or
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governmental or regulatory body on behalf of the Partnership, SP VI or any Partnership Affiliate, (B) any certificates, forms, notices, applications or other documents that may be necessary or
advisable in connection with any bank account of the Partnership, SP VI or any Partnership Affiliate or any banking facilities or services that may be utilized by the Partnership, SP VI or any Partnership Affiliate, and all checks, notes, drafts and
other documents of the Partnership, SP VI or any Partnership Affiliate that may be required in connection with any such bank account, banking facilities or services, (C) resolutions with respect to any of the foregoing matters (which
resolutions, when executed by any person authorized as provided in this Section 3.4(d), each acting individually, shall be deemed to have been adopted by the General Partner, the Partnership, SP VI or any Partnership Affiliate, as applicable,
for all purposes).
The authority granted to any person (other than Stephen A. Schwarzman) in this Section 3.4(d) may be revoked at any time by the
General Partner by an instrument in writing signed by the General Partner.
Section 3.5. Responsibilities of Partners. Unless
otherwise determined by the General Partner in a particular case, each Limited Partner shall devote substantially all his time and attention to the businesses of the Partnership and its Affiliates.
(b) All outside business or investment activities of the Partners (including outside directorships or trusteeships), shall be subject to such
rules and regulations as are established by the General Partner from time to time.
(c) The General Partner may from time to time establish
such other rules and regulations applicable to Partners or other employees as the General Partner deems appropriate, including rules governing the authority of Partners or other employees to bind the Partnership to financial commitments or other
obligations.
Section 3.6. Exculpation and Indemnification.
(a) Liability to Partners. Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent
permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually, a
“Covered Person” and collectively, the “Covered Persons”) shall be liable to the Partnership or any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related document or any
transaction or investment contemplated hereby or thereby) taken or omitted by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable judicial
determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority
granted to such Covered Person by this Agreement, and, with respect to any criminal act or proceeding, had reasonable cause to believe that such Covered Person’s conduct was unlawful. Each Covered Person shall be entitled to rely in good faith
on the advice of legal counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by any Covered Person in reliance on such advice shall in any event subject such person to any liability to any Partner or
the Partnership. To the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to another Partner, to the fullest extent permitted by law, such Partner acting under
this Agreement shall not be liable to the Partnership or to any such other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they expand or restrict the duties and
liabilities of a Partner otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by law, to modify to that extent such other duties and liabilities of such Partner.
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(b) Indemnification. (i) To the fullest extent permitted by law, the Partnership
shall indemnify and hold harmless (but only to the extent of the Partnership’s assets (including, without limitation, the remaining capital commitments of the Partners) each Covered Person from and against any and all claims, damages, losses,
costs, expenses and liabilities (including, without limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable expenses of investigating or defending against
any claim or alleged claim), joint and several, of any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, for purposes of this Section 3.6, “Losses”), arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative, in which the Covered Person may be involved, or threatened to be involved, as a party or otherwise, by reason of such Covered Person’s management of the affairs of
the Partnership or which relate to or arise out of or in connection with the Partnership, its property, its business or affairs (other than claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, arising out
of any act or omission of such Covered Person constituting Cause); provided, that a Covered Person shall not be entitled to indemnification under this Section with respect to any claim, issue or matter if there is a final and non-appealable judicial determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the
best interest of the Partnership and within the authority granted to such Covered Person by this Agreement, and, with respect to any criminal act or proceeding, had reasonable cause to believe that such Covered Person’s conduct was unlawful;
provided further, that if such Covered Person is a Partner or a Withdrawn Partner, such Covered Person shall bear its share of such Losses in accordance with such Covered Person’s GP-Related Profit
Sharing Percentage in the Partnership as of the time of the actions or omissions that gave rise to such Losses. To the fullest extent permitted by law, expenses (including legal fees) incurred by a Covered Person (including, without limitation, the
General Partner) in defending any claim, demand, action, suit or proceeding may, with the approval of the General Partner, from time to time, be advanced by the Partnership prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Partnership of a written undertaking by or on behalf of the Covered Person to repay such amount to the extent that it shall be subsequently determined that the Covered Person is not entitled to be indemnified as
authorized in this Section, and the Partnership and its Affiliates shall have a continuing right of offset against such Covered Person’s interests/investments in the Partnership and such Affiliates and shall have the right to withhold amounts
otherwise distributable to such Covered Person to satisfy such repayment obligation. If a Partner institutes litigation against a Covered Person which gives rise to an indemnity obligation hereunder, such Partner shall be responsible, up to the
amount of such Partner’s Interests and remaining capital commitment, for such Partner’s pro rata share of the Partnership’s expenses related to such indemnity obligation, as determined by the General Partner. The Partnership
may purchase insurance, to the extent available at reasonable cost, to cover losses, claims, damages or liabilities covered by the foregoing indemnification provisions. Partners will not be personally obligated with respect to indemnification
pursuant to this Section. The General Partner shall have the authority to enter into separate agreements with any Covered Person in order to give effect to the obligations to indemnify pursuant to this Section 3.6.
(ii) (A) Notwithstanding anything to the contrary herein, for greater certainty, it is understood and/or agreed that the
Partnership’s obligations hereunder are not intended to render the Partnership as a primary indemnitor for purposes of the indemnification, advancement of expenses and related provisions under applicable law governing SP VI and/or a particular
portfolio entity through which an Investment is indirectly held. It is further understood and/or agreed that a Covered Person shall first seek to be so indemnified and have such expenses advanced in the following order of priority: first out of
proceeds available in respect of applicable insurance policies maintained by the applicable portfolio entity and/or SP VI, second by the applicable portfolio entity through which such investment is indirectly held, and third by SP VI (only to the
extent the foregoing sources are exhausted).
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(B) The Partnership’s obligation, if any, to indemnify or advance expenses to any
Covered Person shall be reduced by any amount that such Covered Person may collect as indemnification or advancement from SP VI and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained thereby), and
to the extent the Partnership (or any Affiliate thereof) pays or causes to be paid any amounts that should have been paid by SP VI and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained thereby),
it is agreed among the Partners that the Partnership shall have a subrogation claim against SP VI and/or such portfolio entity in respect of such advancement or payments. The General Partner and the Partnership shall be specifically empowered to
structure any such advancement or payment as a loan or other arrangement (except for a loan to an executive officer of The Blackstone Group L.P. or any of its Affiliates, which shall not be permitted) as the General Partner may determine necessary
or advisable to give effect to or otherwise implement the foregoing.
Section 3.7. Representations of Limited Partners.
(a) Each Limited Partner by execution of this Agreement (or by otherwise becoming bound by the terms and conditions hereof as provided herein
or in the Partnership Act) represents and warrants to every other Partner and to the Partnership, except as may be waived by the General Partner, that such Limited Partner is acquiring each of such Limited Partner’s Interests for such Limited
Partner’s own account for investment and not with a view to resell or distribute the same or any part hereof, and that no other person has any interest in any such Interest or in the rights of such Limited Partner hereunder; provided, that a
Partner may choose to make transfers for estate and charitable planning purposes (in accordance with the terms hereof). Each Limited Partner represents and warrants that such Limited Partner understands that the Interests have not been registered
under the Securities Act and therefore such Interests may not be resold without registration under such Act or exemption from such registration, and that accordingly such Limited Partner must bear the economic risk of an investment in the
Partnership for an indefinite period of time. Each Limited Partner represents that such Limited Partner has such knowledge and experience in financial and business matters that such Limited Partner is capable of evaluating the merits and risks of an
investment in the Partnership, and that such Limited Partner is able to bear the economic risk of such investment. Each Limited Partner represents that such Limited Partner’s overall commitment to the Partnership and other investments which are
not readily marketable is not disproportionate to the Limited Partner’s net worth and the Limited Partner has no need for liquidity in the Limited Partner’s investment in Interests. Each Limited Partner represents that to the full
satisfaction of the Limited Partner, the Limited Partner has been furnished any materials that such Limited Partner has requested relating to the Partnership, any Investment and the offering of Interests and has been afforded the opportunity to ask
questions of representatives of the Partnership concerning the terms and conditions of the offering of Interests and any matters pertaining to each Investment and to obtain any other additional information relating thereto. Each Limited Partner
represents that the Limited Partner has consulted to the extent deemed appropriate by the Limited Partner with the Limited Partner’s own advisers as to the financial, tax, legal and related matters concerning an investment in Interests and on
that basis believes that an investment in the Interests is suitable and appropriate for the Limited Partner.
(b) Each Partner agrees that
the representations and warranties contained in paragraph (a) above shall be true and correct as of any date that such Partner (1) makes a capital contribution to the Partnership (whether as a result of Firm Advances made to such Partner or
otherwise) with respect to any Investment, and such Partner hereby agrees that such capital contribution shall serve as confirmation thereof and/or (2) repays any portion of the principal amount of a Firm Advance, and such Partner hereby agrees
that such repayment shall serve as confirmation thereof.
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Section 3.8. Tax Representation. Each Limited Partner certifies that (A) if
the Limited Partner is a United States person (as defined in the Code) (x) (i) the Limited Partner’s name, social security number (or, if applicable, employer identification number) and address provided to the Partnership and its
Affiliates pursuant to an IRS Form W-9, Payer’s Request for Taxpayer Identification Number Certification (“W-9”) or otherwise are correct and
(ii) the Limited Partner will complete and return a W-9, and (y) (i) the Limited Partner is a United States person (as defined in the Code) and (ii) the Limited Partner will notify the
Partnership within 60 days of a change to foreign (non-United States) status or (B) if the Limited Partner is not a United States person (as defined in the Code) (x) (i) the information on the
completed IRS Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (“W-8BEN”) or other applicable form,
including but not limited to IRS Form W-8IMY, Certificate of Foreign Intermediary, Foreign Partnership, or Certain U.S. Branches for United States Tax Withholding
(“W-8IMY”), or otherwise is correct and (ii) the Limited Partner will complete and return the applicable IRS form, including but not limited to a
W-8BEN or W-8IMY, and (y) (i) the Limited Partner is not a United States person (as defined in the Code) and (ii) the Limited Partner will notify the Partnership
within 60 days of any change of such status. The Limited Partner agrees to properly execute and provide to the Partnership in a timely manner any tax documentation that may be reasonably required by the Partnership or the General Partner.
ARTICLE IV
CAPITAL OF THE
PARTNERSHIP
Section 4.1. Capital Contributions by Partners. (a) Each Partner shall be required to make capital
contributions to the Partnership (“GP-Related Capital Contributions”) at such times and in such amounts (the “GP-Related Required
Amounts”) as are required to satisfy the Partnership’s obligation to make capital contributions to SP VI in respect of the GP-Related SP VI Interest with respect to any GP- Related SP VI Investment and as are otherwise determined by the General Partner from time to time or as may be set forth in such Limited Partner’s Commitment Agreement or SMD Agreement, if any;
provided, that additional GP-Related Capital Contributions in excess of the GP-Related Required Amounts may be made pro rata among the Partners based upon each
Partner’s Carried Interest Sharing Percentage. GP- Related Capital Contributions in excess of the GP-Related Required Amounts which are to be used for ongoing
business operations (as distinct from financing, legal or other specific liabilities of the Partnership (including those specifically set forth in Sections 4.1(d) and 5.8(d)) shall be determined by the General Partner. Limited Partners shall not be
required to make additional GP-Related Capital Contributions to the Partnership in excess of the GP-Related Required Amounts, except (i) as a condition of an
increase in such Limited Partner’s GP-Related Profit Sharing Percentage or (ii) as specifically set forth in this Agreement; provided, that the General Partner and any Limited Partner may
agree from time to time that such Limited Partner shall make an additional GP-Related Capital Contribution to the Partnership; provided further, that each Investor Limited Partner shall maintain its GP-Related Capital Accounts at an aggregate level equal to the product of (i) its GP-Related Profit Sharing Percentage from time to time and (ii) the total capital
of the Partnership related to the GP-Related SP VI Interest.
(b) The General Partner may elect on
a case by case basis to (i) cause the Partnership to loan any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group
L.P. or any Affiliate thereof) the amount of any GP-Related Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the
Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group L.P. or any Affiliate thereof) to make a required GP-Related Capital Contribution to
the Partnership in installments, in each case on terms determined by the General Partner.
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(c) Each GP-Related Capital Contribution by a
Partner shall be credited to the appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2, subject to Section 5.10.
(d) The Partners and the Withdrawn Partners have entered into the Trust Agreement, pursuant to which certain amounts of distributions relating
to Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account constituting a “Holdback”).
(i) The General Partner shall determine, as set forth below, the percentage of each distribution of Carried Interest that shall
be withheld for any General Partner (including, without limitation, the General Partner) and each Partner Category (such withheld percentage constituting a General Partner’s and such Partner Category’s “Holdback
Percentage”). The applicable Holdback Percentages initially shall be 0% for any General Partner, 15% for Existing Partners (other than any General Partner), 21% for Retaining Withdrawn Partners (other than any General Partner) and 24% for
Deceased Partners (the “Initial Holdback Percentages”). Any provision of this Agreement to the contrary notwithstanding, the Holdback Percentage for any General Partner (including, without limitation, the General Partner) shall not
be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).
(ii) The Holdback Percentage
may not be reduced for any individual Partner as compared to the other Partners in his Partner Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner Categories on a
proportionate basis. For example, if the Holdback Percentage for Existing Partners is decreased to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any reduction
in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such reduction.
(iii) The Holdback Percentage may not be increased for any individual Partner as compared to the other Partners in his Partner
Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’ Holdback Percentage beyond 21% unless the General Partner concurrently increases the Existing Partners’
Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the General Partner increases the Holdback Percentage for both Existing Partners and Retaining Withdrawn Partners to
24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies equally to all Partner Categories. Any increase in the Holdback Percentage for any Partner shall apply only to
distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner from proportionately increasing the Holdback Percentage of any Partner Category (following a reduction of the
Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For example, if the General Partner reduces the Holdback Percentages for Existing Partners, Retaining Withdrawn
Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the Holdback Percentages to the Initial Holdback Percentages.
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(iv) (A) Notwithstanding anything contained herein to the contrary, the
Partnership may increase or decrease the Holdback Percentage for any Partner in any Partner Category (in such capacity, the “Subject Partner”) pursuant to a majority vote of the Limited Partners and the General Partner (a
“Holdback Vote”); provided, that, notwithstanding anything to the contrary contained herein, the Holdback Percentage applicable to any General Partner shall not be increased or decreased without its prior written consent;
provided further, that a Subject Partner’s Holdback Percentage shall not be (I) increased prior to such time as such Subject Partner (x) is notified by the Partnership of the decision to increase such Subject Partner’s Holdback
Percentage and (y) has, if requested by such Subject Partner, been given 30 days to gather and provide information to the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) or (II) decreased
unless such decrease occurs subsequent to an increase in a Subject Partner’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv); provided further, that such decrease shall not exceed an amount such that such
Subject Partner’s Holdback Percentage is less than the prevailing Holdback Percentage for such Subject Partner’s Partner Category; provided further, that a Partner shall not vote to increase a Subject Partner’s Holdback
Percentage unless such voting Partner determines, in such Partner’s good faith judgment, that the facts and circumstances indicate that it is reasonably likely that such Subject Partner, or any of such Subject Partner’s successors or
assigns (including such Subject Partner’s estate or heirs) who at the time of such vote holds the GP-Related Partner Interest or otherwise has the right to receive distributions relating thereto, will not
be capable of satisfying any GP-Related Recontribution Amounts that may become due.
(B) A Holdback Vote shall take place at a Partnership meeting. Each of the Limited Partners and the General Partner shall be
entitled to cast one vote with respect to the Holdback Vote regardless of such Partner’s interest in the Partnership. Such vote may be cast by any such Partner in person or by proxy.
(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback Percentage, such Subject
Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided, that if the Partnership and the Subject Partner cannot agree upon a mutually
satisfactory arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates; provided further,
that if such candidates fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the arbitrator. Each Subject Partner that
submits the decision of the Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected out-of-pocket
expenses relating thereto and each such party shall, to the satisfaction of the arbitrator and prior to any determination being made by the arbitrator, pay the total of such estimated expenses (i.e., both the Subject Partner’s and the
Partnership’s expenses) into an escrow account to be controlled by Simpson Thacher & Bartlett LLP, as escrow agent (or such other comparable law firm as the Partnership and the Subject Partner shall agree). The arbitrator shall direct
the escrow agent to pay out of such escrow account all expenses associated with such arbitration (including costs leading thereto) and to return to the “victorious” party the entire amount of funds such party paid into such escrow account.
If the amount contributed to the escrow account by the losing party is insufficient to cover the expenses of such arbitration, such “losing” party shall then provide any additional funds necessary to cover such costs to such
“victorious” party. For purposes hereof, the “victorious” party shall be the Partnership, if the Holdback Percentage ultimately determined by the arbitrator is closer to the percentage determined in the second Holdback Vote than
it is to the prevailing Holdback Percentage for the Subject Partner’s Partner Category; otherwise, the Subject Partner shall be the “victorious” party. The party that is not the “victorious” party shall be the
“losing” party.
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(D) In the event of a decrease in a Subject Partner’s Holdback
Percentage (1) pursuant to a Holdback Vote under this clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and distribute to such Subject Partner any Trust
Amounts (and the Trust Income thereon (except as expressly provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance with such Subject Partner’s reduced
Holdback Percentage) as though such reduced Holdback Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).
(v) (A) If a Partner’s Holdback Percentage exceeds 15% (such percentage in excess of 15% constituting the
“Excess Holdback Percentage”), such Partner may satisfy the portion of his Holdback obligation in respect of his Excess Holdback Percentage (such portion constituting such Partner’s “Excess Holdback”), and such
Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he was a Partner), to the extent his Excess Holdback obligation has previously been satisfied in cash, may obtain the release of the Trust Amounts (but
not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback obligation, by pledging or otherwise making available
to the Partnership, on a first priority basis (except as provided below), all or any portion of his Firm Collateral in satisfaction of his Excess Holdback obligation. Any Partner seeking to satisfy all or any portion of the Excess Holdback utilizing
Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of
the Partnership to realize on (if required), such Firm Collateral; provided, that in the case of entities listed in the books and records of the Partnership, in which Partners/members are permitted to pledge their interests therein to finance
all or a portion of their capital contributions thereto (“Pledgable Blackstone Interests”), to the extent a first priority security interest is unavailable because of an existing lien on such Firm Collateral, the Partner or
Withdrawn Partner seeking to utilize such Firm Collateral shall grant the Partnership a second priority security interest therein in the manner provided above; provided further, that (x) in the case of Pledgable Blackstone Interests, to
the extent that neither a first priority nor a second priority security interest is available, or (y) if the General Partner otherwise determines in its good faith judgment that a security interest in Firm Collateral (and the corresponding
documents and actions) are not necessary or appropriate, the Partner or Withdrawn Partner shall (in the case of either clause (x) or (y) above) irrevocably instruct in writing the relevant partnership, limited liability company or other entity
listed in the books and records of the Partnership to remit any and all net proceeds resulting from a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully provided in clause (B) below. The Partnership shall, at the
request of any Partner or Withdrawn Partner, assist such Partner or Withdrawn Partner in taking such action as is necessary to enable such Partner or Withdrawn Partner to use Firm Collateral as provided hereunder.
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(B) If upon a sale or other realization of all or any portion of any Firm
Collateral (a “Firm Collateral Realization”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds otherwise
distributable to such Partner or Withdrawn Partner from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust Account to
fully satisfy such Excess Holdback requirement (allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount necessary
to satisfy such Excess Holdback requirement shall be distributed to such Partner or Withdrawn Partner.
(C) Upon any
valuation or revaluation of Firm Collateral that results in a decreased valuation of such Firm Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including
upon a Firm Collateral Realization, if net proceeds therefrom and the remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the
foregoing to such Partner or Withdrawn Partner and such Partner or Withdrawn Partner shall, within 30 days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his Excess
Holdback requirement. If any such Partner or Withdrawn Partner defaults upon his obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed
inapplicable to a default under this clause (C); provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting
Party” where such term appears in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution
Amount” and “GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(vi) Any Limited Partner or Withdrawn Partner may (A) obtain the release of any Trust Amounts (but not the Trust Income
thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such Partner or Withdrawn Partner or (B) require the Partnership
to distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit (an “L/C”) for the benefit of the Trustee(s) in such amounts. Any
Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall deliver to the Trustee(s) an unconditional and irrevocable L/C from a commercial bank whose (x) short-term
deposits are rated at least A-1 by S&P and P-1 by Moody’s (if the L/C is for a term of 1 year or less), or (y) long-term deposits are rated at least A+ by
S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more) (each a “Required Rating”). If the relevant rating of the commercial bank issuing such L/C drops below the relevant Required Rating, the L/C Partner shall
supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, in lieu of the insufficient L/C. In addition, if the L/C has a term expiring on a
date earlier than the latest possible termination date of SP VI, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to provide a new L/C from a commercial bank whose relevant rating is at least equal to the relevant
Required Rating, at least 30 days prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to drawing on any L/C. The Trustee(s) may (as directed by the Partnership in the case of clause
(I) below) draw down on an L/C only if (I) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the Partnership’s obligations under the Clawback Provisions or (II) an L/C Partner has not provided a
new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash
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and/or Firm Collateral (to the extent permitted hereunder)), at least 30 days prior to the stated expiration of an existing L/C in accordance with this clause (vi). The Trustee(s), as directed by
the Partnership, shall return to any L/C Partner his L/C upon (1) the termination of the Trust Account and satisfaction of the Partnership’s obligations, if any, in respect of the Clawback Provisions, (2) an L/C Partner satisfying his
entire Holdback obligation in cash and Firm Collateral (to the extent permitted hereunder), or (3) the release, by the Trustee(s), as directed by the Partnership, of all amounts in the Trust Account to the Partners or Withdrawn Partners. If an
L/C Partner satisfies a portion of his Holdback obligation in cash and/or Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as directed by the Partnership, release a portion of the amounts in the Trust Account to the Partners
or Withdrawn Partners in the Partner Category of such L/C Partner, the L/C of an L/C Partner may be reduced by an amount corresponding to such portion satisfied in cash and/or Firm Collateral (to the extent permitted hereunder) or such portion
released by the Trustee(s), as directed by the Partnership; provided, that in no way shall the general release of any Trust Income cause an L/C Partner to be permitted to reduce the amount of an L/C by any amount.
(vii) (A) Any in-kind distributions by the Partnership relating to Carried
Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose of any in-kind distributions held in the Trust Account at any
time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.
(B) In lieu of the
foregoing, any Existing Partner may pledge with respect to any in-kind distribution the Special Firm Collateral referred to in the applicable category in the books and records of the Partnership;
provided, that the initial contribution of such Special Firm Collateral shall initially equal 130% of the required Holdback Amount for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback Amount. Paragraphs
4.1(d)(viii)(C) and (D) shall apply to such Special Firm Collateral. To the extent such Special Firm Collateral exceeds the applicable minimum percentage of the required Holdback Amount specified in the first sentence of this clause (vii)(B),
the related Partner may obtain a release of such excess amount from the Trust Account.
(viii) (A) Any Limited Partner
or Withdrawn Partner may satisfy all or any portion of his Holdback (excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by
the use of an L/C as provided herein, obtain a release of Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn
Partner’s Holdback (excluding any Excess Holdback) by pledging to the Trustee(s) on a first priority basis all of his Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or exceed the amount of the Holdback
distributed to the Partner or Withdrawn Partner (as more fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise take such other action as is
necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) )to realize on (if required), such Special Firm Collateral.
(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or any portion of any Special Firm
Collateral (a “Special Firm Collateral Realization”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in
30
connection with an Excess Holdback) is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided
herein (i.e., cash contributed to the Trust Account or an L/C in the Trust Account)), then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Special Firm Collateral Realization (which shall not
include the amount of Firm Collateral that consists of a Qualifying Fund or other asset and is being used in connection with an Excess Holdback) shall be paid into the Trust (and allocated to such Partner or Withdrawn Partner) to fully satisfy such
Holdback and shall be deemed thereafter to be Trust Amounts for purposes hereunder. Any net proceeds from such Special Firm Collateral Realization in excess of the amount necessary to satisfy such Holdback (excluding any Excess Holdback) shall be
distributed to such Partner or Withdrawn Partner. To the extent a Qualifying Fund distributes Securities to a Partner or Withdrawn Partner in connection with a Special Firm Collateral Realization, such Partner or Withdrawn Partner shall be required
to promptly fund such Partner’s or Withdrawn Partner’s deficiency with respect to his Holdback in cash or an L/C.
(C) Upon any valuation or revaluation of the Special Firm Collateral and/or any adjustment in the Applicable Collateral
Percentage applicable to a Qualifying Fund (as provided in the books and records of the Partnership), if such Partner’s or Withdrawn Partner’s Special Firm Collateral valued at less than such Partner’s Holdback (excluding any Excess
Holdback) as provided in the books and records of the Partnership, taking into account other permitted means of satisfying the Holdback hereunder, the Partnership shall provide notice of the foregoing to such Partner or Withdrawn Partner and, within
10 business days of receiving such notice, such Partner or Withdrawn Partner shall contribute cash or additional Special Firm Collateral to the Trust Account in an amount necessary to make up such deficiency. If any such Partner or Withdrawn Partner
defaults upon his obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable to such default; provided further,
that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such Section 5.8(d)(ii) shall be
construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related
Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(D) Upon a Partner becoming a Withdrawn Partner, at any time thereafter the General Partner may revoke the ability of such
Withdrawn Partner to use Special Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding anything else in this Section 4.1(d)(viii). In that case the provisions of clause (C) above shall apply to the Withdrawn
Partner’s obligation to satisfy the Holdback (except that 30 days’ notice of such revocation shall be given), given that the Special Firm Collateral is no longer available to satisfy any portion of the Holdback (excluding any Excess
Holdback).
(E) Nothing in this Section 4.1(d)(viii) shall prevent any Partner or Withdrawn Partner from using any
amount of such Partner’s interest in a Qualifying Fund as Firm Collateral; provided that at all times Section 4.1(d)(v) and this Section 4.1(d)(viii) are each satisfied.
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Section 4.2. Interest. Interest on the balances of the Partners’ capital
related to the Partners’ GP-Related Partner Interests (excluding capital invested in GP-Related Investments and, if deemed appropriate by the General Partner,
capital invested in any other investment of the Partnership) shall be credited to the Partners’ GP-Related Capital Accounts at the end of each accounting period pursuant to Section 5.2, or at any
other time as determined by the General Partner, at rates determined by the General Partner from time to time, and shall be charged as an expense of the Partnership.
Section 4.3. Withdrawals of Capital. No Partner may withdraw capital related to such Partner’s
GP-Related Partner Interest from the Partnership except (i) for distributions of cash or other property pursuant to Section 5.8, (ii) as otherwise expressly provided in this Agreement, or
(iii) as determined by the General Partner.
ARTICLE V
PARTICIPATION IN PROFITS AND LOSSES
Section 5.1. General Accounting Matters.
(a) GP-Related Net Income (Loss) shall be determined by the General Partner at the end of each
accounting period and shall be allocated as described in Section 5.4.
(b) “GP-Related
Net Income (Loss)” from any activity of the Partnership related to the GP-Related SP VI Interest for any accounting period means (i) the gross income realized by the Partnership from such
activity during such accounting period less (ii) all expenses of the Partnership, and all other items that are deductible from gross income, for such accounting period that are allocable to such activity (determined as provided below).
“GP-Related Net Income (Loss)” from any GP-Related Investment
for any accounting period in which such GP-Related Investment has not been sold or otherwise disposed of means (i) the gross amount of dividends, interest or other income received by the Partnership from
such GP-Related Investment during such accounting period less (ii) all expenses of the Partnership for such accounting period that are allocable to such GP-Related
Investment (determined as provided below).
“GP-Related Net Income (Loss)” from any GP-Related Investment for the accounting period in which such GP-Related Investment is sold or otherwise disposed of means (i) the sum of the gross proceeds from the sale
or other disposition of such GP-Related Investment and the gross amount of dividends, interest or other income received by the Partnership from such GP-Related
Investment during such accounting period less (ii) the sum of the cost or other basis to the Partnership of such GP-Related Investment and all expenses of the Partnership for such accounting period that
are allocable to such GP- Related Investment.
GP-Related Net Income (Loss)
shall be determined in accordance with the accounting method used by the Partnership for Federal income tax purposes with the following adjustments: (i) any income of the Partnership that is exempt from Federal income taxation and not otherwise
taken into account in computing GP-Related Net Income (Loss) shall be added to such taxable income or loss; (ii) if any asset has a value on the books of the Partnership that differs from its adjusted tax
basis for Federal income tax purposes, any depreciation, amortization or gain resulting from a disposition of such asset shall be calculated with reference to such value; (iii) upon an adjustment to the value of any asset on the books of the
Partnership pursuant to Regulation Section 1.704-1(b)(2), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (iv) any expenditures of the
Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing GP-Related Net Income (Loss) pursuant to this definition shall be
treated as deductible items; (v) any income from a GP-Related Investment that is payable to
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Partnership employees in respect of “phantom interests” in such GP-Related Investment awarded by the General Partner to employees shall be
included as an expense in the calculation of GP-Related Net Income (Loss) from such GP-Related Investment, and (vi) items of income and expense (including interest
income and overhead and other indirect expenses) of the Partnership and Affiliates of the Partnership shall be allocated among the Partnership and such Affiliates, among various Partnership activities and
GP-Related Investments and between accounting periods, in each case as determined by the General Partner. Any adjustments to GP-Related Net Income (Loss) by the General
Partner, including adjustments for items of income accrued but not yet received, unrealized gains, items of expense accrued but not yet paid, unrealized losses, reserves (including reserves for taxes, bad debts, actual or threatened litigation, or
any other expenses, contingencies or obligations) and other appropriate items, shall be made in accordance with U.S. generally accepted accounting principles (“GAAP”); provided, that the General Partner shall not be required
to make any such adjustment.
(c) An accounting period shall be a Fiscal Year except that, at the option of the General Partner, an
accounting period will terminate and a new accounting period will begin on the admission date of an additional Partner or the Settlement Date of a Withdrawn Partner, if any such date is not the first day of a Fiscal Year. If any event referred to in
the preceding sentence occurs and the General Partner does not elect to terminate an accounting period and begin a new accounting period, then the General Partner may make such adjustments as it deems appropriate to the Partners’ GP-Related Profit Sharing Percentages for the accounting period in which such event occurs (prior to any allocations of GP-Related Unallocated Percentages or adjustments to GP-Related Profit Sharing Percentages pursuant to Section 5.3) to reflect the Partners’ average GP-Related Profit Sharing Percentages during such accounting period;
provided, that the GP-Related Profit Sharing Percentages of Partners in GP-Related Net Income (Loss) from GP-Related
Investments acquired during such accounting period will be based on GP-Related Profit Sharing Percentages in effect when each such GP-Related Investment was acquired.
(d) In establishing GP-Related Profit Sharing Percentages and allocating GP-Related Unallocated Percentages pursuant to Section 5.3, the General Partner may consider such factors as it deems appropriate.
(e) All determinations, valuations and other matters of judgment required to be made for accounting purposes under this Agreement shall be made
by the General Partner and approved by the Partnership’s independent accountants. Such approved determinations, valuations and other accounting matters shall be conclusive and binding on all Partners, all Withdrawn Partners, their successors,
heirs, estates or legal representatives and any other person, and to the fullest extent permitted by law no such person shall have the right to an accounting or an appraisal of the assets of the Partnership or any successor thereto.
Section 5.2. GP-Related Capital Accounts.
(a) There shall be established for each Partner on the books of the Partnership, to the extent and at such times as may be appropriate, one or
more capital accounts as the General Partner may deem to be appropriate for purposes of accounting for such Partner’s interests in the capital of the Partnership related to the GP-Related SP VI Interest
and the GP-Related Net Income (Loss) of the Partnership (each a “GP-Related Capital Account”).
(b) As of the end of each accounting period or, in the case of a contribution to the Partnership by one or more of the Partners with respect to
such Partner or Partners’ GP-Related Partner Interests or a distribution by the Partnership to one or more of the Partners with respect to such Partner or Partners’
GP-Related Partner Interests, at the time of such contribution or distribution, (i) the appropriate GP-Related Capital Accounts of each Partner shall be credited
with the following amounts: (A) the
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amount of cash and the value of any property contributed by such Partner to the capital of the Partnership related to the GP-Related SP VI Interest during
such accounting period, (B) the GP-Related Net Income allocated to such Partner for such accounting period and (C) the interest credited on the balance of such Partner’s capital related to such
Partner’s GP-Related Partner Interest for such accounting period pursuant to Section 4.2; and (ii) the appropriate GP-Related Capital Accounts of each
Partner shall be debited with the following amounts: (x) the amount of cash, the principal amount of any subordinated promissory note of the Partnership referred to in Section 6.5 (as such amount is paid) and the value of any property
distributed to such Partner during such accounting period with respect to such Partner’s GP-Related Partner Interest and (y) the GP-Related Net Loss allocated
to such Partner for such accounting period.
Section 5.3. GP-Related Profit Sharing
Percentages.
(a) Prior to the beginning of each annual accounting period, the General Partner shall establish the profit sharing
percentage (the “GP-Related Profit Sharing Percentage”) of each Partner in each category of GP-Related Net Income (Loss) for such annual accounting
period pursuant to Section 5.1(a) taking into account such factors as the General Partner deems appropriate; provided, however, that (i) the General Partner may elect to establish GP-Related
Profit Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment acquired by the Partnership during such accounting period at the time such GP-Related Investment is acquired in accordance with paragraph (d) below and (ii) GP-Related Net Income (Loss) for such accounting period from any GP-Related Investment shall be allocated in accordance with the GP-Related Profit Sharing Percentages in such GP-Related Investment
established in accordance with paragraph (d) below. The General Partner may establish different GP- Related Profit Sharing Percentages for any Partner in different categories of GP-Related Net Income (Loss). In the case of the Withdrawal of a Partner, such former Partner’s GP-Related Profit Sharing Percentages shall be allocated by the General
Partner to one or more of the remaining Partners as the General Partner shall determine. In the case of the admission of any Partner to the Partnership as an additional Partner, the GP-Related Profit Sharing
Percentages of the other Partners shall be reduced by an amount equal to the GP-Related Profit Sharing Percentage allocated to such new Partner pursuant to Section 6.1(b); such reduction of each other
Partner’s GP-Related Profit Sharing Percentage shall be pro rata based upon such Partner’s GP-Related Profit Sharing Percentage as in effect immediately prior
to the admission of the new Partner. Notwithstanding the foregoing, the General Partner may also adjust the GP-Related Profit Sharing Percentage of any Partner for any annual accounting period at the end of
such annual accounting period in its sole discretion.
(b) The General Partner may elect to allocate to the Partners less than 100% of the GP-Related Profit Sharing Percentages of any category for any annual accounting period at the time specified in Section 5.3(a) for the annual fixing of GP-Related Profit
Sharing Percentages (any remainder of such GP-Related Profit Sharing Percentages being called a “GP-Related Unallocated Percentage”); provided,
that any GP-Related Unallocated Percentage in any category of GP-Related Net Income (Loss) for any annual accounting period that is not allocated by the General Partner
within 90 days after the end of such accounting period shall be deemed to be allocated among all the Partners (including the General Partner) in the manner determined by the General Partner in its sole discretion.
(c) Unless otherwise determined by the General Partner in a particular case, (i) GP-Related Profit
Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment shall be allocated in proportion to the Partners’ respective GP-Related Capital Contributions in respect of such GP-Related Investment and (ii) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from each GP-Related Investment shall be fixed at the time such GP-Related Investment is acquired and
shall not thereafter change, subject to any repurchase rights established by the General Partner pursuant to Section 5.7.
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Section 5.4. Allocations of GP-Related Net
Income (Loss).
(a) Except as provided in Section 5.4(d), GP-Related Net Income of the
Partnership for each GP-Related Investment shall be allocated to the GP-Related Capital Accounts related to such GP-Related
Investment of all the Partners participating in such GP-Related Investment (including the General Partner): first, in proportion to and to the extent of the amount of
Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest distributed to the Partners, second, to Partners
that received Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest in years prior to the years such GP- Related Net Income is being allocated to the extent such Non-Carried Interest (other than amounts representing a return of
GP-Related Capital Contributions) or Carried Interest exceeded GP-Related Net Income allocated to such Partners in such earlier years; and third, to the Partners in the
same manner that such Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest would have been distributed
if cash were available to distribute with respect thereto.
(b) GP-Related Net Loss of the
Partnership shall be allocated as follows: (i) GP- Related Net Loss relating to realized losses suffered by SP VI and allocated to the Partnership with respect to its pro rata share thereof (based on
capital contributions made by the Partnership to SP VI with respect to the GP-Related SP VI Interest) shall be allocated to the Partners in accordance with each Partner’s
Non-Carried Interest Sharing Percentage with respect to the GP-Related Investment giving rise to such loss suffered by SP VI and
(ii) GP-Related Net Loss relating to realized losses suffered by SP VI and allocated to the Partnership with respect to the Carried Interest shall be allocated in accordance with a Partner’s
(including a Withdrawn Partner’s) Carried Interest Give Back Percentage (as of the date of such loss) (subject to adjustment pursuant to Section 5.8(e)).
(c) Notwithstanding Section 5.4(a) above, GP-Related Net Income relating to Carried Interest
allocated after the allocation of a GP-Related Net Loss pursuant to clause (ii) of Section 5.4(b) shall be allocated in accordance with such Carried Interest Give Back Percentages until such time as
the Partners have been allocated GP-Related Net Income relating to Carried Interest equal to the aggregate amount of GP-Related Net Loss previously allocated in
accordance with clause (ii) of Section 5.4(b). Withdrawn Partners shall remain Partners for purposes of allocating such GP-Related Net Loss with respect to Carried Interest.
(d) To the extent the Partnership has any GP-Related Net Income (Loss) for any accounting period
unrelated to SP VI, such GP-Related Net Income (Loss) will be allocated in accordance with GP-Related Profit Sharing Percentages prevailing at the beginning of such
accounting period.
(e) The General Partner may authorize from time to time advances to Partners (including any additional Partner admitted
to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group L.P. or any Affiliate thereof) against their allocable shares of GP-Related
Net Income (Loss).
Section 5.5. Liability of General Partners. General Partners shall have unlimited liability for the
satisfaction and discharge of all losses, liabilities and expenses of the Partnership.
Section 5.6. Liability of Limited
Partners. Each Limited Partner and former Limited Partner shall be liable for the satisfaction and discharge of all losses, liabilities and expenses of the Partnership allocable to him pursuant to Section 5.4 or 7.3, but only to the extent
required by applicable law. Except as otherwise provided in the following sentence, in no event shall any Limited Partner or former Limited Partner be obligated to make any additional capital contribution to the Partnership in excess of his
aggregate GP-Related Capital Contributions and Capital Commitment-Related Capital
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Contributions pursuant to Sections 4.1 and 7.1, or have any liability in excess of such aggregate GP- Related Capital Contributions and Capital
Commitment-Related Capital Contributions for the satisfaction and discharge of the losses, liabilities and expenses of the Partnership. In no way does any of the foregoing limit any Partner’s obligations under Section 4.1(d), 5.8(d) or
7.4(g) or otherwise to make capital contributions as provided hereunder.
Section 5.7. Repurchase Rights, etc.. The General
Partner may from time to time establish such repurchase rights and/or other requirements with respect to the Partners’ GP-Related Partner Interests relating to
GP-Related SP VI Investments as the General Partner may determine. The General Partner shall have authority to (a) withhold any distribution otherwise payable to any Partner until any such repurchase
rights have lapsed or any such requirements have been satisfied, (b) pay any distribution to any Partner that is Contingent as of the distribution date and require the refund of any portion of such distribution that is Contingent as of the
Withdrawal Date of such Partner, (c) amend any previously established repurchase rights or other requirements from time to time, and (d) make such exceptions thereto as it may determine on a case by case basis.
Section 5.8. Distributions.
(a) (i) The Partnership shall make distributions of available cash (subject to reserves and other adjustments as provided herein) or other
property to Partners with respect to such Partners’ GP-Related Partner Interests at such times and in such amounts as are determined by the General Partner. The General Partner shall, if it deems it
appropriate, determine the availability for distribution of, and distribute, cash or other property separately for each category of GP-Related Net Income (Loss) established pursuant to Section 5.1(a).
Distributions of cash or other property with respect to Non-Carried Interest shall be made among the Partners in accordance with their respective Non-Carried Interest
Sharing Percentages, and, subject to Sections 4.1(d) and 5.8(e), distributions of cash or other property with respect to Carried Interest shall be made among Partners in accordance with their respective Carried Interest Sharing Percentages.
(ii) At any time that a sale, exchange, transfer or other disposition by SP VI of a portion of a GP-
Related Investment is being considered by the Partnership (a “GP-Related Disposable Investment”), at the election of the General Partner each Partner’s
GP-Related Partner Interest with respect to such GP- Related Investment shall be vertically divided into two separate GP-Related
Partner Interests, a GP- Related Partner Interest attributable to the GP-Related Disposable Investment (a Partner’s
“GP-Related Class B Interest”), and a GP-Related Partner Interest attributable to such
GP-Related Investment excluding the GP-Related Disposable Investment (a Partner’s “GP-Related
Class A Interest”). Distributions (including those resulting from a sale, transfer, exchange or other disposition by SP VI) relating to a GP-Related Disposable Investment (with
respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of GP-Related Class B Interests with respect to such GP-Related Investment in accordance with their GP-Related Profit Sharing Percentages relating to such GP-Related Class B
Interests, and distributions (including those resulting from the sale, transfer, exchange or other disposition by SP VI) relating to a GP-Related Investment excluding such
GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of
GP-Related Class A Interests with respect to such GP-Related Investment in accordance with their respective GP-Related
Profit Sharing Percentages relating to such GP-Related Class A Interests. Except as provided above, distributions of cash or other property with respect to each category of
GP-Related Net Income (Loss) shall be allocated among the Partners in the same proportions as the allocations of GP- Related Net Income (Loss) of each such category.
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(b) Subject to the Partnership’s having sufficient available cash in the reasonable
judgment of the General Partner, the Partnership shall make cash distributions to each Partner with respect to each Fiscal Year of the Partnership in an aggregate amount at least equal to the total Federal, New York State and New York City income
and other taxes that would be payable by such Partner with respect to all categories of GP-Related Net Income (Loss) allocated to such Partner for such Fiscal Year, the amount of which shall be calculated
(i) on the assumption that each Partner is an individual subject to the then prevailing maximum Federal, New York State and New York City income and other tax rates, (ii) taking into account the deductibility of State and local income and other
taxes for Federal income tax purposes and (iii) taking into account any differential in applicable rates due to the type and character of GP-Related Net Income (Loss) allocated to such Partner.
Notwithstanding the provisions of the foregoing sentence, the General Partner may refrain from making any distribution if, in the reasonable judgment of the General Partner, such distribution is prohibited by the Partnership Act.
(c) The General Partner may provide that the GP-Related Partner Interest of any Partner or employee
(including such Partner’s or employee’s right to distributions and investments of the Partnership related thereto) may be subject to repurchase by the Partnership during such period as the General Partner shall determine (a
“Repurchase Period”). Any Contingent distributions from GP-Related Investments subject to repurchase rights will be withheld by the Partnership and will be distributed to the recipient thereof
(together with interest thereon at rates determined by the General Partner from time to time) as the recipient’s rights to such distributions become Non-Contingent (by virtue of the expiration of the
applicable Repurchase Period or otherwise). The General Partner may elect in an individual case to have the Partnership distribute any Contingent distribution to the applicable recipient thereof irrespective of whether the applicable Repurchase
Period has lapsed. If a Partner Withdraws from the Partnership for any reason other than his death, Total Disability or Incompetence, the undistributed share of any GP- Related Investment that remains
Contingent as of the applicable Withdrawal Date shall be repurchased by the Partnership at a purchase price determined at such time by the General Partner. Unless determined otherwise by the General Partner, the repurchased portion thereof will be
allocated among the remaining Partners with interests in such GP-Related Investment in proportion to their respective percentage interests in such GP-Related Investment,
or if no other Partner has a percentage interest in such specific GP-Related Investment, to the General Partner; provided, that the General Partner may allocate the Withdrawn Partner’s share of
unrealized investment income from a repurchased GP-Related Investment attributable to the period after the Withdrawn Partner’s Withdrawal Date on any basis it may determine, including to existing or new
Partners who did not previously have interests in such GP-Related Investment, except that, in any event, each Investor Limited Partner shall be allocated a share of such unrealized investment income equal to
its respective GP-Related Profit Sharing Percentage of such unrealized investment income.
(d)
(i)(A) If the Partnership is obligated under the Clawback Provisions or Giveback Provisions to contribute to SP VI a Clawback Amount or a Giveback Amount (other than a Capital Commitment Giveback Amount) in respect of the GP-Related SP VI Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount being herein called a “GP-Related Giveback
Amount”), the Partnership shall call for such amounts as are necessary to satisfy such obligations of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the
Partnership, in cash, when and as called by the Partnership, such an amount of prior distributions by the Partnership (and the Other Fund GPs) with respect to Carried Interest (and/or Non-Carried Interest in
the case of a GP-Related Giveback Amount) (the “GP-Related Recontribution Amount”) which equals (I) the product of (a) a Partner’s or
Withdrawn Partner’s Carried Interest Give Back Percentage and (b) the aggregate Clawback Amount payable by the Partnership, in the case of Clawback Amounts, and (II) with respect to a GP-Related
Giveback Amount, such Partner’s pro rata share of prior distributions of Carried Interest and/or Non-Carried Interest in connection with (a) the GP-Related SP
VI Investment giving rise to the GP-Related Giveback Amount, (b) if the amounts contributed pursuant to clause (II)(a) above are insufficient to satisfy such
GP-Related Giveback Amount, GP-Related SP VI Investments other than the one giving rise to such obligation, but only those amounts
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received by the Partners with an interest in the GP-Related SP VI Investment referred to in clause (II)(a) above, and (c) if the GP-Related Giveback Amount is unrelated to a specific GP-Related SP VI Investment, all GP-Related SP VI Investments. Each Partner and
Withdrawn Partner shall promptly contribute to the Partnership, along with satisfying his comparable obligations to the Other Fund GPs, if any, upon such call, such Partner’s or Withdrawn Partner’s
GP-Related Recontribution Amount, less the amount paid out of the Trust Account on behalf of such Partner or Withdrawn Partner by the Trustee(s) pursuant to written instructions from the Partnership, or if
applicable, any of the Other Fund GPs with respect to Carried Interest (and/or Non-Carried Interest in the case of GP-Related Giveback Amounts) (the “Net GP-Related Recontribution Amount”), irrespective of the fact that the amounts in the Trust Account may be sufficient on an aggregate basis to satisfy the Partnership’s and the Other Fund GPs’
obligation under the Clawback Provisions and/or Giveback Provisions; provided, that to the extent a Partner’s or Withdrawn Partner’s share of the amount paid with respect to the Clawback Amount and/or the GP-Related Giveback Amount exceeds his GP-Related Recontribution Amount, such excess shall be repaid to such Partner or Withdrawn Partner as promptly as reasonably
practicable, subject to clause (ii) below; provided further, that such written instructions from the Partnership shall specify each Partner’s and Withdrawn Partner’s GP-Related
Recontribution Amount. Prior to such time, the Partnership may, in its discretion (but shall be under no obligation to), provide notice that in the Partnership’s judgment, the potential obligations in respect of the Clawback Provisions or the
Giveback Provisions will probably materialize (and an estimate of the aggregate amount of such obligations); provided further, that any amount from a Partner’s Trust Account used to pay any part of any GP-Related Giveback Amount (or such lesser amount as may be required by the General Partner) shall be contributed by such Partner to such Partner’s Trust Account no later than 30 days after the Net GP-Related Recontribution Amount is paid with respect to such GP-Related Giveback Amount. Solely to the extent required by the SP VI Agreements, each member of the General
Partner shall have the same obligations as a Partner (which obligations shall be subject to the same limitations as the obligations of a Partner) under this Section 5.8(d)(i)(A) and under Section 5.8(d)(ii)(A) solely with respect to such
member’s pro rata share of any Clawback Amount (for purpose of this sentence, as defined in section 11.3(b) of the SP VI Partnership Agreement) and solely to the extent the Partnership has insufficient funds to meet the Partnership’s
obligations under section 11.3 of the SP VI Partnership Agreement and/or the corresponding provisions under any other SP VI Agreement.
(B)
To the extent any Partner or Withdrawn Partner has satisfied any Holdback obligation with Firm Collateral, such Partner or Withdrawn Partner shall, within 10 days of the Partnership’s call for GP- Related
Recontribution Amounts, make a cash payment into the Trust Account in an amount equal to the amount of the Holdback obligation satisfied with such Firm Collateral, or such lesser amount such that the amount in the Trust Account allocable to such
Partner or Withdrawn Partner equals the sum of (I) such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount and (II) any similar amounts payable to any of the Other Fund GPs.
Immediately upon receipt of such cash, the Trustee(s) shall take such steps as are necessary to release such Firm Collateral of such Partner or Withdrawn Partner equal to the amount of such cash payment. If the amount of such cash payment is less
than the amount of Firm Collateral of such Partner or Withdrawn Partner, the balance of such Firm Collateral if any, shall be retained to secure the payment of GP-Related Deficiency Contributions, if any, and
shall be fully released upon the satisfaction of the Partnership’s and the Other Fund GPs’ obligation to pay the Clawback Amount. The failure of any Partner or Withdrawn Partner to make a cash payment in accordance with this clause (B) (to
the extent applicable) shall constitute a default under Section 5.8(d)(ii) as if such cash payment hereunder constitutes a Net GP-Related Recontribution Amount under Section 5.8(d)(ii).
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(ii) (A) In the event any Partner or Withdrawn Partner (a “GP-Related Defaulting Party”) fails to recontribute all or any portion of such GP-Related Defaulting Party’s Net GP-
Related Recontribution Amount for any reason, the Partnership shall require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Carried Interest Give Back Percentages in the case of
Clawback Amounts, and GP-Related Profit Sharing Percentages in the case of GP-Related Giveback Amounts (as more fully described in clause (II) of
Section 5.8(d)(i)(A) above)), such amounts as are necessary to fulfill the GP- Related Defaulting Party’s obligation to pay such GP-Related Defaulting
Party’s Net GP-Related Recontribution Amount (a “GP-Related Deficiency Contribution”) if the General Partner determines in its good faith judgment
that the Partnership (or an Other Fund GP) will be unable to collect such amount in cash from such GP-Related Defaulting Party for payment of the Clawback Amount or
GP-Related Giveback Amount, as the case may be, at least 20 Business Days prior to the latest date that the Partnership, and the Other Fund GPs, if applicable, are permitted to pay the Clawback Amount or GP-Related Giveback Amount, as the case may be; provided, that, subject to Section 5.8(e), no Partner or Withdrawn Partner shall as a result of such GP-Related
Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Net GP-Related Recontribution Amount initially requested from such Partner or Withdrawn Partner in respect of
such default.
(B) Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should
either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all
remedies (at law or equity) available to the Partnership against the GP-Related Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the GP-Related Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such GP-Related Defaulting Party becoming a
GP-Related Defaulting Party) to set-off as appropriate and apply against such GP- Related Defaulting Party’s Net GP-Related Recontribution Amount any amounts otherwise payable to the GP-Related Defaulting Party by the Partnership or any Affiliate thereof (including amounts unrelated to
Carried Interest, such as returns of capital and profit thereon). Each Partner and Withdrawn Partner hereby grants to the Partnership a security interest, effective upon such Partner or Withdrawn Partner becoming a
GP-Related Defaulting Party, in all accounts receivable and other rights to receive payment from any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the
Partnership may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner and Withdrawn Partner hereby appoints the Partnership as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or Withdrawn Partner or in the name of the Partnership, to take any actions which may be necessary to accomplish the
intent of the immediately preceding sentence. The Partnership shall be entitled to collect interest on the Net GP-Related Recontribution Amount of a GP-Related
Defaulting Party from the date such Net GP-Related Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(C) Any Partner’s or Withdrawn Partner’s failure to make a GP-Related
Deficiency Contribution shall cause such Partner or Withdrawn Partner to be a GP-Related Defaulting Party with respect to such amount. The Partnership shall first seek any remaining Trust Amounts (and Trust
Income thereon) allocated to such Partner or Withdrawn Partner to satisfy such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution before seeking cash
contributions from such Partner or Withdrawn Partner in satisfaction of such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution.
(iii) A Partner’s or Withdrawn Partner’s obligation to make contributions to the Partnership under this
Section 5.8(d) shall survive the termination of the Partnership.
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(e) The Partners acknowledge that the General Partner will (and is hereby authorized to)
take such steps as it deems appropriate, in its good faith judgment, to further the objective of providing for the fair and equitable treatment of all Partners, including by allocating writedowns and losses (to be determined by the General Partner
in accordance with GAAP and as reported by SP VI) on GP-Related SP VI Investments that have been the subject of a writedown and/or losses (each, a “Loss Investment”) to those Partners who
participated in such Loss Investments based on their Carried Interest Sharing Percentage therein to the extent that such Partners receive or have received Carried Interest distributions from other GP-Related
SP VI Investments. Consequently and notwithstanding anything herein to the contrary, adjustments to Carried Interest distributions shall be made as set forth in this Section 5.8(e).
(i) At the time the Partnership is making Carried Interest distributions in connection with a
GP-Related SP VI Investment (the “Subject Investment”) that have been reduced under any SP VI Agreement as a result of one or more Loss Investments, the General Partner shall calculate amounts
distributable to or due from each such Partner as follows:
(A) determine each Partner’s share of each such Loss
Investment based on his Carried Interest Sharing Percentage in each such Loss Investment (which may be zero) to the extent such Loss Investment has reduced the Carried Interest distributions otherwise available for distribution to all Partners
(indirectly through the Partnership from SP VI) from the Subject Investment (such reduction, the “Loss Amount”);
(B) determine the amount of Carried Interest distributions otherwise distributable to such Partner with respect to the Subject
Investment (indirectly through the Partnership from SP VI) before any reduction in respect of the amount determined in clause (A) above (the “Unadjusted Carried Interest Distributions”); and
(C) subtract (I) the Loss Amounts relating to all Loss Investments from (II) the Unadjusted Carried Interest
Distributions for such Partner, to determine the amount of Carried Interest distributions to actually be paid to such Partner (“Net Carried Interest Distribution”).
To the extent that the Net Carried Interest Distribution for a Partner as calculated in this clause (i) is a negative number, the General
Partner shall (I) notify such Partner, at or prior to the time such Carried Interest distributions are actually made to the Partners, of his obligation to recontribute to the Partnership prior Carried Interest distributions (a “Net
Carried Interest Distribution Recontribution Amount”), up to the amount of such negative Net Carried Interest Distribution, and (II) to the extent amounts recontributed pursuant to clause (I) are insufficient to satisfy such
negative Net Carried Interest Distribution amount, reduce future Carried Interest distributions otherwise due such Partner, up to the amount of such remaining negative Net Carried Interest Distribution. If a Partner’s (x) Net Carried
Interest Distribution Recontribution Amount exceeds (y) the aggregate amount of prior Carried Interest distributions less the amount of tax thereon, calculated based on the Assumed Tax Rate in effect in the Fiscal Years of such distributions
(the “Excess Tax-Related Amount”), then such Partner may, in lieu of paying such Partner’s Excess Tax-Related Amount, defer such amounts as set
forth below. Such deferred amount shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced and repaid by the amount of Carried Interest otherwise distributable to such Partner in connection with future Carried Interest
distributions until such balance is reduced to zero. Any deferred amounts shall be payable in full upon the earlier of (i) such time as the Clawback Amount is determined (as provided herein) and (ii) such time as the Partner becomes a
Withdrawn Partner.
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To the extent there is an amount of negative Net Carried Interest Distribution with respect
to a Partner remaining after the application of this clause (i), notwithstanding clause (II) of the preceding paragraph, such remaining amount of negative Net Carried Interest Distribution shall be allocated to the other Partners pro rata based
on each of their Carried Interest Sharing Percentages in the Subject Investment.
A Partner who fails to pay a Net Carried Interest
Distribution Recontribution Amount promptly upon notice from the General Partner (as provided above) shall be deemed a GP-Related Defaulting Party for all purposes hereof.
A Partner may satisfy in part any Net Carried Interest Distribution Recontribution Amount from cash that is then subject to a Holdback, to the
extent that the amounts that remain subject to a Holdback satisfy the Holdback requirements hereof as they relate to the reduced amount of aggregate Carried Interest distributions received by such Partner (taking into account any Net Carried
Interest Distribution Recontribution Amount contributed to the Partnership by such Partner).
Any Net Carried Interest Distribution
Recontribution Amount contributed by a Partner, including amounts of cash subject to a Holdback as provided above, shall increase the amount available for distribution to the other Partners as Carried Interest distributions with respect to the
Subject Investment; provided, that any such amounts then subject to a Holdback may be so distributed to the other Partners to the extent a Partner receiving such distribution has satisfied the Holdback requirements with respect to such
distribution (taken together with the other Carried Interest distributions received by such Partner to date).
(ii) In the
case of Clawback Amounts which are required to be contributed to the Partnership as otherwise provided herein, the obligation of the Partners with respect to any Clawback Amount shall be adjusted by the General Partner as follows:
(A) determine each Partner’s share of any Losses in any GP-Related SP VI
Investments which gave rise to the Clawback Amount (i.e., the Losses that followed the last GP-Related SP VI Investment with respect to which Carried Interest distributions were made), based on such
Partner’s Carried Interest Sharing Percentage in such GP-Related SP VI Investments;
(B) determine each Partner’s obligation with respect to the Clawback Amount based on such Partner’s Carried Interest
Give Back Percentage as otherwise provided herein; and
(C) subtract the amount determined in clause (B) above from
the amount determined in clause (A) above with respect to each Partner to determine the amount of adjustment to each Partner’s share of the Clawback Amount (a Partner’s “Clawback Adjustment Amount”).
A Partner’s share of the Clawback Amount shall for all purposes hereof be decreased by such Partner’s Clawback Adjustment Amount, to
the extent it is a negative number (except to the extent expressly provided below). A Partner’s share of the Clawback Amount shall for all purposes hereof be increased by such Partner’s Clawback Adjustment Amount (to the extent it is a
positive number); provided, that in no way shall a Partner’s aggregate obligation to satisfy a Clawback Amount as a result of this clause (ii) exceed the aggregate Carried Interest distributions received by such Partner. To the
extent a positive Clawback Adjustment Amount remains after the application of this clause (ii) with respect to a Partner, such remaining Clawback Adjustment Amount shall be allocated to the Partners (including any Partner whose Clawback Amount
was increased pursuant to this clause (ii)) pro rata based on their Carried Interest Give Back Percentages (determined without regard to this clause (ii)).
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Any distribution or contribution adjustments pursuant to this Section 5.8(e) by the
General Partner shall be based on its good faith judgment, and no Partner shall have any claim against the Partnership, the General Partner or any other Partners as a result of any adjustment made as set forth above. This Section 5.8(e) applies
to all Partners, including Withdrawn Partners.
It is agreed and acknowledged that this Section 5.8(e) is an agreement among the
Partners and in no way modifies the obligations of each Partner regarding the Clawback Amount as provided in the SP VI Agreements.
Section 5.9. Business Expenses. The Partnership shall reimburse the Partners for reasonable travel, entertainment and
miscellaneous expenses incurred by them in the conduct of the Partnership’s business in accordance with rules and regulations established by the General Partner from time to time.
Section 5.10. Tax Capital Accounts; Tax Allocations.
(a) For Federal income tax purposes, there shall be established for each Partner a single capital account combining such Partner’s Capital
Commitment Capital Account and GP-Related Capital Account, with such adjustments as the General Partner determines are appropriate so that such single capital account is maintained in compliance with the
principles and requirements of Section 704(b) of the Code and the Regulations thereunder.
(b) For Federal, State and local income tax
purposes only, Partnership income, gain, loss, deduction or expense (or any item thereof) for each fiscal year shall be allocated to and among the Partners in a manner corresponding to the manner in which corresponding items are allocated among the
Partners pursuant to clause (a) above, provided the General Partner may in its sole discretion make such allocations for tax purposes as it determines are appropriate so that allocations have substantial economic effect or are in accordance
with the interests of the Partners, within the meaning of the Code and the Regulations thereunder.
ARTICLE VI
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS;
SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
Section 6.1. Additional Partners.
(a) Effective on the first day of any month (or on such other date as shall be determined by the General Partner in its sole discretion), the
General Partner shall have the right to admit one or more additional or substitute persons into the Partnership as General Partners or Limited Partners. Each such person shall make the representations and certifications with respect to itself set
forth in Sections 3.7 and 3.8. The General Partner shall determine and negotiate with the additional Partner all terms of such additional Partner’s participation in the Partnership, including the additional Partner’s initial GP-Related Capital Contribution, Capital Commitment-Related Capital Contribution, GP-Related Profit Sharing Percentage and Capital Commitment Profit Sharing Percentage. Each
additional Partner shall have such voting rights as may be determined by the General Partner from time to time unless, upon the
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admission to the Partnership of any Limited Partner, the General Partner shall designate that such Limited Partner shall not have such voting rights (any such Limited Partner being called a
“Nonvoting Limited Partner”). Any additional Partner shall, as a condition to becoming a Partner, agree to become a party to, and be bound by the terms and conditions of, the Trust Agreement. If Blackstone or another or subsequent
holder of an Investor Note approved by the General Partner for purposes of this Section 6.1(a) shall foreclose upon a Limited Partner’s Investor Note issued to finance such Limited Partner’s purchase of his Capital Commitment
Interests, Blackstone or such other or subsequent holder shall succeed to such Limited Partner’s Capital Commitment Interests and shall be deemed to have become a Limited Partner to such extent. Any Additional Partner may have a GP-Related Partner Interest or a Capital Commitment Partner Interest, without having the other such interest.
(b) The GP-Related Profit Sharing Percentages, if any, to be allocated to an additional Partner as of
the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’ GP-Related Profit Sharing Percentages as of such date, shall be established by the General
Partner pursuant to Section 5.3. The Capital Commitment Profit Sharing Percentages, if any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all
other Partners’ Capital Commitment Profit Sharing Percentages as of such date, shall be established by the General Partner.
(c) An
additional Partner shall be required to contribute to the Partnership his pro rata share of the Partnership’s total capital, excluding capital in respect of GP-Related Investments and Capital Commitment
Investments in which such Partner does not acquire any interests, at such times and in such amounts as shall be determined by the General Partner in accordance with Sections 4.1 and 7.1.
(d) The admission of an additional Partner will be evidenced by (i) the execution of a counterpart copy of, or counter-signature page with
respect to, this Agreement by such additional Partner, or (ii) the execution of an amendment to this Agreement by the General Partner and the additional Partner, as determined by the General Partner, or (iii) the execution by such
additional Partner of any other writing evidencing the intent of such person to become a substitute or additional Limited Partner and to be bound by the terms of this Agreement and such writing being accepted by the General Partner on behalf of the
Partnership. In addition, each additional Partner shall sign a counterpart copy of the Trust Agreement or any other writing evidencing the intent of such person to become a party to the Trust Agreement.
Section 6.2. Withdrawal of Partners.
(a) Any Partner may Withdraw voluntarily from the Partnership subject to the prior written consent of the General Partner. The General Partner
generally intends to permit voluntary Withdrawals on the last day of any calendar month (or on such other date as shall be determined by the General Partner in its sole discretion), on not less than 15 days’ prior written notice by such Partner
to the General Partner (or on such shorter notice period as may be mutually agreed upon between such Partner and the General Partner); provided, that a Partner may not voluntarily Withdraw without the consent of the General Partner if such
Withdrawal would (i) cause the Partnership to be in default under any of its contractual obligations or (ii) in the reasonable judgment of the General Partner, have a material adverse effect on the Partnership or its business; provided
further that a Partner may Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest without Withdrawing from the Partnership with respect to such Partner’s Capital
Commitment Partner Interest, and a Partner may Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest without Withdrawing from the Partnership with respect to such Partner’s GP-Related Partner Interest.
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(b) Upon the Withdrawal of any Partner, including by the occurrence of any withdrawal event
under the Partnership Act with respect to any Partner, such Partner shall thereupon cease to be a Partner, except as expressly provided herein.
(c) Upon the Total Disability of a Limited Partner, such Partner shall thereupon cease to be a Limited Partner with respect to such
Partner’s GP-Related Partner Interest; provided, however, that the General Partner may elect to admit such Withdrawn Partner to the Partnership as a Nonvoting Limited Partner with respect to such
Partner’s GP-Related Partner Interest, with such GP- Related Partner Interest as the General Partner may determine. The determination of whether any Partner has
suffered a Total Disability shall be made by the General Partner in its sole discretion after consultation with a qualified medical doctor. In the absence of agreement between the General Partner and such Partner, each party shall nominate a
qualified medical doctor and the two doctors shall select a third doctor, who shall make the determination as to Total Disability.
(d) If
the General Partner determines that it shall be in the best interests of the Partnership for any Partner (including any Partner who has given notice of voluntary Withdrawal pursuant to paragraph (a) above) to Withdraw from the Partnership
(whether or not Cause exists) with respect to such Partner’s GP-Related Partner Interest and/or with respect to such Partner’s Capital Commitment Partner Interest, such Partner, upon written notice
by the General Partner to such Partner, shall be required to Withdraw with respect to such Partner’s GP-Related Partner Interest and/or with respect to such Partner’s Capital Commitment Partner
Interest, as of a date specified in such notice, which date shall be on or after the date of such notice. If the General Partner requires any Partner to Withdraw for Cause with respect to such Partner’s
GP-Related Partner Interest and/or with respect to such Partner’s Capital Commitment Partner Interest, such notice shall state that it has been given for Cause and shall describe the particulars thereof
in reasonable detail.
(e) The Withdrawal from the Partnership of any Partner shall not, in and of itself, affect the obligations of the
other Partners to continue the Partnership during the remainder of its term. A Withdrawn General Partner shall remain liable for all obligations of the Partnership incurred while it was a General Partner and resulting from its acts or omissions as a
General Partner to the fullest extent provided by law.
Section 6.3. GP-Related Partner
Interests Not Transferable.
(a) No Partner may sell, assign, pledge or otherwise transfer or encumber all or any portion of such
Partner’s GP-Related Partner Interest without the prior written consent of the General Partner; provided, that, subject to the Partnership Act, this Section 6.3 shall not impair transfers by
operation of law, transfers by will or by other testamentary instrument occurring by virtue of the death or dissolution of a Partner, or transfers required by trust agreements; provided further, that, subject to the prior written consent of
the General Partner, which shall not be unreasonably withheld, a Limited Partner may transfer, for estate planning purposes, up to 25% of his GP-Related Profit Sharing Percentage to any estate planning trust,
limited partnership or limited liability company with respect to which such Limited Partner controls investments related to any interest in the Partnership held therein (an “Estate Planning Vehicle”). Each Estate Planning Vehicle
will be a Nonvoting Limited Partner. Such Limited Partner and the Nonvoting Limited Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such Nonvoting Limited Partner with respect to the interest
transferred (including the obligation to make additional GP-Related Capital Contributions). The General Partner may at its sole option exercisable at any time require such Estate Planning Vehicle to Withdraw
from the Partnership on the terms of this Article VI. Except as provided in the second proviso to the first sentence of this Section 6.3(a), no assignee, legatee, distributee, heir or transferee (by conveyance, operation of law or otherwise) of
the whole or any portion of any Partner’s GP-Related Partner Interest shall have any right to be a General Partner or Limited Partner without the prior written consent of the General Partner (which
consent may be given or withheld in its sole discretion without giving any reason therefor). Notwithstanding the granting of a security interest in the entire partnership interest of any Partner, such Partner shall continue to be a partner of the
Partnership.
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(b) Notwithstanding any provision hereof to the contrary, no sale or transfer of any GP-Related Partner Interest in the Partnership may be made except in compliance with all Federal, State and other applicable laws, including Federal and State securities laws.
Section 6.4. General Partner Withdrawal; Transfer of General Partner’s Interest.
(a) The General Partner may not transfer or assign its interest as a General Partner in the Partnership or its right to manage the affairs of
the Partnership, except that the General Partner may, with the prior written approval of a Majority In Interest of the Partners admit another person as an additional or substitute General Partner who makes such representations with respect to itself
as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise); provided, however, that the General Partner may, in its sole discretion, transfer all or part of its interest in the
Partnership to a person who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise) and who owns, directly or indirectly, the principal part
of the business then conducted by the General Partner in connection with any liquidation, dissolution or reorganization of the General Partner, and, upon the assumption by such person of liability for all the obligations of the General Partner under
this Agreement, such person shall be admitted as the General Partner. A person who is so admitted as an additional or substitute General Partner shall thereby become a General Partner and shall have the right to manage the affairs of the Partnership
and to vote as a Partner to the extent of the interest in the Partnership so acquired. The General Partner shall not cease to be the general partner of the Partnership upon the collateral assignment of or the pledging or granting of a security
interest in its entire Interest in the Partnership.
(b) Except as contemplated by clause (a) above, Withdrawal by a General Partner
is not permitted. The Withdrawal of a General Partner shall not dissolve the Partnership if at the time of such Withdrawal there are one or more remaining General Partners and any one or more of such remaining General Partners continue the business
of the Partnership (any and all such remaining General Partners being hereby authorized to continue the business of the Partnership without dissolution and hereby agreeing to do so). If upon the Withdrawal of a General Partner there shall be no
remaining General Partner, the Partnership nonetheless shall not be dissolved and shall not be required to be wound up if, within 90 days after the occurrence of such event of Withdrawal, all remaining Limited Partners (excluding Withdrawn Partners)
agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such Withdrawal, of one or more General Partners.
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner
Interest.
(a) The terms of this Section 6.5 shall apply to the GP-Related Partner
Interest of a Withdrawn Partner, but, except as otherwise expressly provided in this Section 6.5, shall not apply to the Capital Commitment Partner Interest of a Withdrawn Partner. For purposes of this Section 6.5, the term
“Settlement Date” means the date as of which a Withdrawn Partner’s GP-Related Partner Interest in the Partnership is settled as determined under paragraph (b) below. Notwithstanding
the foregoing, any Limited Partner who Withdraws from the Partnership, and all or any portion of whose GP-Related Partner Interest is retained as a Limited Partner, shall be considered a Withdrawn Partner for
all purposes hereof.
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(b) Except where a later date for the settlement of a Withdrawn Partner’s GP-Related Partner Interest in the Partnership may be agreed to by the General Partner and a Withdrawn Partner, a Withdrawn Partner’s Settlement Date shall be his Withdrawal Date; provided, that if a
Withdrawn Partner’s Withdrawal Date is not the last day of a month, then the General Partner may elect for such Withdrawn Partner’s Settlement Date to be the last day of the month in which his Withdrawal Date occurs. During the interval,
if any, between a Withdrawn Partner’s Withdrawal Date and Settlement Date, such Withdrawn Partner shall have the same rights and obligations with respect to GP-Related Capital Contributions, interest on
capital, allocations of GP-Related Net Income (Loss) and distributions as would have applied had such Withdrawn Partner remained a Partner of the Partnership during such period.
(c) In the event of the Withdrawal of a Partner with respect to such Withdrawn Partner’s
GP-Related Partner Interest, the General Partner shall, promptly after such Withdrawn Partner’s Settlement Date, (i) determine and allocate to the Withdrawn Partner’s GP-Related Capital Accounts such Withdrawn Partner’s allocable share of the GP-Related Net Income (Loss) of the Partnership for the period ending on such Settlement Date
in accordance with Article V and (ii) credit the Withdrawn Partner’s GP-Related Capital Accounts with interest in accordance with Section 5.2. In making the foregoing calculations, the General
Partner shall be entitled to establish such reserves (including reserves for taxes, bad debts, unrealized losses, actual or threatened litigation or any other expenses, contingencies or obligations) as it deems appropriate. Unless otherwise
determined by the General Partner in a particular case, a Withdrawn Partner shall not be entitled to receive any GP-Related Unallocated Percentage in respect of the accounting period during which such Partner
Withdraws from the Partnership (whether or not previously awarded or allocated) or any GP-Related Unallocated Percentage in respect of prior accounting periods that have not been paid or allocated (whether or
not previously awarded) as of such Withdrawn Partner’s Withdrawal Date.
(d) From and after the Settlement Date of the Withdrawn
Partner, the Withdrawn Partner’s GP-Related Profit Sharing Percentages shall, unless otherwise allocated by the General Partner pursuant to Section 5.3(a), be deemed to be GP-Related Unallocated Percentages (except for GP-Related Profit Sharing Percentages with respect to GP-Related Investments as provided
in paragraph (f) below).
(e) (i) Upon the Withdrawal from the Partnership of a Partner with respect to such Partner’s GP-Related Partner Interest, such Withdrawn Partner thereafter shall not, except as expressly provided in this Section 6.5, have any rights of a Partner (including voting rights) with respect to such
Partner’s GP-Related Partner Interest, and, except as expressly provided in this Section 6.5, such Withdrawn Partner shall not have any interest in the Partnership’s GP-Related Net Income (Loss) or in distributions related to such Partner’s GP-Related Partner Interest, GP-Related Investments or
other assets related to such Partner’s GP-Related Partner Interest. If a Partner Withdraws from the Partnership with respect to such Partner’s GP-Related
Partner Interest for any reason other than for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be entitled to receive, at the time or times specified in Section 6.5(i) below, in satisfaction and discharge in full of the
Withdrawn Partner’s GP-Related Partner Interest in the Partnership, (x) payment equal to the aggregate credit balance, if any, as of the Settlement Date of the Withdrawn Partner’s GP-Related Capital Accounts, (excluding any GP-Related Capital Account or portion thereof attributable to any GP-Related Investment)
and (y) the Withdrawn Partner’s percentage interest attributable to each GP-Related Investment in which the Withdrawn Partner has an interest as of the Settlement Date as provided in paragraph
(f) below (which shall be settled in accordance with paragraph (f) below), subject to all the terms and conditions of paragraphs (a)-(p) of this Section 6.5. If the amount determined pursuant to clause (x) above is an aggregate
negative balance, the Withdrawn Partner shall pay the amount thereof to the Partnership upon demand by the General Partner on or after the date of the statement referred to in Section 6.5(i) below; provided, that if the Withdrawn Partner
was solely a Limited Partner (other than a Special Limited Partner) on his Withdrawal Date, such payment
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shall be required only to the extent of any amounts payable to such Withdrawn Partner pursuant to this Section 6.5. Any aggregate negative balance in the
GP-Related Capital Accounts of a Withdrawn Partner who was solely a Limited Partner (other than a Special Limited Partner), upon the settlement of such Withdrawn Partner’s
GP-Related Partner Interest in the Partnership pursuant to this Section 6.5, shall be allocated among the other Partners’ GP-Related Capital Accounts in
accordance with their respective GP- Related Profit Sharing Percentages in the categories of GP-Related Net Income (Loss) giving rise to such negative balance as
determined by the General Partner as of such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the Partnership, no value shall be
ascribed to goodwill, the Partnership name or the anticipation of any value the Partnership or any successor thereto might have in the event the Partnership or any interest therein were to be sold in whole or in part.
(ii) Notwithstanding clause (i) of this Section 6.5(e), in the case of a Partner whose Withdrawal with respect to
such Partner’s GP-Related Partner Interest resulted from such Partner’s death or Incompetence, such Partner’s estate or legal representative, as the case may be, may elect, at the time described
below, to receive a Nonvoting Limited Partner GP-Related Partner Interest and retain such Partner’s GP-Related Profit Sharing Percentage in all (but not less than
all) illiquid investments of the Partnership in lieu of a cash payment (or Note) in settlement of that portion of the Withdrawn Partner’s GP-Related Partner Interest. The election referred to above shall
be made within 60 days after the Withdrawn Partner’s Settlement Date, based on a statement of the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to
this Section 6.5.
(f) For purposes of clause (y) of paragraph (e)(i) above, a Withdrawn Partner’s “percentage
interest” means his GP-Related Profit Sharing Percentage as of the Settlement Date in the relevant GP-Related Investment. The Withdrawn Partner shall retain his
percentage interest in such GP- Related Investment and shall retain his GP-Related Capital Account or portion thereof attributable to such
GP-Related Investment, in which case such Withdrawn Partner (a “Retaining Withdrawn Partner”) shall become and remain a Limited Partner for such purpose (and, if the General Partner so
designates, such Limited Partner shall be a Nonvoting Limited Partner). The GP-Related Partner Interest of a Retaining Withdrawn Partner pursuant to this paragraph (f) shall be subject to the terms and
conditions applicable to GP-Related Partner Interests of any kind hereunder and such other terms and conditions as are established by the General Partner. At the option of the General Partner in its sole
discretion, the General Partner and the Retaining Withdrawn Partner may agree to have the Partnership acquire such GP-Related Partner Interest without the approval of the other Partners; provided, that
the General Partner shall reflect in the books and records of the Partnership the terms of any acquisition pursuant to this sentence.
(g)
The General Partner may elect, in lieu of payment in cash of any amount payable to a Withdrawn Partner pursuant to paragraph (e) above, to have the Partnership issue to the Withdrawn Partner a subordinated promissory note and/or to distribute
in kind to the Withdrawn Partner such Withdrawn Partner’s pro rata share (as determined by the General Partner) of any securities or other investments of the Partnership in relation to such Partner’s
GP-Related Partner Interest. If any securities or other investments are distributed in kind to a Withdrawn Partner under this paragraph (g), the amount described in clause (x) of paragraph (e)(i) shall be
reduced by the value of such distribution as valued on the latest balance sheet of the Partnership in accordance with generally accepted accounting principles or, if not appearing on such balance sheet, as reasonably determined by the General
Partner.
(h) [Intentionally omitted].
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(i) Within 120 days after each Settlement Date, the General Partner shall submit to the
Withdrawn Partner a statement of the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5 together with any cash payment, subordinated
promissory note and in kind distributions to be made to such Partner as shall be determined by the General Partner. The General Partner shall submit to the Withdrawn Partner supplemental statements with respect to additional amounts payable to or by
the Withdrawn Partner in respect of the settlement of his GP-Related Partner Interest in the Partnership (e.g., payments in respect of GP-Related Investments
pursuant to paragraph (f) above or adjustments to reserves pursuant to paragraph (j) below) promptly after such amounts are determined by the General Partner. To the fullest extent permitted by law, such statements and the valuations on
which they are based shall be accepted by the Withdrawn Partner without examination of the accounting books and records of the Partnership or other inquiry. Any amounts payable by the Partnership to a Withdrawn Partner pursuant to this
Section 6.5 shall be subordinate in right of payment and subject to the prior payment or provision for payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring
prior to the applicable date of payment or distribution; provided that such Withdrawn Partner shall otherwise rank pari passu in right of payment (x) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one
year before the Withdrawal Date of the Withdrawn Partner in question and (y) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year after the Withdrawal Date of the Withdrawn Partner in question.
(j) If the aggregate reserves established by the General Partner as of the Settlement Date in making the foregoing calculations should prove,
in the determination of the General Partner, to be excessive or inadequate, the General Partner may elect, but shall not be obligated, to pay the Withdrawn Partner or his estate such excess, or to charge the Withdrawn Partner or his estate such
deficiency, as the case may be.
(k) Any amounts owed by the Withdrawn Partner to the Partnership at any time on or after the Settlement
Date (e.g., outstanding Partnership loans or advances to such Withdrawn Partner) shall be offset against any amounts payable or distributable by the Partnership to the Withdrawn Partner at any time on or after the Settlement Date or shall be paid by
the Withdrawn Partner to the Partnership, in each case as determined by the General Partner. All cash amounts payable by a Withdrawn Partner to the Partnership under this Section 6.5 shall bear interest from the due date to the date of payment
at a floating rate equal to the lesser of (x) the rate of interest publicly announced from time to time by JPMorgan Chase Bank, N.A., as its prime rate or (y) the maximum rate of interest permitted by applicable law. The “due
date” of amounts payable by a Withdrawn Partner pursuant to Section 6.5(i) above shall be 120 days after a Withdrawn Partner’s Settlement Date. The “due date” of amounts payable to or by a Withdrawn Partner in respect of GP-Related Investments for which the Withdrawn Partner has retained a percentage interest in accordance with paragraph (f) above shall be 120 days after realization with respect to such GP-Related Investment. The “due date” of any other amounts payable by a Withdrawn Partner shall be 60 days after the date such amounts are determined to be payable.
(l) At the time of the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the
Partnership pursuant to this Section 6.5, the General Partner may, to the fullest extent permitted by applicable law, impose any restrictions it deems appropriate on the assignment, pledge, encumbrance or other transfer by such Withdrawn
Partner of any interest in any GP-Related Investment retained by such Withdrawn Partner, any securities or other investments distributed in kind to such Withdrawn Partner or such Withdrawn Partner’s right
to any payment from the Partnership.
(m) If a Partner is required to Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest for Cause pursuant to Section 6.2(d), then his GP-Related Partner Interest shall be settled in accordance with paragraphs (a)-(r) of this
Section 6.5; provided, however, that the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
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(i) In settling the Withdrawn Partner’s interest in any GP-Related Investment in which he has an interest as of his Settlement Date, the General Partner may elect to (A) determine the GP-Related Unrealized Net Income (Loss)
attributable to each such GP-Related Investment as of the Settlement Date and allocate to the appropriate GP-Related Capital Account of the Withdrawn Partner his
allocable share of such GP-Related Unrealized Net Income (Loss) for purposes of calculating the aggregate balance of such Withdrawn Partner’s GP-Related Capital
Account pursuant to clause (x) of paragraph (e)(i) above, (B) credit or debit, as applicable, the Withdrawn Partner with the balance of his GP-Related Capital Account or portion thereof attributable
to each such GP-Related Investment as of his Settlement Date without giving effect to the GP-Related Unrealized Net Income (Loss) from such GP-Related Investment as of his Settlement Date, which shall be forfeited by the Withdrawn Partner or (C) apply the provisions of paragraph (f) above, provided, that the maximum amount of GP-Related Net Income (Loss) allocable to such Withdrawn Partner with respect to any GP-Related Investment shall equal such Partner’s percentage interest of the GP-Related Unrealized Net Income, if any, attributable to such GP-Related Investment as of the Settlement Date (the balance of such
GP-Related Net Income (Loss), if any, shall be allocated as determined by the General Partner). The Withdrawn Partner shall not have any continuing interest in any
GP-Related Investment to the extent an election is made pursuant to (A) or (B) above.
(ii) Any amounts payable by the Partnership to the Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in
right of payment and subject to the prior payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to or on or after the applicable date of payment or
distribution.
(n) The payments to a Withdrawn Partner pursuant to this Section 6.5 may be conditioned on the compliance by such
Withdrawn Partner with any lawful and reasonable (under the circumstances) restrictions against engaging or investing in a business competitive with that of the Partnership or any of its subsidiaries and Affiliates for a period not exceeding two
years determined by the General Partner. Upon written notice to the General Partner, any Withdrawn Partner who is subject to noncompetition restrictions established by the General Partner pursuant to this paragraph (o) may elect to forfeit the
principal amount payable in the final installment of his subordinated promissory note, together with interest to be accrued on such installment after the date of forfeiture, in lieu of being bound by such restrictions.
(o) In addition to the foregoing, the General Partner shall have the right to pay a Withdrawn Partner (other than the General Partner) a
discretionary additional payment in an amount and based upon such circumstances and conditions as it determines to be relevant. The provisions of this Section 6.5 shall apply to any Investor Limited Partner relating to another Limited Partner,
and to any transferee of any GP-Related Partner Interest of such Partner pursuant to Section 6.3, if such Partner Withdraws from the Partnership.
(p) (i) The Partnership will assist a Withdrawn Partner or his estate or guardian, as the case may be, in the settlement of the Withdrawn
Partner’s GP-Related Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his estate.
(ii) The Partnership may reasonably determine in good faith to retain outside professionals to provide the assistance to Withdrawn Partners or
their estates or guardians, as referred to above. In such instances, the Partnership will obtain the prior approval of a Withdrawn Partner or his estate or guardian, as the case may be, prior to engaging such professionals. If the Withdrawn Partner
(or his estate or guardian) declines to incur such costs, the Partnership will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s
day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
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(q) Each Partner (other than the General Partner) hereby irrevocably appoints the General
Partner as such Partner’s true and lawful agent, representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make,
execute, sign and file, on behalf of such Partner, any and all agreements, instruments, consents, ratifications, documents and certificates which the General Partner deems necessary or advisable in connection with any transaction or matter
contemplated by or provided for in this Section 6.5, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is
coupled with an interest and shall survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 6.6. Termination of the Partnership. The General Partner may dissolve the Partnership at any time on not less than 60
days’ notice of the dissolution date given to the other Partners. Upon the dissolution of the Partnership, the Partners’ respective interests in the Partnership shall be valued and settled in accordance with the procedures set forth in
Sections, 6.5, which provide for allocations to the GP-Related Capital Accounts of the Partners and distributions in accordance with the capital account balances of the Partners.
Section 6.7. Certain Tax Matters. i. All items of income, gain, loss, deduction and credit of the Partnership shall be allocated
among the Partners for Federal, State and local income tax purposes in the same manner as such items of income, gain, loss, deduction and credit shall be allocated among the Partners pursuant to this Agreement, except as may otherwise be provided
herein or by the Code or other applicable law. To the extent U.S. Treasury Regulations promulgated pursuant to Subchapter K of the Code (including under Sections 704(b) and (c) of the Code) or other applicable law require allocations for tax
purposes that differ from the foregoing allocations, the General Partner may determine the manner in which such tax allocations shall be made so as to comply more fully with such Treasury Regulations or other applicable law and, at the same time,
preserve the economic relationships among the Partners as set forth in this Agreement. In the event there is a net decrease in partnership minimum gain or partner nonrecourse debt minimum gain (determined in accordance with the principles of
Regulations Sections 1.704-2(d) and 1.704-2(i)) during any taxable year of the Partnership, each Partner shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to its respective share of such net decrease during such year, determined pursuant to Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(f). In addition, this Agreement shall be considered to
contain a “qualified income offset” as provided in Regulations Section 1.704- 1(b)(2)(ii)(d).
(a) The General Partner shall cause to be prepared all Federal, State and local tax returns of the Partnership for each year for which such
returns are required to be filed and, after approval of such returns by the General Partner, shall cause such returns to be timely filed. The General Partner shall determine the appropriate treatment of each item of income, gain, loss, deduction and
credit of the Partnership and the accounting methods and conventions under the tax laws of the United States, the several States and other relevant jurisdictions as to the treatment of any such item or any other method or procedure related to the
preparation of such tax returns. The General Partner may cause the Partnership to make or refrain from making any and all elections permitted by such tax laws. Each Partner agrees that he shall not, unless he provides prior notice of such action to
the Partnership, (i) treat, on his individual income tax returns, any item of income, gain, loss, deduction or credit relating to his interest in the
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Partnership in a manner inconsistent with the treatment of such item by the Partnership as reflected on the Form K-1 or other information statement
furnished by the Partnership to such Partner for use in preparing his income tax returns or (ii) file any claim for refund relating to any such item based on, or which would result in, such inconsistent treatment. In respect of an income tax
audit of any tax return of the Partnership, the filing of any amended return or claim for refund in connection with any item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership, or any administrative or judicial
proceedings arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, (A) the Tax Matters Partner (as defined below) shall be authorized to act for, and his decision shall be final and
binding upon, the Partnership and all Partners except to the extent a Partner shall properly elect to be excluded from such proceeding pursuant to the Code, (B) all expenses incurred by the Tax Matters Partner in connection therewith
(including, without limitation, attorneys’, accountants’ and other experts’ fees and disbursements) shall be expenses of the Partnership and (C) no Partner shall have the right to (1) participate in the audit of any
Partnership tax return, (2) file any amended return or claim for refund in connection with any item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership (unless he provides prior notice of such action to the
Partnership as provided above), (3) participate in any administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner arising out of or in connection with any such audit, amended return, claim for refund or denial of
such claim, or (4) appeal, challenge or otherwise protest any adverse findings in any such audit conducted by the Partnership or the Tax Matters Partner or with respect to any such amended return or claim for refund filed by the Partnership or
the Tax Matters Partner or in any such administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner. The Partnership and each Partner hereby designate any Partner selected by the General Partner as the “tax
matters partner” for purposes of Section 6231(a)(7) of the Code (the “Tax Matters Partner”). To the fullest extent permitted by applicable law, each Partner agrees to indemnify and hold harmless the Partnership and all
other Partners from and against any and all liabilities, obligations, damages, deficiencies and expenses resulting from any breach or violation by such Partner of the provisions of this Section 6.8 and from all actions, suits, proceedings,
demands, assessments, judgments, costs and expenses, including reasonable attorneys’ fees and disbursements, incident to any such breach or violation.
(b) Each individual Partner shall provide to the Partnership copies of each Federal, State and local income tax return of such Partner
(including any amendment thereof) within 30 days after filing such return.
Section 6.8. Special Basis Adjustments. In
connection with any assignment or transfer of a Partnership interest permitted by the terms of this Agreement, the General Partner may cause the Partnership, on behalf of the Partners and at the time and in the manner provided in Code Regulations Section 1.754-1(b), to make an election to adjust the basis of the Partnership’s property in the manner provided in Sections 734(b) and 743(b) of the Code.
ARTICLE VII
CAPITAL COMMITMENT
INTERESTS; CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
Section 7.1. Capital Commitment Interests, etc.
(a) (i) This Article VII and Article VIII hereof set forth certain terms and conditions with respect to the Capital Commitment Partner
Interests and the Capital Commitment SP VI Interest and matters related to the Capital Commitment Partner Interests and the Capital Commitment SP VI Interest. Except as otherwise expressly provided in this Article VII or in Article VIII, the terms
and provisions of this Article VII and Article VIII shall not apply to the GP-Related Partner Interests or the GP-Related SP VI Interest.
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(ii) Each Partner severally, agrees to make contributions of capital to the
Partnership (“Capital Commitment-Related Capital Contributions”) as required to fund the Partnership’s direct or indirect capital contributions to SP VI, in respect of the Capital Commitment SP VI Interest, if any, and the
related Capital Commitment SP VI Commitment, if any. No Partner shall be obligated to make Capital Commitment-Related Capital Contributions to the Partnership in an amount in excess of such Partner’s Capital Commitment-Related Commitment. The
Commitment Agreements and SMD Agreements, if any, of the Partners may include provisions with respect to the foregoing matters. It is understood that a Partner will not necessarily participate in each Capital Commitment Investment (which may include
additional amounts invested in an existing Capital Commitment Investment) nor will a Partner necessarily have the same Capital Commitment Profit Sharing Percentage with respect to (i) the Partnership’s portion of the Capital Commitment SP
VI Commitment, if any, or (ii) the making of each Capital Commitment Investment in which such Partner participates; provided, that this in no way limits the terms of any Commitment Agreement or SMD Agreement. In addition, nothing
contained herein shall be construed to give any Partner the right to obtain financing with respect to the purchase of any Capital Commitment Interest, and nothing contained herein shall limit or dictate the terms upon which the General Partner and
its Affiliates may provide such financing. The acquisition of a Capital Commitment Interest by a Partner shall be evidenced by receipt by the Partnership of funds equal to such Partner’s Capital Commitment-Related Commitment then due with
respect to such Capital Commitment Interest and such appropriate documentation as the General Partner may submit to the Partners from time to time.
(b) The General Partner or one of its Affiliates (in such capacity, the “Advancing Party”) may in its sole discretion advance
to any Limited Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are also executive officers of The Blackstone Group L.P. or any Affiliate thereof) all or any portion
of the Capital Commitment-Related Capital Contributions due to the Partnership from such Limited Partner with respect to any Capital Commitment Investment (“Firm Advances”). Each such Limited Partner shall pay to the Advancing Party
interest on each Firm Advance from the date of such Firm Advance until the repayment thereof by such Limited Partner. Each Firm Advance shall be repayable in full, including accrued interest to the date of such repayment, upon prior written notice
by the Advancing Party. The making and repayment of each Firm Advance shall be recorded in the books and records of the Partnership, and such recording shall be conclusive evidence of each such Firm Advance, binding on the Limited Partner and the
Advancing Party absent manifest error. Except as provided below, the interest rate applicable to a Firm Advance shall equal the cost of funds of the Advancing Party at the time of the making of such Firm Advance. The Advancing Party shall inform any
Limited Partner of such rate upon such Limited Partner’s request; provided, that such interest rate shall not exceed the maximum interest rate allowable by applicable law; provided further, that amounts that are otherwise payable
to such Limited Partner pursuant to Section 7.4(a) shall be used to repay such Firm Advance (including interest thereon). The Advancing Party may, in its sole discretion, change the terms of Firm Advances (including the terms contained herein)
and/or discontinue the making of Firm Advances; provided, that (i) the Advancing Party shall notify the relevant Limited Partners of any material changes to such terms and (ii) the interest rate applicable to such Firm Advances and
overdue amounts thereon shall not exceed the maximum interest rate allowable by applicable law.
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Section 7.2. Capital Commitment Capital Accounts.
(a) There shall be established for each Partner on the books of the Partnership as of the date of formation of the Partnership, or such later
date on which such Partner is admitted to the Partnership, and on each such other date as such Partner first acquires a Capital Commitment Interest in a particular Capital Commitment Investment, a Capital Commitment Capital Account for each Capital
Commitment Investment in which such Partner acquires a Capital Commitment Interest on such date. Each Capital Commitment-Related Capital Contribution of a Partner shall be credited to the appropriate Capital Commitment Capital Account of such
Partner on the date such Capital Commitment-Related Capital Contribution is paid to the Partnership. Capital Commitment Capital Accounts shall be adjusted to reflect any transfer of a Partner’s interest in the Partnership related to his Capital
Commitment Partner Interest, as provided in this Agreement.
(b) A Partner shall not have any obligation to the Partnership or to any other
Partner to restore any negative balance in the Capital Commitment Capital Account of such Partner. Until distribution of any such Partner’s interest in the Partnership with respect to a Capital Commitment Interest as a result of the disposition
by the Partnership of the related Capital Commitment Investment and in whole upon the dissolution of the Partnership, neither such Partner’s Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption
except with the consent of the General Partner.
Section 7.3. Allocations.
(a) Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be allocated to the related Capital
Commitment Capital Accounts of all the Partners (including the General Partner) participating in such Capital Commitment Investment in proportion to their respective Capital Commitment Profit Sharing Percentages for such Capital Commitment
Investment. Capital Commitment Net Income (Loss) on any Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion which such Partner’s aggregate Capital Commitment Capital Accounts bear to the aggregate
Capital Commitment Capital Accounts of all Partners; provided, that if any Partner makes the election provided for in Section 7.6, Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be
allocated to the related Capital Commitment Capital Accounts of all the Partners participating in such Capital Commitment Investment who do not make such election in proportion to their respective Capital Commitment Profit Sharing Percentages for
such Capital Commitment Investment.
(b) Any special costs relating to distributions pursuant to Section 7.6 or 7.7 shall be specially
allocated to the electing Limited Partner.
Section 7.4. Distributions.
(a) Each Limited Partner’s allocable portion of Capital Commitment Net Income received from his Capital Commitment Investments,
distributions to such Limited Partner that constitute returns of capital, and other Capital Commitment Net Income of the Partnership (including without limitation Capital Commitment Net Income attributable to Unallocated Capital Commitment
Interests) during a fiscal year of the Partnership will be credited to payment of the Investor Notes to the extent required below as of the last day of such fiscal year (or on such earlier date as related distributions are made in the sole
discretion of the General Partner) with any cash amount distributable to such Limited Partner pursuant to clauses (ii) and (vii) below to be distributed within 45 days after the end of each fiscal year of the Partnership (or in each case on
such earlier date as selected by the General Partner in its sole discretion) as follows (subject to Section 7.4(c) below):
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(i) First, to the payment of interest then due on all Investor Notes
(relating to Capital Commitment Investments or otherwise) of such Limited Partner (to the extent Capital Commitment Net Income and distributions or payments from Other Sources do not equal or exceed all interest payments due, the selection of those
of such Limited Partner’s Investor Notes upon which interest is to be paid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor);
(ii) Second, to distribution to the Limited Partner of an amount equal to the Federal, State and local income taxes on income
of the Partnership allocated to such Limited Partner for such year in respect of such Limited Partner’s Capital Commitment Partner Interest (the aggregate amount of any such distribution shall be determined by the General Partner, subject to
the limitation that the minimum aggregate amount of such distribution be the tax that would be payable if the taxable income of the Partnership related to all Partners’ Capital Commitment Partner Interests were all allocated to an individual
subject to the then-prevailing maximum Federal, New York State and New York City tax rates (taking into account the extent to which such taxable income allocated by the Partnership was composed of long-term capital gains and the deductibility of
State and local income taxes for Federal income tax purposes)); provided, that additional amounts shall be paid to the Limited Partner pursuant to this clause (ii) to the extent that such amount reduces the amount otherwise distributable to the
Limited Partner pursuant to a comparable provision in any other BCE Agreement and there are not sufficient amounts to fully satisfy such provision from the relevant partnership or other entity; provided further, that amounts paid pursuant to the
provisions in such other BCE Agreements comparable to the immediately preceding proviso shall reduce those amounts otherwise distributable to the Limited Partner pursuant to provisions in such other BCE Agreements that are comparable to this clause
(ii);
(iii) Third, to the payment in full of the principal amount of the Investor Note financing (A) any Capital
Commitment Investment disposed of during or prior to such fiscal year or (B) any BCE Investments (other than Capital Commitment Investments) disposed of during or prior to such fiscal year, to the extent not repaid from Other Sources;
(iv) Fourth, to the return to such Limited Partner of (A) all Capital Commitment-Related Capital Contributions made in
respect of the Capital Commitment Interest to which any Capital Commitment Investment disposed of during or prior to such fiscal year relates or (B) all capital contributions made to any Blackstone Collateral Entity (other than the Partnership)
in respect of interests therein relating to BCE Investments (other than Capital Commitment Investments) disposed of during or prior to such fiscal year (including all principal paid on the related Investor Notes), to the extent not repaid from
amounts of Other Sources (other than amounts of CC Carried Interest);
(v) Fifth, to the payment of principal (including
any previously deferred amounts) then owing under all other Investor Notes of such Limited Partner (including those unrelated to the Partnership), the selection of those of such Limited Partner’s Investor Notes to be repaid and the division of
payments among such Investor Notes to be determined by the Lender or Guarantor;
(vi) Sixth, up to 50% of any Capital
Commitment Net Income remaining after application pursuant to clauses (i) through (v) above shall be applied pro rata to prepayment of principal of all remaining Investor Notes of such Limited Partner (including those unrelated to the
Partnership), the selection of those of such Limited Partner’s Investor Notes to be repaid, the division of payments among such Investor Notes and the percentage of remaining Capital Commitment Net Income to be applied thereto to be determined
by the Lender or Guarantor; and
(vii) Seventh, to such Limited Partner to the extent of any amount of Capital Commitment
Net Income remaining after making the distributions in clauses (i) through (vi) above, and such amount is not otherwise required to be applied to Investor Notes pursuant to the terms thereof.
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To the extent there is a partial disposition of a Capital Commitment Investment or any other
BCE Investment, as applicable, the payments in clauses (iii) and (iv) above shall be based on that portion of the Capital Commitment Investment or other BCE Investment, as applicable, disposed of, and the principal amount and related interest
payments of such Investor Note shall be adjusted to reflect such partial payment so that there are equal payments over the remaining term of the related Investor Note. For a Limited Partner who is no longer an employee or officer of Blackstone,
distributions shall be made pursuant to clauses (i) through (iii) above, and then, unless the General Partner or its Affiliate has exercised its rights pursuant to Section 8.1 hereof, any remaining income or other distribution in respect
of such Limited Partner’s Capital Commitment Partner Interest shall be applied to the prepayment of the outstanding Investor Notes of such Limited Partner, until all such Limited Partner’s Investor Notes have been repaid in full, with any
such income or other distribution remaining thereafter distributed to such Limited Partner.
Distributions of Capital Commitment Net Income
may be made at any other time at the discretion of the General Partner. At the General Partner’s discretion, any amounts distributed to a Limited Partner in respect of such Limited Partner’s Capital Commitment Partner Interest will be net
of any interest and principal payable on his Investor Notes for the full period in respect of which the distribution is made. A distribution of Capital Commitment Net Income to the General Partner shall be made contemporaneously with each
distribution of Capital Commitment Net Income to or for the accounts of the Limited Partners.
(b) [Intentionally omitted]
(c) To the extent that the foregoing Partnership distributions and distributions and payments from Other Sources are insufficient to satisfy
any principal and/or interest due on Investor Notes, and to the extent that the General Partner in its sole discretion elects to apply this paragraph (c) to any individual payments due, such unpaid interest will be added to the remaining
principal amount of such Investor Notes and shall be payable on the next scheduled principal payment date (along with any deferred principal and any principal and interest due on such date); provided, that such deferral shall not apply to a
Limited Partner that is no longer an employee or officer of Blackstone. All unpaid interest on such Investor Notes shall accrue interest at the interest rate then in effect for such Investor Notes.
(d) [Intentionally omitted.]
(e)
The Capital Commitment Capital Account of each Partner shall be reduced by the amount of any distribution to such Partner pursuant to paragraph (a) of this Section 7.4.
(f) At any time that a sale, exchange, transfer or other disposition of a portion of a Capital Commitment Investment is being considered by the
Partnership or SP VI (a “Capital Commitment Disposable Investment”), at the election of the General Partner each Partner’s Capital Commitment Interest with respect to such Capital Commitment Investment shall be vertically
divided into two separate Capital Commitment Interests, a Capital Commitment Interest attributable to the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class B Interest”), and a
Capital Commitment Interest attributable to such Capital Commitment Investment excluding the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class A Interest”). Distributions
(including those resulting from a direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Disposable Investment shall be made only to holders of Capital
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Commitment Class B Interests with respect to such Capital Commitment Investment in accordance with
their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class B Interests, and distributions (including those resulting from the direct or indirect sale, transfer, exchange or other disposition by the
Partnership) relating to a Capital Commitment Investment excluding such Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class A Interests with respect to such Capital Commitment Investment in
accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class A Interests.
(g) (i) If the Partnership) is obligated under the Giveback Provisions to contribute to SP VI all or a portion of a Giveback Amount with
respect to the Capital Commitment SP VI Interest (the amount of any such obligation of the Partnership being herein called a “Capital Commitment Giveback Amount”), the Partnership shall call for such amounts as are necessary to
satisfy such obligation of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the Partnership, such an amount of prior
distributions by the Partnership with respect to the Capital Commitment SP VI Interest (the “Capital Commitment Recontribution Amount”) which equals such Partner’s pro rata share of prior distributions in connection with
(a) the Capital Commitment SP VI Investment giving rise to the Capital Commitment Giveback Amount, or (b) if the amounts contributed pursuant to clause (a) above are insufficient to satisfy such Capital Commitment Giveback Amount,
Capital Commitment SP VI Investments other than the one giving rise to such obligation. Each Partner shall promptly contribute to the Partnership upon notice thereof such Partner’s Capital Commitment Recontribution Amount. Prior to such time,
the Partnership may, in the General Partner’s discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of the Capital Commitment Giveback Amount will
probably materialize (and an estimate of the aggregate amount of such obligations).
(ii) (A) In the event any Partner (a
“Capital Commitment Defaulting Party”) fails to recontribute all or any portion of such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount for any reason, the Partnership shall require all other
Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Capital Commitment Profit Sharing Percentages), such amounts as are necessary to fulfill the Capital Commitment Defaulting Party’s obligation
to pay such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount (a “Capital Commitment Deficiency Contribution”) if the General Partner determines in its good faith judgment that the Partnership will
be unable to collect such amount in cash from such Capital Commitment Defaulting Party for payment of the Capital Commitment Giveback Amount at least 20 Business Days prior to the latest date that the Partnership is permitted to pay the Capital
Commitment Giveback Amount; provided, that no Partner shall as a result of such Capital Commitment Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Capital Commitment Recontribution Amount
initially requested from such Partner in respect of such default. Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs
associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership against the Capital
Commitment Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the Capital Commitment Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such Capital
Commitment Defaulting Party becoming a Capital Commitment Defaulting Party) to set-off as appropriate and apply against such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount
any amounts otherwise payable to the Capital Commitment Defaulting Party by the Partnership or any Affiliate thereof. Each Partner hereby grants to the Partnership a security interest, effective upon such Partner becoming a Capital Commitment
Defaulting Party, in
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all accounts receivable and other rights to receive payment from the Partnership or any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the
Partnership may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner hereby appoints the Partnership as its true and lawful
attorney-in-fact with full irrevocable power and authority, in the name of such Partner or in the name of the Partnership, to take any actions which may be necessary to
accomplish the intent of the immediately preceding sentence. The Partnership shall be entitled to collect interest on the Capital Commitment Recontribution Amount of a Capital Commitment Defaulting Party from the date such Capital Commitment
Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(B)
Any Partner’s failure to make a Capital Commitment Deficiency Contribution shall cause such Partner to be a Capital Commitment Defaulting Party with respect to such amount.
(iii) A Partner’s obligation to make contributions to the Partnership under this Section 7.4(g) shall survive the termination of the
Partnership.
Section 7.5. Valuations. Capital Commitment Investments shall be valued annually as of the end of each year (and
at such other times as deemed appropriate by the General Partner) in accordance with the principles utilized by the Partnership (or any Affiliate of the Partnership that is a general partner of SP VI) in valuing investments of SP VI or, in the case
of investments not held by SP VI, in the good faith judgment of the General Partner, subject in each case to the second proviso of the immediately succeeding sentence. The value of any Capital Commitment Interest as of any date (the “Capital
Commitment Value”) shall be based on the value of the underlying Capital Commitment Investment as set forth above; provided, that the Capital Commitment Value may be determined as of an earlier date if determined appropriate by the
General Partner in good faith; provided further, that such value may be adjusted by the General Partner to take into account factors relating solely to the value of a Capital Commitment Interest (as compared to the value of the underlying
Capital Commitment Investment), such as restrictions on transferability, the lack of a market for such Capital Commitment Interest and lack of control of the underlying Capital Commitment Investment. To the full extent permitted by applicable law
such valuations shall be final and binding on all Partners; provided further, that the immediately preceding proviso shall not apply to any Capital Commitment Interests held by a person who is or was at any time a direct member of a General
Partner.
Section 7.6. Disposition Election.
(a) At any time prior to the date of the Partnership’s execution of a definitive agreement to dispose of a Capital Commitment Investment,
the General Partner may in its sole discretion permit a Partner to retain all or any portion of its pro rata share of such Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such Capital
Commitment Investment). If the General Partner so permits, such Partner shall instruct the General Partner in writing prior to such date (i) not to dispose of all or any portion of such Partner’s pro rata share of such Capital Commitment
Investment (the “Retained Portion”) and (ii) either to (A) distribute such Retained Portion to such Partner on the closing date of such disposition or (B) retain such Retained Portion in the Partnership on behalf of
such Partner until such time as such Partner shall instruct the General Partner upon 5 days’ notice to distribute such Retained Portion to such Partner. Such Partner’s Capital Commitment Capital Account shall not be adjusted in any way to
reflect the retention in the Partnership of such Retained Portion or the Partnership’s disposition of other Partners’ pro rata shares of such Capital Commitment Investment; provided, that such Partner’s Capital Commitment
Capital Account shall be adjusted upon distribution of such Retained Portion to such Partner or upon distribution of proceeds with respect to a subsequent disposition thereof by the Partnership.
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(b) No distribution of such Retained Portion shall occur unless any Investor Notes relating
thereto shall have been paid in full prior to or simultaneously with such distribution.
Section 7.7. Capital Commitment Special
Distribution Election.
(a) From time to time during the term of this Agreement, the General Partner may in its sole discretion, upon
receipt of a written request from a Partner, distribute to such Partner any portion of its pro rata share of a Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such Capital Commitment
Investment) (a “Capital Commitment Special Distribution”). Such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Capital Commitment Special Distribution.
(b) No Capital Commitment Special Distributions shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or
simultaneously with such Capital Commitment Special Distribution.
ARTICLE VIII
WITHDRAWAL; ADMISSION OF NEW PARTNERS
Section 8.1. Limited Partner Withdrawal; Repurchase of Capital Commitment Interests.
(a) Capital Commitment Interests (or a portion thereof) that were financed by Investor Notes will be treated as not subject to repurchase for
purposes hereof based upon the proportion of (a) the sum of Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to each Capital Commitment Interest and principal payments on the related Investor Note
to (b) the sum of the Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to such Capital Commitment Interest, the original principal amount of such Investor Note and all deferred amounts of interest which
from time to time comprise part of the principal amount of the Investor Note. A Limited Partner may prepay a portion of any outstanding principal on the Investor Notes; provided, that in the event that a Limited Partner prepays all or any
portion of the principal amount of the Investor Notes within nine months prior to the date on which such Limited Partner is no longer an employee or officer of Blackstone, the Partnership (or its designee) shall have the right, in its sole
discretion, to purchase the Capital Commitment Interest that became Non-Contingent as a result of such prepayment; provided further, that the purchase price for such Capital Commitment Interest shall be
determined in accordance with the determination of the purchase price of a Limited Partner’s Contingent Capital Commitment Interests as set forth in paragraph (b) below. Prepayments made by a Limited Partner shall apply pro rata against
all of such Limited Partner’s Investor Notes; provided, that such Limited Partner may request that such prepayments be applied only to Investor Notes related to BCE Investments that are related to one or more Blackstone Collateral
Entities specified by such Limited Partner. Except as expressly provided herein, Capital Commitment Interests that were not financed in any respect with Investor Notes shall be treated as Non-Contingent
Capital Commitment Interests.
(b) Upon a Limited Partner ceasing to be an officer or employee of the General Partner or any of its
Affiliates, other than as a result of such Limited Partner dying or suffering a Total Disability, such Limited Partner (the “Withdrawn Partner”) and the Partnership or any other person designated by the General Partner shall each
have the right (exercisable by the Withdrawn Partner within 30 days and by the Partnership or its designee(s) within 45 days of such Limited Partner’s ceasing to be such an officer or employee) or any time thereafter, upon 30 days’ notice,
but not the obligation, to
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require the Partnership, subject to the Partnership Act, to buy (in the case of exercise of such right by such Withdrawn Partner) or the Withdrawn Partner to sell (in the case of exercise of such
right by the Partnership or its designee(s)) all (but not less than all) such Withdrawn Partner’s Contingent Capital Commitment Interests. The purchase price for each such Contingent Capital Commitment Interest will be an amount equal to
(i) the outstanding principal amount of the related Investor Note plus accrued interest thereon to the date of purchase (such portion of the purchase price to be made in cash) and (ii) an additional amount (the “Adjustment
Amount”) equal to (x) all interest paid by the Limited Partner on the portion of the principal amount of the Investor Note relating to the portion of the related Capital Commitment Interest remaining Contingent plus (y) all
Capital Commitment Net Losses allocated to the Withdrawn Partner on the Contingent portion of such Capital Commitment Interest minus (z) all Capital Commitment Net Income allocated to the Withdrawn Partner on the Contingent portion of such
Capital Commitment Interest; provided, that, if the Withdrawn Partner was terminated from employment or his position as an officer for Cause, the amounts referred to in clause (x) or (y) of the Adjustment Amount, in the General
Partner’s sole discretion, may be deemed to equal zero. The Adjustment Amount shall, if positive, be payable by the holders of the purchased Capital Commitment Interests to the Withdrawn Partner from the next Capital Commitment Net Income
received by such holders on the Contingent portion of such Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received. If the Adjustment Amount resulting from an exchange is negative, it shall be
payable to the holders of the purchased Capital Commitment Interest by the Withdrawn Partner at the time such Capital Commitment Net Income is received by the Withdrawn Partner from the next Capital Commitment Net Income on the Non-Contingent portion of the Withdrawn Partner’s Capital Commitment Interests or, if the Partnership or its designee(s) elect to purchase such Withdrawn Partner’s
Non-Contingent Capital Commitment Interests, in cash by the Withdrawn Partner at the time of such purchase; provided, that the General Partner and its Affiliates may offset any amounts otherwise owing
to a Withdrawn Partner against any Adjustment Amount owed by such Withdrawn Partner. Until so paid, such remaining Adjustment Amount will not itself bear interest. At the time of such purchase of the Withdrawn Partner’s Contingent Capital
Commitment Interests, his related Investor Note shall be payable in full. If neither the Withdrawn Partner nor the Partnership nor its designee(s) exercise the right to require repurchase of such Contingent Capital Commitment Interests, then the
Withdrawn Partner shall retain the Contingent portion of his Capital Commitment Interests and the Investor Notes shall remain outstanding, shall become fully recourse to the Withdrawn Partner in his individual capacity, shall be payable in
accordance with their remaining original maturity schedules and shall be prepayable at any time by the Withdrawn Partner at his option, and the General Partner shall apply such prepayments against outstanding Investor Notes on a pro rata basis. To
the extent that another Partner purchases a portion of a Capital Commitment Interest of a Withdrawn Partner, the purchasing Partner’s Capital Commitment Capital Account and Capital Commitment Profit Sharing Percentage for such Capital
Commitment Investment shall be correspondingly increased.
(c) Upon the occurrence of a Final Event with respect to any Limited Partner,
such Limited Partner shall thereupon cease to be a Partner with respect to such Limited Partner’s Capital Commitment Partner Interest. If such a Final Event shall occur, no Successor in Interest to any such Limited Partner shall for any purpose
hereof become or be deemed to become a Partner. The sole right, as against the Partnership and the remaining Partners, acquired hereunder by, or resulting hereunder to, a Successor in Interest to any Partner shall be to receive any distributions and
allocations with respect to such Limited Partner’s Capital Commitment Partner Interest pursuant to Article VII and this Article VIII, subject to the right of the Partnership to purchase the Capital Commitment Interests of such former Partner
pursuant to Section 8.1(b) or Section 8.1(d)) to the extent, at the time, in the manner and in the amount otherwise payable to such Limited Partner had such a Final Event not occurred, and no other right shall be acquired hereunder by, or
shall result hereunder to, a Successor in Interest to such Partner, whether by operation of law or otherwise. Until distribution of any such Partner’s interest in the Partnership upon the dissolution of the Partnership as provided in
Section 9.2, neither his Capital
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Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption without the consent of the General Partner. The Partnership shall be entitled to treat any Successor
in Interest to such Partner as the only person entitled to receive distributions and allocations hereunder with respect to such Partner’s Capital Commitment Partner Interest.
(d) If a Limited Partner dies or suffers a Total Disability, all Contingent Capital Commitment Interests of such Partner shall be purchased by
the Partnership or its designee (within 30 days of the first date on which the Partnership knows or has reason to know of such Limited Partner’s death or Total Disability) as provided in Section 8.1(b) (except that any Adjustment Amount
shall be payable by or to the estate or personal representative in cash), and any Investor Notes financing such Contingent Capital Commitment Interests shall thereupon be prepaid as provided in Section 8.1(b). In addition, in the case of the
death or Total Disability of a Limited Partner, if the estate or personal representative of such Limited Partner so requests in writing within 180 days of the Limited Partner’s death or ceasing to be an employee or member (directly or
indirectly) of the General Partner or any of its Affiliates by reason of Total Disability (such requests shall not exceed one per calendar year), the Partnership or its designee may but is not obligated to purchase for cash all (but not less than
all) Non- Contingent Capital Commitment Interests of such Limited Partner as of the last day of the Partnership’s then current fiscal year at a price equal to the Capital Commitment Value thereof. Each
Limited Partner shall be required to include appropriate provisions in his will to reflect such provisions of this Agreement. In addition, the Partnership may, in the sole discretion of the General Partner, upon notice to the estate or personal
representative of such Limited Partner within 30 days of the first date on which the Partnership knows or has reason to know of such Limited Partner’s death or Total Disability, determine either (i) to distribute Securities or other
property to the estate or personal representative in exchange for such Non- Contingent Capital Commitment Interests as provided in Section 8.1(e) or (ii) to require sale of such Non- Contingent Capital Commitment Interests to the Partnership or its designee as of the last day of any fiscal year of the Partnership (or earlier period, as determined by the General Partner in its sole
discretion) for an amount in cash equal to the Capital Commitment Value thereof.
(e) In lieu of retaining a Withdrawn Partner as a Limited
Partner with respect to any Non-Contingent Capital Commitment Interests, the General Partner may, in its sole discretion, by notice to such Withdrawn Partner within 45 days of his ceasing to be an employee or
officer of the General Partner or any of its Affiliates, or at any time thereafter, upon 30 days written notice, determine (1) to distribute to such Withdrawn Partner the pro rata portion of the Securities or other property underlying such
Withdrawn Partner’s Non-Contingent Capital Commitment Interests, subject to any restrictions on distributions associated with the Securities or other property, in satisfaction of his Non-Contingent Capital Commitment Interests in the Partnership or (2) to cause, as of the last day of any fiscal year of the Partnership (or earlier period, as determined by the General Partner in its sole
discretion), the Partnership or another person designated by the General Partner (who may be itself another Limited Partner or another Affiliate of the General Partner) to purchase all (but not less than all) of such Withdrawn Partner’s Non-Contingent Capital Commitment Interests for a price equal to the Capital Commitment Value thereof. The General Partner shall condition any distribution or purchase of voting Securities pursuant to paragraph
(d) above or this paragraph (e) upon the Withdrawn Partner’s execution and delivery to the Partnership of an appropriate irrevocable proxy, in favor of the Partnership or its nominee, relating to such Securities.
(f) The Partnership may subsequently transfer any Unallocated Capital Commitment Interest or portion thereof which is purchased by it as
described above to any other person approved by the General Partner. In connection with such purchase or transfer or the purchase of a Capital Commitment Interest or portion thereof by the Partnership’s designee(s), Blackstone may loan all or a
portion of the purchase price of the transferred or purchased Capital Commitment Interest to the Partnership, the transferee or the designee-purchaser(s), as applicable (excluding any of the foregoing
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who is an executive officer of The Blackstone Group L.P. or any of its Affiliates). To the extent that a Withdrawn Partner’s Capital Commitment Interests (or portions thereof) are
repurchased by the Partnership and not transferred to or purchased by another person, all or any portion of such repurchased Capital Commitment Interests may, in the sole discretion of the General Partner, (i) be allocated to each Partner
already participating in the Capital Commitment Investment to which the repurchased Capital Commitment Interest relates, (ii) be allocated to each Partner in the Partnership, whether or not already participating in such Capital Commitment
Investment, and/or (iii) continue to be held by the Partnership itself as an unallocated Capital Commitment Investment (such Capital Commitment Interests being herein called “Unallocated Capital Commitment Interests”). To the
extent that a Capital Commitment Interest is allocated to Partners as provided in clause (i) and/or (ii) above, any indebtedness incurred by the Partnership to finance such repurchase shall also be allocated to such Partners. All such
Capital Commitment Interests allocated to Limited Partners shall be deemed to be Contingent and shall become Non-Contingent as and to the extent that the principal amount of such related indebtedness is
repaid. The Limited Partners receiving such allocations shall be responsible for such related indebtedness only on a nonrecourse basis to the extent appropriate as provided in this Agreement, except as such Limited Partners and the General Partner
shall otherwise agree. If the indebtedness financing such repurchased interests is not so limited, the Partnership may require an assumption by the Limited Partners of such indebtedness on the terms thereof as a precondition to allocation of the
related Capital Commitment Interests to such Limited Partners; provided, that a Limited Partner shall not, except as set forth in his Investor Note, be obligated to accept any personally recourse obligation unless his prior consent is
obtained. So long as the Partnership itself retains the Unallocated Capital Commitment Interests pursuant to clause (iii) above, such Unallocated Capital Commitment Interests shall belong to the Partnership and any indebtedness financing the
Unallocated Capital Commitment Interests shall be an obligation of the Partnership to which all income of the Partnership is subject except as otherwise agreed by the lender of such indebtedness. Any Capital Commitment Net Income (Loss) on an
Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion his aggregate Capital Commitment Capital Accounts bear to the aggregate Capital Commitment Capital Accounts of all Partners; debt service on such related
financing will be an expense of the Partnership allocable to all Partners in such proportions.
(g) If a Partner is required to Withdraw
from the Partnership with respect to such Partner’s Capital Commitment Partner Interest for Cause, then his Capital Commitment Interest shall be settled in accordance with paragraphs (a)-(f) and (j) of this Section 8.1;
provided, that if such Partner was not at any time a direct member of a General Partner, the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) purchase for cash all of such Withdrawn Partner’s Non-Contingent Capital
Commitment Interests. The purchase price for each such Non-Contingent Capital Commitment Interest shall be the lower of (A) the original cost of such Non-Contingent
Capital Commitment Interest or (B) an amount equal to the Capital Commitment Value thereof;
(ii) allow the Withdrawn
Partner to retain such Non-Contingent Capital Commitment Interests; provided, that the maximum amount of Capital Commitment Net Income allocable to such Withdrawn Partner with respect to any Capital
Commitment Investment shall equal the amount of Capital Commitment Net Income that would have been allocated to such Withdrawn Partner if such Capital Commitment Investment had been sold as of the Settlement Date at the then prevailing Capital
Commitment Value thereof; or
(iii) in lieu of cash, purchase such Non-Contingent
Capital Commitment Interests by providing the Withdrawn Partner with a promissory note in the amount determined in (i) above. Such promissory note shall have a maximum term of ten (10) years with interest at the Federal Funds Rate.
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(h) The Partnership will assist a Withdrawn Partner or his estate or guardian, as the case
may be, in the settlement of the Withdrawn Partner’s Capital Commitment Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his estate.
(i) The Partnership may reasonably determine in good faith to retain outside professionals to provide the assistance to Withdrawn Partners or
their estates or guardians, as referred to above. In such instances, the Partnership will obtain the prior approval of a Withdrawn Partner or his estate or guardian, as the case may be, prior to engaging such professionals. If the Withdrawn Partner
(or his estate or guardian) declines to incur such costs, the Partnership will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s
day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(j) Each Limited Partner hereby irrevocably appoints each General Partner as such Limited Partner’s true and lawful agent, representative
and attorney-in-fact, each acting alone, in such Limited Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Limited Partner, any
and all agreements, instruments, documents and certificates which such General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this Section 8.1, including, without limitation,
the performance of any obligation of such Limited Partner or the Partnership or the exercise of any right of such Limited Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and
effect notwithstanding the Withdrawal from the Partnership of any Limited Partner for any reason and shall not be affected by the death, disability or incapacity of such Limited Partner.
Section 8.2. Transfer of Limited Partner’s Capital Commitment Interest. Without the prior written consent of the General
Partner, no Limited Partner or former Limited Partner shall have the right to sell, assign, mortgage, pledge or otherwise dispose of or transfer (“Transfer”) all or part of any such Partner’s Capital Commitment Partner Interest
in the Partnership; provided, that this Section 8.2 shall in no way impair (i) Transfers as permitted in Section 8.1 above, in the case of the purchase of a Withdrawn Partner’s or deceased or Totally Disabled Limited
Partner’s Capital Commitment Interests, (ii) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers by a Limited Partner to another Limited Partner of
Non-Contingent Capital Commitment Interests, (iii) Transfers with the prior written consent of the General Partner, which consent may be granted or withheld in its sole discretion without giving any
reason therefor, and (iv) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers, for estate planning purposes, of up to 25% of a Limited Partner’s Capital Commitment Partner Interest to
an Estate Planning Vehicle. Each Estate Planning Vehicle will be a Nonvoting Limited Partner. Such Limited Partner and the Nonvoting Limited Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such
Nonvoting Limited Partner with respect to the interest transferred (including the obligation to make additional Capital Commitment-Related Capital Contributions). The General Partner may at its sole option exercisable at any time require such Estate
Planning Vehicle to Withdraw from the Partnership on the terms of Section 8.1 and Article VI. No person acquiring an interest in the Partnership pursuant to this Section 8.2 shall become a Limited Partner of the Partnership, or acquire
such Partner’s right to participate in the affairs of the Partnership, unless such person shall be admitted as a Limited Partner pursuant to Section 6.1. A Limited Partner shall not cease to be a limited partner of the Partnership upon the
collateral assignment of, or the pledging or granting of a security interest in, its entire limited partner interest in the Partnership in accordance with the provisions of this Agreement.
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Section 8.3. Compliance with Law. Notwithstanding any provision hereof to the
contrary, no Transfer of a Capital Commitment Interest in the Partnership may be made except in compliance with all Federal, State and other applicable laws, including Federal and State securities laws.
ARTICLE IX
DISSOLUTION
Section 9.1. Dissolution.
(a) The Partnership shall be dissolved and subsequently terminated:
(i) pursuant to Section 6.6;
(ii) upon the expiration of the Term; or
(iii) upon the occurrence of a Disabling Event with respect to the last remaining General Partner, provided that the
Partnership shall not be dissolved if, within 90 days after the Disabling Event, Limited Partners entitled to vote thereon as provided herein who, as of the last day of the most recent accounting period ending on or prior to the date of the
Disabling Event, have aggregate GP-Related Capital Account balances representing at least a majority in amount of the total GP-Related Capital Account balances of all
the persons who are Limited Partners entitled to vote thereon as provided herein agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of the Disabling Event, of another General Partner.
(b) When the Partnership is dissolved, the business and property of the Partnership shall be wound up and liquidated by the General Partner or,
in the event of the unavailability of the General Partner, such Limited Partner or other liquidating trustee as shall be named by the Designated Limited Partner (the General Partner, such Limited Partner or other liquidating trustee, as the case may
be, being hereinafter referred to as the “Liquidator”).
Section 9.2. Final Distribution. Within 120 calendar
days after the effective date of dissolution of the Partnership, the assets of the Partnership shall be distributed in the following manner and order:
(i) to the payment of the expenses of the winding-up, liquidation and dissolution of
the Partnership;
(ii) to pay all creditors of the Partnership, other than Partners, either by the payment thereof or the
making of reasonable provision therefor;
(iii) to establish reserves, in amounts established by the General Partner or the
Liquidator, to meet other liabilities of the Partnership; and
(iv) to pay, in accordance with the terms agreed among them
and otherwise on a pro rata basis, all creditors of the Partnership that are Partners, either by the payment thereof or the making of reasonable provision therefor.
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(b) The remaining assets of the Partnership shall be applied and distributed among the
Partners as follows:
(i) With respect to each Partner’s GP-Related Partner
Interest, the remaining assets of the Partnership shall be applied and distributed to such Partner in accordance with the procedures set forth in Section 6.5 which provide for allocations to the capital accounts of the Partners and
distributions in accordance with the capital account balances of the Partners; and for purposes of the application of this Section 9.2 (b)(i), determining GP-Related Capital Accounts on liquidation, all
unrealized gains, losses and accrued income and deductions of the Partnership shall be treated as realized and recognized immediately before the date of distribution; and
(ii) With respect to each Partner’s Capital Commitment Partner Interest, an amount shall be paid to such Partner in cash
or Securities in an amount equal to such Partner’s respective Capital Commitment Liquidating Share for each Capital Commitment Investment; provided, that if the remaining assets relating to any Capital Commitment Investment shall not be
equal to or exceed the aggregate Capital Commitment Liquidating Shares for such Capital Commitment Investment, to each Partner in proportion to its Capital Commitment Liquidating Share for such Capital Commitment Investment; and the remaining assets
of the Partnership related to the Partners’ Capital Commitment Partner Interests shall be paid to the Partners in cash or Securities in proportion to their respective Capital Commitment Profit Sharing Percentages for each Capital Commitment
Investment from which such cash or Securities are derived.
Section 9.3. Amounts Reserved Related to Capital Commitment Partner
Interests.If there are any Securities or other property or other investments or securities related to the Partners’ Capital Commitment Partner Interests which, in the judgment of the Liquidator, cannot be sold, or properly distributed in
kind in the case of dissolution, without sacrificing a significant portion of the value thereof, the value of a Partner’s interest in each such Security or other investment or security may be excluded from the amount distributed to the Partners
participating in the related Capital Commitment Investment pursuant to clause (ii) of Section 9.2(b). Any interest of a Partner, including his pro rata interest in any gains, losses or distributions, in Securities or other property or
other investments or securities so excluded shall not be paid or distributed until such time as the Liquidator shall determine.
(b) If
there is any pending transaction, contingent liability or claim by or against the Partnership related to the Partners’ Capital Commitment Partner Interests as to which the interest or obligation of any Partner therein cannot, in the judgment of
the Liquidator, be then ascertained, the value thereof or probable loss therefrom may be deducted from the amount distributable to such Partner pursuant to clause (ii) of Section 9.2(b). No amount shall be paid or charged to any such
Partner on account of any such transaction or claim until its final settlement or such earlier time as the Liquidator shall determine. The Partnership may meanwhile retain from other sums due such Partner in respect of such Partner’s Capital
Commitment Partner Interest an amount which the Liquidator estimates to be sufficient to cover the share of such Partner in any probable loss or liability on account of such transaction or claim.
(c) Upon determination by the Liquidator that circumstances no longer require the exclusion of any Securities or other property or retention of
sums as provided in paragraphs (a) and (b) of this Section 9.3, the Liquidator shall, at the earliest practicable time, distribute as provided in clause (ii) of Section 9.2(b) such sums or such Securities or other property or the
proceeds realized from the sale of such Securities or other property to each Partner from whom such sums or Securities or other property were withheld.
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ARTICLE X
MISCELLANEOUS
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be settled amicably,
including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including
the validity, scope and enforceability of this arbitration provision) shall be finally settled by arbitration conducted by a single arbitrator in New York , NY in accordance with the then-existing Rules of Arbitration of the International Chamber of
Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator
shall be a lawyer and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may cause the Partnership to bring, on behalf of the
General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an
arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner
(i) expressly
consents to the application of paragraph (c) of this Section 10.1 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult
to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the General Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of
process upon any such agent, who shall promptly advise such Partner of any such service of process, shall be deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY
JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 10.1, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT.
Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the forum(s)
designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may
have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 10.1 and such parties agree not to plead or claim the same.
(d) Notwithstanding any provision of this Agreement to the contrary, this Section 10.1 shall be construed to the maximum extent possible to
comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be determined by a court of
competent jurisdiction that any provision or wording of this Section 10.1, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or other applicable law, such
invalidity shall not invalidate all of this Section 10.1. In that case, this Section 10.1 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act
or other applicable law, and, in the event such term or provision cannot be so limited, this Section 10.1 shall be construed to omit such invalid or unenforceable provision.
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Section 10.2. Ownership and Use of the Firm Name. The Partnership acknowledges
that Blackstone TM L.L.C. (“TM”), a Delaware limited liability company with a principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., (or its successors or assigns) is the sole and exclusive owner of the
mark and name BLACKSTONE and that the ownership of, and the right to use, sell or otherwise dispose of, the firm name or any abbreviation or modification thereof which consists of or includes BLACKSTONE, shall belong exclusively to TM, which company
(or its predecessors, successors or assigns) has licensed the Partnership to use BLACKSTONE in its name. The Partnership acknowledges that TM owns the service mark BLACKSTONE for various services and that the Partnership is using the BLACKSTONE mark
and name on a non-exclusive, non-sublicensable and non-assignable basis in connection with its business and authorized activities
with the permission of TM. All services rendered by the Partnership under the BLACKSTONE mark and name will be rendered in a manner and with quality levels that are consistent with the high reputation heretofore developed for the BLACKSTONE mark by
TM and its Affiliates and licensees. The Partnership understands that TM may terminate its right to use BLACKSTONE at any time in TM’s sole discretion by giving the Partnership written notice of termination. Promptly following any such
termination, the Partnership will take all steps necessary to change its partnership name to one which does not include BLACKSTONE or any confusingly similar term and cease all use of BLACKSTONE or any term confusingly similar thereto as a service
mark or otherwise.
Section 10.3. Written Consent. Any action required or permitted to be taken by a vote of Partners at a
meeting may be taken without a meeting if a Majority in Interest of the Partners consent thereto in writing.
Section 10.4. Letter
Agreements; Schedules. The General Partner may, or may cause the Partnership to, enter or has previously entered, into separate letter agreements with individual Partners with respect to GP-Related Profit
Sharing Percentages, Capital Commitment Profit Sharing Percentages or any other matter. The General Partner may from time to time execute and deliver to the Partners Schedules which set forth the then current capital balances, GP-Related Profit Sharing Percentages and Capital Commitment Profit Sharing Percentages of the Partners and any other matters deemed appropriate by the General Partner. Such Schedules shall be for information
purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever; provided that this in no way limits the effectiveness of any Commitment Agreement.
Section 10.5. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of
Delaware without regard to principles of conflict of laws. In particular, the Partnership has been formed pursuant to the Partnership Act, and the rights and liabilities of the Partners shall be as provided therein, except as herein otherwise
expressly provided. If any provision of this Agreement shall be held to be invalid, such provision shall be given its meaning to the maximum extent permitted by law and the remainder of this Agreement shall not be affected thereby.
Section 10.6. Successors and Assigns; Third Party Beneficiaries. This Agreement shall be binding upon and
shall, subject to the penultimate sentence of Section 6.3(a), inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any successor to a trustee of a trust which is or becomes a party hereto;
provided that no person claiming by, through or under a Partner (whether such Partner’s heir, personal representative or otherwise), as distinct from such Partner itself, shall have any rights as, or in respect to, a Partner (including the
right to approve or vote on any matter or to notice thereof) except the right to receive only those distributions expressly payable to such person pursuant to Articles VI and VIII. Any Partner or Withdrawn Partner shall remain liable for the
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obligations under this Agreement (including any Net GP-Related
Recontribution Amounts and any Capital Commitment Recontribution Amounts) of any transferee of all or any portion of such Partner’s or Withdrawn Partner’s interest in the Partnership, unless waived by the General Partner. The Partnership
shall, if the General Partner determines, in its good faith judgment, based on the standards set forth in Sections 5.8(d)(ii)(A) and 7.4(g)(ii)(A), to pursue such transferee, pursue payment (including any Net
GP-Related Recontribution Amounts and/or any Capital Commitment Recontribution Amounts) from the transferee with respect to any such obligations. Nothing in this Agreement is intended, nor shall anything
herein be construed, to confer any rights, legal or equitable, on any person other than the Partners and their respective legal representatives, heirs, successors and permitted assigns. Notwithstanding the foregoing, solely to the extent required by
the SP VI Agreements, the limited partners in SP VI shall be third-party beneficiaries of the provisions of Sections 5.8(d)(i)(A) and 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount (for purpose of
this sentence, as defined in section 11.3 (b) of the SP VI Partnership Agreement).
Section 10.7. Partner’s Will. Each
Limited Partner and Withdrawn Partner shall include in his or her will a provision that addresses certain matters in respect of his or her obligation relating to the Partnership that is satisfactory to the General Partner, and each such Limited
Partner and Withdrawn Partner shall confirm annually to the Partnership, in writing, that such provision remains in his or her current will. Where applicable, any estate planning trust of such Partner or Withdrawn Partner to which a portion of such
Limited Partner’s or Withdrawn Partner’s Interest is transferred shall include a provision substantially similar to such provision and the trustee of such trust shall confirm annually to the Partnership, in writing, that such provision or
its substantial equivalent remains in such trust. In the event any Limited Partner or Withdrawn Partner fails to comply with the provisions of this Section 10.7 after the Partnership has notified such Limited Partner or Withdrawn Partner of his
or her failure to so comply and such failure to so comply is not cured within 30 days of such notice, the Partnership may withhold any and all distributions to such Limited Partner or Withdrawn Partner until the time at which such party complies
with the requirements of this Section 10.7.
Section 10.8. Confidentiality. By executing this Agreement, each Partner
expressly agrees, at all times during the term of the Partnership and thereafter and whether or not at the time a Partner of the Partnership, to maintain the confidentiality of, and not to disclose to any person other than the Partnership, another
Partner or a person designated by the Partnership, any information relating to the business, financial structure, financial position or financial results, clients or affairs of the Partnership that shall not be generally known to the public or the
securities industry, except as otherwise required by law or by any regulatory or self-regulatory organization having jurisdiction; provided, however, that any corporate Partner may disclose any such information it is required by law, rule,
regulation or custom to disclose. Notwithstanding anything in this Agreement to the contrary, to comply with Treasury Regulation Section 1.6011-4(b)(3)(i), each Partner (and any employee, representative
or other agent of such Partner) may disclose to any and all persons, without limitation of any kind, the Federal income tax treatment and tax structure of the Partnership, it being understood and agreed, for this purpose, (1) the name of, or
any other identifying information regarding (a) the Partners or any existing or future investor (or any Affiliate thereof) in any of the Partners, or (b) any investment or transaction entered into by the Partners; (2) any performance
information relating to any of the Partners or their investments; and (3) any performance or other information relating to previous funds or investments sponsored by any of the Partners, does not constitute such tax treatment or tax structure
information.
Section 10.9. Notices. Whenever notice is required or permitted by this Agreement to be given, such notice shall
be in writing (including telecopy or similar writing) and shall be given by hand delivery (including any courier service) or telecopy to any Partner at its address or telecopy number shown in the books and records of the Partnership or, if given to
the General Partner or the Partnership, at the address or telecopy number of the Partnership in New York City. Each such notice shall be effective (i) if given by telecopy, upon dispatch, and (ii) if given by hand delivery, when delivered to
the address of such Partner or the General Partner or the Partnership specified as aforesaid.
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Section 10.10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together shall constitute a single instrument.
Section 10.11.
Power of Attorney. Each Partner hereby irrevocably appoints the General Partner as such Partner’s true and lawful representative and attorney-in-fact, each
acting alone, in such Partner’s name, place and stead, to make, execute, sign and file all instruments, documents and certificates which, from time to time, may be required to set forth any amendment to this Agreement or may be required by this
Agreement or by the laws of the United States of America, the State of Delaware or any other state in which the Partnership shall determine to do business, or any political subdivision or agency thereof, to execute, implement and continue the valid
and subsisting existence of the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and effect notwithstanding the subsequent Withdrawal from the Partnership of any Partner for any reason and
shall not be affected by the subsequent disability or incapacity of such Partner.
Section 10.12. Cumulative Remedies. Rights
and remedies under this Agreement are cumulative and do not preclude use of other rights and remedies available under applicable law.
Section 10.13. Legal Fees. Except as more specifically provided herein, in the event of a legal dispute (including litigation,
arbitration or mediation) between any Partner or Withdrawn Partner and the Partnership, arising in connection with any party seeking to enforce Section 4.1(d) or any other provision of this Agreement relating to the Holdback, the Clawback
Amount, the GP-Related Giveback Amount, the Capital Commitment Giveback Amount, the Net GP-Related Recontribution Amount or the Capital Commitment Recontribution Amount,
the “losing” party to such dispute shall promptly reimburse the “victorious party” for all reasonable legal fees and expenses incurred in connection with such dispute (such determination to be made by the relevant adjudicator).
Any amounts due under this Section 10.13 shall be paid within 30 days of the date upon which such amounts are due to be paid and such amounts remaining unpaid after such date shall accrue interest at the Default Interest Rate.
Section 10.14. Entire Agreement. This Agreement embodies the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. Subject to Section 10.4, this Agreement supersedes
all prior agreements and understandings between the parties with respect to such subject matter
.
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IN WITNESS W HEREOF, the parties have executed this Agreement effective as of the date first
above written. In the event that it is impracticable to obtain the signature of any one or more of the Partners to this Agreement , this Agreement shall be binding among the other Partners executing the same.
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GENERAL PARTNER:
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SPFSA VI L.L.C.
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By:
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/s/ Peter Song
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Name: Peter Song
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Title: Authorized Person
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INITIAL LIMITED PARTNER
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/s/ Peter Song
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Peter Song, as Initial Limited Partner, to reflect his withdrawal from the Partnership
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69
Exhibit 10.12
HIGHLY CONFIDENTIAL & TRADE SECRET
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES VII L.P.
AMENDED AND RESTATED
AGREEMENT OF
LIMITED PARTNERSHIP
Dated as of February 12, 2016
Table of Contents
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Page
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ARTICLE I DEFINITIONS
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1
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Section 1.1.
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Definitions
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1
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Section 1.2.
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Terms Generally
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16
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ARTICLE II GENERAL PROVISIONS
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16
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Section 2.1.
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General Partner and Limited Partners
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16
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Section 2.2.
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Formation; Name
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17
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Section 2.3.
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Term
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17
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Section 2.4.
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Purpose; Powers
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17
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Section 2.5.
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Place of Business
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19
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Section 2.6.
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Withdrawal of Initial Limited Partner
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19
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ARTICLE III MANAGEMENT
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19
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Section 3.1.
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General Partners
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19
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Section 3.2.
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Limitations on Limited Partners
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19
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Section 3.3.
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Partner Voting
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20
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Section 3.4.
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Management
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20
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Section 3.5.
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Responsibilities of Partners
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22
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Section 3.6.
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Exculpation and Indemnification
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22
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Section 3.7.
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Representations of Limited Partners
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24
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Section 3.8.
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Tax Representation
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24
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ARTICLE IV CAPITAL OF THE PARTNERSHIP
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25
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Section 4.1.
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Capital Contributions by Partners
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25
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Section 4.2.
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Interest
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31
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Section 4.3.
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Withdrawals of Capital
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31
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ARTICLE V PARTICIPATION IN PROFITS AND LOSSES
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32
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Section 5.1.
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General Accounting Matters
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32
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Section 5.2.
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GP-Related Capital Accounts
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33
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Section 5.3.
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GP-Related Profit Sharing Percentages
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33
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Section 5.4.
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Allocations of GP-Related Net Income (Loss)
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34
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Section 5.5.
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Liability of General Partners
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35
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Section 5.6.
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Liability of Limited Partners
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35
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Section 5.7.
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Repurchase Rights, etc.
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35
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Section 5.8.
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Distributions
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36
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Section 5.9.
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Business Expenses
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42
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Section 5.10.
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Tax Capital Accounts; Tax Allocations
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42
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ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
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42
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Section 6.1.
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Additional Partners
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42
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Section 6.2.
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Withdrawal of Partners
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43
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Section 6.3.
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GP-Related Partner Interests Not Transferable
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44
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Section 6.4.
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General Partner Withdrawal; Transfer of General Partner’s Interest
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45
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Section 6.5.
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Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interest
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45
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Section 6.6.
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Termination of the Partnership
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50
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Section 6.7.
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Certain Tax Matters
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50
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Section 6.8.
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Special Basis Adjustments
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51
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ARTICLE VII Capital Commitment Interests; Capital Contributions; Allocations;
Distributions
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51
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Section 7.1.
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Capital Commitment Interests, etc.
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51
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Section 7.2.
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Capital Commitment Capital Accounts
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52
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Section 7.3.
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Allocations
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53
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Section 7.4.
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Distributions
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53
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Section 7.5.
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Valuations
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57
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Section 7.6.
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Disposition Election
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57
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Section 7.7.
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Capital Commitment Special Distribution Election
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58
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ARTICLE VIII Withdrawal; Admission of New Partners
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58
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Section 8.1.
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Limited Partner Withdrawal; Repurchase of Capital Commitment Interests
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58
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Section 8.2.
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Transfer of Limited Partner’s Capital Commitment Interest
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62
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Section 8.3.
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Compliance with Law
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62
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ARTICLE IX DISSOLUTION
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63
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Section 9.1.
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Dissolution
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63
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Section 9.2.
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Final Distribution
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63
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Section 9.3.
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Amounts Reserved Related to Capital Commitment Partner Interests
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64
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ARTICLE X MISCELLANEOUS
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65
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Section 10.1.
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Submission to Jurisdiction; Waiver of Jury Trial
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65
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Section 10.2.
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Ownership and Use of the Firm Name
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66
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Section 10.3.
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Written Consent
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66
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Section 10.4.
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Letter Agreements; Schedules
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66
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Section 10.5.
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Governing Law
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66
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Section 10.6.
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Successors and Assigns; Third Party Beneficiaries
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66
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Section 10.7.
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Partner’s Will
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67
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Section 10.8.
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Confidentiality
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67
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Section 10.9.
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Notices
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67
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Section 10.10.
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Counterparts
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67
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Section 10.11.
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Power of Attorney
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68
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Section 10.12.
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Cumulative Remedies
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68
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Section 10.13.
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Legal Fees
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68
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Section 10.14.
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Entire Agreement
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68
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STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES VII L.P.
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of February 12, 2016, of Strategic Partners Fund Solutions Associates VII
L.P., a Delaware limited partnership (the “Partnership”), by and between SPFSA VII L.L.C., a Delaware limited liability company (the “General Partner”), and the limited partners listed in the books and records of
the Partnership, as limited partners.
WITNESSETH
WHEREAS, the Limited Partnership Agreement of Strategic Partners Fund Solutions Associates VII L.P., dated as of September 11, 2015,
constitutes the existing partnership agreement of the Partnership (the “Original Agreement”); and
WHEREAS, in order to
amend the Partnership’s Original Agreement to reflect certain changes thereto and to reflect the withdrawal of the Initial Limited Partner, the parties hereto wish to amend and restate the Original Agreement in its entirety as hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein made and intending to be legally bound, the parties
hereto hereby agree that the Original Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1.
Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for purposes of this Agreement:
“Advancing Party” has the meaning set forth in Section 7.1(b).
“Affiliate” when used with reference to another person means any person (other than the Partnership),
directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person.
“Agreement” means this Amended and Restated Agreement of Limited Partnership, as it may be further amended,
supplemented, restated or otherwise modified from time to time.
“Alternative Vehicle” means any
“Alternative Investment Fund” (as defined in section 4.7(a) of the SP VII Partnership Agreement).
“Applicable Collateral Percentage,” with respect to any Firm Collateral or Special Firm Collateral, has the
meaning set forth in the books and records of the Partnership with respect thereto.
“Assumed Income Tax
Rate” shall mean the highest effective marginal combined U.S. federal, state and local income tax rate for a Fiscal Year prescribed for an individual resident in New York, New York.
“Bankruptcy” means, with respect to any person, the
occurrence of any of the following events: (i) the filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his assets; (ii) the filing by such person of a voluntary petition in Bankruptcy
or the seeking of relief under Title 11 of the United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his inability to pay his debts as they become due; (iii) the
failure of such person to pay his debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of an answer admitting the material allegations of, or his
consenting to, or defaulting in answering, a Bankruptcy petition filed against him in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States Code, as now constituted or as hereafter amended; or (vi) the entry
of an order, judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a trustee or custodian of his assets and the continuance of such order,
judgment or decree unstayed and in effect for a period of 60 consecutive days.
“BCE Agreement” means the
limited partnership agreement, limited liability company agreement or other governing document of any limited partnership, limited liability company or other entity named or referred to in the definition of any of “BFREP,”
“BFIP,” “BFGSO,”
“BFCOMP” or “Other Blackstone Collateral Entity,” as such
limited partnership agreement, limited liability company agreement or other governing document may be amended, supplemented, restated or otherwise modified to date, and as such limited partnership agreement, limited liability company agreement or
other governing document may be further amended, supplemented, restated or otherwise modified from time to time, and any other Blackstone Collateral Entity limited partnership agreement, limited liability company agreement or other governing
document..
“BCE Investment” means any direct or indirect investment by any Blackstone Collateral
Entity.
“BCOM” is the collective reference to (i) Blackstone Communications Partners I L.P., a Delaware limited
partnership, and (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above.
“BCP VI” is the collective reference to (i) Blackstone Capital Partners VI L.P., a Delaware limited
partnership, and (ii) any alternative investment vehicle relating thereto and any parallel fund.
“BCTP” means (i) Blackstone Clean Technology Partners L.P., a Delaware limited partnership, and
(ii) any alternative vehicle relating thereto and any parallel fund.
“BEP” means“(i)
Blackstone Energy Partners L.P. and Blackstone Energy Partners Q L.P., each a Delaware limited partnership, and (ii) any alternative investment vehicle relating thereto and any parallel fund.
“BFCOMP” means Blackstone Family Communications Partnership I L.P., Blackstone Family Communications
Partnership I-SMD L.P. and any other entity that is an Affiliate thereof and has terms substantially similar to those of the foregoing partnerships and is formed in connection with the participation by one or
more partners thereof directly or indirectly in investments in securities also purchased by BCOM or any other funds with substantially similar investment objectives to BCOM and that are sponsored or managed by an Affiliate of the General Partner
(which includes serving as general partner of such funds).
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“BFGSO” means any entity formed to invest side-by-side with any GSO Fund and any other entity that is an Affiliate thereof and that has terms substantially similar to those of the foregoing partnerships or other
entities and is formed in connection with the participation by one or more partners or other equity owners thereof directly or indirectly in investments in securities also purchased by any GSO Fund or any other funds with substantially similar
investment objectives to any GSO Fund and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).
“BFIP” means Blackstone Capital Associates II L.P., Blackstone Capital Associates III L.P., Blackstone Family
Investment Partnership II L.P., Blackstone Family Investment Partnership III L.P., Blackstone Family Investment Partnership IV-A L.P., Blackstone Family Investment Partnership
IV-A—SMD L.P., Blackstone Family Investment Partnership V L.P., Blackstone Family Investment Partnership V- SMD L.P., Blackstone Family Investment Partnership VI
L.P., Blackstone Family Investment Partnership VI-SMD L.P., Blackstone Family Investment Partnership VII—ESC L.P., Blackstone Family Cleantech Investment Partnership L.P., Blackstone Family Cleantech
Investment Partnership—SMD L.P., Blackstone Energy Family Investment Partnership L.P., Blackstone Energy Family Investment Partnership—SMD L.P., Blackstone Family Tactical Opportunities Investment Partnership L.P., Blackstone Family
Tactical Opportunities Investment Partnership—SMD L.P., Blackstone Family Tactical Opportunities Investment Partnership (Cayman) L.P., Blackstone Family Tactical Opportunities Investment Partnership (Cayman)—SMD L.P., Blackstone Energy
Family Investment Partnership II L.P., and any other entity that is an Affiliate thereof and has terms similar to those of the foregoing partnerships and is formed in connection with the participation by one or more of the partners thereof in
investments in securities also purchased by BCP VI, BCP VII, BCTP, BEP, BEP II, BTO or any other fund with substantially similar investment objectives to BCP VI, BCP VII, BCTP, BEP, BEP II or BTO and that are sponsored or managed by an Affiliate of
the General Partner (which includes serving as general partner of such funds).
“BFREP” means Blackstone
Real Estate Capital Associates L.P., Blackstone Real Estate Capital Associates II L.P., Blackstone Real Estate Capital Associates III L.P., Blackstone Family Real Estate Partnership L.P., Blackstone Family Real Estate Partnership II L.P., Blackstone
Family Real Estate Partnership III L.P., Blackstone Family Real Estate Partnership International- A-SMD L.P., Blackstone Family Real Estate Partnership IV-SMD L.P.,
Blackstone Family Real Estate Partnership International II-SMD L.P., Blackstone Family Real Estate Partnership V-SMD L.P., Blackstone Family Real Estate Partnership VI-SMD L.P., Blackstone Family Real Estate Partnership VII-SMD L.P., Blackstone Family Real Estate Partnership VIII-SMD L.P.,
Blackstone Family Real Estate Partnership Europe III-SMD L.P., Blackstone Family Real Estate Special Situations Partnership—SMD L.P., Blackstone Family Real Estate Special Situations Partnership
Europe—SMD L.P., Blackstone Real Estate Holdings L.P., Blackstone Real Estate Holdings II L.P., Blackstone Real Estate Holdings III L.P., Blackstone Real Estate Holdings International—A L.P., Blackstone Real Estate Holdings IV L.P.,
Blackstone Real Estate Holdings International II L.P., Blackstone Real Estate Holdings V L.P., Blackstone Real Estate Holdings VI L.P., Blackstone Real Estate Holdings VII L.P., Blackstone Real Estate Holdings Europe III L.P., Blackstone Real Estate
Holdings Europe IV L.P., Blackstone Real Estate Special Situations Holdings II L.P., Blackstone Real Estate Special Situations Holdings Europe L.P., Blackstone Family Real Estate Partnership Europe IV SMD L.P., Blackstone Real Estate Holdings Europe
IV ESC L.P., Blackstone Family Real Estate Partnership Asia—SMD L.P., Blackstone Real Estate Holdings Asia—ESC L.P., Blackstone Real Estate Holdings VII-ESC L.P., Blackstone Real
3
Estate Holdings VIII-ESC L.P., and any other entity that is an Affiliate thereof and that has terms substantially similar to those of the foregoing
partnerships and is formed in connection with the participation by one or more partners thereof in real estate and real estate-related investments also purchased by BREP VII, BREP VIII, the BREDS Funds, BREP Europe IV or BREP Asia and any other
funds with substantially similar investment objectives to BREP VII, BREP VIII, the BREDS Funds, BREP Europe IV, BREP Asia or BPP and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of
such funds).
“Blackstone Co-Investment Rights” has the meaning
set forth in section 5.2(e) of the SP VII Partnership Agreement.
“Blackstone Collateral Entity” means
any limited partnership, limited liability company or other entity named or referred to in the definition of any of “BFREP,” “BFIP,” “BFGSO,”
“BFCOMP” or “Other Blackstone Collateral Entity.”
“Blackstone Commitment” has the meaning set forth in the SP VII Partnership Agreement.
“Blackstone Entity” means any partnership, limited liability company or other entity (excluding any natural
persons and any portfolio companies of any Blackstone—sponsored fund) that is an Affiliate of The Blackstone Group L.P. For the avoidance of doubt, any partnership, limited liability company or other entity that comprise the Strategic Partners
Fund Solutions Business shall be considered a Blackstone Entity.
“Capital Commitment SP VII Commitment”
means the Capital Commitment (as defined in the SP VII Partnership Agreement), if any, of the Partnership to SP VII that relates solely to the Capital Commitment SP VII Interest, if any.
“Capital Commitment SP VII Interest” means the Interest (as used in the SP VII Partnership Agreement), if
any, of the Partnership as a capital partner of SP VII.
“Capital Commitment SP VII Investment” means the
Partnership’s interest in a specific investment of SP VII held by the Partnership through the Capital Commitment SP VII Interest.
“Capital Commitment Capital Account” means, with respect to each Capital Commitment Investment for each
Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such Capital Commitment Investment and any net income allocated to such Partner pursuant to Section 7.3
with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment Investment to such Partner and any net losses allocated to such Partner with respect to such Capital Commitment
Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the related Capital Commitment Investment shall be adjusted as if the asset distributed had been sold in a taxable
transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners participating in such Capital Commitment Investment pursuant to Section 7.3.
“Capital Commitment Class A Interest” has the meaning set forth in Section 7.4(f).
“Capital Commitment Class B Interest” has the meaning set forth in
Section 7.4(f).
4
“Capital Commitment Defaulting Party” has the meaning
specified in Section 7.4(g).
“Capital Commitment Deficiency Contribution” has the meaning specified
in Section 7.4(g).
“Capital Commitment Disposable Investment” has the meaning set forth in
Section 7.4(f).
“Capital Commitment Distributions” means, with respect to each Capital Commitment
Investment, all amounts of distributions, received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Capital Commitment SP VII Interest, if any, less any costs, fees and expenses of the Partnership with
respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of such Capital Commitment
Investment as it may determine in good faith is appropriate.
“Capital Commitment Giveback Amount” has
the meaning set forth in Section 7.4(g).
“Capital Commitment Interest” means the interest of a
Partner in a specific Capital Commitment Investment as provided herein.
“Capital Commitment Investment”
means any Capital Commitment SP VII Investment, but shall exclude any GP-Related Investment.
“Capital Commitment Liquidating Share” with respect to each Capital Commitment Investment means, in the case
of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with Section 9.3) as of the close of business on the effective date of dissolution.
“Capital Commitment Net Income (Loss)” with respect to each Capital Commitment Investment means all amounts
of income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition, in whole or in part, of such Capital Commitment Investment, less any costs, fees and
expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated thereto.
“Capital Commitment Partner Interest” means a Partner’s partnership interest in the Partnership with
respect to the Capital Commitment SP VII Interest.
“Capital Commitment Profit Sharing Percentage” with
respect to each Capital Commitment Investment means the percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the Partnership.
“Capital Commitment Recontribution Amount” has the meaning set forth in Section 7.4(g).
“Capital Commitment-Related Capital Contributions” has the meaning set forth in Section 7.1(a).
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“Capital Commitment-Related Commitment”, with respect to
any Partner, means such Partner’s commitment to the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such commitment
that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“Capital Commitment
Special Distribution” has the meaning set forth in Section 7.7(a).
“Capital Commitment
Value” has the meaning set forth in Section 7.5.
“Carried Interest” means “Carried
Interest Distributions,” as defined in the SP VII Partnership Agreement,. In the case of each of (i) and (ii) above, except as determined by the General Partner, the amount shall not be less any costs, fees and expenses of the Partnership
with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto (in each case which the General Partner may allocate among all or any portion of the GP-Related Investments as it determines in good faith is appropriate).
“Carried
Interest Give Back Percentage” means, for any Partner or Withdrawn Partner, subject to Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner
from the Partnership or any Other Fund GPs or their Affiliates in respect of Carried Interest by (B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership or any Other Fund GP or
any of their Affiliates (in any capacity) in respect of Carried Interest. For purposes of determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership or any Other Fund
GPs on behalf of a Partner or Withdrawn Partner (but not the Trust Income thereon) shall be deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as members, partners or other equity owners of the Partnership or
any of the Other Fund GPs or their Affiliates.
“Carried Interest Sharing Percentage” means, with respect
to each GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the
Partnership.
“Cause” means the occurrence or existence of any of the following with respect to any
Partner, as determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any non-competition agreement, (x) any
material breach of this Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such Partner’s deliberate failure to perform his or her duties to the Partnership or any of its
Affiliates, or (z) such Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Partnership or any of its Affiliates in a material way as determined by the General Partner; provided, that in
the case of any of the foregoing clauses (w), (x), (y) and (z), the General Partner has given such Partner written notice (a “Notice of Breach”) within fifteen days after the General Partner becomes aware of such action and such
Partner fails to cure such breach, failure to perform or conduct or behavior within fifteen days after receipt of such Notice of Breach from the General Partner (or such longer period, not to exceed an additional fifteen days, as shall be reasonably
required for such cure, provided that such Partner is diligently pursuing such cure); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Partnership or any of its Affiliates; (iii) conviction
(on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony or crime (including any misdemeanor charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement,
extortion or bribery), or a determination by a court of competent jurisdiction, by a regulatory body or by a self-regulatory body having
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authority with respect to securities laws, rules or regulations of the applicable securities industry, that such Partner individually has violated any applicable securities laws or any rules or
regulations thereunder, or any rules of any such self-regulatory body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such Partner’s ability to function
as a Partner of the Partnership, taking into account the services required of such Partner and the nature of the business of the Partnership and its Affiliates or (B) the business of the Partnership and its Affiliates; or (iv) becoming
subject to an event described in Rule 506(d)(1)(i)-(viii) of Regulation D under the Securities Act of 1933 (the “Securities Act”).
“CC Carried Interest” means, with respect to any Partner, the aggregate amount of distributions or payments
received by such Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest”, including the amount of any bonuses received by a Partner as an employee of an Affiliate of the Partnership that
relate to the amount of “carried interest” received by an Affiliate of the Partnership. “CC Carried Interest” includes any amount initially received by an Affiliate of the Partnership from any fund (including SP VII, any
similar funds formed after the date hereof, and any other private equity merchant banking, secondary, real estate or debt funds, whether or not in existence as of the date hereof) to which such Affiliate serves as general partner (or other similar
capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions thereto (or the capital contributions to make the investment of such fund giving rise to such “carried interest”).
“Clawback Adjustment Amount” has the meaning set forth in Section 5.8(e).
“Clawback Amount” means the “Overdistribution Amount,” as defined in the SP VII Partnership
Agreement, and any other clawback amount payable pursuant to any SP VII Agreement, as applicable.
“Clawback
Provisions” means sections 2.7(d)(iii) and 11.3 of the SP VII Partnership Agreement and any other similar provisions in any other SP VII Agreement existing heretofore or hereafter entered into.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute. Any
reference herein to a particular provision of the Code means, where appropriate, the corresponding provision in any successor statute.
“Commitment Agreement” means the agreement between the Partnership or an Affiliate thereof and a Partner,
pursuant to which such Partner undertakes certain obligations, including the obligation to make capital contributions pursuant to Sections 4.1 and/or 7.1. Each Commitment Agreement is hereby incorporated by reference as between the Partnership and
the relevant Partner.
“Contingent” means subject to repurchase rights and/or other requirements.
“Covered Person” has the meaning set forth in Section 3.6(a).
The term “control” when used with reference to any person means the power to direct the management and
policies of such person, directly or indirectly, by or through stock or other equity ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with one or more other persons by
or through stock or other equity ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing.
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“Controlled Entity” when used with reference to another
person means any person controlled by such other person.
“Deceased Partner” means any Partner or
Withdrawn Partner who has died or who suffers from Incompetence. For purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the
case may be, that have received such Deceased Partner’s interest in the Partnership.
“Default Interest
Rate” means the lower of (i) the sum of (a) the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate and (b) 5%, or (ii) the highest rate of interest permitted under
applicable law.
“Disabling Event” means (a) the withdrawal of the General Partner, other than in
accordance with Section 6.4(a) or (b) if the General Partner (i) makes an assignment for the benefit of its creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent or has entered
against it an order for relief in any bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute,
law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in a proceeding described in clause (iv), or (v) seeks consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the General Partner or of all or substantially all of its properties.
“Estate Planning Vehicle” has the meaning set forth in Section 6.3.
“Excess Holdback” has the meaning set forth in Section 4.1(d).
“Excess Holdback Percentage” has the meaning set forth in Section 4.1(d).
“Excess Tax-Related Amount” has the meaning set forth in
Section 5.8(e).
“Existing Partner” means any Partner who is neither a Retaining Withdrawn Partner
nor a Deceased Partner.
“Final Event” means the death, Total Disability, Incompetence, Bankruptcy,
liquidation, dissolution or Withdrawal from the Partnership of any person who is a Partner.
“Firm
Advances” has the meaning set forth in Section 7.1.
“Firm Collateral” means a
Partner’s or Withdrawn Partner’s interest in one or more partnerships or limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been
pledged or made available to the Trustee(s) to satisfy all or any portion of the Excess Holdback of such Partner or Withdrawn Partner as more fully described in the books and records of the Partnership; provided, that for all purposes hereof
(and any other agreement (e.g., the Trust Agreement) that incorporates the meaning of the term “Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”, excluding
references to “Firm Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).
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“Firm Collateral Realization” has the meaning set forth in
Section 4.1(d).
“Fiscal Year” means a calendar year, or any other period chosen by the General
Partner.
“Fund GP” means the Partnership (only with respect to the
GP-Related SP VII Interest) and the Other Fund GPs.
“GAAP” has
the meaning specified in Section 5.1(b).
“General Partner” means SPFSA VII L.L.C. and any person
admitted to the Partnership as an additional General Partner in accordance with the provisions of this Agreement, until such time as such person ceases to be a general partner of the Partnership as provided herein or in the Partnership Act.
“Giveback” means obligations to return distributions to satisfy certain fund-related obligations and
liabilities pursuant to section 9.2 of SP VII Partnership Agreement.
“Giveback Amount” means the amounts
required to satisfy Giveback.
“Giveback Provisions” means section 9.2 of the SP VII Partnership
Agreement and any other similar provisions in any other SP VII Agreement existing heretofore or hereafter entered into.
“GP-Related SP VII Interest” means the interest held by the
Partnership in SP VII in the Partnership’s capacity as general partner of SP VII, excluding any Capital Commitment SP VII Interest.
“GP-Related SP VII Investment” means the Partnership’s interest
in a Portfolio Investment (for purposes of this definition, as defined in the SP VII Partnership Agreement) in the Partnership’s capacity as the general partner of SP VII, but does not include any Capital Commitment Investment.
“GP-Related Capital Account” has the meaning set forth in
Section 5.2.
“GP-Related Capital Contribution” has the
meaning set forth in Section 4.1(a).
“GP-Related
Class A Interest” has the meaning set forth in Section 5.8(a).
“GP-Related Class B Interest” has the meaning set forth in Section 5.8(a).
“GP-Related Commitment”, with respect to any Partner, means such
Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such
commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“GP-Related Defaulting Party” has the meaning set forth in Section 5.8(d).
“GP-Related Deficiency Contribution” has the meaning set forth in
Section 5.8(d).
“GP-Related Disposable Investment” has the
meaning set forth in Section 5.8(a).
“GP-Related Giveback
Amount” has the meaning set forth in Section 5.8(d).
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“GP-Related
Investment” means any investment (direct or indirect) of the Partnership in respect of the GP-Related SP VII Interest (including, without limitation, any
GP-Related SP VII Investment, but excluding any Capital Commitment Investment).
“GP-Related Net Income (Loss)” has the meaning set forth in
Section 5.1(b).
“GP-Related Partner Interest” of a Partner
means all interests of such Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect to the GP-Related SP VII Interest and with respect to all GP-Related Investments.
“GP-Related Profit Sharing Percentage” means the “Carried
Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each Partner; provided that any references in this Agreement to
GP-Related Profit Sharing Percentages made (i) in connection with voting or voting rights or (ii) GP-Related Capital Contributions with respect to GP-Related Investments (including Section 5.3(b)) means the “Non-Carried Interest Sharing Percentage” of each Partner; provided further that, the term “GP-Related Profit Sharing Percentage” shall not include any Capital Commitment Profit Sharing Percentage.
“GP-Related Recontribution Amount” has the meaning set forth in
Section 5.8(d).
“GP-Related Required Amounts” has the
meaning set forth in Section 4.1(a).
“GP-Related Unallocated
Percentage” has the meaning set forth in Section 5.3(b).
“GP-Related Unrealized Net Income (Loss)” attributable to any GP-Related SP VII Investment as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related SP VII Investment if SP VII’s entire portfolio of investments were sold on such date for cash in an amount equal to their aggregate value on such date (determined in accordance with
Section 5.1(e)) and all distributions payable by SP VII to the Partnership (indirectly through the general partner of SP VII) pursuant to any SP VII Agreement with respect to such GP-Related SP VII
Investment were made on such date. “GP-Related Unrealized Net Income (Loss)” attributable to any other GP-Related Investment (other than any Capital Commitment
Investment) as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related Investment if such GP- Related Investment were sold on such date for cash in an amount equal to its value on such date (determined in accordance with Section 5.1(e)).
“GSO Fund” means (i) any of GSO Capital Opportunities Fund LP, GSO Capital Opportunities Overseas Fund
L.P., GSO Capital Opportunities Overseas Master Fund L.P., GSO Liquidity Partners LP, GSO Liquidity Overseas Partners LP, Blackstone / GSO Capital Solutions Fund LP, Blackstone / GSO Capital Solutions Overseas Fund L.P., Blackstone / GSO Capital
Solutions Overseas Master Fund L.P., GSO Capital Solutions Fund II LP, GSO Capital Solutions Overseas Feeder Fund II LP, GSO European Senior Debt Fund LP, GSO European Senior Debt Feeder Fund LP, GSO Targeted Opportunity Partners LP, GSO Targeted
Opportunity Overseas Partners L.P., GSO Targeted Opportunity Overseas Intermediate Partners L.P., GSO Targeted Opportunity Master Partners L.P., GSO SJ Partners LP, GSO Capital Opportunities Fund II LP, GSO Capital Opportunities Cayman Overseas Fund
II LP, GSO NMERB LP, GSO Energy Partners-A LP, GSO Palmetto Opportunistic Investment Partners LP, GSO Foreland Co-Invest Holdings LP, GSO Bakken Holdings I LP or GSO
Churchill Partners LP, or (ii) any alternative vehicle or parallel fund relating to any of the partnerships referred to in clause (i) above.
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“Holdback” has the meaning set forth in
Section 4.1(d).
“Holdback Percentage” has the meaning set forth in Section 4.1(d).
“Holdback Vote” has the meaning set forth in Section 4.1(d).
“Holdings” means Blackstone Holdings II L.P., a Delaware limited partnership.
“Incompetence” means, with respect to any Partner, the determination by the General Partner in its sole
discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his or her person or his or her property.
“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d).
“Initial Limited Partner” means Peter Song.
“Interest” means a Partner’s interest in the Partnership, including any interest that is held by a
Retaining Withdrawn Partner, and including any Partner’s GP-Related Partner Interest and Capital Commitment Partner Interest.
“Investment” means any investment (direct or indirect) of the Partnership designated by the General Partner
from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments, and (b) Capital Commitment Investments.
“Investor Limited Partner” means any Limited Partner so designated at the time of its admission as a partner
of the Partnership.
“Investor Note” means a promissory note of a Partner evidencing indebtedness
incurred by such Partner to purchase a Capital Commitment Interest, the terms of which were or are approved by the General Partner and which is secured by such Capital Commitment Interest, all other Capital Commitment Interests of such Partner and
all other interests of such Partner in Blackstone Collateral Entities; provided, that such promissory note may also evidence indebtedness relating to other interests of such Partner in Blackstone Collateral Entities, and such indebtedness
shall be prepayable with Capital Commitment Net Income (whether or not such indebtedness relates to Capital Commitment Investments) as set forth in this Agreement, the Investor Note, the other BCE Agreements and any documentation relating to Other
Sources; provided further, that references to “Investor Notes” herein refer to multiple loans made pursuant to such note, whether made with respect to Capital Commitment Investments or other BCE Investments, and references to an
“Investor Note” refer to one such loan as the context requires. In no way shall any indebtedness incurred to acquire Capital Commitment Interests or other interests in Blackstone Collateral Entities be considered part of the Investor Notes
for purposes hereof if the Lender or Guarantor is not the lender or guarantor with respect thereto.
“Issuer” means the issuer of any Security comprising part of an Investment.
“L/C” has the meaning set forth in Section 4.1(d).
“L/C Partner” has the meaning set forth in Section 4.1(d).
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“Lender or Guarantor” means Blackstone Holdings I L.P., in
its capacity as lender or guarantor under the Investor Notes, or any other Affiliate of the Partnership that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests or other interests in Blackstone Collateral Entities.
“Limited Partner” means any person who is shown on the books and records of the Partnership as a Limited
Partner of the Partnership, including any Special Limited Partner and any Nonvoting Limited Partner.
“Liquidator” has the meaning set forth in Section 9.1(b).
“Loss Amount” has the meaning set forth in Section 5.8(e).
“Loss Investment” has the meaning set forth in Section 5.8(e).
“Majority in Interest of the Partners” on any date (a “vote date”) means one or more persons
who are Partners (including the General Partner and the Limited Partners but excluding Nonvoting Limited Partners) on the vote date and who, as of the last day of the most recent accounting period ending on or prior to the vote date (or as of such
later date on or prior to the vote date selected by the General Partner as of which the Partners’ capital account balances can be determined), have aggregate capital account balances representing at least a majority in amount of the total
capital account balances of all the persons who are Partners (including the General Partner and the Limited Partners but excluding Nonvoting Limited Partners) on the vote date.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
“Net Carried Interest Distribution” has the meaning set forth in Section 5.8(e).
“Net Carried Interest Distribution Recontribution Amount” has the meaning set forth in Section 5.8(e).
“Net GP-Related Recontribution Amount” has the meaning set forth
in Section 5.8(d).
“Non-Carried Interest” means, with
respect to each GP-Related Investment, all amounts of distributions, other than Carried Interest (and other than Capital Commitment Distributions) received by the Partnership with respect to such GP-Related Investment, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with
respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments as it may determine in good faith is appropriate.
“Non-Carried Interest Sharing Percentage” means, with respect to each
GP-Related Investment, the percentage interest of a Partner in Non-Carried Interest from such GP-Related Investment set forth in
the books and records of the Partnership.
“Non-Contingent” means
generally not subject to repurchase rights or other requirements.
“Nonvoting Limited Partner” has the
meaning set forth in Section 6.1(a).
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“Other Blackstone Collateral Entity” means any Blackstone
Entity (other than any limited partnership, limited liability company or other entity named or referred to in the definition of any of “BFIP,” “BFREP,” “BFGSO” or “BFCOMP”) in which any limited partner
interest, limited liability company interest, unit or other interest is pledged to secure any Investor Note.
“Other Fund GPs” means the General Partner (only with respect to the General Partner’s GP-Related SP VII Partner Interest in the Partnership) and any other entity (other than the Partnership) through which any Partner, Withdrawn Partner or any other person directly receives any amounts of Carried
Interest, and any successor thereto; provided, that this includes any other entity which has in its organizational documents a provision which indicates that it is a “Fund GP” or an “Other Fund GP”; provided
further, that notwithstanding any of the foregoing, neither Holdings nor any estate planning vehicle established for the benefit of family members of any Partner or of any member or partner of any Other Fund GP shall be considered an “Other
Fund GP” for purposes hereof.
“Other Sources” means (i) distributions or payments of CC
Carried Interest (which shall include amounts of CC Carried Interest which are not distributed or paid to a Partner but are instead contributed to a trust (or similar arrangement) to satisfy any “holdback” obligation with respect thereto),
and (ii) distributions from Blackstone Collateral Entities (other than the Partnership) to such Partner.
“Parallel Fund” has the meaning set forth in section 4.6(a) of the SP VII Partnership Agreement.
“Partner” means any person who is a partner of the Partnership, whether a General Partner or a Limited
Partner in whatsoever Partner Category.
“Partner Category” means the Existing Partners, Retaining
Withdrawn Partners or Deceased Partners, each referred to as a group for purposes hereof.
“Partnership”
means Strategic Partners Fund Solutions Associates VII L.P., a Delaware limited partnership.
“Partnership
Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101, et seq., as it may be amended from time to time, and any successor to such statute.
“Pledgable Blackstone Interests” has the meaning set forth in Section 4.1(d).
“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase
Bank, N.A. as its prime rate.
“Qualifying Fund” means any fund designated by the General Partner as a
“Qualifying Fund.”
“Repurchase Period” has the meaning set forth in Section 5.8.
“Required Rating” has the meaning set forth in Section 4.1(d).
“Retained Portion” has the meaning set forth in Section 7.6.
“Retaining Withdrawn Partner” means a Withdrawn Partner who has retained a GP- Related Partner Interest,
pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Nonvoting Limited Partner for all purposes hereof.
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“Securities” means any debt or equity securities of an
Issuer and its subsidiaries and other Controlled Entities constituting part of an Investment, including without limitation common and preferred stock, interests in limited partnerships and interests in limited liability companies (including
warrants, rights, put and call options and other options relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or
interests commonly regarded as securities, interests in real property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as money-market investments, bank deposits
and interests in personal property of all kinds, whether tangible or intangible.
“Settlement Date” has
the meaning set forth in Section 6.5(a).
“SMD Agreements” means the agreements between the
Partnership and/or one or more of its Affiliates and certain of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby incorporated by
reference as between the Partnership and the relevant Partner.
“SP VII” means (i) Strategic
Partners Fund VII, L.P., a Delaware limited partnership, (ii) any alternative vehicle, parallel fund or other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause
(i) above, and (iii) any investment vehicle formed to co-invest with any of the partnerships referred to in clause (i) above using third party capital and that potentially pays Carried Interest
Distributions (as such term is used in such partnership agreements).
“SP VII Agreements” means
(i) the SP VII Partnership Agreement and (ii) any other SP VII partnership agreements, as each may be amended, supplemented, restated or otherwise modified from time to time.
“SP VII Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership of Strategic
Partners Fund VII, L.P., dated as of February 12, 2016, as may be amended, supplemented, restated or otherwise modified from time to time.
“Special Firm Collateral” means interests in a Qualifying Fund or other assets that have been pledged to the
Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the books and records of the Partnership.
“Special Firm Collateral Realization” has the meaning set forth in Section 4.1(d).
“Special Limited Partner” means any of the persons shown in the books and records of the Partnership as a
Special Limited Partner and any person admitted to the Partnership as an additional Special Limited Partner in accordance with the provisions of this Agreement.
“S&P” means Standard & Poor’s Ratings Group, and any successor thereto.
“Strategic Partners Fund Solutions Business” shall mean Blackstone’s business line responsible for
managing SP VII and any predecessor and successor funds thereto, including Strategic Partners Fund, L.P., Strategic Partners Fund II, L.P., Strategic Partners Fund III, L.P., Strategic Partners Fund IV, L.P., Strategic Partners Fund V, L.P.,
Strategic Partners Fund VI, L.P. and their respective parallel vehicles.
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“Subject Investment” has the meaning set forth in
Section 5.8(e).
“Subject Partner” has the meaning set forth in Section 4.1(d).
“Successor in Interest” means any (i) shareholder of; (ii) trustee, custodian, receiver or other
person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or receiver, or former officer, director or partner,
or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or assign of, any Partner, whether by operation of law or
otherwise.
“Tax Matters Partner” has the meaning set forth in Section 6.7(b).
“TM” has the meaning set forth in Section 10.2
“Total Disability” means the inability of a Limited Partner substantially to perform the services required of
such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether arising out of
sickness, accident or otherwise.
“Transfer” has the meaning set forth in Section 8.2.
“Trust Account” has the meaning set forth in the Trust Agreement.
“Trust Agreement” means the Trust Agreement dated as of the date set forth therein, as amended, supplemented,
restated or otherwise modified from time to time, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time to time.
“Trust Amount” has the meaning set forth in the Trust Agreement.
“Trust Income” has the meaning set forth in the Trust Agreement.
“Trustee(s)” has the meaning set forth in the Trust Agreement.
“Unadjusted Carried Interest Distributions” has the meaning set forth in Section 5.8(e).
“Unallocated Capital Commitment Interests” has the meaning set forth in Section 8.1(f).
“Withdraw” or “Withdrawal” with respect to a Partner means a Partner ceasing to be a partner
of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary), unless the context shall limit the type of withdrawal to a
specific reason, and “Withdrawn” with respect to a Partner means, as aforesaid, a Partner who has ceased to be a partner of the Partnership.
“Withdrawal Date” means the date of the Withdrawal from the Partnership of a Withdrawn Partner.
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“Withdrawn Partner” means a Limited Partner whose GP-Related Partner Interest or Capital Commitment Partner Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include, unless
the context requires otherwise, the estate or legal representatives of any such Partner.
“W-8BEN” has the meaning set forth in Section 3.8.
“W-8IMY” has the meaning set forth in Section 3.8.
“W-9” has the meaning set forth in Section 3.8
Section 1.2. Terms Generally.
The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term
“person” includes individuals, partnerships (including limited liability partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions
thereof) and other associations and entities. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
ARTICLE II
GENERAL PROVISIONS
Section 2.1. General Partner and Limited Partners. The Partners may be General Partners or Limited Partners. The General
Partner as of the date hereof is SPFSA VII L.L.C.. The Limited Partners shall be as shown on the books and records of the Partnership. The books and records of the Partnership contain the GP-Related Profit
Sharing Percentage and GP-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to the GP-Related Investments of the
Partnership as of the date hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each Partner (including, without limitation, the General Partner) with
respect to the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to time to reflect additional
GP-Related Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by the Partnership of Capital
Commitment Investments, the GP-Related Profit Sharing Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the Capital Commitment Profit Sharing
Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the admission of additional Partners, the Withdrawal of Partners, and the transfer or assignment of interests in the Partnership pursuant
to the terms of this Agreement. At the time of admission of each additional Partner, the General Partner shall determine in its sole discretion the GP-Related Investments and Capital Commitment Investments in
which such Partner shall participate and such Partner’s GP-Related Commitment, Capital Commitment-Related Commitment, GP-Related Profit Sharing Percentage with
respect to each such GP-Related Investment and Capital Commitment Profit Sharing Percentage with respect to each such Capital Commitment Investment. Each Partner may have a
GP-Related Partner Interest and/or a Capital Commitment Partner Interest.
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Section 2.2. Formation; Name; Foreign Jurisdictions. The Partnership is hereby
continued as a limited partnership pursuant to the Partnership Act and shall conduct its activities on and after the date hereof under the name of Strategic Partners Fund Solutions Associates VII L.P. The certificate of limited partnership of the
Partnership may be amended and/or restated from time to time by the General Partner The General Partner is further authorized to execute and deliver and file any other certificates (and any amendments and/or restatements thereof) necessary for the
Partnership to qualify to do business in a jurisdiction in which the Partnership may wish to conduct business.Term. The term of the Partnership shall continue until December 31, 2061, unless earlier dissolved and terminated in accordance
with this Agreement and the Act.
Section 2.4. Purpose; Powers. (a) The purposes of the Partnership shall be, directly or
indirectly through subsidiaries or Affiliates:
(i) to serve as the general partner of SP VII (including any Alternative Vehicle, Parallel
Fund or other partnership included in the definition of “SP VII”) and perform the functions of a general partner of SP VII (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP
VII”) specified in the SP VII Agreements,
(ii) to serve as, and hold the Capital Commitment SP VII Interest as, a capital partner
(and, if applicable, a limited partner and/or a general partner) of SP VII (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP VII”) and perform the functions of a capital partner (and,
if applicable, a limited partner and/or a general partner) of SP VII (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP VII”) specified in the SP VII Agreements,
(iii) to make the Blackstone Commitment or a portion thereof, either directly or indirectly through another entity,
(iv) to serve as a general partner or limited partner of other partnerships and perform the functions of a general partner or limited partner
specified in the respective partnership agreements, as amended, supplemented, restated or otherwise modified from time to time, of any such partnership,
(v) to serve as a member of limited liability companies and perform the functions of a member specified in the respective limited liability
company agreements, as amended, supplemented, restated or otherwise modified from time to time, of any such limited liability company,
(vi) to invest in Capital Commitment Investments and/or GP-Related Investments and acquire and invest
in Securities or other property (directly or indirectly through SP VII (including any Alternative Vehicle, Parallel Fund or other partnership included in the definition of “SP VII”), including, without limitation, in connection with any
action referred to in any of clauses (i) through (v) above,
(vii) to carry on such other businesses, perform such other services and
make such other investments as are deemed desirable by the General Partner and as are permitted under the Partnership Act and SP VII Agreements, and the respective partnership agreement of any partnership referred to in clause (iv) above and
the respective limited liability company agreement of any limited liability company referred to in clause (v) above, in the case of each of the foregoing, as amended, supplemented, restated or otherwise modified from time to time,
(viii) any other lawful purpose, and
(ix) to do all things necessary, desirable, convenient or incidental thereto.
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(b) In furtherance of its purposes, the Partnership shall have all powers necessary,
suitable or convenient for the accomplishment of its purposes, alone or with others, as principal or agent, including the following:
(i) to be and become a general or limited partner of partnerships, a member of limited liability companies, a holder of common
and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with the making of Investments or the acquisition, holding or disposition of Securities or other property or as otherwise deemed
appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection therewith;
(ii) to acquire and invest in general or limited partner interests, in limited liability company interests, in common and
preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or direct or indirect interests therein, whether such Investments and
Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company interests, stock, interests, obligations, Investments or Securities or
other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or short, options on futures contracts;
(iii) to buy, sell and otherwise acquire investments, whether such investments are readily marketable or not;
(iv) to invest and reinvest the cash assets of the Partnership in money-market or other short-term investments;
(v) to hold, receive, mortgage, pledge, lease, transfer, exchange or otherwise dispose of, grant options with respect to, and
otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or owned by the Partnership;
(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by mortgage, pledge,
conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and to buy, sell,
pledge or otherwise dispose of any such instrument or evidence of indebtedness;
(vii) to lend any of its property or
funds, either with or without security, at any legal rate of interest or without interest;
(viii) to have and maintain one
or more offices within or without the State of Delaware, and in connection therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection with the
maintenance of such office or offices;
(ix) to open, maintain and close accounts, including margin accounts, with brokers;
(x) to open, maintain and close bank accounts and draw checks and other orders for the payment of moneys;
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(xi) to engage accountants, auditors, custodians, investment advisers,
attorneys and any and all other agents and assistants, both professional and nonprofessional, and to compensate any of them as may be necessary or advisable;
(xii) to form or cause to be formed and to own the stock of one or more corporations, whether foreign or domestic, to form or
cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic, and to form or cause to be formed and be a member or manager or both of one or more limited liability companies;
(xiii) to enter into, make and perform all contracts, agreements and other undertakings as may be necessary, convenient or
advisable or incident to carrying out its purposes;
(xiv) to sue and be sued, to prosecute, settle or compromise all
claims against third parties, to compromise, settle or accept judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection therewith;
(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to the Partners cash or
investments or other property of the Partnership, or any combination thereof; and
(xvi) to take such other actions
necessary, desirable, convenient or incidental thereto and to engage in such other businesses as may be permitted under Delaware and other applicable law.
Section 2.5. Place of Business. The Partnership shall maintain a registered office at The Corporation Trust Company, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801. The Partnership shall maintain an office and principal place of business at such place or places as the General Partner specifies from time to time and as set forth in the books and records of
the Partnership. The name and address of the Partnership’s registered agent is The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The General Partner may from time to time change the registered
agent or office by an amendment to the certificate of limited partnership of the Partnership.
Section 2.6. Withdrawal of Initial
Limited Partner. Upon the admission of one or more Limited Partners to the Partnership, the Initial Limited Partner shall Withdraw as the Initial Limited Partner of the Partnership and have no further right, interest or obligation of any kind
whatsoever as a Partner in the Partnership.
ARTICLE III
MANAGEMENT
Section 3.1.
General Partners. The General Partner shall be the general partner of the Partnership. The General Partner may not be removed without its consent.
Section 3.2. Limitations on Limited Partners. Except as may be expressly required or permitted by the Partnership Act,
Limited Partners as such shall have no right to, and shall not, take part in the management, conduct or control of the Partnership’s business or act for or bind the Partnership, and shall have only the rights and powers granted to Limited
Partners herein.
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Section 3.3. Partner Voting.
(a) To the extent a Partner is entitled to vote with respect to any matter relating to the Partnership, such Partner shall not be obligated to
abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such Partner (or any Affiliate thereof) in such matter.
(b) Meetings of the Partners may be called only by the General Partner.
Section 3.4. Management. (a) The management, control and operation of the Partnership and the formulation and execution of
business and investment policy shall be vested in the General Partner, and the General Partner shall have full control over the business and affairs of the Partnership. The General Partner shall, in the General Partner’s discretion, exercise
all powers necessary and convenient for the purposes of the Partnership, including those enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the
General Partner pursuant to this Agreement shall be made in the General Partner’s discretion, subject only to the express terms and conditions of this Agreement.
(b) All outside business or investment activities of the Partners (including outside directorships or trusteeships) shall be subject to such
rules and regulations as are established by the General Partner from time to time.
(c) Notwithstanding any provision in this Agreement to
the contrary, the Partnership is hereby authorized, without the need for any further act, vote or consent of any person (directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in
its capacity as a general partner, capital partner and/or limited partner of SP VII, or in the Partnership’s capacity as a general or limited partner, member or other equity owner of any Partnership Affiliate (as hereinafter defined), (i) to
execute and deliver, and to perform the Partnership’s obligations under, the SP VII Agreements, including, without limitation, serving as a general partner of SP VII, (ii) to execute and deliver, and to perform the Partnership’s
obligations under, the governing agreement, as amended, supplemented, restated or otherwise modified (each a “Partnership Affiliate Governing Agreement”), of any other partnership, limited liability company or other entity
(each a “Partnership Affiliate”) of which the Partnership is to become a general or limited partner, member or other equity owner, including, without limitation, serving as a general or limited partner, member or other equity
owner of each Partnership Affiliate, and (iii) to take any action, in the applicable capacity, contemplated by or arising out of this Agreement, the SP VII Agreements or any Partnership Affiliate Governing Agreement (and any amendment,
supplement, restatement and/or other modification of any of the foregoing).
(d) Each of Stephen A. Schwarzman, Hamilton E. James, John G.
Finley, John A. Magliano, Kathleen Skero, Matthew Skurbe, Christopher J. James, Peter Song, Stephen H. Can, Verdun Perry, Joshua S. Blaine, Michael Petryczenko and any other person designated by the General Partner, each acting individually, is
hereby authorized and empowered, as an authorized representative of the Partnership or as an authorized person of the General Partner (within the meaning of the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq., as amended, or otherwise) (the General Partner hereby authorizing and ratifying any of the following actions):
(i) (i) to execute and deliver and/or file (including any such action, directly or indirectly through one or more other
entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP VII, or in the Partnership’s capacity as a general or limited partner, member or
other equity owner of any Partnership Affiliate, any of the following:
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(A)
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any agreement, certificate, instrument or other document of the Partnership, SP VII or any Partnership
Affiliate (and any amendments, supplements, restatements and/or other modifications thereof), including, without limitation, the following: (I) the SP VII Agreements and each Partnership Affiliate Governing Agreement, (II) Subscription
Agreements on behalf of SP VII and/or the Partnership, (III) side letters issued in connection with investments in SP VII on behalf of SP VII and/or the Partnership, and (IV) such other agreements, certificates, instruments and other
documents as may be necessary or desirable in furtherance of the purposes of the Partnership, SP VII or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing referred to in
(I) through (IV) hereof);
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(B)
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the certificates of formation, certificates of limited partnership and/or other organizational documents of the
Partnership, SP VII or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications thereof); and
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(C)
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any other certificates, notices, applications or other documents (and any amendments, supplements, restatements
and/or other modifications thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Partnership, SP VII or any Partnership Affiliate to qualify to do
business in a jurisdiction in which the Partnership, SP VII or such Partnership Affiliate desires to do business;
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(ii) to prepare or cause to be prepared, and to sign, execute and deliver and/or file (including any such action, directly or
indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP VII or in the Partnership’s capacity as a
general or limited partner, member or other equity owner of any Partnership Affiliate): (A) any certificates, forms, notices, applications or other documents to be filed with any government or governmental or regulatory body on behalf of the
Partnership, SP VII or any Partnership Affiliate, (B) any certificates, forms, notices, applications or other documents that may be necessary or advisable in connection with any bank account of the Partnership, SP VII or any Partnership
Affiliate or any banking facilities or services that may be utilized by the Partnership, SP VII or any Partnership Affiliate, and all checks, notes, drafts and other documents of the Partnership, SP VII or any Partnership Affiliate that may be
required in connection with any such bank account, banking facilities or services, (C) resolutions with respect to any of the foregoing matters (which resolutions, when executed by any person authorized as provided in this Section 3.4(d),
each acting individually, shall be deemed to have been adopted by the General Partner, the Partnership, SP VII or any Partnership Affiliate, as applicable, for all purposes).
The authority granted to any person (other than Stephen A. Schwarzman) in this Section 3.4(d) may be revoked at any time by the General Partner by an
instrument in writing signed by the General Partner.
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Section 3.5. Responsibilities of Partners.Unless otherwise determined by
the General Partner in a particular case, each Limited Partner shall devote substantially all his time and attention to the businesses of the Partnership and its Affiliates.
(b) All outside business or investment activities of the Partners (including outside directorships or trusteeships), shall be subject to such
rules and regulations as are established by the General Partner from time to time.
(c) The General Partner may from time to time establish
such other rules and regulations applicable to Partners or other employees as the General Partner deems appropriate, including rules governing the authority of Partners or other employees to bind the Partnership to financial commitments or other
obligations.
Section 3.6. Exculpation and Indemnification.
(a) Liability to Partners. Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent
permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually, a
“Covered Person” and collectively, the “Covered Persons”) shall be liable to the Partnership or any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related document or any
transaction or investment contemplated hereby or thereby) taken or omitted by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable judicial
determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority
granted to such Covered Person by this Agreement, and, with respect to any criminal act or proceeding, had reasonable cause to believe that such Covered Person’s conduct was unlawful. Each Covered Person shall be entitled to rely in good faith
on the advice of legal counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by any Covered Person in reliance on such advice shall in any event subject such person to any liability to any Partner or
the Partnership. To the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to another Partner, to the fullest extent permitted by law, such Partner acting under
this Agreement shall not be liable to the Partnership or to any such other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they expand or restrict the duties and
liabilities of a Partner otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by law, to modify to that extent such other duties and liabilities of such Partner.
(b) Indemnification. (i) To the fullest extent permitted by law, the Partnership shall indemnify and hold harmless (but only to the
extent of the Partnership’s assets (including, without limitation, the remaining capital commitments of the Partners) each Covered Person from and against any and all claims, damages, losses, costs, expenses and liabilities (including, without
limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable expenses of investigating or defending against any claim or alleged claim), joint and several, of
any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, for purposes of this Section 3.6, “Losses”), arising from any and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which the Covered Person may be involved, or threatened to be involved, as a party or otherwise, by reason of such Covered Person’s management of the affairs of the Partnership or which relate to or arise out
of or in connection with the Partnership, its property, its business or affairs (other than claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, arising out of any act or omission of such Covered Person
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constituting Cause); provided, that a Covered Person shall not be entitled to indemnification under this Section with respect to any claim, issue or matter if there is a final and non-appealable judicial determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the
best interest of the Partnership and within the authority granted to such Covered Person by this Agreement, and, with respect to any criminal act or proceeding, had reasonable cause to believe that such Covered Person’s conduct was unlawful;
provided further, that if such Covered Person is a Partner or a Withdrawn Partner, such Covered Person shall bear its share of such Losses in accordance with such Covered Person’s GP-Related Profit
Sharing Percentage in the Partnership as of the time of the actions or omissions that gave rise to such Losses. To the fullest extent permitted by law, expenses (including legal fees) incurred by a Covered Person (including, without limitation, the
General Partner) in defending any claim, demand, action, suit or proceeding may, with the approval of the General Partner, from time to time, be advanced by the Partnership prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Partnership of a written undertaking by or on behalf of the Covered Person to repay such amount to the extent that it shall be subsequently determined that the Covered Person is not entitled to be indemnified as
authorized in this Section, and the Partnership and its Affiliates shall have a continuing right of offset against such Covered Person’s interests/investments in the Partnership and such Affiliates and shall have the right to withhold amounts
otherwise distributable to such Covered Person to satisfy such repayment obligation. If a Partner institutes litigation against a Covered Person which gives rise to an indemnity obligation hereunder, such Partner shall be responsible, up to the
amount of such Partner’s Interests and remaining capital commitment, for such Partner’s pro rata share of the Partnership’s expenses related to such indemnity obligation, as determined by the General Partner. The Partnership
may purchase insurance, to the extent available at reasonable cost, to cover losses, claims, damages or liabilities covered by the foregoing indemnification provisions. Partners will not be personally obligated with respect to indemnification
pursuant to this Section. The General Partner shall have the authority to enter into separate agreements with any Covered Person in order to give effect to the obligations to indemnify pursuant to this Section 3.6.
(ii) (A) Notwithstanding anything to the contrary herein, for greater certainty, it is understood and/or agreed that the
Partnership’s obligations hereunder are not intended to render the Partnership as a primary indemnitor for purposes of the indemnification, advancement of expenses and related provisions under applicable law governing SP VII and/or a particular
portfolio entity through which an Investment is indirectly held. It is further understood and/or agreed that a Covered Person shall first seek to be so indemnified and have such expenses advanced in the following order of priority: first out of
proceeds available in respect of applicable insurance policies maintained by the applicable portfolio entity and/or SP VII, second by the applicable portfolio entity through which such investment is indirectly held, and third by SP VII (only to the
extent the foregoing sources are exhausted).
(B) The Partnership’s obligation, if any, to indemnify or advance expenses to any
Covered Person shall be reduced by any amount that such Covered Person may collect as indemnification or advancement from SP VII and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained thereby),
and to the extent the Partnership (or any Affiliate thereof) pays or causes to be paid any amounts that should have been paid by SP VII and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained
thereby), it is agreed among the Partners that the Partnership shall have a subrogation claim against SP VII and/or such portfolio entity in respect of such advancement or payments. The General Partner and the Partnership shall be specifically
empowered to structure any such advancement or payment as a loan or other arrangement (except for a loan to an executive officer of The Blackstone Group L.P. or any of its Affiliates, which shall not be permitted) as the General Partner may
determine necessary or advisable to give effect to or otherwise implement the foregoing.
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Section 3.7. Representations of Limited Partners.
(a) Each Limited Partner by execution of this Agreement (or by otherwise becoming bound by the terms and conditions hereof as provided herein
or in the Partnership Act) represents and warrants to every other Partner and to the Partnership, except as may be waived by the General Partner, that such Limited Partner is acquiring each of such Limited Partner’s Interests for such Limited
Partner’s own account for investment and not with a view to resell or distribute the same or any part hereof, and that no other person has any interest in any such Interest or in the rights of such Limited Partner hereunder; provided,
that a Partner may choose to make transfers for estate and charitable planning purposes (in accordance with the terms hereof). Each Limited Partner represents and warrants that such Limited Partner understands that the Interests have not been
registered under the Securities Act of 1933 and therefore such Interests may not be resold without registration under such Act or exemption from such registration, and that accordingly such Limited Partner must bear the economic risk of an
investment in the Partnership for an indefinite period of time. Each Limited Partner represents that such Limited Partner has such knowledge and experience in financial and business matters that such Limited Partner is capable of evaluating the
merits and risks of an investment in the Partnership, and that such Limited Partner is able to bear the economic risk of such investment. Each Limited Partner represents that such Limited Partner’s overall commitment to the Partnership and
other investments which are not readily marketable is not disproportionate to the Limited Partner’s net worth and the Limited Partner has no need for liquidity in the Limited Partner’s investment in Interests. Each Limited Partner
represents that to the full satisfaction of the Limited Partner, the Limited Partner has been furnished any materials that such Limited Partner has requested relating to the Partnership, any Investment and the offering of Interests and has been
afforded the opportunity to ask questions of representatives of the Partnership concerning the terms and conditions of the offering of Interests and any matters pertaining to each Investment and to obtain any other additional information relating
thereto. Each Limited Partner represents that the Limited Partner has consulted to the extent deemed appropriate by the Limited Partner with the Limited Partner’s own advisers as to the financial, tax, legal and related matters concerning an
investment in Interests and on that basis believes that an investment in the Interests is suitable and appropriate for the Limited Partner.
(b) Each Partner agrees that the representations and warranties contained in paragraph (a) above shall be true and correct as of any date
that such Partner (1) makes a capital contribution to the Partnership (whether as a result of Firm Advances made to such Partner or otherwise) with respect to any Investment, and such Partner hereby agrees that such capital contribution shall
serve as confirmation thereof and/or (2) repays any portion of the principal amount of a Firm Advance, and such Partner hereby agrees that such repayment shall serve as confirmation thereof.
Section 3.8. Tax Representation. Each Limited Partner certifies that (A) if the Limited Partner is a United States person (as
defined in the Code) (x) (i) the Limited Partner’s name, social security number (or, if applicable, employer identification number) and address provided to the Partnership and its Affiliates pursuant to an IRS Form W-9, Payer’s Request for Taxpayer Identification Number Certification (“W-9”) or otherwise are correct and (ii) the Limited Partner will complete
and return a W-9, and (y) (i) the Limited Partner is a United States person (as defined in the Code) and (ii) the Limited Partner will notify the Partnership within 60 days of a change to foreign (non-United States) status or (B) if the Limited Partner is not a United States person (as defined in the Code) (x) (i) the information on the completed IRS Form
W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (“W-8BEN”) or other applicable form, including but not
limited to IRS Form W-8IMY, Certificate of Foreign Intermediary, Foreign Partnership, or Certain U.S. Branches for United States Tax Withholding
(“W-8IMY”), or otherwise is correct and (ii) the Limited Partner will complete and return the applicable IRS form, including but not limited to a
W-8BEN or W-8IMY, and (y) (i) the Limited Partner is not a United States person (as defined in the Code) and (ii) the Limited Partner will notify the Partnership
within 60 days of any change of such status. The Limited Partner agrees to properly execute and provide to the Partnership in a timely manner any tax documentation that may be reasonably required by the Partnership or the General Partner.
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ARTICLE IV
CAPITAL OF THE PARTNERSHIP
Section 4.1. Capital Contributions by Partners. (a) Each Partner shall be required to make capital contributions to the
Partnership (“GP-Related Capital Contributions”) at such times and in such amounts (the “GP-Related Required Amounts”) as are required
to satisfy the Partnership’s obligation to make capital contributions to SP VII in respect of the GP-Related SP VII Interest with respect to any GP-Related SP VII
Investment and as are otherwise determined by the General Partner from time to time or as may be set forth in such Limited Partner’s Commitment Agreement or SMD Agreement, if any; provided, that additional
GP-Related Capital Contributions in excess of the GP-Related Required Amounts may be made pro rata among the Partners based upon each Partner’s Carried Interest
Sharing Percentage. GP-Related Capital Contributions in excess of the GP-Related Required Amounts which are to be used for ongoing business operations (as distinct from
financing, legal or other specific liabilities of the Partnership (including those specifically set forth in Sections 4.1(d) and 5.8(d)) shall be determined by the General Partner. Limited Partners shall not be required to make additional GP-Related Capital Contributions to the Partnership in excess of the GP-Related Required Amounts, except (i) as a condition of an increase in such Limited Partner’s GP-Related Profit Sharing Percentage or (ii) as specifically set forth in this Agreement; provided, that the General Partner and any Limited Partner may agree from time to time that such Limited Partner
shall make an additional GP-Related Capital Contribution to the Partnership; provided further, that each Investor Limited Partner shall maintain its GP-Related
Capital Accounts at an aggregate level equal to the product of (i) its GP-Related Profit Sharing Percentage from time to time and (ii) the total capital of the Partnership related to the GP-Related SP VII Interest.
(b) The General Partner may elect on a case by case basis to (i) cause
the Partnership to loan any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group L.P. or any Affiliate thereof) the
amount of any GP-Related Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but
excluding any Partners who are also executive officers of The Blackstone Group L.P. or any Affiliate thereof) to make a required GP-Related Capital Contribution to the Partnership in installments, in each case
on terms determined by the General Partner.
(c) Each GP-Related Capital Contribution by a Partner
shall be credited to the appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2, subject to Section 5.10.
(d) The Partners and the Withdrawn Partners have entered into the Trust Agreement, pursuant to which certain amounts of distributions relating
to Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account constituting a “Holdback”).
(i) The General Partner shall determine, as set forth below, the percentage of each distribution of Carried Interest that shall
be withheld for any General Partner (including, without limitation, the General Partner) and each Partner Category (such withheld percentage constituting a General Partner’s and such Partner Category’s “Holdback
Percentage”). The
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applicable Holdback Percentages initially shall be 0% for any General Partner, 15% for Existing Partners (other than any General Partner), 21% for Retaining Withdrawn Partners (other than any
General Partner) and 24% for Deceased Partners (the “Initial Holdback Percentages”). Any provision of this Agreement to the contrary notwithstanding, the Holdback Percentage for any General Partner (including, without limitation,
the General Partner) shall not be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).
(ii) The Holdback Percentage may not be reduced for any individual Partner as compared to the other Partners in his Partner
Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner Categories on a proportionate basis. For example, if the Holdback Percentage for Existing Partners is decreased
to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any reduction in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried
Interest made after the date of such reduction.
(iii) The Holdback Percentage may not be increased for any individual
Partner as compared to the other Partners in his Partner Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’ Holdback Percentage beyond 21% unless the General Partner
concurrently increases the Existing Partners’ Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the General Partner increases the Holdback Percentage for both
Existing Partners and Retaining Withdrawn Partners to 24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies equally to all Partner Categories. Any increase in the Holdback
Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner from proportionately increasing the Holdback Percentage of any
Partner Category (following a reduction of the Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For example, if the General Partner reduces the Holdback Percentages
for Existing Partners, Retaining Withdrawn Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the Holdback Percentages to the Initial Holdback Percentages.
(iv) (A) Notwithstanding anything contained herein to the contrary, the Partnership may increase or decrease the Holdback
Percentage for any Partner in any Partner Category (in such capacity, the “Subject Partner”) pursuant to a majority vote of the Limited Partners and the General Partner (a “Holdback Vote”); provided, that,
notwithstanding anything to the contrary contained herein, the Holdback Percentage applicable to any General Partner shall not be increased or decreased without its prior written consent; provided further, that a Subject Partner’s
Holdback Percentage shall not be (I) increased prior to such time as such Subject Partner (x) is notified by the Partnership of the decision to increase such Subject Partner’s Holdback Percentage and (y) has, if requested by such
Subject Partner, been given 30 days to gather and provide information to the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) or (II) decreased unless such decrease occurs subsequent to an increase
in a Subject Partner’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv); provided further, that such decrease shall not exceed an amount such that such Subject Partner’s Holdback Percentage is less than the
prevailing Holdback Percentage for such Subject Partner’s Partner Category; provided further, that a Partner shall not vote to increase a Subject Partner’s Holdback Percentage unless such voting Partner determines, in such
Partner’s good faith judgment, that the facts and circumstances indicate that it is reasonably likely that such Subject
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Partner, or any of such Subject Partner’s successors or assigns (including such Subject
Partner’s estate or heirs) who at the time of such vote holds the GP-Related Partner Interest or otherwise has the right to receive distributions relating thereto, will not be capable of satisfying any GP-Related Recontribution Amounts that may become due.
(B) A Holdback Vote shall take
place at a Partnership meeting. Each of the Limited Partners and the General Partner shall be entitled to cast one vote with
respect to
the Holdback Vote regardless of such Partner’s interest in the Partnership. Such vote may be cast by any such Partner in person or by proxy.
(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback Percentage, such Subject
Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided, that if the Partnership and the Subject Partner cannot agree upon a mutually
satisfactory arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates; provided further,
that if such candidates fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the arbitrator. Each Subject Partner that
submits the decision of the Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected out-of-pocket
expenses relating thereto and each such party shall, to the satisfaction of the arbitrator and prior to any determination being made by the arbitrator, pay the total of such estimated expenses (i.e., both the Subject Partner’s and the
Partnership’s expenses) into an escrow account to be controlled by Simpson Thacher & Bartlett LLP, as escrow agent (or such other comparable law firm as the Partnership and the Subject Partner shall agree). The arbitrator shall direct
the escrow agent to pay out of such escrow account all expenses associated with such arbitration (including costs leading thereto) and to return to the “victorious” party the entire amount of funds such party paid into such escrow account.
If the amount contributed to the escrow account by the losing party is insufficient to cover the expenses of such arbitration, such “losing” party shall then provide any additional funds necessary to cover such costs to such
“victorious” party. For purposes hereof, the “victorious” party shall be the Partnership, if the Holdback Percentage ultimately determined by the arbitrator is closer to the percentage determined in the second Holdback Vote than
it is to the prevailing Holdback Percentage for the Subject Partner’s Partner Category; otherwise, the Subject Partner shall be the “victorious” party. The party that is not the “victorious” party shall be the
“losing” party.
(D) In the event of a decrease in a Subject Partner’s Holdback Percentage
(1) pursuant to a Holdback Vote under this clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and distribute to such Subject Partner any Trust Amounts (and
the Trust Income thereon (except as expressly provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance with such Subject Partner’s reduced Holdback
Percentage) as though such reduced Holdback Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).
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(v) (A) If a Partner’s Holdback Percentage exceeds 15% (such
percentage in excess of 15% constituting the “Excess Holdback Percentage”), such Partner may satisfy the portion of his Holdback obligation in respect of his Excess Holdback Percentage (such portion constituting such Partner’s
“Excess Holdback”), and such Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he was a Partner), to the extent his Excess Holdback obligation has previously been satisfied in cash, may
obtain the release of the Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback
obligation, by pledging or otherwise making available to the Partnership, on a first priority basis (except as provided below), all or any portion of his Firm Collateral in satisfaction of his Excess Holdback obligation. Any Partner seeking to
satisfy all or any portion of the Excess Holdback utilizing Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority
security interest in, and otherwise assure the ability of the Partnership to realize on (if required), such Firm Collateral; provided, that in the case of entities listed in the books and records of the Partnership, in which Partners/members
are permitted to pledge their interests therein to finance all or a portion of their capital contributions thereto (“Pledgable Blackstone Interests”), to the extent a first priority security interest is unavailable because of an
existing lien on such Firm Collateral, the Partner or Withdrawn Partner seeking to utilize such Firm Collateral shall grant the Partnership a second priority security interest therein in the manner provided above; provided further, that
(x) in the case of Pledgable Blackstone Interests, to the extent that neither a first priority nor a second priority security interest is available, or (y) if the General Partner otherwise determines in its good faith judgment that a
security interest in Firm Collateral (and the corresponding documents and actions) are not necessary or appropriate, the Partner or Withdrawn Partner shall (in the case of either clause (x) or (y) above) irrevocably instruct in writing the
relevant partnership, limited liability company or other entity listed in the books and records of the Partnership to remit any and all net proceeds resulting from a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully
provided in clause (B) below. The Partnership shall, at the request of any Partner or Withdrawn Partner, assist such Partner or Withdrawn Partner in taking such action as is necessary to enable such Partner or Withdrawn Partner to use Firm
Collateral as provided hereunder.
(B) If upon a sale or other realization of all or any portion of any Firm Collateral (a
“Firm Collateral Realization”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds otherwise distributable to such
Partner or Withdrawn Partner from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust Account to fully satisfy such
Excess Holdback requirement (allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount necessary to satisfy such
Excess Holdback requirement shall be distributed to such Partner or Withdrawn Partner.
(C) Upon any valuation or
revaluation of Firm Collateral that results in a decreased valuation of such Firm Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including upon a Firm
Collateral Realization, if net proceeds therefrom and the remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the foregoing to such
Partner or Withdrawn Partner and such Partner or Withdrawn Partner shall, within 30 days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his Excess Holdback
requirement. If
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any such Partner or Withdrawn Partner defaults upon his obligations under this clause (C),
then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable to a default under this clause (C); provided further, that for purposes of applying
Section 5.8(d)(ii) to a default under this clause (C):
(I) the term “GP-Related
Defaulting Party” where such term appears in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution
Amount” and “GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(vi) Any Limited Partner or Withdrawn Partner may (A) obtain the release of any Trust Amounts (but not the Trust Income
thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such Partner or Withdrawn Partner or (B) require the Partnership
to distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit (an “L/C”) for the benefit of the Trustee(s) in such amounts. Any
Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall deliver to the Trustee(s) an unconditional and irrevocable L/C from a commercial bank whose (x) short-term
deposits are rated at least A-1 by S&P and P-1 by Moody’s (if the L/C is for a term of 1 year or less), or (y) long-term deposits are rated at least A+ by
S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more) (each a “Required Rating”). If the relevant rating of the commercial bank issuing such L/C drops below the relevant Required Rating, the L/C Partner shall
supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, in lieu of the insufficient L/C. In addition, if the L/C has a term expiring on a
date earlier than the latest possible termination date of SP VII, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to provide a new L/C from a commercial bank whose relevant rating is at least equal to the relevant
Required Rating, at least 30 days prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to drawing on any L/C. The Trustee(s) may (as directed by the Partnership in the case of clause
(I) below) draw down on an L/C only if (I) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the Partnership’s obligations under the Clawback Provisions or (II) an L/C Partner has not provided a
new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash and/or Firm Collateral (to the extent permitted hereunder)), at least 30 days prior to the stated expiration of
an existing L/C in accordance with this clause (vi). The Trustee(s), as directed by the Partnership, shall return to any L/C Partner his L/C upon (1) the termination of the Trust Account and satisfaction of the Partnership’s obligations,
if any, in respect of the Clawback Provisions, (2) an L/C Partner satisfying his entire Holdback obligation in cash and Firm Collateral (to the extent permitted hereunder), or (3) the release, by the Trustee(s), as directed by the
Partnership, of all amounts in the Trust Account to the Partners or Withdrawn Partners. If an L/C Partner satisfies a portion of his Holdback obligation in cash and/or Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as
directed by the Partnership, release a portion of the amounts in the Trust Account to the Partners or Withdrawn Partners in the Partner Category of such L/C Partner, the L/C of an L/C Partner may be reduced by an amount corresponding to such portion
satisfied in cash and/or Firm Collateral (to the extent permitted hereunder) or such portion released by the Trustee(s), as directed by the Partnership; provided, that in no way shall the general release of any Trust Income cause an L/C Partner to
be permitted to reduce the amount of an L/C by any amount.
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(vii) (A) Any in-kind
distributions by the Partnership relating to Carried Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose of any
in-kind distributions held in the Trust Account at any time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.
(B) In lieu of the foregoing, any Existing Partner may pledge with respect to any
in-kind distribution the Special Firm Collateral referred to in the applicable category in the books and records of the Partnership; provided, that the initial contribution of such Special Firm
Collateral shall initially equal 130% of the required Holdback Amount for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback Amount. Paragraphs 4.1(d)(viii)(C) and (D) shall apply to such Special Firm
Collateral. To the extent such Special Firm Collateral exceeds the applicable minimum percentage of the required Holdback Amount specified in the first sentence of this clause (vii)(B), the related Partner may obtain a release of such excess amount
from the Trust Account.
(viii) (A) Any Limited Partner or Withdrawn Partner may satisfy all or any portion of his
Holdback (excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by the use of an L/C as provided herein, obtain a release of
Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn Partner’s Holdback (excluding any Excess Holdback) by
pledging to the Trustee(s) on a first priority basis all of his Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or exceed the amount of the Holdback distributed to the Partner or Withdrawn Partner (as more
fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the
General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) )to realize on (if required), such Special Firm Collateral.
(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or any portion of any Special Firm
Collateral (a “Special Firm Collateral Realization”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in connection with an Excess
Holdback) is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided herein (i.e., cash contributed to the Trust Account or an L/C in the Trust
Account)), then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Special Firm Collateral Realization (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund or
other asset and is being used in connection with an Excess Holdback) shall be paid into the Trust (and allocated to such Partner or Withdrawn Partner) to fully satisfy such Holdback and shall be deemed thereafter to be Trust Amounts for purposes
hereunder. Any net proceeds from such Special Firm Collateral Realization in excess of the amount necessary to satisfy such Holdback (excluding any Excess Holdback) shall be distributed to such Partner or Withdrawn Partner. To the extent a
Qualifying Fund distributes Securities to a Partner or Withdrawn Partner in connection with a Special Firm Collateral Realization, such Partner or Withdrawn Partner shall be required to promptly fund such Partner’s or Withdrawn Partner’s
deficiency with respect to his Holdback in cash or an L/C.
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(C) Upon any valuation or revaluation of the Special Firm Collateral and/or
any adjustment in the Applicable Collateral Percentage applicable to a Qualifying Fund (as provided in the books and records of the Partnership), if such Partner’s or Withdrawn Partner’s Special Firm Collateral valued at less than such
Partner’s Holdback (excluding any Excess Holdback) as provided in the books and records of the Partnership, taking into account other permitted means of satisfying the Holdback hereunder, the Partnership shall provide notice of the foregoing to
such Partner or Withdrawn Partner and, within 10 business days of receiving such notice, such Partner or Withdrawn Partner shall contribute cash or additional Special Firm Collateral to the Trust Account in an amount necessary to make up such
deficiency. If any such Partner or Withdrawn Partner defaults upon his obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable
to such default; provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears
in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(D) Upon a Partner becoming a Withdrawn Partner, at any time thereafter the General Partner may revoke the ability of such
Withdrawn Partner to use Special Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding anything else in this Section 4.1(d)(viii). In that case the provisions of clause (C) above shall
apply to the Withdrawn Partner’s obligation to satisfy the Holdback (except that 30 days’ notice of such revocation shall be given),
given that the Special Firm Collateral is no longer available to satisfy any portion of the Holdback (excluding any Excess Holdback).
(E) Nothing in this Section 4.1(d)(viii) shall prevent any Partner or Withdrawn Partner from using any amount of such
Partner’s interest in a Qualifying Fund as Firm Collateral; provided that at all times Section 4.1(d)(v) and this Section 4.1(d)(viii) are each satisfied.
Section 4.2. Interest. Interest on the balances of the Partners’ capital related to the Partners’ GP-Related Partner Interests (excluding capital invested in GP-Related Investments and, if deemed appropriate by the General Partner, capital invested in any other investment
of the Partnership) shall be credited to the Partners’ GP-Related Capital Accounts at the end of each accounting period pursuant to Section 5.2, or at any other time as determined by the General
Partner, at rates determined by the General Partner from time to time, and shall be charged as an expense of the Partnership.
Section 4.3. Withdrawals of Capital. No Partner may withdraw capital related to such Partner’s
GP-Related Partner Interest from the Partnership except (i) for distributions of cash or other property pursuant to Section 5.8, (ii) as otherwise expressly provided in this Agreement, or
(iii) as determined by the General Partner.
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ARTICLE V
PARTICIPATION IN PROFITS AND LOSSES
Section 5.1. General Accounting Matters.
(a) GP-Related Net Income (Loss) shall be determined by the General Partner at the end of each
accounting period and shall be allocated as described in Section 5.4.
(b) “GP-Related
Net Income (Loss)” from any activity of the Partnership related to the GP-Related SP VII Interest for any accounting period means (i) the gross income realized by the Partnership from such
activity during such accounting period less (ii) all expenses of the Partnership, and all other items that are deductible from gross income, for such accounting period that are allocable to such activity (determined as provided below).
“GP-Related Net Income (Loss)” from any GP-Related Investment
for any accounting period in which such GP-Related Investment has not been sold or otherwise disposed of means (i) the gross amount of dividends, interest or other income received by the Partnership from
such GP-Related Investment during such accounting period less (ii) all expenses of the Partnership for such accounting period that are allocable to such GP-Related
Investment (determined as provided below).
“GP-Related Net Income (Loss)” from any GP-Related Investment for the accounting period in which such GP-Related Investment is sold or otherwise disposed of means (i) the sum of the gross proceeds from the sale
or other disposition of such GP-Related Investment and the gross amount of dividends, interest or other income received by the Partnership from such GP-Related
Investment during such accounting period less (ii) the sum of the cost or other basis to the Partnership of such GP-Related Investment and all expenses of the Partnership for such accounting period that
are allocable to such GP- Related Investment.
GP-Related Net Income
(Loss) shall be determined in accordance with the accounting method used by the Partnership for Federal income tax purposes with the following adjustments: (i) any income of the Partnership that is exempt from Federal income taxation and not
otherwise taken into account in computing GP-Related Net Income (Loss) shall be added to such taxable income or loss; (ii) if any asset has a value on the books of the Partnership that differs from its
adjusted tax basis for Federal income tax purposes, any depreciation, amortization or gain resulting from a disposition of such asset shall be calculated with reference to such value; (iii) upon an adjustment to the value of any asset on the
books of the Partnership pursuant to Regulation Section 1.704-1(b)(2), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (iv) any expenditures
of the Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing GP-Related Net Income (Loss) pursuant to this definition
shall be treated as deductible items; (v) any income from a GP-Related Investment that is payable to Partnership employees in respect of “phantom interests” in such GP-Related Investment awarded by the General Partner to employees shall be included as an expense in the calculation of GP-Related Net Income (Loss) from such GP-Related Investment, and (vi) items of income and expense (including interest income and overhead and other indirect expenses) of the Partnership and Affiliates of the Partnership shall be allocated among the
Partnership and such Affiliates, among various Partnership activities and GP-Related Investments and between accounting periods, in each case as determined by the General Partner. Any adjustments to GP-Related Net Income (Loss) by the General Partner, including adjustments for items of income accrued but not yet received, unrealized gains, items of expense accrued but not yet paid, unrealized losses, reserves
(including reserves for taxes, bad debts, actual or threatened litigation, or any other expenses, contingencies or obligations) and other appropriate items, shall be made in accordance with U.S. generally accepted accounting principles
(“GAAP”); provided, that the General Partner shall not be required to make any such adjustment.
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(c) An accounting period shall be a Fiscal Year except that, at the option of the General
Partner, an accounting period will terminate and a new accounting period will begin on the admission date of an additional Partner or the Settlement Date of a Withdrawn Partner, if any such date is not the first day of a Fiscal Year. If any event
referred to in the preceding sentence occurs and the General Partner does not elect to terminate an accounting period and begin a new accounting period, then the General Partner may make such adjustments as it deems appropriate to the Partners’
GP-Related Profit Sharing Percentages for the accounting period in which such event occurs (prior to any allocations of GP-Related Unallocated Percentages or adjustments
to GP-Related Profit Sharing Percentages pursuant to Section 5.3) to reflect the Partners’ average GP-Related Profit Sharing Percentages during such accounting
period; provided, that the GP-Related Profit Sharing Percentages of Partners in GP-Related Net Income (Loss) from
GP-Related Investments acquired during such accounting period will be based on GP-Related Profit Sharing Percentages in effect when each such GP-Related Investment was acquired.
(d) In establishing
GP-Related Profit Sharing Percentages and allocating GP-Related Unallocated Percentages pursuant to Section 5.3, the General Partner may consider such factors as it
deems appropriate.
(e) All determinations, valuations and other matters of judgment required to be made for accounting purposes under this
Agreement shall be made by the General Partner and approved by the Partnership’s independent accountants. Such approved determinations, valuations and other accounting matters shall be conclusive and binding on all Partners, all Withdrawn
Partners, their successors, heirs, estates or legal representatives and any other person, and to the fullest extent permitted by law no such person shall have the right to an accounting or an appraisal of the assets of the Partnership or any
successor thereto.
Section 5.2. GP-Related Capital Accounts.
(a) There shall be established for each Partner on the books of the Partnership, to the extent and at such times as may be appropriate, one or
more capital accounts as the General Partner may deem to be appropriate for purposes of accounting for such Partner’s interests in the capital of the Partnership related to the GP-Related SP VII Interest
and the GP-Related Net Income (Loss) of the Partnership (each a “GP-Related Capital Account”).
(b) As of the end of each accounting period or, in the case of a contribution to the Partnership by one or more of the Partners with respect to
such Partner or Partners’ GP-Related Partner Interests or a distribution by the Partnership to one or more of the Partners with respect to such Partner or Partners’
GP-Related Partner Interests, at the time of such contribution or distribution, (i) the appropriate GP-Related Capital Accounts of each Partner shall be credited
with the following amounts: (A) the amount of cash and the value of any property contributed by such Partner to the capital of the Partnership related to the GP-Related SP VII Interest during such
accounting period, (B) the GP-Related Net Income allocated to such Partner for such accounting period and (C) the interest credited on the balance of such Partner’s capital related to such
Partner’s GP-Related Partner Interest for such accounting period pursuant to Section 4.2; and (ii) the appropriate GP-Related Capital Accounts of each
Partner shall be debited with the following amounts: (x) the amount of cash, the principal amount of any subordinated promissory note of the Partnership referred to in Section 6.5 (as such amount is paid) and the value of any property
distributed to such Partner during such accounting period with respect to such Partner’s GP-Related Partner Interest and (y) the GP-Related Net Loss allocated
to such Partner for such accounting period.
Section 5.3. GP-Related Profit Sharing
Percentages.
(a) Prior to the beginning of each annual accounting period, the General Partner shall establish the profit sharing
percentage (the “GP-Related Profit Sharing Percentage”) of each Partner in each category of GP-Related Net Income (Loss) for such annual accounting
period pursuant to Section 5.1(a) taking into account such factors as the General Partner deems appropriate; provided, however, that
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(i) the General Partner may elect to establish GP-Related Profit
Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment acquired by the Partnership during such accounting period at the time such GP-Related Investment is acquired in accordance with paragraph (d) below and (ii) GP-Related Net Income (Loss) for such accounting period from any GP-Related Investment shall be allocated in accordance with the GP-Related Profit Sharing Percentages in such GP-Related Investment
established in accordance with paragraph (d) below. The General Partner may establish different GP- Related Profit Sharing Percentages for any Partner in different categories of GP-Related Net Income (Loss). In the case of the Withdrawal of a Partner, such former Partner’s GP-Related Profit Sharing Percentages shall be allocated by the General
Partner to one or more of the remaining Partners as the General Partner shall determine. In the case of the admission of any Partner to the Partnership as an additional Partner, the GP-Related Profit Sharing
Percentages of the other Partners shall be reduced by an amount equal to the GP-Related Profit Sharing Percentage allocated to such new Partner pursuant to Section 6.1(b); such reduction of each other
Partner’s GP-Related Profit Sharing Percentage shall be pro rata based upon such Partner’s GP-Related Profit Sharing Percentage as in effect immediately prior
to the admission of the new Partner. Notwithstanding the foregoing, the General Partner may also adjust the GP-Related Profit Sharing Percentage of any Partner for any annual accounting period at the end of
such annual accounting period in its sole discretion.
(b) The General Partner may elect to allocate to the Partners less than 100% of the GP-Related Profit Sharing Percentages of any category for any annual accounting period at the time specified in Section 5.3(a) for the annual fixing of GP-Related Profit
Sharing Percentages (any remainder of such GP-Related Profit Sharing Percentages being called a “GP-Related Unallocated Percentage”); provided,
that any GP-Related Unallocated Percentage in any category of GP-Related Net Income (Loss) for any annual accounting period that is not allocated by the General Partner
within 90 days after the end of such accounting period shall be deemed to be allocated among all the Partners (including the General Partner) in the manner determined by the General Partner in its sole discretion.
(c) Unless otherwise determined by the General Partner in a particular case, (i) GP- Related
Profit Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment shall be allocated in proportion to the Partners’ respective GP-Related Capital Contributions in respect of such GP-Related Investment and (ii) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from each GP-Related Investment shall be fixed at the time such GP-Related Investment is acquired and
shall not thereafter change, subject to any repurchase rights established by the General Partner pursuant to Section 5.7.
Section 5.4. Allocations of GP-Related Net Income (Loss).
(a) Except as provided in Section 5.4(d), GP-Related Net Income of the Partnership for each GP-Related Investment shall be allocated to the GP-Related Capital Accounts related to such GP-Related Investment of all the Partners
participating in such GP-Related Investment (including the General Partner): first, in proportion to and to the extent of the amount of Non-Carried Interest (other than
amounts representing a return of GP-Related Capital Contributions) or Carried Interest distributed to the Partners, second, to Partners that received Non-Carried
Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest in years prior to the years such GP-Related Net Income is
being allocated to the extent such Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest exceeded GP-Related Net Income allocated to such Partners in such earlier years; and third, to the Partners in the same manner that such Non-Carried Interest (other than amounts
representing a return of GP-Related Capital Contributions) or Carried Interest would have been distributed if cash were available to distribute with respect thereto.
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(b) GP-Related Net Loss of the Partnership shall be
allocated as follows: (i) GP- Related Net Loss relating to realized losses suffered by SP VII and allocated to the Partnership with respect to its pro rata share thereof (based on capital contributions
made by the Partnership to SP VII with respect to the GP-Related SP VII Interest) shall be allocated to the Partners in accordance with each Partner’s Non-Carried
Interest Sharing Percentage with respect to the GP-Related Investment giving rise to such loss suffered by SP VII and (ii) GP-Related Net Loss relating to realized
losses suffered by SP VII and allocated to the Partnership with respect to the Carried Interest shall be allocated in accordance with a Partner’s (including a Withdrawn Partner’s) Carried Interest Give Back Percentage (as of the date of
such loss) (subject to adjustment pursuant to Section 5.8(e)).
(c) Notwithstanding Section 5.4(a) above, GP-Related Net Income relating to Carried Interest allocated after the allocation of a GP-Related Net Loss pursuant to clause (ii) of Section 5.4(b) shall be
allocated in accordance with such Carried Interest Give Back Percentages until such time as the Partners have been allocated GP-Related Net Income relating to Carried Interest equal to the aggregate amount of GP-Related Net Loss previously allocated in accordance with clause (ii) of Section 5.4(b). Withdrawn Partners shall remain Partners for purposes of allocating such
GP-Related Net Loss with respect to Carried Interest.
(d) To the extent the Partnership has any GP-Related Net Income (Loss) for any accounting period unrelated to SP VII, such GP-Related Net Income (Loss) will be allocated in accordance with GP-Related Profit Sharing Percentages prevailing at the beginning of such accounting period.
(e) The
General Partner may authorize from time to time advances to Partners (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group L.P.
or any Affiliate thereof) against their allocable shares of GP-Related Net Income (Loss).
Section 5.5. Liability of General Partners. General Partners shall have unlimited liability for the satisfaction and
discharge of all losses, liabilities and expenses of the Partnership.
Section 5.6. Liability of Limited Partners. Each
Limited Partner and former Limited Partner shall be liable for the satisfaction and discharge of all losses, liabilities and expenses of the Partnership allocable to him pursuant to Section 5.4 or 7.3, but only to the extent required by
applicable law. Except as otherwise provided in the following sentence, in no event shall any Limited Partner or former Limited Partner be obligated to make any additional capital contribution to the Partnership in excess of his aggregate GP-Related Capital Contributions and Capital Commitment-Related Capital Contributions pursuant to Sections 4.1 and 7.1, or have any liability in excess of such aggregate GP-
Related Capital Contributions and Capital Commitment-Related Capital Contributions for the satisfaction and discharge of the losses, liabilities and expenses of the Partnership. In no way does any of the foregoing limit any Partner’s
obligations under Section 4.1(d), 5.8(d) or 7.4(g) or otherwise to make capital contributions as provided hereunder.
Section 5.7. Repurchase Rights, etc.. The General Partner may from time to time establish such repurchase rights and/or other
requirements with respect to the Partners’ GP-Related Partner Interests relating to GP-Related SP VII Investments as the General Partner may determine. The General
Partner shall have authority to (a) withhold any distribution otherwise payable to any Partner until any such repurchase rights have lapsed or any such requirements have been satisfied, (b) pay any distribution to any Partner that is
Contingent as of the distribution date and require the refund of any portion of such distribution that is Contingent as of the Withdrawal Date of such Partner, (c) amend any previously established repurchase rights or other requirements from
time to time, and (d) make such exceptions thereto as it may determine on a case by case basis.
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Section 5.8. Distributions.
(a) (i) The Partnership shall make distributions of available cash (subject to reserves and other adjustments as provided herein) or other
property to Partners with respect to such Partners’ GP-Related Partner Interests at such times and in such amounts as are determined by the General Partner. The General Partner shall, if it deems it
appropriate, determine the availability for distribution of, and distribute, cash or other property separately for each category of GP-Related Net Income (Loss) established pursuant to Section 5.1(a).
Distributions of cash or other property with respect to Non-Carried Interest shall be made among the Partners in accordance with their respective Non-Carried Interest
Sharing Percentages, and, subject to Sections 4.1(d) and 5.8(e), distributions of cash or other property with respect to Carried Interest shall be made among Partners in accordance with their respective Carried Interest Sharing Percentages.
(ii) At any time that a sale, exchange, transfer or other disposition by SP VII of a portion of a GP-
Related Investment is being considered by the Partnership (a “GP-Related Disposable Investment”), at the election of the General Partner each Partner’s
GP-Related Partner Interest with respect to such GP- Related Investment shall be vertically divided into two separate GP-Related
Partner Interests, a GP- Related Partner Interest attributable to the GP-Related Disposable Investment (a Partner’s
“GP-Related Class B Interest”), and a GP-Related Partner Interest attributable to such
GP-Related Investment excluding the GP-Related Disposable Investment (a Partner’s “GP-Related
Class A Interest”). Distributions (including those resulting from a sale, transfer, exchange or other disposition by SP VII) relating to a GP-Related Disposable Investment (with
respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of GP-Related Class B Interests with respect to such GP-Related Investment in accordance with their GP-Related Profit Sharing Percentages relating to such GP-Related Class B
Interests, and distributions (including those resulting from the sale, transfer, exchange or other disposition by SP VII) relating to a GP-Related Investment excluding such
GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of
GP-Related Class A Interests with respect to such GP-Related Investment in accordance with their respective GP-Related
Profit Sharing Percentages relating to such GP-Related Class A Interests. Except as provided above, distributions of cash or other property with respect to each category of
GP-Related Net Income (Loss) shall be allocated among the Partners in the same proportions as the allocations of GP- Related Net Income (Loss) of each such category.
(b) Subject to the Partnership’s having sufficient available cash in the reasonable judgment of the General Partner, the Partnership
shall make cash distributions to each Partner with respect to each Fiscal Year of the Partnership in an aggregate amount at least equal to the total Federal, New York State and New York City income and other taxes that would be payable by such
Partner with respect to all categories of GP-Related Net Income (Loss) allocated to such Partner for such Fiscal Year, the amount of which shall be calculated (i) on the assumption that each Partner is an
individual subject to the then prevailing maximum Federal, New York State and New York City income and other tax rates, (ii) taking into account the deductibility of State and local income and other taxes for Federal income tax purposes and
(iii) taking into account any differential in applicable rates due to the type and character of GP-Related Net Income (Loss) allocated to such Partner. Notwithstanding the provisions of the foregoing
sentence, the General Partner may refrain from making any distribution if, in the reasonable judgment of the General Partner, such distribution is prohibited by the Partnership Act.
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(c) The General Partner may provide that the
GP-Related Partner Interest of any Partner or employee (including such Partner’s or employee’s right to distributions and investments of the Partnership related thereto) may be subject to repurchase
by the Partnership during such period as the General Partner shall determine (a “Repurchase Period”). Any Contingent distributions from GP-Related Investments subject to repurchase rights will
be withheld by the Partnership and will be distributed to the recipient thereof (together with interest thereon at rates determined by the General Partner from time to time) as the recipient’s rights to such distributions become Non-Contingent (by virtue of the expiration of the applicable Repurchase Period or otherwise). The General Partner may elect in an individual case to have the Partnership distribute any Contingent distribution to
the applicable recipient thereof irrespective of whether the applicable Repurchase Period has lapsed. If a Partner Withdraws from the Partnership for any reason other than his death, Total Disability or Incompetence, the undistributed share of any GP- Related Investment that remains Contingent as of the applicable Withdrawal Date shall be repurchased by the Partnership at a purchase price determined at such time by the General Partner. Unless determined
otherwise by the General Partner, the repurchased portion thereof will be allocated among the remaining Partners with interests in such GP-Related Investment in proportion to their respective percentage
interests in such GP-Related Investment, or if no other Partner has a percentage interest in such specific GP-Related Investment, to the General Partner;
provided, that the General Partner may allocate the Withdrawn Partner’s share of unrealized investment income from a repurchased GP-Related Investment attributable to the period after the Withdrawn
Partner’s Withdrawal Date on any basis it may determine, including to existing or new Partners who did not previously have interests in such GP-Related Investment, except that, in any event, each Investor
Limited Partner shall be allocated a share of such unrealized investment income equal to its respective GP-Related Profit Sharing Percentage of such unrealized investment income.
(d) (i)(A) If the Partnership is obligated under the Clawback Provisions or Giveback Provisions to contribute to SP VII a Clawback Amount or a
Giveback Amount (other than a Capital Commitment Giveback Amount) in respect of the GP-Related SP VII Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount being
herein called a “GP-Related Giveback Amount”), the Partnership shall call for such amounts as are necessary to satisfy such obligations of the Partnership as determined by the General Partner,
in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the Partnership, such an amount of prior distributions by the Partnership (and the Other Fund GPs) with respect to Carried Interest
(and/or Non-Carried Interest in the case of a GP-Related Giveback Amount) (the “GP-Related Recontribution
Amount”) which equals (I) the product of (a) a Partner’s or Withdrawn Partner’s Carried Interest Give Back Percentage and (b) the aggregate Clawback Amount payable by the Partnership, in the case of Clawback
Amounts, and (II) with respect to a GP-Related Giveback Amount, such Partner’s pro rata share of prior distributions of Carried Interest and/or Non-Carried
Interest in connection with (a) the GP-Related SP VII Investment giving rise to the GP-Related Giveback Amount, (b) if the amounts contributed pursuant to
clause (II)(a) above are insufficient to satisfy such GP-Related Giveback Amount, GP-Related SP VII Investments other than the one giving rise to such obligation, but
only those amounts received by the Partners with an interest in the GP-Related SP VII Investment referred to in clause (II)(a) above, and (c) if the GP-Related
Giveback Amount is unrelated to a specific GP-Related SP VII Investment, all GP-Related SP VII Investments. Each Partner and Withdrawn Partner shall promptly contribute
to the Partnership, along with satisfying his comparable obligations to the Other Fund GPs, if any, upon such call, such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount, less the
amount paid out of the Trust Account on behalf of such Partner or Withdrawn Partner by the Trustee(s) pursuant to written instructions from the Partnership, or if applicable, any of the Other Fund GPs with respect to Carried Interest (and/or Non-Carried Interest in the case of GP-Related Giveback Amounts) (the “Net GP-Related Recontribution Amount”),
irrespective of the fact that the amounts in the Trust Account may be sufficient on an aggregate basis to satisfy the Partnership’s and the Other Fund GPs’ obligation under the Clawback Provisions and/or Giveback Provisions;
provided, that to the extent a Partner’s or Withdrawn Partner’s share of the amount paid with respect to the Clawback Amount and/or the GP-Related Giveback Amount exceeds his GP-Related Recontribution Amount, such excess shall be
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repaid to such Partner or Withdrawn Partner as promptly as reasonably practicable, subject to clause
(ii) below; provided further, that such written instructions from the Partnership shall specify each Partner’s and Withdrawn Partner’s GP-Related Recontribution Amount. Prior to such
time, the Partnership may, in its discretion (but shall be under no obligation to), provide notice that in the Partnership’s judgment, the potential obligations in respect of the Clawback Provisions or the Giveback Provisions will probably
materialize (and an estimate of the aggregate amount of such obligations); provided further, that any amount from a Partner’s Trust Account used to pay any part of any GP-Related Giveback Amount
(or such lesser amount as may be required by the General Partner) shall be contributed by such Partner to such Partner’s Trust Account no later than 30 days after the Net GP-Related Recontribution Amount
is paid with respect to such GP-Related Giveback Amount. Solely to the extent required by the SP VII Agreements, each member of the General Partner shall have the same obligations as a Partner (which
obligations shall be subject to the same limitations as the obligations of a Partner) under this Section 5.8(d)(i)(A) and under Section 5.8(d)(ii)(A) solely with respect to such member’s pro rata share of any Clawback Amount (for
purpose of this sentence, as defined in section 11.3(b) of the SP VII Partnership Agreement) and solely to the extent the Partnership has insufficient funds to meet the Partnership’s obligations under section 11.3 of the SP VII Partnership
Agreement and/or the corresponding provisions under any other SP VII Agreement.
(B) To the extent any Partner or Withdrawn Partner has
satisfied any Holdback obligation with Firm Collateral, such Partner or Withdrawn Partner shall, within 10 days of the Partnership’s call for GP- Related Recontribution Amounts, make a cash payment into
the Trust Account in an amount equal to the amount of the Holdback obligation satisfied with such Firm Collateral, or such lesser amount such that the amount in the Trust Account allocable to such Partner or Withdrawn Partner equals the sum of
(I) such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount and (II) any similar amounts payable to any of the Other Fund GPs. Immediately upon receipt of such cash, the
Trustee(s) shall take such steps as are necessary to release such Firm Collateral of such Partner or Withdrawn Partner equal to the amount of such cash payment. If the amount of such cash payment is less than the amount of Firm Collateral of such
Partner or Withdrawn Partner, the balance of such Firm Collateral if any, shall be retained to secure the payment of GP-Related Deficiency Contributions, if any, and shall be fully released upon the
satisfaction of the Partnership’s and the Other Fund GPs’ obligation to pay the Clawback Amount. The failure of any Partner or Withdrawn Partner to make a cash payment in accordance with this clause (B) (to the extent applicable) shall
constitute a default under Section 5.8(d)(ii) as if such cash payment hereunder constitutes a Net GP-Related Recontribution Amount under Section 5.8(d)(ii).
(ii) (A) In the event any Partner or Withdrawn Partner (a “GP-Related
Defaulting Party”) fails to recontribute all or any portion of such GP-Related Defaulting Party’s Net GP- Related Recontribution Amount for any reason, the
Partnership shall require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Carried Interest Give Back Percentages in the case of Clawback Amounts, and GP-Related Profit Sharing Percentages in the case of GP-Related Giveback Amounts (as more fully described in clause (II) of Section 5.8(d)(i)(A) above)), such
amounts as are necessary to fulfill the GP- Related Defaulting Party’s obligation to pay such GP-Related Defaulting Party’s Net GP-Related Recontribution
Amount (a “GP-Related Deficiency Contribution”) if the General Partner determines in its good faith judgment that the Partnership (or an Other Fund GP) will be unable to collect such amount in
cash from such GP-Related Defaulting Party for payment of the Clawback Amount or GP-Related Giveback Amount, as the case may be, at least 20 Business Days prior to the
latest date that the Partnership, and the Other Fund GPs, if applicable, are permitted to pay the Clawback Amount or GP-Related Giveback Amount, as the case may be; provided, that no Partner or
Withdrawn Partner shall as a result of such GP-Related Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Net GP-Related
Recontribution Amount initially requested from such Partner or Withdrawn Partner in respect of such default.
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(B) Thereafter, the General Partner shall determine in its good faith
judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General
Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership against the GP-Related Defaulting Party, the cost of which shall be a Partnership expense to the extent not
ultimately reimbursed by the GP-Related Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such GP-Related Defaulting Party
becoming a GP-Related Defaulting Party) to set-off as appropriate and apply against such GP- Related Defaulting Party’s Net GP-Related Recontribution Amount any amounts otherwise payable to the GP-Related Defaulting Party by the Partnership or any Affiliate thereof (including amounts unrelated to
Carried Interest, such as returns of capital and profit thereon). Each Partner and Withdrawn Partner hereby grants to the Partnership a security interest, effective upon such Partner or Withdrawn Partner becoming a
GP-Related Defaulting Party, in all accounts receivable and other rights to receive payment from any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the
Partnership may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner and Withdrawn Partner hereby appoints the Partnership as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or Withdrawn Partner or in the name of the Partnership, to take any actions which may be necessary to accomplish the
intent of the immediately preceding sentence. The Partnership shall be entitled to collect interest on the Net GP-Related Recontribution Amount of a GP-Related
Defaulting Party from the date such Net GP-Related Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(C) Any Partner’s or Withdrawn Partner’s failure to make a GP-Related
Deficiency Contribution shall cause such Partner or Withdrawn Partner to be a GP-Related Defaulting Party with respect to such amount. The Partnership shall first seek any remaining Trust Amounts (and Trust
Income thereon) allocated to such Partner or Withdrawn Partner to satisfy such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution before seeking cash
contributions from such Partner or Withdrawn Partner in satisfaction of such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution.
(iii) A Partner’s or Withdrawn Partner’s obligation to make contributions to the Partnership under this
Section 5.8(d) shall survive the termination of the Partnership.
(e) The Partners acknowledge that the General Partner will (and is
hereby authorized to) take such steps as it deems appropriate, in its good faith judgment, to further the objective of providing for the fair and equitable treatment of all Partners, including by allocating writedowns and losses (to be determined by
the General Partner in accordance with GAAP and as reported by SP VII) on GP-Related SP VII Investments that have been the subject of a writedown and/or losses (each, a “Loss Investment”) to
those Partners who participated in such Loss Investments based on their Carried Interest Sharing Percentage therein to the extent that such Partners receive or have received Carried Interest distributions from other
GP-Related SP VII Investments. Consequently and notwithstanding anything herein to the contrary, adjustments to Carried Interest distributions shall be made as set forth in this Section 5.8(e).
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(i) At the time the Partnership is making Carried Interest distributions in
connection with a GP-Related SP VII Investment (the “Subject Investment”) that have been reduced under any SP VII Agreement as a result of one or more Loss Investments, the General Partner
shall calculate amounts distributable to or due from each such Partner as follows:
(A) determine each Partner’s
share of each such Loss Investment based on his Carried Interest Sharing Percentage in each such Loss Investment (which may be zero) to the extent such Loss Investment has reduced the Carried Interest distributions otherwise available for
distribution to all Partners (indirectly through the Partnership from SP VII) from the Subject Investment (such reduction, the “Loss Amount”);
(B) determine the amount of Carried Interest distributions otherwise distributable to such Partner with respect to the Subject
Investment (indirectly through the Partnership from SP VII) before any reduction in respect of the amount determined in clause (A) above (the “Unadjusted Carried Interest Distributions”); and
(C) subtract (I) the Loss Amounts relating to all Loss Investments from (II) the Unadjusted Carried Interest
Distributions for such Partner, to determine the amount of Carried Interest distributions to actually be paid to such Partner (“Net Carried Interest Distribution”).
To the extent that the Net Carried Interest Distribution for a Partner as calculated in this clause (i) is a negative number, the General
Partner shall (I) notify such Partner, at or prior to the time such Carried Interest distributions are actually made to the Partners, of his obligation to recontribute to the Partnership prior Carried Interest distributions (a “Net
Carried Interest Distribution Recontribution Amount”), up to the amount of such negative Net Carried Interest Distribution, and (II) to the extent amounts recontributed pursuant to clause (I) are insufficient to satisfy such
negative Net Carried Interest Distribution amount, reduce future Carried Interest distributions otherwise due such Partner, up to the amount of such remaining negative Net Carried Interest Distribution. If a Partner’s (x) Net Carried
Interest Distribution Recontribution Amount exceeds (y) the aggregate amount of prior Carried Interest distributions less the amount of tax thereon, calculated based on the Assumed Tax Rate in effect in the Fiscal Years of such distributions
(the “Excess Tax-Related Amount”), then such Partner may, in lieu of paying such Partner’s Excess Tax-Related Amount, defer such amounts as set
forth below. Such deferred amount shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced and repaid by the amount of Carried Interest otherwise distributable to such Partner in connection with future Carried Interest
distributions until such balance is reduced to zero. Any deferred amounts shall be payable in full upon the earlier of (i) such time as the Clawback Amount is determined (as provided herein) and (ii) such time as the Partner becomes a
Withdrawn Partner.
To the extent there is an amount of negative Net Carried Interest Distribution with respect to a Partner remaining
after the application of this clause (i), notwithstanding clause (II) of the preceding paragraph, such remaining amount of negative Net Carried Interest Distribution shall be allocated to the other Partners pro rata based on each of their
Carried Interest Sharing Percentages in the Subject Investment.
A Partner who fails to pay a Net Carried Interest Distribution
Recontribution Amount promptly upon notice from the General Partner (as provided above) shall be deemed a GP-Related Defaulting Party for all purposes hereof.
A Partner may satisfy in part any Net Carried Interest Distribution Recontribution Amount from cash that is then subject to a Holdback, to the
extent that the amounts that remain subject to a Holdback satisfy the Holdback requirements hereof as they relate to the reduced amount of aggregate Carried Interest distributions received by such Partner (taking into account any Net Carried
Interest Distribution Recontribution Amount contributed to the Partnership by such Partner).
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Any Net Carried Interest Distribution Recontribution Amount contributed by a Partner,
including amounts of cash subject to a Holdback as provided above, shall increase the amount available for distribution to the other Partners as Carried Interest distributions with respect to the Subject Investment; provided, that any such
amounts then subject to a Holdback may be so distributed to the other Partners to the extent a Partner receiving such distribution has satisfied the Holdback requirements with respect to such distribution (taken together with the other Carried
Interest distributions received by such Partner to date).
(ii) In the case of Clawback Amounts which are required to be
contributed to the Partnership as otherwise provided herein, the obligation of the Partners with respect to any Clawback Amount shall be adjusted by the General Partner as follows:
(A) determine each Partner’s share of any Losses in any GP-Related SP VII
Investments which gave rise to the Clawback Amount (i.e., the Losses that followed the last GP-Related SP VII Investment with respect to which Carried Interest distributions were made), based on such
Partner’s Carried Interest Sharing Percentage in such GP-Related SP VII Investments;
(B) determine each Partner’s obligation with respect to the Clawback Amount based on such Partner’s Carried Interest
Give Back Percentage as otherwise provided herein; and
(C) subtract the amount determined in clause (B) above from
the amount determined in clause (A) above with respect to each Partner to determine the amount of adjustment to each Partner’s share of the Clawback Amount (a Partner’s “Clawback Adjustment Amount”).
A Partner’s share of the Clawback Amount shall for all purposes hereof be decreased by such Partner’s Clawback Adjustment Amount, to
the extent it is a negative number (except to the extent expressly provided below). A Partner’s share of the Clawback Amount shall for all purposes hereof be increased by such Partner’s Clawback Adjustment Amount (to the extent it is a
positive number); provided, that in no way shall a Partner’s aggregate obligation to satisfy a Clawback Amount as a result of this clause (ii) exceed the aggregate Carried Interest distributions received by such Partner. To the
extent a positive Clawback Adjustment Amount remains after the application of this clause (ii) with respect to a Partner, such remaining Clawback Adjustment Amount shall be allocated to the Partners (including any Partner whose Clawback Amount
was increased pursuant to this clause (ii)) pro rata based on their Carried Interest Give Back Percentages (determined without regard to this clause (ii)).
Any distribution or contribution adjustments pursuant to this Section 5.8(e) by the General Partner shall be based on its good faith
judgment, and no Partner shall have any claim against the Partnership, the General Partner or any other Partners as a result of any adjustment made as set forth above. This Section 5.8(e) applies to all Partners, including Withdrawn Partners.
It is agreed and acknowledged that this Section 5.8(e) is an agreement among the Partners and in no way modifies the obligations of
each Partner regarding the Clawback Amount as provided in the SP VII Agreements.
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Section 5.9. Business Expenses. The Partnership shall reimburse the Partners for
reasonable travel, entertainment and miscellaneous expenses incurred by them in the conduct of the Partnership’s business in accordance with rules and regulations established by the General Partner from time to time.
Section 5.10. Tax Capital Accounts; Tax Allocations.
(a) For Federal income tax purposes, there shall be established for each Partner a single capital account combining such Partner’s Capital
Commitment Capital Account and GP-Related Capital Account, with such adjustments as the General Partner determines are appropriate so that such single capital account is maintained in compliance with the
principles and requirements of Section 704(b) of the Code and the Regulations thereunder.
(b) For Federal, State and local income tax
purposes only, Partnership income, gain, loss, deduction or expense (or any item thereof) for each fiscal year shall be allocated to and among the Partners in a manner corresponding to the manner in which corresponding items are allocated among the
Partners pursuant to clause (a) above, provided the General Partner may in its sole discretion make such allocations for tax purposes as it determines are appropriate so that allocations have substantial economic effect or are in accordance
with the interests of the Partners, within the meaning of the Code and the Regulations thereunder.
ARTICLE VI
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS;
SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
Section 6.1. Additional Partners.
(a) Effective on the first day of any month (or on such other date as shall be determined by the General Partner in its sole discretion), the
General Partner shall have the right to admit one or more additional or substitute persons into the Partnership as General Partners or Limited Partners. Each such person shall make the representations and certifications with respect to itself set
forth in Sections 3.7 and 3.8. The General Partner shall determine and negotiate with the additional Partner all terms of such additional Partner’s participation in the Partnership, including the additional Partner’s initial GP-Related Capital Contribution, Capital Commitment-Related Capital Contribution, GP-Related Profit Sharing Percentage and Capital Commitment Profit Sharing Percentage. Each
additional Partner shall have such voting rights as may be determined by the General Partner from time to time unless, upon the admission to the Partnership of any Limited Partner, the General Partner shall designate that such Limited Partner shall
not have such voting rights (any such Limited Partner being called a “Nonvoting Limited Partner”). Any additional Partner shall, as a condition to becoming a Partner, agree to become a party to, and be bound by the terms and
conditions of, the Trust Agreement. If Blackstone or another or subsequent holder of an Investor Note approved by the General Partner for purposes of this Section 6.1(a) shall foreclose upon a Limited Partner’s Investor Note issued to
finance such Limited Partner’s purchase of his Capital Commitment Interests, Blackstone or such other or subsequent holder shall succeed to such Limited Partner’s Capital Commitment Interests and shall be deemed to have become a Limited
Partner to such extent. Any Additional Partner may have a GP-Related Partner Interest or a Capital Commitment Partner Interest, without having the other such interest.
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(b) The GP-Related Profit Sharing Percentages, if
any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata
reduction in all other Partners’ GP-Related Profit Sharing Percentages as of such date, shall be
established by the General Partner pursuant to Section 5.3. The Capital Commitment Profit Sharing Percentages, if any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro
rata reduction in all other Partners’ Capital Commitment Profit Sharing Percentages as of such date, shall be established by the General Partner.
(c) An additional Partner shall be required to contribute to the Partnership his pro rata share of the Partnership’s total capital,
excluding capital in respect of GP-Related Investments and Capital Commitment Investments in which such Partner does not acquire any interests, at such times and in such amounts as shall be determined by the
General Partner in accordance with Sections 4.1 and 7.1.
(d) The admission of an additional Partner will be evidenced by (i) the
execution of a counterpart copy of, or counter-signature page with respect to, this Agreement by such additional Partner, or (ii) the execution of an amendment to this Agreement by the General Partner and the additional Partner, as determined
by the General Partner, or (iii) the execution by such additional Partner of any other writing evidencing the intent of such person to become a substitute or additional Limited Partner and to be bound by the terms of this Agreement and such
writing being accepted by the General Partner on behalf of the Partnership. In addition, each additional Partner shall sign a counterpart copy of the Trust Agreement or any other writing evidencing the intent of such person to become a party to the
Trust Agreement.
Section 6.2. Withdrawal of Partners.
(a) Any Partner may Withdraw voluntarily from the Partnership subject to the prior written consent of the General Partner. The General Partner
generally intends to permit voluntary Withdrawals on the last day of any calendar month (or on such other date as shall be determined by the General Partner in its sole discretion), on not less than 15 days’ prior written notice by such Partner
to the General Partner (or on such shorter notice period as may be mutually agreed upon between such Partner and the General Partner); provided, that a Partner may not voluntarily Withdraw without the consent of the General Partner if such
Withdrawal would (i) cause the Partnership to be in default under any of its contractual obligations or (ii) in the reasonable judgment of the General Partner, have a material adverse effect on the Partnership or its business; provided
further that a Partner may Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest without Withdrawing from the Partnership with respect to such Partner’s Capital
Commitment Partner Interest, and a Partner may Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest without Withdrawing from the Partnership with respect to such Partner’s GP-Related Partner Interest.
(b) Upon the Withdrawal of any Partner, including by the occurrence of any
withdrawal event under the Partnership Act with respect to any Partner, such Partner shall thereupon cease to be a Partner, except as expressly provided herein.
(c) Upon the Total Disability of a Limited Partner, such Partner shall thereupon cease to be a Limited Partner with respect to such
Partner’s GP-Related Partner Interest; provided, however, that the General Partner may elect to admit such Withdrawn Partner to the Partnership as a Nonvoting Limited Partner with respect to such
Partner’s GP-Related Partner Interest, with such GP- Related Partner Interest as the General Partner may determine. The determination of whether any Partner has suffered a Total Disability shall be made
by the General Partner in its sole discretion after consultation with a qualified medical doctor. In the absence of agreement between the General Partner and such Partner, each party shall nominate a qualified medical doctor and the two doctors
shall select a third doctor, who shall make the determination as to Total Disability.
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(d) If the General Partner determines that it shall be in the best interests of the
Partnership for any Partner (including any Partner who has given notice of voluntary Withdrawal pursuant to paragraph (a) above) to Withdraw from the Partnership (whether or not Cause exists) with respect to such Partner’s GP-Related Partner Interest and/or with respect to such Partner’s Capital Commitment Partner Interest, such Partner, upon written notice by the General Partner to such Partner, shall be required to Withdraw
with respect to such Partner’s GP-Related Partner Interest and/or with respect to such Partner’s Capital Commitment Partner Interest, as of a date specified in such notice, which date shall be on or
after the date of such notice. If the General Partner requires any Partner to Withdraw for Cause with respect to such Partner’s GP-Related Partner Interest and/or with respect to such Partner’s
Capital Commitment Partner Interest, such notice shall state that it has been given for Cause and shall describe the particulars thereof in reasonable detail.
(e) The Withdrawal from the Partnership of any Partner shall not, in and of itself, affect the obligations of the other Partners to continue
the Partnership during the remainder of its term. A Withdrawn General Partner shall remain liable for all obligations of the Partnership incurred while it was a General Partner and resulting from its acts or omissions as a General Partner to the
fullest extent provided by law.
Section 6.3. GP-Related Partner Interests Not
Transferable.
(a) No Partner may sell, assign, pledge or otherwise transfer or encumber all or any portion of such Partner’s GP-Related Partner Interest without the prior written consent of the General Partner; provided, that, subject to the Partnership Act, this Section 6.3 shall not impair transfers by operation of law,
transfers by will or by other testamentary instrument occurring by virtue of the death or dissolution of a Partner, or transfers required by trust agreements; provided further, that, subject to the prior written consent of the General
Partner, which shall not be unreasonably withheld, a Limited Partner may transfer, for estate planning purposes, up to 25% of his GP-Related Profit Sharing Percentage to any estate planning trust, limited
partnership or limited liability company with respect to which such Limited Partner controls investments related to any interest in the Partnership held therein (an “Estate Planning Vehicle”). Each Estate Planning Vehicle will be a
Nonvoting Limited Partner. Such Limited Partner and the Nonvoting Limited Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such Nonvoting Limited Partner with respect to the interest transferred
(including the obligation to make additional GP-Related Capital Contributions). The General Partner may at its sole option exercisable at any time require such Estate Planning Vehicle to Withdraw from the
Partnership on the terms of this Article VI. Except as provided in the second proviso to the first sentence of this Section 6.3(a), no assignee, legatee, distributee, heir or transferee (by conveyance, operation of law or otherwise) of the
whole or any portion of any Partner’s GP-Related Partner Interest shall have any right to be a General Partner or Limited Partner without the prior written consent of the General Partner (which consent
may be given or withheld in its sole discretion without giving any reason therefor). Notwithstanding the granting of a security interest in the entire partnership interest of any Partner, such Partner shall continue to be a partner of the
Partnership.
(b) Notwithstanding any provision hereof to the contrary, no sale or transfer of any
GP-Related Partner Interest in the Partnership may be made except in compliance with all Federal, State and other applicable laws, including Federal and State securities laws.
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Section 6.4. General Partner Withdrawal; Transfer of General
Partner’s Interest.
(a) The General Partner may not transfer or assign its interest as a General Partner in
the Partnership or its right to manage the affairs of the Partnership, except that the General Partner may, with the prior written approval of a Majority In Interest of the Partners admit another person as an additional or substitute General Partner
who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise); provided, however, that the General Partner may, in its sole
discretion, transfer all or part of its interest in the Partnership to a person who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise)
and who owns, directly or indirectly, the principal part of the business then conducted by the General Partner in connection with any liquidation, dissolution or reorganization of the General Partner, and, upon the assumption by such person of
liability for all the obligations of the General Partner under this Agreement, such person shall be admitted as the General Partner. A person who is so admitted as an additional or substitute General Partner shall thereby become a General Partner
and shall have the right to manage the affairs of the Partnership and to vote as a Partner to the extent of the interest in the Partnership so acquired. The General Partner shall not cease to be the general partner of the Partnership upon the
collateral assignment of or the pledging or granting of a security interest in its entire Interest in the Partnership.
(b) Except as
contemplated by clause (a) above, Withdrawal by a General Partner is not permitted. The Withdrawal of a General Partner shall not dissolve the Partnership if at the time of such Withdrawal there are one or more remaining General Partners and
any one or more of such remaining General Partners continue the business of the Partnership (any and all such remaining General Partners being hereby authorized to continue the business of the Partnership without dissolution and hereby agreeing to
do so). If upon the Withdrawal of a General Partner there shall be no remaining General Partner, the Partnership nonetheless shall not be dissolved and shall not be required to be wound up if, within 90 days after the occurrence of such event of
Withdrawal, all remaining Limited Partners (excluding Withdrawn Partners) agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such Withdrawal, of one or more General Partners.
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related
Partner Interest.
(a) The terms of this Section 6.5 shall apply to the GP-Related Partner
Interest of a Withdrawn Partner, but, except as otherwise expressly provided in this Section 6.5, shall not apply to the Capital Commitment Partner Interest of a Withdrawn Partner. For purposes of this Section 6.5, the term
“Settlement Date” means the date as of which a Withdrawn Partner’s GP-Related Partner Interest in the Partnership is settled as determined under paragraph (b) below. Notwithstanding
the foregoing, any Limited Partner who Withdraws from the Partnership, and all or any portion of whose GP-Related Partner Interest is retained as a Limited Partner, shall be considered a Withdrawn Partner for
all purposes hereof.
(b) Except where a later date for the settlement of a Withdrawn Partner’s
GP-Related Partner Interest in the Partnership may be agreed to by the General Partner and a Withdrawn Partner, a Withdrawn Partner’s Settlement Date shall be his Withdrawal Date; provided, that if
a Withdrawn Partner’s Withdrawal Date is not the last day of a month, then the General Partner may elect for such Withdrawn Partner’s Settlement Date to be the last day of the month in which his Withdrawal Date occurs. During the interval,
if any, between a Withdrawn Partner’s Withdrawal Date and Settlement Date, such Withdrawn Partner shall have the same rights and obligations with respect to GP-Related Capital Contributions, interest on
capital, allocations of GP-Related Net Income (Loss) and distributions as would have applied had such Withdrawn Partner remained a Partner of the Partnership during such period.
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(c) In the event of the Withdrawal of a Partner with respect to such Withdrawn
Partner’s GP-Related Partner Interest, the General Partner shall, promptly after such Withdrawn Partner’s Settlement Date, (i) determine and allocate to the Withdrawn Partner’s GP-Related Capital Accounts such Withdrawn Partner’s allocable share of the GP-Related Net Income (Loss) of the Partnership for the period ending on such Settlement Date
in accordance with Article V and (ii) credit the Withdrawn Partner’s GP-Related Capital Accounts with interest in accordance with Section 5.2. In making the foregoing calculations, the General
Partner shall be entitled to establish such reserves (including reserves for taxes, bad debts, unrealized losses, actual or threatened litigation or any other expenses, contingencies or obligations) as it deems appropriate. Unless otherwise
determined by the General Partner in a particular case, a Withdrawn Partner shall not be entitled to receive any GP-Related Unallocated Percentage in respect of the accounting period during which such Partner
Withdraws from the Partnership (whether or not previously awarded or allocated) or any GP-Related Unallocated Percentage in respect of prior accounting periods that have not been paid or allocated (whether or
not previously awarded) as of such Withdrawn Partner’s Withdrawal Date.
(d) From and after the Settlement Date of the Withdrawn
Partner, the Withdrawn Partner’s GP-Related Profit Sharing Percentages shall, unless otherwise allocated by the General Partner pursuant to Section 5.3(a), be deemed to be GP-Related Unallocated Percentages (except for GP-Related Profit Sharing Percentages with respect to GP-Related Investments as provided
in paragraph (f) below).
(e) (i) Upon the Withdrawal from the Partnership of a Partner with respect to such Partner’s GP-Related Partner Interest, such Withdrawn Partner thereafter shall not, except as expressly provided in this Section 6.5, have any rights of a Partner (including voting rights) with respect to such
Partner’s GP-Related Partner Interest, and, except as expressly provided in this Section 6.5, such Withdrawn Partner shall not have any interest in the Partnership’s GP-Related Net Income (Loss) or in distributions related to such Partner’s GP-Related Partner Interest, GP-Related Investments or
other assets related to such Partner’s GP-Related Partner Interest. If a Partner Withdraws from the Partnership with respect to such Partner’s GP-Related
Partner Interest for any reason other than for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be entitled to receive, at the time or times specified in Section 6.5(i) below, in satisfaction and discharge in full of the
Withdrawn Partner’s GP-Related Partner Interest in the Partnership, (x) payment equal to the aggregate credit balance, if any, as of the Settlement Date of the Withdrawn Partner’s GP-Related Capital Accounts, (excluding any GP-Related Capital Account or portion thereof attributable to any GP-Related Investment)
and (y) the Withdrawn Partner’s percentage interest attributable to each GP-Related Investment in which the Withdrawn Partner has an interest as of the Settlement Date as provided in paragraph
(f) below (which shall be settled in accordance with paragraph (f) below), subject to all the terms and conditions of paragraphs (a)-(p) of this Section 6.5. If the amount determined pursuant to clause (x) above is an aggregate
negative balance, the Withdrawn Partner shall pay the amount thereof to the Partnership upon demand by the General Partner on or after the date of the statement referred to in Section 6.5(i) below; provided, that if the Withdrawn Partner
was solely a Limited Partner (other than a Special Limited Partner) on his Withdrawal Date, such payment shall be required only to the extent of any amounts payable to such Withdrawn Partner pursuant to this Section 6.5. Any aggregate negative
balance in the GP-Related Capital Accounts of a Withdrawn Partner who was solely a Limited Partner (other than a Special Limited Partner), upon the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5, shall be allocated among the other Partners’ GP-Related Capital Accounts in accordance
with their respective GP- Related Profit Sharing Percentages in the categories of GP-Related Net Income (Loss) giving rise to such negative balance as determined by the
General Partner as of such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the Partnership, no value shall be ascribed to goodwill,
the Partnership name or the anticipation of any value the Partnership or any successor thereto might have in the event the Partnership or any interest therein were to be sold in whole or in part.
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(ii) Notwithstanding clause (i) of this Section 6.5(e), in the
case of a Partner whose Withdrawal with respect to such Partner’s GP-Related Partner Interest resulted from such Partner’s death or Incompetence, such Partner’s estate or legal representative,
as the case may be, may elect, at the time described below, to receive a Nonvoting Limited Partner GP-Related Partner Interest and retain such Partner’s GP-Related
Profit Sharing Percentage in all (but not less than all) illiquid investments of the Partnership in lieu of a cash payment (or Note) in settlement of that portion of the Withdrawn Partner’s GP-Related
Partner Interest. The election referred to above shall be made within 60 days after the Withdrawn Partner’s Settlement Date, based on a statement of the settlement of such Withdrawn Partner’s
GP-Related Partner Interest in the Partnership pursuant to this Section 6.5.
(f) For purposes
of clause (y) of paragraph (e)(i) above, a Withdrawn Partner’s “percentage interest” means his GP-Related Profit Sharing Percentage as of the Settlement Date in the relevant GP-Related Investment. The Withdrawn Partner shall retain his percentage interest in such GP- Related Investment and shall retain his
GP-Related Capital Account or portion thereof attributable to such GP-Related Investment, in which case such Withdrawn Partner (a “Retaining Withdrawn
Partner”) shall become and remain a Limited Partner for such purpose (and, if the General Partner so designates, such Limited Partner shall be a Nonvoting Limited Partner). The GP-Related Partner
Interest of a Retaining Withdrawn Partner pursuant to this paragraph (f) shall be subject to the terms and conditions applicable to GP-Related Partner Interests of any kind hereunder and such other terms
and conditions as are established by the General Partner. At the option of the General Partner in its sole discretion, the General Partner and the Retaining Withdrawn Partner may agree to have the Partnership acquire such GP-Related Partner Interest without the approval of the other Partners; provided, that the General Partner shall reflect in the books and records of the Partnership the terms of any acquisition pursuant to
this sentence.
(g) The General Partner may elect, in lieu of payment in cash of any amount payable to a Withdrawn Partner pursuant to
paragraph (e) above, to have the Partnership issue to the Withdrawn Partner a subordinated promissory note and/or to distribute in kind to the Withdrawn Partner such Withdrawn Partner’s pro rata share (as determined by the General Partner)
of any securities or other investments of the Partnership in relation to such Partner’s GP-Related Partner Interest. If any securities or other investments are distributed in kind to a Withdrawn Partner
under this paragraph (g), the amount described in clause (x) of paragraph (e)(i) shall be reduced by the value of such distribution as valued on the latest balance sheet of the Partnership in accordance with generally accepted accounting
principles or, if not appearing on such balance sheet, as reasonably determined by the General Partner.
(h) [Intentionally omitted].
(i) Within 120 days after each Settlement Date, the General Partner shall submit to the Withdrawn Partner a statement of the settlement of such
Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5 together with any cash payment, subordinated promissory note and in kind distributions to be made to
such Partner as shall be determined by the General Partner. The General Partner shall submit to the Withdrawn Partner supplemental statements with respect to additional amounts payable to or by the Withdrawn Partner in respect of the settlement of
his GP-Related Partner Interest in the Partnership (e.g., payments in respect of GP-Related Investments pursuant to paragraph (f) above or adjustments to
reserves pursuant to paragraph (j) below) promptly after such amounts are determined by the General Partner. To the fullest extent permitted by law, such statements and the valuations on which they are based shall be accepted by the Withdrawn
Partner without examination of the accounting books and records of the Partnership or other inquiry. Any amounts payable by the Partnership to a Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in right of payment and subject
to the prior payment or provision for payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters
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occurring prior to the applicable date of payment or distribution; provided that such Withdrawn Partner shall otherwise rank pari passu in right of payment (x) with all persons who
become Withdrawn Partners and whose Withdrawal Date is within one year before the Withdrawal Date of the Withdrawn Partner in question and (y) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year after the
Withdrawal Date of the Withdrawn Partner in question.
(j) If the aggregate reserves established by the General Partner as of the
Settlement Date in making the foregoing calculations should prove, in the determination of the General Partner, to be excessive or inadequate, the General Partner may elect, but shall not be obligated, to pay the Withdrawn Partner or his estate such
excess, or to charge the Withdrawn Partner or his estate such deficiency, as the case may be.
(k) Any amounts owed by the Withdrawn
Partner to the Partnership at any time on or after the Settlement Date (e.g., outstanding Partnership loans or advances to such Withdrawn Partner) shall be offset against any amounts payable or distributable by the Partnership to the Withdrawn
Partner at any time on or after the Settlement Date or shall be paid by the Withdrawn Partner to the Partnership, in each case as determined by the General Partner. All cash amounts payable by a Withdrawn Partner to the Partnership under this
Section 6.5 shall bear interest from the due date to the date of payment at a floating rate equal to the lesser of (x) the rate of interest publicly announced from time to time by JPMorgan Chase Bank, N.A., as its prime rate or
(y) the maximum rate of interest permitted by applicable law. The “due date” of amounts payable by a Withdrawn Partner pursuant to Section 6.5(i) above shall be 120 days after a Withdrawn Partner’s Settlement Date. The
“due date” of amounts payable to or by a Withdrawn Partner in respect of GP-Related Investments for which the Withdrawn Partner has retained a percentage interest in accordance with paragraph
(f) above shall be 120 days after realization with respect to such GP-Related Investment. The “due date” of any other amounts payable by a Withdrawn Partner shall be 60 days after the date such
amounts are determined to be payable.
(l) At the time of the settlement of any Withdrawn Partner’s
GP-Related Partner Interest in the Partnership pursuant to this Section 6.5, the General Partner may, to the fullest extent permitted by applicable law, impose any restrictions it deems appropriate on the
assignment, pledge, encumbrance or other transfer by such Withdrawn Partner of any interest in any GP-Related Investment retained by such Withdrawn Partner, any securities or other investments distributed in
kind to such Withdrawn Partner or such Withdrawn Partner’s right to any payment from the Partnership.
(m) If a Partner is required to
Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest for Cause pursuant to Section 6.2(d), then his GP-Related Partner
Interest shall be settled in accordance with paragraphs (a)-(r) of this Section 6.5; provided, however, that the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such
settlement:
(i) In settling the Withdrawn Partner’s interest in any
GP-Related Investment in which he has an interest as of his Settlement Date, the General Partner may elect to (A) determine the GP-Related Unrealized Net Income
(Loss) attributable to each such GP-Related Investment as of the Settlement Date and allocate to the appropriate GP-Related Capital Account of the Withdrawn Partner his
allocable share of such GP-Related Unrealized Net Income (Loss) for purposes of calculating the aggregate balance of such Withdrawn Partner’s GP-Related Capital
Account pursuant to clause (x) of paragraph (e)(i) above, (B) credit or debit, as applicable, the Withdrawn Partner with the balance of his GP-Related Capital Account or portion thereof attributable
to each such GP-Related Investment as of his Settlement Date without giving effect to the GP-Related Unrealized Net Income (Loss) from such GP-Related Investment as of his Settlement Date, which shall be forfeited by the Withdrawn Partner or (C) apply the provisions of
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paragraph (f) above, provided, that the maximum amount of GP-Related Net Income (Loss) allocable to such Withdrawn Partner with respect to any GP-Related Investment shall equal such Partner’s percentage interest of the GP-Related Unrealized Net Income, if any, attributable to such
GP-Related Investment as of the Settlement Date (the balance of such GP-Related Net Income (Loss), if any, shall be allocated as determined by the General Partner). The
Withdrawn Partner shall not have any continuing interest in any GP-Related Investment to the extent an election is made pursuant to (A) or (B) above.
(ii) Any amounts payable by the Partnership to the Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in
right of payment and subject to the prior payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to or on or after the applicable date of payment or
distribution.
(n) The payments to a Withdrawn Partner pursuant to this Section 6.5 may be conditioned on the compliance by such
Withdrawn Partner with any lawful and reasonable (under the circumstances) restrictions against engaging or investing in a business competitive with that of the Partnership or any of its subsidiaries and Affiliates for a period not exceeding two
years determined by the General Partner. Upon written notice to the General Partner, any Withdrawn Partner who is subject to noncompetition restrictions established by the General Partner pursuant to this paragraph (o) may elect to forfeit the
principal amount payable in the final installment of his subordinated promissory note, together with interest to be accrued on such installment after the date of forfeiture, in lieu of being bound by such restrictions.
(o) In addition to the foregoing, the General Partner shall have the right to pay a Withdrawn Partner (other than the General Partner) a
discretionary additional payment in an amount and based upon such circumstances and conditions as it determines to be relevant. The provisions of this Section 6.5 shall apply to any Investor Limited Partner relating to another Limited Partner,
and to any transferee of any GP-Related Partner Interest of such Partner pursuant to Section 6.3, if such Partner Withdraws from the Partnership.
(p) (i) The Partnership will assist a Withdrawn Partner or his estate or guardian, as the case may be, in the settlement of the Withdrawn
Partner’s GP-Related Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his estate.
(ii) The Partnership may reasonably determine in good faith to retain outside professionals to provide the assistance to Withdrawn Partners or
their estates or guardians, as referred to above. In such instances, the Partnership will obtain the prior approval of a Withdrawn Partner or his estate or guardian, as the case may be, prior to engaging such professionals. If the Withdrawn Partner
(or his estate or guardian) declines to incur such costs, the Partnership will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s
day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(q) Each Partner (other than the General Partner) hereby irrevocably appoints the General Partner as such Partner’s true and lawful agent,
representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Partner, any and
all agreements, instruments, consents, ratifications, documents and certificates which the General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this Section 6.5, including,
without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force
and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
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Section 6.6. Termination of the Partnership. The General Partner may dissolve
the Partnership at any time on not less than 60 days’ notice of the dissolution date given to the other Partners. Upon the dissolution of the Partnership, the Partners’ respective interests in the Partnership shall be valued and settled in
accordance with the procedures set forth in Sections, 6.5, which provide for allocations to the GP-Related Capital Accounts of the Partners and distributions in accordance with the capital account balances of
the Partners.
Section 6.7. Certain Tax Matters. i. All items of income, gain, loss, deduction and credit of the Partnership
shall be allocated among the Partners for Federal, State and local income tax purposes in the same manner as such items of income, gain, loss, deduction and credit shall be allocated among the Partners pursuant to this Agreement, except as may
otherwise be provided herein or by the Code or other applicable law. To the extent U.S. Treasury Regulations promulgated pursuant to Subchapter K of the Code (including under Sections 704(b) and (c) of the Code) or other applicable law require
allocations for tax purposes that differ from the foregoing allocations, the General Partner may determine the manner in which such tax allocations shall be made so as to comply more fully with such Treasury Regulations or other applicable law and,
at the same time, preserve the economic relationships among the Partners as set forth in this Agreement. In the event there is a net decrease in partnership minimum gain or partner nonrecourse debt minimum gain (determined in accordance with the
principles of Regulations Sections 1.704-2(d) and 1.704-2(i)) during any taxable year of the Partnership, each Partner shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years) in an amount equal to its respective share of such net decrease during such year, determined pursuant to Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(f). In addition, this Agreement shall be considered to
contain a “qualified income offset” as provided in Regulations Section 1.704- 1(b)(2)(ii)(d).
(a) The General Partner shall cause to be prepared all Federal, State and local tax returns of the Partnership for each year for which such
returns are required to be filed and, after approval of such returns by the General Partner, shall cause such returns to be timely filed. The General Partner shall determine the appropriate treatment of each item of income, gain, loss, deduction and
credit of the Partnership and the accounting methods and conventions under the tax laws of the United States, the several States and other relevant jurisdictions as to the treatment of any such item or any other method or procedure related to the
preparation of such tax returns. The General Partner may cause the Partnership to make or refrain from making any and all elections permitted by such tax laws. Each Partner agrees that he shall not, unless he provides prior notice of such action to
the Partnership, (i) treat, on his individual income tax returns, any item of income, gain, loss, deduction or credit relating to his interest in the Partnership in a manner inconsistent with the treatment of such item by the Partnership as
reflected on the Form K-1 or other information statement furnished by the Partnership to such Partner for use in preparing his income tax returns or (ii) file any claim for refund relating to any such
item based on, or which would result in, such inconsistent treatment. In respect of an income tax audit of any tax return of the Partnership, the filing of any amended return or claim for refund in connection with any item of income, gain, loss,
deduction or credit reflected on any tax return of the Partnership, or any administrative or judicial proceedings arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, (A) the Tax Matters
Partner (as defined below) shall be authorized to act for, and his decision shall be final and binding upon, the Partnership and all Partners except to the extent a Partner shall properly elect to be excluded from such proceeding pursuant to the
Code, (B) all expenses incurred by the Tax Matters Partner in connection therewith (including, without limitation, attorneys’, accountants’
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and other experts’ fees and disbursements) shall be expenses of the Partnership and (C) no Partner shall have the right to (1) participate in the audit of any Partnership tax
return, (2) file any amended return or claim for refund in connection with any item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership (unless he provides prior notice of such action to the Partnership as
provided above), (3) participate in any administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, or
(4) appeal, challenge or otherwise protest any adverse findings in any such audit conducted by the Partnership or the Tax Matters Partner or with respect to any such amended return or claim for refund filed by the Partnership or the Tax Matters
Partner or in any such administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner. The Partnership and each Partner hereby designate any Partner selected by the General Partner as the “tax matters
partner” for purposes of Section 6231(a)(7) of the Code (the “Tax Matters Partner”). To the fullest extent permitted by applicable law, each Partner agrees to indemnify and hold harmless the Partnership and all other
Partners from and against any and all liabilities, obligations, damages, deficiencies and expenses resulting from any breach or violation by such Partner of the provisions of this Section 6.8 and from all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including reasonable attorneys’ fees and disbursements, incident to any such breach or violation.
(b) Each individual Partner shall provide to the Partnership copies of each Federal, State and local income tax return of such Partner
(including any amendment thereof) within 30 days after filing such return.
Section 6.8. Special Basis Adjustments. In
connection with any assignment or transfer of a Partnership interest permitted by the terms of this Agreement, the General Partner may cause the Partnership, on behalf of the Partners and at the time and in the manner provided in Code Regulations Section 1.754-1(b), to make an election to adjust the basis of the Partnership’s property in the manner provided in Sections 734(b) and 743(b) of the Code.
ARTICLE VII
CAPITAL COMMITMENT
INTERESTS; CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
Section 7.1. Capital Commitment Interests, etc.
(a) (i) This Article VII and Article VIII hereof set forth certain terms and conditions with respect to the Capital Commitment Partner
Interests and the Capital Commitment SP VII Interest and matters related to the Capital Commitment Partner Interests and the Capital Commitment SP VII Interest. Except as otherwise expressly provided in this Article VII or in Article VIII, the terms
and provisions of this Article VII and Article VIII shall not apply to the GP-Related Partner Interests or the GP-Related SP VII Interest.
(ii) Each Partner severally, agrees to make contributions of capital to the Partnership (“Capital Commitment-Related
Capital Contributions”) as required to fund the Partnership’s direct or indirect capital contributions to SP VII, in respect of the Capital Commitment SP VII Interest, if any, and the related Capital Commitment SP VII Commitment, if
any. No Partner shall be obligated to make Capital Commitment-Related Capital Contributions to the Partnership in an amount in excess of such Partner’s Capital Commitment-Related Commitment. The Commitment Agreements and SMD Agreements, if any,
of the Partners may include provisions with respect to the foregoing matters. It is understood that a Partner will not
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necessarily participate in each Capital Commitment Investment (which may include additional amounts invested in an existing Capital Commitment Investment) nor will a Partner necessarily have the
same Capital Commitment Profit Sharing Percentage with respect to (i) the Partnership’s portion of the Capital Commitment SP VII Commitment, if any, or (ii) the making of each Capital Commitment Investment in which such Partner
participates; provided, that this in no way limits the terms of any Commitment Agreement or SMD Agreement. In addition, nothing contained herein shall be construed to give any Partner the right to obtain financing with respect to the purchase
of any Capital Commitment Interest, and nothing contained herein shall limit or dictate the terms upon which the General Partner and its Affiliates may provide such financing. The acquisition of a Capital Commitment Interest by a Partner shall be
evidenced by receipt by the Partnership of funds equal to such Partner’s Capital Commitment-Related Commitment then due with respect to such Capital Commitment Interest and such appropriate documentation as the General Partner may submit to the
Partners from time to time.
(b) The General Partner or one of its Affiliates (in such capacity, the “Advancing Party”)
may in its sole discretion advance to any Limited Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are also executive officers of The Blackstone Group L.P. or any
Affiliate thereof) all or any portion of the Capital Commitment-Related Capital Contributions due to the Partnership from such Limited Partner with respect to any Capital Commitment Investment (“Firm Advances”). Each such Limited
Partner shall pay to the Advancing Party interest on each Firm Advance from the date of such Firm Advance until the repayment thereof by such Limited Partner. Each Firm Advance shall be repayable in full, including accrued interest to the date of
such repayment, upon prior written notice by the Advancing Party. The making and repayment of each Firm Advance shall be recorded in the books and records of the Partnership, and such recording shall be conclusive evidence of each such Firm Advance,
binding on the Limited Partner and the Advancing Party absent manifest error. Except as provided below, the interest rate applicable to a Firm Advance shall equal the cost of funds of the Advancing Party at the time of the making of such Firm
Advance. The Advancing Party shall inform any Limited Partner of such rate upon such Limited Partner’s request; provided, that such interest rate shall not exceed the maximum interest rate allowable by applicable law; provided
further, that amounts that are otherwise payable to such Limited Partner pursuant to Section 7.4(a) shall be used to repay such Firm Advance (including interest thereon). The Advancing Party may, in its sole discretion, change the terms of
Firm Advances (including the terms contained herein) and/or discontinue the making of Firm Advances; provided, that (i) the Advancing Party shall notify the relevant Limited Partners of any material changes to such terms and
(ii) the interest rate applicable to such Firm Advances and overdue amounts thereon shall not exceed the maximum interest rate allowable by applicable law.
Section 7.2. Capital Commitment Capital Accounts.
(a) There shall be established for each Partner on the books of the Partnership as of the date of formation of the Partnership, or such later
date on which such Partner is admitted to the Partnership, and on each such other date as such Partner first acquires a Capital Commitment Interest in a particular Capital Commitment Investment, a Capital Commitment Capital Account for each Capital
Commitment Investment in which such Partner acquires a Capital Commitment Interest on such date. Each Capital Commitment-Related Capital Contribution of a Partner shall be credited to the appropriate Capital Commitment Capital Account of such
Partner on the date such Capital Commitment-Related Capital Contribution is paid to the Partnership. Capital Commitment Capital Accounts shall be adjusted to reflect any transfer of a Partner’s interest in the Partnership related to his Capital
Commitment Partner Interest, as provided in this Agreement.
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(b) A Partner shall not have any obligation to the Partnership or to any other Partner to
restore any negative balance in the Capital Commitment Capital Account of such Partner. Until distribution of any such Partner’s interest in the Partnership with respect to a Capital Commitment Interest as a result of the disposition by the
Partnership of the related Capital Commitment Investment and in whole upon the dissolution of the Partnership, neither such Partner’s Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption except
with the consent of the General Partner.
Section 7.3. Allocations.
(a) Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be allocated to the related Capital
Commitment Capital Accounts of all the Partners (including the General Partner) participating in such Capital Commitment Investment in proportion to their respective Capital Commitment Profit Sharing Percentages for such Capital Commitment
Investment. Capital Commitment Net Income (Loss) on any Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion which such Partner’s aggregate Capital Commitment Capital Accounts bear to the aggregate
Capital Commitment Capital Accounts of all Partners; provided, that if any Partner makes the election provided for in Section 7.6, Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be
allocated to the related Capital Commitment Capital Accounts of all the Partners participating in such Capital Commitment Investment who do not make such election in proportion to their respective Capital Commitment Profit Sharing Percentages for
such Capital Commitment Investment.
(b) Any special costs relating to distributions pursuant to Section 7.6 or 7.7 shall be specially
allocated to the electing Limited Partner.
Section 7.4. Distributions.
(a) Each Limited Partner’s allocable portion of Capital Commitment Net Income received from his Capital Commitment Investments,
distributions to such Limited Partner that constitute returns of capital, and other Capital Commitment Net Income of the Partnership (including without limitation Capital Commitment Net Income attributable to Unallocated Capital Commitment
Interests) during a fiscal year of the Partnership will be credited to payment of the Investor Notes to the extent required below as of the last day of such fiscal year (or on such earlier date as related distributions are made in the sole
discretion of the General Partner) with any cash amount distributable to such Limited Partner pursuant to clauses (ii) and (vii) below to be distributed within 45 days after the end of each fiscal year of the Partnership (or in each case on
such earlier date as selected by the General Partner in its sole discretion) as follows (subject to Section 7.4(c) below):
(i) First, to the payment of interest then due on all Investor Notes (relating to Capital Commitment Investments or otherwise)
of such Limited Partner (to the extent Capital Commitment Net Income and distributions or payments from Other Sources do not equal or exceed all interest payments due, the selection of those of such Limited Partner’s Investor Notes upon which
interest is to be paid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor);
(ii) Second, to distribution to the Limited Partner of an amount equal to the Federal, State and local income taxes on income
of the Partnership allocated to such Limited Partner for such year in respect of such Limited Partner’s Capital Commitment Partner Interest (the aggregate amount of any such distribution shall be determined by the General Partner, subject to
the limitation that the minimum aggregate amount of such distribution be the tax that would be
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payable if the taxable income of the Partnership related to all Partners’ Capital Commitment Partner Interests were all allocated to an individual subject to the then-prevailing maximum
Federal, New York State and New York City tax rates (taking into account the extent to which such taxable income allocated by the Partnership was composed of long-term capital gains and the deductibility of State and local income taxes for Federal
income tax purposes)); provided, that additional amounts shall be paid to the Limited Partner pursuant to this clause (ii) to the extent that such amount reduces the amount otherwise distributable to the Limited Partner pursuant to a comparable
provision in any other BCE Agreement and there are not sufficient amounts to fully satisfy such provision from the relevant partnership or other entity; provided further, that amounts paid pursuant to the provisions in such other BCE Agreements
comparable to the immediately preceding proviso shall reduce those amounts otherwise distributable to the Limited Partner pursuant to provisions in such other BCE Agreements that are comparable to this clause (ii);
(iii) Third, to the payment in full of the principal amount of the Investor Note financing (A) any Capital Commitment
Investment disposed of during or prior to such fiscal year or (B) any BCE Investments (other than Capital Commitment Investments) disposed of during or prior to such fiscal year, to the extent not repaid from Other Sources;
(iv) Fourth, to the return to such Limited Partner of (A) all Capital Commitment-Related Capital Contributions made in
respect of the Capital Commitment Interest to which any Capital Commitment Investment disposed of during or prior to such fiscal year relates or (B) all capital contributions made to any Blackstone Collateral Entity (other than the Partnership)
in respect of interests therein relating to BCE Investments (other than Capital Commitment Investments) disposed of during or prior to such fiscal year (including all principal paid on the related Investor Notes), to the extent not repaid from
amounts of Other Sources (other than amounts of CC Carried Interest);
(v) Fifth, to the payment of principal (including
any previously deferred amounts) then owing under all other Investor Notes of such Limited Partner (including those unrelated to the Partnership), the selection of those of such Limited Partner’s Investor Notes to be repaid and the division of
payments among such Investor Notes to be determined by the Lender or Guarantor;
(vi) Sixth, up to 50% of any Capital
Commitment Net Income remaining after application pursuant to clauses (i) through (v) above shall be applied pro rata to prepayment of principal of all remaining Investor Notes of such Limited Partner (including those unrelated to the
Partnership), the selection of those of such Limited Partner’s Investor Notes to be repaid, the division of payments among such Investor Notes and the percentage of remaining Capital Commitment Net Income to be applied thereto to be determined
by the Lender or Guarantor; and
(vii) Seventh, to such Limited Partner to the extent of any amount of Capital Commitment
Net Income remaining after making the distributions in clauses (i) through (vi) above, and such amount is not otherwise required to be applied to Investor Notes pursuant to the terms thereof.
To the extent there is a partial disposition of a Capital Commitment Investment or any other BCE Investment, as applicable, the payments in
clauses (iii) and (iv) above shall be based on that portion of the Capital Commitment Investment or other BCE Investment, as applicable, disposed of, and the principal amount and related interest payments of such Investor Note shall be adjusted
to reflect such partial payment so that there are equal payments over the remaining term of the related Investor Note. For a Limited Partner who is no longer an employee or officer of Blackstone, distributions shall be made
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pursuant to clauses (i) through (iii) above, and then, unless the General Partner or its Affiliate has exercised its rights pursuant to Section 8.1 hereof, any remaining income or other
distribution in respect of such Limited Partner’s Capital Commitment Partner Interest shall be applied to the prepayment of the outstanding Investor Notes of such Limited Partner, until all such Limited Partner’s Investor Notes have been
repaid in full, with any such income or other distribution remaining thereafter distributed to such Limited Partner.
Distributions of
Capital Commitment Net Income may be made at any other time at the discretion of the General Partner. At the General Partner’s discretion, any amounts distributed to a Limited Partner in respect of such Limited Partner’s Capital Commitment
Partner Interest will be net of any interest and principal payable on his Investor Notes for the full period in respect of which the distribution is made. A distribution of Capital Commitment Net Income to the General Partner shall be made
contemporaneously with each distribution of Capital Commitment Net Income to or for the accounts of the Limited Partners.
(b)
[Intentionally omitted]
(c) To the extent that the foregoing Partnership distributions and distributions and payments from Other Sources
are insufficient to satisfy any principal and/or interest due on Investor Notes, and to the extent that the General Partner in its sole discretion elects to apply this paragraph (c) to any individual payments due, such unpaid interest will be
added to the remaining principal amount of such Investor Notes and shall be payable on the next scheduled principal payment date (along with any deferred principal and any principal and interest due on such date); provided, that such deferral
shall not apply to a Limited Partner that is no longer an employee or officer of Blackstone. All unpaid interest on such Investor Notes shall accrue interest at the interest rate then in effect for such Investor Notes.
(d) [Intentionally omitted.]
(e)
The Capital Commitment Capital Account of each Partner shall be reduced by the amount of any distribution to such Partner pursuant to paragraph (a) of this Section 7.4.
(f) At any time that a sale, exchange, transfer or other disposition of a portion of a Capital Commitment Investment is being considered by the
Partnership or SP VII (a “Capital Commitment Disposable Investment”), at the election of the General Partner each Partner’s Capital Commitment Interest with respect to such Capital Commitment Investment shall be vertically
divided into two separate Capital Commitment Interests, a Capital Commitment Interest attributable to the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class B Interest”), and a
Capital Commitment Interest attributable to such Capital Commitment Investment excluding the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class A Interest”). Distributions
(including those resulting from a direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class B Interests
with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class B Interests, and distributions (including those resulting from the
direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Investment excluding such Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class A
Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class A Interests.
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(g) (i) If the Partnership) is obligated under the Giveback Provisions to contribute to
SP VII all or a portion of a Giveback Amount with respect to the Capital Commitment SP VII Interest (the amount of any such obligation of the Partnership being herein called a “Capital Commitment Giveback Amount”), the Partnership
shall call for such amounts as are necessary to satisfy such obligation of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the
Partnership, such an amount of prior distributions by the Partnership with respect to the Capital Commitment SP VII Interest (the “Capital Commitment Recontribution Amount”) which equals such Partner’s pro rata share of prior
distributions in connection with (a) the Capital Commitment SP VII Investment giving rise to the Capital Commitment Giveback Amount, or (b) if the amounts contributed pursuant to clause (a) above are insufficient to satisfy such
Capital Commitment Giveback Amount, Capital Commitment SP VII Investments other than the one giving rise to such obligation. Each Partner shall promptly contribute to the Partnership upon notice thereof such Partner’s Capital Commitment
Recontribution Amount. Prior to such time, the Partnership may, in the General Partner’s discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of the
Capital Commitment Giveback Amount will probably materialize (and an estimate of the aggregate amount of such obligations).
(ii) (A)In the event any Partner (a “Capital Commitment Defaulting Party”) fails to recontribute all or any
portion of such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount for any reason, the Partnership shall require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their
respective Capital Commitment Profit Sharing Percentages), such amounts as are necessary to fulfill the Capital Commitment Defaulting Party’s obligation to pay such Capital Commitment Defaulting Party’s Capital Commitment Recontribution
Amount (a “Capital Commitment Deficiency Contribution”) if the General Partner determines in its good faith judgment that the Partnership will be unable to collect such amount in cash from such Capital Commitment Defaulting Party
for payment of the Capital Commitment Giveback Amount at least 20 Business Days prior to the latest date that the Partnership is permitted to pay the Capital Commitment Giveback Amount; provided, that no Partner shall as a result of such
Capital Commitment Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Capital Commitment Recontribution Amount initially requested from such Partner in respect of such default. Thereafter, the General
Partner shall determine in its good faith judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the
good faith judgment of the General Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership against the Capital Commitment Defaulting Party, the cost of which shall be a Partnership expense to the extent not
ultimately reimbursed by the Capital Commitment Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such Capital Commitment Defaulting Party becoming a Capital Commitment Defaulting Party) to set-off as appropriate and apply against such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount any amounts otherwise payable to the Capital Commitment Defaulting Party by the
Partnership or any Affiliate thereof. Each Partner hereby grants to the Partnership a security interest, effective upon such Partner becoming a Capital Commitment Defaulting Party, in all accounts receivable and other rights to receive payment from
the Partnership or any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the Partnership may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner hereby
appoints the Partnership as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or in the name of the
Partnership, to take any actions which may be necessary to accomplish the intent of the immediately preceding sentence. The Partnership shall be entitled to collect interest on the Capital Commitment Recontribution Amount of a Capital Commitment
Defaulting Party from the date such Capital Commitment Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
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(B) Any Partner’s failure to make a Capital Commitment Deficiency
Contribution shall cause such Partner to be a Capital Commitment Defaulting Party with respect to such amount.
(iii) A Partner’s
obligation to make contributions to the Partnership under this Section 7.4(g) shall survive the termination of the Partnership.
Section 7.5. Valuations. Capital Commitment Investments shall be valued annually as of the end of each year (and at such other
times as deemed appropriate by the General Partner) in accordance with the principles utilized by the Partnership (or any Affiliate of the Partnership that is a general partner of SP VII) in valuing investments of SP VII or, in the case of
investments not held by SP VII, in the good faith judgment of the General Partner, subject in each case to the second proviso of the immediately succeeding sentence. The value of any Capital Commitment Interest as of any date (the “Capital
Commitment Value”) shall be based on the value of the underlying Capital Commitment Investment as set forth above; provided, that the Capital Commitment Value may be determined as of an earlier date if determined appropriate by the
General Partner in good faith; provided further, that such value may be adjusted by the General Partner to take into account factors relating solely to the value of a Capital Commitment Interest (as compared to the value of the underlying
Capital Commitment Investment), such as restrictions on transferability, the lack of a market for such Capital Commitment Interest and lack of control of the underlying Capital Commitment Investment. To the full extent permitted by applicable law
such valuations shall be final and binding on all Partners; provided further, that the immediately preceding proviso shall not apply to any Capital Commitment Interests held by a person who is or was at any time a direct member of a General
Partner.
Section 7.6. Disposition Election.
(a) At any time prior to the date of the Partnership’s execution of a definitive agreement to dispose of a Capital Commitment Investment,
the General Partner may in its sole discretion permit a Partner to retain all or any portion of its pro rata share of such Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such Capital
Commitment Investment). If the General Partner so permits, such Partner shall instruct the General Partner in writing prior to such date (i) not to dispose of all or any portion of such Partner’s pro rata share of such Capital Commitment
Investment (the “Retained Portion”) and (ii) either to (A) distribute such Retained Portion to such Partner on the closing date of such disposition or (B) retain such Retained Portion in the Partnership on behalf of
such Partner until such time as such Partner shall instruct the General Partner upon 5 days notice to distribute such Retained Portion to such Partner. Such Partner’s Capital Commitment Capital Account shall not be adjusted in any way to
reflect the retention in the Partnership of such Retained Portion or the Partnership’s disposition of other Partners’ pro rata shares of such Capital Commitment Investment; provided, that such Partner’s Capital Commitment
Capital Account shall be adjusted upon distribution of such Retained Portion to such Partner or upon distribution of proceeds with respect to a subsequent disposition thereof by the Partnership.
(b) No distribution of such Retained Portion shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or
simultaneously with such distribution.
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Section 7.7. Capital Commitment Special Distribution Election.
(a) From time to time during the term of this Agreement, the General Partner may in its sole discretion, upon receipt of a written request from
a Partner, distribute to such Partner any portion of its pro rata share of a Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such Capital Commitment Investment) (a “Capital
Commitment Special Distribution”). Such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Capital Commitment Special Distribution.
(b) No Capital Commitment Special Distributions shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or
simultaneously with such Capital Commitment Special Distribution.
ARTICLE VIII
WITHDRAWAL; ADMISSION OF NEW PARTNERS
Section 8.1. Limited Partner Withdrawal; Repurchase of Capital Commitment Interests.
(a) Capital Commitment Interests (or a portion thereof) that were financed by Investor Notes will be treated as not subject to repurchase for
purposes hereof based upon the proportion of (a) the sum of Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to each Capital Commitment Interest and principal payments on the related Investor Note
to (b) the sum of the Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to such Capital Commitment Interest, the original principal amount of such Investor Note and all deferred amounts of interest which
from time to time comprise part of the principal amount of the Investor Note. A Limited Partner may prepay a portion of any outstanding principal on the Investor Notes; provided, that in the event that a Limited Partner prepays all or any
portion of the principal amount of the Investor Notes within nine months prior to the date on which such Limited Partner is no longer an employee or officer of Blackstone, the Partnership (or its designee) shall have the right, in its sole
discretion, to purchase the Capital Commitment Interest that became Non-Contingent as a result of such prepayment; provided further, that the purchase price for such Capital Commitment Interest shall be
determined in accordance with the determination of the purchase price of a Limited Partner’s Contingent Capital Commitment Interests as set forth in paragraph (b) below. Prepayments made by a Limited Partner shall apply pro rata against
all of such Limited Partner’s Investor Notes; provided, that such Limited Partner may request that such prepayments be applied only to Investor Notes related to BCE Investments that are related to one or more Blackstone Collateral
Entities specified by such Limited Partner. Except as expressly provided herein, Capital Commitment Interests that were not financed in any respect with Investor Notes shall be treated as Non-Contingent
Capital Commitment Interests.
(b) Upon a Limited Partner ceasing to be an officer or employee of the General Partner or any of its
Affiliates, other than as a result of such Limited Partner dying or suffering a Total Disability, such Limited Partner (the “Withdrawn Partner”) and the Partnership or any other person designated by the General Partner shall each
have the right (exercisable by the Withdrawn Partner within 30 days and by the Partnership or its designee(s) within 45 days of such Limited Partner’s ceasing to be such an officer or employee) or any time thereafter, upon 30 days notice, but
not the obligation, to require the Partnership, subject to the Partnership Act, to buy (in the case of exercise of such right by such Withdrawn Partner) or the Withdrawn Partner to sell (in the case of exercise of such right by the Partnership or
its designee(s)) all (but not less than all) such Withdrawn Partner’s Contingent Capital Commitment Interests. The purchase price for each such Contingent Capital Commitment Interest will be an amount equal to (i) the outstanding principal
amount of the related Investor Note plus accrued interest thereon to the date of purchase (such portion of the purchase price to be made in cash) and (ii) an additional amount (the “Adjustment Amount”) equal to (x) all
interest paid by the Limited Partner on the
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portion of the principal amount of the Investor Note relating to the portion of the related Capital Commitment Interest remaining Contingent plus (y) all Capital Commitment Net Losses
allocated to the Withdrawn Partner on the Contingent portion of such Capital Commitment Interest minus (z) all Capital Commitment Net Income allocated to the Withdrawn Partner on the Contingent portion of such Capital Commitment Interest;
provided, that, if the Withdrawn Partner was terminated from employment or his position as an officer for Cause, the amounts referred to in clause (x) or (y) of the Adjustment Amount, in the General Partner’s sole discretion, may be
deemed to equal zero. The Adjustment Amount shall, if positive, be payable by the holders of the purchased Capital Commitment Interests to the Withdrawn Partner from the next Capital Commitment Net Income received by such holders on the Contingent
portion of such Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received. If the Adjustment Amount resulting from an exchange is negative, it shall be payable to the holders of the purchased
Capital Commitment Interest by the Withdrawn Partner at the time such Capital Commitment Net Income is received by the Withdrawn Partner from the next Capital Commitment Net Income on the Non-Contingent
portion of the Withdrawn Partner’s Capital Commitment Interests or, if the Partnership or its designee(s) elect to purchase such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, in
cash by the Withdrawn Partner at the time of such purchase; provided, that the General Partner and its Affiliates may offset any amounts otherwise owing to a Withdrawn Partner against any Adjustment Amount owed by such Withdrawn Partner.
Until so paid, such remaining Adjustment Amount will not itself bear interest. At the time of such purchase of the Withdrawn Partner’s Contingent Capital Commitment Interests, his related Investor Note shall be payable in full. If neither the
Withdrawn Partner nor the Partnership nor its designee(s) exercise the right to require repurchase of such Contingent Capital Commitment Interests, then the Withdrawn Partner shall retain the Contingent portion of his Capital Commitment Interests
and the Investor Notes shall remain outstanding, shall become fully recourse to the Withdrawn Partner in his individual capacity, shall be payable in accordance with their remaining original maturity schedules and shall be prepayable at any time by
the Withdrawn Partner at his option, and the General Partner shall apply such prepayments against outstanding Investor Notes on a pro rata basis. To the extent that another Partner purchases a portion of a Capital Commitment Interest of a Withdrawn
Partner, the purchasing Partner’s Capital Commitment Capital Account and Capital Commitment Profit Sharing Percentage for such Capital Commitment Investment shall be correspondingly increased.
(c) Upon the occurrence of a Final Event with respect to any Limited Partner, such Limited Partner shall thereupon cease to be a Partner with
respect to such Limited Partner’s Capital Commitment Partner Interest. If such a Final Event shall occur, no Successor in Interest to any such Limited Partner shall for any purpose hereof become or be deemed to become a Partner. The sole right,
as against the Partnership and the remaining Partners, acquired hereunder by, or resulting hereunder to, a Successor in Interest to any Partner shall be to receive any distributions and allocations with respect to such Limited Partner’s Capital
Commitment Partner Interest pursuant to Article VII and this Article VIII, subject to the right of the Partnership to purchase the Capital Commitment Interests of such former Partner pursuant to Section 8.1(b) or Section 8.1(d)) to the
extent, at the time, in the manner and in the amount otherwise payable to such Limited Partner had such a Final Event not occurred, and no other right shall be acquired hereunder by, or shall result hereunder to, a Successor in Interest to such
Partner, whether by operation of law or otherwise. Until distribution of any such Partner’s interest in the Partnership upon the dissolution of the Partnership as provided in Section 9.2, neither his Capital Commitment Capital Accounts nor
any part thereof shall be subject to withdrawal or redemption without the consent of the General Partner. The Partnership shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and
allocations hereunder with respect to such Partner’s Capital Commitment Partner Interest.
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(d) If a Limited Partner dies or suffers a Total Disability, all Contingent Capital
Commitment Interests of such Partner shall be purchased by the Partnership or its designee (within 30 days of the first date on which the Partnership knows or has reason to know of such Limited Partner’s death or Total Disability) as provided
in Section 8.1(b) (except that any Adjustment Amount shall be payable by or to the estate or personal representative in cash), and any Investor Notes financing such Contingent Capital Commitment Interests shall thereupon be prepaid as provided
in Section 8.1(b). In addition, in the case of the death or Total Disability of a Limited Partner, if the estate or personal representative of such Limited Partner so requests in writing within 180 days of the Limited Partner’s death or
ceasing to be an employee or member (directly or indirectly) of the General Partner or any of its Affiliates by reason of Total Disability (such requests shall not exceed one per calendar year), the Partnership or its designee may but is not
obligated to purchase for cash all (but not less than all) Non- Contingent Capital Commitment Interests of such Limited Partner as of the last day of the Partnership’s then current fiscal year at a price
equal to the Capital Commitment Value thereof. Each Limited Partner shall be required to include appropriate provisions in his will to reflect such provisions of this Agreement. In addition, the Partnership may, in the sole discretion of the General
Partner, upon notice to the estate or personal representative of such Limited Partner within 30 days of the first date on which the Partnership knows or has reason to know of such Limited Partner’s death or Total Disability, determine either
(i) to distribute Securities or other property to the estate or personal representative in exchange for such Non- Contingent Capital Commitment Interests as provided in Section 8.1(e) or (ii) to
require sale of such Non- Contingent Capital Commitment Interests to the Partnership or its designee as of the last day of any fiscal year of the Partnership (or earlier period, as determined by the General
Partner in its sole discretion) for an amount in cash equal to the Capital Commitment Value thereof.
(e) In lieu of retaining a Withdrawn
Partner as a Limited Partner with respect to any Non-Contingent Capital Commitment Interests, the General Partner may, in its sole discretion, by notice to such Withdrawn Partner within 45 days of his ceasing
to be an employee or officer of the General Partner or any of its Affiliates, or at any time thereafter, upon 30 days written notice, determine (1) to distribute to such Withdrawn Partner the pro rata portion of the Securities or other property
underlying such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, subject to any restrictions on distributions associated with the Securities or other property, in satisfaction of his Non-Contingent Capital Commitment Interests in the Partnership or (2) to cause, as of the last day of any fiscal year of the Partnership (or earlier period, as determined by the General Partner in its sole
discretion), the Partnership or another person designated by the General Partner (who may be itself another Limited Partner or another Affiliate of the General Partner) to purchase all (but not less than all) of such Withdrawn Partner’s Non-Contingent Capital Commitment Interests for a price equal to the Capital Commitment Value thereof. The General Partner shall condition any distribution or purchase of voting Securities pursuant to paragraph
(d) above or this paragraph (e) upon the Withdrawn Partner’s execution and delivery to the Partnership of an appropriate irrevocable proxy, in favor of the Partnership or its nominee, relating to such Securities.
(f) The Partnership may subsequently transfer any Unallocated Capital Commitment Interest or portion thereof which is purchased by it as
described above to any other person approved by the General Partner. In connection with such purchase or transfer or the purchase of a Capital Commitment Interest or portion thereof by the Partnership’s designee(s), Blackstone may loan all or a
portion of the purchase price of the transferred or purchased Capital Commitment Interest to the Partnership, the transferee or the designee-purchaser(s), as applicable (excluding any of the foregoing who is an executive officer of The Blackstone
Group L.P. or any of its Affiliates). To the extent that a Withdrawn Partner’s Capital Commitment Interests (or portions thereof) are repurchased by the Partnership and not transferred to or purchased by another person, all or any portion of
such repurchased Capital Commitment Interests may, in the sole discretion of the General Partner, (i) be allocated to each Partner already participating in the Capital Commitment Investment to which the repurchased Capital Commitment Interest
relates, (ii) be allocated to each Partner in the Partnership, whether or not already participating in such Capital Commitment Investment, and/or (iii) continue to be held by the Partnership
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itself as an unallocated Capital Commitment Investment (such Capital Commitment Interests being herein called “Unallocated Capital Commitment Interests”). To the extent that a
Capital Commitment Interest is allocated to Partners as provided in clause (i) and/or (ii) above, any indebtedness incurred by the Partnership to finance such repurchase shall also be allocated to such Partners. All such Capital Commitment
Interests allocated to Limited Partners shall be deemed to be Contingent and shall become Non-Contingent as and to the extent that the principal amount of such related indebtedness is repaid. The Limited
Partners receiving such allocations shall be responsible for such related indebtedness only on a nonrecourse basis to the extent appropriate as provided in this Agreement, except as such Limited Partners and the General Partner shall otherwise
agree. If the indebtedness financing such repurchased interests is not so limited, the Partnership may require an assumption by the Limited Partners of such indebtedness on the terms thereof as a precondition to allocation of the related Capital
Commitment Interests to such Limited Partners; provided, that a Limited Partner shall not, except as set forth in his Investor Note, be obligated to accept any personally recourse obligation unless his prior consent is obtained. So long as
the Partnership itself retains the Unallocated Capital Commitment Interests pursuant to clause (iii) above, such Unallocated Capital Commitment Interests shall belong to the Partnership and any indebtedness financing the Unallocated Capital
Commitment Interests shall be an obligation of the Partnership to which all income of the Partnership is subject except as otherwise agreed by the lender of such indebtedness. Any Capital Commitment Net Income (Loss) on an Unallocated Capital
Commitment Interest shall be allocated to each Partner in the proportion his aggregate Capital Commitment Capital Accounts bear to the aggregate Capital Commitment Capital Accounts of all Partners; debt service on such related financing will be an
expense of the Partnership allocable to all Partners in such proportions.
(g) If a Partner is required to Withdraw from the Partnership
with respect to such Partner’s Capital Commitment Partner Interest for Cause, then his Capital Commitment Interest shall be settled in accordance with paragraphs (a)-(f) and (j) of this Section 8.1; provided, that if such
Partner was not at any time a direct member of a General Partner, the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) purchase for cash all of such Withdrawn Partner’s Non-Contingent Capital
Commitment Interests. The purchase price for each such Non-Contingent Capital Commitment Interest shall be the lower of (A) the original cost of such Non-Contingent
Capital Commitment Interest or (B) an amount equal to the Capital Commitment Value thereof;
(ii) allow the Withdrawn
Partner to retain such Non-Contingent Capital Commitment Interests; provided, that the maximum amount of Capital Commitment Net Income allocable to such Withdrawn Partner with respect to any Capital
Commitment Investment shall equal the amount of Capital Commitment Net Income that would have been allocated to such Withdrawn Partner if such Capital Commitment Investment had been sold as of the Settlement Date at the then prevailing Capital
Commitment Value thereof; or
(iii) in lieu of cash, purchase such Non-Contingent
Capital Commitment Interests by providing the Withdrawn Partner with a promissory note in the amount determined in (i) above. Such promissory note shall have a maximum term of ten (10) years with interest at the Federal Funds Rate.
(h) The Partnership will assist a Withdrawn Partner or his estate or guardian, as the case may be, in the settlement of the Withdrawn
Partner’s Capital Commitment Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his estate.
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(i) The Partnership may reasonably determine in good faith to retain outside professionals
to provide the assistance to Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the Partnership will obtain the prior approval of a Withdrawn Partner or his estate or guardian, as the case may be, prior to
engaging such professionals. If the Withdrawn Partner (or his estate or guardian) declines to incur such costs, the Partnership will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(j) Each Limited Partner hereby irrevocably appoints each General Partner as such Limited Partner’s true and lawful agent, representative
and attorney-in-fact, each acting alone, in such Limited Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Limited Partner, any
and all agreements, instruments, documents and certificates which such General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this Section 8.1, including, without limitation,
the performance of any obligation of such Limited Partner or the Partnership or the exercise of any right of such Limited Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and
effect notwithstanding the Withdrawal from the Partnership of any Limited Partner for any reason and shall not be affected by the death, disability or incapacity of such Limited Partner.
Section 8.2. Transfer of Limited Partner’s Capital Commitment Interest. Without the prior written consent of
the General Partner, no Limited Partner or former Limited Partner shall have the right to sell, assign, mortgage, pledge or otherwise dispose of or transfer (“Transfer”) all or part of any such Partner’s Capital Commitment
Partner Interest in the Partnership; provided, that this Section 8.2 shall in no way impair (i) Transfers as permitted in Section 8.1 above, in the case of the purchase of a Withdrawn Partner’s or deceased or Totally
Disabled Limited Partner’s Capital Commitment Interests,
(ii) with the prior written consent of the General Partner, which shall not
be unreasonably withheld, Transfers by a Limited Partner to another Limited Partner of Non-Contingent Capital Commitment Interests, (iii) Transfers with the prior written consent of the General Partner,
which consent may be granted or withheld in its sole discretion without giving any reason therefor, and (iv) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers, for estate planning
purposes, of up to 25% of a Limited Partner’s Capital Commitment Partner Interest to an Estate Planning Vehicle. Each Estate Planning Vehicle will be a Nonvoting Limited Partner. Such Limited Partner and the Nonvoting Limited Partner shall be
jointly and severally liable for all obligations of both such Limited Partner and such Nonvoting Limited Partner with respect to the interest transferred (including the obligation to make additional Capital Commitment-Related Capital Contributions).
The General Partner may at its sole option exercisable at any time require such Estate Planning Vehicle to Withdraw from the Partnership on the terms of Section 8.1 and Article VI. No person acquiring an interest in the Partnership pursuant to
this Section 8.2 shall become a Limited Partner of the Partnership, or acquire such Partner’s right to participate in the affairs of the Partnership, unless such person shall be admitted as a Limited Partner pursuant to Section 6.1. A
Limited Partner shall not cease to be a limited partner of the Partnership upon the collateral assignment of, or the pledging or granting of a security interest in, its entire limited partner interest in the Partnership in accordance with the
provisions of this Agreement.
Section 8.3. Compliance with Law. Notwithstanding any provision hereof to the contrary, no
Transfer of a Capital Commitment Interest in the Partnership may be made except in compliance with all Federal, State and other applicable laws, including Federal and State securities laws.
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ARTICLE IX
DISSOLUTION
Section 9.1.
Dissolution.
(a) The Partnership shall be dissolved and subsequently terminated:
(i) pursuant to Section 6.6;
(ii) upon the expiration of the Term; or
(iii) upon the occurrence of a Disabling Event with respect to the last remaining General Partner, provided that the
Partnership shall not be dissolved if, within 90 days after the Disabling Event, Limited Partners entitled to vote thereon as provided herein who, as of the last day of the most recent accounting period ending on or prior to the date of the
Disabling Event, have aggregate GP-Related Capital Account balances representing at least a majority in amount of the total GP-Related Capital Account balances of all
the persons who are Limited Partners entitled to vote thereon as provided herein agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of the Disabling Event, of another General Partner.
(b) When the Partnership is dissolved, the business and property of the Partnership shall be wound up and liquidated by the General Partner or,
in the event of the unavailability of the General Partner, such Limited Partner or other liquidating trustee as shall be named by the Designated Limited Partner (the General Partner, such Limited Partner or other liquidating trustee, as the case may
be, being hereinafter referred to as the “Liquidator”).
Section 9.2. Final Distribution. Within 120 calendar
days after the effective date of dissolution of the Partnership, the assets of the Partnership shall be distributed in the following manner and order:
(i) to the payment of the expenses of the winding-up, liquidation and dissolution of
the Partnership;
(ii) to pay all creditors of the Partnership, other than Partners, either by the payment thereof or the
making of reasonable provision therefor;
(iii) to establish reserves, in amounts established by the General Partner or the
Liquidator, to meet other liabilities of the Partnership; and
(iv) to pay, in accordance with the terms agreed among them
and otherwise on a pro rata basis, all creditors of the Partnership that are Partners, either by the payment thereof or the making of reasonable provision therefor.
(b) The remaining assets of the Partnership shall be applied and distributed among the Partners as follows:
(i) With respect to each Partner’s GP-Related Partner Interest, the remaining
assets of the Partnership shall be applied and distributed to such Partner in accordance with the procedures set forth in Section 6.5 which provide for allocations to the capital accounts of the
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Partners and distributions in accordance with the capital account balances of the Partners; and for purposes of the application of this Section 9.2 (b)(i), determining GP-Related Capital Accounts on liquidation, all unrealized gains, losses and accrued income and deductions of the Partnership shall be treated as realized and recognized immediately before the date of distribution;
and
(ii) With respect to each Partner’s Capital Commitment Partner Interest, an amount shall be paid to such Partner
in cash or Securities in an amount equal to such Partner’s respective Capital Commitment Liquidating Share for each Capital Commitment Investment; provided, that if the remaining assets relating to any Capital Commitment Investment shall
not be equal to or exceed the aggregate Capital Commitment Liquidating Shares for such Capital Commitment Investment, to each Partner in proportion to its Capital Commitment Liquidating Share for such Capital Commitment Investment; and the remaining
assets of the Partnership related to the Partners’ Capital Commitment Partner Interests shall be paid to the Partners in cash or Securities in proportion to their respective Capital Commitment Profit Sharing Percentages for each Capital
Commitment Investment from which such cash or Securities are derived.
Section 9.3. Amounts Reserved Related to Capital Commitment
Partner Interests. If there are any Securities or other property or other investments or securities related to the Partners’ Capital Commitment Partner Interests which, in the judgment of the Liquidator, cannot be sold, or properly
distributed in kind in the case of dissolution, without sacrificing a significant portion of the value thereof, the value of a Partner’s interest in each such Security or other investment or security may be excluded from the amount distributed
to the Partners participating in the related Capital Commitment Investment pursuant to clause (ii) of Section 9.2(b). Any interest of a Partner, including his pro rata interest in any gains, losses or distributions, in Securities or other
property or other investments or securities so excluded shall not be paid or distributed until such time as the Liquidator shall determine.
(b) If there is any pending transaction, contingent liability or claim by or against the Partnership related to the Partners’ Capital
Commitment Partner Interests as to which the interest or obligation of any Partner therein cannot, in the judgment of the Liquidator, be then ascertained, the value thereof or probable loss therefrom may be deducted from the amount distributable to
such Partner pursuant to clause (ii) of Section 9.2(b). No amount shall be paid or charged to any such Partner on account of any such transaction or claim until its final settlement or such earlier time as the Liquidator shall determine.
The Partnership may meanwhile retain from other sums due such Partner in respect of such Partner’s Capital Commitment Partner Interest an amount which the Liquidator estimates to be sufficient to cover the share of such Partner in any probable
loss or liability on account of such transaction or claim.
(c) Upon determination by the Liquidator that circumstances no longer require
the exclusion of any Securities or other property or retention of sums as provided in paragraphs (a) and (b) of this Section 9.3, the Liquidator shall, at the earliest practicable time, distribute as provided in clause (ii) of
Section 9.2(b) such sums or such Securities or other property or the proceeds realized from the sale of such Securities or other property to each Partner from whom such sums or Securities or other property were withheld.
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ARTICLE X MISCELLANEOUS
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be settled
amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement
(including the validity, scope and enforceability of this arbitration provision) shall be finally settled by arbitration conducted by a single arbitrator in New York , NY in accordance with the then-existing Rules of Arbitration of the International
Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The
arbitrator shall be a lawyer and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may cause the Partnership to bring, on behalf of the
General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an
arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of paragraph (c) of this Section 10.1 to any such action or proceeding,
(ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the General
Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon any such agent, who shall promptly advise such Partner of any such service of process, shall be
deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 10.1, OR ANY JUDICIAL PROCEEDING ANCILLARY TO
AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial
relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the forum(s) designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may
have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 10.1 and such parties agree not to plead or claim the same.
(d) Notwithstanding any provision of this Agreement to the contrary, this Section 10.1 shall be construed to the maximum extent possible to
comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be determined by a court of
competent jurisdiction that any provision or wording of this Section 10.1, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or other applicable law, such
invalidity shall not invalidate all of this Section 10.1. In that case, this Section 10.1 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act
or other applicable law, and, in the event such term or provision cannot be so limited, this Section 10.1 shall be construed to omit such invalid or unenforceable provision.
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Section 10.2. Ownership and Use of the Firm Name. The Partnership acknowledges
that Blackstone TM L.L.C. (“TM”), a Delaware limited liability company with a principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., (or its successors or assigns) is the sole and exclusive owner of the
mark and name BLACKSTONE and that the ownership of, and the right to use, sell or otherwise dispose of, the firm name or any abbreviation or modification thereof which consists of or includes BLACKSTONE, shall belong exclusively to TM, which company
(or its predecessors, successors or assigns) has licensed the Partnership to use BLACKSTONE in its name. The Partnership acknowledges that TM owns the service mark BLACKSTONE for various services and that the Partnership is using the BLACKSTONE mark
and name on a non-exclusive, non-sublicensable and non-assignable basis in connection with its business and authorized activities
with the permission of TM. All services rendered by the Partnership under the BLACKSTONE mark and name will be rendered in a manner and with quality levels that are consistent with the high reputation heretofore developed for the BLACKSTONE mark by
TM and its Affiliates and licensees. The Partnership understands that TM may terminate its right to use BLACKSTONE at any time in TM’s sole discretion by giving the Partnership written notice of termination. Promptly following any such
termination, the Partnership will take all steps necessary to change its partnership name to one which does not include BLACKSTONE or any confusingly similar term and cease all use of BLACKSTONE or any term confusingly similar thereto as a service
mark or otherwise.
Section 10.3. Written Consent. Any action required or permitted to be taken by a vote of Partners at a
meeting may be taken without a meeting if a Majority in Interest of the Partners consent thereto in writing.
Section 10.4. Letter
Agreements; Schedules. The General Partner may, or may cause the Partnership to, enter or has previously entered, into separate letter agreements with individual Partners with respect to GP-Related Profit
Sharing Percentages, Capital Commitment Profit Sharing Percentages or any other matter. The General Partner may from time to time execute and deliver to the Partners Schedules which set forth the then current capital balances, GP-Related Profit Sharing Percentages and Capital Commitment Profit Sharing Percentages of the Partners and any other matters deemed appropriate by the General Partner. Such Schedules shall be for information
purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever; provided that this in no way limits the effectiveness of any Commitment Agreement.
Section 10.5. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of
Delaware without regard to principles of conflict of laws. In particular, the Partnership has been formed pursuant to the Partnership Act, and the rights and liabilities of the Partners shall be as provided therein, except as herein otherwise
expressly provided. If any provision of this Agreement shall be held to be invalid, such provision shall be given its meaning to the maximum extent permitted by law and the remainder of this Agreement shall not be affected thereby.
Section 10.6. Successors and Assigns; Third Party Beneficiaries. This Agreement shall be binding upon and shall, subject to the
penultimate sentence of Section 6.3(a), inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any successor to a trustee of a trust which is or becomes a party hereto; provided that no person
claiming by, through or under a Partner (whether such Partner’s heir, personal representative or otherwise), as distinct from such Partner itself, shall have any rights as, or in respect to, a Partner (including the right to approve or vote on
any matter or to notice thereof) except the right to receive only those distributions expressly payable to such person pursuant to Articles VI and VIII. Any Partner or Withdrawn Partner shall remain liable for the obligations under this Agreement
(including any Net GP-Related Recontribution Amounts and any Capital Commitment Recontribution Amounts) of any transferee of all or any portion of such Partner’s or Withdrawn Partner’s interest in
the Partnership, unless waived by the General Partner. The Partnership shall, if the General Partner determines, in its good faith judgment, based on the standards set forth in Sections 5.8(d)(ii)(A) and 7.4(g)(ii)(A), to pursue such transferee,
pursue payment (including any Net GP-Related Recontribution Amounts and/or any Capital Commitment Recontribution Amounts) from the
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transferee with respect to any such obligations. Nothing in this Agreement is intended, nor shall anything herein be construed, to confer any rights, legal or equitable, on any person other than
the Partners and their respective legal representatives, heirs, successors and permitted assigns. Notwithstanding the foregoing, solely to the extent required by the SP VII Agreements, the limited partners in SP VII shall be third-party
beneficiaries of the provisions of Sections 5.8(d)(i)(A) and 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount (for purpose of this sentence, as defined in section 11.3 (b) of the SP VII Partnership
Agreement).
Section 10.7. Partner’s Will. Each Limited Partner and Withdrawn Partner shall include in his
or her will a provision that addresses certain matters in respect of his or her obligation relating to the Partnership that is satisfactory to the General Partner, and each such Limited Partner and Withdrawn Partner shall confirm annually to the
Partnership, in writing, that such provision remains in his or her current will. Where applicable, any estate planning trust of such Partner or Withdrawn Partner to which a portion of such Limited Partner’s or Withdrawn Partner’s Interest
is transferred shall include a provision substantially similar to such provision and the trustee of such trust shall confirm annually to the Partnership, in writing, that such provision or its substantial equivalent remains in such trust. In the
event any Limited Partner or Withdrawn Partner fails to comply with the provisions of this Section 10.7 after the Partnership has notified such Limited Partner or Withdrawn Partner of his or her failure to so comply and such failure to so
comply is not cured within 30 days of such notice, the Partnership may withhold any and all distributions to such Limited Partner or Withdrawn Partner until the time at which such party complies with the requirements of this Section 10.7.
Section 10.8. Confidentiality. By executing this Agreement, each Partner expressly agrees, at all times during the term of the
Partnership and thereafter and whether or not at the time a Partner of the Partnership, to maintain the confidentiality of, and not to disclose to any person other than the Partnership, another Partner or a person designated by the Partnership, any
information relating to the business, financial structure, financial position or financial results, clients or affairs of the Partnership that shall not be generally known to the public or the securities industry, except as otherwise required by law
or by any regulatory or self-regulatory organization having jurisdiction; provided, however, that any corporate Partner may disclose any such information it is required by law, rule, regulation or custom to disclose. Notwithstanding anything in this
Agreement to the contrary, to comply with Treasury Regulation Section 1.6011-4(b)(3)(i), each Partner (and any employee, representative or other agent of such Partner) may disclose to any and all persons,
without limitation of any kind, the Federal income tax treatment and tax structure of the Partnership, it being understood and agreed, for this purpose, (1) the name of, or any other identifying information regarding (a) the Partners or
any existing or future investor (or any Affiliate thereof) in any of the Partners, or (b) any investment or transaction entered into by the Partners; (2) any performance information relating to any of the Partners or their investments; and
(3) any performance or other information relating to previous funds or investments sponsored by any of the Partners, does not constitute such tax treatment or tax structure information.
Section 10.9. Notices. Whenever notice is required or permitted by this Agreement to be given, such notice shall be in writing
(including telecopy or similar writing) and shall be given by hand delivery (including any courier service) or telecopy to any Partner at its address or telecopy number shown in the books and records of the Partnership or, if given to the General
Partner or the Partnership, at the address or telecopy number of the Partnership in New York City. Each such notice shall be effective (i) if given by telecopy, upon dispatch, and (ii) if given by hand delivery, when delivered to the address of
such Partner or the General Partner or the Partnership specified as aforesaid.
Section 10.10. Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute a single instrument.
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Section 10.11. Power of Attorney. Each Partner hereby irrevocably appoints the
General Partner as such Partner’s true and lawful representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make,
execute, sign and file all instruments, documents and certificates which, from time to time, may be required to set forth any amendment to this Agreement or may be required by this Agreement or by the laws of the United States of America, the State
of Delaware or any other state in which the Partnership shall determine to do business, or any political subdivision or agency thereof, to execute, implement and continue the valid and subsisting existence of the Partnership. Such power of attorney
is coupled with an interest and shall survive and continue in full force and effect notwithstanding the subsequent Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the subsequent disability or incapacity of
such Partner.
Section 10.12. Cumulative Remedies. Rights and remedies under this Agreement are cumulative and do not preclude
use of other rights and remedies available under applicable law.
Section 10.13. Legal Fees. Except as more specifically
provided herein, in the event of a legal dispute (including litigation, arbitration or mediation) between any Partner or Withdrawn Partner and the Partnership, arising in connection with any party seeking to enforce Section 4.1(d) or any other
provision of this Agreement relating to the Holdback, the Clawback Amount, the GP-Related Giveback Amount, the Capital Commitment Giveback Amount, the Net GP-Related
Recontribution Amount or the Capital Commitment Recontribution Amount, the “losing” party to such dispute shall promptly reimburse the “victorious party” for all reasonable legal fees and expenses incurred in connection with such
dispute (such determination to be made by the relevant adjudicator). Any amounts due under this Section 10.13 shall be paid within 30 days of the date upon which such amounts are due to be paid and such amounts remaining unpaid after such date
shall accrue interest at the Default Interest Rate.
Section 10.14. Entire Agreement. This Agreement embodies the entire
agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to
herein. Subject to Section 10.4, this Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first
above written. In the event that it is impracticable to obtain the signature of any one or more of the Partners to this Agreement, this Agreement shall be binding among the other Partners executing the same.
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GENERAL PARTNER:
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SPFSA VII L.L.C.
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By:
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/s/ Peter Song
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Name:
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Peter Song
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Title:
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Authorized Person
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INITIAL LIMITED PARTNER
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/s/ Peter Song
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Peter Song, as Initial Limited
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Partner, to reflect his withdrawal from the
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Partnership
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Exhibit 10.13
Execution Version
HIGHLY CONFIDENTIAL &
TRADE SECRET
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES VIII L.P.
AMENDED AND RESTATED
LIMITED
PARTNERSHIP AGREEMENT
Dated November 4, 2020
Effective as of December 21, 2018
THE
LIMITED PARTNERSHIP INTERESTS (THE “INTERESTS”) OF STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES VIII L.P. (THE “PARTNERSHIP”) HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), THE SECURITIES LAWS OF ANY STATE IN THE UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE ACQUIRED FOR
INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS, AND ANY OTHER APPLICABLE SECURITIES LAWS;
AND (II) THE TERMS AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE INTERESTS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT.
THEREFORE, PURCHASERS OF SUCH INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
Table of Contents
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ARTICLE I DEFINITIONS
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1
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Section 1.1. Definitions
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1
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Section 1.2. Terms Generally
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16
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ARTICLE II GENERAL PROVISIONS
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16
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Section 2.1. General Partner, Limited Partner, Special Partner
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16
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Section 2.2. Formation; Name; Foreign Jurisdictions
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17
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Section 2.3. Term
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17
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Section 2.4. Purposes; Powers
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17
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Section 2.5. Place of Business
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19
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Section 2.6. Withdrawal of Initial Limited Partner
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20
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ARTICLE III MANAGEMENT
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20
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Section 3.1. General Partner
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20
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Section 3.2. Partner Voting, etc.
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20
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Section 3.3. Management
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21
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Section 3.4. Responsibilities of Partners
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23
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Section 3.5. Exculpation and Indemnification
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23
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Section 3.6. Representations of Partners
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25
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Section 3.7. Tax Representation and Further Assurances
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26
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ARTICLE IV CAPITAL OF THE PARTNERSHIP
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27
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Section 4.1. Capital Contributions by Partners
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27
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Section 4.2. Interest
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34
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Section 4.3. Withdrawals of Capital
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35
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ARTICLE V PARTICIPATION IN PROFITS AND LOSSES
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35
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Section 5.1. General Accounting Matters
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35
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Section 5.2. GP-Related Capital
Accounts
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36
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Section 5.3. GP-Related Profit Sharing
Percentages
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37
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Section 5.4. Allocations of GP-Related Net
Income (Loss)
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38
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Section 5.5. Liability of Partners
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39
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Section 5.6. [Intentionally Omitted]
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39
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Section 5.7. Repurchase Rights, etc.
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39
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Section 5.8. Distributions
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39
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Section 5.9. Business Expenses
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47
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Section 5.10. Tax Capital Accounts; Tax Allocations 47
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47
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ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND DISCHARGE OF PARTNERSHIP
INTERESTS; TERMINATION
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48
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Section 6.1. Additional Partners
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48
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Section 6.2. Withdrawal of Partners
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49
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Section 6.3. GP-Related Partner Interests Not
Transferable
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50
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Section 6.4. Consequences upon Withdrawal of a Partner
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51
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Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interests
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51
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Section 6.6. Dissolution of the Partnership
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57
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Section 6.7. Certain Tax Matters
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57
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Section 6.8. Special Basis Adjustments
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58
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ARTICLE VII CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS; ALLOCATIONS;
DISTRIBUTIONS
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|
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59
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Section 7.1. Capital Commitment Interests, etc.
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|
|
59
|
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Section 7.2. Capital Commitment Capital Accounts
|
|
|
60
|
|
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Section 7.3. Allocations
|
|
|
60
|
|
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Section 7.4. Distributions
|
|
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61
|
|
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Section 7.5. Valuations
|
|
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65
|
|
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Section 7.6. Disposition Election
|
|
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65
|
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Section 7.7. Capital Commitment Special Distribution Election
|
|
|
66
|
|
|
|
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ARTICLE VIII WITHDRAWAL; ADMISSION OF NEW PARTNERS
|
|
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66
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Section 8.1. Partner Withdrawal; Repurchase of Capital Commitment Interests
|
|
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66
|
|
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Section 8.2. Transfer of Partner’s Capital Commitment Interest
|
|
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71
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Section 8.3. Compliance with Law
|
|
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72
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|
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ARTICLE IX DISSOLUTION
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|
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72
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Section 9.1. Dissolution
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|
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72
|
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Section 9.2. Final Distribution
|
|
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72
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Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests
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|
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73
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|
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|
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ARTICLE X MISCELLANEOUS
|
|
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74
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Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial
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|
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74
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Section 10.2. Ownership and Use of the Blackstone Name
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|
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75
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Section 10.3. Written Consent
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|
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75
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Section 10.4. Letter Agreements; Schedules
|
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75
|
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Section 10.5. Governing Law, Separability of Provisions
|
|
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76
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Section 10.6. Successors and Assigns; Third Party Beneficiaries
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|
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76
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Section 10.7. Confidentiality
|
|
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77
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Section 10.8. Notices
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|
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77
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Section 10.9. Counterparts
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|
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78
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Section 10.10. Power of Attorney
|
|
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78
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Section 10.11. Partner’s Will
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|
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78
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Section 10.12. Cumulative Remedies
|
|
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78
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Section 10.13. Legal Fees
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|
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79
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Section 10.14. Entire Agreement; Modifications
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79
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Section 10.15. Section Titles
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79
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3
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES VIII L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of Strategic Partners Fund Solutions Associates VIII L.P., a Delaware limited partnership
(the “Partnership”), dated November 4, 2020, and effective as of December 21, 2018, by and among SPFSA VIII L.L.C., a Delaware limited liability company, as general partner of the Partnership (in its capacity as general
partner of the Partnership (the “General Partner”)), Peter Song (the “Initial Limited Partner”), as initial limited partner, and such other persons that are admitted to the Partnership as partners after the date
hereof in accordance herewith.
WITNESSETH
WHEREAS, the Partnership was formed pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101, et seq., as it may be amended from time to time (the “Partnership Act”), pursuant to a certificate of limited partnership filed in the office of the Secretary of State of the State of
Delaware on May 30, 2018;
WHEREAS, the General Partner and the Initial Limited Partner entered into a Limited Partnership Agreement
dated as of May 30, 2018 (the “Original Agreement”); and
WHEREAS, the parties hereto desire to enter into this
Agreement, and hereby amend and restate the Original Agreement in its entirety and reflect the withdrawal of the Initial Limited Partner, in each case effective on December 21, 2018;
NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby, the parties
hereto agree that the Original Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for
purposes of this Agreement:
“Adjustment Amount” has the meaning set forth in Section 8.1(b)(ii).
“Advancing Party” has the meaning set forth in Section 7.1(b).
“Affiliate” when used with reference to another person means any person (other than the Partnership), directly
or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person, which may include, for greater certainty and as the context requires, endowment funds, estate planning vehicles
(including any trusts, family members, family investment vehicles, descendant, trusts and other related persons and entities), charitable programs and other similar and/or related vehicles or accounts associated with or established by Blackstone
and/or its affiliates, partners and current and/or former employees and/or related persons.
“Agreement” means this Amended and Restated Limited
Partnership Agreement, as it may be further amended, supplemented, restated or otherwise modified from time to time.
“Applicable Collateral Percentage” with respect to any Firm Collateral or Special Firm Collateral, has the
meaning set forth in the books and records of the Partnership with respect thereto.
“Bankruptcy” means,
with respect to any person, the occurrence of any of the following events: (i) the filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his or her assets; (ii) the filing by such person
of a voluntary petition in Bankruptcy or the seeking of relief under Title 11 of the United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his or her inability to pay his
or her debts as they become due; (iii) the failure of such person to pay his or her debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of
an answer admitting the material allegations of, or his or her consenting to, or defaulting in answering, a Bankruptcy petition filed against him or her in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States
Code, as now constituted or as hereafter amended; or (vi) the entry of an order, judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a
trustee or custodian of his or her assets and the continuance of such order, judgment or decree unstayed and in effect for a period of 60 consecutive days.
“BE Agreement” means the limited partnership agreement, limited liability company agreement or other governing
document of any limited partnership, limited liability company or other entity referred to in the definition of “Blackstone Entity,” as such limited partnership agreement, limited liability company agreement or other governing document may
be amended, supplemented, restated or otherwise modified to date, and as such limited partnership agreement, limited liability company agreement or other governing document may be further amended, supplemented, restated or otherwise modified from
time to time.
“BE Investment” means any direct or indirect investment by any Blackstone Entity.
“Blackstone” means, collectively, The Blackstone Group Inc., a Delaware corporation, and any predecessor or
successor thereto, and any Affiliate thereof (excluding any natural persons and any portfolio companies, investments or similar entities of any Blackstone-sponsored fund (or any affiliate thereof that is not otherwise an Affiliate of The Blackstone
Group Inc.)).
“Blackstone Commitment” has the meaning set forth in the SP VIII Partnership Agreement.
“Blackstone Entity” means any partnership, limited liability company or other entity (excluding any
natural persons and any portfolio companies of any Blackstone-sponsored fund) that is an Affiliate of The Blackstone Group Inc., as designated by the General Partner in its sole discretion.
2
“Business Day” means any day other than a Saturday, Sunday
or other day on which banks are authorized or required by law to be closed in New York, New York.
“Capital
Commitment Capital Account” means, with respect to each Capital Commitment Investment for each Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such
Capital Commitment Investment and any net income allocated to such Partner pursuant to Section 7.3 with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment
Investment to such Partner and any net losses allocated to such Partner with respect to such Capital Commitment Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the
related Capital Commitment Investment shall be adjusted as if the asset distributed had been sold in a taxable transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners
participating in such Capital Commitment Investment pursuant to Section 7.3.
“Capital Commitment
Class A Interest” has the meaning set forth in Section 7.4(f).
“Capital
Commitment Class B Interest” has the meaning set forth in Section 7.4(f).
“Capital Commitment Defaulting Party” has the meaning set forth in Section 7.4(g)(ii)(A).
“Capital Commitment Deficiency Contribution” has the meaning set forth in Section 7.4(g)(ii)(A).
“Capital Commitment Disposable Investment” has the meaning set forth in Section 7.4(f).
“Capital Commitment Distributions” means, with respect to each Capital Commitment Investment, all amounts of
distributions, received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Capital Commitment SP VIII Interest, if any, less any costs, fees and expenses of the Partnership with respect thereto and less
reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of such Capital Commitment Investment as it may
determine in good faith is appropriate.
“Capital Commitment Giveback Amount” has the meaning set forth in
Section 7.4(g)(i).
“Capital Commitment Interest” means the interest of a Partner in a specific
Capital Commitment Investment as provided herein.
3
“Capital Commitment Investment” means any Capital
Commitment SP VIII Investment, but shall exclude any GP-Related Investment.
“Capital Commitment Liquidating Share” means, with respect to each Capital Commitment Investment, in the case
of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with Section 9.3) immediately prior to dissolution.
“Capital Commitment Net Income (Loss)” means, with respect to each Capital Commitment Investment, all amounts
of income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition, in whole or in part, of such Capital Commitment Investment, less any costs, fees and
expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated thereto.
“Capital Commitment Partner Carried Interest” means, with respect to any Partner, the aggregate amount of
distributions or payments received by such Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest.” Capital Commitment Partner Carried Interest includes any amount initially received by
an Affiliate of the Partnership from any fund (including SP VIII, any similar funds formed after the date hereof, and any Other Blackstone Funds (as defined in the SP VIII Partnership Agreement), whether or not in existence as of the date hereof) to
which such Affiliate serves as general partner (or in another similar capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions thereto (or the capital contributions to make the
investment of such fund giving rise to such “carried interest”).
“Capital Commitment Partner
Interest” means a Partner’s interest in the Partnership which relates to the Capital Commitment SP VIII Interest.
“Capital Commitment Profit Sharing Percentage” means, with respect to each Capital Commitment Investment, the
percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the Partnership.
“Capital Commitment Recontribution Amount” has the meaning set forth in Section 7.4(g)(i).
“Capital Commitment-Related Capital Contributions” has the meaning set forth in Section 7.1(a)(ii).
“Capital Commitment-Related Commitment” means, with respect to any Partner, such Partner’s commitment to
the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such commitment that may be set forth in such Partner’s Commitment
Agreement or SMD Agreement, if any.
4
“Capital Commitment SP VIII Commitment” means the Capital
Commitment (as defined in the SP VIII Partnership Agreement), if any, of the Partnership to SP VIII that relates solely to the Capital Commitment SP VIII Interest, if any.
“Capital Commitment SP VIII Interest” means the Interest (as defined in the SP VIII Partnership Agreement), if
any, of the Partnership as a capital partner of SP VIII.
“Capital Commitment SP VIII Investment” means
the Partnership’s interest in a specific investment of SP VIII held by the Partnership through the Capital Commitment SP VIII Interest.
“Capital Commitment Special Distribution” has the meaning set forth in Section 7.7(a).
“Capital Commitment Value” has the meaning set forth in Section 7.5.
“Carried Interest” means (i) “Carried Interest,” as defined in the SP VIII Partnership Agreement,
and (ii) any other carried interest distribution to a Fund GP pursuant to any SP VIII Agreement. In the case of each of (i) and (ii) above, except as determined by the General Partner, the amount shall not be less any costs, fees and
expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto (in each case which the General Partner may allocate among all or any
portion of the GP-Related Investments as it determines in good faith is appropriate).
“Carried Interest Give Back Percentage” means, for any Partner or Withdrawn Partner, subject to
Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner from the Partnership or any Other Fund GPs or their Affiliates in respect of Carried Interest by
(B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership or any Other Fund GP or any of their Affiliates (in any capacity) in respect of Carried Interest. For purposes of
determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership or any Other Fund GPs on behalf of a Partner or Withdrawn Partner (but not the Trust Income thereon) shall be
deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as members, partners or other equity interest owners of the Partnership or any of the Other Fund GPs or their Affiliates.
“Carried Interest Sharing Percentage” means, with respect to each
GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
“Cause” means the occurrence or existence of any of the following with respect to any Partner, as
determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any non-competition agreement, (x) any material
breach of this Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such Partner’s deliberate failure to perform his or her duties to the Partnership or any of its
5
Affiliates or (z) such Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Partnership or any of its Affiliates in a material way as
determined by the General Partner; provided, that in the case of any of the foregoing clauses (w), (x), (y) and (z), the General Partner has given such Partner written notice (a “Notice of Breach”) within 15 days after the
General Partner becomes aware of such action and such Partner fails to cure such breach, failure to perform or conduct or behavior within 15 days after receipt of such Notice of Breach from the General Partner (or such longer period, not to exceed
an additional 15 days, as shall be reasonably required for such cure; provided, that such Partner is diligently pursuing such cure); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Partnership
or any of its Affiliates; or (iii) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony (under U.S. law or its equivalent in any jurisdiction) or crime (including any misdemeanor charge involving
moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of competent jurisdiction, by a regulatory body or by a self-regulatory body having authority
with respect to securities laws, rules or regulations of the applicable securities industry, that such Partner individually has violated any applicable securities laws or any rules or regulations thereunder, or any rules of any such self-regulatory
body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such Partner’s ability to function as a Partner of the Partnership, taking into account the services
required of such Partner and the nature of the business of the Partnership and its Affiliates or (B) the business of the Partnership and its Affiliates or (iv) becoming subject to an event described in Rule 506(d)(1)(i)-(viii) of
Regulation D under the Securities Act.
“Clawback Adjustment Amount” has the meaning set forth in
Section 5.8(e)(ii)(C).
“Clawback Amount” means the “Clawback Amount”, as defined in the SP
VIII Partnership Agreement, and any other clawback amount payable to the limited partners of SP VIII or to SP VIII pursuant to any SP VIII Agreement, as applicable.
“Clawback Provisions” means Section 9.4 of the SP VIII Partnership Agreement and any other similar
provisions in any other SP VIII Agreement existing heretofore or hereafter entered into.
“Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any successor statute. Any reference herein to a particular provision of the Code means, where appropriate, the corresponding provision in any successor statute.
“Commitment Agreements” means the agreements between the Partnership or an Affiliate thereof and Partners,
pursuant to which each Partner undertakes certain obligations, including the obligation to make capital contributions pursuant to Section 4.1 and/or Section 7.1. Each Commitment Agreement is hereby incorporated by reference as between the
Partnership and the relevant Partner.
“Contingent” means subject to repurchase rights and/or other
requirements.
6
The term “control” when used with reference to any person
means the power to direct the management and policies of such person, directly or indirectly, by or through stock or other equity interest ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or
understanding (written or oral) with one or more other persons by or through stock or other equity interest ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings
correlative to the foregoing.
“Controlled Entity” when used with reference to another person means any
person controlled by such other person.
“Covered Person” has the meaning set forth in
Section 3.5(a).
“Deceased Partner” means any Partner or Withdrawn Partner who has died or who
suffers from Incompetence. For purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the case may be, that have received such
Deceased Partner’s interest in the Partnership.
“Default Interest Rate” means the lower of
(i) the sum of (a) the Prime Rate and (b) 5% or (ii) the highest rate of interest permitted under applicable law.
“Delaware Arbitration Act” has the meaning set forth in Section 10.1(d).
“Electronic Signature” has the meaning set forth in Section 10.9.
“Estate Planning Vehicle” has the meaning set forth in Section 6.3(a).
“Excess Holdback” has the meaning set forth in Section 4.1(d)(v)(A).
“Excess Holdback Percentage” has the meaning set forth in Section 4.1(d)(v)(A).
“Excess Tax-Related Amount” has the meaning set forth in
Section 5.8(e).
“Existing Partner” means any Partner who is neither a Retaining Withdrawn Partner
nor a Deceased Partner.
“Final Event” means the death, Total Disability, Incompetence, Bankruptcy,
liquidation, dissolution or Withdrawal from the Partnership of any person who is a Partner.
“Firm
Advances” has the meaning set forth in Section 7.1(b).
“Firm Collateral” means a
Partner’s or Withdrawn Partner’s interest in one or more partnerships or limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been
pledged or made available to the Trustee(s) to satisfy all or any portion of the Excess Holdback of such Partner or Withdrawn Partner as more fully described in the Partnership’s books and records; provided, that for all purposes hereof
(and any other agreement (e.g., the Trust Agreement) that incorporates the meaning of the term “Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”, excluding
references to “Firm Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).
7
“Firm Collateral Realization” has the meaning set forth in
Section 4.1(d)(v)(B).
“Fiscal Year” means a calendar year, or any other period chosen by the General
Partner.
“Fund GP” means the Partnership (only with respect to the
GP-Related SP VIII Interest) and the Other Fund GPs.
“GAAP” means
U.S. generally accepted accounting principles.
“General Partner” means SPFSA VIII L.L.C. and any person
admitted to the Partnership as an additional or substitute general partner of the Partnership in accordance with the provisions of this Agreement (until such time as such person ceases to be a general partner of the Partnership as provided herein or
in the Partnership Act).
“Giveback Amount(s)” means the amount(s) payable by partners of SP VIII pursuant
to the Giveback Provisions.
“Giveback Provisions” means Section 5.2(b) of the SP VIII Partnership
Agreement and any other similar provisions in any other SP VIII Agreement existing heretofore or hereafter entered into.
“Governmental Entity” has the meaning set forth in Section 10.7(b).
“GP-Related Capital Account” has the meaning set forth in
Section 5.2(a).
“GP-Related Capital Contribution” has the
meaning set forth in Section 4.1(a).
“GP-Related
Class A Interest” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Class B Interest” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Commitment”, with respect to any Partner, means such
Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such
commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“GP-Related Defaulting Party” has the meaning set forth in Section 5.8(d)(ii)(A).
“GP-Related Deficiency Contribution” has the meaning set forth in
Section 5.8(d)(ii)(A).
“GP-Related Disposable Investment”
has the meaning set forth in Section 5.8(a)(ii).
8
“GP-Related Giveback
Amount” has the meaning set forth in Section 5.8(d)(i)(A).
“GP-Related Investment” means any investment (direct or indirect) of
the Partnership in respect of the GP-Related SP VIII Interest (including, without limitation, any GP-Related SP VIII Investment, but excluding any Capital Commitment
Investment).
“GP-Related Net Income (Loss)” has the meaning set
forth in Section 5.1(b).
“GP-Related Partner Interest” of a
Partner means all interests of such Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect to the GP-Related SP VIII Interest and with respect to all GP-Related Investments.
“GP-Related Profit Sharing Percentage” means the “Carried
Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each Partner; provided, that any references in this Agreement to
GP-Related Profit Sharing Percentages made (i) in connection with voting or voting rights or (ii) GP-Related Capital Contributions with respect to GP-Related
Investments (including Section 5.3(b)) means the “Non-Carried Interest Sharing Percentage” of each Partner; provided further, that the term
“GP-Related Profit Sharing Percentage” shall not include any Capital Commitment Profit Sharing Percentage.
“GP-Related Recontribution Amount” has the meaning set forth in
Section 5.8(d)(i)(A).
“GP-Related Required Amounts” has the
meaning set forth in Section 4.1(a).
“GP-Related SP VIII
Interest” means the interest held by the Partnership in SP VIII in the Partnership’s capacity as general partner of SP VIII, excluding any Capital Commitment SP VIII Interest.
“GP-Related SP VIII Investment” means the Partnership’s interest
in a Portfolio Investment (for purposes of this definition, as defined in the SP VIII Partnership Agreement) in the Partnership’s capacity as the general partner of SP VIII, but does not include any Capital Commitment Investment.
“GP-Related Unallocated Percentage” has the meaning set forth in
Section 5.3(b).
“GP-Related Unrealized Net Income (Loss)”
attributable to any GP-Related SP VIII Investment as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such
GP-Related SP VIII Investment if SP VIII’s entire portfolio of investments were sold on such date for cash in an amount equal to their aggregate value on such date (determined in accordance with
Section 5.1(e)) and all distributions payable by SP VIII to the Partnership (indirectly through the general partner of SP VIII) pursuant to any SP VIII Agreement with respect to such GP-Related SP VIII
Investment were made on such date. “GP-Related Unrealized Net Income (Loss)” attributable to any other GP-Related Investment (other than any Capital Commitment
Investment) as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related Investment if such GP-Related Investment were sold on such date for cash in an amount equal to its value on such date (determined in accordance with Section 5.1(e)).
9
“Holdback” has the meaning set forth in
Section 4.1(d)(i).
“Holdback Percentage” has the meaning set forth in Section 4.1(d)(i).
“Holdback Vote” has the meaning set forth in Section 4.1(d)(iv)(A).
“Holdings” means Blackstone Holdings II L.P., a Delaware limited partnership.
“Incompetence” means, with respect to any Partner, the determination by the General Partner in its sole
discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his or her person or his or her property.
“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d)(i).
“Initial Limited Partner” has the meaning set forth in the preamble hereto.
“Interest” means a partnership interest (as defined in
§17-101(13) of the Partnership Act) in the Partnership, including any interest that is held by a Retaining Withdrawn Partner and including any Partner’s
GP-Related Partner Interest and Capital Commitment Partner Interest.
“Investment” means any investment (direct or indirect) of the Partnership designated by the General Partner
from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments, and (b) Capital Commitment Investments.
“Investor Note” means a promissory note of a Partner evidencing indebtedness incurred by such Partner to
purchase a Capital Commitment Interest, the terms of which were or are approved by the General Partner and which is secured by such Capital Commitment Interest, all other Capital Commitment Interests of such Partner and all other interests of such
Partner in Blackstone Entities; provided, that such promissory note may also evidence indebtedness relating to other interests of such Partner in Blackstone Entities, and such indebtedness shall be prepayable with Capital Commitment Net
Income (whether or not such indebtedness relates to Capital Commitment Investments) as set forth in this Agreement, the Investor Note, the other BE Agreements and any documentation relating to Other Sources; provided further, that
references to “Investor Notes” herein refer to multiple loans made pursuant to such note, whether made with respect to Capital Commitment Investments or other BE Investments, and references to an “Investor Note” refer to one such
loan as the context requires. In no way shall any indebtedness incurred to acquire Capital Commitment Interests or other interests in Blackstone Entities be considered part of the Investor Notes for purposes hereof if the Lender or Guarantor is not
the lender or guarantor with respect thereto.
10
“Investor Special Partner” means any Special Partner so
designated at the time of its admission by the General Partner as a Partner of the Partnership.
“Issuer”
means the issuer of any Security comprising part of an Investment.
“L/C” has the meaning set forth in
Section 4.1(d)(vi).
“L/C Partner” has the meaning set forth in Section 4.1(d)(vi).
“Lender or Guarantor” means Blackstone Holdings I L.P. in its capacity as lender or guarantor under the
Investor Notes, or any other Affiliate of the Partnership that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests or other interests in Blackstone Entities.
“Limited Partner” means each of the parties listed as Limited Partners in the books and records of the
Partnership or any person that has been admitted to the Partnership as a substituted or additional Limited Partner in accordance with the terms of this Agreement, each in its capacity as a limited partner of the Partnership. For the avoidance of
doubt, the term “Limited Partner” does not include the General Partner or any Special Partners (notwithstanding the fact that Special Partners are limited partners of the Partnership).
“Loss Amount” has the meaning set forth in Section 5.8(e)(i)(A).
“Loss Investment” has the meaning set forth in Section 5.8(e).
“Losses” has the meaning set forth in Section 3.5(b)(i).
“Majority in Interest of the Partners” on any date (a “vote date”) means one or more persons
who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date and who, as of the last day of the most recent accounting period ending on or prior to the vote date (or as of such later date on or prior to
the vote date selected by the General Partner as of which the Partners’ capital account balances can be determined), have aggregate capital account balances representing at least a majority in amount of the total capital account balances of all
the persons who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
“Net Carried Interest Distribution” has the meaning set forth in Section 5.8(e)(i)(C).
“Net Carried Interest Distribution Recontribution Amount” has the meaning set forth in
Section 5.8(e)(i)(C).
“Net GP-Related Recontribution Amount”
has the meaning set forth in Section 5.8(d)(i)(A).
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“Non-Carried
Interest” means, with respect to each GP-Related Investment, all amounts of distributions, other than Carried Interest and other than Capital Commitment Distributions, received by the Partnership with
respect to such GP-Related Investment, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are
anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments as it may determine in good faith is appropriate.
“Non-Carried Interest Sharing Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Non-Carried Interest from such GP-Related Investment set forth in the
books and records of the Partnership.
“Non-Contingent” means
generally not subject to repurchase rights or other requirements.
“Nonvoting Partner” has the meaning set
forth in Section 8.2.
“Nonvoting Special Partner” has the meaning set forth in Section 6.1(a).
“Original Agreement” has the meaning set forth in the recitals.
“Other Fund GPs” means any other entity (other than the Partnership) through which any Partner, Withdrawn
Partner or any other person directly receives any amounts of Carried Interest, and any successor thereto; provided, that this includes any other entity which has in its organizational documents a provision which indicates that it is a
“Fund GP” or an “Other Fund GP”; provided further, that notwithstanding any of the foregoing, neither SPFSA VIII L.L.C. nor Holdings nor any Estate Planning Vehicle established for the benefit of family members of
any Partner or of any member or partner of any Other Fund GP shall be considered an “Other Fund GP” for purposes hereof.
“Other Sources” means (i) distributions or payments of Capital Commitment Partner Carried Interest (which
shall include amounts of Capital Commitment Partner Carried Interest which are not distributed or paid to a Partner but are instead contributed to a trust (or similar arrangement) to satisfy any “holdback” obligation with respect thereto)
and (ii) distributions from Blackstone Entities (other than the Partnership) to such Partner.
“Partner” means any person who is a partner of the Partnership, including the Limited Partners, the General
Partner and the Special Partners. Except as otherwise specifically provided herein, no group of Partners, including the Special Partners and any group of Partners in the same Partner Category, shall have any right to vote as a class on any matter
relating to the Partnership, including, but not limited to, any merger, reorganization, dissolution or liquidation.
“Partner Category” means the General Partner, Existing Partners, Retaining Withdrawn Partners or Deceased
Partners, each referred to as a group for purposes hereof.
“Partnership” has the meaning set forth in the
preamble hereto.
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“Partnership Act” has the meaning set forth in the preamble
hereto.
“Partnership Affiliate” has the meaning set forth in Section 3.3(b).
“Partnership Affiliate Governing Agreement” has the meaning set forth in Section 3.3(b).
“Pledgable Blackstone Interests” has the meaning set forth in Section 4.1(d)(v)(A).
“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank,
N.A. as its prime rate.
“Qualifying Fund” means any fund designated by the General Partner as a
“Qualifying Fund”.
“Repurchase Period” has the meaning set forth in Section 5.8(c).
“Required Rating” has the meaning set forth in Section 4.1(d)(vi).
“Retained Portion” has the meaning set forth in Section 7.6(a).
“Retaining Withdrawn Partner” means a Withdrawn Partner who has retained a
GP-Related Partner Interest, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Nonvoting Special Partner for all purposes hereof.
“Securities” means any debt or equity securities of an Issuer and its subsidiaries and other Controlled
Entities constituting part of an Investment, including without limitation common and preferred stock, interests in limited partnerships and interests in limited liability companies (including warrants, rights, put and call options and other options
relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or interests commonly regarded as securities, interests in real
property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as money-market
investments, bank deposits and interests in personal property of all kinds, whether tangible or intangible.
“Securities Act” means the U.S. Securities Act of 1933, as amended from time to time, or any successor
statute.
“Settlement Date” has the meaning set forth in Section 6.5(a).
“SMD Agreements” means the agreements between the Partnership and/or one or more of its Affiliates and certain
of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby incorporated by reference as between the Partnership and the relevant Partner.
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“SP VIII” means (i) Strategic Partners VIII L.P., a
Delaware limited partnership, (ii) any alternative investment vehicles relating to, or formed in connection with, any of the partnerships referred to in clauses (i) and (iii) of this definition, (iii) any parallel fund, managed
account or other capital vehicle relating to, or formed in connection with, the partnership referred to in clause (i) of this definition and (iv) any other limited partnership, limited liability company or other entity (in each case,
whether now or hereafter established) of which the Partnership or the General Partner serves, directly or indirectly, as the general partner, special general partner, manager, managing member or in a similar capacity.
“SP VIII Agreements” means the collective reference to (i) the SP VIII Partnership Agreement and
(ii) any other SP VIII partnership, limited liability company or other governing agreements, as each may be amended, supplemented, restated or otherwise modified from time to time.
“SP VIII Partnership Agreement” means the partnership agreement of the limited partnership named in clause
(i) of the definition of “SP VIII,” as it may be amended, supplemented, restated or otherwise modified from time to time.
“Special Firm Collateral” means interests in a Qualifying Fund or other assets that have been pledged to the
Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the Partnership’s books and records.
“Special Firm Collateral Realization” has the meaning set forth in Section 4.1(d)(viii)(B).
“Special Partner” means any person shown in the books and records of the Partnership as a Special Partner of
the Partnership, including any Nonvoting Special Partner and any Investor Special Partner.
“S&P”
means Standard & Poor’s Ratings Group, and any successor thereto.
“Subject Investment” has
the meaning set forth in Section 5.8(e)(i).
“Subject Partner” has the meaning set forth in
Section 4.1(d)(iv)(A).
“Successor in Interest” means any (i) shareholder of; (ii) trustee,
custodian, receiver or other person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or receiver, or former
officer, director or partner, or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or assign of, any Partner,
whether by operation of law or otherwise.
“Tax Advances” has the meaning set forth in
Section 6.7(d).
“Tax Matters Partner” has the meaning set forth in Section 6.7(b).
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“TM” has the meaning set forth in Section 10.2.
“Total Disability” means the inability of a Limited Partner substantially to perform the services required of
such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether arising out of
sickness, accident or otherwise.
“Transfer” has the meaning set forth in Section 8.2.
“Trust Account” has the meaning set forth in the Trust Agreement.
“Trust Agreement” means the Trust Agreement dated as of the date set forth therein, as amended, supplemented,
restated or otherwise modified from time to time, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time to time.
“Trust Amount” has the meaning set forth in the Trust Agreement.
“Trust Income” has the meaning set forth in the Trust Agreement.
“Trustee(s)” has the meaning set forth in the Trust Agreement.
“Unadjusted Carried Interest Distributions” has the meaning set forth in Section 5.8(e)(i)(B).
“Unallocated Capital Commitment Interests” has the meaning set forth in Section 8.1(f).
“U.S.” means the United States of America.
“W-8BEN” has the meaning set forth in Section 3.7.
“W-8BEN-E” has the meaning set
forth in Section 3.7.
“W-8IMY” has the meaning set forth in
Section 3.7.
“W-9” has the meaning set forth in
Section 3.7.
“Withdraw” or “Withdrawal” means, with respect to a Partner, such
Partner ceasing to be a partner of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary), unless the context shall limit
the type of withdrawal to a specific reason, and “Withdrawn” with respect to a Partner means, as aforesaid, such Partner ceasing to be a partner of the Partnership.
“Withdrawal Date” means the date of the Withdrawal from the Partnership of a Withdrawn Partner.
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“Withdrawn Partner” means a Limited Partner whose GP-Related Partner Interest or Capital Commitment Partner Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include, unless
the context requires otherwise, the estate or legal representatives of any such Partner.
Section 1.2. Terms Generally.
The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term
“person” includes individuals, partnerships (including limited liability partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions thereof)
and other associations and entities. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
ARTICLE II
GENERAL PROVISIONS
Section 2.1. General Partner, Limited Partner, Special Partner,. The Partners may be General
Partners, Limited Partners or Special Partners. The General Partner as of the date hereof is SPFSA VIII L.L.C. and the Limited Partners as of the date hereof are those persons shown as Limited Partners in the books and records of the Partnership and
the Special Partners as of the date hereof are those persons shown as Special Partners in the books and records of the Partnership as of the date hereof. The books and records of the Partnership contain the
GP-Related Profit Sharing Percentage and GP-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to the GP-Related Investments of the Partnership as of the date hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each
Partner (including, without limitation, the General Partner) with respect to the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to
time to reflect additional GP-Related Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by
the Partnership of Capital Commitment Investments, the GP-Related Profit Sharing Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the Capital
Commitment Profit Sharing Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the admission of additional Partners, the Withdrawal of Partners, and the transfer or assignment of interests
in the Partnership pursuant to the terms of this Agreement. At the time of admission of each additional Partner, the General Partner shall determine in its sole discretion the GP-Related Investments and
Capital Commitment Investments in which such Partner shall participate and such Partner’s GP-Related Commitment, Capital Commitment-Related Commitment, GP-Related
Profit Sharing Percentage with respect to each such GP-Related Investment and Capital Commitment Profit Sharing Percentage with respect to each such Capital Commitment Investment. Each Partner may have a GP-Related Partner Interest and/or a Capital Commitment Partner Interest.
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Section 2.2. Formation; Name; Foreign Jurisdictions. The Partnership is
hereby continued as a limited partnership pursuant to the Partnership Act and shall conduct its activities on and after the date hereof under the name of Strategic Partners Fund Solutions Associates VIII L.P. The certificate of limited partnership
of the Partnership may be amended and/or restated from time to time by the General Partner, as an “authorized person” (within the meaning of the Partnership Act). The General Partner is further authorized to execute and deliver and file
any other certificates (and any amendments and/or restatements thereof) necessary for the Partnership to qualify to do business in a jurisdiction in which the Partnership may wish to conduct business.
Section 2.3. Term. The term of the Partnership shall continue until December 31, 2068, unless earlier dissolved and its
affairs wound up in accordance with this Agreement and the Partnership Act.
Section 2.4. Purposes; Powers.
(a) The purposes of the Partnership shall be, directly or indirectly through subsidiaries or Affiliates:
(i) to serve as the general partner of SP VIII and perform the functions of a general partner of SP VIII specified in the SP
VIII Agreements;
(ii) to serve as, and hold the Capital Commitment SP VIII Interest as, a capital partner (and, if
applicable, a limited partner and/or a general partner) of SP VIII and perform the functions of a capital partner (and, if applicable, a limited partner and/or a general partner) of SP VIII specified in the SP VIII Agreements;
(iii) to invest in Capital Commitment Investments and/or GP-Related Investments and
acquire and invest in Securities or other property directly or indirectly through SP VIII;
(iv) to make the Blackstone
Commitment or a portion thereof, directly or indirectly, and to invest in GP-Related Investments, Capital Commitment Investments and other Investments and acquire and invest in Securities or other property
either directly or indirectly through another entity;
(v) to serve as a general partner or limited partner of SP VIII and
/ or other partnerships and perform the functions of a general partner or limited partner, member, shareholder or other equity interest owner specified in the respective partnership agreement, limited liability company agreement, charter or other
governing documents, as amended, supplemented, restated or otherwise modified from time to time, of any such partnership;
(vi) to serve as a member, shareholder or other equity interest owner of limited liability companies, other companies,
corporations or other entities and perform the functions of a member, shareholder or other equity interest owner specified in the respective limited liability company agreement, charter or other governing documents, as amended, supplemented,
restated or otherwise modified from time to time, of any such limited liability company, company, corporation or other entity;
(vii) to carry on such other businesses, perform such other services and make such other investments as are deemed desirable by
the General Partner and as are permitted under the Partnership Act, the SP VIII Agreements, and any applicable partnership agreement, limited liability company agreement, charter or other governing document referred to in clause (v) or (vi)
above, in each case as the same may be amended, supplemented, restated or otherwise modified from time to time;
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(viii) any other lawful purpose; and
(ix) to do all things necessary, desirable, convenient or incidental thereto.
(b) In furtherance of its purposes, the Partnership shall have all powers necessary, suitable or convenient for the accomplishment of its
purposes, alone or with others, as principal or agent, including the following:
(i) to be and become a general partner or
limited partner of partnerships, a member of limited liability companies, a holder of common and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with the making of Investments or the
acquisition, holding or disposition of Securities or other property or as otherwise deemed appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection therewith;
(ii) to acquire and invest in general partner or limited partner interests, in limited liability company interests, in common
and preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or direct or indirect interests therein, whether such Investments and
Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company interests, stock, interests, obligations, Investments or Securities or
other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or short, options on futures contracts;
(iii) to buy, sell and otherwise acquire investments, whether such investments are readily marketable or not;
(iv) to invest and reinvest the cash assets of the Partnership in money-market or other
short-term investments;
(v) to hold, receive, mortgage, pledge, grant security
interests over, lease, transfer, exchange or otherwise dispose of, grant options with respect to, and otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or
owned by the Partnership;
(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by
mortgage, pledge, conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and
to buy, sell, pledge or otherwise dispose of any such instrument or evidence of indebtedness;
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(vii) to lend any of its property or funds, either with or without security,
at any legal rate of interest or without interest;
(viii) to have and maintain one or more offices within or without the
State of Delaware, and in connection therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection with the maintenance of such office or offices;
(ix) to open, maintain and close accounts, including margin accounts, with brokers and futures commission merchants;
(x) to open, maintain and close bank accounts and draw checks and other orders for the payment of moneys;
(xi) to engage accountants, auditors, custodians, investment advisers, attorneys and any and all other agents and assistants,
both professional and nonprofessional, and to compensate any of them as may be necessary or advisable;
(xii) to form or
cause to be formed and to own the stock of one or more corporations, whether foreign or domestic, to form or cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic and to form or cause to be formed and
be a member or manager or both of one or more limited liability companies;
(xiii) to enter into, make and perform all
contracts, agreements and other undertakings as may be necessary, convenient, advisable or incident to carrying out its purposes;
(xiv) to sue and be sued, to prosecute, settle or compromise all claims against third parties, to compromise, settle or accept
judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection therewith;
(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to the Partners cash or
investments or other property of the Partnership, or any combination thereof; and (xvi) to take such other actions necessary, desirable, convenient or incidental thereto and to engage in such other businesses as may be permitted under Delaware
and other applicable law.
Section 2.5. Place of Business. The Partnership shall maintain a registered office at c/o
Intertrust Corporate Services Delaware Ltd., 200 Bellevue Parkway, Suite 210, Bellevue Park Corporate Center, Wilmington, Delaware 19809. The Partnership shall maintain an office and principal place of business at such place or places as the General
Partner specifies from time to time and as set forth in the books and records of the Partnership. The name and address of the Partnership’s registered agent is Intertrust Corporate Services Delaware Ltd., 200 Bellevue Parkway, Suite 210,
Bellevue Park Corporate Center, Wilmington, Delaware 19809. The General Partner may from time to time change the registered agent or office by an amendment to the certificate of limited partnership of the Partnership.
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Section 2.6. Withdrawal of Initial Limited Partner. Upon the admission of
one or more additional Limited Partners to the Partnership, the Initial Limited Partner shall (a) Withdraw as the Initial Limited Partner of the Partnership, and (b) have no further right, interest or obligation of any kind whatsoever as a
Partner in the Partnership; provided, that the effective date of such Withdrawal shall be deemed as between the parties hereto to be December 21, 2018.
ARTICLE III
MANAGEMENT
Section 3.1. General Partner.
(a) SPFSA VIII L.L.C. is the General Partner as of the date hereof. The General Partner shall cease to be the General Partner only if
(i) it Withdraws from the Partnership for any reason, (ii) it consents in its sole discretion to resign as the General Partner, or (iii) a Final Event with respect to it occurs. The General Partner may not be removed without its
consent. There may be one or more General Partners. In the event that one or more other General Partners is admitted to the Partnership as such, all references herein to the “General Partner” in the singular form shall be deemed to also
refer to such other General Partners as may be appropriate. The relative rights and responsibilities of such General Partners will be as agreed upon from time to time between them.
(b) Upon the Withdrawal from the Partnership or voluntary resignation of the last remaining General Partner, all of the powers formerly vested
therein pursuant to this Agreement and the Partnership Act shall be exercised by a Majority in Interest of the Partners.
Section 3.2. Partner Voting, etc.
(a) Except as otherwise expressly provided herein and except as may be expressly required by the Partnership Act, Partners (including Special
Partners), other than General Partners, as such shall have no right to, and shall not, take part in the management or control of the Partnership’s business or act for or bind the Partnership, and shall have only the rights and powers granted to
Partners of the applicable class herein.
(b) To the extent a Partner is entitled to vote with respect to any matter relating to the
Partnership, such Partner shall not be obligated to abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such Partner (or any Affiliate thereof) in such matter.
(c) Meetings of the Partners may be called only by the General Partner.
(d) Notwithstanding any other provision of this Agreement, any Limited Partner or Withdrawn Partner that fails to respond to a notice provided
by the General Partner requesting the consent, approval or vote of such Limited Partner or Withdrawn Partner within 14 days after such notice is sent to such Limited Partner or Withdrawn Partner shall be deemed to have given its affirmative consent
or approval thereto.
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Section 3.3. Management. (a) The management, control and operation of
the Partnership and the formulation and execution of business and investment policy shall be vested in the General Partner. The General Partner shall, in its discretion, exercise all powers necessary and convenient for the purposes of the
Partnership, including those enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the General Partner pursuant to this Agreement shall be made in
its sole discretion, subject only to the express terms and conditions of this Agreement.
(b) Notwithstanding any provision in this
Agreement to the contrary, the Partnership is hereby authorized, without the need for any further act, vote or consent of any person (directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own
behalf or in its capacity as a general partner, capital partner and/or limited partner of SP VIII or as general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate or, if applicable, in the
Partnership’s capacity as a capital partner of SP VIII or as general or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (i) to execute and deliver, and to perform the Partnership’s
obligations under, the SP VIII Agreements, including, without limitation, serving as a general partner of SP VIII and, if applicable, a capital partner of SP VIII, (ii) if applicable, to execute and deliver, and to perform the
Partnership’s obligations under the governing agreement, as amended, supplemented, restated or otherwise modified (each a “Partnership Affiliate Governing Agreement”), of any other partnership, limited liability company, other
company, corporation or other entity (each a “Partnership Affiliate”) of which the Partnership is, or is to become, a general partner or limited partner, member, shareholder or other equity interest owner, including, without
limitation, serving as a general partner or limited partner, member, shareholder or other equity interest owner of each Partnership Affiliate, and (iii) to take any action, in the applicable capacity, contemplated by or arising out of this
Agreement, the SP VIII Agreements or each Partnership Affiliate Governing Agreement (and any amendment, supplement, restatement and/or other modification of any of the foregoing).
(c) The General Partner and any other person designated by the General Partner, each acting individually, is hereby authorized and empowered,
as an authorized person of the Partnership within the meaning of the Partnership Act, or otherwise, or as an authorized representative of the General Partner (the General Partner hereby authorizing and ratifying any of the following actions):
(i) to execute and deliver and/or file (including any such action, directly or indirectly through one or more other entities,
in the name and on behalf of the Partnership, on its own behalf, or in its capacity as general partner, capital partner and/or limited partner of SP VIII, or as general partner or limited partner, member, shareholder or other equity interest owner
of any Partnership Affiliate), any of the following:
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(A) any agreement, certificate, instrument or other document of the
Partnership, SP VIII or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications thereof), including, without limitation, the following: (I) the SP VIII Agreements and each Partnership Affiliate
Governing Agreement, (II) subscription agreements and documents on behalf of SP VIII, (III) side letters issued in connection with investments in SP VIII and (IV) such other agreements, certificates, instruments and other documents as
may be necessary or desirable in furtherance of the purposes of the Partnership, SP VIII or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing referred to in (I) through
(IV) above) and for the avoidance of doubt, this Agreement may be amended by the General Partner in its sole discretion;
(B) the certificates of formation, certificates of limited partnership and/or other organizational documents of the
Partnership, SP VIII or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing); and
(C) any other certificates, notices, applications and other documents (and any amendments, supplements, restatements and/or
other modifications thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Partnership, SP VIII or any Partnership Affiliate to qualify to do
business in a jurisdiction in which the Partnership, SP VIII or such Partnership Affiliate desires to do business;
(ii) to
prepare or cause to be prepared, and to sign, execute and deliver and/or file (including any such action, directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity
as a general partner, capital partner and/or limited partner of SP VIII or as a general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (A) any certificates, forms, notices, applications
and other documents to be filed with any government or governmental or regulatory body on behalf of the Partnership, SP VIII and/or any Partnership Affiliate, (B) any certificates, forms, notices, applications and other documents that may be
necessary or advisable in connection with any bank account of the Partnership, SP VIII or any Partnership Affiliate or any banking facilities or services that may be utilized by the Partnership, SP VIII or any Partnership Affiliate, and all checks,
notes, drafts and other documents of the Partnership, SP VIII or any Partnership Affiliate that may be required in connection with any such bank account or banking facilities or services and (C) resolutions with respect to any of the foregoing
matters (which resolutions, when executed by any person authorized as provided in this Section 3.3(c), each acting individually, shall be deemed to have been duly adopted by the General Partner, the Partnership, SP VIII or any Partnership
Affiliate, as applicable, for all purposes).
(d) The authority granted to any person (other than the General Partner) in
Section 3.3(c) may be revoked at any time by the General Partner by an instrument in writing signed by the General Partner.
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Section 3.4. Responsibilities of Partners.
(a) Unless otherwise determined by the General Partner in a particular case, each Limited Partner (other than a Special Partner) shall devote
substantially all of his or her time and attention to the businesses of the Partnership and its Affiliates, and each Special Partner shall not be required to devote any time or attention to the businesses of the Partnership or its Affiliates.
(b) All outside business or investment activities of the Partners (including outside directorships or trusteeships), shall be subject to such
rules and regulations as are established by the General Partner from time to time.
(c) The General Partner may from time to time establish
such other rules and regulations applicable to Partners or other employees as the General Partner deems appropriate, including rules governing the authority of Partners or other employees to bind the Partnership to financial commitments or other
obligations.
Section 3.5. Exculpation and Indemnification.
(a) Liability to Partners. Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent
permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually, a
“Covered Person” and collectively, the “Covered Persons”) shall be liable to the Partnership or any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related document or any
transaction or investment contemplated hereby or thereby) taken or omitted by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable judicial
determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority
granted to such Covered Person by this Agreement. Each Covered Person shall be entitled to rely in good faith on the advice of legal counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by any
Covered Person in reliance on such advice shall in any event subject such person to any liability to any Partner or the Partnership. To the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities relating
thereto to the Partnership or to another Partner, to the fullest extent permitted by law, such Partner acting under this Agreement shall not be liable to the Partnership or to any such other Partner for its good faith reliance on the provisions of
this Agreement. The provisions of this Agreement, to the extent that they expand or restrict the duties and liabilities of a Partner otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by law, to
modify to that extent such other duties and liabilities of such Partner. To the fullest extent permitted by law, the parties hereto agree that the General Partner shall be held to have acted in good faith for the purposes of this Agreement and its
duties under the Partnership Act if it believes that it has acted honestly and in accordance with the specific terms of this Agreement.
(b) Indemnification. (i) To the fullest extent permitted by law, the Partnership shall indemnify and hold harmless (but only to the
extent of the Partnership’s assets (including, without limitation, the remaining capital commitments of the Partners)) each Covered Person from and against any and all claims, damages, losses, costs, expenses and liabilities (including, without
limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines
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and penalties and legal or other costs and reasonable expenses of investigating or defending against any claim or alleged claim), joint and several, of any nature whatsoever, known or unknown,
liquidated or unliquidated (collectively, for purposes of this Section 3.5(b), “Losses”), arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the
Covered Person may be involved, or threatened to be involved, as a party or otherwise, by reason of such Covered Person’s management of the affairs of the Partnership or which relate to or arise out of or in connection with the Partnership, its
property, its business or affairs (other than claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, arising out of any act or omission of such Covered Person constituting Cause); provided, that a
Covered Person shall not be entitled to indemnification under this Section 3.5(b) with respect to any claim, issue or matter if there is a final and non-appealable judicial determination and/or
determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority granted to such Covered
Person by this Agreement; provided further, that if such Covered Person is a Partner or a Withdrawn Partner, such Covered Person shall bear its share of such Losses in accordance with such Covered Person’s GP-Related Profit Sharing Percentage in the Partnership as of the time of the actions or omissions that gave rise to such Losses. To the fullest extent permitted by law, expenses (including legal fees) incurred by a
Covered Person (including, without limitation, the General Partner) in defending any claim, demand, action, suit or proceeding may, with the approval of the General Partner, from time to time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by the Partnership of a written undertaking by or on behalf of the Covered Person to repay such amount to the extent that it shall be subsequently determined that the Covered
Person is not entitled to be indemnified as authorized in this Section 3.5(b), and the Partnership and its Affiliates shall have a continuing right of offset against such Covered Person’s interests/investments in the Partnership and such
Affiliates and shall have the right to withhold amounts otherwise distributable to such Covered Person to satisfy such repayment obligation. If a Partner institutes litigation against a Covered Person which gives rise to an indemnity obligation
hereunder, such Partner shall be responsible, up to the amount of such Partner’s Interests and remaining capital commitments, for such Partner’s pro rata share of the Partnership’s expenses related to such indemnity obligation,
as determined by the General Partner. The Partnership may purchase insurance, to the extent available at reasonable cost, to cover losses, claims, damages or liabilities covered by the foregoing indemnification provisions. Partners will not be
personally obligated with respect to indemnification pursuant to this Section 3.5(b). The General Partner shall have the authority to enter into separate agreements with any Covered Person in order to give effect to the obligations to indemnify
pursuant to this Section 3.5(b).
(ii) (A) Notwithstanding anything to the contrary herein, for greater
certainty, it is understood and/or agreed that the Partnership’s obligations hereunder are not intended to render the Partnership as a primary indemnitor for purposes of the indemnification, advancement of expenses and related provisions under
applicable law governing SP VIII and/or a particular portfolio entity through which an Investment is indirectly held. It is further understood and/or agreed that a Covered Person shall first seek to be so indemnified and have such expenses advanced
in the following order of priority: first, out of proceeds available in respect of applicable insurance policies maintained by the applicable portfolio entity and/or SP VIII; second, by the applicable portfolio entity through which
such investment is indirectly held; and third, by SP VIII (only to the extent the foregoing sources are exhausted).
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(B) The Partnership’s obligation, if any, to indemnify or advance
expenses to any Covered Person shall be reduced by any amount that such Covered Person may collect as indemnification or advancement from SP VIII and/or the applicable portfolio entity (including by virtue of any applicable insurance policies
maintained thereby), and to the extent the Partnership (or any Affiliate thereof) pays or causes to be paid any amounts that should have been paid by SP VIII and/or the applicable portfolio entity (including by virtue of any applicable insurance
policies maintained thereby), it is agreed among the Partners that the Partnership shall have a subrogation claim against SP VIII and/or such portfolio entity in respect of such advancement or payments. The General Partner and the Partnership shall
be specifically empowered to structure any such advancement or payment as a loan or other arrangement (except for a loan to an executive officer of The Blackstone Group Inc. or any of its Affiliates, which shall not be permitted) as the General
Partner may determine necessary or advisable to give effect to or otherwise implement the foregoing.
Section 3.6. Representations of Partners.
(a) Each Limited Partner and Special Partner by execution of this Agreement (or by otherwise becoming bound by the terms and conditions hereof
as provided herein or in the Partnership Act) represents and warrants to every other Partner and to the Partnership, except as may be waived by the General Partner, that such Partner is acquiring each of such Partner’s Interests for such
Partner’s own account for investment and not with a view to resell or distribute the same or any part hereof, and that no other person has any interest in any such Interest or in the rights of such Partner hereunder; provided, that a
Partner may choose to make transfers for estate and charitable planning purposes (pursuant to Section 6.3(a) and otherwise in accordance with the terms hereof). Each Limited Partner and Special Partner represents and warrants that such Partner
understands that the Interests have not been registered under the Securities Act, and therefore such Interests may not be resold without registration under the Securities Act or exemption from such registration, and that accordingly such Partner
must bear the economic risk of an investment in the Partnership for an indefinite period of time. Each Limited Partner and Special Partner represents that such Partner has such knowledge and experience in financial and business matters that such
Partner is capable of evaluating the merits and risks of an investment in the Partnership, and that such Partner is able to bear the economic risk of such investment. Each Limited Partner and Special Partner represents that such Partner’s
overall commitment to the Partnership and other investments which are not readily marketable is not disproportionate to the Partner’s net worth and the Partner has no need for liquidity in the Partner’s investment in Interests. Each
Limited Partner and Special Partner represents that to the full satisfaction of the Partner, the Partner has been furnished any materials that such Partner has requested relating to the Partnership, any Investment and the offering of Interests and
has been afforded the opportunity to ask questions of representatives of the Partnership concerning the terms and conditions of the offering of Interests and any matters pertaining to each Investment and to obtain any other additional information
relating thereto. Each Limited Partner and Special Partner represents that the Partner has consulted to the extent deemed appropriate by the Partner with the Partner’s own advisers as to the financial, tax, legal and related matters concerning
an investment in Interests and on that basis believes that an investment in the Interests is suitable and appropriate for the Partner.
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(b) Each Limited Partner and Special Partner agrees that the representations and warranties
contained in paragraph (a) above shall be true and correct as of any date that such Partner (1) makes a capital contribution to the Partnership (whether as a result of Firm Advances made to such Partner or otherwise) with respect to any
Investment, and such Partner hereby agrees that such capital contribution shall serve as confirmation thereof and/or (2) repays any portion of the principal amount of a Firm Advance, and such Partner hereby agrees that such repayment shall
serve as confirmation thereof.
Section 3.7. Tax Representation and Further Assurances. (a) Each Limited Partner and
Special Partner, upon the request of the General Partner, agrees to perform all further acts and to execute, acknowledge and deliver any documents that may be reasonably necessary to comply with the General Partner’s or the Partnership’s
obligations under applicable law or to carry out the provisions of this Agreement.
(b) Each Limited Partner and Special Partner certifies
that (A) if the Limited Partner or Special Partner is a United States person (as defined in the Code) (x) (i) the Limited Partner or Special Partner’s name, social security number (or, if applicable, employer identification number)
and address provided to the Partnership and its Affiliates pursuant to an IRS Form W 9, Request for Taxpayer Identification Number Certification (“W 9”) or otherwise are correct and (ii) the Limited Partner or Special Partner will
complete and return a W 9 and (y) (i) the Limited Partner or Special Partner is a United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days of a change to
foreign (non-United States) status or (B) if the Limited Partner or Special Partner is not a United States person (as defined in the Code) (x) (i) the information on the completed IRS Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) (“W-8BEN”), IRS Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)
(“W-8BEN-E”), or other applicable form, including but not limited to IRS Form W-8IMY, Certificate of Foreign
Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting (“W-8IMY”), or otherwise is correct and (ii) the Limited Partner or Special
Partner will complete and return the applicable IRS form, including but not limited to a W-8BEN, W-8BEN-E or W-8IMY, and (y) (i) the Limited Partner or Special Partner is not a United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days
of any change of such status. Each Limited Partner and Special Partner agrees to provide such cooperation and assistance, including but not limited to properly executing and providing to the Partnership in a timely manner any tax or other
documentation or information that may be reasonably requested by the Partnership or the General Partner.
(c) Each Limited Partner and
Special Partner acknowledges and agrees that the Partnership and the General Partner may release confidential information or other information about the Limited Partner or Special Partner or related to such Limited Partner or Special Partner’s
investment in the Partnership if the Partnership or the General Partner, in its or their sole discretion, determines that such disclosure is required by applicable law or regulation or in order to comply for an exception from, or reduced tax rate
of, tax or other tax benefit. Any such disclosure shall
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not be treated as a breach of any restriction upon the disclosure of information imposed on any such person by law or otherwise, and a Limited Partner or Special Partner shall have no claim
against the Partnership, the General Partner or any of their Affiliates for any form of damages or liability as a result of actions taken by the foregoing in order to comply with any disclosure obligations that the foregoing reasonably believe are
required by law, regulation or otherwise.
(d) Each Limited Partner and Special Partner acknowledges and agrees that if it provides
information that is in anyway materially misleading, or if it fails to provide the Partnership or its agents with any information requested hereunder, in either case in order to satisfy the Partnership’s obligations, the General Partner
reserves the right to take any action and pursue any remedies at its disposal, including (i) requiring such Limited Partner or Special Partner to Withdraw for Cause and (ii) withholding or deducting any costs caused by such Limited
Partner’s or Special Partner’s action or inaction from amounts otherwise distributable to such Limited Partner or Special Partner from the Partnership and its Affiliates.
ARTICLE IV
CAPITAL OF THE
PARTNERSHIP
Section 4.1. Capital Contributions by Partners. (a) Each Partner shall be required to make capital
contributions to the Partnership (“GP-Related Capital Contributions”) at such times and in such amounts (the “GP-Related Required
Amounts”) as are required to satisfy the Partnership’s obligation to make capital contributions to SP VIII in respect of the GP-Related SP VIII Interest with respect to any GP-Related SP VIII Investment and as are otherwise determined by the General Partner from time to time or as may be set forth in such Limited Partner’s Commitment Agreement or SMD Agreement, if any, or
otherwise; provided, that additional GP-Related Capital Contributions in excess of the GP-Related Required Amounts may be made pro rata among the Partners based upon
each Partner’s Carried Interest Sharing Percentage. GP-Related Capital Contributions in excess of the GP-Related Required Amounts which are to be used for ongoing
business operations (as distinct from financing, legal or other specific liabilities of the Partnership (including those specifically set forth in Section 4.1(d) and Section 5.8(d))) shall be determined by the General Partner. Special
Partners shall not be required to make additional GP-Related Capital Contributions to the Partnership in excess of the GP-Related Required Amounts, except (i) as a
condition of an increase in such Special Partner’s GP-Related Profit Sharing Percentage or (ii) as specifically set forth in this Agreement; provided, that the General Partner and any Special Partner
may agree from time to time that such Special Partner shall make an additional GP-Related Capital Contribution to the Partnership; provided, further, that each Investor Special Partner shall maintain its GP-Related Capital Accounts at an aggregate level equal to the product of (i) its GP-Related Profit Sharing Percentage from time to time and (ii) the total capital
of the Partnership related to the GP-Related SP VIII Interest.
(b) Each GP-Related Capital Contribution by a Partner shall be credited to the appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2, subject to
Section 5.10.
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(c) The General Partner may elect on a case by case basis to (i) cause the Partnership
to loan any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) the amount of any GP-Related Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any
Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) to make a required GP-Related Capital Contribution to the Partnership in installments, in each case on terms
determined by the General Partner.
(d) (i) The Partners and the Withdrawn Partners have entered into the Trust Agreement, pursuant to
which certain amounts of the distributions relating to Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account constituting a
“Holdback”). The General Partner shall determine, as set forth below, the percentage of each distribution of Carried Interest that shall be withheld for any General Partner and/or Holdings and each Partner Category (such withheld
percentage constituting the General Partner’s and such Partner Category’s “Holdback Percentage”). The applicable Holdback Percentages initially shall be 0% for any General Partner, 15% for Existing Partners (other than the
General Partner), 21% for Retaining Withdrawn Partners (other than the General Partner) and 24% for Deceased Partners (the “Initial Holdback Percentages”). Any provision of this Agreement to the contrary notwithstanding, the
Holdback Percentage for the General Partner and/or Holdings shall not be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).
(ii) The Holdback Percentage may not be reduced for any individual Partner as compared to the other Partners in his or her
Partner Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner Categories on a proportionate basis. For example, if the Holdback Percentage for Existing Partners is
decreased to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any reduction in the Holdback Percentage for any Partner shall apply only to distributions relating
to Carried Interest made after the date of such reduction.
(iii) The Holdback Percentage may not be increased for any
individual Partner as compared to the other Partners in his or her Partner Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’ Holdback Percentage beyond 21% unless the
General Partner concurrently increases the Existing Partners’ Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the General Partner increases the Holdback
Percentage for both Existing Partners and Retaining Withdrawn Partners to 24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies equally to all Partner Categories. Any
increase in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner from proportionately increasing the
Holdback Percentage of any Partner Category (following a reduction of the Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For example, if the General Partner reduces
the Holdback Percentages for Existing Partners, Retaining Withdrawn Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the Holdback Percentages to the Initial
Holdback Percentages.
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(iv) (A) Notwithstanding anything contained herein to the contrary, the
General Partner may increase or decrease the Holdback Percentage for any Partner in any Partner Category (in such capacity, the “Subject Partner”) pursuant to a majority vote of the Limited Partners (a “Holdback
Vote”); provided, that, notwithstanding anything to the contrary contained herein, the Holdback Percentage applicable to any General Partner shall not be increased or decreased without its prior written consent; provided
further, that a Subject Partner’s Holdback Percentage shall not be (I) increased prior to such time as such Subject Partner (x) is notified by the Partnership of the decision to increase such Subject Partner’s Holdback
Percentage and (y) has, if requested by such Subject Partner, been given 30 days to gather and provide information to the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) or (II) decreased
unless such decrease occurs subsequent to an increase in a Subject Partner’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv); provided further, that such decrease shall not exceed an amount such that such
Subject Partner’s Holdback Percentage is less than the prevailing Holdback Percentage for the Partner Category of such Subject Partner; provided further, that a Partner shall not vote to increase a Subject Partner’s Holdback
Percentage unless such voting Partner determines, in such Partner’s good faith judgment, that the facts and circumstances indicate that it is reasonably likely that such Subject Partner, or any of such Subject Partner’s successors or
assigns (including such Subject Partner’s estate or heirs) who at the time of such vote holds the GP-Related Partner Interest or otherwise has the right to receive distributions relating thereto, will not
be capable of satisfying any GP-Related Recontribution Amounts that may become due.
(B) A Holdback Vote shall take place at a Partnership meeting. Each of the Limited Partners shall be entitled to cast one vote
with respect to the Holdback Vote regardless of such Limited Partner’s interest in the Partnership. Such vote may be cast by any such Partner in person or by proxy.
(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback Percentage, such Subject
Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided, that if the Partnership and the Subject Partner cannot agree upon a mutually satisfactory
arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates; provided further, that if such candidates
fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the arbitrator. Each Subject Partner that submits the decision of the
Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected out-of-pocket expenses relating thereto,
and each such party shall, to the satisfaction of the arbitrator and prior to any determination being made by the arbitrator, pay the total of such estimated expenses (i.e., both the Subject Partner’s and the Partnership’s expenses) into
an escrow account. The arbitrator shall direct the escrow agent to
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pay out of such escrow account all expenses associated with such arbitration (including costs leading thereto) and to return to the “victorious” party the entire amount of funds such
party paid into such escrow account. If the amount contributed to the escrow account by the losing party is insufficient to cover the expenses of such arbitration, such “losing” party shall then provide any additional funds necessary to
cover such costs to such “victorious” party. For purposes hereof, the “victorious” party shall be the Partnership if the Holdback Percentage ultimately determined by the arbitrator is closer to the percentage determined in the
second Holdback Vote than it is to the prevailing Holdback Percentage for the Subject Partner’s Partner Category; otherwise, the Subject Partner shall be the “victorious” party. The party that is not the “victorious” party
shall be the “losing” party.
(D) In the event of a decrease in a Subject Partner’s Holdback Percentage
(1) pursuant to a Holdback Vote under this clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and distribute to such Subject Partner any Trust Amounts (and
the Trust Income thereon (except as expressly provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance with such Subject Partner’s reduced Holdback
Percentage) as though such reduced Holdback Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).
(v) (A) If a Partner’s Holdback Percentage exceeds 15% (such percentage in excess of 15% constituting the
“Excess Holdback Percentage”), such Partner may satisfy the portion of his or her Holdback obligation in respect of his or her Excess Holdback Percentage (such portion constituting such Partner’s “Excess
Holdback”), and such Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he or she was a Partner), to the extent his or her Excess Holdback obligation has previously been satisfied in cash, may
obtain the release of the Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback
obligation, by pledging, granting a security interest or otherwise making available to the General Partner, on a first priority basis (except as provided below), all or any portion of his or her Firm Collateral in satisfaction of his or her Excess
Holdback obligation. Any Partner seeking to satisfy all or any portion of the Excess Holdback utilizing Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the
General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Partnership to realize on (if required), such Firm Collateral; provided, that, in the case of entities listed in the Partnership’s
books and records in which Partners are permitted to pledge or grant a security interest over their interests therein to finance all or a portion of their capital contributions thereto (“Pledgable Blackstone Interests”), to the
extent a first priority security interest is unavailable because of an existing lien on such Firm Collateral, the Partner or Withdrawn Partner seeking to utilize such Firm Collateral shall grant the General Partner a second priority security
interest therein in the manner provided above; provided further, that (x) in the case of Pledgable Blackstone Interests, to the extent that neither a
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first priority nor a second priority security interest is available, or (y) if the General Partner otherwise determines in its good faith judgment that a security interest in Firm Collateral
(and the corresponding documents and actions) are not necessary or appropriate, the Partner or Withdrawn Partner shall (in the case of either clause (x) or (y) above) irrevocably instruct in writing the relevant partnership, limited liability
company or other entity listed in the Partnership’s books and records to remit any and all net proceeds resulting from a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully provided in clause (B) below. The
Partnership shall, at the request of any Partner or Withdrawn Partner, assist such Partner or Withdrawn Partner in taking such action as is necessary to enable such Partner or Withdrawn Partner to use Firm Collateral as provided hereunder.
(B) If upon a sale or other realization of all or any portion of any Firm Collateral (a “Firm Collateral
Realization”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner
from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust Account to fully satisfy such Excess Holdback requirement
(allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount necessary to satisfy such Excess Holdback requirement
shall be distributed to such Partner or Withdrawn Partner.
(C) Upon any valuation or revaluation of Firm Collateral that
results in a decreased valuation of such Firm Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including upon a Firm Collateral Realization, if net proceeds
therefrom and the remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the foregoing to such Partner or Withdrawn Partner and such
Partner or Withdrawn Partner shall, within 30 days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his or her Excess Holdback requirement. If any such Partner or
Withdrawn Partner defaults upon his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable to a default under this clause
(C); provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such
Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and
“GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
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(vi) Any Partner or Withdrawn Partner may (A) obtain the release of any
Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such Partner or Withdrawn
Partner or (B) require the Partnership to distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit (an “L/C”) for the
benefit of the Trustee(s) in such amounts. Any Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall deliver to the Trustee(s) an unconditional and irrevocable L/C from
a commercial bank whose (x) short-term deposits are rated at least A-1 by S&P or P-1 by Moody’s (if the L/C is for a term of 1 year or less), or
(y) long-term deposits are rated at least A+ by S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more) (each a “Required Rating”). If the relevant rating of the commercial bank issuing such L/C drops below
the relevant Required Rating, the L/C Partner shall supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, in lieu of the insufficient
L/C. In addition, if the L/C has a term expiring on a date earlier than the latest possible termination date of SP VIII, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to provide a new L/C from a commercial bank
whose relevant rating is at least equal to the relevant Required Rating, at least 30 days prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to drawing on any L/C. The Trustee(s) may
(as directed by the Partnership in the case of clause (I) below) draw down on an L/C only if (I) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the Partnership’s obligations under the Clawback
Provisions or (II) an L/C Partner has not provided a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash and/or Firm Collateral (to the extent permitted
hereunder)), at least 30 days prior to the stated expiration of an existing L/C in accordance with this clause (vi). The Trustee(s), as directed by the Partnership, shall return to any L/C Partner his or her L/C upon (1) the termination of the
Trust Account and satisfaction of the Partnership’s obligations, if any, in respect of the Clawback Provisions, (2) an L/C Partner satisfying his or her entire Holdback obligation in cash and Firm Collateral (to the extent permitted
hereunder), or (3) the release, by the Trustee(s), as directed by the Partnership, of all amounts in the Trust Account to the Partners or Withdrawn Partners. If an L/C Partner satisfies a portion of his or her Holdback obligation in cash and/or
Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as directed by the Partnership, release a portion of the amounts in the Trust Account to the Partners or Withdrawn Partners in the Partner Category of such L/C Partner, the
L/C of an L/C Partner may be reduced by an amount corresponding to such portion satisfied in cash and/or Firm Collateral (to the extent permitted hereunder) or such portion released by the Trustee(s), as directed by the Partnership; provided,
that in no way shall the general release of any Trust Income cause an L/C Partner to be permitted to reduce the amount of an L/C by any amount.
(vii) (A) Any in-kind distributions by the Partnership relating to Carried
Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose of any in-kind distributions held in the Trust Account at any
time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.
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(B) In lieu of the foregoing, any Existing Partner may pledge or grant a
security interest with respect to any in-kind distribution the Special Firm Collateral referred to in the applicable category in the Partnership’s books and records; provided, that the initial
contribution of such Special Firm Collateral shall initially equal 130% of the required Holdback for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback. Sections 4.1(d)(viii)(C) and (D) shall apply to such
Special Firm Collateral. To the extent such Special Firm Collateral exceeds the applicable minimum percentage of the required Holdback specified in the first sentence of this clause (vii)(B), the related Partner may obtain a release of such excess
amount from the Trust Account.
(viii) (A) Any Limited Partner or Withdrawn Partner may satisfy all or any portion of
his or her Holdback (excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his or her Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by the use of an L/C as provided herein,
obtain a release of Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn Partner’s Holdback (excluding any
Excess Holdback) by pledging or otherwise granting a security interest to the Trustee(s) on a first priority basis all of his or her Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or exceed the amount of the
Holdback distributed to the Partner or Withdrawn Partner (as more fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise take such other action as
is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) to realize on (if required), such Special Firm Collateral.
(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or any portion of any Special Firm
Collateral (a “Special Firm Collateral Realization”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in connection with an Excess Holdback)
is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided herein (i.e., cash contributed to the Trust Account or an L/C in the Trust Account)), then
up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Special Firm Collateral Realization (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund or other asset and is
being used in connection with an Excess Holdback) shall be paid into the Trust (and allocated to such Partner or Withdrawn Partner) to fully satisfy such Holdback and shall be deemed thereafter to be Trust Amounts for purposes hereunder. Any net
proceeds from such Special Firm Collateral Realization in excess of the amount necessary to satisfy such Holdback (excluding any Excess Holdback) shall be distributed to such Partner or Withdrawn Partner. To the extent a Qualifying Fund distributes
Securities to a Partner or Withdrawn Partner in connection with a Special Firm Collateral Realization, such Partner or Withdrawn Partner shall be required to promptly fund such Partner’s or Withdrawn Partner’s deficiency with respect to
his or her Holdback in cash or an L/C.
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(C) Upon any valuation or revaluation of the Special Firm Collateral and/or
any adjustment in the Applicable Collateral Percentage applicable to a Qualifying Fund (as provided in the Partnership’s books and records), if such Partner’s or Withdrawn Partner’s Special Firm Collateral is valued at less than such
Partner’s Holdback (excluding any Excess Holdback) as provided in the Partnership’s books and records, taking into account other permitted means of satisfying the Holdback hereunder, the Partnership shall provide notice of the foregoing to
such Partner or Withdrawn Partner and, within 10 Business Days of receiving such notice, such Partner or Withdrawn Partner shall contribute cash or additional Special Firm Collateral to the Trust Account in an amount necessary to make up such
deficiency. If any such Partner or Withdrawn Partner defaults upon his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that the first sentence of Section 5.8(d)(ii)(A) shall be deemed
inapplicable to such default; provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term
appears in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(D) Upon a Partner becoming a Withdrawn Partner, at any time thereafter the General Partner may revoke the ability of such
Withdrawn Partner to use Special Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding anything else in this Section 4.1(d)(viii). In that case the provisions of clause (C) above shall apply to the Withdrawn
Partner’s obligation to satisfy the Holdback (except that 30 days’ notice of such revocation shall be given), given that the Special Firm Collateral is no longer available to satisfy any portion of the Holdback (excluding any Excess
Holdback).
(E) Nothing in this Section 4.1(d)(viii) shall prevent any Partner or Withdrawn Partner from using any
amount of such Partner’s interest in a Qualifying Fund as Firm Collateral; provided, that at all times Section 4.1(d)(v) and this Section 4.1(d)(viii) are each satisfied.
Section 4.2. Interest. Interest on the balances of the Partners’ capital related to the Partners’ GP-Related Partner Interests (excluding capital invested in GP-Related Investments and, if deemed appropriate by the General Partner, capital invested in any other investment
of the Partnership) shall be credited to the Partners’ GP-Related Capital Accounts at the end of each accounting period pursuant to Section 5.2, or at any other time as determined by the General
Partner, at rates determined by the General Partner from time to time, and shall be charged as an expense of the Partnership.
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Section 4.3. Withdrawals of Capital. No Partner may withdraw capital
related to such Partner’s GP-Related Partner Interests from the Partnership except (i) for distributions of cash or other property pursuant to Section 5.8, (ii) as otherwise expressly provided
in this Agreement or (iii) as determined by the General Partner.
ARTICLE V
PARTICIPATION IN PROFITS AND LOSSES
Section 5.1. General Accounting Matters.
(a) GP-Related Net Income (Loss) shall be determined by the General Partner at the end of each
accounting period and shall be allocated as described in Section 5.4.
(b) “GP-Related
Net Income (Loss)” means:
(i) from any activity of the Partnership related to the
GP-Related SP VIII Interest for any accounting period (other than GP-Related Net Income (Loss) from GP-Related Investments
described below), (x) the gross income realized by the Partnership from such activity during such accounting period less (y) all expenses of the Partnership, and all other items that are deductible from gross income, for such accounting period
that are allocable to such activity (determined as provided below);
(ii) from any
GP-Related Investment for any accounting period in which such GP-Related Investment has not been sold or otherwise disposed of, (x) the gross amount of dividends,
interest or other income received by the Partnership from such GP-Related Investment during such accounting period less (y) all expenses of the Partnership for such accounting period that are allocable to
such GP-Related Investment (determined as provided below); and
(iii) from any GP-Related Investment for the accounting period in which such GP-Related Investment is sold or otherwise disposed of, (x) the sum of the gross proceeds from the sale or
other disposition of such GP-Related Investment and the gross amount of dividends, interest or other income received by the Partnership from such GP-Related Investment
during such accounting period less (y) the sum of the cost or other basis to the Partnership of such GP-Related Investment and all expenses of the Partnership for such accounting period that are allocable
to such GP-Related Investment.
(c) GP-Related Net Income
(Loss) shall be determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (i) any income of the Partnership that is exempt from U.S. federal income taxation
and not otherwise taken into account in computing GP-Related Net Income (Loss) shall be added to such taxable income or loss; (ii) if any asset has a value in the books of the Partnership that differs
from its adjusted tax basis for U.S. federal income tax purposes, any depreciation, amortization or gain resulting from a disposition of such asset shall be calculated with reference to such value; (iii) upon an adjustment to the value of any
asset in the books of the Partnership pursuant to Treasury Regulations Section 1.704-1(b)(2), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss;
(iv) any expenditures of the
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Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing GP-Related Net
Income (Loss) pursuant to this definition shall be treated as deductible items; (v) any income from a GP-Related Investment that is payable to Partnership employees in respect of “phantom
interests” in such GP-Related Investment awarded by the General Partner to employees shall be included as an expense in the calculation of GP-Related Net Income
(Loss) from such GP-Related Investment, and (vi) items of income and expense (including interest income and overhead and other indirect expenses) of the Partnership, Holdings and other Affiliates of the
Partnership shall be allocated among the Partnership, Holdings and such Affiliates, among various Partnership activities and GP-Related Investments and between accounting periods, in each case as determined by
the General Partner. Any adjustments to GP-Related Net Income (Loss) by the General Partner, including adjustments for items of income accrued but not yet received, unrealized gains, items of expense accrued
but not yet paid, unrealized losses, reserves (including reserves for taxes, bad debts, actual or threatened litigation, or any other expenses, contingencies or obligations) and other appropriate items shall be made in accordance with GAAP;
provided, that the General Partner shall not be required to make any such adjustment.
(d) An accounting period shall be a Fiscal
Year, except that, at the option of the General Partner, an accounting period will terminate and a new accounting period will begin on the admission date of an additional Partner or the Settlement Date of a Withdrawn Partner, if any such date is not
the first day of a Fiscal Year. If any event referred to in the preceding sentence occurs and the General Partner does not elect to terminate an accounting period and begin a new accounting period, then the General Partner may make such adjustments
as it deems appropriate to the Partners’ GP-Related Profit Sharing Percentages for the accounting period in which such event occurs (prior to any allocations of
GP-Related Unallocated Percentages or adjustments to GP-Related Profit Sharing Percentages pursuant to Section 5.3) to reflect the Partners’ average GP-Related Profit Sharing Percentages during such accounting period; provided, that the GP-Related Profit Sharing Percentages of Partners in GP-Related Net Income (Loss) from GP-Related Investments acquired during such accounting period will be based on GP-Related Profit
Sharing Percentages in effect when each such GP-Related Investment was acquired.
(e) In
establishing GP-Related Profit Sharing Percentages and allocating GP-Related Unallocated Percentages pursuant to Section 5.3, the General Partner may consider such
factors as it deems appropriate.
(f) All determinations, valuations and other matters of judgment required to be made for accounting
purposes under this Agreement shall be made by the General Partner and approved by the Partnership’s independent accountants. Such approved determinations, valuations and other accounting matters shall be conclusive and binding on all Partners,
all Withdrawn Partners, their successors, heirs, estates or legal representatives and any other person, and to the fullest extent permitted by law no such person shall have the right to an accounting or an appraisal of the assets of the Partnership
or any successor thereto.
Section 5.2. GP-Related Capital Accounts.
(a) There shall be established for each Partner in the books of the Partnership, to the extent and at such times as may be appropriate, one or
more capital accounts as the General Partner may deem to be appropriate for purposes of accounting for such Partner’s interests in the capital of the Partnership related to the GP-Related SP VIII Interest
and the GP-Related Net Income (Loss) of the Partnership (each a “GP-Related Capital Account”).
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(b) As of the end of each accounting period or, in the case of a contribution to the
Partnership by one or more of the Partners with respect to such Partner or Partners’ GP-Related Partner Interests or a distribution by the Partnership to one or more of the Partners with respect to such
Partner or Partners’ GP-Related Partner Interests, at the time of such contribution or distribution, (i) the appropriate GP-Related Capital Accounts of each
Partner shall be credited with the following amounts: (A) the amount of cash and the value of any property contributed by such Partner to the capital of the Partnership related to such Partner’s
GP-Related Partner Interest during such accounting period, (B) the GP-Related Net Income allocated to such Partner for such accounting period and (C) the
interest credited on the balance of such Partner’s capital related to such Partner’s GP-Related Partner Interest for such accounting period pursuant to Section 4.2; and (ii) the appropriate
GP-Related Capital Accounts of each Partner shall be debited with the following amounts: (x) the amount of cash, the principal amount of any subordinated promissory note of the Partnership referred to in
Section 6.5 (as such amount is paid) and the value of any property distributed to such Partner during such accounting period with respect to such Partner’s GP-Related Partner Interest and
(y) the GP-Related Net Loss allocated to such Partner for such accounting period.
Section 5.3. GP-Related Profit Sharing Percentages.
(a) Prior to the beginning of each annual accounting period, the General Partner shall establish the profit sharing percentage (the “GP-Related Profit Sharing Percentage”) of each Partner in each category of GP-Related Net Income (Loss) for such annual accounting period pursuant to
Section 5.1(a) taking into account such factors as the General Partner deems appropriate; provided, that (i) the General Partner may elect to establish GP-Related Profit Sharing Percentages in
GP-Related Net Income (Loss) from any GP-Related Investment acquired by the Partnership during such accounting period at the time such
GP-Related Investment is acquired in accordance with paragraph (c) below and (ii) GP-Related Net Income (Loss) for such accounting period from any GP-Related Investment shall be allocated in accordance with the GP-Related Profit Sharing Percentages in such GP-Related Investment
established in accordance with paragraph (c) below. The General Partner may establish different GP-Related Profit Sharing Percentages for any Partner in different categories of GP-Related Net Income (Loss). In the case of the Withdrawal of a Partner, such former Partner’s GP-Related Profit Sharing Percentages shall be allocated by the General
Partner to one or more of the remaining Partners as the General Partner shall determine. In the case of the admission of any Partner to the Partnership as an additional Partner, the GP-Related Profit Sharing
Percentages of the other Partners shall be reduced by an amount equal to the GP-Related Profit Sharing Percentage allocated to such new Partner pursuant to Section 6.1(b); such reduction of each other
Partner’s GP-Related Profit Sharing Percentage shall be pro rata based upon such Partner’s GP-Related Profit Sharing Percentage as in effect immediately
prior to the admission of the new Partner. Notwithstanding the foregoing, the General Partner may also adjust the GP-Related Profit Sharing Percentage of any Partner for any annual accounting period at the end
of such annual accounting period in its sole discretion.
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(b) The General Partner may elect to allocate to the Partners less than 100% of the GP-Related Profit Sharing Percentages of any category for any annual accounting period at the time specified in Section 5.3(a) for the annual fixing of GP-Related Profit
Sharing Percentages (any remainder of such GP-Related Profit Sharing Percentages being called a “GP-Related Unallocated Percentage”); provided,
that any GP-Related Unallocated Percentage in any category of GP-Related Net Income (Loss) for any annual accounting period that is not allocated by the General Partner
within 90 days after the end of such accounting period shall be deemed to be allocated among all the Partners (including the General Partner) in the manner determined by the General Partner in its sole discretion.
(c) Unless otherwise determined by the General Partner in a particular case, (i) GP-Related Profit
Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment shall be allocated in proportion to the Partners’ respective GP-Related Capital Contributions in respect of such GP-Related Investment and (ii) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from each GP-Related Investment shall be fixed at the time such GP-Related Investment is acquired and
shall not thereafter change, subject to any repurchase rights established by the General Partner pursuant to Section 5.7.
Section 5.4. Allocations of GP-Related Net Income (Loss) .
(a) Except as provided in Section 5.4(d), GP-Related Net Income of the Partnership for each GP-Related Investment shall be allocated to the GP-Related Capital Accounts related to such GP-Related Investment of all the Partners
participating in such GP-Related Investment (including the General Partner): first, in proportion to and to the extent of the amount of Non-Carried Interest (other than
amounts representing a return of GP-Related Capital Contributions) or Carried Interest distributed to the Partners; second, to Partners that received Non-Carried
Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest in years prior to the years such GP-Related Net Income is
being allocated to the extent such Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest exceeded GP-Related Net Income allocated to such Partners in such earlier years; and third, to the Partners in the same manner that such Non-Carried Interest (other than amounts
representing a return of GP-Related Capital Contributions) or Carried Interest would have been distributed if cash were available to distribute with respect thereto.
(b) GP-Related Net Loss of the Partnership shall be allocated as follows: (i) GP-Related Net Loss relating to realized losses suffered by SP VIII and allocated to the Partnership with respect to its pro rata share thereof (based on capital contributions made by the Partnership
to SP VIII with respect to the GP-Related SP VIII Interest) shall be allocated to the Partners in accordance with each Partner’s Non-Carried Interest Sharing
Percentage with respect to the GP-Related Investment giving rise to such loss suffered by SP VIII and (ii) GP-Related Net Loss relating to realized losses suffered
by SP VIII and allocated to the Partnership with respect to the Carried Interest shall be allocated in accordance with a Partner’s (including a Withdrawn Partner’s) Carried Interest Give Back Percentage (as of the date of such loss)
(subject to adjustment pursuant to Section 5.8(e)).
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(c) Notwithstanding Section 5.4(a) above,
GP-Related Net Income relating to Carried Interest allocated after the allocation of a GP-Related Net Loss pursuant to clause (ii) of Section 5.4(b) shall be
allocated in accordance with such Carried Interest Give Back Percentages until such time as the Partners have been allocated GP-Related Net Income relating to Carried Interest equal to the aggregate amount of GP-Related Net Loss previously allocated in accordance with clause (ii) of Section 5.4(b). Withdrawn Partners shall remain Partners for purposes of allocating such
GP-Related Net Loss with respect to Carried Interest.
(d) To the extent the Partnership has any GP-Related Net Income (Loss) for any accounting period unrelated to SP VIII, such GP-Related Net Income (Loss) will be allocated in accordance with GP-Related Profit Sharing Percentages prevailing at the beginning of such accounting period.
(e) The
General Partner may authorize from time to time advances to Partners (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc.
or any Affiliate thereof) against their allocable shares of GP-Related Net Income (Loss).
(f)
Notwithstanding the foregoing, the General Partner may make such allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems
reasonably necessary for this purpose.
Section 5.5. Liability of Partners. Except as otherwise provided in the
Partnership Act or as expressly provided in this Agreement, no Partner shall be personally obligated for any debt, obligation or liability of the Partnership or of any other Partner solely by reason of being a Partner. In no event shall any Partner
or Withdrawn Partner (i) be obligated to make any capital contribution or payment to or on behalf of the Partnership or (ii) have any liability to return distributions received by such Partner from the Partnership, in each case except as
specifically provided in Section 4.1(d) or Section 5.8 or otherwise in this Agreement, as such Partner shall otherwise expressly agree in writing or as may be required by applicable law.
Section 5.6. [Intentionally Omitted].
Section 5.7. Repurchase Rights, etc. The General Partner may from time to time establish such repurchase rights and/or other
requirements with respect to the Partners’ GP-Related Partner Interests relating to GP-Related SP VIII Investments as the General Partner may determine. The General
Partner shall have authority to (a) withhold any distribution otherwise payable to any Partner until any such repurchase rights have lapsed or any such requirements have been satisfied, (b) pay any distribution to any Partner that is
Contingent as of the distribution date and require the refund of any portion of such distribution that is Contingent as of the Withdrawal Date of such Partner, (c) amend any previously established repurchase rights or other requirements from
time to time and (d) make such exceptions thereto as it may determine on a case by case basis.
Section 5.8. Distributions.
(a) (i) The Partnership shall make distributions of available cash (subject to reserves and other adjustments as provided herein) or other
property to Partners with respect to such Partners’ GP-Related Partner Interests at such times and in such amounts as are determined by the General Partner. The General Partner shall, if it deems it
appropriate, determine the
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availability for distribution of, and distribute, cash or other property separately for each category of GP-Related Net Income (Loss) established pursuant
to Section 5.1(a). Distributions of cash or other property with respect to Non-Carried Interest shall be made among the Partners in accordance with their respective
Non-Carried Interest Sharing Percentages, and, subject to Section 4.1(d) and Section 5.8(e), distributions of cash or other property with respect to Carried Interest shall be made among Partners in
accordance with their respective Carried Interest Sharing Percentages.
(ii) At any time that a sale, exchange, transfer or
other disposition by SP VIII of a portion of a GP-Related Investment is being considered by the Partnership (a “GP-Related Disposable Investment”), at
the election of the General Partner each Partner’s GP-Related Partner Interest with respect to such GP-Related Investment shall be vertically divided into two
separate GP-Related Partner Interests, a GP-Related Partner Interest attributable to the GP-Related Disposable Investment (a
Partner’s “GP-Related Class B Interest”), and a GP-Related Partner Interest attributable to such
GP-Related Investment excluding the GP-Related Disposable Investment (a Partner’s “GP-Related
Class A Interest”). Distributions (including those resulting from a sale, transfer, exchange or other disposition by SP VIII) relating to a GP-Related Disposable Investment (with
respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of GP-Related Class B Interests with respect to such GP-Related Investment in accordance with their GP-Related Profit Sharing Percentages relating to such GP-Related Class B
Interests, and distributions (including those resulting from the sale, transfer, exchange or other disposition by SP VIII) relating to a GP-Related Investment excluding such
GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of
GP-Related Class A Interests with respect to such GP-Related Investment in accordance with their respective GP-Related
Profit Sharing Percentages relating to such GP-Related Class A Interests. Except as provided above, distributions of cash or other property with respect to each category of
GP-Related Net Income (Loss) shall be allocated among the Partners in the same proportions as the allocations of GP-Related Net Income (Loss) of each such category.
(b) Subject to the Partnership’s having sufficient available cash in the reasonable judgment of the General Partner, the Partnership shall
make cash distributions to each Partner with respect to each Fiscal Year of the Partnership in an aggregate amount at least equal to the total U.S. federal, New York State and New York City income and other taxes that would be payable by such
Partner with respect to all categories of GP-Related Net Income (Loss) allocated to such Partner for such Fiscal Year, the amount of which shall be calculated (i) on the assumption that each Partner is an
individual subject to the then prevailing maximum rate of U.S. federal, New York State and New York City and other income taxes (including, without limitation, taxes under Sections 1401 and 1411 of the Code), (ii) taking into account (x) the
limitations on the deductibility of expenses and other items for U.S. federal income tax purposes and (y) the character (e.g., long-term or short-term capital gain or ordinary or exempt) of the applicable income, and (iii) taking into
account any differential in applicable rates due to the type and character of GP-Related Net Income (Loss) allocated to such Partner. Notwithstanding the provisions of the foregoing sentence, the General
Partner may refrain from making any distribution if, in the reasonable judgment of the General Partner, such distribution is prohibited by applicable law.
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(c) The General Partner may provide that the
GP-Related Partner Interest of any Partner or employee (including such Partner’s or employee’s right to distributions and investments of the Partnership related thereto) may be subject to repurchase
by the Partnership during such period as the General Partner shall determine (a “Repurchase Period”). Any Contingent distributions from GP-Related Investments subject to repurchase rights will
be withheld by the Partnership and will be distributed to the recipient thereof (together with interest thereon at rates determined by the General Partner from time to time) as the recipient’s rights to such distributions become Non-Contingent (by virtue of the expiration of the applicable Repurchase Period or otherwise). The General Partner may elect in an individual case to have the Partnership distribute any Contingent distribution to
the applicable recipient thereof irrespective of whether the applicable Repurchase Period has lapsed. If a Partner Withdraws from the Partnership for any reason other than his or her death, Total Disability or Incompetence, the undistributed share
of any GP-Related Investment that remains Contingent as of the applicable Withdrawal Date shall be repurchased by the Partnership at a purchase price determined at such time by the General Partner. Unless
determined otherwise by the General Partner, the repurchased portion thereof will be allocated among the remaining Partners with interests in such GP-Related Investment in proportion to their respective
percentage interests in such GP-Related Investment, or if no other Partner has a percentage interest in such specific GP-Related Investment, to the General Partner;
provided, that the General Partner may allocate the Withdrawn Partner’s share of unrealized investment income from a repurchased GP-Related Investment attributable to the period after the Withdrawn
Partner’s Withdrawal Date on any basis it may determine, including to existing or new Partners who did not previously have interests in such GP-Related Investment, except that, in any event, each Investor
Special Partner shall be allocated a share of such unrealized investment income equal to its respective GP-Related Profit Sharing Percentage of such unrealized investment income.
(d) (i) (A) If the Partnership is obligated under the Clawback Provisions or Giveback Provisions to contribute to SP VIII a Clawback
Amount or a Giveback Amount (other than a Capital Commitment Giveback Amount) in respect of the GP-Related SP VIII Interest (the amount of any such obligation of the Partnership with respect to such a Giveback
Amount being herein called a “GP-Related Giveback Amount”), the General Partner shall call for such amounts as are necessary to satisfy such obligations of the Partnership as determined by the
General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the General Partner, such an amount of prior distributions by the Partnership (and the Other Fund GPs) with respect
to Carried Interest (and/or Non-Carried Interest in the case of a GP-Related Giveback Amount) (the “GP-Related
Recontribution Amount”) which equals (I) the product of (a) a Partner’s or Withdrawn Partner’s Carried Interest Give Back Percentage and (b) the aggregate Clawback Amount payable by the Partnership in the case of
Clawback Amounts and (II) with respect to a GP-Related Giveback Amount, such Partner’s pro rata share of prior distributions of Carried Interest and/or
Non-Carried Interest in connection with (a) the GP-Related SP VIII Investment giving rise to the GP-Related Giveback Amount,
(b) if the amounts contributed pursuant to clause (II)(a) above are insufficient to satisfy such GP-Related Giveback Amount, GP-Related SP VIII Investments other
than the one giving rise to such obligation, but only those amounts received by the Partners with an interest in the GP-Related SP VIII Investment referred to in clause (II)(a) above, and (c) if the GP-Related Giveback Amount pursuant to an applicable SP VIII Agreement is unrelated to a specific GP-Related SP VIII Investment, all
GP-Related SP VIII Investments. Each Partner and Withdrawn Partner shall promptly contribute to the
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Partnership, along with satisfying his or her comparable obligations to the Other Fund GPs, if any, upon such call such Partner’s or Withdrawn Partner’s
GP-Related Recontribution Amount, less the amount paid out of the Trust Account on behalf of such Partner or Withdrawn Partner by the Trustee(s) pursuant to written instructions from the Partnership, or if
applicable, any of the Other Fund GPs with respect to Carried Interest (and/or Non-Carried Interest in the case of GP-Related Giveback Amounts) (the “Net GP-Related Recontribution Amount”), irrespective of the fact that the amounts in the Trust Account may be sufficient on an aggregate basis to satisfy the Partnership’s and the Other Fund GPs’
obligation under the Clawback Provisions and/or Giveback Provisions; provided, that to the extent a Partner’s or Withdrawn Partner’s share of the amount paid with respect to the Clawback Amount or the
GP-Related Giveback Amount exceeds his or her GP-Related Recontribution Amount, such excess shall be repaid to such Partner or Withdrawn Partner as promptly as
reasonably practicable, subject to clause (ii) below; provided further, that such written instructions from the General Partner shall specify each Partner’s and Withdrawn Partner’s
GP-Related Recontribution Amount. Prior to such time, the General Partner may, in its discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential
obligations in respect of the Clawback Provisions or the Giveback Provisions will probably materialize (and an estimate of the aggregate amount of such obligations); provided further, that any amount from a Partner’s Trust Account
used to pay any GP-Related Giveback Amount (or such lesser amount as may be required by the General Partner) shall be contributed by such Partner to such Partner’s Trust Account no later than 30 days
after the Net GP-Related Recontribution Amount is paid with respect to such GP-Related Giveback Amount.
(B) To the extent any Partner or Withdrawn Partner has satisfied any Holdback obligation with Firm Collateral, such Partner or
Withdrawn Partner shall, within 10 days of the General Partner’s call for GP-Related Recontribution Amounts, make a cash payment into the Trust Account in an amount equal to the amount of the Holdback
obligation satisfied with such Firm Collateral, or such lesser amount such that the amount in the Trust Account allocable to such Partner or Withdrawn Partner equals the sum of (I) such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount and (II) any similar amounts payable to any of the Other Fund GPs. Immediately upon receipt of such cash, the Trustee(s) shall take such steps as are necessary to release such
Firm Collateral of such Partner or Withdrawn Partner equal to the amount of such cash payment. If the amount of such cash payment is less than the amount of Firm Collateral of such Partner or Withdrawn Partner, the balance of such Firm Collateral if
any, shall be retained to secure the payment of GP-Related Deficiency Contributions, if any, and shall be fully released upon the satisfaction of the Partnership’s and the Other Fund GPs’ obligation
to pay the Clawback Amount. The failure of any Partner or Withdrawn Partner to make a cash payment in accordance with this clause (B) (to the extent applicable) shall constitute a default under Section 5.8(d)(ii) as if such cash payment
hereunder constitutes a Net GP-Related Recontribution Amount under Section 5.8(d)(ii). Solely to the extent required by the SP VIII Partnership Agreement, each partner of the General Partner shall have
the same obligations as a Partner (which obligations shall be subject to the same limitations as the obligations of a Partner) under this Section 5.8(d)(i)(B) and under Section 5.8(d)(ii)(A) with respect to such partner’s pro
rata share of any Clawback Amount and solely to the extent that the Partnership has insufficient funds to meet the Partnership’s obligations under the SP VIII Partnership Agreement.
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(ii) (A) In the event any Partner or Withdrawn Partner (a “GP-Related Defaulting Party”) fails to recontribute all or any portion of such GP-Related Defaulting Party’s Net
GP-Related Recontribution Amount for any reason, the General Partner shall (i) use its reasonable efforts to collect any amounts from any such GP-Related Defaulting
Party and (ii) require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Carried Interest Give Back Percentages in the case of Clawback Amounts, and GP-Related Profit Sharing Percentages in the case of GP-Related Giveback Amounts (as more fully described in clause (II) of Section 5.8(d)(i)(A) above)), such
amounts as are necessary to fulfill the GP-Related Defaulting Party’s obligation to pay such GP-Related Defaulting Party’s Net
GP-Related Recontribution Amount (a “GP-Related Deficiency Contribution”) if the General Partner determines in its good faith judgment that the
Partnership (or an Other Fund GP) will be unable to collect such amount in cash from such GP-Related Defaulting Party for payment of the Clawback Amount or GP-Related
Giveback Amount, as the case may be, at least 20 Business Days prior to the latest date that the Partnership, and the Other Fund GPs, if applicable, are permitted to pay the Clawback Amount or GP-Related
Giveback Amount, as the case may be; provided, that, subject to Section 5.8(e), no Partner or Withdrawn Partner shall as a result of such GP-Related Deficiency Contribution be required to
contribute an amount in excess of 150% of the amount of the Net GP Related Recontribution Amount initially requested from such Partner or Withdrawn Partner in respect of such default.
(B) Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should either (1) not
attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all remedies (at law or
equity) available to the Partnership against the GP-Related Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the
GP-Related Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such GP-Related Defaulting Party becoming a GP-Related Defaulting Party) to set-off as appropriate and apply against such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount any amounts otherwise payable to the GP-Related Defaulting Party by the Partnership or any Affiliate thereof (including amounts unrelated to
Carried Interest, such as returns of capital and profit thereon). Each Partner and Withdrawn Partner hereby grants to the General Partner a security interest, effective upon such Partner or Withdrawn Partner becoming a
GP-Related Defaulting Party, in all accounts receivable and other rights to receive payment from any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General
Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner and Withdrawn Partner hereby appoints the General Partner as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or Withdrawn Partner or in the name of the General Partner, to take any actions which may be necessary to accomplish the
intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the Net GP-Related Recontribution Amount of a GP-Related
Defaulting Party from the date such Net GP-Related Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
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(C) Any Partner’s or Withdrawn Partner’s failure to make a GP-Related Deficiency Contribution shall cause such Partner or Withdrawn Partner to be a GP-Related Defaulting Party with respect to such amount. The Partnership shall first
seek any remaining Trust Amounts (and Trust Income thereon) allocated to such Partner or Withdrawn Partner to satisfy such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency
Contribution before seeking cash contributions from such Partner or Withdrawn Partner in satisfaction of such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution.
(iii) In the event any Partner or Withdrawn Partner initially fails to recontribute all or any portion of such Partner or
Withdrawn Partner’s pro rata share of any Clawback Amount pursuant to Section 5.8(d)(i)(A), the Partnership shall use its reasonable efforts to collect the amount which such Partner or Withdrawn Partner so fails to recontribute.
(iv) A Partner’s or Withdrawn Partner’s obligation to make contributions to the Partnership under this
Section 5.8(d) shall survive the termination of the Partnership.
(e) The Partners acknowledge that the General Partner will (and is
hereby authorized to) take such steps as it deems appropriate, in its good faith judgment, to further the objective of providing for the fair and equitable treatment of all Partners, including by allocating Losses (as defined in the SP VIII
Agreements) on GP-Related SP VIII Investments that have been the subject of a writedown and/or losses (each, a “Loss Investment”) to those Partners who participated in such Loss Investments
based on their Carried Interest Sharing Percentage therein to the extent that such Partners receive or have received Carried Interest distributions from other GP-Related SP VIII Investments. Consequently and
notwithstanding anything herein to the contrary, adjustments to Carried Interest distributions shall be made as set forth in this Section 5.8(e).
(i) At the time the Partnership is making Carried Interest distributions in connection with a
GP-Related SP VIII Investment (the “Subject Investment”) that have been reduced under any SP VIII Agreement as a result of one or more Loss Investments, the General Partner shall calculate
amounts distributable to or due from each such Partner as follows:
(A) determine each Partner’s share of each such
Loss Investment based on his or her Carried Interest Sharing Percentage in each such Loss Investment (which may be zero) to the extent such Loss Investment has reduced the Carried Interest distributions otherwise available for distribution to all
Partners (indirectly through the Partnership from SP VIII) from the Subject Investment (such reduction, the “Loss Amount”);
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(B) determine the amount of Carried Interest distributions otherwise
distributable to such Partner with respect to the Subject Investment (indirectly through the Partnership from SP VIII) before any reduction in respect of the amount determined in clause (A) above (the “Unadjusted Carried Interest
Distributions”); and
(C) subtract (I) the Loss Amounts relating to all Loss Investments from (II) the
Unadjusted Carried Interest Distributions for such Partner, to determine the amount of Carried Interest distributions to actually be paid to such Partner (“Net Carried Interest Distribution”).
To the extent that the Net Carried Interest Distribution for a Partner as calculated in this clause (i) is a negative number, the General
Partner shall (I) notify such Partner, at or prior to the time such Carried Interest distributions are actually made to the Partners, of his or her obligation to recontribute to the Partnership prior Carried Interest distributions (a
“Net Carried Interest Distribution Recontribution Amount”), up to the amount of such negative Net Carried Interest Distribution and (II) to the extent amounts recontributed pursuant to clause (I) are insufficient to
satisfy such negative Net Carried Interest Distribution amount, reduce future Carried Interest distributions otherwise due such Partner, up to the amount of such remaining negative Net Carried Interest Distribution. If a Partner’s (x) Net
Carried Interest Distribution Recontribution Amount exceeds (y) the aggregate amount of prior Carried Interest distributions less the amount of tax thereon, calculated based on the Assumed Income Tax Rate (as defined in the SP VIII Agreements)
in effect in the Fiscal Years of such distributions (the “Excess Tax-Related Amount”), then such Partner may, in lieu of paying such Partner’s Excess
Tax-Related Amount, defer such amounts as set forth below. Such deferred amount shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced and repaid by the amount of Carried Interest
otherwise distributable to such Partner in connection with future Carried Interest distributions until such balance is reduced to zero. Any deferred amounts shall be payable in full upon the earlier of (i) such time as the Clawback Amount is
determined (as provided herein) and (ii) such time as the Partner becomes a Withdrawn Partner.
To the extent there is an amount of
negative Net Carried Interest Distribution with respect to a Partner remaining after the application of this clause (i), notwithstanding clause (II) of the preceding paragraph, such remaining amount of negative Net Carried Interest Distribution
shall be allocated to the other Partners pro rata based on each of their Carried Interest Sharing Percentages in the Subject Investment.
A Partner who fails to pay a Net Carried Interest Distribution Recontribution Amount promptly upon notice from the General Partner (as
provided above) shall be deemed a GP-Related Defaulting Party for all purposes hereof.
A Partner
may satisfy in part any Net Carried Interest Distribution Recontribution Amount from cash that is then subject to a Holdback, to the extent that the amounts that remain subject to a Holdback satisfy the Holdback requirements hereof as they relate to
the reduced amount of aggregate Carried Interest distributions received by such Partner (taking into account any Net Carried Interest Distribution Recontribution Amount contributed to the Partnership by such Partner).
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Any Net Carried Interest Distribution Recontribution Amount contributed by a Partner,
including amounts of cash subject to a Holdback as provided above, shall increase the amount available for distribution to the other Partners as Carried Interest distributions with respect to the Subject Investment; provided, that any such
amounts then subject to a Holdback may be so distributed to the other Partners to the extent a Partner receiving such distribution has satisfied the Holdback requirements with respect to such distribution (taken together with the other Carried
Interest distributions received by such Partner to date).
(ii) In the case of Clawback Amounts which are required to be
contributed to the Partnership as otherwise provided herein, the obligation of the Partners with respect to any Clawback Amount shall be adjusted by the General Partner as follows:
(A) determine each Partner’s share of any Losses (as defined in the SP VIII Agreements) in any GP-Related SP VIII Investments which gave rise to the Clawback Amount (i.e., the Losses that followed the last GP-Related SP VIII Investment with respect to which Carried
Interest distributions were made), based on such Partner’s Carried Interest Sharing Percentage in such GP-Related SP VIII Investments;
(B) determine each Partner’s obligation with respect to the Clawback Amount based on such Partner’s Carried Interest
Give Back Percentage as otherwise provided herein; and
(C) subtract the amount determined in clause (B) above from
the amount determined in clause (A) above with respect to each Partner to determine the amount of adjustment to each Partner’s share of the Clawback Amount (a Partner’s “Clawback Adjustment Amount”).
A Partner’s share of the Clawback Amount shall for all purposes hereof be decreased by such Partner’s Clawback Adjustment Amount, to
the extent it is a negative number (except to the extent expressly provided below). A Partner’s share of the Clawback Amount shall for all purposes hereof be increased by such Partner’s Clawback Adjustment Amount (to the extent it is a
positive number); provided, that in no way shall a Partner’s aggregate obligation to satisfy a Clawback Amount as a result of this clause (ii) exceed the aggregate Carried Interest distributions received by such Partner. To the
extent a positive Clawback Adjustment Amount remains after the application of this clause (ii) with respect to a Partner, such remaining Clawback Adjustment Amount shall be allocated to the Partners (including any Partner whose Clawback Amount
was increased pursuant to this clause (ii)) pro rata based on their Carried Interest Give Back Percentages (determined without regard to this clause (ii)).
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Any distribution or contribution adjustments pursuant to this Section 5.8(e) by the
General Partner shall be based on its good faith judgment, and no Partner shall have any claim against the Partnership, the General Partner or any other Partners as a result of any adjustment made as set forth above. This Section 5.8(e) applies
to all Partners, including Withdrawn Partners.
It is agreed and acknowledged that this Section 5.8(e) is an agreement among the
Partners and in no way modifies the obligations of each Partner regarding the Clawback Amount as provided in the SP VIII Agreements.
Section 5.9. Business Expenses. The Partnership shall reimburse the Partners for reasonable travel, entertainment and
miscellaneous expenses incurred by them in the conduct of the Partnership’s business in accordance with rules and regulations established by the General Partner from time to time.
Section 5.10. Tax Capital Accounts; Tax Allocations.
(a) For U.S. federal income tax purposes, there shall be established for each Partner a single capital account combining such Partner’s
Capital Commitment Capital Account and GP-Related Capital Account, with such adjustments as the General Partner determines are appropriate so that such single capital account is maintained in compliance with
the principles and requirements of Section 704(b) of the Code and the Treasury Regulations thereunder.
(b) All items of income, gain,
loss, deduction and credit of the Partnership shall be allocated among the Partners for U.S. federal, state and local income tax purposes in the same manner as such items of income, gain, loss, deduction and credit shall be allocated among the
Partners pursuant to this Agreement, except as may otherwise be provided herein or by the Code or other applicable law. In the event there is a net decrease in partnership minimum gain or partner nonrecourse debt minimum gain (determined in
accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i)) during any taxable year of the Partnership, each Partner shall be specially
allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to its respective share of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Treasury Regulations
Section 1.704-2(f). In addition, this Agreement shall be considered to contain a “qualified income offset” as provided in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d). Notwithstanding the foregoing, the General Partner in its sole discretion shall make allocations for tax purposes as may be needed to ensure that allocations are in
accordance with the interests of the Partners within the meaning of the Code and the Treasury Regulations.
(c) For U.S. federal, state and
local income tax purposes only, Partnership income, gain, loss, deduction or expense (or any item thereof) for each Fiscal Year shall be allocated to and among the Partners in a manner corresponding to the manner in which corresponding items are
allocated among the Partners pursuant to the other provisions of this Section 5.10; provided, that the General Partner may in its sole discretion make such allocations for tax purposes as it determines are appropriate so that allocations
have substantial economic effect or are in accordance with the interests of the Partners, within the meaning of the Code and the Treasury Regulations thereunder. To the extent there is an adjustment by a taxing authority to any item of income, gain,
loss, deduction or credit of the Partnership (or an adjustment to any Partner’s distributive share thereof), the General Partner may reallocate the adjusted items among each Partner or former Partner (as determined by the General Partner) in
accordance with the final resolution of such audit adjustment.
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ARTICLE VI
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS;
SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
Section 6.1. Additional Partners.
(a) Effective on the first day of any month (or on such other date as shall be determined by the General Partner in its sole discretion), the
General Partner shall have the right to admit one or more additional or substitute persons into the Partnership as Limited Partners or Special Partners. Each such person shall make the representations and certifications with respect to itself set
forth in Section 3.6 and Section 3.7. The General Partner shall determine and negotiate with the additional Partner (which term shall include, without limitation, any substitute Partner) all terms of such additional Partner’s
participation in the Partnership, including the additional Partner’s initial GP-Related Capital Contribution, Capital Commitment-Related Capital Contribution,
GP-Related Profit Sharing Percentage and Capital Commitment Profit Sharing Percentage. Each additional Partner shall have such voting rights as may be determined by the General Partner from time to time
unless, upon the admission to the Partnership of any Special Partner, the General Partner shall designate that such Special Partner shall not have such voting rights (any such Special Partner being called a “Nonvoting Special Partner”).
Any additional Partner shall, as a condition to becoming a Partner, agree to become a party to, and be bound by the terms and conditions of, the Trust Agreement. If Blackstone or another or subsequent holder of an Investor Note approved by the
General Partner for purposes of this Section 6.1(a) shall foreclose upon a Limited Partner’s Investor Note issued to finance such Limited Partner’s purchase of his or her Capital Commitment Interests, Blackstone or such other or
subsequent holder shall succeed to such Limited Partner’s Capital Commitment Interests and shall be deemed to have become a Limited Partner to such extent. Any additional Partner may have a GP-Related
Partner Interest or a Capital Commitment Partner Interest, without having the other such interest.
(b) The
GP-Related Profit Sharing Percentages, if any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other
Partners’ GP-Related Profit Sharing Percentages as of such date, shall be established by the General Partner pursuant to Section 5.3. The Capital Commitment Profit Sharing Percentages, if any, to be
allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’ Capital Commitment Profit Sharing Percentages as of such date, shall be established by
the General Partner. Notwithstanding any provision in this Agreement to the contrary, the General Partner is authorized, without the need for any further act, vote or consent of any person, to make adjustments to the
GP-Related Profit Sharing Percentages as it determines necessary in its sole discretion in connection with any additional Partners admitted to the Partnership, adjustments with respect to other Partners of the
Partnership and to give effect to other matters set forth herein, as applicable.
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(c) An additional Partner shall be required to contribute to the Partnership his or her pro
rata share of the Partnership’s total capital, excluding capital in respect of GP-Related Investments and Capital Commitment Investments in which such Partner does not acquire any interests, at such times
and in such amounts as shall be determined by the General Partner in accordance with Section 4.1 and Section 7.1.
(d) The
admission of an additional Partner will be evidenced by (i) the execution of a counterpart copy of this Agreement by such additional Partner, (ii) the execution of an amendment to this Agreement by the General Partner and the additional
Partner, as determined by the General Partner and / or (iii) the execution by such additional Partner of any other writing evidencing the intent of such person to become an additional Partner and to be bound by the terms of this Agreement and
such writing being acceptable to the General Partner on behalf of the Partnership. In addition, each additional Partner shall sign a counterpart copy of the Trust Agreement or any other writing evidencing the intent of such person to become a party
to the Trust Agreement that is acceptable to the General Partner on behalf of the Partnership.
Section 6.2. Withdrawal of
Partners.
(a) Any Partner may Withdraw voluntarily from the Partnership subject to the prior written consent of the General Partner,
including if such Withdrawal would (i) cause the Partnership to be in default under any of its contractual obligations or (ii) in the reasonable judgment of the General Partner, have a material adverse effect on the Partnership or its
business. Without limiting the foregoing sentence, the General Partner generally intends to permit voluntary Withdrawals on the last day of any calendar month (or on such other date as shall be determined by the General Partner in its sole
discretion), on not less than 15 days’ prior written notice by such Partner to the General Partner (or on such shorter notice period as may be mutually agreed upon between such Partner and the General Partner); provided, that a Partner may
Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest without Withdrawing from the Partnership with respect to such Partner’s Capital Commitment Partner Interest,
and a Partner may Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest without Withdrawing from the Partnership with respect to such Partner’s GP-Related
Partner Interest.
(b) Upon the Withdrawal of any Partner, including by the occurrence of any withdrawal event under the Partnership Act
with respect to any Partner, such Partner shall thereupon cease to be a Partner, except as expressly provided herein.
(c) Upon the Total
Disability of a Limited Partner, such Partner shall thereupon cease to be a Limited Partner with respect to such person’s GP-Related Partner Interest; provided, that the General Partner may elect to admit
such Withdrawn Partner to the Partnership as a Nonvoting Special Partner with respect to such person’s GP-Related Partner Interest, with such GP-Related Partner
Interest as the General Partner may determine. The determination of whether any Partner has suffered a Total Disability shall be made by the General Partner in its sole discretion after consultation with a qualified medical doctor. In the absence of
agreement between the General Partner and such Partner, each party shall nominate a qualified medical doctor and the two doctors shall select a third doctor, who shall make the determination as to Total Disability.
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(d) If the General Partner determines that it shall be in the best interests of the
Partnership for any Partner (including any Partner who has given notice of voluntary Withdrawal pursuant to paragraph (a) above) to Withdraw from the Partnership (whether or not Cause exists) with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, such Partner, upon written notice by the General Partner to such Partner, shall be required to Withdraw with
respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, as of a date specified in such notice, which date shall be on or after
the date of such notice. If the General Partner requires any Partner to Withdraw for Cause with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital
Commitment Partner Interest, such notice shall state that it has been given for Cause and shall describe the particulars thereof in reasonable detail.
(e) The Withdrawal from the Partnership of any Partner shall not, in and of itself, affect the obligations of the other Partners to continue
the Partnership during the remainder of its term. A Withdrawn General Partner shall remain liable for all obligations of the Partnership incurred while it was a General Partner and resulting from its acts or omissions as a General Partner to the
fullest extent provided by law.
Section 6.3. GP-Related Partner Interests Not
Transferable.
(a) No Partner may sell, assign, pledge, grant a security interest over or otherwise transfer or encumber all or any
portion of such Partner’s GP-Related Partner Interest other than as permitted by written agreement between such Partner and the Partnership; provided, that this Section 6.3 shall not impair transfers
by operation of law, transfers by will or by other testamentary instrument occurring by virtue of the death or dissolution of a Partner, or transfers required by trust agreements; provided further, that, subject to the prior written consent of the
General Partner, which shall not be unreasonably withheld, a Limited Partner may transfer, for estate planning purposes, up to 25% of his or her GP-Related Profit Sharing Percentage to any estate planning
trust, limited partnership, or limited liability company with respect to which a Limited Partner controls investments related to any interest in the Partnership held therein (an “Estate Planning Vehicle”). Each Estate Planning Vehicle will
be a Nonvoting Special Partner. Such Limited Partner and the Nonvoting Special Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such Nonvoting Special Partner with respect to the Partnership
(including the obligation to make additional GP-Related Capital Contributions), as the case may be. The General Partner may at its sole option exercisable at any time require any Estate Planning Vehicle to
Withdraw from the Partnership on the terms of this Article VI. Except as provided in the second proviso to the first sentence of this Section 6.3, no assignee, legatee, distributee, heir or transferee (by conveyance, operation of law or
otherwise) of the whole or any portion of any Partner’s GP-Related Partner Interest shall have any right to be a Partner without the prior written consent of the General Partner (which consent may be
given or withheld in its sole discretion without giving any reason therefor). Notwithstanding the granting of a security interest in the entire Interest of any Partner, such Partner shall continue to be a Partner of the Partnership.
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(b) Notwithstanding any provision hereof to the contrary, no sale or transfer of any GP-Related Partner Interest in the Partnership may be made except in compliance with all federal, state and other applicable laws, including U.S. federal and state securities laws.
Section 6.4. Consequences upon Withdrawal of a Partner.
(a) Subject to the Partnership Act, the General Partner may not transfer or assign its interest as a General Partner in the Partnership or its
right to manage the affairs of the Partnership, except that the General Partner may, subject to the Partnership Act, with the prior written approval of a Majority in Interest of the Partners, admit another person as an additional or substitute
General Partner who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise); provided however, that the General Partner may, in its sole
discretion, transfer all or part of its interest in the Partnership to a person who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise)
and who owns, directly or indirectly, the principal part of the business then conducted by the General Partner in connection with any liquidation, dissolution or reorganization of the General Partner, and, upon the assumption by such person of
liability for all the obligations of the General Partner under this Agreement, such person shall be admitted as the General Partner. A person who is so admitted as an additional or substitute General Partner shall thereby become a General Partner
and shall have the right to manage the affairs of the Partnership and to vote as a Partner to the extent of the interest in the Partnership so acquired. The General Partner shall not cease to be the general partner of the Partnership upon the
collateral assignment of or the pledging or granting of a security interest in its entire Interest in the Partnership.
(b) Except as
contemplated by Section 6.4(a) above, Withdrawal by a General Partner is not permitted. The Withdrawal of a Partner shall not dissolve the Partnership if at the time of such Withdrawal there are one or more remaining Partners and any one or
more of such remaining Partners continue the business of the Partnership (any and all such remaining Partners being hereby authorized to continue the business of the Partnership without dissolution and hereby agreeing to do so). Notwithstanding
Section 6.4(c), if upon the Withdrawal of a Partner there shall be no remaining Limited Partners, the Partnership shall be dissolved and shall be wound up unless, within 90 days after the occurrence of such Withdrawal, all remaining Special
Partners agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such Withdrawal, of one or more Limited Partners.
(c) The Partnership shall not be dissolved, in and of itself, by the Withdrawal of any Partner, but shall continue with the surviving or
remaining Partners as partners thereof in accordance with and subject to the terms and provisions of this Agreement.
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s
GP-Related Partner Interests.
(a) The terms of this Section 6.5 shall apply to the GP-Related Partner Interest of a Withdrawn Partner, but, except as otherwise expressly provided in this Section 6.5, shall not apply to the Capital Commitment Partner Interest of a Withdrawn Partner. For
purposes of this Section 6.5, the term “Settlement Date” means the date as of which a Withdrawn Partner’s GP-Related Partner Interest in the Partnership is settled as determined under paragraph (b) below.
Notwithstanding the foregoing, any Limited Partner who Withdraws from the Partnership, and all or any portion of whose GP-Related Partner Interest is retained as a Special Partner, shall be considered a
Withdrawn Partner for all purposes hereof.
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(b) Except where a later date for the settlement of a Withdrawn Partner’s GP-Related Partner Interest in the Partnership may be agreed to by the General Partner and a Withdrawn Partner, a Withdrawn Partner’s Settlement Date shall be his or her Withdrawal Date; provided, that
if a Withdrawn Partner’s Withdrawal Date is not the last day of a month, then the General Partner may elect for such Withdrawn Partner’s Settlement Date to be the last day of the month in which his or her Withdrawal Date occurs. During the
interval, if any, between a Withdrawn Partner’s Withdrawal Date and Settlement Date, such Withdrawn Partner shall have the same rights and obligations with respect to GP-Related Capital Contributions,
interest on capital, allocations of GP-Related Net Income (Loss) and distributions as would have applied had such Withdrawn Partner remained a Partner of the Partnership during such period.
(c) In the event of the Withdrawal of a Partner, with respect to such Withdrawn Partner’s
GP-Related Partner Interest, the General Partner shall promptly after such Withdrawn Partner’s Settlement Date (i) determine and allocate to the Withdrawn Partner’s GP-Related Capital Accounts such Withdrawn Partner’s allocable share of the GP-Related Net Income (Loss) of the Partnership for the period ending on such Settlement Date
in accordance with Article V and (ii) credit the Withdrawn Partner’s GP-Related Capital Accounts with interest in accordance with Section 5.2. In making the foregoing calculations, the General
Partner shall be entitled to establish such reserves (including reserves for taxes, bad debts, unrealized losses, actual or threatened litigation or any other expenses, contingencies or obligations) as it deems appropriate. Unless otherwise
determined by the General Partner in a particular case, a Withdrawn Partner shall not be entitled to receive any GP-Related Unallocated Percentage in respect of the accounting period during which such Partner
Withdraws from the Partnership (whether or not previously awarded or allocated) or any GP-Related Unallocated Percentage in respect of prior accounting periods that have not been paid or allocated (whether or
not previously awarded) as of such Withdrawn Partner’s Withdrawal Date.
(d) From and after the Settlement Date of the Withdrawn
Partner, the Withdrawn Partner’s GP-Related Profit Sharing Percentages shall, unless otherwise allocated by the General Partner pursuant to Section 5.3(a), be deemed to be GP-Related Unallocated Percentages (except for GP-Related Profit Sharing Percentages with respect to GP-Related Investments as provided
in paragraph (f) below).
(e) (i) Upon the Withdrawal from the Partnership of a Partner with respect to such Partner’s GP-Related Partner Interest, such Withdrawn Partner thereafter shall not, except as expressly provided in this Section 6.5, have any rights of a Partner (including voting rights) with respect to such
Partner’s GP-Related Partner Interest, and, except as expressly provided in this Section 6.5, such Withdrawn Partner shall not have any interest in the Partnership’s GP-Related Net Income (Loss), or in distributions related to such Partner’s GP-Related Partner Interest, GP-Related Investments or
other assets related to such Partner’s GP-Related Partner Interest. If a Partner Withdraws from the Partnership with respect to such Partner’s GP-Related
Partner Interest for any reason other than for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be
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entitled to receive, at the time or times specified in Section 6.5(i) below, in satisfaction and discharge in full of the Withdrawn Partner’s
GP-Related Partner Interest in the Partnership, (x) payment equal to the aggregate credit balance, if any, as of the Settlement Date of the Withdrawn Partner’s
GP-Related Capital Accounts, (excluding any GP-Related Capital Account or portion thereof attributable to any GP-Related
Investment) and (y) the Withdrawn Partner’s percentage interest attributable to each GP-Related Investment in which the Withdrawn Partner has an interest as of the Settlement Date as provided in
paragraph (f) below (which shall be settled in accordance with paragraph (f) below), subject to all the terms and conditions of paragraphs (a)-(r) of this Section 6.5. If the amount determined pursuant to clause (x) above is an
aggregate negative balance, the Withdrawn Partner shall pay the amount thereof to the Partnership upon demand by the General Partner on or after the date of the statement referred to in Section 6.5(i) below; provided, that if the Withdrawn
Partner was solely a Special Partner on his or her Withdrawal Date, such payment shall be required only to the extent of any amounts payable to such Withdrawn Partner pursuant to this Section 6.5. Any aggregate negative balance in the GP-Related Capital Accounts of a Withdrawn Partner who was solely a Special Partner, upon the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the
Partnership pursuant to this Section 6.5, shall be allocated among the other Partners’ GP-Related Capital Accounts in accordance with their respective
GP-Related Profit Sharing Percentages in the categories of GP-Related Net Income (Loss) giving rise to such negative balance as determined by the General Partner as of
such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the Partnership, no value shall be ascribed to goodwill, the Partnership name or
the anticipation of any value the Partnership or any successor thereto might have in the event the Partnership or any interest therein were to be sold in whole or in part.
(ii) Notwithstanding clause (i) of this Section 6.5(e), in the case of a Partner whose Withdrawal with respect to
such Partner’s GP-Related Partner Interest resulted from such Partner’s death or Incompetence, such Partner’s estate or legal representative, as the case may be, may elect, at the time described
below, to receive a Nonvoting Special Partner GP-Related Partner Interest and retain such Partner’s GP-Related Profit Sharing Percentage in all (but not less than
all) illiquid investments of the Partnership in lieu of a cash payment (or Investor Note) in settlement of that portion of the Withdrawn Partner’s GP-Related Partner Interest. The election referred to
above shall be made within 60 days after the Withdrawn Partner’s Settlement Date, based on a statement of the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership
pursuant to this Section 6.5.
(f) For purposes of clause (y) of paragraph (e)(i) above, a Withdrawn Partner’s
“percentage interest” means his or her GP-Related Profit Sharing Percentage as of the Settlement Date in the relevant GP-Related Investment. The Withdrawn
Partner shall retain his or her percentage interest in such GP-Related Investment and shall retain his or her GP-Related Capital Account or portion thereof attributable
to such GP-Related Investment, in which case such Withdrawn Partner (a “Retaining Withdrawn Partner”) shall become and remain a Special Partner for such purpose (and, if the General Partner so
designates, such Special Partner shall be a Nonvoting Special Partner). The GP-Related Partner Interest of a Retaining Withdrawn Partner pursuant to this paragraph (f) shall be subject to the terms and
conditions applicable to GP-Related Partner Interests of any kind hereunder and such other terms and conditions as are established by the General Partner. At the option of the General Partner in its sole
discretion, the General Partner and the Retaining Withdrawn Partner may agree to have the Partnership acquire such GP-Related Partner Interest without the approval of the other Partners; provided, that
the General Partner shall reflect in the books and records of the Partnership the terms of any acquisition pursuant to this sentence.
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(g) The General Partner may elect, in lieu of payment in cash of any amount payable to a
Withdrawn Partner pursuant to paragraph (e) above, to (i) have the Partnership issue to the Withdrawn Partner a subordinated promissory note and/or to (ii) distribute in kind to the Withdrawn Partner such Withdrawn Partner’s
pro rata share (as determined by the General Partner) of any securities or other investments of the Partnership in relation to such Partner’s GP-Related Partner Interest. If any securities or other
investments are distributed in kind to a Withdrawn Partner under this paragraph (g), the amount described in clause (x) of paragraph (e)(i) shall be reduced by the value of such distribution as valued on the latest balance sheet of the
Partnership in accordance with generally accepted accounting principles or, if not appearing on such balance sheet, as reasonably determined by the General Partner.
(h) [Intentionally omitted].
(i)
Within 120 days after each Settlement Date, the General Partner shall submit to the Withdrawn Partner a statement of the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the
Partnership pursuant to this Section 6.5 together with any cash payment, subordinated promissory note and in kind distributions to be made to such Partner as shall be determined by the General Partner. The General Partner shall submit to the
Withdrawn Partner supplemental statements with respect to additional amounts payable to or by the Withdrawn Partner in respect of the settlement of his or her GP-Related Partner Interest in the Partnership
(e.g., payments in respect of GP-Related Investments pursuant to paragraph (f) above or adjustments to reserves pursuant to paragraph (j) below) promptly after such amounts are determined by
the General Partner. To the fullest extent permitted by law, such statements and the valuations on which they are based shall be accepted by the Withdrawn Partner without examination of the accounting books and records of the Partnership or other
inquiry. Any amounts payable by the Partnership to a Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in right of payment and subject to the prior payment or provision for payment in full of claims of all present or future
creditors of the Partnership or any successor thereto arising out of matters occurring prior to the applicable date of payment or distribution; provided, that such Withdrawn Partner shall otherwise rank pari passu in right of payment
(x) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year before the Withdrawal Date of the Withdrawn Partner in question and (y) with all persons who become Withdrawn Partners and whose Withdrawal
Date is within one year after the Withdrawal Date of the Withdrawn Partner in question.
(j) If the aggregate reserves established by the
General Partner as of the Settlement Date in making the foregoing calculations should prove, in the determination of the General Partner, to be excessive or inadequate, the General Partner may elect, but shall not be obligated, to pay the Withdrawn
Partner or his or her estate such excess, or to charge the Withdrawn Partner or his or her estate such deficiency, as the case may be.
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(k) Any amounts owed by the Withdrawn Partner to the Partnership at any time on or after the
Settlement Date (e.g., outstanding Partnership loans or advances to such Withdrawn Partner) shall be offset against any amounts payable or distributable by the Partnership to the Withdrawn Partner at any time on or after the Settlement Date
or shall be paid by the Withdrawn Partner to the Partnership, in each case as determined by the General Partner. All cash amounts payable by a Withdrawn Partner to the Partnership under this Section 6.5 shall bear interest from the due date to
the date of payment at a floating rate equal to the lesser of (x) the Prime Rate or (y) the maximum rate of interest permitted by applicable law. The “due date” of amounts payable by a Withdrawn Partner pursuant to
Section 6.5(i) above shall be 120 days after a Withdrawn Partner’s Settlement Date. The “due date” of amounts payable to or by a Withdrawn Partner in respect of GP-Related Investments for
which the Withdrawn Partner has retained a percentage interest in accordance with paragraph (f) above shall be 120 days after realization with respect to such GP-Related Investment. The “due
date” of any other amounts payable by a Withdrawn Partner shall be 60 days after the date such amounts are determined to be payable.
(l) At the time of the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the
Partnership pursuant to this Section 6.5, the General Partner may, to the fullest extent permitted by applicable law, impose any restrictions it deems appropriate on the assignment, pledge, grant of a security interest, encumbrance or other
transfer by such Withdrawn Partner of any interest in any GP-Related Investment retained by such Withdrawn Partner, any securities or other investments distributed in kind to such Withdrawn Partner or such
Withdrawn Partner’s right to any payment from the Partnership.
(m) If a Partner is required to Withdraw from the Partnership with
respect to such Partner’s GP-Related Partner Interest for Cause pursuant to Section 6.2(d), then his or her GP-Related Partner Interest shall be settled in
accordance with paragraphs (a)-(r) of this Section 6.5; provided, that the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such
settlement:
(i) In settling the Withdrawn Partner’s interest in any
GP-Related Investment in which he or she has an interest as of his or her Settlement Date, the General Partner may elect to (A) determine the GP-Related Unrealized
Net Income (Loss) attributable to each such GP-Related Investment as of the Settlement Date and allocate to the appropriate GP-Related Capital Account of the Withdrawn
Partner his or her allocable share of such GP-Related Unrealized Net Income (Loss) for purposes of calculating the aggregate balance of such Withdrawn Partner’s
GP-Related Capital Account pursuant to clause (x) of paragraph (e)(i) above, (B) credit or debit, as applicable, the Withdrawn Partner with the balance of his or her
GP-Related Capital Account or portion thereof attributable to each such GP-Related Investment as of his or her Settlement Date without giving effect to the GP-Related Unrealized Net Income (Loss) from such GP-Related Investment as of his or her Settlement Date, which shall be forfeited by the Withdrawn Partner or (C) apply
the provisions of paragraph (f) above; provided, that the maximum amount of GP-Related Net Income (Loss) allocable to such Withdrawn Partner with respect to any
GP-Related Investment shall equal such Partner’s percentage interest of the GP-Related Unrealized Net Income, if any, attributable to such GP-Related Investment as of the Settlement Date (the balance of such GP-Related Net Income (Loss), if any, shall be allocated as determined by the General Partner). The
Withdrawn Partner shall not have any continuing interest in any GP-Related Investment to the extent an election is made pursuant to (A) or (B) above.
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(ii) Any amounts payable by the Partnership to the Withdrawn Partner
pursuant to this Section 6.5 shall be subordinate in right of payment and subject to the prior payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to or
on or after the applicable date of payment or distribution.
(n) The payments to a Withdrawn Partner pursuant to this Section 6.5 may
be conditioned on the compliance by such Withdrawn Partner with any lawful and reasonable (under the circumstances) restrictions against engaging or investing in a business competitive with that of the Partnership or any of its subsidiaries and
Affiliates for a period not exceeding two years determined by the General Partner. Upon written notice to the General Partner, any Withdrawn Partner who is subject to noncompetition restrictions established by the General Partner pursuant to this
paragraph (n) may elect to forfeit the principal amount payable in the final installment of his or her subordinated promissory note, together with interest to be accrued on such installment after the date of forfeiture, in lieu of being bound
by such restrictions.
(o) In addition to the foregoing, the General Partner shall have the right to pay a Withdrawn Partner (other than
the General Partner) a discretionary additional payment in an amount and based upon such circumstances and conditions as it determines to be relevant.
(p) The provisions of this Section 6.5 shall apply to any Investor Special Partner relating to a Limited Partner or Special Partner and to
any transferee of any GP-Related Partner Interest of such Partner pursuant to Section 6.3 if such Partner Withdraws from the Partnership.
(q) (i) The Partnership will assist a Withdrawn Partner or his or her estate or guardian, as the case may be, in the settlement of the
Withdrawn Partner’s GP-Related Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his or her estate.
(ii) The General Partner may reasonably determine in good faith to retain outside professionals to provide the assistance
to Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the case may be, prior to engaging such
professionals. If the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(r) Each Partner (other than the General Partner) hereby irrevocably appoints the General Partner as such Partner’s true and lawful agent,
representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Partner, any and
all agreements, instruments, consents, ratifications, documents and certificates which the General Partner deems necessary or advisable in connection with any
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transaction or matter contemplated by or provided for in this Section 6.5, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise
of any right of such Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall
not be affected by the death, disability or incapacity of such Partner.
Section 6.6. Dissolution of the Partnership. The
General Partner may dissolve the Partnership prior to the expiration of its term at any time on not less than 60 days’ notice of the dissolution date given to the other Partners. Upon the dissolution of the Partnership, the Partners’
respective interests in the Partnership shall be valued and settled in accordance with the procedures set forth in Section 6.5.
Section 6.7. Certain Tax Matters. (a) The General Partner shall determine all matters concerning allocations for tax
purposes not expressly provided for herein in its sole discretion.
(b) The General Partner shall cause to be prepared all federal, state
and local tax returns of the Partnership for each year for which such returns are required to be filed and, after approval of such returns by the General Partner, shall cause such returns to be timely filed. The General Partner shall determine the
appropriate treatment of each item of income, gain, loss, deduction and credit of the Partnership and the accounting methods and conventions under the tax laws of the United States, the several States and other relevant jurisdictions as to the
treatment of any such item or any other method or procedure related to the preparation of such tax returns. The General Partner may cause the Partnership to make or refrain from making any and all elections permitted by such tax laws. Each Partner
agrees that he or she shall not, unless he or she provides prior notice of such action to the Partnership, (i) treat, on his or her individual income tax returns, any item of income, gain, loss, deduction or credit relating to his or her
interest in the Partnership in a manner inconsistent with the treatment of such item by the Partnership as reflected on the Form K-1 or other information statement furnished by the Partnership to such Partner
for use in preparing his or her income tax returns or (ii) file any claim for refund relating to any such item based on, or which would result in, such inconsistent treatment. In respect of an income tax audit of any tax return of the
Partnership, the filing of any amended return or claim for refund in connection with any item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership, or any administrative or judicial proceedings arising out of or
in connection with any such audit, amended return, claim for refund or denial of such claim, (A) the Tax Matters Partner (as defined below) shall be authorized to act for, and his or her decision shall be final and binding upon, the Partnership
and all Partners except to the extent a Partner shall properly elect to be excluded from such proceeding pursuant to the Code, (B) all expenses incurred by the Tax Matters Partner in connection therewith (including, without limitation,
attorneys’, accountants’ and other experts’ fees and disbursements) shall be expenses of the Partnership and (C) no Partner shall have the right to (1) participate in the audit of any Partnership tax return, (2) file
any amended return or claim for refund in connection with any item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership (unless he or she provides prior notice of such action to the Partnership as provided
above), (3) participate in any administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, or
(4) appeal, challenge or
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otherwise protest any adverse findings in any such audit conducted by the Partnership or the Tax Matters Partner or with respect to any such amended return or claim for refund filed by the
Partnership or the Tax Matters Partner or in any such administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner. The Partnership and each Partner hereby designate any Partner selected by the General Partner as
the “partnership representative” (as defined under the Code) (the “Tax Matters Partner”). To the fullest extent permitted by applicable law, each Partner agrees to indemnify and hold harmless the Partnership and all other
Partners from and against any and all liabilities, obligations, damages, deficiencies and expenses resulting from any breach or violation by such Partner of the provisions of this Section 6.7 and from all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including reasonable attorneys’ fees and disbursements, incident to any such breach or violation.
(c) Each individual Partner shall provide to the Partnership copies of each federal, state and local income tax return of such Partner
(including any amendment thereof) within 30 days after filing such return.
(d) To the extent the General Partner reasonably determines
that the Partnership (or any entity in which the Partnership holds an interest) is or may be required by law to withhold or to make tax payments, including interest and penalties on such amounts, on behalf of or with respect to any Partner,
including pursuant to Section 6225 of the Code (“Tax Advances”), the General Partner may withhold or escrow such amounts or make such tax payments as so required. All Tax Advances made on behalf of a Partner shall, at the option of
the General Partner, (i) be promptly paid to the Partnership by the Partner on whose behalf such Tax Advances were made or (ii) be repaid by reducing the amount of the current or next succeeding distribution or distributions which would
otherwise have been made to such Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds upon dissolution of the Partnership otherwise payable to such Partner. Whenever the General Partner selects option
(ii) pursuant to the preceding sentence for repayment of a Tax Advance by a Partner, for all other purposes of this Agreement such Partner shall be treated as having received all distributions (whether before or upon dissolution of the
Partnership) unreduced by the amount of such Tax Advance. To the fullest extent permitted by law, each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including, without
limitation, any liability for taxes, penalties, additions to tax or interest) with respect to income attributable to or distributions or other payments to such Partner. The obligations of a Partner set forth in this Section 6.7(d) shall survive
the Withdrawal of any Partner from the Partnership or any Transfer of a Partner’s interest.
Section 6.8. Special Basis
Adjustments. In connection with any assignment or transfer of a Partnership interest permitted by the terms of this Agreement, the General Partner may cause the Partnership, on behalf of the Partners and at the time and in the manner provided in
Treasury Regulations Section 1.754-1(b), to make an election to adjust the basis of the Partnership’s property in the manner provided in Sections 734(b) and 743(b) of the Code.
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ARTICLE VII
CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
Section 7.1. Capital Commitment Interests, etc.
(a) (i) This Article VII and Article VIII hereof set forth certain terms and conditions with respect to the Capital Commitment Partner
Interests and the Capital Commitment SP VIII Interest and matters related to the Capital Commitment Partner Interests and the Capital Commitment SP VIII Interest. Except as otherwise expressly provided in this Article VII or in Article VIII, the
terms and provisions of this Article VII and Article VIII shall not apply to the GP-Related Partner Interests or the GP-Related SP VIII Interest.
(ii) Each Partner severally, agrees to make contributions of capital to the Partnership (“Capital Commitment-Related
Capital Contributions”) as required to fund the Partnership’s capital contributions to SP VIII in respect of the Capital Commitment SP VIII Interest, if any, and the related Capital Commitment SP VIII Commitment, if any (including,
without limitation, funding all or a portion of the Blackstone Capital Commitment). No Partner shall be obligated to make Capital Commitment-Related Capital Contributions to the Partnership in an amount in excess of such Partner’s Capital
Commitment-Related Commitment. The Commitment Agreements and SMD Agreements, if any, of the Partners may include provisions with respect to the foregoing matters. It is understood that a Partner will not necessarily participate in each Capital
Commitment Investment (which may include additional amounts invested in an existing Capital Commitment Investment) nor will a Partner necessarily have the same Capital Commitment Profit Sharing Percentage with respect to (i) the
Partnership’s portion of the Blackstone Capital Commitment, or (ii) the making of each Capital Commitment Investment in which such Partner participates; provided, that this in no way limits the terms of any Commitment Agreement or
SMD Agreement. In addition, nothing contained herein shall be construed to give any Partner the right to obtain financing with respect to the purchase of any Capital Commitment Interest, and nothing contained herein shall limit or dictate the terms
upon which the Partnership and its Affiliates may provide such financing. The acquisition of a Capital Commitment Interest by a Partner shall be evidenced by receipt by the Partnership of funds equal to such Partner’s Capital Commitment-Related
Commitment then due with respect to such Capital Commitment Interest and such appropriate documentation as the General Partner may submit to the Partners from time to time.
(b) The Partnership or one of its Affiliates (in such capacity, the “Advancing Party”) may in its sole discretion advance to
any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are also executive officers of Blackstone) all or any portion of the Capital Commitment-Related Capital
Contributions due to the Partnership from such Partner with respect to any Capital Commitment Investment (“Firm Advances”). Each such Partner shall pay interest to the Advancing Party on each Firm Advance from the date of such Firm
Advance until the repayment thereof by such Partner. Each Firm Advance shall be repayable in full, including accrued interest to the date of such repayment, upon prior written notice by the Advancing Party. The making and repayment of each Firm
Advance shall be recorded in the books and records of the Partnership, and such recording shall be conclusive evidence of each such Firm Advance, binding on the Partner and the Advancing Party absent manifest error. Except as provided below, the
interest rate applicable to a Firm Advance shall equal the cost of funds of the Advancing Party at the time of the making of such Firm
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Advance. The Advancing Party shall inform any Partner of such rate upon such Partner’s request; provided, that such interest rate shall not exceed the maximum interest rate allowable
by applicable law; provided further, that amounts that are otherwise payable to such Partner pursuant to Section 7.4(a) shall be used to repay such Firm Advance (including interest thereon). The Advancing Party may, in its sole
discretion, change the terms of Firm Advances (including the terms contained herein) and/or discontinue the making of Firm Advances; provided, that (i) the Advancing Party shall notify the relevant Partners of any material changes to
such terms and (ii) the interest rate applicable to such Firm Advances and overdue amounts thereon shall not exceed the maximum interest rate allowable by applicable law.
Section 7.2. Capital Commitment Capital Accounts.
(a) There shall be established for each Partner in the books of the Partnership as of the date of formation of the Partnership, or such later
date on which such Partner is admitted to the Partnership, and on each such other date as such Partner first acquires a Capital Commitment Interest in a particular Capital Commitment Investment, a Capital Commitment Capital Account for each Capital
Commitment Investment in which such Partner acquires a Capital Commitment Interest on such date. Each Capital Commitment-Related Capital Contribution of a Partner shall be credited to the appropriate Capital Commitment Capital Account of such
Partner on the date such Capital Commitment-Related Capital Contribution is paid to the Partnership. Capital Commitment Capital Accounts shall be adjusted to reflect any transfer of a Partner’s interest in the Partnership related to his or her
Capital Commitment Partner Interest as provided in this Agreement.
(b) A Partner shall not have any obligation to the Partnership or to
any other Partner to restore any negative balance in the Capital Commitment Capital Account of such Partner. Until distribution of any such Partner’s interest in the Partnership with respect to a Capital Commitment Interest as a result of the
disposition by the Partnership of the related Capital Commitment Investment and in whole upon the dissolution of the Partnership, neither such Partner’s Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or
redemption except with the consent of the General Partner.
Section 7.3. Allocations.
(a) Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be allocated to the related Capital
Commitment Capital Accounts of all the Partners (including the General Partner) participating in such Capital Commitment Investment in proportion to their respective Capital Commitment Profit Sharing Percentages for such Capital Commitment
Investment. Capital Commitment Net Income (Loss) on any Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion which such Partner’s aggregate Capital Commitment Capital Accounts bear to the aggregate
Capital Commitment Capital Accounts of all Partners; provided, that if any Partner makes the election provided for in Section 7.6, Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be
allocated to the related Capital Commitment Capital Accounts of all the Partners participating in such Capital Commitment Investment who do not make such election in proportion to their respective Capital Commitment Profit Sharing Percentages for
such Capital Commitment Investment.
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(b) Any special costs relating to distributions pursuant to Section 7.6 or
Section 7.7 shall be specially allocated to the electing Partner.
(c) Notwithstanding the foregoing, the General Partner may make
such allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems reasonably necessary for this purpose.
Section 7.4. Distributions.
(a) Each Partner’s allocable portion of Capital Commitment Net Income received from his or her Capital Commitment Investments,
distributions to such Partner that constitute returns of capital, and other Capital Commitment Net Income of the Partnership (including, without limitation, Capital Commitment Net Income attributable to Unallocated Capital Commitment Interests)
during a Fiscal Year of the Partnership will be credited to payment of the Investor Notes to the extent required below as of the last day of such Fiscal Year (or on such earlier date as related distributions are made in the sole discretion of the
General Partner) with any cash amount distributable to such Partner pursuant to clauses (ii) and (vii) below to be distributed within 45 days after the end of each Fiscal Year of the Partnership (or in each case on such earlier date as selected
by the General Partner in its sole discretion) as follows (subject to Section 7.4(c) below):
(i) First, to the
payment of interest then due on all Investor Notes (relating to Capital Commitment Investments or otherwise) of such Partner (to the extent Capital Commitment Net Income and distributions or payments from Other Sources do not equal or exceed all
interest payments due, the selection of those of such Partner’s Investor Notes upon which interest is to be paid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor);
(ii) Second, to distribution to the Partner of an amount equal to the U.S. federal, state and local income taxes on income of
the Partnership allocated to such Partner for such year in respect of such Partner’s Capital Commitment Partner Interest (the aggregate amount of any such distribution shall be determined by the General Partner, subject to the limitation that
the minimum aggregate amount of such distribution be the tax that would be payable if the taxable income of the Partnership related to all Partners’ Capital Commitment Partner Interests were all allocated to an individual subject to the
then-prevailing maximum rate of U.S. federal, New York State and New York City taxes (including, without limitation, taxes imposed under Section 1411 of the Code), taking into account the character of such taxable income allocated by the
Partnership and the limitations on deductibility of expenses and other items for U.S. federal income tax purposes); provided, that additional amounts shall be paid to the Partner pursuant to this clause (ii) to the extent that such amount
reduces the amount otherwise distributable to the Partner pursuant to a comparable provision in any other BE Agreement and there are not sufficient amounts to fully satisfy such provision from the relevant partnership or other entity; provided
further, that amounts paid pursuant to the provisions in such other BE Agreements comparable to the immediately preceding proviso shall reduce those amounts otherwise distributable to the Partner pursuant to provisions in such other BE Agreements
that are comparable to this clause (ii);
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(iii) Third, to the payment in full of the principal amount of the Investor
Note financing (A) any Capital Commitment Investment disposed of during or prior to such Fiscal Year or (B) any BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal Year, to the extent not
repaid from Other Sources;
(iv) Fourth, to the return to such Partner of (A) all Capital Commitment-Related Capital
Contributions made in respect of the Capital Commitment Interest to which any Capital Commitment Investment disposed of during or prior to such Fiscal Year relates or (B) all capital contributions made to any Blackstone Entity (other than the
Partnership) in respect of interests therein relating to BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal Year (including all principal paid on the related Investor Notes), to the extent not
repaid from amounts of Other Sources (other than amounts of Capital Commitment Partner Carried Interest);
(v) Fifth, to
the payment of principal (including any previously deferred amounts) then owing under all other Investor Notes of such Partner (including those unrelated to the Partnership), the selection of those of such Partner’s Investor Notes to be repaid
and the division of payments among such Investor Notes to be determined by the Lender or Guarantor;
(vi) Sixth, up to 50%
of any Capital Commitment Net Income remaining after application pursuant to clauses (i) through (v) above shall be applied pro rata to prepayment of principal of all remaining Investor Notes of such Partner (including those unrelated to
the Partnership), the selection of those of such Partner’s Investor Notes to be repaid, the division of payments among such Investor Notes and the percentage of remaining Capital Commitment Net Income to be applied thereto to be determined by
the Lender or Guarantor; and
(vii) Seventh, to such Partner to the extent of any amount of Capital Commitment Net Income
remaining after making the distributions in clauses (i) through (vi) above, and such amount is not otherwise required to be applied to Investor Notes pursuant to the terms thereof.
To the extent there is a partial disposition of a Capital Commitment Investment or any other BE Investment, as applicable, the payments in
clauses (iii) and (iv) above shall be based on that portion of the Capital Commitment Investment or other BE Investment, as applicable, disposed of, and the principal amount and related interest payments of such Investor Note shall be adjusted
to reflect such partial payment so that there are equal payments over the remaining term of the related Investor Note. For a Partner who is no longer an employee or officer of Holdings or an Affiliate thereof, distributions shall be made pursuant to
clauses (i) through (iii) above, and then, unless the Partnership or its Affiliate has exercised its rights pursuant to Section 8.1 hereof, any remaining income or other distribution in respect of such Partner’s Capital Commitment
Partner Interest shall be applied to the prepayment of the outstanding Investor Notes of such Partner, until all such Partner’s Investor Notes have been repaid in full, with any such income or other distribution remaining thereafter distributed
to such Partner.
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Distributions of Capital Commitment Net Income may be made at any other time at the
discretion of the General Partner. At the General Partner’s discretion, any amounts distributed to a Partner in respect of such Partner’s Capital Commitment Partner Interest will be net of any interest and principal payable on his or her
Investor Notes for the full period in respect of which the distribution is made.
(b) [Intentionally omitted.]
(c) To the extent that the foregoing Partnership distributions and distributions and payments from Other Sources are insufficient to satisfy
any principal and/or interest due on Investor Notes, and to the extent that the General Partner in its sole discretion elects to apply this paragraph (c) to any individual payments due, such unpaid interest will be added to the remaining
principal amount of such Investor Notes and shall be payable on the next scheduled principal payment date (along with any deferred principal and any principal and interest due on such date); provided, that such deferral shall not apply to a
Partner that is no longer an employee or officer of Holdings or its Affiliates. All unpaid interest on such Investor Notes shall accrue interest at the interest rate then in effect for such Investor Notes.
(d) [Intentionally omitted.]
(e)
The Capital Commitment Capital Account of each Partner shall be reduced by the amount of any distribution to such Partner pursuant to Section 7.4(a).
(f) At any time that a sale, exchange, transfer or other disposition of a portion of a Capital Commitment Investment is being considered by the
Partnership or SP VIII (a “Capital Commitment Disposable Investment”), at the election of the General Partner each Partner’s Capital Commitment Interest with respect to such Capital Commitment Investment shall be vertically
divided into two separate Capital Commitment Interests, a Capital Commitment Interest attributable to the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class B Interest”), and a
Capital Commitment Interest attributable to such Capital Commitment Investment excluding the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class A Interest”). Distributions
(including those resulting from a direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class B Interests
with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class B Interests, and distributions (including those resulting from the
direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Investment excluding such Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class A
Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class A Interests.
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(g) (i) If the Partnership is obligated under the Giveback Provisions to contribute to
SP VIII a Giveback Amount with respect to any Capital Commitment SP VIII Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount being herein called a “Capital Commitment Giveback
Amount”), the General Partner shall call for such amounts as are necessary to satisfy such obligation of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the
Partnership, in cash, when and as called by the General Partner, such an amount of prior distributions by the Partnership with respect to the Capital Commitment SP VIII Interest (the “Capital Commitment Recontribution Amount”) which
equals such Partner’s pro rata share of prior distributions in connection with (a) the Capital Commitment SP VIII Investment giving rise to the Capital Commitment Giveback Amount, (b) if the amounts contributed pursuant to
clause (a) above are insufficient to satisfy such Capital Commitment Giveback Amount, Capital Commitment SP VIII Investments other than the one giving rise to such obligation and (c) if the Capital Commitment Giveback Amount pursuant to an
applicable SP VIII Agreement is unrelated to a specific Capital Commitment SP VIII Investment, all Capital Commitment SP VIII Investments. Each Partner shall promptly contribute to the Partnership upon notice thereof such Partner’s Capital
Commitment Recontribution Amount. Prior to such time, the General Partner may, at the General Partner’s discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in
respect of the Capital Commitment Giveback Amount will probably materialize (and an estimate of the aggregate amount of such obligations).
(ii) (A) In the event any Partner (a “Capital Commitment Defaulting Party”) fails to recontribute all or
any portion of such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount for any reason, the General Partner shall (i) use its reasonable efforts to collect any amounts from any such
GP-Related Defaulting Party and (ii) require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Capital Commitment Profit Sharing
Percentages), such amounts as are necessary to fulfill the Capital Commitment Defaulting Party’s obligation to pay such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount (a “Capital Commitment
Deficiency Contribution”) if the General Partner determines in its good faith judgment that the Partnership will be unable to collect such amount in cash from such Capital Commitment Defaulting Party for payment of the Capital Commitment
Giveback Amount at least 20 Business Days prior to the latest date that the Partnership is permitted to pay the Capital Commitment Giveback Amount; provided, that no Partner shall as a result of such Capital Commitment Deficiency Contribution
be required to contribute an amount in excess of 150% of the amount of the Capital Commitment Recontribution Amount initially requested from such Partner’s in respect of such default. Thereafter, the General Partner shall determine in its good
faith judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General
Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership against the Capital Commitment Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the Capital
Commitment Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such Capital Commitment Defaulting Party becoming a Capital Commitment Defaulting Party) to set-off as
appropriate and apply
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against such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount any amounts otherwise payable to the Capital Commitment Defaulting Party by the Partnership or any
Affiliate thereof. Each Partner hereby grants to the General Partner a security interest, effective upon such Partner becoming a Capital Commitment Defaulting Party, in all accounts receivable and other rights to receive payment from the Partnership
or any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner hereby appoints the
General Partner as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or in the name of the Partnership, to take
any actions which may be necessary to accomplish the intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the Capital Commitment Recontribution Amount of a Capital Commitment Defaulting Party
from the date such Capital Commitment Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(B) Any Partner’s failure to make a Capital Commitment Deficiency Contribution shall cause such Partner to be a Capital
Commitment Defaulting Party with respect to such amount.
(iii) A Partner’s obligation to make contributions to the
Partnership under this Section 7.4(g) shall survive the termination of the Partnership.
Section 7.5. Valuations.
Capital Commitment Investments shall be valued annually as of the end of each year (and at such other times as deemed appropriate by the General Partner) in accordance with the principles utilized by the Partnership (or any other Affiliate of the
Partnership that is a general partner of SP VIII) in valuing investments of SP VIII or, in the case of investments not held by SP VIII, in the good faith judgment of the General Partner, subject in each case to the second proviso of the immediately
succeeding sentence. The value of any Capital Commitment Interest as of any date (the “Capital Commitment Value”) shall be based on the value of the underlying Capital Commitment Investment as set forth above; provided, that the
Capital Commitment Value may be determined as of an earlier date if determined appropriate by the General Partner in good faith; provided further, that such value may be adjusted by the General Partner to take into account factors relating solely to
the value of a Capital Commitment Interest (as compared to the value of the underlying Capital Commitment Investment), such as restrictions on transferability, the lack of a market for such Capital Commitment Interest and lack of control of the
underlying Capital Commitment Investment. To the full extent permitted by applicable law such valuations shall be final and binding on all Partners; provided further, that the immediately preceding proviso shall not apply to any Capital Commitment
Interests held by a person who is or was at any time a direct member or partner of a General Partner of the Partnership.
Section 7.6. Disposition Election.
(a) At any time prior to the date of the Partnership’s execution of a definitive agreement to dispose of a Capital Commitment Investment,
the General Partner may in its sole discretion permit a Partner to retain all or any portion of its pro rata share of such Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing
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Percentage in such Capital Commitment Investment). If the General Partner so permits, such Partner shall instruct the General Partner in writing prior to such date (i) not to dispose of all
or any portion of such Partner’s pro rata share of such Capital Commitment Investment (the “Retained Portion”) and (ii) either to (A) distribute such Retained Portion to such Partner on the closing date of such
disposition or (B) retain such Retained Portion in the Partnership on behalf of such Partner until such time as such Partner shall instruct the General Partner upon 5 days’ notice to distribute such Retained Portion to such Partner. Such
Partner’s Capital Commitment Capital Account shall not be adjusted in any way to reflect the retention in the Partnership of such Retained Portion or the Partnership’s disposition of other Partners’ pro rata shares of such
Capital Commitment Investment; provided, that such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Retained Portion to such Partner or upon distribution of proceeds with respect to a subsequent
disposition thereof by the Partnership.
(b) No distribution of such Retained Portion shall occur unless any Investor Notes relating
thereto shall have been paid in full prior to or simultaneously with such distribution.
Section 7.7. Capital Commitment
Special Distribution Election.
(a) From time to time during the term of this Agreement, the General Partner may in its sole
discretion, upon receipt of a written request from a Partner, distribute to such Partner any portion of its pro rata share of a Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in
such Capital Commitment Investment) (a “Capital Commitment Special Distribution”). Such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Capital Commitment Special Distribution.
(b) No Capital Commitment Special Distributions shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or
simultaneously with such Capital Commitment Special Distribution.
ARTICLE VIII
WITHDRAWAL; ADMISSION OF NEW PARTNERS
Section 8.1. Partner Withdrawal; Repurchase of Capital Commitment Interests.
(a) Capital Commitment Interests (or a portion thereof) that were financed by Investor Notes will be treated as
Non-Contingent for purposes hereof based upon the proportion of (a) the sum of Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to each Capital Commitment
Interest and principal payments on the related Investor Note to (b) the sum of the Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to such Capital Commitment Interest, the original principal amount
of such Investor Note and all deferred amounts of interest which from time to time comprise part of the principal amount of the Investor Note. A Partner may prepay a portion of any outstanding principal on the Investor Notes; provided, that in the
event that a Partner prepays all or any portion of the principal amount of the Investor Notes within nine months prior to the date on which such Partner is no longer an employee or officer of Holdings or an Affiliate thereof, the Partnership (or its
designee) shall have the right, in its sole discretion, to purchase the
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Capital Commitment Interest that became Non-Contingent as a result of such prepayment; provided further, that the purchase price for such Capital
Commitment Interest shall be determined in accordance with the determination of the purchase price of a Partner’s Contingent Capital Commitment Interests as set forth in paragraph (b) below. Prepayments made by a Partner shall apply pro
rata against all of such Partner’s Investor Notes; provided, that such Partner may request that such prepayments be applied only to Investor Notes related to BE Investments that are related to one or more Blackstone Entities specified by such
Partner. Except as expressly provided herein, Capital Commitment Interests that were not financed in any respect with Investor Notes shall be treated as Non-Contingent Capital Commitment Interests.
(b) (i) Upon a Partner ceasing to be an officer or employee of the Partnership or any of its Affiliates, other than as a result of such
Partner dying or suffering a Total Disability, such Partner and the Partnership or any other person designated by the General Partner shall each have the right (exercisable by the Withdrawn Partner within 30 days and by the Partnership or its
designee(s) within 45 days after such Partner’s ceasing to be such an officer or employee) or any time thereafter, upon 30 days’ notice, but not the obligation, to require the Partnership (subject to the prior consent of the General
Partner, such consent not to be unreasonably withheld or delayed), subject to the Partnership Act, to buy (in the case of exercise of such right by such Withdrawn Partner) or the Withdrawn Partner to sell (in the case of exercise of such right by
the Partnership or its designee(s)) all (but not less than all) such Withdrawn Partner’s Contingent Capital Commitment Interests.
(ii) The purchase price for each such Contingent Capital Commitment Interest shall be an amount equal to (A) the
outstanding principal amount of the related Investor Note plus accrued interest thereon to the date of purchase (such portion of the purchase price to be paid in cash) and (B) an additional amount (the “Adjustment Amount”) equal to
(x) all interest paid by the Partner on the portion of the principal amount of such Investor Note(s) relating to the portion of the related Capital Commitment Interest remaining Contingent and to be repurchased, plus (y) all Capital
Commitment Net Losses allocated to the Withdrawn Partner on such Contingent portion of such Capital Commitment Interest, minus (z) all Capital Commitment Net Income allocated to the Withdrawn Partner on the Contingent portion of such Capital
Commitment Interest; provided, that, if the Withdrawn Partner was terminated from employment or his or her position as an officer for Cause, all amounts referred to in clause (x) or (y) of the Adjustment Amount, in the General Partner’s
sole discretion, may be deemed to equal zero. The Adjustment Amount shall, if positive, be payable by the holders of the purchased Capital Commitment Interests to the Withdrawn Partner from the next Capital Commitment Net Income received by such
holders on the Contingent portion of such Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received. If the Adjustment Amount is negative, it shall be payable to the holders of the purchased
Capital Commitment Interest by the Withdrawn Partner (A) from the next Capital Commitment Net Income on the Non-Contingent portion of the Withdrawn Partner’s Capital Commitment Interests at the time
such Capital Commitment Net Income is received by the Withdrawn Partner, or (B) if the Partnership or its designee(s) elect to purchase such Withdrawn Partner’s Non-Contingent Capital Commitment
Interests, in cash by the Withdrawn Partner at the time of such purchase; provided, that the Partnership and its Affiliates may offset any amounts otherwise owing to a Withdrawn Partner against any Adjustment Amount owed by such Withdrawn Partner.
Until so paid, such remaining Adjustment Amount will not itself bear interest. At the time of such purchase of the Withdrawn Partner’s Contingent Capital Commitment Interests, his or her related Investor Note shall be payable in full.
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(iii) Upon such Partner ceasing to be such an officer or employee, all
Investor Notes shall become fully recourse to the Withdrawn Partner in his or her individual capacity (whether or not the Withdrawn Partner or the Partnership or its designee(s) exercises the right to require repurchase of the Withdrawn
Partner’s Contingent Capital Commitment Interests).
(iv) If neither the Withdrawn Partner nor the Partnership nor its
designee(s) exercises the right to require repurchase of such Contingent Capital Commitment Interests, then the Withdrawn Partner shall retain the Contingent portion of his or her Capital Commitment Interests and the Investor Notes shall remain
outstanding, shall become fully recourse to the Withdrawn Partner in his or her individual capacity, shall be payable in accordance with their remaining original maturity schedules and shall be prepayable at any time by the Withdrawn Partner at his
or her option, and the Partnership shall apply such prepayments against outstanding Investor Notes on a pro rata basis.
(v) To the extent that another Partner purchases a portion of a Capital Commitment Interest of a Withdrawn Partner, the
purchasing Partner’s Capital Commitment Capital Account and Capital Commitment Profit Sharing Percentage for such Capital Commitment Investment shall be correspondingly increased.
(c) Upon the occurrence of a Final Event with respect to any Partner, such Partner shall thereupon cease to be a Partner with respect to such
Partner’s Capital Commitment Partner Interest. If such a Final Event shall occur, no Successor in Interest to any such Partner shall for any purpose hereof become or be deemed to become a Partner. The sole right, as against the Partnership and
the remaining Partners, acquired hereunder by, or resulting hereunder to, a Successor in Interest to any Partner shall be to receive any distributions and allocations with respect to such Partner’s Capital Commitment Partner Interest pursuant
to Article VII and this Article VIII (subject to the right of the Partnership to purchase the Capital Commitment Interests of such former Partner pursuant to Section 8.1(b) or Section 8.1(d)), to the extent, at the time, in the manner and
in the amount otherwise payable to such Partner had such a Final Event not occurred, and no other right shall be acquired hereunder by, or shall result hereunder to, a Successor in Interest to such Partner, whether by operation of law or otherwise
and the Partnership shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations hereunder. Until distribution of any such Partner’s interest in the Partnership upon
the dissolution of the Partnership as provided in Section 9.2, neither his or her Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption without the consent of the General Partner. The General
Partner shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations hereunder with respect to such Partner’s Capital Commitment Partner Interest.
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(d) If a Partner dies or suffers a Total Disability, all Contingent Capital Commitment
Interests of such Partner shall be purchased by the Partnership or its designee (within 30 days of the first date on which the Partnership knows or has reason to know of such Partner’s death or Total Disability) (and the purchase price for such
Contingent Capital Commitment Interests shall be determined in accordance with Section 8.1(b) (except that any Adjustment Amount shall be payable by or to such Partner’s estate, personal representative or other Successor in Interest, in
cash)), and any Investor Notes financing such Contingent Capital Commitment Interests shall thereupon be prepaid as provided in Section 8.1(b). Upon such Partner’s death or Total Disability, any Investor Note(s) financing such Contingent
Capital Commitment Interests shall become fully recourse. In addition, in the case of the death or Total Disability of a Partner, if the estate, personal representative or other Successor in Interest of such Partner, so requests in writing within
180 days after the Partner’s death or ceasing to be an employee or member (directly or indirectly) of the Partnership or any of its Affiliates by reason of Total Disability (such requests shall not exceed one per calendar year), the Partnership
or its designee may but is not obligated to purchase for cash all (but not less than all) Non-Contingent Capital Commitment Interests of such Partner as of the last day of the Partnership’s then current
Fiscal Year at a price equal to the Capital Commitment Value thereof as of the most recent valuation prior to the date of purchase. Each Partner shall be required to include appropriate provisions in his or her will to reflect such provisions of
this Agreement. In addition, the Partnership may, in the sole discretion of the General Partner, upon notice to the estate, personal representative or other Successor in Interest of such Partner, within 30 days of the first date on which the General
Partner knows or has reason to know of such Partner’s death or Total Disability, determine either (i) to distribute Securities or other property to the estate, personal representative or other Successor in Interest, in exchange for such Non-Contingent Capital Commitment Interests as provided in Section 8.1(e) or (ii) to require sale of such Non-Contingent Capital Commitment Interests to the
Partnership or its designee as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by the General Partner in its sole discretion) for an amount in cash equal to the Capital Commitment Value thereof.
(e) In lieu of retaining a Withdrawn Partner as a Partner with respect to any Non-Contingent Capital
Commitment Interests, the General Partner may, in its sole discretion, by notice to such Withdrawn Partner within 45 days of his or her ceasing to be an employee or officer of the Partnership or any of its Affiliates, or at any time thereafter, upon
30 days written notice, determine (1) to distribute to such Withdrawn Partner the pro rata portion of the Securities or other property underlying such Withdrawn Partner’s Non-Contingent Capital
Commitment Interests, subject to any restrictions on distributions associated with the Securities or other property, in satisfaction of his or her Non-Contingent Capital Commitment Interests in the Partnership
or (2) to cause, as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by the General Partner in its sole discretion), the Partnership or another person designated by the General Partner (who may be itself
another Partner or another Affiliate of the Partnership) to purchase all (but not less than all) of such Withdrawn Partner’s Non-Contingent Capital Commitment Interests for a price equal to the Capital
Commitment Value thereof (determined in good faith by the General Partner as of the most recent valuation prior to the date of purchase). The General Partner shall condition any distribution or purchase of voting Securities pursuant to paragraph
(d) above or this paragraph (e) upon the Withdrawn Partner’s execution and delivery to the Partnership of an appropriate irrevocable proxy, in favor of the General Partner or its nominee, relating to such Securities.
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(f) The Partnership may subsequently transfer any Unallocated Capital Commitment Interest or
portion thereof which is purchased by it as described above to any other person approved by the General Partner. In connection with such purchase or transfer or the purchase of a Capital Commitment Interest or portion thereof by the General
Partner’s designee(s), Holdings may loan all or a portion of the purchase price of the transferred or purchased Capital Commitment Interest to the Partnership, the transferee or the designee-purchaser(s), as applicable (excluding any of the
foregoing who is an executive officer of The Blackstone Group Inc. or any Affiliate thereof). To the extent that a Withdrawn Partner’s Capital Commitment Interests (or portions thereof) are repurchased by the Partnership and not transferred to
or purchased by another person, all or any portion of such repurchased Capital Commitment Interests may, in the sole discretion of the General Partner, (i) be allocated to each Partner already participating in the Capital Commitment Investment
to which the repurchased Capital Commitment Interest relates, (ii) be allocated to each Partner in the Partnership, whether or not already participating in such Capital Commitment Investment, and/or (iii) continue to be held by the
Partnership itself as an unallocated Capital Commitment Investment (such Capital Commitment Interests being herein called “Unallocated Capital Commitment Interests”). To the extent that a Capital Commitment Interest is allocated to
Partners as provided in clause (i) and/or (ii) above, any indebtedness incurred by the Partnership to finance such repurchase shall also be allocated to such Partners. All such Capital Commitment Interests allocated to Partners shall be
deemed to be Contingent and shall become Non-Contingent as and to the extent that the principal amount of such related indebtedness is repaid. The Partners receiving such allocations shall be responsible for
such related indebtedness only on a nonrecourse basis to the extent appropriate as provided in this Agreement, except as otherwise provided in this Section 8.1 and except as such Partners and the General Partner shall otherwise agree; provided,
that such indebtedness shall become fully recourse to the extent and at the time provided in this Section 8.1. If the indebtedness financing such repurchased interests is not to be non-recourse or so
limited, the Partnership may require an assumption by the Partners of such indebtedness on the terms thereof as a precondition to allocation of the related Capital Commitment Interests to such Partners; provided, that a Partner shall not, except as
set forth in his or her Investor Note(s), be obligated to accept any obligation that is personally recourse (except as provided in this Section 8.1), unless his or her prior consent is obtained. So long as the Partnership itself retains the
Unallocated Capital Commitment Interests pursuant to clause (iii) above, such Unallocated Capital Commitment Interests shall belong to the Partnership and any indebtedness financing the Unallocated Capital Commitment Interests shall be an
obligation of the Partnership to which all income of the Partnership is subject except as otherwise agreed by the lender of such indebtedness. Any Capital Commitment Net Income (Loss) on an Unallocated Capital Commitment Interest shall be allocated
to each Partner in the proportion his or her aggregate Capital Commitment Capital Accounts bear to the aggregate Capital Commitment Capital Accounts of all Partners; debt service on such related financing will be an expense of the Partnership
allocable to all Partners in such proportions.
(g) If a Partner is required to Withdraw from the Partnership with respect to such
Partner’s Capital Commitment Partner Interest for Cause, then his or her Capital Commitment Interest shall be settled in accordance with paragraphs (a)-(f) and (j) of this Section 8.1;
provided, that if such Partner was not at any time a direct partner of a General Partner of the Partnership, the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
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(i) purchase for cash all of such Withdrawn Partner’s Non-Contingent Capital Commitment Interests. The purchase price for each such Non-Contingent Capital Commitment Interest shall be the lower of (A) the original cost of
such Non-Contingent Capital Commitment Interest or (B) an amount equal to the Capital Commitment Value thereof (determined as of the most recent valuation prior to the date of the purchase of such Non-Contingent Capital Commitment Interest);
(ii) allow the Withdrawn Partner to retain
such Non-Contingent Capital Commitment Interests; provided, that the maximum amount of Capital Commitment Net Income allocable to such Withdrawn Partner with respect to any Capital Commitment Investment
shall equal the amount of Capital Commitment Net Income that would have been allocated to such Withdrawn Partner if such Capital Commitment Investment had been sold as of the Settlement Date at the then prevailing Capital Commitment Value thereof;
or (iii) in lieu of cash, purchase such Non-Contingent Capital Commitment Interests by providing the Withdrawn Partner with a promissory note in the amount determined in (i) above. Such promissory
note shall have a maximum term of ten (10) years with interest at the Federal Funds Rate.
(h) The Partnership will assist a Withdrawn
Partner or his or her estate or guardian, as the case may be, in the settlement of the Withdrawn Partner’s Capital Commitment Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will
be borne by the Withdrawn Partner or his or her estate.
(i) The General Partner may reasonably determine in good faith to retain outside
professionals to provide the assistance to Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the
case may be, prior to engaging such professionals. If the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with
the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(j) Each Partner hereby irrevocably appoints the General Partner as such Partner’s true and lawful agent, representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Partner, any and all agreements,
instruments, consents, ratifications, documents and certificates which such General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this Section 8.1, including, without
limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and
effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 8.2. Transfer of Partner’s Capital Commitment Interest. Except as otherwise agreed by the General
Partner, no Partner or former Partner shall have the right to sell, assign, mortgage, pledge, grant a security interest over, or otherwise dispose of or transfer (“Transfer”) all or part of any such Partner’s Capital Commitment
Partner Interest in the Partnership; provided, that this Section 8.2 shall in no way impair (i) Transfers as permitted in Section 8.1 above, in the case of the purchase of a Withdrawn Partner’s or Deceased or Totally
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Disabled Partner’s Capital Commitment Interests, (ii) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers by a Partner to another
Partner of Non-Contingent Capital Commitment Interests, (iii) Transfers with the prior written consent of the General Partner (which consent may be granted or withheld in its sole discretion without
giving any reason therefor) and (iv) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers of up to 25% of a Limited Partner’s Capital Commitment Partner Interest to an Estate Planning
Vehicle (it being understood that it shall not be unreasonable for the General Partner to condition any Transfer of an Interest pursuant to this clause (iv) on the satisfaction of certain conditions and/or requirements imposed by the General
Partner in connection with any such Transfer, including, for example, a requirement that any transferee of an Interest hold such Interest as a passive, non-voting interest in the Partnership). The General
Partner shall designate that each Estate Planning Vehicle shall not have voting rights (any such Partner being called a “Nonvoting Partner”). Such Partner shall be jointly and severally liable for all obligations of both such Partner and
such Nonvoting Partner with respect to the interest transferred (including the obligation to make additional Capital Commitment-Related Capital Contributions). The General Partner may at its sole option exercisable at any time require such Estate
Planning Vehicle to Withdraw from the Partnership on the terms of Section 8.1 and Article VI. No person acquiring an interest in the Partnership pursuant to this Section 8.2 shall become a Partner of the Partnership, or acquire such
Partner’s right to participate in the affairs of the Partnership, unless such person shall be admitted as a Partner pursuant to Section 6.1. A Partner shall not cease to be a Partner of the Partnership upon the collateral assignment of, or
the pledging or granting of a security interest in, its entire Interest in the Partnership in accordance with the provisions of this Agreement.
Section 8.3. Compliance with Law. Notwithstanding any provision hereof to the contrary, no sale or Transfer of a Capital
Commitment Interest in the Partnership may be made except in compliance with all U.S. federal, state and other applicable laws, including U.S. federal and state securities laws.
ARTICLE IX
DISSOLUTION
Section 9.1. Dissolution. The Partnership shall be dissolved and subsequently terminated:
(a) pursuant to Section 6.6; or
(b) upon the expiration of the term of the Partnership.
Section 9.2. Final Distribution. Upon the dissolution of the Partnership, and following the payment of creditors of the
Partnership and the making of provisions for the payment of any contingent, conditional or unmatured claims known to the Partnership as required under the Partnership Act:
(a) The Partners’ respective interests in the Partnership shall be valued and settled in accordance with the procedures set forth in
Section 6.5 which provide for allocations to the GP-Related Capital Accounts of the Partners and distributions in accordance with the GP-Related Capital Account
balances of the Partners; and
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(b) With respect to each Partner’s Capital Commitment Partner Interest, an amount shall
be paid to such Partner in cash or Securities in an amount equal to such Partner’s respective Capital Commitment Liquidating Share for each Capital Commitment Investment; provided, that if the remaining assets relating to any Capital
Commitment Investment shall not be equal to or exceed the aggregate Capital Commitment Liquidating Shares for such Capital Commitment Investment, to each Partner in proportion to its Capital Commitment Liquidating Share for such Capital Commitment
Investment; and the remaining assets of the Partnership related to the Partners’ Capital Commitment Partner Interests shall be paid to the Partners in cash or Securities in proportion to their respective Capital Commitment Profit Sharing
Percentages for each Capital Commitment Investment from which such cash or Securities are derived.
The General Partner shall be the
liquidator. In the event that the General Partner is unable to serve as liquidator, a liquidating trustee shall be chosen by the affirmative vote of a Majority in Interest of the Partners voting at a meeting of Partners (excluding Nonvoting Special
Partners).
Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests.
(a) If there are any Securities or other property or other investments or securities related to the Partners’ Capital Commitment Partner
Interests which, in the judgment of the liquidator, cannot be sold, or properly distributed in kind in the case of dissolution, without sacrificing a significant portion of the value thereof, the value of a Partner’s interest in each such
Security or other investment or security may be excluded from the amount distributed to the Partners participating in the related Capital Commitment Investment pursuant to Section 9.2(b). Any interest of a Partner, including his or her pro
rata interest in any gains, losses or distributions, in Securities or other property or other investments or securities so excluded shall not be paid or distributed until such time as the liquidator shall determine.
(b) If there is any pending transaction, contingent liability or claim by or against the Partnership related to the Partners’ Capital
Commitment Partner Interests as to which the interest or obligation of any Partner therein cannot, in the judgment of the liquidator, be then ascertained, the value thereof or probable loss therefrom may be deducted from the amount distributable to
such Partner pursuant to Section 9.2(b). No amount shall be paid or charged to any such Partner on account of any such transaction or claim until its final settlement or such earlier time as the liquidator shall determine. The Partnership may
meanwhile retain from other sums due such Partner in respect of such Partner’s Capital Commitment Partner Interest an amount which the liquidator estimates to be sufficient to cover the share of such Partner in any probable loss or liability on
account of such transaction or claim.
(c) Upon determination by the liquidator that circumstances no longer require the exclusion of any
Securities or other property or retention of sums as provided in paragraphs (a) and (b) of this Section 9.3, the liquidator shall, at the earliest practicable time, distribute as provided in Section 9.2(b) such sums or such Securities
or other property or the proceeds realized from the sale of such Securities or other property to each Partner from whom such sums or Securities or other property were withheld.
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ARTICLE X
MISCELLANEOUS
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be settled
amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement
(including the validity, scope and enforceability of this arbitration provision as well as any and all disputes arising out of, relating to or in connection with the termination, liquidation or winding up of the Partnership), whether arising during
the existence of the Partnership or at or after its termination or during or after the liquidation or winding up of the Partnership, shall be finally settled by arbitration conducted by a single arbitrator in New York, New York U.S.A., in accordance
with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) days of the receipt of the request for arbitration, the
International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration
proceedings.
(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may cause the Partnership to bring, on
behalf of the General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief
in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of paragraph (c) of this Section 10.1 to any such action or
proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the
General Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon any such agent, who shall promptly advise such Partner of any such service of process, shall
be deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 10.1, OR ANY JUDICIAL PROCEEDING
ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary
judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the forum(s) designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one
another.
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(ii) The parties hereby waive, to the fullest extent permitted by applicable
law, any objection which they now or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 10.1 and such
parties agree not to plead or claim the same.
(d) Notwithstanding any provision of this Agreement to the contrary, this Section 10.1
shall be construed to the maximum extent possible to comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If,
nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of this Section 10.1, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable under the Delaware
Arbitration Act, or other applicable law, such invalidity shall not invalidate all of this Section 10.1. In that case, this Section 10.1 shall be construed so as to limit any term or provision so as to make it valid or enforceable within
the requirements of the Delaware Arbitration Act or other applicable law, and, in the event such term or provision cannot be so limited, this Section 10.1 shall be construed to omit such invalid or unenforceable provision.
Section 10.2. Ownership and Use of the Blackstone Name. The Partnership acknowledges that Blackstone TM L.L.C.
(“TM”), a Delaware limited liability company with a principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., (or its successors or assigns) is the sole and exclusive owner of the mark and name BLACKSTONE and
that the ownership of, and the right to use, sell or otherwise dispose of, the firm name or any abbreviation or modification thereof which consists of or includes BLACKSTONE, shall belong exclusively to TM, which company (or its predecessors,
successors or assigns) has licensed the Partnership to use BLACKSTONE in its name. The Partnership acknowledges that TM owns the service mark BLACKSTONE for various services and that the Partnership is using the BLACKSTONE mark and name on a non-exclusive, non-sublicensable and non-assignable basis in connection with its business and authorized activities with the permission
of TM. All services rendered by the Partnership under the BLACKSTONE mark and name will be rendered in a manner and with quality levels that are consistent with the high reputation heretofore developed for the BLACKSTONE mark by TM and its
Affiliates and licensees. The Partnership understands that TM may terminate its right to use BLACKSTONE at any time in TM’s sole discretion by giving the Partnership written notice of termination. Promptly following any such termination, the
Partnership will take all steps necessary to change its partnership name to one which does not include BLACKSTONE or any confusingly similar term and cease all use of BLACKSTONE or any term confusingly similar thereto as a service mark or otherwise.
Section 10.3. Written Consent. Any action required or permitted to be taken by a vote of Partners at a meeting may be
taken without a meeting if a Majority in Interest of the Partners consent thereto in writing.
Section 10.4. Letter
Agreements; Schedules. The General Partner may, or may cause the Partnership to, enter or has previously entered, into separate letter agreements with individual Partners, officers or employees with respect to
GP-Related Profit Sharing Percentages, Capital Commitment Profit Sharing Percentages, benefits or any other matter, which letter agreements have the effect of establishing rights under, or altering or
supplementing, the terms of this Agreement with respect to any such Partner and such matters. The parties hereto agree that any rights established, or any terms of this Agreement altered or supplemented, in any such
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separate letter agreement, including any Commitment Agreement or SMD Agreement, shall govern solely with respect to such Partner notwithstanding any other provision of this Agreement. The General
Partner may from time to time execute and deliver to the Partners schedules which set forth the then current capital balances, GP-Related Profit Sharing Percentages and Capital Commitment Profit Sharing
Percentages of the Partners and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever; provided, that this
in no way limits the effectiveness of any Commitment Agreement or SMD Agreement.
Section 10.5. Governing Law,
Separability of Provisions. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law. In particular, the Partnership has been formed pursuant
to the Partnership Act, and the rights and liabilities of the Partners shall be as provided therein, except as herein otherwise expressly provided. If any provision of this Agreement shall be held to be invalid, such provision shall be given its
meaning to the maximum extent permitted by law and the remainder of this Agreement shall not be affected thereby.
Section 10.6. Successors and Assigns; Third Party Beneficiaries. This Agreement shall be binding upon and shall, subject to
the penultimate sentence of Section 6.3(a), inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any successor to a trustee of a trust which is or becomes a party hereto; provided, that no person
claiming by, through or under a Partner (whether such Partner’s heir, personal representative or otherwise), as distinct from such Partner itself, shall have any rights as, or in respect to, a Partner (including the right to approve or vote on
any matter or to notice thereof) except the right to receive only those distributions expressly payable to such person pursuant to Article VI and Article VIII. Any Partner or Withdrawn Partner shall remain liable for the obligations under this
Agreement (including any Net GP-Related Recontribution Amounts and any Capital Commitment Recontribution Amounts) of any transferee of all or any portion of such Partner’s or Withdrawn Partner’s
interest in the Partnership, unless waived by the General Partner. The Partnership shall, if the General Partner determines, in its good faith judgment, based on the standards set forth in Section 5.8(d)(ii)(A) and Section 7.4(g)(ii)(A),
to pursue such transferee, pursue payment (including any Net GP-Related Recontribution Amounts and/or Capital Commitment Recontribution Amounts) from the transferee with respect to any such obligations.
Nothing in this Agreement is intended, nor shall anything herein be construed, to confer any rights, legal or equitable, on any person other than the Partners and their respective legal representatives, heirs, successors and permitted assigns.
Notwithstanding the foregoing, solely to the extent required by the SP VIII Agreements, (x) the limited partners in SP VIII shall be third-party beneficiaries of the provisions of Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and
the definitions relating thereto), solely as they relate to any Clawback Amount (for purpose of this sentence, as defined in Section 9.4(a) of the SP VIII Partnership Agreement) and (y) the amendment of the provisions of
Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount (for purpose of this sentence, as defined in Section 9.4(a) of the SP VIII Partnership Agreement), in
a manner materially adverse to such limited partners shall be effective against such limited partners only with the 662⁄3% Combined Limited Partner Consent (as such
term is used in the SP VIII Partnership Agreement).
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Section 10.7. Confidentiality.
(a) By executing this Agreement, each Partner expressly agrees, at all times during the term of the Partnership and thereafter and whether or
not at the time a Partner of the Partnership, to maintain the confidentiality of, and not to disclose to any person other than the Partnership, another Partner or a person designated by the Partnership, any information relating to the business,
financial structure, financial position or financial results, clients or affairs of the Partnership that shall not be generally known to the public or the securities industry, except as otherwise required by law or by any regulatory or self-regulatory organization having jurisdiction; provided, that any corporate Partner may disclose any such information it is required by law, rule, regulation or custom to disclose. Notwithstanding anything
in this Agreement to the contrary, to comply with Treasury Regulations Section 1.6011-4(b)(3)(i), each Partner (and any employee, representative or other agent of such Partner) may disclose to any and all
persons, without limitation of any kind, the U.S. federal income tax treatment and tax structure of the Partnership, it being understood and agreed, for this purpose, (1) the name of, or any other identifying information regarding (a) the
Partners or any existing or future investor (or any Affiliate thereof) in any of the Partners, or (b) any investment or transaction entered into by the Partners; (2) any performance information relating to any of the Partners or their
investments; and (3) any performance or other information relating to previous funds or investments sponsored by any of the Partners, does not constitute such tax treatment or tax structure information.
(b) Nothing in this Agreement shall prohibit or impede any Partner from communicating, cooperating or filing a complaint on possible violations
of U.S. federal, state or local law or regulation to or with any governmental agency or regulatory authority (collectively, a “Governmental Entity”), including, but not limited to, the SEC, FINRA, EEOC or NLRB, or from making other
disclosures to any Governmental Entity that are protected under the whistleblower provisions of U.S. federal, state or local law or regulation; provided, that in each case such communications and disclosures are consistent with applicable law. Each
Partner understands and acknowledges that (a) an individual shall not be held criminally or civilly liable under any U.S. federal or state trade secret law for the disclosure of a trade secret that is made (i) in confidence to a U.S.
federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is
made under seal, and (b) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the
court proceeding, if the individual files any document containing the trade secret under seal; and does not disclose the trade secret, except pursuant to court order. Moreover, a Partner shall not be required to give prior notice to (or get prior
authorization from) Blackstone regarding any such communication or disclosure. Except as otherwise provided in this paragraph or under applicable law, under no circumstance is any Partner authorized to disclose any information covered by Blackstone
or its affiliates’ attorney-client privilege or attorney work product or Blackstone’s trade secrets without the prior written consent of Blackstone.
Section 10.8. Notices. Whenever notice is required or permitted by this Agreement to be given, such notice shall be in
writing (including telecopy or similar writing) and shall be given by hand delivery (including any courier service) or telecopy to any Partner at its address or telecopy number shown in the Partnership’s books and records or, if given to the
General Partner, at the address or telecopy number of the Partnership in New York City. Each such notice shall be effective (i) if given by telecopy, upon dispatch and (ii) if given by hand delivery, when delivered to the address of such
Partner, the General Partner or the Partnership specified as aforesaid.
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Section 10.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together shall constitute a single instrument. For the avoidance of doubt, a Person’s execution and delivery of this Agreement by electronic signature and electronic transmission
(jointly, an “Electronic Signature”), including via DocuSign or other similar method, shall constitute the execution and delivery of a counterpart of this Agreement by or on behalf of such Person and shall bind such Person to the terms of
this Agreement. The parties hereto agree that this Agreement and any additional information incidental hereto may be maintained as electronic records. Any Person executing and delivering this Agreement by an Electronic Signature further agrees to
take any and all reasonable additional actions, if any, evidencing its intent to be bound by the terms of this Agreement, as may be reasonably requested by the General Partner.
Section 10.10. Power of Attorney. Each Partner hereby irrevocably appoints the General Partner as such Partner’s
true and lawful representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file all instruments, documents and certificates which, from
time to time, may be required to set forth any amendment to this Agreement or may be required by this Agreement or by the laws of the United States of America, the State of Delaware or any other state in which the Partnership shall determine to do
business, or any political subdivision or agency thereof, to execute, implement and continue the valid and subsisting existence of the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and
effect notwithstanding the subsequent Withdrawal from the Partnership of any Partner for any reason and shall survive and shall not be affected by the subsequent disability or incapacity of such Partner.
Section 10.11. Partner’s Will. Each Partner and Withdrawn Partner shall include in his or her will a
provision that addresses certain matters in respect of his or her obligations relating to the Partnership that is satisfactory to the General Partner and each such Partner and Withdrawn Partner shall confirm annually to the Partnership, in writing,
that such provision remains in his or her current will. Where applicable, any estate planning trust of such Partner or Withdrawn Partner to which a portion of such Partner’s or Withdrawn Partner’s Interest is transferred shall include a
provision substantially similar to such provision and the trustee of such trust shall confirm annually to the Partnership, in writing, that such provision or its substantial equivalent remains in such trust. In the event any Partner or Withdrawn
Partner fails to comply with the provisions of this Section 10.11 after the Partnership has notified such Partner or Withdrawn Partner of his or her failure to so comply and such failure to so comply is not cured within 30 days of such notice,
the Partnership may withhold any and all distributions to such Partner until the time at which such party complies with the requirements of this Section 10.11.
Section 10.12. Cumulative Remedies. Rights and remedies under this Agreement are cumulative and do not preclude use of other
rights and remedies available under applicable law.
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Section 10.13. Legal Fees. Except as more specifically provided herein, in
the event of a legal dispute (including litigation, arbitration or mediation) between any Partner or Withdrawn Partner and the Partnership, arising in connection with any party seeking to enforce Section 4.1(d) or any other provision of this
Agreement relating to the Holdback, the Clawback Amount, the GP-Related Giveback Amount, the Capital Commitment Giveback Amount, the Net GP-Related Recontribution Amount
or the Capital Commitment Recontribution Amount, the “losing” party to such dispute shall promptly reimburse the “victorious party” for all reasonable legal fees and expenses incurred in connection with such dispute (such
determination to be made by the relevant adjudicator). Any amounts due under this Section 10.13 shall be paid within 30 days of the date upon which such amounts are due to be paid and such amounts remaining unpaid after such date shall accrue
interest at the Default Interest Rate.
Section 10.14. Entire Agreement; Modifications. This Agreement embodies
the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. Subject to Section 10.4, this Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. Except as provided herein, this Agreement may be amended or modified at any
time by the General Partner in its sole discretion, upon notification thereof to the Limited Partners.
Section 10.15. Section Titles. The headings contained in this Agreement are for convenience and reference purposes only and
shall not be deemed to alter or affect in any way the meaning or interpretation of any provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the day and
year first above written.
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GENERAL PARTNER:
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SPFSA VIII L.L.C.
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By:
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/s/ Peter Song
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Name:
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Peter Song
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Title:
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Authorized Person
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LIMITED PARTNERS AND SPECIAL PARTNERS:
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Limited Partners and Special Partners now admitted pursuant to the power of attorney now and hereafter granted to SPFSA VIII L.L.C.
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SPFSA VIII L.L.C.
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By: Blackstone Holdings II L.P., its sole member
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By: Blackstone Holdings I/II GP L.L.C., its general partner
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By:
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/s/ John G. Finley
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Name:
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John G. Finley
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Title:
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Chief Legal Officer and Secretary
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INITIAL LIMITED PARTNER, solely to reflect his Withdrawal from the Partnership:
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/s/ Peter Song
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Name:
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Peter Song
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Title:
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Initial Limited Partner
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Exhibit 10.14
Execution Version
HIGHLY CONFIDENTIAL &
TRADE SECRET
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES DE L.P.
AMENDED AND RESTATED
LIMITED
PARTNERSHIP AGREEMENT
Dated November 4, 2020
Effective as of February 26, 2018
THE
LIMITED PARTNERSHIP INTERESTS (THE “INTERESTS”) OF STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES DE L.P. (THE “PARTNERSHIP”) HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), THE SECURITIES LAWS OF ANY STATE IN THE UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE ACQUIRED FOR
INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS, AND ANY OTHER APPLICABLE SECURITIES LAWS;
AND (II) THE TERMS AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE INTERESTS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT.
THEREFORE, PURCHASERS OF SUCH INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
Table of Contents
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ARTICLE I DEFINITIONS
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1
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Section 1.1. Definitions
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1
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Section 1.2. Terms Generally
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16
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ARTICLE II GENERAL PROVISIONS
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16
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Section 2.1. General Partner, Limited Partner, Special Partner
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16
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Section 2.2. Formation; Name; Foreign Jurisdictions
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17
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Section 2.3. Term
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17
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Section 2.4. Purposes; Powers
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17
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Section 2.5. Place of Business
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20
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Section 2.6. Withdrawal of Initial Limited Partner
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20
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ARTICLE III MANAGEMENT
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20
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Section 3.1. General Partner
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20
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Section 3.2. Partner Voting, etc.
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21
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Section 3.3. Management
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21
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Section 3.4. Responsibilities of Partners
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23
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Section 3.5. Exculpation and Indemnification
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23
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Section 3.6. Representations of Partners
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26
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Section 3.7. Tax Representation and Further Assurances
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26
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ARTICLE IV CAPITAL OF THE PARTNERSHIP
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28
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Section 4.1. Capital Contributions by Partners
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28
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Section 4.2. Interest
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35
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Section 4.3. Withdrawals of Capital
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35
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ARTICLE V PARTICIPATION IN PROFITS AND LOSSES
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35
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Section 5.1. General Accounting Matters
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35
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Section 5.2. GP-Related Capital
Accounts
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37
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Section 5.3. GP-Related Profit Sharing
Percentages
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38
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Section 5.4. Allocations of GP-Related Net
Income (Loss)
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39
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Section 5.5. Liability of Partners
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40
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Section 5.6. [Intentionally Omitted]
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40
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Section 5.7. Repurchase Rights, etc.
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40
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Section 5.8. Distributions
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40
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Section 5.9. Business Expenses
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48
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Section 5.10. Tax Capital Accounts; Tax Allocations
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48
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ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND DISCHARGE OF PARTNERSHIP
INTERESTS; TERMINATION
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49
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Section 6.1. Additional Partners
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49
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Section 6.2. Withdrawal of Partners
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50
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Section 6.3. GP-Related Partner Interests Not
Transferable
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51
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Section 6.4. Consequences upon Withdrawal of a Partner
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52
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Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interests
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52
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Section 6.6. Dissolution of the Partnership
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58
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Section 6.7. Certain Tax Matters
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58
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Section 6.8. Special Basis Adjustments
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59
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ARTICLE VII CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS; ALLOCATIONS;
DISTRIBUTIONS
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60
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Section 7.1. Capital Commitment Interests, etc.
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60
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Section 7.2. Capital Commitment Capital Accounts
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61
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Section 7.3. Allocations
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61
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Section 7.4. Distributions
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62
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Section 7.5. Valuations
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66
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Section 7.6. Disposition Election
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67
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Section 7.7. Capital Commitment Special Distribution Election
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67
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ARTICLE VIII WITHDRAWAL; ADMISSION OF NEW PARTNERS
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67
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Section 8.1. Partner Withdrawal; Repurchase of Capital Commitment Interests
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67
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Section 8.2. Transfer of Partner’s Capital Commitment Interest
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73
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Section 8.3. Compliance with Law
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73
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ARTICLE IX DISSOLUTION
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Section 9.1. Dissolution
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Section 9.2. Final Distribution
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Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests
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ARTICLE X MISCELLANEOUS
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Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial
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75
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Section 10.2. Ownership and Use of the Blackstone Name
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Section 10.3. Written Consent
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Section 10.4. Letter Agreements; Schedules
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Section 10.5. Governing Law, Separability of Provisions
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77
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Section 10.6. Successors and Assigns; Third Party Beneficiaries
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77
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Section 10.7. Confidentiality
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78
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Section 10.8. Notices
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79
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Section 10.9. Counterparts
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79
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Section 10.10. Power of Attorney
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Section 10.11. Partner’s Will
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80
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Section 10.12. Cumulative Remedies
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80
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Section 10.13. Legal Fees
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80
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Section 10.14. Entire Agreement; Modifications
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80
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Section 10.15. Section Titles
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2
STRATEGIC PARTNERS FUND SOLUTIONS ASSOCIATES DE L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of Strategic Partners Fund Solutions Associates DE L.P., a Delaware limited partnership
(the “Partnership”), dated November 4, 2020, and effective as of February 26, 2018, by and among SPFSA DE L.L.C., a Delaware limited liability company, as general partner of the Partnership (in its capacity as general
partner of the Partnership (the “General Partner”)), Peter Song (the “Initial Limited Partner”), as initial limited partner, and such other persons that are admitted to the Partnership as partners after the date
hereof in accordance herewith.
WITNESSETH
WHEREAS, the Partnership was formed pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101, et seq., as it may be amended from time to time (the “Partnership Act”), pursuant to a certificate of limited partnership filed in the office of the Secretary of State of the State of
Delaware on February 2, 2018;
WHEREAS, the General Partner and the Initial Limited Partner entered into a Limited Partnership
Agreement dated as of February 2, 2018 (the “Original Agreement”); and
WHEREAS, the parties hereto desire to enter
into this Agreement, and hereby amend and restate the Original Agreement in its entirety and reflect the withdrawal of the Initial Limited Partner, in each case effective on February 26, 2018;
NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby, the parties
hereto agree that the Original Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for
purposes of this Agreement:
“Adjustment Amount” has the meaning set forth in Section 8.1(b)(ii).
“Advancing Party” has the meaning set forth in Section 7.1(b).
“Affiliate” when used with reference to another person means any person (other than the Partnership), directly
or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person, which may include, for greater certainty and as the context requires, endowment funds, estate planning vehicles
(including any trusts, family members, family investment vehicles, descendant, trusts and other related persons and entities), charitable programs and other similar and/or related vehicles or accounts associated with or established by Blackstone
and/or its affiliates, partners and current and/or former employees and/or related persons.
“Agreement” means this Amended and Restated Limited
Partnership Agreement, as it may be further amended, supplemented, restated or otherwise modified from time to time.
“Applicable Collateral Percentage” with respect to any Firm Collateral or Special Firm Collateral, has the
meaning set forth in the books and records of the Partnership with respect thereto.
“Bankruptcy” means,
with respect to any person, the occurrence of any of the following events: (i) the filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his or her assets; (ii) the filing by such person
of a voluntary petition in Bankruptcy or the seeking of relief under Title 11 of the United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his or her inability to pay his
or her debts as they become due; (iii) the failure of such person to pay his or her debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of
an answer admitting the material allegations of, or his or her consenting to, or defaulting in answering, a Bankruptcy petition filed against him or her in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States
Code, as now constituted or as hereafter amended; or (vi) the entry of an order, judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a
trustee or custodian of his or her assets and the continuance of such order, judgment or decree unstayed and in effect for a period of 60 consecutive days.
“BE Agreement” means the limited partnership agreement, limited liability company agreement or other governing
document of any limited partnership, limited liability company or other entity referred to in the definition of “Blackstone Entity,” as such limited partnership agreement, limited liability company agreement or other governing document may
be amended, supplemented, restated or otherwise modified to date, and as such limited partnership agreement, limited liability company agreement or other governing document may be further amended, supplemented, restated or otherwise modified from
time to time.
“BE Investment” means any direct or indirect investment by any Blackstone Entity.
“Blackstone” means, collectively, The Blackstone Group Inc., a Delaware corporation, and any predecessor or
successor thereto, and any Affiliate thereof (excluding any natural persons and any portfolio companies, investments or similar entities of any Blackstone-sponsored fund (or any affiliate thereof that is not otherwise an Affiliate of The Blackstone
Group Inc.)).
“Blackstone Entity” means any partnership, limited liability company or other entity
(excluding any natural persons and any portfolio companies of any Blackstone-sponsored fund) that is an Affiliate of The Blackstone Group Inc., as designated by the General Partner in its sole discretion.
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“Business Day” means any day other than a Saturday, Sunday
or other day on which banks are authorized or required by law to be closed in New York, New York.
“Capital
Commitment Capital Account” means, with respect to each Capital Commitment Investment for each Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such
Capital Commitment Investment and any net income allocated to such Partner pursuant to Section 7.3 with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment
Investment to such Partner and any net losses allocated to such Partner with respect to such Capital Commitment Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the
related Capital Commitment Investment shall be adjusted as if the asset distributed had been sold in a taxable transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners
participating in such Capital Commitment Investment pursuant to Section 7.3.
“Capital Commitment
Class A Interest” has the meaning set forth in Section 7.4(f).
“Capital
Commitment Class B Interest” has the meaning set forth in Section 7.4(f).
“Capital Commitment Defaulting Party” has the meaning set forth in Section 7.4(g)(ii)(A).
“Capital Commitment Deficiency Contribution” has the meaning set forth in Section 7.4(g)(ii)(A).
“Capital Commitment Disposable Investment” has the meaning set forth in Section 7.4(f).
“Capital Commitment Distributions” means, with respect to each Capital Commitment Investment, all amounts of
distributions, received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Capital Commitment SP DE Interest, if any, less any costs, fees and expenses of the Partnership with respect thereto and less
reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of such Capital Commitment Investment as it may
determine in good faith is appropriate.
“Capital Commitment Giveback Amount” has the meaning set forth in
Section 7.4(g)(i).
“Capital Commitment Interest” means the interest of a Partner in a specific
Capital Commitment Investment as provided herein.
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“Capital Commitment Investment” means any Capital
Commitment SP DE Investment, but shall exclude any GP-Related Investment.
“Capital Commitment Liquidating Share” means, with respect to each Capital Commitment Investment, in the case
of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with Section 9.3) immediately prior to dissolution.
“Capital Commitment Net Income (Loss)” means, with respect to each Capital Commitment Investment, all amounts
of income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition, in whole or in part, of such Capital Commitment Investment, less any costs, fees and
expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated thereto.
“Capital Commitment Partner Carried Interest” means, with respect to any Partner, the aggregate amount of
distributions or payments received by such Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest.” Capital Commitment Partner Carried Interest includes any amount initially received by
an Affiliate of the Partnership from any fund (including SP DE, any similar funds formed after the date hereof, and any Other Blackstone Funds (as defined in the SP DE Partnership Agreement), whether or not in existence as of the date hereof) to
which such Affiliate serves as general partner (or in another similar capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions thereto (or the capital contributions to make the
investment of such fund giving rise to such “carried interest”).
“Capital Commitment Partner
Interest” means a Partner’s interest in the Partnership which relates to the Capital Commitment SP DE Interest.
“Capital Commitment Profit Sharing Percentage” means, with respect to each Capital Commitment Investment, the
percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the Partnership.
“Capital Commitment Recontribution Amount” has the meaning set forth in Section 7.4(g)(i).
“Capital Commitment-Related Capital Contributions” has the meaning set forth in Section 7.1(a)(ii).
“Capital Commitment-Related Commitment” means, with respect to any Partner, such Partner’s commitment to
the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such commitment that may be set forth in such Partner’s Commitment
Agreement or SMD Agreement, if any.
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“Capital Commitment SP DE Commitment” means the Capital
Commitment (as defined in the SP DE Partnership Agreement), if any, of the Partnership to SP DE that relates solely to the Capital Commitment SP DE Interest, if any.
“Capital Commitment SP DE Interest” means the Interest (as defined in the SP DE Partnership Agreement), if
any, of the Partnership as a capital partner of SP DE.
“Capital Commitment SP DE Investment” means the
Partnership’s interest in a specific investment of SP DE held by the Partnership through the Capital Commitment SP DE Interest.
“Capital Commitment Special Distribution” has the meaning set forth in Section 7.7(a).
“Capital Commitment Value” has the meaning set forth in Section 7.5.
“Carried Interest” means (i) “Carried Interest,” as defined in the SP DE Partnership Agreement, and
(ii) any other carried interest distribution to a Fund GP pursuant to any SP DE Agreement. In the case of each of (i) and (ii) above, except as determined by the General Partner, the amount shall not be less any costs, fees and expenses of
the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto (in each case which the General Partner may allocate among all or any portion of
the GP-Related Investments as it determines in good faith is appropriate).
“Carried Interest Give Back Percentage” means, for any Partner or Withdrawn Partner, subject to
Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner from the Partnership or any Other Fund GPs or their Affiliates in respect of Carried Interest by
(B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership or any Other Fund GP or any of their Affiliates (in any capacity) in respect of Carried Interest. For purposes of
determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership or any Other Fund GPs on behalf of a Partner or Withdrawn Partner (but not the Trust Income thereon) shall be
deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as members, partners or other equity interest owners of the Partnership or any of the Other Fund GPs or their Affiliates.
“Carried Interest Sharing Percentage” means, with respect to each
GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
“Cause” means the occurrence or existence of any of the following with respect to any Partner, as
determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any non-competition agreement, (x) any material
breach of this Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such Partner’s deliberate failure to perform his or her duties to the Partnership or any of its
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Affiliates or (z) such Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Partnership or any of its Affiliates in a material way as
determined by the General Partner; provided, that in the case of any of the foregoing clauses (w), (x), (y) and (z), the General Partner has given such Partner written notice (a “Notice of Breach”) within 15 days after the
General Partner becomes aware of such action and such Partner fails to cure such breach, failure to perform or conduct or behavior within 15 days after receipt of such Notice of Breach from the General Partner (or such longer period, not to exceed
an additional 15 days, as shall be reasonably required for such cure; provided, that such Partner is diligently pursuing such cure); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Partnership
or any of its Affiliates; or (iii) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony (under U.S. law or its equivalent in any jurisdiction) or crime (including any misdemeanor charge involving
moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of competent jurisdiction, by a regulatory body or by a self-regulatory body having authority
with respect to securities laws, rules or regulations of the applicable securities industry, that such Partner individually has violated any applicable securities laws or any rules or regulations thereunder, or any rules of any such self-regulatory
body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such Partner’s ability to function as a Partner of the Partnership, taking into account the services
required of such Partner and the nature of the business of the Partnership and its Affiliates or (B) the business of the Partnership and its Affiliates or (iv) becoming subject to an event described in Rule 506(d)(1)(i)-(viii) of
Regulation D under the Securities Act.
“Clawback Adjustment Amount” has the meaning set forth in
Section 5.8(e)(ii)(C).
“Clawback Amount” means any clawback amount payable to the limited partners
of SP DE or to SP DE pursuant to any SP DE Agreement, as applicable.
“Clawback Provisions” means the
applicable clawback provisions in any SP DE Agreement existing heretofore or hereafter entered into.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute. Any
reference herein to a particular provision of the Code means, where appropriate, the corresponding provision in any successor statute.
“Commitment Agreements” means the agreements between the Partnership or an Affiliate thereof and Partners,
pursuant to which each Partner undertakes certain obligations, including the obligation to make capital contributions pursuant to Section 4.1 and/or Section 7.1. Each Commitment Agreement is hereby incorporated by reference as between the
Partnership and the relevant Partner.
“Contingent” means subject to repurchase rights and/or other
requirements.
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The term “control” when used with reference to any person
means the power to direct the management and policies of such person, directly or indirectly, by or through stock or other equity interest ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or
understanding (written or oral) with one or more other persons by or through stock or other equity interest ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings
correlative to the foregoing.
“Controlled Entity” when used with reference to another person means any
person controlled by such other person.
“Covered Person” has the meaning set forth in
Section 3.5(a).
“Deceased Partner” means any Partner or Withdrawn Partner who has died or who
suffers from Incompetence. For purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the case may be, that have received such
Deceased Partner’s interest in the Partnership.
“Default Interest Rate” means the lower of
(i) the sum of (a) the Prime Rate and (b) 5% or (ii) the highest rate of interest permitted under applicable law.
“Delaware Arbitration Act” has the meaning set forth in Section 10.1(d).
“Electronic Signature” has the meaning set forth in Section 10.9.
“Estate Planning Vehicle” has the meaning set forth in Section 6.3(a).
“Excess Holdback” has the meaning set forth in Section 4.1(d)(v)(A).
“Excess Holdback Percentage” has the meaning set forth in Section 4.1(d)(v)(A).
“Excess Tax-Related Amount” has the meaning set forth in
Section 5.8(e).
“Existing Partner” means any Partner who is neither a Retaining Withdrawn Partner
nor a Deceased Partner.
“Final Event” means the death, Total Disability, Incompetence, Bankruptcy,
liquidation, dissolution or Withdrawal from the Partnership of any person who is a Partner.
“Firm
Advances” has the meaning set forth in Section 7.1(b).
“Firm Collateral” means a
Partner’s or Withdrawn Partner’s interest in one or more partnerships or limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been
pledged or made available to the Trustee(s) to satisfy all or any portion of the Excess Holdback of such Partner or Withdrawn Partner as more fully described in the
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Partnership’s books and records; provided, that for all purposes hereof (and any other agreement (e.g., the Trust Agreement) that incorporates the meaning of the term
“Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”, excluding references to “Firm Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).
“Firm Collateral Realization” has the meaning set forth in Section 4.1(d)(v)(B).
“Fiscal Year” means a calendar year, or any other period chosen by the General Partner.
“Fund GP” means the Partnership (only with respect to the GP-Related
SP DE Interest) and the Other Fund GPs.
“GAAP” means U.S. generally accepted accounting principles.
“General Partner” means SPFSA DE L.L.C. and any person admitted to the Partnership as an additional or
substitute general partner of the Partnership in accordance with the provisions of this Agreement (until such time as such person ceases to be a general partner of the Partnership as provided herein or in the Partnership Act).
“Giveback Amount(s)” means the amount(s) payable by partners of SP DE pursuant to the Giveback Provisions.
“Giveback Provisions” means Section 5.2(b) of the SP DE Partnership Agreement and any other similar
provisions in any other SP DE Agreement existing heretofore or hereafter entered into.
“Governmental
Entity” has the meaning set forth in Section 10.7(b).
“GP Commitment” has the meaning set
forth in the SP DE Partnership Agreement.
“GP-Related Capital
Account” has the meaning set forth in Section 5.2(a).
“GP-Related Capital Contribution” has the meaning set forth in
Section 4.1(a).
“GP-Related Class A
Interest” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Class B Interest” has the meaning set
forth in Section 5.8(a)(ii).
“GP-Related Commitment”, with
respect to any Partner, means such Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of the Partnership, including,
without limitation, any such commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“GP-Related Defaulting Party” has the meaning set forth in
Section 5.8(d)(ii)(A).
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“GP-Related Deficiency
Contribution” has the meaning set forth in Section 5.8(d)(ii)(A).
“GP-Related Disposable Investment” has the meaning set forth in
Section 5.8(a)(ii).
“GP-Related Giveback Amount” has the
meaning set forth in Section 5.8(d)(i)(A).
“GP-Related
Investment” means any investment (direct or indirect) of the Partnership in respect of the GP-Related SP DE Interest (including, without limitation, any
GP-Related SP DE Investment, but excluding any Capital Commitment Investment).
“GP-Related Net Income (Loss)” has the meaning set forth in
Section 5.1(b).
“GP-Related Partner Interest” of a Partner
means all interests of such Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect to the GP-Related SP DE Interest and with respect to all GP-Related Investments.
“GP-Related Profit Sharing Percentage” means the “Carried
Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each Partner; provided, that any references in this Agreement to
GP-Related Profit Sharing Percentages made (i) in connection with voting or voting rights or (ii) GP-Related Capital Contributions with respect to GP-Related
Investments (including Section 5.3(b)) means the “Non-Carried Interest Sharing Percentage” of each Partner; provided further, that the term
“GP-Related Profit Sharing Percentage” shall not include any Capital Commitment Profit Sharing Percentage.
“GP-Related Recontribution Amount” has the meaning set forth in
Section 5.8(d)(i)(A).
“GP-Related Required Amounts” has the
meaning set forth in Section 4.1(a).
“GP-Related SP DE
Interest” means the interest held by the Partnership in SP DE in the Partnership’s capacity as general partner of SP DE, excluding any Capital Commitment SP DE Interest.
“GP-Related SP DE Investment” means the Partnership’s interest in
a Portfolio Investment (for purposes of this definition, as defined in the SP DE Partnership Agreement) in the Partnership’s capacity as the general partner of SP DE, but does not include any Capital Commitment Investment.
“GP-Related Unallocated Percentage” has the meaning set forth in
Section 5.3(b).
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“GP-Related Unrealized Net
Income (Loss)” attributable to any GP-Related SP DE Investment as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related SP DE Investment if SP DE’s entire portfolio of investments were sold on such date for cash in an amount equal to their aggregate value on such date (determined in accordance with
Section 5.1(e)) and all distributions payable by SP DE to the Partnership (indirectly through the general partner of SP DE) pursuant to any SP DE Agreement with respect to such GP-Related SP DE Investment
were made on such date. “GP-Related Unrealized Net Income (Loss)” attributable to any other GP-Related Investment (other than any Capital Commitment
Investment) as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related Investment if such GP-Related Investment were sold on such date for cash in an amount equal to its value on such date (determined in accordance with Section 5.1(e)).
“Holdback” has the meaning set forth in Section 4.1(d)(i).
“Holdback Percentage” has the meaning set forth in Section 4.1(d)(i).
“Holdback Vote” has the meaning set forth in Section 4.1(d)(iv)(A).
“Holdings” means Blackstone Holdings II L.P., a Delaware limited partnership.
“Incompetence” means, with respect to any Partner, the determination by the General Partner in its sole
discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his or her person or his or her property.
“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d)(i).
“Initial Limited Partner” has the meaning set forth in the preamble hereto.
“Interest” means a partnership interest (as defined in
§17-101(13) of the Partnership Act) in the Partnership, including any interest that is held by a Retaining Withdrawn Partner and including any Partner’s
GP-Related Partner Interest and Capital Commitment Partner Interest.
“Investment” means any investment (direct or indirect) of the Partnership designated by the General Partner
from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments, and (b) Capital Commitment Investments.
“Investor Note” means a promissory note of a Partner evidencing indebtedness incurred by such Partner to
purchase a Capital Commitment Interest, the terms of which were or are approved by the General Partner and which is secured by such Capital Commitment Interest, all other Capital Commitment Interests of such Partner and all other interests of such
Partner in Blackstone Entities; provided, that such promissory note may also evidence indebtedness relating to other interests of such Partner in Blackstone Entities, and such indebtedness shall be prepayable with Capital Commitment Net
Income (whether or not such indebtedness relates to Capital Commitment Investments) as set forth in this Agreement, the Investor Note, the other BE Agreements and any documentation relating to Other Sources; provided further, that
references to “Investor
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Notes” herein refer to multiple loans made pursuant to such note, whether made with respect to Capital Commitment Investments or other BE Investments, and references to an “Investor
Note” refer to one such loan as the context requires. In no way shall any indebtedness incurred to acquire Capital Commitment Interests or other interests in Blackstone Entities be considered part of the Investor Notes for purposes hereof if
the Lender or Guarantor is not the lender or guarantor with respect thereto.
“Investor Special Partner”
means any Special Partner so designated at the time of its admission by the General Partner as a Partner of the Partnership.
“Issuer” means the issuer of any Security comprising part of an Investment.
“L/C” has the meaning set forth in Section 4.1(d)(vi).
“L/C Partner” has the meaning set forth in Section 4.1(d)(vi).
“Lender or Guarantor” means Blackstone Holdings I L.P. in its capacity as lender or guarantor under the
Investor Notes, or any other Affiliate of the Partnership that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests or other interests in Blackstone Entities.
“Limited Partner” means each of the parties listed as Limited Partners in the books and records of the
Partnership or any person that has been admitted to the Partnership as a substituted or additional Limited Partner in accordance with the terms of this Agreement, each in its capacity as a limited partner of the Partnership. For the avoidance of
doubt, the term “Limited Partner” does not include the General Partner or any Special Partners (notwithstanding the fact that Special Partners are limited partners of the Partnership).
“Loss Amount” has the meaning set forth in Section 5.8(e)(i)(A).
“Loss Investment” has the meaning set forth in Section 5.8(e).
“Losses” has the meaning set forth in Section 3.5(b)(i).
“Majority in Interest of the Partners” on any date (a “vote date”) means one or more persons
who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date and who, as of the last day of the most recent accounting period ending on or prior to the vote date (or as of such later date on or prior to
the vote date selected by the General Partner as of which the Partners’ capital account balances can be determined), have aggregate capital account balances representing at least a majority in amount of the total capital account balances of all
the persons who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
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“Net Carried Interest Distribution” has the meaning set
forth in Section 5.8(e)(i)(C).
“Net Carried Interest Distribution Recontribution Amount” has the
meaning set forth in Section 5.8(e)(i)(C).
“Net GP-Related
Recontribution Amount” has the meaning set forth in Section 5.8(d)(i)(A).
“Non-Carried Interest” means, with respect to each GP-Related Investment, all amounts of distributions, other than Carried Interest and other than Capital Commitment
Distributions, received by the Partnership with respect to such GP-Related Investment, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of
costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments as it may
determine in good faith is appropriate.
“Non-Carried Interest Sharing
Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Non-Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
“Non-Contingent” means generally not subject to repurchase rights or other requirements.
“Nonvoting Partner” has the meaning set forth in Section 8.2.
“Nonvoting Special Partner” has the meaning set forth in Section 6.1(a).
“Original Agreement” has the meaning set forth in the recitals.
“Other Fund GPs” means any other entity (other than the Partnership) through which any Partner, Withdrawn
Partner or any other person directly receives any amounts of Carried Interest, and any successor thereto; provided, that this includes any other entity which has in its organizational documents a provision which indicates that it is a
“Fund GP” or an “Other Fund GP”; provided further, that notwithstanding any of the foregoing, neither SPFSA DE L.L.C. nor Holdings nor any Estate Planning Vehicle established for the benefit of family members of any
Partner or of any member or partner of any Other Fund GP shall be considered an “Other Fund GP” for purposes hereof.
“Other Sources” means (i) distributions or payments of Capital Commitment Partner Carried Interest (which
shall include amounts of Capital Commitment Partner Carried Interest which are not distributed or paid to a Partner but are instead contributed to a trust (or similar arrangement) to satisfy any “holdback” obligation with respect thereto)
and (ii) distributions from Blackstone Entities (other than the Partnership) to such Partner.
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“Partner” means any person who is a partner of the
Partnership, including the Limited Partners, the General Partner and the Special Partners. Except as otherwise specifically provided herein, no group of Partners, including the Special Partners and any group of Partners in the same Partner Category,
shall have any right to vote as a class on any matter relating to the Partnership, including, but not limited to, any merger, reorganization, dissolution or liquidation.
“Partner Category” means the General Partner, Existing Partners, Retaining Withdrawn Partners or Deceased
Partners, each referred to as a group for purposes hereof.
“Partnership” has the meaning set forth in the
preamble hereto.
“Partnership Act” has the meaning set forth in the preamble hereto.
“Partnership Affiliate” has the meaning set forth in Section 3.3(b).
“Partnership Affiliate Governing Agreement” has the meaning set forth in Section 3.3(b).
“Pledgable Blackstone Interests” has the meaning set forth in Section 4.1(d)(v)(A).
“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank,
N.A. as its prime rate.
“Qualifying Fund” means any fund designated by the General Partner as a
“Qualifying Fund”.
“Repurchase Period” has the meaning set forth in Section 5.8(c).
“Required Rating” has the meaning set forth in Section 4.1(d)(vi).
“Retained Portion” has the meaning set forth in Section 7.6(a).
“Retaining Withdrawn Partner” means a Withdrawn Partner who has retained a
GP-Related Partner Interest, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Nonvoting Special Partner for all purposes hereof.
“Securities” means any debt or equity securities of an Issuer and its subsidiaries and other Controlled
Entities constituting part of an Investment, including without limitation common and preferred stock, interests in limited partnerships and interests in limited liability companies (including warrants, rights, put and call options and other options
relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or interests commonly regarded as securities, interests in real
property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as money-market
investments, bank deposits and interests in personal property of all kinds, whether tangible or intangible.
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“Securities Act” means the U.S. Securities Act of 1933, as
amended from time to time, or any successor statute.
“Settlement Date” has the meaning set forth in
Section 6.5(a).
“SMD Agreements” means the agreements between the Partnership and/or one or more of
its Affiliates and certain of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby incorporated by reference as between the Partnership
and the relevant Partner.
“SP DE” means (i) Strategic Partners Direct Equity (G) L.P., a Cayman
Islands exempted limited partnership, (ii) any alternative investment vehicles relating to, or formed in connection with, any of the partnerships referred to in clauses (i) and (iii) of this definition, (iii) any parallel fund,
managed account or other capital vehicle relating to, or formed in connection with, the partnership referred to in clause (i) of this definition and (iv) any other limited partnership, limited liability company or other entity (in each
case, whether now or hereafter established) of which the Partnership or the General Partner serves, directly or indirectly, as the general partner, special general partner, manager, managing member or in a similar capacity.
“SP DE Agreements” means the collective reference to (i) the SP DE Partnership Agreement and
(ii) any other SP DE partnership, limited liability company or other governing agreements, as each may be amended, supplemented, restated or otherwise modified from time to time.
“SP DE Partnership Agreement” means the partnership agreement of the limited partnership named in clause
(i) of the definition of “SP DE,” as it may be amended, supplemented, restated or otherwise modified from time to time.
“Special Firm Collateral” means interests in a Qualifying Fund or other assets that have been pledged to the
Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the Partnership’s books and records.
“Special Firm Collateral Realization” has the meaning set forth in Section 4.1(d)(viii)(B).
“Special Partner” means any person shown in the books and records of the Partnership as a Special Partner of
the Partnership, including any Nonvoting Special Partner and any Investor Special Partner.
“S&P”
means Standard & Poor’s Ratings Group, and any successor thereto.
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“Subject Investment” has the meaning set forth in
Section 5.8(e)(i).
“Subject Partner” has the meaning set forth in Section 4.1(d)(iv)(A).
“Successor in Interest” means any (i) shareholder of; (ii) trustee, custodian, receiver or other
person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or receiver, or former officer, director or partner,
or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or assign of, any Partner, whether by operation of law or
otherwise.
“Tax Advances” has the meaning set forth in Section 6.7(d).
“Tax Matters Partner” has the meaning set forth in Section 6.7(b).
“TM” has the meaning set forth in Section 10.2.
“Total Disability” means the inability of a Limited Partner substantially to perform the services required of
such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether arising out of
sickness, accident or otherwise.
“Transfer” has the meaning set forth in Section 8.2.
“Trust Account” has the meaning set forth in the Trust Agreement.
“Trust Agreement” means the Trust Agreement dated as of the date set forth therein, as amended, supplemented,
restated or otherwise modified from time to time, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time to time.
“Trust Amount” has the meaning set forth in the Trust Agreement.
“Trust Income” has the meaning set forth in the Trust Agreement.
“Trustee(s)” has the meaning set forth in the Trust Agreement.
“Unadjusted Carried Interest Distributions” has the meaning set forth in Section 5.8(e)(i)(B).
“Unallocated Capital Commitment Interests” has the meaning set forth in Section 8.1(f).
“U.S.” means the United States of America.
“W-8BEN” has the meaning set forth in Section 3.7.
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“W-8BEN-E” has the meaning set
forth in Section 3.7.
“W-8IMY” has the meaning set forth in
Section 3.7.
“W-9” has the meaning set forth in
Section 3.7.
“Withdraw” or “Withdrawal” means, with respect to a Partner, such
Partner ceasing to be a partner of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary), unless the context shall limit
the type of withdrawal to a specific reason, and “Withdrawn” with respect to a Partner means, as aforesaid, such Partner ceasing to be a partner of the Partnership.
“Withdrawal Date” means the date of the Withdrawal from the Partnership of a Withdrawn Partner.
“Withdrawn Partner” means a Limited Partner whose GP-Related Partner
Interest or Capital Commitment Partner Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include, unless the context requires otherwise, the estate or legal
representatives of any such Partner.
Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “person” includes individuals, partnerships
(including limited liability partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions thereof) and other associations and entities. The words
“include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
ARTICLE II
GENERAL PROVISIONS
Section 2.1. General Partner, Limited Partner, Special Partner,. The Partners may be General
Partners, Limited Partners or Special Partners. The General Partner as of the date hereof is SPFSA DE L.L.C. and the Limited Partners as of the date hereof are those persons shown as Limited Partners in the books and records of the Partnership and
the Special Partners as of the date hereof are those persons shown as Special Partners in the books and records of the Partnership as of the date hereof. The books and records of the Partnership contain the
GP-Related Profit Sharing Percentage and GP-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to the GP-Related Investments of the Partnership as of the date hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each
Partner (including, without limitation, the General Partner) with respect to the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to
time to reflect additional GP-
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Related Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by the Partnership
of Capital Commitment Investments, the GP-Related Profit Sharing Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the Capital Commitment Profit
Sharing Percentages of the Partners (including, without limitation, the General Partner) as modified from time to time, the admission of additional Partners, the Withdrawal of Partners, and the transfer or assignment of interests in the Partnership
pursuant to the terms of this Agreement. At the time of admission of each additional Partner, the General Partner shall determine in its sole discretion the GP-Related Investments and Capital Commitment
Investments in which such Partner shall participate and such Partner’s GP-Related Commitment, Capital Commitment-Related Commitment, GP-Related Profit Sharing
Percentage with respect to each such GP-Related Investment and Capital Commitment Profit Sharing Percentage with respect to each such Capital Commitment Investment. Each Partner may have a GP-Related Partner Interest and/or a Capital Commitment Partner Interest.
Section 2.2. Formation; Name; Foreign Jurisdictions. The Partnership is hereby continued as a limited partnership pursuant to
the Partnership Act and shall conduct its activities on and after the date hereof under the name of Strategic Partners Fund Solutions Associates DE L.P. The certificate of limited partnership of the Partnership may be amended and/or restated from
time to time by the General Partner, as an “authorized person” (within the meaning of the Partnership Act). The General Partner is further authorized to execute and deliver and file any other certificates (and any amendments and/or
restatements thereof) necessary for the Partnership to qualify to do business in a jurisdiction in which the Partnership may wish to conduct business.
Section 2.3. Term. The term of the Partnership shall continue until December 31, 2068, unless earlier dissolved and its
affairs wound up in accordance with this Agreement and the Partnership Act.
Section 2.4. Purposes; Powers. (a) The
purposes of the Partnership shall be, directly or indirectly through subsidiaries or Affiliates:
(i) to serve as the
general partner of SP DE and perform the functions of a general partner of SP DE specified in the SP DE Agreements;
(ii)
to serve as, and hold the Capital Commitment SP DE Interest as, a capital partner (and, if applicable, a limited partner and/or a general partner) of SP DE and perform the functions of a capital partner (and, if applicable, a limited partner and/or
a general partner) of SP DE specified in the SP DE Agreements;
(iii) to invest in Capital Commitment Investments and/or GP-Related Investments and acquire and invest in Securities or other property directly or indirectly through SP DE;
(iv) to make the GP Commitment or a portion thereof, directly or indirectly, and to invest in
GP-Related Investments, Capital Commitment Investments and other Investments and acquire and invest in Securities or other property either directly or indirectly through another entity;
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(v) to serve as a general partner or limited partner of SP DE and / or other
partnerships and perform the functions of a general partner or limited partner, member, shareholder or other equity interest owner specified in the respective partnership agreement, limited liability company agreement, charter or other governing
documents, as amended, supplemented, restated or otherwise modified from time to time, of any such partnership;
(vi) to
serve as a member, shareholder or other equity interest owner of limited liability companies, other companies, corporations or other entities and perform the functions of a member, shareholder or other equity interest owner specified in the
respective limited liability company agreement, charter or other governing documents, as amended, supplemented, restated or otherwise modified from time to time, of any such limited liability company, company, corporation or other entity;
(vii) to carry on such other businesses, perform such other services and make such other investments as are deemed desirable by
the General Partner and as are permitted under the Partnership Act, the SP DE Agreements, and any applicable partnership agreement, limited liability company agreement, charter or other governing document referred to in clause (v) or (vi)
above, in each case as the same may be amended, supplemented, restated or otherwise modified from time to time;
(viii) any
other lawful purpose; and
(ix) to do all things necessary, desirable, convenient or incidental thereto.
(b) In furtherance of its purposes, the Partnership shall have all powers necessary, suitable or convenient for the accomplishment of its
purposes, alone or with others, as principal or agent, including the following:
(i) to be and become a general partner or
limited partner of partnerships, a member of limited liability companies, a holder of common and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with the making of Investments or the
acquisition, holding or disposition of Securities or other property or as otherwise deemed appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection therewith;
(ii) to acquire and invest in general partner or limited partner interests, in limited liability company interests, in common
and preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or direct or indirect interests therein, whether such Investments and
Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company interests, stock, interests, obligations, Investments or Securities or
other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or short, options on futures contracts;
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(iii) to buy, sell and otherwise acquire investments, whether such
investments are readily marketable or not;
(iv) to invest and reinvest the cash assets of the Partnership in money-market or other short-term investments;
(v) to hold, receive, mortgage, pledge, grant security interests over, lease, transfer, exchange or otherwise dispose of, grant
options with respect to, and otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or owned by the Partnership;
(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by mortgage, pledge,
conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and to buy, sell,
pledge or otherwise dispose of any such instrument or evidence of indebtedness;
(vii) to lend any of its property or
funds, either with or without security, at any legal rate of interest or without interest;
(viii) to have and maintain one
or more offices within or without the State of Delaware, and in connection therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection with the
maintenance of such office or offices;
(ix) to open, maintain and close accounts, including margin accounts, with brokers
and futures commission merchants;
(x) to open, maintain and close bank accounts and draw checks and other orders for the
payment of moneys;
(xi) to engage accountants, auditors, custodians, investment advisers, attorneys and any and all other
agents and assistants, both professional and nonprofessional, and to compensate any of them as may be necessary or advisable;
(xii) to form or cause to be formed and to own the stock of one or more corporations, whether foreign or domestic, to form or
cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic and to form or cause to be formed and be a member or manager or both of one or more limited liability companies;
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(xiii) to enter into, make and perform all contracts, agreements and other
undertakings as may be necessary, convenient, advisable or incident to carrying out its purposes;
(xiv) to sue and be
sued, to prosecute, settle or compromise all claims against third parties, to compromise, settle or accept judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection
therewith;
(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to the Partners
cash or investments or other property of the Partnership, or any combination thereof; and (xvi) to take such other actions necessary, desirable, convenient or incidental thereto and to engage in such other businesses as may be permitted under
Delaware and other applicable law.
Section 2.5. Place of Business. The Partnership shall maintain a registered office at
c/o Intertrust Corporate Services Delaware Ltd., 200 Bellevue Parkway, Suite 210, Bellevue Park Corporate Center, Wilmington, Delaware 19809. The Partnership shall maintain an office and principal place of business at such place or places as the
General Partner specifies from time to time and as set forth in the books and records of the Partnership. The name and address of the Partnership’s registered agent is Intertrust Corporate Services Delaware Ltd., 200 Bellevue Parkway, Suite
210, Bellevue Park Corporate Center, Wilmington, Delaware 19809. The General Partner may from time to time change the registered agent or office by an amendment to the certificate of limited partnership of the Partnership.
Section 2.6. Withdrawal of Initial Limited Partner. Upon the admission of one or more additional Limited Partners to the
Partnership, the Initial Limited Partner shall (a) Withdraw as the Initial Limited Partner of the Partnership, and (b) have no further right, interest or obligation of any kind whatsoever as a Partner in the Partnership; provided, that the
effective date of such Withdrawal shall be deemed as between the parties hereto to be February 26, 2018.
ARTICLE III
MANAGEMENT
Section 3.1. General Partner.
(a) SPFSA DE L.L.C. is the General Partner as of the date hereof. The General Partner shall cease to be the General Partner only if (i) it
Withdraws from the Partnership for any reason, (ii) it consents in its sole discretion to resign as the General Partner, or (iii) a Final Event with respect to it occurs. The General Partner may not be removed without its consent. There
may be one or more General Partners. In the event that one or more other General Partners is admitted to the Partnership as such, all references herein to the “General Partner” in the singular form shall be deemed to also refer to such
other General Partners as may be appropriate. The relative rights and responsibilities of such General Partners will be as agreed upon from time to time between them.
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(b) Upon the Withdrawal from the Partnership or voluntary resignation of the last remaining
General Partner, all of the powers formerly vested therein pursuant to this Agreement and the Partnership Act shall be exercised by a Majority in Interest of the Partners.
Section 3.2. Partner Voting, etc.
(a) Except as otherwise expressly provided herein and except as may be expressly required by the Partnership Act, Partners (including Special
Partners), other than General Partners, as such shall have no right to, and shall not, take part in the management or control of the Partnership’s business or act for or bind the Partnership, and shall have only the rights and powers granted to
Partners of the applicable class herein.
(b) To the extent a Partner is entitled to vote with respect to any matter relating to the
Partnership, such Partner shall not be obligated to abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such Partner (or any Affiliate thereof) in such matter.
(c) Meetings of the Partners may be called only by the General Partner.
(d) Notwithstanding any other provision of this Agreement, any Limited Partner or Withdrawn Partner that fails to respond to a notice provided
by the General Partner requesting the consent, approval or vote of such Limited Partner or Withdrawn Partner within 14 days after such notice is sent to such Limited Partner or Withdrawn Partner shall be deemed to have given its affirmative consent
or approval thereto.
Section 3.3. Management. (a) The management, control and operation of the Partnership and the
formulation and execution of business and investment policy shall be vested in the General Partner. The General Partner shall, in its discretion, exercise all powers necessary and convenient for the purposes of the Partnership, including those
enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the General Partner pursuant to this Agreement shall be made in its sole discretion, subject
only to the express terms and conditions of this Agreement.
(b) Notwithstanding any provision in this Agreement to the contrary, the
Partnership is hereby authorized, without the need for any further act, vote or consent of any person (directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a
general partner, capital partner and/or limited partner of SP DE or as general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate or, if applicable, in the Partnership’s capacity as a
capital partner of SP DE or as general or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (i) to execute and deliver, and to perform the Partnership’s obligations under, the SP DE Agreements,
including, without limitation, serving as a general partner of SP DE and, if applicable, a capital partner of SP DE, (ii) if applicable, to execute and deliver, and to perform the Partnership’s obligations under the governing agreement, as
amended, supplemented, restated or otherwise modified (each a “Partnership Affiliate Governing Agreement”), of any other partnership, limited liability company, other company, corporation or other entity (each a “Partnership
Affiliate”) of which the Partnership is, or is to
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become, a general partner or limited partner, member, shareholder or other equity interest owner, including, without limitation, serving as a general partner or limited partner, member,
shareholder or other equity interest owner of each Partnership Affiliate, and (iii) to take any action, in the applicable capacity, contemplated by or arising out of this Agreement, the SP DE Agreements or each Partnership Affiliate Governing
Agreement (and any amendment, supplement, restatement and/or other modification of any of the foregoing).
(c) The General Partner and any
other person designated by the General Partner, each acting individually, is hereby authorized and empowered, as an authorized person of the Partnership within the meaning of the Partnership Act, or otherwise, or as an authorized representative of
the General Partner (the General Partner hereby authorizing and ratifying any of the following actions):
(i) to execute
and deliver and/or file (including any such action, directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf, or in its capacity as general partner, capital partner and/or limited
partner of SP DE, or as general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate), any of the following:
(A) any agreement, certificate, instrument or other document of the Partnership, SP DE or any Partnership Affiliate (and any
amendments, supplements, restatements and/or other modifications thereof), including, without limitation, the following: (I) the SP DE Agreements and each Partnership Affiliate Governing Agreement, (II) subscription agreements and
documents on behalf of SP DE, (III) side letters issued in connection with investments in SP DE and (IV) such other agreements, certificates, instruments and other documents as may be necessary or desirable in furtherance of the purposes
of the Partnership, SP DE or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing referred to in (I) through (IV) above) and for the avoidance of doubt, this Agreement may
be amended by the General Partner in its sole discretion;
(B) the certificates of formation, certificates of limited
partnership and/or other organizational documents of the Partnership, SP DE or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing); and
(C) any other certificates, notices, applications and other documents (and any amendments, supplements, restatements and/or
other modifications thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Partnership, SP DE or any Partnership Affiliate to qualify to do business
in a jurisdiction in which the Partnership, SP DE or such Partnership Affiliate desires to do business;
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(ii) to prepare or cause to be prepared, and to sign, execute and deliver
and/or file (including any such action, directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a general partner, capital partner and/or limited partner of SP
DE or as a general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (A) any certificates, forms, notices, applications and other documents to be filed with any government or governmental
or regulatory body on behalf of the Partnership, SP DE and/or any Partnership Affiliate, (B) any certificates, forms, notices, applications and other documents that may be necessary or advisable in connection with any bank account of the
Partnership, SP DE or any Partnership Affiliate or any banking facilities or services that may be utilized by the Partnership, SP DE or any Partnership Affiliate, and all checks, notes, drafts and other documents of the Partnership, SP DE or any
Partnership Affiliate that may be required in connection with any such bank account or banking facilities or services and (C) resolutions with respect to any of the foregoing matters (which resolutions, when executed by any person authorized as
provided in this Section 3.3(c), each acting individually, shall be deemed to have been duly adopted by the General Partner, the Partnership, SP DE or any Partnership Affiliate, as applicable, for all purposes).
(d) The authority granted to any person (other than the General Partner) in Section 3.3(c) may be revoked at any time by the General
Partner by an instrument in writing signed by the General Partner.
Section 3.4. Responsibilities of Partners.
(a) Unless otherwise determined by the General Partner in a particular case, each Limited Partner (other than a Special Partner) shall devote
substantially all of his or her time and attention to the businesses of the Partnership and its Affiliates, and each Special Partner shall not be required to devote any time or attention to the businesses of the Partnership or its Affiliates.
(b) All outside business or investment activities of the Partners (including outside directorships or trusteeships), shall be subject to such
rules and regulations as are established by the General Partner from time to time.
(c) The General Partner may from time to time establish
such other rules and regulations applicable to Partners or other employees as the General Partner deems appropriate, including rules governing the authority of Partners or other employees to bind the Partnership to financial commitments or other
obligations.
Section 3.5. Exculpation and Indemnification.
(a) Liability to Partners. Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent
permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually, a
“Covered Person” and collectively, the “Covered Persons”) shall be liable to the Partnership or any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related document or any
transaction or investment contemplated hereby or thereby) taken or
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omitted by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable judicial determination and/or
determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority granted to such Covered
Person by this Agreement. Each Covered Person shall be entitled to rely in good faith on the advice of legal counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by any Covered Person in reliance on
such advice shall in any event subject such person to any liability to any Partner or the Partnership. To the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or
to another Partner, to the fullest extent permitted by law, such Partner acting under this Agreement shall not be liable to the Partnership or to any such other Partner for its good faith reliance on the provisions of this Agreement. The provisions
of this Agreement, to the extent that they expand or restrict the duties and liabilities of a Partner otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by law, to modify to that extent such other
duties and liabilities of such Partner. To the fullest extent permitted by law, the parties hereto agree that the General Partner shall be held to have acted in good faith for the purposes of this Agreement and its duties under the Partnership Act
if it believes that it has acted honestly and in accordance with the specific terms of this Agreement.
(b) Indemnification.
(i) To the fullest extent permitted by law, the Partnership shall indemnify and hold harmless (but only to the extent of the Partnership’s assets (including, without limitation, the remaining capital commitments of the Partners)) each
Covered Person from and against any and all claims, damages, losses, costs, expenses and liabilities (including, without limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other
costs and reasonable expenses of investigating or defending against any claim or alleged claim), joint and several, of any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, for purposes of this Section 3.5(b),
“Losses”), arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the Covered Person may be involved, or threatened to be involved, as a party or
otherwise, by reason of such Covered Person’s management of the affairs of the Partnership or which relate to or arise out of or in connection with the Partnership, its property, its business or affairs (other than claims, demands, actions,
suits or proceedings, civil, criminal, administrative or investigative, arising out of any act or omission of such Covered Person constituting Cause); provided, that a Covered Person shall not be entitled to indemnification under this
Section 3.5(b) with respect to any claim, issue or matter if there is a final and non-appealable judicial determination and/or determination of an arbitrator that such Covered Person did not act in good
faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority granted to such Covered Person by this Agreement; provided further, that if such
Covered Person is a Partner or a Withdrawn Partner, such Covered Person shall bear its share of such Losses in accordance with such Covered Person’s GP-Related Profit Sharing Percentage in the Partnership
as of the time of the actions or omissions that gave rise to such Losses. To the fullest extent permitted by law, expenses (including legal fees) incurred by a Covered Person (including, without limitation, the General Partner) in defending any
claim, demand, action, suit or proceeding may, with the approval of the General Partner, from time to time, be advanced by the Partnership prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the
Partnership of a written undertaking by or on behalf of the Covered Person to
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repay such amount to the extent that it shall be subsequently determined that the Covered Person is not entitled to be indemnified as authorized in this Section 3.5(b), and the Partnership
and its Affiliates shall have a continuing right of offset against such Covered Person’s interests/investments in the Partnership and such Affiliates and shall have the right to withhold amounts otherwise distributable to such Covered Person to
satisfy such repayment obligation. If a Partner institutes litigation against a Covered Person which gives rise to an indemnity obligation hereunder, such Partner shall be responsible, up to the amount of such Partner’s Interests and remaining
capital commitments, for such Partner’s pro rata share of the Partnership’s expenses related to such indemnity obligation, as determined by the General Partner. The Partnership may purchase insurance, to the extent available at
reasonable cost, to cover losses, claims, damages or liabilities covered by the foregoing indemnification provisions. Partners will not be personally obligated with respect to indemnification pursuant to this Section 3.5(b). The General Partner
shall have the authority to enter into separate agreements with any Covered Person in order to give effect to the obligations to indemnify pursuant to this Section 3.5(b).
(ii) (A) Notwithstanding anything to the contrary herein, for greater certainty, it is understood and/or agreed that the
Partnership’s obligations hereunder are not intended to render the Partnership as a primary indemnitor for purposes of the indemnification, advancement of expenses and related provisions under applicable law governing SP DE and/or a particular
portfolio entity through which an Investment is indirectly held. It is further understood and/or agreed that a Covered Person shall first seek to be so indemnified and have such expenses advanced in the following order of priority: first, out
of proceeds available in respect of applicable insurance policies maintained by the applicable portfolio entity and/or SP DE; second, by the applicable portfolio entity through which such investment is indirectly held; and third, by SP
DE (only to the extent the foregoing sources are exhausted).
(B) The Partnership’s obligation, if any, to indemnify
or advance expenses to any Covered Person shall be reduced by any amount that such Covered Person may collect as indemnification or advancement from SP DE and/or the applicable portfolio entity (including by virtue of any applicable insurance
policies maintained thereby), and to the extent the Partnership (or any Affiliate thereof) pays or causes to be paid any amounts that should have been paid by SP DE and/or the applicable portfolio entity (including by virtue of any applicable
insurance policies maintained thereby), it is agreed among the Partners that the Partnership shall have a subrogation claim against SP DE and/or such portfolio entity in respect of such advancement or payments. The General Partner and the
Partnership shall be specifically empowered to structure any such advancement or payment as a loan or other arrangement (except for a loan to an executive officer of The Blackstone Group Inc. or any of its Affiliates, which shall not be permitted)
as the General Partner may determine necessary or advisable to give effect to or otherwise implement the foregoing.
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Section 3.6. Representations of Partners.
(a) Each Limited Partner and Special Partner by execution of this Agreement (or by otherwise becoming bound by the terms and conditions hereof
as provided herein or in the Partnership Act) represents and warrants to every other Partner and to the Partnership, except as may be waived by the General Partner, that such Partner is acquiring each of such Partner’s Interests for such
Partner’s own account for investment and not with a view to resell or distribute the same or any part hereof, and that no other person has any interest in any such Interest or in the rights of such Partner hereunder; provided, that a
Partner may choose to make transfers for estate and charitable planning purposes (pursuant to Section 6.3(a) and otherwise in accordance with the terms hereof). Each Limited Partner and Special Partner represents and warrants that such Partner
understands that the Interests have not been registered under the Securities Act, and therefore such Interests may not be resold without registration under the Securities Act or exemption from such registration, and that accordingly such Partner
must bear the economic risk of an investment in the Partnership for an indefinite period of time. Each Limited Partner and Special Partner represents that such Partner has such knowledge and experience in financial and business matters that such
Partner is capable of evaluating the merits and risks of an investment in the Partnership, and that such Partner is able to bear the economic risk of such investment. Each Limited Partner and Special Partner represents that such Partner’s
overall commitment to the Partnership and other investments which are not readily marketable is not disproportionate to the Partner’s net worth and the Partner has no need for liquidity in the Partner’s investment in Interests. Each
Limited Partner and Special Partner represents that to the full satisfaction of the Partner, the Partner has been furnished any materials that such Partner has requested relating to the Partnership, any Investment and the offering of Interests and
has been afforded the opportunity to ask questions of representatives of the Partnership concerning the terms and conditions of the offering of Interests and any matters pertaining to each Investment and to obtain any other additional information
relating thereto. Each Limited Partner and Special Partner represents that the Partner has consulted to the extent deemed appropriate by the Partner with the Partner’s own advisers as to the financial, tax, legal and related matters concerning
an investment in Interests and on that basis believes that an investment in the Interests is suitable and appropriate for the Partner.
(b)
Each Limited Partner and Special Partner agrees that the representations and warranties contained in paragraph (a) above shall be true and correct as of any date that such Partner (1) makes a capital contribution to the Partnership
(whether as a result of Firm Advances made to such Partner or otherwise) with respect to any Investment, and such Partner hereby agrees that such capital contribution shall serve as confirmation thereof and/or (2) repays any portion of the
principal amount of a Firm Advance, and such Partner hereby agrees that such repayment shall serve as confirmation thereof.
Section 3.7. Tax Representation and Further Assurances. (a) Each Limited Partner and Special Partner, upon the request
of the General Partner, agrees to perform all further acts and to execute, acknowledge and deliver any documents that may be reasonably necessary to comply with the General Partner’s or the Partnership’s obligations under applicable law or
to carry out the provisions of this Agreement.
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(b) Each Limited Partner and Special Partner certifies that (A) if the Limited Partner
or Special Partner is a United States person (as defined in the Code) (x) (i) the Limited Partner or Special Partner’s name, social security number (or, if applicable, employer identification number) and address provided to the Partnership
and its Affiliates pursuant to an IRS Form W 9, Request for Taxpayer Identification Number Certification (“W 9”) or otherwise are correct and (ii) the Limited Partner or Special Partner will complete and return a W 9 and (y) (i)
the Limited Partner or Special Partner is a United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days of a change to foreign
(non-United States) status or (B) if the Limited Partner or Special Partner is not a United States person (as defined in the Code) (x) (i) the information on the completed IRS Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) (“W-8BEN”), IRS Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)
(“W-8BEN-E”), or other applicable form, including but not limited to IRS Form W-8IMY, Certificate of Foreign
Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting (“W-8IMY”), or otherwise is correct and (ii) the Limited Partner or Special
Partner will complete and return the applicable IRS form, including but not limited to a W-8BEN, W-8BEN-E or W-8IMY, and (y) (i) the Limited Partner or Special Partner is not a United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days
of any change of such status. Each Limited Partner and Special Partner agrees to provide such cooperation and assistance, including but not limited to properly executing and providing to the Partnership in a timely manner any tax or other
documentation or information that may be reasonably requested by the Partnership or the General Partner.
(c) Each Limited Partner and
Special Partner acknowledges and agrees that the Partnership and the General Partner may release confidential information or other information about the Limited Partner or Special Partner or related to such Limited Partner or Special Partner’s
investment in the Partnership if the Partnership or the General Partner, in its or their sole discretion, determines that such disclosure is required by applicable law or regulation or in order to comply for an exception from, or reduced tax rate
of, tax or other tax benefit. Any such disclosure shall not be treated as a breach of any restriction upon the disclosure of information imposed on any such person by law or otherwise, and a Limited Partner or Special Partner shall have no claim
against the Partnership, the General Partner or any of their Affiliates for any form of damages or liability as a result of actions taken by the foregoing in order to comply with any disclosure obligations that the foregoing reasonably believe are
required by law, regulation or otherwise.
(d) Each Limited Partner and Special Partner acknowledges and agrees that if it provides
information that is in anyway materially misleading, or if it fails to provide the Partnership or its agents with any information requested hereunder, in either case in order to satisfy the Partnership’s obligations, the General Partner
reserves the right to take any action and pursue any remedies at its disposal, including (i) requiring such Limited Partner or Special Partner to Withdraw for Cause and (ii) withholding or deducting any costs caused by such Limited
Partner’s or Special Partner’s action or inaction from amounts otherwise distributable to such Limited Partner or Special Partner from the Partnership and its Affiliates.
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ARTICLE IV
CAPITAL OF THE PARTNERSHIP
Section 4.1. Capital Contributions by Partners. (a) Each Partner shall be required to make capital contributions to the
Partnership (“GP-Related Capital Contributions”) at such times and in such amounts (the “GP-Related Required Amounts”) as are required
to satisfy the Partnership’s obligation to make capital contributions to SP DE in respect of the GP-Related SP DE Interest with respect to any GP-Related SP DE
Investment and as are otherwise determined by the General Partner from time to time or as may be set forth in such Limited Partner’s Commitment Agreement or SMD Agreement, if any, or otherwise; provided, that additional GP-Related Capital Contributions in excess of the GP-Related Required Amounts may be made pro rata among the Partners based upon each Partner’s Carried Interest Sharing
Percentage. GP-Related Capital Contributions in excess of the GP-Related Required Amounts which are to be used for ongoing business operations (as distinct from
financing, legal or other specific liabilities of the Partnership (including those specifically set forth in Section 4.1(d) and Section 5.8(d))) shall be determined by the General Partner. Special Partners shall not be required to make
additional GP-Related Capital Contributions to the Partnership in excess of the GP-Related Required Amounts, except (i) as a condition of an increase in such
Special Partner’s GP-Related Profit Sharing Percentage or (ii) as specifically set forth in this Agreement; provided, that the General Partner and any Special Partner may agree from time to time that
such Special Partner shall make an additional GP-Related Capital Contribution to the Partnership; provided, further, that each Investor Special Partner shall maintain its
GP-Related Capital Accounts at an aggregate level equal to the product of (i) its GP-Related Profit Sharing Percentage from time to time and (ii) the total
capital of the Partnership related to the GP-Related SP DE Interest.
(b) Each GP-Related Capital Contribution by a Partner shall be credited to the appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2, subject to
Section 5.10.
(c) The General Partner may elect on a case by case basis to (i) cause the Partnership to loan any Partner
(including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) the amount of any GP-Related Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any
Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) to make a required GP-Related Capital Contribution to the Partnership in installments, in each case on terms
determined by the General Partner.
(d) (i) The Partners and the Withdrawn Partners have entered into the Trust Agreement, pursuant to
which certain amounts of the distributions relating to Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account constituting a
“Holdback”). The General Partner shall determine, as set forth below, the percentage of each distribution of Carried Interest that shall be withheld for any General Partner and/or Holdings and each Partner Category (such withheld
percentage constituting the General Partner’s and such Partner Category’s “Holdback Percentage”). The applicable Holdback Percentages initially shall be 0% for any General Partner, 15% for Existing Partners (other than the
General Partner), 21% for Retaining Withdrawn Partners (other than the General Partner) and 24% for Deceased Partners (the “Initial Holdback Percentages”). Any provision of this Agreement to the contrary notwithstanding, the
Holdback Percentage for the General Partner and/or Holdings shall not be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).
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(ii) The Holdback Percentage may not be reduced for any individual Partner
as compared to the other Partners in his or her Partner Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner Categories on a proportionate basis. For example, if the
Holdback Percentage for Existing Partners is decreased to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any reduction in the Holdback Percentage for any Partner
shall apply only to distributions relating to Carried Interest made after the date of such reduction.
(iii) The Holdback
Percentage may not be increased for any individual Partner as compared to the other Partners in his or her Partner Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’
Holdback Percentage beyond 21% unless the General Partner concurrently increases the Existing Partners’ Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the
General Partner increases the Holdback Percentage for both Existing Partners and Retaining Withdrawn Partners to 24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies
equally to all Partner Categories. Any increase in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner
from proportionately increasing the Holdback Percentage of any Partner Category (following a reduction of the Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For
example, if the General Partner reduces the Holdback Percentages for Existing Partners, Retaining Withdrawn Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the
Holdback Percentages to the Initial Holdback Percentages.
(iv) (A) Notwithstanding anything contained herein to the
contrary, the General Partner may increase or decrease the Holdback Percentage for any Partner in any Partner Category (in such capacity, the “Subject Partner”) pursuant to a majority vote of the Limited Partners (a
“Holdback Vote”); provided, that, notwithstanding anything to the contrary contained herein, the Holdback Percentage applicable to any General Partner shall not be increased or decreased without its prior written consent;
provided further, that a Subject Partner’s Holdback Percentage shall not be (I) increased prior to such time as such Subject Partner (x) is notified by the Partnership of the decision to increase such Subject
Partner’s Holdback Percentage and (y) has, if requested by such Subject Partner, been given 30 days to gather and provide information to the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) or
(II) decreased unless such decrease occurs subsequent to an increase in a Subject Partner’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv); provided further, that such decrease shall not exceed an
amount such that such Subject Partner’s Holdback
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Percentage is less than the prevailing Holdback Percentage for the Partner Category of such Subject Partner; provided further, that a Partner shall not vote to increase a Subject
Partner’s Holdback Percentage unless such voting Partner determines, in such Partner’s good faith judgment, that the facts and circumstances indicate that it is reasonably likely that such Subject Partner, or any of such Subject
Partner’s successors or assigns (including such Subject Partner’s estate or heirs) who at the time of such vote holds the GP-Related Partner Interest or otherwise has the right to receive
distributions relating thereto, will not be capable of satisfying any GP-Related Recontribution Amounts that may become due.
(B) A Holdback Vote shall take place at a Partnership meeting. Each of the Limited Partners shall be entitled to cast one vote
with respect to the Holdback Vote regardless of such Limited Partner’s interest in the Partnership. Such vote may be cast by any such Partner in person or by proxy.
(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback Percentage, such Subject
Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided, that if the Partnership and the Subject Partner cannot agree upon a mutually satisfactory
arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates; provided further, that if such candidates
fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the arbitrator. Each Subject Partner that submits the decision of the
Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected out-of-pocket expenses relating thereto,
and each such party shall, to the satisfaction of the arbitrator and prior to any determination being made by the arbitrator, pay the total of such estimated expenses (i.e., both the Subject Partner’s and the Partnership’s expenses) into
an escrow account. The arbitrator shall direct the escrow agent to pay out of such escrow account all expenses associated with such arbitration (including costs leading thereto) and to return to the “victorious” party the entire amount of
funds such party paid into such escrow account. If the amount contributed to the escrow account by the losing party is insufficient to cover the expenses of such arbitration, such “losing” party shall then provide any additional funds
necessary to cover such costs to such “victorious” party. For purposes hereof, the “victorious” party shall be the Partnership if the Holdback Percentage ultimately determined by the arbitrator is closer to the percentage
determined in the second Holdback Vote than it is to the prevailing Holdback Percentage for the Subject Partner’s Partner Category; otherwise, the Subject Partner shall be the “victorious” party. The party that is not the
“victorious” party shall be the “losing” party.
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(D) In the event of a decrease in a Subject Partner’s Holdback
Percentage (1) pursuant to a Holdback Vote under this clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and distribute to such Subject Partner any Trust
Amounts (and the Trust Income thereon (except as expressly provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance with such Subject Partner’s reduced
Holdback Percentage) as though such reduced Holdback Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).
(v) (A) If a Partner’s Holdback Percentage exceeds 15% (such percentage in excess of 15% constituting the
“Excess Holdback Percentage”), such Partner may satisfy the portion of his or her Holdback obligation in respect of his or her Excess Holdback Percentage (such portion constituting such Partner’s “Excess
Holdback”), and such Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he or she was a Partner), to the extent his or her Excess Holdback obligation has previously been satisfied in cash, may
obtain the release of the Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback
obligation, by pledging, granting a security interest or otherwise making available to the General Partner, on a first priority basis (except as provided below), all or any portion of his or her Firm Collateral in satisfaction of his or her Excess
Holdback obligation. Any Partner seeking to satisfy all or any portion of the Excess Holdback utilizing Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the
General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Partnership to realize on (if required), such Firm Collateral; provided, that, in the case of entities listed in the Partnership’s
books and records in which Partners are permitted to pledge or grant a security interest over their interests therein to finance all or a portion of their capital contributions thereto (“Pledgable Blackstone Interests”), to the
extent a first priority security interest is unavailable because of an existing lien on such Firm Collateral, the Partner or Withdrawn Partner seeking to utilize such Firm Collateral shall grant the General Partner a second priority security
interest therein in the manner provided above; provided further, that (x) in the case of Pledgable Blackstone Interests, to the extent that neither a first priority nor a second priority security interest is available, or
(y) if the General Partner otherwise determines in its good faith judgment that a security interest in Firm Collateral (and the corresponding documents and actions) are not necessary or appropriate, the Partner or Withdrawn Partner shall (in
the case of either clause (x) or (y) above) irrevocably instruct in writing the relevant partnership, limited liability company or other entity listed in the Partnership’s books and records to remit any and all net proceeds resulting from
a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully provided in clause (B) below. The Partnership shall, at the request of any Partner or Withdrawn Partner, assist such Partner or Withdrawn Partner in taking
such action as is necessary to enable such Partner or Withdrawn Partner to use Firm Collateral as provided hereunder.
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(B) If upon a sale or other realization of all or any portion of any Firm
Collateral (a “Firm Collateral Realization”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds otherwise distributable to
such Partner or Withdrawn Partner from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust Account to fully satisfy
such Excess Holdback requirement (allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount necessary to satisfy
such Excess Holdback requirement shall be distributed to such Partner or Withdrawn Partner.
(C) Upon any valuation or
revaluation of Firm Collateral that results in a decreased valuation of such Firm Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including upon a Firm
Collateral Realization, if net proceeds therefrom and the remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the foregoing to such
Partner or Withdrawn Partner and such Partner or Withdrawn Partner shall, within 30 days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his or her Excess Holdback
requirement. If any such Partner or Withdrawn Partner defaults upon his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed
inapplicable to a default under this clause (C); provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party”
where such term appears in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(vi) Any Partner or Withdrawn Partner may (A) obtain the release of any Trust Amounts (but not the Trust Income thereon
which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such Partner or Withdrawn Partner or (B) require the Partnership to
distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit (an “L/C”) for the benefit of the Trustee(s) in such amounts. Any
Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall deliver to the Trustee(s) an unconditional and irrevocable L/C from a commercial bank whose (x) short-term
deposits are rated at least A-1 by S&P or P-1 by Moody’s (if the L/C is for a term of 1 year or less), or (y) long-term deposits are rated at least A+ by
S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more) (each a “Required Rating”). If the relevant rating of the commercial bank issuing such L/C drops below the relevant Required Rating, the L/C Partner shall
supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, in lieu of the insufficient L/C. In addition,
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if the L/C has a term expiring on a date earlier than the latest possible termination date of SP DE, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to provide
a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, at least 30 days prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to drawing
on any L/C. The Trustee(s) may (as directed by the Partnership in the case of clause (I) below) draw down on an L/C only if (I) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the Partnership’s
obligations under the Clawback Provisions or (II) an L/C Partner has not provided a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash and/or Firm Collateral
(to the extent permitted hereunder)), at least 30 days prior to the stated expiration of an existing L/C in accordance with this clause (vi). The Trustee(s), as directed by the Partnership, shall return to any L/C Partner his or her L/C upon
(1) the termination of the Trust Account and satisfaction of the Partnership’s obligations, if any, in respect of the Clawback Provisions, (2) an L/C Partner satisfying his or her entire Holdback obligation in cash and Firm Collateral
(to the extent permitted hereunder), or (3) the release, by the Trustee(s), as directed by the Partnership, of all amounts in the Trust Account to the Partners or Withdrawn Partners. If an L/C Partner satisfies a portion of his or her Holdback
obligation in cash and/or Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as directed by the Partnership, release a portion of the amounts in the Trust Account to the Partners or Withdrawn Partners in the Partner Category
of such L/C Partner, the L/C of an L/C Partner may be reduced by an amount corresponding to such portion satisfied in cash and/or Firm Collateral (to the extent permitted hereunder) or such portion released by the Trustee(s), as directed by the
Partnership; provided, that in no way shall the general release of any Trust Income cause an L/C Partner to be permitted to reduce the amount of an L/C by any amount.
(vii) (A) Any in-kind distributions by the Partnership relating to Carried
Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose of any in-kind distributions held in the Trust Account at any
time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.
(B) In lieu of the
foregoing, any Existing Partner may pledge or grant a security interest with respect to any in-kind distribution the Special Firm Collateral referred to in the applicable category in the Partnership’s
books and records; provided, that the initial contribution of such Special Firm Collateral shall initially equal 130% of the required Holdback for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback. Sections
4.1(d)(viii)(C) and (D) shall apply to such Special Firm Collateral. To the extent such Special Firm Collateral exceeds the applicable minimum percentage of the required Holdback specified in the first sentence of this clause (vii)(B), the
related Partner may obtain a release of such excess amount from the Trust Account.
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(viii) (A) Any Limited Partner or Withdrawn Partner may satisfy all or
any portion of his or her Holdback (excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his or her Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by the use of an L/C as
provided herein, obtain a release of Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn Partner’s Holdback
(excluding any Excess Holdback) by pledging or otherwise granting a security interest to the Trustee(s) on a first priority basis all of his or her Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or exceed the
amount of the Holdback distributed to the Partner or Withdrawn Partner (as more fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise take such
other action as is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) to realize on (if required), such Special Firm
Collateral.
(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or any portion of any
Special Firm Collateral (a “Special Firm Collateral Realization”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in connection with an
Excess Holdback) is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided herein (i.e., cash contributed to the Trust Account or an L/C in the Trust
Account)), then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Special Firm Collateral Realization (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund or
other asset and is being used in connection with an Excess Holdback) shall be paid into the Trust (and allocated to such Partner or Withdrawn Partner) to fully satisfy such Holdback and shall be deemed thereafter to be Trust Amounts for purposes
hereunder. Any net proceeds from such Special Firm Collateral Realization in excess of the amount necessary to satisfy such Holdback (excluding any Excess Holdback) shall be distributed to such Partner or Withdrawn Partner. To the extent a
Qualifying Fund distributes Securities to a Partner or Withdrawn Partner in connection with a Special Firm Collateral Realization, such Partner or Withdrawn Partner shall be required to promptly fund such Partner’s or Withdrawn Partner’s
deficiency with respect to his or her Holdback in cash or an L/C.
(C) Upon any valuation or revaluation of the Special
Firm Collateral and/or any adjustment in the Applicable Collateral Percentage applicable to a Qualifying Fund (as provided in the Partnership’s books and records), if such Partner’s or Withdrawn Partner’s Special Firm Collateral is
valued at less than such Partner’s Holdback (excluding any Excess Holdback) as provided in the Partnership’s books and records, taking into account other permitted means of satisfying the Holdback hereunder, the Partnership shall provide
notice of the foregoing to such Partner or Withdrawn Partner and, within 10 Business Days of receiving such notice, such Partner or Withdrawn Partner shall contribute cash or additional Special Firm Collateral to the Trust Account in an amount
necessary to make up such deficiency. If any such Partner or Withdrawn Partner defaults upon
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his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that the first sentence of Section 5.8(d)(ii)(A) shall be deemed inapplicable to
such default; provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such
Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and
“GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(D) Upon a Partner becoming a Withdrawn Partner, at any time thereafter the General Partner may revoke the ability of such
Withdrawn Partner to use Special Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding anything else in this Section 4.1(d)(viii). In that case the provisions of clause (C) above shall apply to the Withdrawn
Partner’s obligation to satisfy the Holdback (except that 30 days’ notice of such revocation shall be given), given that the Special Firm Collateral is no longer available to satisfy any portion of the Holdback (excluding any Excess
Holdback).
(E) Nothing in this Section 4.1(d)(viii) shall prevent any Partner or Withdrawn Partner from using any
amount of such Partner’s interest in a Qualifying Fund as Firm Collateral; provided, that at all times Section 4.1(d)(v) and this Section 4.1(d)(viii) are each satisfied.
Section 4.2. Interest. Interest on the balances of the Partners’ capital related to the Partners’ GP-Related Partner Interests (excluding capital invested in GP-Related Investments and, if deemed appropriate by the General Partner, capital invested in any other investment
of the Partnership) shall be credited to the Partners’ GP-Related Capital Accounts at the end of each accounting period pursuant to Section 5.2, or at any other time as determined by the General
Partner, at rates determined by the General Partner from time to time, and shall be charged as an expense of the Partnership.
Section 4.3. Withdrawals of Capital. No Partner may withdraw capital related to such Partner’s GP-Related Partner Interests from the Partnership except (i) for distributions of cash or other property pursuant to Section 5.8, (ii) as otherwise expressly provided in this Agreement or (iii) as
determined by the General Partner.
ARTICLE V
PARTICIPATION IN PROFITS AND LOSSES
Section 5.1. General Accounting Matters.
(a) GP-Related Net Income (Loss) shall be determined by the General Partner at the end of each
accounting period and shall be allocated as described in Section 5.4.
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(b) “GP-Related Net Income (Loss)”
means:
(i) from any activity of the Partnership related to the GP-Related SP DE
Interest for any accounting period (other than GP-Related Net Income (Loss) from GP-Related Investments described below), (x) the gross income realized by the
Partnership from such activity during such accounting period less (y) all expenses of the Partnership, and all other items that are deductible from gross income, for such accounting period that are allocable to such activity (determined as
provided below);
(ii) from any GP-Related Investment for any accounting period in
which such GP-Related Investment has not been sold or otherwise disposed of, (x) the gross amount of dividends, interest or other income received by the Partnership from such GP-Related Investment during such accounting period less (y) all expenses of the Partnership for such accounting period that are allocable to such GP-Related Investment
(determined as provided below); and
(iii) from any GP-Related Investment for the
accounting period in which such GP-Related Investment is sold or otherwise disposed of, (x) the sum of the gross proceeds from the sale or other disposition of such
GP-Related Investment and the gross amount of dividends, interest or other income received by the Partnership from such GP-Related Investment during such accounting
period less (y) the sum of the cost or other basis to the Partnership of such GP-Related Investment and all expenses of the Partnership for such accounting period that are allocable to such GP-Related Investment.
(c) GP-Related Net Income (Loss) shall be
determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (i) any income of the Partnership that is exempt from U.S. federal income taxation and not
otherwise taken into account in computing GP-Related Net Income (Loss) shall be added to such taxable income or loss; (ii) if any asset has a value in the books of the Partnership that differs from its
adjusted tax basis for U.S. federal income tax purposes, any depreciation, amortization or gain resulting from a disposition of such asset shall be calculated with reference to such value; (iii) upon an adjustment to the value of any asset in
the books of the Partnership pursuant to Treasury Regulations Section 1.704-1(b)(2), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (iv) any
expenditures of the Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing GP-Related Net Income (Loss) pursuant to this
definition shall be treated as deductible items; (v) any income from a GP-Related Investment that is payable to Partnership employees in respect of “phantom interests” in such GP-Related
Investment awarded by the General Partner to employees shall be included as an expense in the calculation of GP-Related Net Income (Loss) from such GP-Related
Investment, and (vi) items of income and expense (including interest income and overhead and other indirect expenses) of the Partnership, Holdings and other Affiliates of the Partnership shall be allocated among the Partnership, Holdings and
such Affiliates, among various Partnership activities and GP-Related Investments and between accounting periods, in each case as determined by the General Partner. Any adjustments to GP-Related Net Income (Loss) by the General Partner, including adjustments for items of income accrued but not yet received, unrealized gains, items of expense accrued but not yet paid, unrealized losses, reserves
(including reserves for taxes, bad debts, actual or threatened litigation, or any other expenses, contingencies or obligations) and other appropriate items shall be made in accordance with GAAP; provided, that the General Partner shall not be
required to make any such adjustment.
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(d) An accounting period shall be a Fiscal Year, except that, at the option of the General
Partner, an accounting period will terminate and a new accounting period will begin on the admission date of an additional Partner or the Settlement Date of a Withdrawn Partner, if any such date is not the first day of a Fiscal Year. If any event
referred to in the preceding sentence occurs and the General Partner does not elect to terminate an accounting period and begin a new accounting period, then the General Partner may make such adjustments as it deems appropriate to the Partners’
GP-Related Profit Sharing Percentages for the accounting period in which such event occurs (prior to any allocations of GP-Related Unallocated Percentages or adjustments
to GP-Related Profit Sharing Percentages pursuant to Section 5.3) to reflect the Partners’ average GP-Related Profit Sharing Percentages during such accounting
period; provided, that the GP-Related Profit Sharing Percentages of Partners in GP-Related Net Income (Loss) from
GP-Related Investments acquired during such accounting period will be based on GP-Related Profit Sharing Percentages in effect when each such GP-Related Investment was acquired.
(e) In establishing
GP-Related Profit Sharing Percentages and allocating GP-Related Unallocated Percentages pursuant to Section 5.3, the General Partner may consider such factors as it
deems appropriate.
(f) All determinations, valuations and other matters of judgment required to be made for accounting purposes under this
Agreement shall be made by the General Partner and approved by the Partnership’s independent accountants. Such approved determinations, valuations and other accounting matters shall be conclusive and binding on all Partners, all Withdrawn
Partners, their successors, heirs, estates or legal representatives and any other person, and to the fullest extent permitted by law no such person shall have the right to an accounting or an appraisal of the assets of the Partnership or any
successor thereto.
Section 5.2. GP-Related Capital Accounts.
(a) There shall be established for each Partner in the books of the Partnership, to the extent and at such times as may be appropriate, one or
more capital accounts as the General Partner may deem to be appropriate for purposes of accounting for such Partner’s interests in the capital of the Partnership related to the GP-Related SP DE Interest
and the GP-Related Net Income (Loss) of the Partnership (each a “GP-Related Capital Account”).
(b) As of the end of each accounting period or, in the case of a contribution to the Partnership by one or more of the Partners with respect to
such Partner or Partners’ GP-Related Partner Interests or a distribution by the Partnership to one or more of the Partners with respect to such Partner or Partners’
GP-Related Partner Interests, at the time of such contribution or distribution, (i) the appropriate GP-Related Capital Accounts of each Partner shall be credited
with the following amounts: (A) the amount of cash and the value of any property contributed by such Partner to the capital of the Partnership related to such Partner’s GP-Related Partner Interest
during such accounting period, (B) the GP-Related Net Income allocated to such Partner for such accounting period and (C) the interest credited on the balance of such Partner’s capital related
to
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such Partner’s GP-Related Partner Interest for such accounting period pursuant to Section 4.2; and (ii) the appropriate GP-Related Capital Accounts of each Partner shall be debited with the following amounts: (x) the amount of cash, the principal amount of any subordinated promissory note of the Partnership referred to in
Section 6.5 (as such amount is paid) and the value of any property distributed to such Partner during such accounting period with respect to such Partner’s GP-Related Partner Interest and
(y) the GP-Related Net Loss allocated to such Partner for such accounting period.
Section 5.3. GP-Related Profit Sharing Percentages.
(a) Prior to the beginning of each annual accounting period, the General Partner shall establish the profit sharing percentage (the “GP-Related Profit Sharing Percentage”) of each Partner in each category of GP-Related Net Income (Loss) for such annual accounting period pursuant to
Section 5.1(a) taking into account such factors as the General Partner deems appropriate; provided, that (i) the General Partner may elect to establish GP-Related Profit Sharing Percentages in
GP-Related Net Income (Loss) from any GP-Related Investment acquired by the Partnership during such accounting period at the time such
GP-Related Investment is acquired in accordance with paragraph (c) below and (ii) GP-Related Net Income (Loss) for such accounting period from any GP-Related Investment shall be allocated in accordance with the GP-Related Profit Sharing Percentages in such GP-Related Investment
established in accordance with paragraph (c) below. The General Partner may establish different GP-Related Profit Sharing Percentages for any Partner in different categories of GP-Related Net Income (Loss). In the case of the Withdrawal of a Partner, such former Partner’s GP-Related Profit Sharing Percentages shall be allocated by the General
Partner to one or more of the remaining Partners as the General Partner shall determine. In the case of the admission of any Partner to the Partnership as an additional Partner, the GP-Related Profit Sharing
Percentages of the other Partners shall be reduced by an amount equal to the GP-Related Profit Sharing Percentage allocated to such new Partner pursuant to Section 6.1(b); such reduction of each other
Partner’s GP-Related Profit Sharing Percentage shall be pro rata based upon such Partner’s GP-Related Profit Sharing Percentage as in effect immediately
prior to the admission of the new Partner. Notwithstanding the foregoing, the General Partner may also adjust the GP-Related Profit Sharing Percentage of any Partner for any annual accounting period at the end
of such annual accounting period in its sole discretion.
(b) The General Partner may elect to allocate to the Partners less than 100% of
the GP-Related Profit Sharing Percentages of any category for any annual accounting period at the time specified in Section 5.3(a) for the annual fixing of
GP-Related Profit Sharing Percentages (any remainder of such GP-Related Profit Sharing Percentages being called a
“GP-Related Unallocated Percentage”); provided, that any GP-Related Unallocated Percentage in any category of
GP-Related Net Income (Loss) for any annual accounting period that is not allocated by the General Partner within 90 days after the end of such accounting period shall be deemed to be allocated among all the
Partners (including the General Partner) in the manner determined by the General Partner in its sole discretion.
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(c) Unless otherwise determined by the General Partner in a particular case, (i) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment shall be allocated in
proportion to the Partners’ respective GP-Related Capital Contributions in respect of such GP-Related Investment and
(ii) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from each GP-Related Investment shall be fixed at
the time such GP-Related Investment is acquired and shall not thereafter change, subject to any repurchase rights established by the General Partner pursuant to Section 5.7.
Section 5.4. Allocations of GP-Related Net Income (Loss) .
(a) Except as provided in Section 5.4(d), GP-Related Net Income of the Partnership for each GP-Related Investment shall be allocated to the GP-Related Capital Accounts related to such GP-Related Investment of all the Partners
participating in such GP-Related Investment (including the General Partner): first, in proportion to and to the extent of the amount of Non-Carried Interest (other than
amounts representing a return of GP-Related Capital Contributions) or Carried Interest distributed to the Partners; second, to Partners that received Non-Carried
Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest in years prior to the years such GP-Related Net Income is
being allocated to the extent such Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest exceeded GP-Related Net Income allocated to such Partners in such earlier years; and third, to the Partners in the same manner that such Non-Carried Interest (other than amounts
representing a return of GP-Related Capital Contributions) or Carried Interest would have been distributed if cash were available to distribute with respect thereto.
(b) GP-Related Net Loss of the Partnership shall be allocated as follows: (i) GP-Related Net Loss relating to realized losses suffered by SP DE and allocated to the Partnership with respect to its pro rata share thereof (based on capital contributions made by the Partnership
to SP DE with respect to the GP-Related SP DE Interest) shall be allocated to the Partners in accordance with each Partner’s Non-Carried Interest Sharing Percentage
with respect to the GP-Related Investment giving rise to such loss suffered by SP DE and (ii) GP-Related Net Loss relating to realized losses suffered by SP DE and
allocated to the Partnership with respect to the Carried Interest shall be allocated in accordance with a Partner’s (including a Withdrawn Partner’s) Carried Interest Give Back Percentage (as of the date of such loss) (subject to
adjustment pursuant to Section 5.8(e)).
(c) Notwithstanding Section 5.4(a) above,
GP-Related Net Income relating to Carried Interest allocated after the allocation of a GP-Related Net Loss pursuant to clause (ii) of Section 5.4(b) shall be
allocated in accordance with such Carried Interest Give Back Percentages until such time as the Partners have been allocated GP-Related Net Income relating to Carried Interest equal to the aggregate amount of GP-Related Net Loss previously allocated in accordance with clause (ii) of Section 5.4(b). Withdrawn Partners shall remain Partners for purposes of allocating such
GP-Related Net Loss with respect to Carried Interest.
(d) To the extent the Partnership has any GP-Related Net Income (Loss) for any accounting period unrelated to SP DE, such GP-Related Net Income (Loss) will be allocated in accordance with GP-Related Profit Sharing Percentages prevailing at the beginning of such accounting period.
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(e) The General Partner may authorize from time to time advances to Partners (including any
additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) against their allocable shares of GP-Related Net Income (Loss).
(f) Notwithstanding the foregoing, the General Partner may make such
allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems reasonably necessary for this purpose.
Section 5.5. Liability of Partners. Except as otherwise provided in the Partnership Act or as expressly provided in this
Agreement, no Partner shall be personally obligated for any debt, obligation or liability of the Partnership or of any other Partner solely by reason of being a Partner. In no event shall any Partner or Withdrawn Partner (i) be obligated to
make any capital contribution or payment to or on behalf of the Partnership or (ii) have any liability to return distributions received by such Partner from the Partnership, in each case except as specifically provided in Section 4.1(d) or
Section 5.8 or otherwise in this Agreement, as such Partner shall otherwise expressly agree in writing or as may be required by applicable law.
Section 5.6. [Intentionally Omitted].
Section 5.7. Repurchase Rights, etc. The General Partner may from time to time establish such repurchase rights and/or other
requirements with respect to the Partners’ GP-Related Partner Interests relating to GP-Related SP DE Investments as the General Partner may determine. The General
Partner shall have authority to (a) withhold any distribution otherwise payable to any Partner until any such repurchase rights have lapsed or any such requirements have been satisfied, (b) pay any distribution to any Partner that is
Contingent as of the distribution date and require the refund of any portion of such distribution that is Contingent as of the Withdrawal Date of such Partner, (c) amend any previously established repurchase rights or other requirements from
time to time and (d) make such exceptions thereto as it may determine on a case by case basis.
Section 5.8. Distributions.
(a) (i) The Partnership shall make distributions of available cash (subject to reserves and other adjustments as provided herein) or other
property to Partners with respect to such Partners’ GP-Related Partner Interests at such times and in such amounts as are determined by the General Partner. The General Partner shall, if it deems it
appropriate, determine the availability for distribution of, and distribute, cash or other property separately for each category of GP-Related Net Income (Loss) established pursuant to Section 5.1(a).
Distributions of cash or other property with respect to Non-Carried Interest shall be made among the Partners in accordance with their respective Non-Carried Interest
Sharing Percentages, and, subject to Section 4.1(d) and Section 5.8(e), distributions of cash or other property with respect to Carried Interest shall be made among Partners in accordance with their respective Carried Interest Sharing
Percentages.
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(ii) At any time that a sale, exchange, transfer or other disposition by SP
DE of a portion of a GP-Related Investment is being considered by the Partnership (a “GP-Related Disposable Investment”), at the election of the General
Partner each Partner’s GP-Related Partner Interest with respect to such GP-Related Investment shall be vertically divided into two separate GP-Related Partner Interests, a GP-Related Partner Interest attributable to the GP-Related Disposable Investment (a Partner’s
“GP-Related Class B Interest”), and a GP-Related Partner Interest attributable to such
GP-Related Investment excluding the GP-Related Disposable Investment (a Partner’s “GP-Related
Class A Interest”). Distributions (including those resulting from a sale, transfer, exchange or other disposition by SP DE) relating to a GP-Related Disposable Investment (with
respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of GP-Related Class B Interests with respect to such GP-Related Investment in accordance with their GP-Related Profit Sharing Percentages relating to such GP-Related Class B
Interests, and distributions (including those resulting from the sale, transfer, exchange or other disposition by SP DE) relating to a GP-Related Investment excluding such
GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of
GP-Related Class A Interests with respect to such GP-Related Investment in accordance with their respective GP-Related
Profit Sharing Percentages relating to such GP-Related Class A Interests. Except as provided above, distributions of cash or other property with respect to each category of
GP-Related Net Income (Loss) shall be allocated among the Partners in the same proportions as the allocations of GP-Related Net Income (Loss) of each such category.
(b) Subject to the Partnership’s having sufficient available cash in the reasonable judgment of the General Partner, the Partnership shall
make cash distributions to each Partner with respect to each Fiscal Year of the Partnership in an aggregate amount at least equal to the total U.S. federal, New York State and New York City income and other taxes that would be payable by such
Partner with respect to all categories of GP-Related Net Income (Loss) allocated to such Partner for such Fiscal Year, the amount of which shall be calculated (i) on the assumption that each Partner is an
individual subject to the then prevailing maximum rate of U.S. federal, New York State and New York City and other income taxes (including, without limitation, taxes under Sections 1401 and 1411 of the Code), (ii) taking into account (x) the
limitations on the deductibility of expenses and other items for U.S. federal income tax purposes and (y) the character (e.g., long-term or short-term capital gain or ordinary or exempt) of the applicable income, and (iii) taking into
account any differential in applicable rates due to the type and character of GP-Related Net Income (Loss) allocated to such Partner. Notwithstanding the provisions of the foregoing sentence, the General
Partner may refrain from making any distribution if, in the reasonable judgment of the General Partner, such distribution is prohibited by applicable law.
(c) The General Partner may provide that the GP-Related Partner Interest of any Partner or employee
(including such Partner’s or employee’s right to distributions and investments of the Partnership related thereto) may be subject to repurchase by the Partnership during such period as the General Partner shall determine (a
“Repurchase Period”). Any Contingent distributions from GP-Related Investments subject to repurchase rights will be withheld by the Partnership and will be distributed to the recipient thereof
(together with interest thereon at rates determined by the General Partner from time to time) as the recipient’s rights to
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such distributions become Non-Contingent (by virtue of the expiration of the applicable Repurchase Period or otherwise). The General Partner may elect in
an individual case to have the Partnership distribute any Contingent distribution to the applicable recipient thereof irrespective of whether the applicable Repurchase Period has lapsed. If a Partner Withdraws from the Partnership for any reason
other than his or her death, Total Disability or Incompetence, the undistributed share of any GP-Related Investment that remains Contingent as of the applicable Withdrawal Date shall be repurchased by the
Partnership at a purchase price determined at such time by the General Partner. Unless determined otherwise by the General Partner, the repurchased portion thereof will be allocated among the remaining Partners with interests in such GP-Related Investment in proportion to their respective percentage interests in such GP-Related Investment, or if no other Partner has a percentage interest in such specific GP-Related Investment, to the General Partner; provided, that the General Partner may allocate the Withdrawn Partner’s share of unrealized investment income from a repurchased GP-Related Investment attributable to the period after the Withdrawn Partner’s Withdrawal Date on any basis it may determine, including to existing or new Partners who did not previously have interests in such GP-Related Investment, except that, in any event, each Investor Special Partner shall be allocated a share of such unrealized investment income equal to its respective
GP-Related Profit Sharing Percentage of such unrealized investment income.
(d) (i) (A) If the
Partnership is obligated under the Clawback Provisions or Giveback Provisions to contribute to SP DE a Clawback Amount or a Giveback Amount (other than a Capital Commitment Giveback Amount) in respect of the
GP-Related SP DE Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount being herein called a “GP-Related Giveback
Amount”), the General Partner shall call for such amounts as are necessary to satisfy such obligations of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the
Partnership, in cash, when and as called by the General Partner, such an amount of prior distributions by the Partnership (and the Other Fund GPs) with respect to Carried Interest (and/or Non-Carried Interest
in the case of a GP-Related Giveback Amount) (the “GP-Related Recontribution Amount”) which equals (I) the product of (a) a Partner’s or
Withdrawn Partner’s Carried Interest Give Back Percentage and (b) the aggregate Clawback Amount payable by the Partnership in the case of Clawback Amounts and (II) with respect to a GP-Related
Giveback Amount, such Partner’s pro rata share of prior distributions of Carried Interest and/or Non-Carried Interest in connection with (a) the
GP-Related SP DE Investment giving rise to the GP-Related Giveback Amount, (b) if the amounts contributed pursuant to clause (II)(a) above are insufficient to
satisfy such GP-Related Giveback Amount, GP-Related SP DE Investments other than the one giving rise to such obligation, but only those amounts received by the Partners
with an interest in the GP-Related SP DE Investment referred to in clause (II)(a) above, and (c) if the GP-Related Giveback Amount pursuant to an applicable SP DE
Agreement is unrelated to a specific GP-Related SP DE Investment, all GP-Related SP DE Investments. Each Partner and Withdrawn Partner shall promptly contribute to the
Partnership, along with satisfying his or her comparable obligations to the Other Fund GPs, if any, upon such call such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount, less the
amount paid out of the Trust Account on behalf of such Partner or Withdrawn Partner by the Trustee(s) pursuant to written instructions from the Partnership, or if applicable, any of the Other Fund GPs with respect to Carried Interest (and/or Non-Carried Interest in the case of GP-Related Giveback Amounts) (the “Net GP-Related Recontribution Amount”),
irrespective of the fact that the amounts in the Trust Account may be
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sufficient on an aggregate basis to satisfy the Partnership’s and the Other Fund GPs’ obligation under the Clawback Provisions and/or Giveback Provisions; provided, that to the
extent a Partner’s or Withdrawn Partner’s share of the amount paid with respect to the Clawback Amount or the GP-Related Giveback Amount exceeds his or her
GP-Related Recontribution Amount, such excess shall be repaid to such Partner or Withdrawn Partner as promptly as reasonably practicable, subject to clause (ii) below; provided further, that
such written instructions from the General Partner shall specify each Partner’s and Withdrawn Partner’s GP-Related Recontribution Amount. Prior to such time, the General Partner may, in its
discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of the Clawback Provisions or the Giveback Provisions will probably materialize (and an estimate of
the aggregate amount of such obligations); provided further, that any amount from a Partner’s Trust Account used to pay any GP-Related Giveback Amount (or such lesser amount as may be
required by the General Partner) shall be contributed by such Partner to such Partner’s Trust Account no later than 30 days after the Net GP-Related Recontribution Amount is paid with respect to such GP-Related Giveback Amount.
(B) To the extent any Partner or Withdrawn Partner has
satisfied any Holdback obligation with Firm Collateral, such Partner or Withdrawn Partner shall, within 10 days of the General Partner’s call for GP-Related Recontribution Amounts, make a cash payment
into the Trust Account in an amount equal to the amount of the Holdback obligation satisfied with such Firm Collateral, or such lesser amount such that the amount in the Trust Account allocable to such Partner or Withdrawn Partner equals the sum of
(I) such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount and (II) any similar amounts payable to any of the Other Fund GPs. Immediately upon receipt of such cash, the
Trustee(s) shall take such steps as are necessary to release such Firm Collateral of such Partner or Withdrawn Partner equal to the amount of such cash payment. If the amount of such cash payment is less than the amount of Firm Collateral of such
Partner or Withdrawn Partner, the balance of such Firm Collateral if any, shall be retained to secure the payment of GP-Related Deficiency Contributions, if any, and shall be fully released upon the
satisfaction of the Partnership’s and the Other Fund GPs’ obligation to pay the Clawback Amount. The failure of any Partner or Withdrawn Partner to make a cash payment in accordance with this clause (B) (to the extent applicable) shall
constitute a default under Section 5.8(d)(ii) as if such cash payment hereunder constitutes a Net GP-Related Recontribution Amount under Section 5.8(d)(ii). Solely to the extent required by the SP DE
Partnership Agreement, each partner of the General Partner shall have the same obligations as a Partner (which obligations shall be subject to the same limitations as the obligations of a Partner) under this Section 5.8(d)(i)(B) and under
Section 5.8(d)(ii)(A) with respect to such partner’s pro rata share of any Clawback Amount and solely to the extent that the Partnership has insufficient funds to meet the Partnership’s obligations under the SP DE Partnership
Agreement.
(ii) (A) In the event any Partner or Withdrawn Partner (a
“GP-Related Defaulting Party”) fails to recontribute all or any portion of such GP-Related Defaulting Party’s Net
GP-Related Recontribution Amount for any reason, the General Partner shall (i) use its reasonable efforts to collect any amounts from any such GP-Related Defaulting
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Party and (ii) require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Carried Interest Give Back Percentages in the
case of Clawback Amounts, and GP-Related Profit Sharing Percentages in the case of GP-Related Giveback Amounts (as more fully described in clause (II) of
Section 5.8(d)(i)(A) above)), such amounts as are necessary to fulfill the GP-Related Defaulting Party’s obligation to pay such GP-Related Defaulting
Party’s Net GP-Related Recontribution Amount (a “GP-Related Deficiency Contribution”) if the General Partner determines in its good faith judgment
that the Partnership (or an Other Fund GP) will be unable to collect such amount in cash from such GP-Related Defaulting Party for payment of the Clawback Amount or
GP-Related Giveback Amount, as the case may be, at least 20 Business Days prior to the latest date that the Partnership, and the Other Fund GPs, if applicable, are permitted to pay the Clawback Amount or GP-Related Giveback Amount, as the case may be; provided, that, subject to Section 5.8(e), no Partner or Withdrawn Partner shall as a result of such GP-Related
Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Net GP Related Recontribution Amount initially requested from such Partner or Withdrawn Partner in respect of such default.
(B) Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should either (1) not
attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all remedies (at law or
equity) available to the Partnership against the GP-Related Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the
GP-Related Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such GP-Related Defaulting Party becoming a GP-Related Defaulting Party) to set-off as appropriate and apply against such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount any amounts otherwise payable to the GP-Related Defaulting Party by the Partnership or any Affiliate thereof (including amounts unrelated to
Carried Interest, such as returns of capital and profit thereon). Each Partner and Withdrawn Partner hereby grants to the General Partner a security interest, effective upon such Partner or Withdrawn Partner becoming a
GP-Related Defaulting Party, in all accounts receivable and other rights to receive payment from any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General
Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner and Withdrawn Partner hereby appoints the General Partner as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or Withdrawn Partner or in the name of the General Partner, to take any actions which may be necessary to accomplish the
intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the Net GP-Related Recontribution Amount of a GP-Related
Defaulting Party from the date such Net GP-Related Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
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(C) Any Partner’s or Withdrawn Partner’s failure to make a GP-Related Deficiency Contribution shall cause such Partner or Withdrawn Partner to be a GP-Related Defaulting Party with respect to such amount. The Partnership shall first
seek any remaining Trust Amounts (and Trust Income thereon) allocated to such Partner or Withdrawn Partner to satisfy such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency
Contribution before seeking cash contributions from such Partner or Withdrawn Partner in satisfaction of such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution.
(iii) In the event any Partner or Withdrawn Partner initially fails to recontribute all or any portion of such Partner or
Withdrawn Partner’s pro rata share of any Clawback Amount pursuant to Section 5.8(d)(i)(A), the Partnership shall use its reasonable efforts to collect the amount which such Partner or Withdrawn Partner so fails to recontribute.
(iv) A Partner’s or Withdrawn Partner’s obligation to make contributions to the Partnership under this
Section 5.8(d) shall survive the termination of the Partnership.
(e) The Partners acknowledge that the General Partner will (and is
hereby authorized to) take such steps as it deems appropriate, in its good faith judgment, to further the objective of providing for the fair and equitable treatment of all Partners, including by allocating Losses (as defined in the SP DE
Agreements) on GP-Related SP DE Investments that have been the subject of a writedown and/or losses (each, a “Loss Investment”) to those Partners who participated in such Loss Investments
based on their Carried Interest Sharing Percentage therein to the extent that such Partners receive or have received Carried Interest distributions from other GP-Related SP DE Investments. Consequently and
notwithstanding anything herein to the contrary, adjustments to Carried Interest distributions shall be made as set forth in this Section 5.8(e).
(i) At the time the Partnership is making Carried Interest distributions in connection with a
GP-Related SP DE Investment (the “Subject Investment”) that have been reduced under any SP DE Agreement as a result of one or more Loss Investments, the General Partner shall calculate amounts
distributable to or due from each such Partner as follows:
(A) determine each Partner’s share of each such Loss
Investment based on his or her Carried Interest Sharing Percentage in each such Loss Investment (which may be zero) to the extent such Loss Investment has reduced the Carried Interest distributions otherwise available for distribution to all
Partners (indirectly through the Partnership from SP DE) from the Subject Investment (such reduction, the “Loss Amount”);
(B) determine the amount of Carried Interest distributions otherwise distributable to such Partner with respect to the Subject
Investment (indirectly through the Partnership from SP DE) before any reduction in respect of the amount determined in clause (A) above (the “Unadjusted Carried Interest Distributions”); and
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(C) subtract (I) the Loss Amounts relating to all Loss Investments from
(II) the Unadjusted Carried Interest Distributions for such Partner, to determine the amount of Carried Interest distributions to actually be paid to such Partner (“Net Carried Interest Distribution”).
To the extent that the Net Carried Interest Distribution for a Partner as calculated in this clause (i) is a negative number, the General
Partner shall (I) notify such Partner, at or prior to the time such Carried Interest distributions are actually made to the Partners, of his or her obligation to recontribute to the Partnership prior Carried Interest distributions (a
“Net Carried Interest Distribution Recontribution Amount”), up to the amount of such negative Net Carried Interest Distribution and (II) to the extent amounts recontributed pursuant to clause (I) are insufficient to
satisfy such negative Net Carried Interest Distribution amount, reduce future Carried Interest distributions otherwise due such Partner, up to the amount of such remaining negative Net Carried Interest Distribution. If a Partner’s (x) Net
Carried Interest Distribution Recontribution Amount exceeds (y) the aggregate amount of prior Carried Interest distributions less the amount of tax thereon, calculated based on the Assumed Income Tax Rate (as defined in the SP DE Agreements) in
effect in the Fiscal Years of such distributions (the “Excess Tax-Related Amount”), then such Partner may, in lieu of paying such Partner’s Excess
Tax-Related Amount, defer such amounts as set forth below. Such deferred amount shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced and repaid by the amount of Carried Interest
otherwise distributable to such Partner in connection with future Carried Interest distributions until such balance is reduced to zero. Any deferred amounts shall be payable in full upon the earlier of (i) such time as the Clawback Amount is
determined (as provided herein) and (ii) such time as the Partner becomes a Withdrawn Partner.
To the extent there is an amount of
negative Net Carried Interest Distribution with respect to a Partner remaining after the application of this clause (i), notwithstanding clause (II) of the preceding paragraph, such remaining amount of negative Net Carried Interest Distribution
shall be allocated to the other Partners pro rata based on each of their Carried Interest Sharing Percentages in the Subject Investment.
A Partner who fails to pay a Net Carried Interest Distribution Recontribution Amount promptly upon notice from the General Partner (as
provided above) shall be deemed a GP-Related Defaulting Party for all purposes hereof.
A Partner
may satisfy in part any Net Carried Interest Distribution Recontribution Amount from cash that is then subject to a Holdback, to the extent that the amounts that remain subject to a Holdback satisfy the Holdback requirements hereof as they relate to
the reduced amount of aggregate Carried Interest distributions received by such Partner (taking into account any Net Carried Interest Distribution Recontribution Amount contributed to the Partnership by such Partner).
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Any Net Carried Interest Distribution Recontribution Amount contributed by a Partner,
including amounts of cash subject to a Holdback as provided above, shall increase the amount available for distribution to the other Partners as Carried Interest distributions with respect to the Subject Investment; provided, that any such
amounts then subject to a Holdback may be so distributed to the other Partners to the extent a Partner receiving such distribution has satisfied the Holdback requirements with respect to such distribution (taken together with the other Carried
Interest distributions received by such Partner to date).
(ii) In the case of Clawback Amounts which are required to be
contributed to the Partnership as otherwise provided herein, the obligation of the Partners with respect to any Clawback Amount shall be adjusted by the General Partner as follows:
(A) determine each Partner’s share of any Losses (as defined in the SP DE Agreements) in any GP-Related SP DE Investments which gave rise to the Clawback Amount (i.e., the Losses that followed the last GP-Related SP DE Investment with respect to which Carried Interest
distributions were made), based on such Partner’s Carried Interest Sharing Percentage in such GP-Related SP DE Investments;
(B) determine each Partner’s obligation with respect to the Clawback Amount based on such Partner’s Carried Interest
Give Back Percentage as otherwise provided herein; and
(C) subtract the amount determined in clause (B) above from
the amount determined in clause (A) above with respect to each Partner to determine the amount of adjustment to each Partner’s share of the Clawback Amount (a Partner’s “Clawback Adjustment Amount”).
A Partner’s share of the Clawback Amount shall for all purposes hereof be decreased by such Partner’s Clawback Adjustment Amount, to
the extent it is a negative number (except to the extent expressly provided below). A Partner’s share of the Clawback Amount shall for all purposes hereof be increased by such Partner’s Clawback Adjustment Amount (to the extent it is a
positive number); provided, that in no way shall a Partner’s aggregate obligation to satisfy a Clawback Amount as a result of this clause (ii) exceed the aggregate Carried Interest distributions received by such Partner. To the
extent a positive Clawback Adjustment Amount remains after the application of this clause (ii) with respect to a Partner, such remaining Clawback Adjustment Amount shall be allocated to the Partners (including any Partner whose Clawback Amount
was increased pursuant to this clause (ii)) pro rata based on their Carried Interest Give Back Percentages (determined without regard to this clause (ii)).
Any distribution or contribution adjustments pursuant to this Section 5.8(e) by the General Partner shall be based on its good faith
judgment, and no Partner shall have any claim against the Partnership, the General Partner or any other Partners as a result of any adjustment made as set forth above. This Section 5.8(e) applies to all Partners, including Withdrawn Partners.
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It is agreed and acknowledged that this Section 5.8(e) is an agreement among the
Partners and in no way modifies the obligations of each Partner regarding the Clawback Amount as provided in the SP DE Agreements.
Section 5.9. Business Expenses. The Partnership shall reimburse the Partners for reasonable travel, entertainment and
miscellaneous expenses incurred by them in the conduct of the Partnership’s business in accordance with rules and regulations established by the General Partner from time to time.
Section 5.10. Tax Capital Accounts; Tax Allocations.
(a) For U.S. federal income tax purposes, there shall be established for each Partner a single capital account combining such Partner’s
Capital Commitment Capital Account and GP-Related Capital Account, with such adjustments as the General Partner determines are appropriate so that such single capital account is maintained in compliance with
the principles and requirements of Section 704(b) of the Code and the Treasury Regulations thereunder.
(b) All items of income, gain,
loss, deduction and credit of the Partnership shall be allocated among the Partners for U.S. federal, state and local income tax purposes in the same manner as such items of income, gain, loss, deduction and credit shall be allocated among the
Partners pursuant to this Agreement, except as may otherwise be provided herein or by the Code or other applicable law. In the event there is a net decrease in partnership minimum gain or partner nonrecourse debt minimum gain (determined in
accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i)) during any taxable year of the Partnership, each Partner shall be specially
allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to its respective share of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Treasury Regulations
Section 1.704-2(f). In addition, this Agreement shall be considered to contain a “qualified income offset” as provided in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d). Notwithstanding the foregoing, the General Partner in its sole discretion shall make allocations for tax purposes as may be needed to ensure that allocations are in
accordance with the interests of the Partners within the meaning of the Code and the Treasury Regulations.
(c) For U.S. federal, state and
local income tax purposes only, Partnership income, gain, loss, deduction or expense (or any item thereof) for each Fiscal Year shall be allocated to and among the Partners in a manner corresponding to the manner in which corresponding items are
allocated among the Partners pursuant to the other provisions of this Section 5.10; provided, that the General Partner may in its sole discretion make such allocations for tax purposes as it determines are appropriate so that allocations
have substantial economic effect or are in accordance with the interests of the Partners, within the meaning of the Code and the Treasury Regulations thereunder. To the extent there is an adjustment by a taxing authority to any item of income, gain,
loss, deduction or credit of the Partnership (or an adjustment to any Partner’s distributive share thereof), the General Partner may reallocate the adjusted items among each Partner or former Partner (as determined by the General Partner) in
accordance with the final resolution of such audit adjustment.
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ARTICLE VI
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS;
SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
Section 6.1. Additional Partners.
(a) Effective on the first day of any month (or on such other date as shall be determined by the General Partner in its sole discretion), the
General Partner shall have the right to admit one or more additional or substitute persons into the Partnership as Limited Partners or Special Partners. Each such person shall make the representations and certifications with respect to itself set
forth in Section 3.6 and Section 3.7. The General Partner shall determine and negotiate with the additional Partner (which term shall include, without limitation, any substitute Partner) all terms of such additional Partner’s
participation in the Partnership, including the additional Partner’s initial GP-Related Capital Contribution, Capital Commitment-Related Capital Contribution,
GP-Related Profit Sharing Percentage and Capital Commitment Profit Sharing Percentage. Each additional Partner shall have such voting rights as may be determined by the General Partner from time to time
unless, upon the admission to the Partnership of any Special Partner, the General Partner shall designate that such Special Partner shall not have such voting rights (any such Special Partner being called a “Nonvoting Special Partner”).
Any additional Partner shall, as a condition to becoming a Partner, agree to become a party to, and be bound by the terms and conditions of, the Trust Agreement. If Blackstone or another or subsequent holder of an Investor Note approved by the
General Partner for purposes of this Section 6.1(a) shall foreclose upon a Limited Partner’s Investor Note issued to finance such Limited Partner’s purchase of his or her Capital Commitment Interests, Blackstone or such other or
subsequent holder shall succeed to such Limited Partner’s Capital Commitment Interests and shall be deemed to have become a Limited Partner to such extent. Any additional Partner may have a GP-Related
Partner Interest or a Capital Commitment Partner Interest, without having the other such interest.
(b) The
GP-Related Profit Sharing Percentages, if any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other
Partners’ GP-Related Profit Sharing Percentages as of such date, shall be established by the General Partner pursuant to Section 5.3. The Capital Commitment Profit Sharing Percentages, if any, to be
allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’ Capital Commitment Profit Sharing Percentages as of such date, shall be established by
the General Partner. Notwithstanding any provision in this Agreement to the contrary, the General Partner is authorized, without the need for any further act, vote or consent of any person, to make adjustments to the
GP-Related Profit Sharing Percentages as it determines necessary in its sole discretion in connection with any additional Partners admitted to the Partnership, adjustments with respect to other Partners of the
Partnership and to give effect to other matters set forth herein, as applicable.
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(c) An additional Partner shall be required to contribute to the Partnership his or her pro
rata share of the Partnership’s total capital, excluding capital in respect of GP-Related Investments and Capital Commitment Investments in which such Partner does not acquire any interests, at such times
and in such amounts as shall be determined by the General Partner in accordance with Section 4.1 and Section 7.1.
(d) The
admission of an additional Partner will be evidenced by (i) the execution of a counterpart copy of this Agreement by such additional Partner, (ii) the execution of an amendment to this Agreement by the General Partner and the additional
Partner, as determined by the General Partner and / or (iii) the execution by such additional Partner of any other writing evidencing the intent of such person to become an additional Partner and to be bound by the terms of this Agreement and
such writing being acceptable to the General Partner on behalf of the Partnership. In addition, each additional Partner shall sign a counterpart copy of the Trust Agreement or any other writing evidencing the intent of such person to become a party
to the Trust Agreement that is acceptable to the General Partner on behalf of the Partnership.
Section 6.2. Withdrawal of
Partners.
(a) Any Partner may Withdraw voluntarily from the Partnership subject to the prior written consent of the General Partner,
including if such Withdrawal would (i) cause the Partnership to be in default under any of its contractual obligations or (ii) in the reasonable judgment of the General Partner, have a material adverse effect on the Partnership or its
business. Without limiting the foregoing sentence, the General Partner generally intends to permit voluntary Withdrawals on the last day of any calendar month (or on such other date as shall be determined by the General Partner in its sole
discretion), on not less than 15 days’ prior written notice by such Partner to the General Partner (or on such shorter notice period as may be mutually agreed upon between such Partner and the General Partner); provided, that a Partner may
Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest without Withdrawing from the Partnership with respect to such Partner’s Capital Commitment Partner Interest,
and a Partner may Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest without Withdrawing from the Partnership with respect to such Partner’s GP-Related
Partner Interest.
(b) Upon the Withdrawal of any Partner, including by the occurrence of any withdrawal event under the Partnership Act
with respect to any Partner, such Partner shall thereupon cease to be a Partner, except as expressly provided herein.
(c) Upon the Total
Disability of a Limited Partner, such Partner shall thereupon cease to be a Limited Partner with respect to such person’s GP-Related Partner Interest; provided, that the General Partner may elect to admit
such Withdrawn Partner to the Partnership as a Nonvoting Special Partner with respect to such person’s GP-Related Partner Interest, with such GP-Related Partner
Interest as the General Partner may determine. The determination of whether any Partner has suffered a Total Disability shall be made by the General Partner in its sole discretion after consultation with a qualified medical doctor. In the absence of
agreement between the General Partner and such Partner, each party shall nominate a qualified medical doctor and the two doctors shall select a third doctor, who shall make the determination as to Total Disability.
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(d) If the General Partner determines that it shall be in the best interests of the
Partnership for any Partner (including any Partner who has given notice of voluntary Withdrawal pursuant to paragraph (a) above) to Withdraw from the Partnership (whether or not Cause exists) with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, such Partner, upon written notice by the General Partner to such Partner, shall be required to Withdraw with
respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, as of a date specified in such notice, which date shall be on or after
the date of such notice. If the General Partner requires any Partner to Withdraw for Cause with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital
Commitment Partner Interest, such notice shall state that it has been given for Cause and shall describe the particulars thereof in reasonable detail.
(e) The Withdrawal from the Partnership of any Partner shall not, in and of itself, affect the obligations of the other Partners to continue
the Partnership during the remainder of its term. A Withdrawn General Partner shall remain liable for all obligations of the Partnership incurred while it was a General Partner and resulting from its acts or omissions as a General Partner to the
fullest extent provided by law.
Section 6.3. GP-Related Partner Interests Not
Transferable.
(a) No Partner may sell, assign, pledge, grant a security interest over or otherwise transfer or encumber all or any
portion of such Partner’s GP-Related Partner Interest other than as permitted by written agreement between such Partner and the Partnership; provided, that this Section 6.3 shall not impair transfers
by operation of law, transfers by will or by other testamentary instrument occurring by virtue of the death or dissolution of a Partner, or transfers required by trust agreements; provided further, that, subject to the prior written consent of the
General Partner, which shall not be unreasonably withheld, a Limited Partner may transfer, for estate planning purposes, up to 25% of his or her GP-Related Profit Sharing Percentage to any estate planning
trust, limited partnership, or limited liability company with respect to which a Limited Partner controls investments related to any interest in the Partnership held therein (an “Estate Planning Vehicle”). Each Estate Planning Vehicle will
be a Nonvoting Special Partner. Such Limited Partner and the Nonvoting Special Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such Nonvoting Special Partner with respect to the Partnership
(including the obligation to make additional GP-Related Capital Contributions), as the case may be. The General Partner may at its sole option exercisable at any time require any Estate Planning Vehicle to
Withdraw from the Partnership on the terms of this Article VI. Except as provided in the second proviso to the first sentence of this Section 6.3, no assignee, legatee, distributee, heir or transferee (by conveyance, operation of law or
otherwise) of the whole or any portion of any Partner’s GP-Related Partner Interest shall have any right to be a Partner without the prior written consent of the General Partner (which consent may be
given or withheld in its sole discretion without giving any reason therefor). Notwithstanding the granting of a security interest in the entire Interest of any Partner, such Partner shall continue to be a Partner of the Partnership.
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(b) Notwithstanding any provision hereof to the contrary, no sale or transfer of any GP-Related Partner Interest in the Partnership may be made except in compliance with all federal, state and other applicable laws, including U.S. federal and state securities laws.
Section 6.4. Consequences upon Withdrawal of a Partner.
(a) Subject to the Partnership Act, the General Partner may not transfer or assign its interest as a General Partner in the Partnership or its
right to manage the affairs of the Partnership, except that the General Partner may, subject to the Partnership Act, with the prior written approval of a Majority in Interest of the Partners, admit another person as an additional or substitute
General Partner who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise); provided however, that the General Partner may, in its sole
discretion, transfer all or part of its interest in the Partnership to a person who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law or otherwise)
and who owns, directly or indirectly, the principal part of the business then conducted by the General Partner in connection with any liquidation, dissolution or reorganization of the General Partner, and, upon the assumption by such person of
liability for all the obligations of the General Partner under this Agreement, such person shall be admitted as the General Partner. A person who is so admitted as an additional or substitute General Partner shall thereby become a General Partner
and shall have the right to manage the affairs of the Partnership and to vote as a Partner to the extent of the interest in the Partnership so acquired. The General Partner shall not cease to be the general partner of the Partnership upon the
collateral assignment of or the pledging or granting of a security interest in its entire Interest in the Partnership.
(b) Except as
contemplated by Section 6.4(a) above, Withdrawal by a General Partner is not permitted. The Withdrawal of a Partner shall not dissolve the Partnership if at the time of such Withdrawal there are one or more remaining Partners and any one or
more of such remaining Partners continue the business of the Partnership (any and all such remaining Partners being hereby authorized to continue the business of the Partnership without dissolution and hereby agreeing to do so). Notwithstanding
Section 6.4(c), if upon the Withdrawal of a Partner there shall be no remaining Limited Partners, the Partnership shall be dissolved and shall be wound up unless, within 90 days after the occurrence of such Withdrawal, all remaining Special
Partners agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such Withdrawal, of one or more Limited Partners.
(c) The Partnership shall not be dissolved, in and of itself, by the Withdrawal of any Partner, but shall continue with the surviving or
remaining Partners as partners thereof in accordance with and subject to the terms and provisions of this Agreement.
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s
GP-Related Partner Interests.
(a) The terms of this Section 6.5 shall apply to the GP-Related Partner Interest of a Withdrawn Partner, but, except as otherwise expressly provided in this Section 6.5, shall not apply to the Capital Commitment Partner Interest of a Withdrawn Partner. For
purposes of this
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Section 6.5, the term “Settlement Date” means the date as of which a Withdrawn Partner’s GP-Related Partner Interest in the
Partnership is settled as determined under paragraph (b) below. Notwithstanding the foregoing, any Limited Partner who Withdraws from the Partnership, and all or any portion of whose GP-Related Partner
Interest is retained as a Special Partner, shall be considered a Withdrawn Partner for all purposes hereof.
(b) Except where a later date
for the settlement of a Withdrawn Partner’s GP-Related Partner Interest in the Partnership may be agreed to by the General Partner and a Withdrawn Partner, a Withdrawn Partner’s Settlement Date shall
be his or her Withdrawal Date; provided, that if a Withdrawn Partner’s Withdrawal Date is not the last day of a month, then the General Partner may elect for such Withdrawn Partner’s Settlement Date to be the last day of the month
in which his or her Withdrawal Date occurs. During the interval, if any, between a Withdrawn Partner’s Withdrawal Date and Settlement Date, such Withdrawn Partner shall have the same rights and obligations with respect to GP-Related Capital Contributions, interest on capital, allocations of GP-Related Net Income (Loss) and distributions as would have applied had such Withdrawn Partner remained
a Partner of the Partnership during such period.
(c) In the event of the Withdrawal of a Partner, with respect to such Withdrawn
Partner’s GP-Related Partner Interest, the General Partner shall promptly after such Withdrawn Partner’s Settlement Date (i) determine and allocate to the Withdrawn Partner’s GP-Related Capital Accounts such Withdrawn Partner’s allocable share of the GP-Related Net Income (Loss) of the Partnership for the period ending on such Settlement Date
in accordance with Article V and (ii) credit the Withdrawn Partner’s GP-Related Capital Accounts with interest in accordance with Section 5.2. In making the foregoing calculations, the General
Partner shall be entitled to establish such reserves (including reserves for taxes, bad debts, unrealized losses, actual or threatened litigation or any other expenses, contingencies or obligations) as it deems appropriate. Unless otherwise
determined by the General Partner in a particular case, a Withdrawn Partner shall not be entitled to receive any GP-Related Unallocated Percentage in respect of the accounting period during which such Partner
Withdraws from the Partnership (whether or not previously awarded or allocated) or any GP-Related Unallocated Percentage in respect of prior accounting periods that have not been paid or allocated (whether or
not previously awarded) as of such Withdrawn Partner’s Withdrawal Date.
(d) From and after the Settlement Date of the Withdrawn
Partner, the Withdrawn Partner’s GP-Related Profit Sharing Percentages shall, unless otherwise allocated by the General Partner pursuant to Section 5.3(a), be deemed to be GP-Related Unallocated Percentages (except for GP-Related Profit Sharing Percentages with respect to GP-Related Investments as provided
in paragraph (f) below).
(e) (i) Upon the Withdrawal from the Partnership of a Partner with respect to such Partner’s GP-Related Partner Interest, such Withdrawn Partner thereafter shall not, except as expressly provided in this Section 6.5, have any rights of a Partner (including voting rights) with respect to such
Partner’s GP-Related Partner Interest, and, except as expressly provided in this Section 6.5, such Withdrawn Partner shall not have any interest in the Partnership’s GP-Related Net Income (Loss), or in distributions related to such Partner’s GP-Related Partner Interest, GP-Related Investments or
other assets related to such Partner’s GP-Related Partner Interest. If a Partner Withdraws from the Partnership with respect to such Partner’s GP-Related
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Partner Interest for any reason other than for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be entitled to receive, at the time or times specified in Section 6.5(i)
below, in satisfaction and discharge in full of the Withdrawn Partner’s GP-Related Partner Interest in the Partnership, (x) payment equal to the aggregate credit balance, if any, as of the Settlement
Date of the Withdrawn Partner’s GP-Related Capital Accounts, (excluding any GP-Related Capital Account or portion thereof attributable to any GP-Related Investment) and (y) the Withdrawn Partner’s percentage interest attributable to each GP-Related Investment in which the Withdrawn Partner has an interest
as of the Settlement Date as provided in paragraph (f) below (which shall be settled in accordance with paragraph (f) below), subject to all the terms and conditions of paragraphs (a)-(r) of this Section 6.5. If the amount determined
pursuant to clause (x) above is an aggregate negative balance, the Withdrawn Partner shall pay the amount thereof to the Partnership upon demand by the General Partner on or after the date of the statement referred to in Section 6.5(i)
below; provided, that if the Withdrawn Partner was solely a Special Partner on his or her Withdrawal Date, such payment shall be required only to the extent of any amounts payable to such Withdrawn Partner pursuant to this Section 6.5. Any
aggregate negative balance in the GP-Related Capital Accounts of a Withdrawn Partner who was solely a Special Partner, upon the settlement of such Withdrawn Partner’s
GP-Related Partner Interest in the Partnership pursuant to this Section 6.5, shall be allocated among the other Partners’ GP-Related Capital Accounts in
accordance with their respective GP-Related Profit Sharing Percentages in the categories of GP-Related Net Income (Loss) giving rise to such negative balance as
determined by the General Partner as of such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the Partnership, no value shall be
ascribed to goodwill, the Partnership name or the anticipation of any value the Partnership or any successor thereto might have in the event the Partnership or any interest therein were to be sold in whole or in part.
(ii) Notwithstanding clause (i) of this Section 6.5(e), in the case of a Partner whose Withdrawal with respect to
such Partner’s GP-Related Partner Interest resulted from such Partner’s death or Incompetence, such Partner’s estate or legal representative, as the case may be, may elect, at the time described
below, to receive a Nonvoting Special Partner GP-Related Partner Interest and retain such Partner’s GP-Related Profit Sharing Percentage in all (but not less than
all) illiquid investments of the Partnership in lieu of a cash payment (or Investor Note) in settlement of that portion of the Withdrawn Partner’s GP-Related Partner Interest. The election referred to
above shall be made within 60 days after the Withdrawn Partner’s Settlement Date, based on a statement of the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership
pursuant to this Section 6.5.
(f) For purposes of clause (y) of paragraph (e)(i) above, a Withdrawn Partner’s
“percentage interest” means his or her GP-Related Profit Sharing Percentage as of the Settlement Date in the relevant GP-Related Investment. The Withdrawn
Partner shall retain his or her percentage interest in such GP-Related Investment and shall retain his or her GP-Related Capital Account or portion thereof attributable
to such GP-Related Investment, in which case such Withdrawn Partner (a “Retaining Withdrawn Partner”) shall become and remain a Special Partner for such purpose (and, if the General Partner so
designates, such Special Partner shall be a Nonvoting Special Partner). The GP-Related Partner Interest of a Retaining Withdrawn Partner pursuant to this paragraph (f) shall be subject to the terms and
conditions applicable to
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GP-Related Partner Interests of any kind hereunder and such other terms and conditions as are established by the General Partner. At the option of the
General Partner in its sole discretion, the General Partner and the Retaining Withdrawn Partner may agree to have the Partnership acquire such GP-Related Partner Interest without the approval of the other
Partners; provided, that the General Partner shall reflect in the books and records of the Partnership the terms of any acquisition pursuant to this sentence.
(g) The General Partner may elect, in lieu of payment in cash of any amount payable to a Withdrawn Partner pursuant to paragraph
(e) above, to (i) have the Partnership issue to the Withdrawn Partner a subordinated promissory note and/or to (ii) distribute in kind to the Withdrawn Partner such Withdrawn Partner’s pro rata share (as determined by the
General Partner) of any securities or other investments of the Partnership in relation to such Partner’s GP-Related Partner Interest. If any securities or other investments are distributed in kind to a
Withdrawn Partner under this paragraph (g), the amount described in clause (x) of paragraph (e)(i) shall be reduced by the value of such distribution as valued on the latest balance sheet of the Partnership in accordance with generally accepted
accounting principles or, if not appearing on such balance sheet, as reasonably determined by the General Partner.
(h) [Intentionally
omitted].
(i) Within 120 days after each Settlement Date, the General Partner shall submit to the Withdrawn Partner a statement of the
settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5 together with any cash payment, subordinated promissory note and in kind
distributions to be made to such Partner as shall be determined by the General Partner. The General Partner shall submit to the Withdrawn Partner supplemental statements with respect to additional amounts payable to or by the Withdrawn Partner in
respect of the settlement of his or her GP-Related Partner Interest in the Partnership (e.g., payments in respect of GP-Related Investments pursuant to paragraph
(f) above or adjustments to reserves pursuant to paragraph (j) below) promptly after such amounts are determined by the General Partner. To the fullest extent permitted by law, such statements and the valuations on which they are based
shall be accepted by the Withdrawn Partner without examination of the accounting books and records of the Partnership or other inquiry. Any amounts payable by the Partnership to a Withdrawn Partner pursuant to this Section 6.5 shall be
subordinate in right of payment and subject to the prior payment or provision for payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to the applicable date
of payment or distribution; provided, that such Withdrawn Partner shall otherwise rank pari passu in right of payment (x) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year before the
Withdrawal Date of the Withdrawn Partner in question and (y) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year after the Withdrawal Date of the Withdrawn Partner in question.
(j) If the aggregate reserves established by the General Partner as of the Settlement Date in making the foregoing calculations should prove,
in the determination of the General Partner, to be excessive or inadequate, the General Partner may elect, but shall not be obligated, to pay the Withdrawn Partner or his or her estate such excess, or to charge the Withdrawn Partner or his or her
estate such deficiency, as the case may be.
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(k) Any amounts owed by the Withdrawn Partner to the Partnership at any time on or after the
Settlement Date (e.g., outstanding Partnership loans or advances to such Withdrawn Partner) shall be offset against any amounts payable or distributable by the Partnership to the Withdrawn Partner at any time on or after the Settlement Date
or shall be paid by the Withdrawn Partner to the Partnership, in each case as determined by the General Partner. All cash amounts payable by a Withdrawn Partner to the Partnership under this Section 6.5 shall bear interest from the due date to
the date of payment at a floating rate equal to the lesser of (x) the Prime Rate or (y) the maximum rate of interest permitted by applicable law. The “due date” of amounts payable by a Withdrawn Partner pursuant to
Section 6.5(i) above shall be 120 days after a Withdrawn Partner’s Settlement Date. The “due date” of amounts payable to or by a Withdrawn Partner in respect of GP-Related Investments for
which the Withdrawn Partner has retained a percentage interest in accordance with paragraph (f) above shall be 120 days after realization with respect to such GP-Related Investment. The “due
date” of any other amounts payable by a Withdrawn Partner shall be 60 days after the date such amounts are determined to be payable.
(l) At the time of the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the
Partnership pursuant to this Section 6.5, the General Partner may, to the fullest extent permitted by applicable law, impose any restrictions it deems appropriate on the assignment, pledge, grant of a security interest, encumbrance or other
transfer by such Withdrawn Partner of any interest in any GP-Related Investment retained by such Withdrawn Partner, any securities or other investments distributed in kind to such Withdrawn Partner or such
Withdrawn Partner’s right to any payment from the Partnership.
(m) If a Partner is required to Withdraw from the Partnership with
respect to such Partner’s GP-Related Partner Interest for Cause pursuant to Section 6.2(d), then his or her GP-Related Partner Interest shall be settled in
accordance with paragraphs (a)-(r) of this Section 6.5; provided, that the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such
settlement:
(i) In settling the Withdrawn Partner’s interest in any
GP-Related Investment in which he or she has an interest as of his or her Settlement Date, the General Partner may elect to (A) determine the GP-Related Unrealized
Net Income (Loss) attributable to each such GP-Related Investment as of the Settlement Date and allocate to the appropriate GP-Related Capital Account of the Withdrawn
Partner his or her allocable share of such GP-Related Unrealized Net Income (Loss) for purposes of calculating the aggregate balance of such Withdrawn Partner’s
GP-Related Capital Account pursuant to clause (x) of paragraph (e)(i) above, (B) credit or debit, as applicable, the Withdrawn Partner with the balance of his or her
GP-Related Capital Account or portion thereof attributable to each such GP-Related Investment as of his or her Settlement Date without giving effect to the GP-Related Unrealized Net Income (Loss) from such GP-Related Investment as of his or her Settlement Date, which shall be forfeited by the Withdrawn Partner or (C) apply
the provisions of paragraph (f) above; provided, that the maximum amount of GP-Related Net Income (Loss) allocable to such Withdrawn Partner with respect to any
GP-Related Investment shall equal such Partner’s percentage interest of the GP-Related Unrealized Net Income, if any, attributable to such GP-Related Investment as of the Settlement Date (the balance of such GP-Related Net Income (Loss), if any, shall be allocated as determined by the General Partner). The
Withdrawn Partner shall not have any continuing interest in any GP-Related Investment to the extent an election is made pursuant to (A) or (B) above.
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(ii) Any amounts payable by the Partnership to the Withdrawn Partner
pursuant to this Section 6.5 shall be subordinate in right of payment and subject to the prior payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to or
on or after the applicable date of payment or distribution.
(n) The payments to a Withdrawn Partner pursuant to this Section 6.5 may
be conditioned on the compliance by such Withdrawn Partner with any lawful and reasonable (under the circumstances) restrictions against engaging or investing in a business competitive with that of the Partnership or any of its subsidiaries and
Affiliates for a period not exceeding two years determined by the General Partner. Upon written notice to the General Partner, any Withdrawn Partner who is subject to noncompetition restrictions established by the General Partner pursuant to this
paragraph (n) may elect to forfeit the principal amount payable in the final installment of his or her subordinated promissory note, together with interest to be accrued on such installment after the date of forfeiture, in lieu of being bound
by such restrictions.
(o) In addition to the foregoing, the General Partner shall have the right to pay a Withdrawn Partner (other than
the General Partner) a discretionary additional payment in an amount and based upon such circumstances and conditions as it determines to be relevant.
(p) The provisions of this Section 6.5 shall apply to any Investor Special Partner relating to a Limited Partner or Special Partner and to
any transferee of any GP-Related Partner Interest of such Partner pursuant to Section 6.3 if such Partner Withdraws from the Partnership.
(q) (i) The Partnership will assist a Withdrawn Partner or his or her estate or guardian, as the case may be, in the settlement of the
Withdrawn Partner’s GP-Related Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his or her estate.
(ii) The General Partner may reasonably determine in good faith to retain outside professionals to provide the assistance
to Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the case may be, prior to engaging such
professionals. If the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(r) Each Partner (other than the General Partner) hereby irrevocably appoints the General Partner as such Partner’s true and lawful agent,
representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on
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behalf of such Partner, any and all agreements, instruments, consents, ratifications, documents and certificates which the General Partner deems necessary or advisable in connection with any
transaction or matter contemplated by or provided for in this Section 6.5, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such
power of attorney is coupled with an interest and shall survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity
of such Partner.
Section 6.6. Dissolution of the Partnership. The General Partner may dissolve the Partnership prior to
the expiration of its term at any time on not less than 60 days’ notice of the dissolution date given to the other Partners. Upon the dissolution of the Partnership, the Partners’ respective interests in the Partnership shall be valued and
settled in accordance with the procedures set forth in Section 6.5.
Section 6.7. Certain Tax Matters. (a) The
General Partner shall determine all matters concerning allocations for tax purposes not expressly provided for herein in its sole discretion.
(b) The General Partner shall cause to be prepared all federal, state and local tax returns of the Partnership for each year for which such
returns are required to be filed and, after approval of such returns by the General Partner, shall cause such returns to be timely filed. The General Partner shall determine the appropriate treatment of each item of income, gain, loss, deduction and
credit of the Partnership and the accounting methods and conventions under the tax laws of the United States, the several States and other relevant jurisdictions as to the treatment of any such item or any other method or procedure related to the
preparation of such tax returns. The General Partner may cause the Partnership to make or refrain from making any and all elections permitted by such tax laws. Each Partner agrees that he or she shall not, unless he or she provides prior notice of
such action to the Partnership, (i) treat, on his or her individual income tax returns, any item of income, gain, loss, deduction or credit relating to his or her interest in the Partnership in a manner inconsistent with the treatment of such
item by the Partnership as reflected on the Form K-1 or other information statement furnished by the Partnership to such Partner for use in preparing his or her income tax returns or (ii) file any claim
for refund relating to any such item based on, or which would result in, such inconsistent treatment. In respect of an income tax audit of any tax return of the Partnership, the filing of any amended return or claim for refund in connection with any
item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership, or any administrative or judicial proceedings arising out of or in connection with any such audit, amended return, claim for refund or denial of such
claim, (A) the Tax Matters Partner (as defined below) shall be authorized to act for, and his or her decision shall be final and binding upon, the Partnership and all Partners except to the extent a Partner shall properly elect to be excluded
from such proceeding pursuant to the Code, (B) all expenses incurred by the Tax Matters Partner in connection therewith (including, without limitation, attorneys’, accountants’ and other experts’ fees and disbursements) shall be
expenses of the Partnership and (C) no Partner shall have the right to (1) participate in the audit of any Partnership tax return, (2) file any amended return or claim for refund in connection with any item of income, gain, loss,
deduction or credit reflected on any tax return of the Partnership (unless he or she provides prior notice of such action to the Partnership
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as provided above), (3) participate in any administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner arising out of or in connection with any such audit,
amended return, claim for refund or denial of such claim, or (4) appeal, challenge or otherwise protest any adverse findings in any such audit conducted by the Partnership or the Tax Matters Partner or with respect to any such amended return or
claim for refund filed by the Partnership or the Tax Matters Partner or in any such administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner. The Partnership and each Partner hereby designate any Partner
selected by the General Partner as the “partnership representative” (as defined under the Code) (the “Tax Matters Partner”). To the fullest extent permitted by applicable law, each Partner agrees to indemnify and hold harmless
the Partnership and all other Partners from and against any and all liabilities, obligations, damages, deficiencies and expenses resulting from any breach or violation by such Partner of the provisions of this Section 6.7 and from all actions,
suits, proceedings, demands, assessments, judgments, costs and expenses, including reasonable attorneys’ fees and disbursements, incident to any such breach or violation.
(c) Each individual Partner shall provide to the Partnership copies of each federal, state and local income tax return of such Partner
(including any amendment thereof) within 30 days after filing such return.
(d) To the extent the General Partner reasonably determines
that the Partnership (or any entity in which the Partnership holds an interest) is or may be required by law to withhold or to make tax payments, including interest and penalties on such amounts, on behalf of or with respect to any Partner,
including pursuant to Section 6225 of the Code (“Tax Advances”), the General Partner may withhold or escrow such amounts or make such tax payments as so required. All Tax Advances made on behalf of a Partner shall, at the option of
the General Partner, (i) be promptly paid to the Partnership by the Partner on whose behalf such Tax Advances were made or (ii) be repaid by reducing the amount of the current or next succeeding distribution or distributions which would
otherwise have been made to such Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds upon dissolution of the Partnership otherwise payable to such Partner. Whenever the General Partner selects option
(ii) pursuant to the preceding sentence for repayment of a Tax Advance by a Partner, for all other purposes of this Agreement such Partner shall be treated as having received all distributions (whether before or upon dissolution of the
Partnership) unreduced by the amount of such Tax Advance. To the fullest extent permitted by law, each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including, without
limitation, any liability for taxes, penalties, additions to tax or interest) with respect to income attributable to or distributions or other payments to such Partner. The obligations of a Partner set forth in this Section 6.7(d) shall survive
the Withdrawal of any Partner from the Partnership or any Transfer of a Partner’s interest.
Section 6.8. Special Basis
Adjustments. In connection with any assignment or transfer of a Partnership interest permitted by the terms of this Agreement, the General Partner may cause the Partnership, on behalf of the Partners and at the time and in the manner provided in
Treasury Regulations Section 1.754-1(b), to make an election to adjust the basis of the Partnership’s property in the manner provided in Sections 734(b) and 743(b) of the Code.
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ARTICLE VII
CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
Section 7.1. Capital Commitment Interests, etc.
(a) (i) This Article VII and Article VIII hereof set forth certain terms and conditions with respect to the Capital Commitment Partner
Interests and the Capital Commitment SP DE Interest and matters related to the Capital Commitment Partner Interests and the Capital Commitment SP DE Interest. Except as otherwise expressly provided in this Article VII or in Article VIII, the terms
and provisions of this Article VII and Article VIII shall not apply to the GP-Related Partner Interests or the GP-Related SP DE Interest.
(ii) Each Partner severally, agrees to make contributions of capital to the Partnership (“Capital Commitment-Related
Capital Contributions”) as required to fund the Partnership’s capital contributions to SP DE in respect of the Capital Commitment SP DE Interest, if any, and the related Capital Commitment SP DE Commitment, if any (including, without
limitation, funding all or a portion of the Blackstone Capital Commitment). No Partner shall be obligated to make Capital Commitment-Related Capital Contributions to the Partnership in an amount in excess of such Partner’s Capital
Commitment-Related Commitment. The Commitment Agreements and SMD Agreements, if any, of the Partners may include provisions with respect to the foregoing matters. It is understood that a Partner will not necessarily participate in each Capital
Commitment Investment (which may include additional amounts invested in an existing Capital Commitment Investment) nor will a Partner necessarily have the same Capital Commitment Profit Sharing Percentage with respect to (i) the
Partnership’s portion of the Blackstone Capital Commitment, or (ii) the making of each Capital Commitment Investment in which such Partner participates; provided, that this in no way limits the terms of any Commitment Agreement or
SMD Agreement. In addition, nothing contained herein shall be construed to give any Partner the right to obtain financing with respect to the purchase of any Capital Commitment Interest, and nothing contained herein shall limit or dictate the terms
upon which the Partnership and its Affiliates may provide such financing. The acquisition of a Capital Commitment Interest by a Partner shall be evidenced by receipt by the Partnership of funds equal to such Partner’s Capital Commitment-Related
Commitment then due with respect to such Capital Commitment Interest and such appropriate documentation as the General Partner may submit to the Partners from time to time.
(b) The Partnership or one of its Affiliates (in such capacity, the “Advancing Party”) may in its sole discretion advance to
any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are also executive officers of Blackstone) all or any portion of the Capital Commitment-Related Capital
Contributions due to the Partnership from such Partner with respect to any Capital Commitment Investment (“Firm Advances”). Each such Partner shall pay interest to the Advancing Party on each Firm Advance from the date of such Firm
Advance until the repayment thereof by such Partner. Each Firm Advance shall be repayable in full, including accrued interest to the date of
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such repayment, upon prior written notice by the Advancing Party. The making and repayment of each Firm Advance shall be recorded in the books and records of the Partnership, and such recording
shall be conclusive evidence of each such Firm Advance, binding on the Partner and the Advancing Party absent manifest error. Except as provided below, the interest rate applicable to a Firm Advance shall equal the cost of funds of the Advancing
Party at the time of the making of such Firm Advance. The Advancing Party shall inform any Partner of such rate upon such Partner’s request; provided, that such interest rate shall not exceed the maximum interest rate allowable by
applicable law; provided further, that amounts that are otherwise payable to such Partner pursuant to Section 7.4(a) shall be used to repay such Firm Advance (including interest thereon). The Advancing Party may, in its sole
discretion, change the terms of Firm Advances (including the terms contained herein) and/or discontinue the making of Firm Advances; provided, that (i) the Advancing Party shall notify the relevant Partners of any material changes to
such terms and (ii) the interest rate applicable to such Firm Advances and overdue amounts thereon shall not exceed the maximum interest rate allowable by applicable law.
Section 7.2. Capital Commitment Capital Accounts.
(a) There shall be established for each Partner in the books of the Partnership as of the date of formation of the Partnership, or such later
date on which such Partner is admitted to the Partnership, and on each such other date as such Partner first acquires a Capital Commitment Interest in a particular Capital Commitment Investment, a Capital Commitment Capital Account for each Capital
Commitment Investment in which such Partner acquires a Capital Commitment Interest on such date. Each Capital Commitment-Related Capital Contribution of a Partner shall be credited to the appropriate Capital Commitment Capital Account of such
Partner on the date such Capital Commitment-Related Capital Contribution is paid to the Partnership. Capital Commitment Capital Accounts shall be adjusted to reflect any transfer of a Partner’s interest in the Partnership related to his or her
Capital Commitment Partner Interest as provided in this Agreement.
(b) A Partner shall not have any obligation to the Partnership or to
any other Partner to restore any negative balance in the Capital Commitment Capital Account of such Partner. Until distribution of any such Partner’s interest in the Partnership with respect to a Capital Commitment Interest as a result of the
disposition by the Partnership of the related Capital Commitment Investment and in whole upon the dissolution of the Partnership, neither such Partner’s Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or
redemption except with the consent of the General Partner.
Section 7.3. Allocations.
(a) Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be allocated to the related Capital
Commitment Capital Accounts of all the Partners (including the General Partner) participating in such Capital Commitment Investment in proportion to their respective Capital Commitment Profit Sharing Percentages for such Capital Commitment
Investment. Capital Commitment Net Income (Loss) on any Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion which such Partner’s aggregate Capital Commitment Capital Accounts bear to the
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aggregate Capital Commitment Capital Accounts of all Partners; provided, that if any Partner makes the election provided for in Section 7.6, Capital Commitment Net Income (Loss) of
the Partnership for each Capital Commitment Investment shall be allocated to the related Capital Commitment Capital Accounts of all the Partners participating in such Capital Commitment Investment who do not make such election in proportion to their
respective Capital Commitment Profit Sharing Percentages for such Capital Commitment Investment.
(b) Any special costs relating to
distributions pursuant to Section 7.6 or Section 7.7 shall be specially allocated to the electing Partner.
(c) Notwithstanding
the foregoing, the General Partner may make such allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems reasonably necessary
for this purpose.
Section 7.4. Distributions.
(a) Each Partner’s allocable portion of Capital Commitment Net Income received from his or her Capital Commitment Investments,
distributions to such Partner that constitute returns of capital, and other Capital Commitment Net Income of the Partnership (including, without limitation, Capital Commitment Net Income attributable to Unallocated Capital Commitment Interests)
during a Fiscal Year of the Partnership will be credited to payment of the Investor Notes to the extent required below as of the last day of such Fiscal Year (or on such earlier date as related distributions are made in the sole discretion of the
General Partner) with any cash amount distributable to such Partner pursuant to clauses (ii) and (vii) below to be distributed within 45 days after the end of each Fiscal Year of the Partnership (or in each case on such earlier date as selected
by the General Partner in its sole discretion) as follows (subject to Section 7.4(c) below):
(i) First, to the
payment of interest then due on all Investor Notes (relating to Capital Commitment Investments or otherwise) of such Partner (to the extent Capital Commitment Net Income and distributions or payments from Other Sources do not equal or exceed all
interest payments due, the selection of those of such Partner’s Investor Notes upon which interest is to be paid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor);
(ii) Second, to distribution to the Partner of an amount equal to the U.S. federal, state and local income taxes on income of
the Partnership allocated to such Partner for such year in respect of such Partner’s Capital Commitment Partner Interest (the aggregate amount of any such distribution shall be determined by the General Partner, subject to the limitation that
the minimum aggregate amount of such distribution be the tax that would be payable if the taxable income of the Partnership related to all Partners’ Capital Commitment Partner Interests were all allocated to an individual subject to the
then-prevailing maximum rate of U.S. federal, New York State and New York City taxes (including, without limitation, taxes imposed under Section 1411 of the Code), taking into account the character of such taxable income allocated by the
Partnership and the limitations on deductibility of expenses and other items for U.S. federal income tax
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purposes); provided, that additional amounts shall be paid to the Partner pursuant to this clause (ii) to the extent that such amount reduces the amount otherwise distributable to the
Partner pursuant to a comparable provision in any other BE Agreement and there are not sufficient amounts to fully satisfy such provision from the relevant partnership or other entity; provided further, that amounts paid pursuant to the provisions
in such other BE Agreements comparable to the immediately preceding proviso shall reduce those amounts otherwise distributable to the Partner pursuant to provisions in such other BE Agreements that are comparable to this clause (ii);
(iii) Third, to the payment in full of the principal amount of the Investor Note financing (A) any Capital Commitment
Investment disposed of during or prior to such Fiscal Year or (B) any BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal Year, to the extent not repaid from Other Sources;
(iv) Fourth, to the return to such Partner of (A) all Capital Commitment-Related Capital Contributions made in respect of
the Capital Commitment Interest to which any Capital Commitment Investment disposed of during or prior to such Fiscal Year relates or (B) all capital contributions made to any Blackstone Entity (other than the Partnership) in respect of
interests therein relating to BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal Year (including all principal paid on the related Investor Notes), to the extent not repaid from amounts of Other
Sources (other than amounts of Capital Commitment Partner Carried Interest);
(v) Fifth, to the payment of principal
(including any previously deferred amounts) then owing under all other Investor Notes of such Partner (including those unrelated to the Partnership), the selection of those of such Partner’s Investor Notes to be repaid and the division of
payments among such Investor Notes to be determined by the Lender or Guarantor;
(vi) Sixth, up to 50% of any Capital
Commitment Net Income remaining after application pursuant to clauses (i) through (v) above shall be applied pro rata to prepayment of principal of all remaining Investor Notes of such Partner (including those unrelated to the
Partnership), the selection of those of such Partner’s Investor Notes to be repaid, the division of payments among such Investor Notes and the percentage of remaining Capital Commitment Net Income to be applied thereto to be determined by the
Lender or Guarantor; and
(vii) Seventh, to such Partner to the extent of any amount of Capital Commitment Net Income
remaining after making the distributions in clauses (i) through (vi) above, and such amount is not otherwise required to be applied to Investor Notes pursuant to the terms thereof.
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To the extent there is a partial disposition of a Capital Commitment Investment or any other
BE Investment, as applicable, the payments in clauses (iii) and (iv) above shall be based on that portion of the Capital Commitment Investment or other BE Investment, as applicable, disposed of, and the principal amount and related interest
payments of such Investor Note shall be adjusted to reflect such partial payment so that there are equal payments over the remaining term of the related Investor Note. For a Partner who is no longer an employee or officer of Holdings or an Affiliate
thereof, distributions shall be made pursuant to clauses (i) through (iii) above, and then, unless the Partnership or its Affiliate has exercised its rights pursuant to Section 8.1 hereof, any remaining income or other distribution in
respect of such Partner’s Capital Commitment Partner Interest shall be applied to the prepayment of the outstanding Investor Notes of such Partner, until all such Partner’s Investor Notes have been repaid in full, with any such income or
other distribution remaining thereafter distributed to such Partner.
Distributions of Capital Commitment Net Income may be made at any
other time at the discretion of the General Partner. At the General Partner’s discretion, any amounts distributed to a Partner in respect of such Partner’s Capital Commitment Partner Interest will be net of any interest and principal
payable on his or her Investor Notes for the full period in respect of which the distribution is made.
(b) [Intentionally omitted.]
(c) To the extent that the foregoing Partnership distributions and distributions and payments from Other Sources are insufficient to satisfy
any principal and/or interest due on Investor Notes, and to the extent that the General Partner in its sole discretion elects to apply this paragraph (c) to any individual payments due, such unpaid interest will be added to the remaining
principal amount of such Investor Notes and shall be payable on the next scheduled principal payment date (along with any deferred principal and any principal and interest due on such date); provided, that such deferral shall not apply to a
Partner that is no longer an employee or officer of Holdings or its Affiliates. All unpaid interest on such Investor Notes shall accrue interest at the interest rate then in effect for such Investor Notes.
(d) [Intentionally omitted.]
(e)
The Capital Commitment Capital Account of each Partner shall be reduced by the amount of any distribution to such Partner pursuant to Section 7.4(a).
(f) At any time that a sale, exchange, transfer or other disposition of a portion of a Capital Commitment Investment is being considered by the
Partnership or SP DE (a “Capital Commitment Disposable Investment”), at the election of the General Partner each Partner’s Capital Commitment Interest with respect to such Capital Commitment Investment shall be vertically
divided into two separate Capital Commitment Interests, a Capital Commitment Interest attributable to the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class B Interest”), and a
Capital Commitment Interest attributable to such Capital Commitment Investment excluding the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class A Interest”). Distributions
(including those resulting from a direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class B Interests
with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class B Interests, and distributions (including those resulting from the
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direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Investment excluding such Capital Commitment Disposable Investment shall be
made only to holders of Capital Commitment Class A Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class A
Interests.
(g) (i) If the Partnership is obligated under the Giveback Provisions to contribute to SP DE a Giveback Amount with
respect to any Capital Commitment SP DE Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount being herein called a “Capital Commitment Giveback Amount”), the General Partner shall
call for such amounts as are necessary to satisfy such obligation of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the
General Partner, such an amount of prior distributions by the Partnership with respect to the Capital Commitment SP DE Interest (the “Capital Commitment Recontribution Amount”) which equals such Partner’s pro rata share
of prior distributions in connection with (a) the Capital Commitment SP DE Investment giving rise to the Capital Commitment Giveback Amount, (b) if the amounts contributed pursuant to clause (a) above are insufficient to satisfy such
Capital Commitment Giveback Amount, Capital Commitment SP DE Investments other than the one giving rise to such obligation and (c) if the Capital Commitment Giveback Amount pursuant to an applicable SP DE Agreement is unrelated to a specific
Capital Commitment SP DE Investment, all Capital Commitment SP DE Investments. Each Partner shall promptly contribute to the Partnership upon notice thereof such Partner’s Capital Commitment Recontribution Amount. Prior to such time, the
General Partner may, at the General Partner’s discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of the Capital Commitment Giveback Amount will
probably materialize (and an estimate of the aggregate amount of such obligations).
(ii) (A) In the event any Partner
(a “Capital Commitment Defaulting Party”) fails to recontribute all or any portion of such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount for any reason, the General Partner shall (i) use
its reasonable efforts to collect any amounts from any such GP-Related Defaulting Party and (ii) require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each
of their respective Capital Commitment Profit Sharing Percentages), such amounts as are necessary to fulfill the Capital Commitment Defaulting Party’s obligation to pay such Capital Commitment Defaulting Party’s Capital Commitment
Recontribution Amount (a “Capital Commitment Deficiency Contribution”) if the General Partner determines in its good faith judgment that the Partnership will be unable to collect such amount in cash from such Capital Commitment
Defaulting Party for payment of the Capital Commitment Giveback Amount at least 20 Business Days prior to the latest date that the Partnership is permitted to pay the Capital Commitment Giveback Amount; provided, that no Partner shall as a
result of such Capital Commitment Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Capital Commitment Recontribution Amount initially requested from such Partner’s in respect of such default.
Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of
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recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership
against the Capital Commitment Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the Capital Commitment Defaulting Party. It is agreed that the Partnership shall have the right (effective
upon such Capital Commitment Defaulting Party becoming a Capital Commitment Defaulting Party) to set-off as appropriate and apply against such Capital Commitment Defaulting Party’s Capital Commitment
Recontribution Amount any amounts otherwise payable to the Capital Commitment Defaulting Party by the Partnership or any Affiliate thereof. Each Partner hereby grants to the General Partner a security interest, effective upon such Partner becoming a
Capital Commitment Defaulting Party, in all accounts receivable and other rights to receive payment from the Partnership or any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General Partner may
sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner hereby appoints the General Partner as its true and lawful
attorney-in-fact with full irrevocable power and authority, in the name of such Partner or in the name of the Partnership, to take any actions which may be necessary to
accomplish the intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the Capital Commitment Recontribution Amount of a Capital Commitment Defaulting Party from the date such Capital Commitment
Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(B)
Any Partner’s failure to make a Capital Commitment Deficiency Contribution shall cause such Partner to be a Capital Commitment Defaulting Party with respect to such amount.
(iii) A Partner’s obligation to make contributions to the Partnership under this Section 7.4(g) shall survive the
termination of the Partnership.
Section 7.5. Valuations. Capital Commitment Investments shall be valued annually as of
the end of each year (and at such other times as deemed appropriate by the General Partner) in accordance with the principles utilized by the Partnership (or any other Affiliate of the Partnership that is a general partner of SP DE) in valuing
investments of SP DE or, in the case of investments not held by SP DE, in the good faith judgment of the General Partner, subject in each case to the second proviso of the immediately succeeding sentence. The value of any Capital Commitment Interest
as of any date (the “Capital Commitment Value”) shall be based on the value of the underlying Capital Commitment Investment as set forth above; provided, that the Capital Commitment Value may be determined as of an earlier date if
determined appropriate by the General Partner in good faith; provided further, that such value may be adjusted by the General Partner to take into account factors relating solely to the value of a Capital Commitment Interest (as compared to the
value of the underlying Capital Commitment Investment), such as restrictions on transferability, the lack of a market for such Capital Commitment Interest and lack of control of the underlying Capital Commitment Investment. To the full extent
permitted by applicable law such valuations shall be final and binding on all Partners; provided further, that the immediately preceding proviso shall not apply to any Capital Commitment Interests held by a person who is or was at any time a direct
member or partner of a General Partner of the Partnership.
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Section 7.6. Disposition Election.
(a) At any time prior to the date of the Partnership’s execution of a definitive agreement to dispose of a Capital Commitment Investment,
the General Partner may in its sole discretion permit a Partner to retain all or any portion of its pro rata share of such Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such
Capital Commitment Investment). If the General Partner so permits, such Partner shall instruct the General Partner in writing prior to such date (i) not to dispose of all or any portion of such Partner’s pro rata share of such
Capital Commitment Investment (the “Retained Portion”) and (ii) either to (A) distribute such Retained Portion to such Partner on the closing date of such disposition or (B) retain such Retained Portion in the
Partnership on behalf of such Partner until such time as such Partner shall instruct the General Partner upon 5 days’ notice to distribute such Retained Portion to such Partner. Such Partner’s Capital Commitment Capital Account shall not
be adjusted in any way to reflect the retention in the Partnership of such Retained Portion or the Partnership’s disposition of other Partners’ pro rata shares of such Capital Commitment Investment; provided, that such
Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Retained Portion to such Partner or upon distribution of proceeds with respect to a subsequent disposition thereof by the Partnership.
(b) No distribution of such Retained Portion shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or
simultaneously with such distribution.
Section 7.7. Capital Commitment Special Distribution Election.
(a) From time to time during the term of this Agreement, the General Partner may in its sole discretion, upon receipt of a written request from
a Partner, distribute to such Partner any portion of its pro rata share of a Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such Capital Commitment Investment) (a
“Capital Commitment Special Distribution”). Such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Capital Commitment Special Distribution.
(b) No Capital Commitment Special Distributions shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or
simultaneously with such Capital Commitment Special Distribution.
ARTICLE VIII
WITHDRAWAL; ADMISSION OF NEW PARTNERS
Section 8.1. Partner Withdrawal; Repurchase of Capital Commitment Interests.
(a) Capital Commitment Interests (or a portion thereof) that were financed by Investor Notes will be treated as
Non-Contingent for purposes hereof based upon the proportion of (a) the sum of Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to each Capital Commitment
Interest and principal payments on the related Investor Note to (b) the sum of the Capital Commitment-Related Capital Contributions not
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financed by an Investor Note with respect to such Capital Commitment Interest, the original principal amount of such Investor Note and all deferred amounts of interest which from time to time
comprise part of the principal amount of the Investor Note. A Partner may prepay a portion of any outstanding principal on the Investor Notes; provided, that in the event that a Partner prepays all or any portion of the principal amount of the
Investor Notes within nine months prior to the date on which such Partner is no longer an employee or officer of Holdings or an Affiliate thereof, the Partnership (or its designee) shall have the right, in its sole discretion, to purchase the
Capital Commitment Interest that became Non-Contingent as a result of such prepayment; provided further, that the purchase price for such Capital Commitment Interest shall be determined in accordance with the
determination of the purchase price of a Partner’s Contingent Capital Commitment Interests as set forth in paragraph (b) below. Prepayments made by a Partner shall apply pro rata against all of such Partner’s Investor Notes; provided,
that such Partner may request that such prepayments be applied only to Investor Notes related to BE Investments that are related to one or more Blackstone Entities specified by such Partner. Except as expressly provided herein, Capital Commitment
Interests that were not financed in any respect with Investor Notes shall be treated as Non-Contingent Capital Commitment Interests.
(b) (i) Upon a Partner ceasing to be an officer or employee of the Partnership or any of its Affiliates, other than as a result of such
Partner dying or suffering a Total Disability, such Partner and the Partnership or any other person designated by the General Partner shall each have the right (exercisable by the Withdrawn Partner within 30 days and by the Partnership or its
designee(s) within 45 days after such Partner’s ceasing to be such an officer or employee) or any time thereafter, upon 30 days’ notice, but not the obligation, to require the Partnership (subject to the prior consent of the General
Partner, such consent not to be unreasonably withheld or delayed), subject to the Partnership Act, to buy (in the case of exercise of such right by such Withdrawn Partner) or the Withdrawn Partner to sell (in the case of exercise of such right by
the Partnership or its designee(s)) all (but not less than all) such Withdrawn Partner’s Contingent Capital Commitment Interests.
(ii) The purchase price for each such Contingent Capital Commitment Interest shall be an amount equal to (A) the
outstanding principal amount of the related Investor Note plus accrued interest thereon to the date of purchase (such portion of the purchase price to be paid in cash) and (B) an additional amount (the “Adjustment Amount”) equal to
(x) all interest paid by the Partner on the portion of the principal amount of such Investor Note(s) relating to the portion of the related Capital Commitment Interest remaining Contingent and to be repurchased, plus (y) all Capital
Commitment Net Losses allocated to the Withdrawn Partner on such Contingent portion of such Capital Commitment Interest, minus (z) all Capital Commitment Net Income allocated to the Withdrawn Partner on the Contingent portion of such Capital
Commitment Interest; provided, that, if the Withdrawn Partner was terminated from employment or his or her position as an officer for Cause, all amounts referred to in clause (x) or (y) of the Adjustment Amount, in the General Partner’s
sole discretion, may be deemed to equal zero. The Adjustment Amount shall, if positive, be payable by the holders of the purchased Capital Commitment Interests to the Withdrawn Partner from the next Capital Commitment Net Income received by such
holders on the Contingent portion of such Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received. If the Adjustment Amount is negative, it
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shall be payable to the holders of the purchased Capital Commitment Interest by the Withdrawn Partner (A) from the next Capital Commitment Net Income on the
Non-Contingent portion of the Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received by the Withdrawn Partner, or (B) if the Partnership or its
designee(s) elect to purchase such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, in cash by the Withdrawn Partner at the time of such purchase; provided, that the Partnership and its
Affiliates may offset any amounts otherwise owing to a Withdrawn Partner against any Adjustment Amount owed by such Withdrawn Partner. Until so paid, such remaining Adjustment Amount will not itself bear interest. At the time of such purchase of the
Withdrawn Partner’s Contingent Capital Commitment Interests, his or her related Investor Note shall be payable in full.
(iii) Upon such Partner ceasing to be such an officer or employee, all Investor Notes shall become fully recourse to the
Withdrawn Partner in his or her individual capacity (whether or not the Withdrawn Partner or the Partnership or its designee(s) exercises the right to require repurchase of the Withdrawn Partner’s Contingent Capital Commitment Interests).
(iv) If neither the Withdrawn Partner nor the Partnership nor its designee(s) exercises the right to require repurchase of such
Contingent Capital Commitment Interests, then the Withdrawn Partner shall retain the Contingent portion of his or her Capital Commitment Interests and the Investor Notes shall remain outstanding, shall become fully recourse to the Withdrawn Partner
in his or her individual capacity, shall be payable in accordance with their remaining original maturity schedules and shall be prepayable at any time by the Withdrawn Partner at his or her option, and the Partnership shall apply such prepayments
against outstanding Investor Notes on a pro rata basis.
(v) To the extent that another Partner purchases a portion of a
Capital Commitment Interest of a Withdrawn Partner, the purchasing Partner’s Capital Commitment Capital Account and Capital Commitment Profit Sharing Percentage for such Capital Commitment Investment shall be correspondingly increased.
(c) Upon the occurrence of a Final Event with respect to any Partner, such Partner shall thereupon cease to be a Partner with respect to such
Partner’s Capital Commitment Partner Interest. If such a Final Event shall occur, no Successor in Interest to any such Partner shall for any purpose hereof become or be deemed to become a Partner. The sole right, as against the Partnership and
the remaining Partners, acquired hereunder by, or resulting hereunder to, a Successor in Interest to any Partner shall be to receive any distributions and allocations with respect to such Partner’s Capital Commitment Partner Interest pursuant
to Article VII and this Article VIII (subject to the right of the Partnership to purchase the Capital Commitment Interests of such former Partner pursuant to Section 8.1(b) or Section 8.1(d)), to the extent, at the time, in the manner and
in the amount otherwise payable to such Partner had such a Final Event not occurred, and no other right shall be acquired hereunder by, or shall result hereunder to, a Successor in Interest to such Partner, whether by operation of law or otherwise
and the Partnership shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations hereunder. Until distribution of any such
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Partner’s interest in the Partnership upon the dissolution of the Partnership as provided in Section 9.2, neither his or her Capital Commitment Capital Accounts nor any part thereof
shall be subject to withdrawal or redemption without the consent of the General Partner. The General Partner shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations
hereunder with respect to such Partner’s Capital Commitment Partner Interest.
(d) If a Partner dies or suffers a Total Disability,
all Contingent Capital Commitment Interests of such Partner shall be purchased by the Partnership or its designee (within 30 days of the first date on which the Partnership knows or has reason to know of such Partner’s death or Total
Disability) (and the purchase price for such Contingent Capital Commitment Interests shall be determined in accordance with Section 8.1(b) (except that any Adjustment Amount shall be payable by or to such Partner’s estate, personal
representative or other Successor in Interest, in cash)), and any Investor Notes financing such Contingent Capital Commitment Interests shall thereupon be prepaid as provided in Section 8.1(b). Upon such Partner’s death or Total
Disability, any Investor Note(s) financing such Contingent Capital Commitment Interests shall become fully recourse. In addition, in the case of the death or Total Disability of a Partner, if the estate, personal representative or other Successor in
Interest of such Partner, so requests in writing within 180 days after the Partner’s death or ceasing to be an employee or member (directly or indirectly) of the Partnership or any of its Affiliates by reason of Total Disability (such requests
shall not exceed one per calendar year), the Partnership or its designee may but is not obligated to purchase for cash all (but not less than all) Non-Contingent Capital Commitment Interests of such Partner as
of the last day of the Partnership’s then current Fiscal Year at a price equal to the Capital Commitment Value thereof as of the most recent valuation prior to the date of purchase. Each Partner shall be required to include appropriate
provisions in his or her will to reflect such provisions of this Agreement. In addition, the Partnership may, in the sole discretion of the General Partner, upon notice to the estate, personal representative or other Successor in Interest of such
Partner, within 30 days of the first date on which the General Partner knows or has reason to know of such Partner’s death or Total Disability, determine either (i) to distribute Securities or other property to the estate, personal
representative or other Successor in Interest, in exchange for such Non-Contingent Capital Commitment Interests as provided in Section 8.1(e) or (ii) to require sale of such Non-Contingent Capital Commitment Interests to the Partnership or its designee as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by the General Partner in its sole
discretion) for an amount in cash equal to the Capital Commitment Value thereof.
(e) In lieu of retaining a Withdrawn Partner as a Partner
with respect to any Non-Contingent Capital Commitment Interests, the General Partner may, in its sole discretion, by notice to such Withdrawn Partner within 45 days of his or her ceasing to be an employee or
officer of the Partnership or any of its Affiliates, or at any time thereafter, upon 30 days written notice, determine (1) to distribute to such Withdrawn Partner the pro rata portion of the Securities or other property underlying such
Withdrawn Partner’s Non-Contingent Capital Commitment Interests, subject to any restrictions on distributions associated with the Securities or other property, in satisfaction of his or her Non-Contingent Capital Commitment Interests in the Partnership or (2) to cause, as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by the General Partner in its sole
discretion), the Partnership or another person designated by the General Partner (who may be itself another Partner or another Affiliate
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of the Partnership) to purchase all (but not less than all) of such Withdrawn Partner’s Non-Contingent Capital Commitment Interests for a price equal
to the Capital Commitment Value thereof (determined in good faith by the General Partner as of the most recent valuation prior to the date of purchase). The General Partner shall condition any distribution or purchase of voting Securities pursuant
to paragraph (d) above or this paragraph (e) upon the Withdrawn Partner’s execution and delivery to the Partnership of an appropriate irrevocable proxy, in favor of the General Partner or its nominee, relating to such Securities.
(f) The Partnership may subsequently transfer any Unallocated Capital Commitment Interest or portion thereof which is purchased by it as
described above to any other person approved by the General Partner. In connection with such purchase or transfer or the purchase of a Capital Commitment Interest or portion thereof by the General Partner’s designee(s), Holdings may loan all or
a portion of the purchase price of the transferred or purchased Capital Commitment Interest to the Partnership, the transferee or the designee-purchaser(s), as applicable (excluding any of the foregoing who is an executive officer of The Blackstone
Group Inc. or any Affiliate thereof). To the extent that a Withdrawn Partner’s Capital Commitment Interests (or portions thereof) are repurchased by the Partnership and not transferred to or purchased by another person, all or any portion of
such repurchased Capital Commitment Interests may, in the sole discretion of the General Partner, (i) be allocated to each Partner already participating in the Capital Commitment Investment to which the repurchased Capital Commitment Interest
relates, (ii) be allocated to each Partner in the Partnership, whether or not already participating in such Capital Commitment Investment, and/or (iii) continue to be held by the Partnership itself as an unallocated Capital Commitment
Investment (such Capital Commitment Interests being herein called “Unallocated Capital Commitment Interests”). To the extent that a Capital Commitment Interest is allocated to Partners as provided in clause (i) and/or (ii) above,
any indebtedness incurred by the Partnership to finance such repurchase shall also be allocated to such Partners. All such Capital Commitment Interests allocated to Partners shall be deemed to be Contingent and shall become Non-Contingent as and to the extent that the principal amount of such related indebtedness is repaid. The Partners receiving such allocations shall be responsible for such related indebtedness only on a nonrecourse
basis to the extent appropriate as provided in this Agreement, except as otherwise provided in this Section 8.1 and except as such Partners and the General Partner shall otherwise agree; provided, that such indebtedness shall become fully
recourse to the extent and at the time provided in this Section 8.1. If the indebtedness financing such repurchased interests is not to be non-recourse or so limited, the Partnership may require an
assumption by the Partners of such indebtedness on the terms thereof as a precondition to allocation of the related Capital Commitment Interests to such Partners; provided, that a Partner shall not, except as set forth in his or her Investor
Note(s), be obligated to accept any obligation that is personally recourse (except as provided in this Section 8.1), unless his or her prior consent is obtained. So long as the Partnership itself retains the Unallocated Capital Commitment
Interests pursuant to clause (iii) above, such Unallocated Capital Commitment Interests shall belong to the Partnership and any indebtedness financing the Unallocated Capital Commitment Interests shall be an obligation of the Partnership to
which all income of the Partnership is subject except as otherwise agreed by the lender of such indebtedness. Any Capital Commitment Net Income (Loss) on an Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion
his or her aggregate Capital Commitment Capital Accounts bear to the aggregate Capital Commitment Capital Accounts of all Partners; debt service on such related financing will be an expense of the Partnership allocable to all Partners in such
proportions.
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(g) If a Partner is required to Withdraw from the Partnership with respect to such
Partner’s Capital Commitment Partner Interest for Cause, then his or her Capital Commitment Interest shall be settled in accordance with paragraphs (a)-(f) and (j) of this Section 8.1;
provided, that if such Partner was not at any time a direct partner of a General Partner of the Partnership, the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) purchase for cash all of such Withdrawn Partner’s Non-Contingent Capital
Commitment Interests. The purchase price for each such Non-Contingent Capital Commitment Interest shall be the lower of (A) the original cost of such Non-Contingent
Capital Commitment Interest or (B) an amount equal to the Capital Commitment Value thereof (determined as of the most recent valuation prior to the date of the purchase of such Non-Contingent Capital
Commitment Interest);
(ii) allow the Withdrawn Partner to retain such
Non-Contingent Capital Commitment Interests; provided, that the maximum amount of Capital Commitment Net Income allocable to such Withdrawn Partner with respect to any Capital Commitment Investment
shall equal the amount of Capital Commitment Net Income that would have been allocated to such Withdrawn Partner if such Capital Commitment Investment had been sold as of the Settlement Date at the then prevailing Capital Commitment Value thereof;
or (iii) in lieu of cash, purchase such Non-Contingent Capital Commitment Interests by providing the Withdrawn Partner with a promissory note in the amount determined in (i) above. Such promissory
note shall have a maximum term of ten (10) years with interest at the Federal Funds Rate.
(h) The Partnership will assist a Withdrawn
Partner or his or her estate or guardian, as the case may be, in the settlement of the Withdrawn Partner’s Capital Commitment Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will
be borne by the Withdrawn Partner or his or her estate.
(i) The General Partner may reasonably determine in good faith to retain outside
professionals to provide the assistance to Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the
case may be, prior to engaging such professionals. If the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with
the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(j) Each Partner hereby irrevocably appoints the General Partner as such Partner’s true and lawful agent, representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Partner, any and all agreements,
instruments, consents, ratifications, documents and certificates which such General Partner deems necessary or advisable in connection with any transaction or matter
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contemplated by or provided for in this Section 8.1, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such
Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the
death, disability or incapacity of such Partner.
Section 8.2. Transfer of Partner’s Capital Commitment
Interest. Except as otherwise agreed by the General Partner, no Partner or former Partner shall have the right to sell, assign, mortgage, pledge, grant a security interest over, or otherwise dispose of or transfer (“Transfer”) all or
part of any such Partner’s Capital Commitment Partner Interest in the Partnership; provided, that this Section 8.2 shall in no way impair (i) Transfers as permitted in Section 8.1 above, in the case of the purchase of a Withdrawn
Partner’s or Deceased or Totally Disabled Partner’s Capital Commitment Interests, (ii) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers by a Partner to another Partner of Non-Contingent Capital Commitment Interests, (iii) Transfers with the prior written consent of the General Partner (which consent may be granted or withheld in its sole discretion without giving any reason
therefor) and (iv) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers of up to 25% of a Limited Partner’s Capital Commitment Partner Interest to an Estate Planning Vehicle (it being
understood that it shall not be unreasonable for the General Partner to condition any Transfer of an Interest pursuant to this clause (iv) on the satisfaction of certain conditions and/or requirements imposed by the General Partner in
connection with any such Transfer, including, for example, a requirement that any transferee of an Interest hold such Interest as a passive, non-voting interest in the Partnership). The General Partner shall
designate that each Estate Planning Vehicle shall not have voting rights (any such Partner being called a “Nonvoting Partner”). Such Partner shall be jointly and severally liable for all obligations of both such Partner and such Nonvoting
Partner with respect to the interest transferred (including the obligation to make additional Capital Commitment-Related Capital Contributions). The General Partner may at its sole option exercisable at any time require such Estate Planning Vehicle
to Withdraw from the Partnership on the terms of Section 8.1 and Article VI. No person acquiring an interest in the Partnership pursuant to this Section 8.2 shall become a Partner of the Partnership, or acquire such Partner’s right to
participate in the affairs of the Partnership, unless such person shall be admitted as a Partner pursuant to Section 6.1. A Partner shall not cease to be a Partner of the Partnership upon the collateral assignment of, or the pledging or
granting of a security interest in, its entire Interest in the Partnership in accordance with the provisions of this Agreement.
Section 8.3. Compliance with Law. Notwithstanding any provision hereof to the contrary, no sale or Transfer of a Capital
Commitment Interest in the Partnership may be made except in compliance with all U.S. federal, state and other applicable laws, including U.S. federal and state securities laws.
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ARTICLE IX
DISSOLUTION
Section 9.1. Dissolution. The Partnership shall be dissolved and subsequently terminated:
(a) pursuant to Section 6.6; or
(b) upon the expiration of the term of the Partnership.
Section 9.2. Final Distribution. Upon the dissolution of the Partnership, and following the payment of creditors of the
Partnership and the making of provisions for the payment of any contingent, conditional or unmatured claims known to the Partnership as required under the Partnership Act:
(a) The Partners’ respective interests in the Partnership shall be valued and settled in accordance with the procedures set forth in
Section 6.5 which provide for allocations to the GP-Related Capital Accounts of the Partners and distributions in accordance with the GP-Related Capital Account
balances of the Partners; and
(b) With respect to each Partner’s Capital Commitment Partner Interest, an amount shall be paid to such
Partner in cash or Securities in an amount equal to such Partner’s respective Capital Commitment Liquidating Share for each Capital Commitment Investment; provided, that if the remaining assets relating to any Capital Commitment
Investment shall not be equal to or exceed the aggregate Capital Commitment Liquidating Shares for such Capital Commitment Investment, to each Partner in proportion to its Capital Commitment Liquidating Share for such Capital Commitment Investment;
and the remaining assets of the Partnership related to the Partners’ Capital Commitment Partner Interests shall be paid to the Partners in cash or Securities in proportion to their respective Capital Commitment Profit Sharing Percentages for
each Capital Commitment Investment from which such cash or Securities are derived.
The General Partner shall be the liquidator. In the
event that the General Partner is unable to serve as liquidator, a liquidating trustee shall be chosen by the affirmative vote of a Majority in Interest of the Partners voting at a meeting of Partners (excluding Nonvoting Special Partners).
Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests.
(a) If there are any Securities or other property or other investments or securities related to the Partners’ Capital Commitment Partner
Interests which, in the judgment of the liquidator, cannot be sold, or properly distributed in kind in the case of dissolution, without sacrificing a significant portion of the value thereof, the value of a Partner’s interest in each such
Security or other investment or security may be excluded from the amount distributed to the Partners participating in the related Capital Commitment Investment pursuant to Section 9.2(b). Any interest of a Partner, including his or her pro
rata interest in any gains, losses or distributions, in Securities or other property or other investments or securities so excluded shall not be paid or distributed until such time as the liquidator shall determine.
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(b) If there is any pending transaction, contingent liability or claim by or against the
Partnership related to the Partners’ Capital Commitment Partner Interests as to which the interest or obligation of any Partner therein cannot, in the judgment of the liquidator, be then ascertained, the value thereof or probable loss therefrom
may be deducted from the amount distributable to such Partner pursuant to Section 9.2(b). No amount shall be paid or charged to any such Partner on account of any such transaction or claim until its final settlement or such earlier time as the
liquidator shall determine. The Partnership may meanwhile retain from other sums due such Partner in respect of such Partner’s Capital Commitment Partner Interest an amount which the liquidator estimates to be sufficient to cover the share of
such Partner in any probable loss or liability on account of such transaction or claim.
(c) Upon determination by the liquidator that
circumstances no longer require the exclusion of any Securities or other property or retention of sums as provided in paragraphs (a) and (b) of this Section 9.3, the liquidator shall, at the earliest practicable time, distribute as
provided in Section 9.2(b) such sums or such Securities or other property or the proceeds realized from the sale of such Securities or other property to each Partner from whom such sums or Securities or other property were withheld.
ARTICLE X
MISCELLANEOUS
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be settled
amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement
(including the validity, scope and enforceability of this arbitration provision as well as any and all disputes arising out of, relating to or in connection with the termination, liquidation or winding up of the Partnership), whether arising during
the existence of the Partnership or at or after its termination or during or after the liquidation or winding up of the Partnership, shall be finally settled by arbitration conducted by a single arbitrator in New York, New York U.S.A., in accordance
with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) days of the receipt of the request for arbitration, the
International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration
proceedings.
(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may cause the Partnership to bring, on
behalf of the General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief
in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of paragraph (c) of this Section 10.1 to any such action or
proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the
General Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon any such agent, who shall promptly advise such Partner of any such service of process, shall
be deemed in every respect effective service of process upon the Partner in any such action or proceeding.
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(c) (i) EACH PARTNER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED
IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 10.1, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF
OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration
award. The parties acknowledge that the forum(s) designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may
have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 10.1 and such parties agree not to plead or claim the same.
(d) Notwithstanding any provision of this Agreement to the contrary, this Section 10.1 shall be construed to the maximum extent possible
to comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be determined by a court of
competent jurisdiction that any provision or wording of this Section 10.1, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or other applicable law, such
invalidity shall not invalidate all of this Section 10.1. In that case, this Section 10.1 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act
or other applicable law, and, in the event such term or provision cannot be so limited, this Section 10.1 shall be construed to omit such invalid or unenforceable provision.
Section 10.2. Ownership and Use of the Blackstone Name. The Partnership acknowledges that Blackstone TM L.L.C.
(“TM”), a Delaware limited liability company with a principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., (or its successors or assigns) is the sole and exclusive owner of the mark and name BLACKSTONE and
that the ownership of, and the right to use, sell or otherwise dispose of, the firm name or any abbreviation or modification thereof which consists of or includes BLACKSTONE, shall belong exclusively to TM, which company (or its predecessors,
successors or assigns) has licensed the Partnership to use BLACKSTONE in its name. The Partnership acknowledges that TM owns the service mark BLACKSTONE for various services and that the Partnership is using the BLACKSTONE mark and name on a non-exclusive, non-sublicensable and non-assignable basis in connection with its business and authorized activities with the permission
of TM. All services rendered by the Partnership under the BLACKSTONE mark and name will be rendered in a manner and with quality levels that are consistent with the high reputation heretofore developed for the BLACKSTONE mark by TM and its
Affiliates and licensees. The Partnership understands that TM may terminate its right to use BLACKSTONE at any time in TM’s sole discretion by giving the Partnership written notice of termination. Promptly following any such termination, the
Partnership will take all steps necessary to change its partnership name to one which does not include BLACKSTONE or any confusingly similar term and cease all use of BLACKSTONE or any term confusingly similar thereto as a service mark or otherwise.
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Section 10.3. Written Consent. Any action required or permitted to be taken
by a vote of Partners at a meeting may be taken without a meeting if a Majority in Interest of the Partners consent thereto in writing.
Section 10.4. Letter Agreements; Schedules. The General Partner may, or may cause the Partnership to, enter or has previously
entered, into separate letter agreements with individual Partners, officers or employees with respect to GP-Related Profit Sharing Percentages, Capital Commitment Profit Sharing Percentages, benefits or any
other matter, which letter agreements have the effect of establishing rights under, or altering or supplementing, the terms of this Agreement with respect to any such Partner and such matters. The parties hereto agree that any rights established, or
any terms of this Agreement altered or supplemented, in any such separate letter agreement, including any Commitment Agreement or SMD Agreement, shall govern solely with respect to such Partner notwithstanding any other provision of this Agreement.
The General Partner may from time to time execute and deliver to the Partners schedules which set forth the then current capital balances, GP-Related Profit Sharing Percentages and Capital Commitment Profit
Sharing Percentages of the Partners and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever; provided,
that this in no way limits the effectiveness of any Commitment Agreement or SMD Agreement.
Section 10.5. Governing
Law, Separability of Provisions. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law. In particular, the Partnership has been
formed pursuant to the Partnership Act, and the rights and liabilities of the Partners shall be as provided therein, except as herein otherwise expressly provided. If any provision of this Agreement shall be held to be invalid, such provision shall
be given its meaning to the maximum extent permitted by law and the remainder of this Agreement shall not be affected thereby.
Section 10.6. Successors and Assigns; Third Party Beneficiaries. This Agreement shall be binding upon and shall, subject to
the penultimate sentence of Section 6.3(a), inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any successor to a trustee of a trust which is or becomes a party hereto; provided, that no person
claiming by, through or under a Partner (whether such Partner’s heir, personal representative or otherwise), as distinct from such Partner itself, shall have any rights as, or in respect to, a Partner (including the right to approve or vote on
any matter or to notice thereof) except the right to receive only those distributions expressly payable to such person pursuant to Article VI and Article VIII. Any Partner or Withdrawn Partner shall remain liable for the obligations under this
Agreement (including any Net GP-Related Recontribution Amounts and any Capital Commitment Recontribution Amounts) of any transferee of all or any portion of such Partner’s or Withdrawn Partner’s
interest in the Partnership, unless waived by the General Partner. The Partnership shall, if the General Partner determines, in its good faith judgment, based on the standards set forth in Section 5.8(d)(ii)(A) and Section 7.4(g)(ii)(A),
to pursue such transferee, pursue payment (including any Net GP-Related Recontribution Amounts and/or Capital
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Commitment Recontribution Amounts) from the transferee with respect to any such obligations. Nothing in this Agreement is intended, nor shall anything herein be construed, to confer any rights,
legal or equitable, on any person other than the Partners and their respective legal representatives, heirs, successors and permitted assigns. Notwithstanding the foregoing, solely to the extent required by the SP DE Agreements, (x) the limited
partners in SP DE shall be third-party beneficiaries of the provisions of Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount and (y) the amendment of the
provisions of Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount, in a manner materially adverse to such limited partners shall be effective against such
limited partners only in a manner consistent with the requirements of the applicable SP DE Agreement.
Section 10.7. Confidentiality.
(a) By executing this Agreement, each Partner expressly agrees, at all times during the term of the Partnership and thereafter and whether or
not at the time a Partner of the Partnership, to maintain the confidentiality of, and not to disclose to any person other than the Partnership, another Partner or a person designated by the Partnership, any information relating to the business,
financial structure, financial position or financial results, clients or affairs of the Partnership that shall not be generally known to the public or the securities industry, except as otherwise required by law or by any regulatory or self-regulatory organization having jurisdiction; provided, that any corporate Partner may disclose any such information it is required by law, rule, regulation or custom to disclose. Notwithstanding anything
in this Agreement to the contrary, to comply with Treasury Regulations Section 1.6011-4(b)(3)(i), each Partner (and any employee, representative or other agent of such Partner) may disclose to any and all
persons, without limitation of any kind, the U.S. federal income tax treatment and tax structure of the Partnership, it being understood and agreed, for this purpose, (1) the name of, or any other identifying information regarding (a) the
Partners or any existing or future investor (or any Affiliate thereof) in any of the Partners, or (b) any investment or transaction entered into by the Partners; (2) any performance information relating to any of the Partners or their
investments; and (3) any performance or other information relating to previous funds or investments sponsored by any of the Partners, does not constitute such tax treatment or tax structure information.
(b) Nothing in this Agreement shall prohibit or impede any Partner from communicating, cooperating or filing a complaint on possible violations
of U.S. federal, state or local law or regulation to or with any governmental agency or regulatory authority (collectively, a “Governmental Entity”), including, but not limited to, the SEC, FINRA, EEOC or NLRB, or from making other
disclosures to any Governmental Entity that are protected under the whistleblower provisions of U.S. federal, state or local law or regulation; provided, that in each case such communications and disclosures are consistent with applicable law. Each
Partner understands and acknowledges that (a) an individual shall not be held criminally or civilly liable under any U.S. federal or state trade secret law for the disclosure of a trade secret that is made (i) in confidence to a U.S.
federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is
made under seal, and (b) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation
78
of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade
secret under seal; and does not disclose the trade secret, except pursuant to court order. Moreover, a Partner shall not be required to give prior notice to (or get prior authorization from) Blackstone regarding any such communication or disclosure.
Except as otherwise provided in this paragraph or under applicable law, under no circumstance is any Partner authorized to disclose any information covered by Blackstone or its affiliates’ attorney-client privilege or attorney work product or
Blackstone’s trade secrets without the prior written consent of Blackstone.
Section 10.8. Notices. Whenever notice
is required or permitted by this Agreement to be given, such notice shall be in writing (including telecopy or similar writing) and shall be given by hand delivery (including any courier service) or telecopy to any Partner at its address or telecopy
number shown in the Partnership’s books and records or, if given to the General Partner, at the address or telecopy number of the Partnership in New York City. Each such notice shall be effective (i) if given by telecopy, upon dispatch and
(ii) if given by hand delivery, when delivered to the address of such Partner, the General Partner or the Partnership specified as aforesaid.
Section 10.9. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original
and all of which together shall constitute a single instrument. For the avoidance of doubt, a Person’s execution and delivery of this Agreement by electronic signature and electronic transmission (jointly, an “Electronic Signature”),
including via DocuSign or other similar method, shall constitute the execution and delivery of a counterpart of this Agreement by or on behalf of such Person and shall bind such Person to the terms of this Agreement. The parties hereto agree that
this Agreement and any additional information incidental hereto may be maintained as electronic records. Any Person executing and delivering this Agreement by an Electronic Signature further agrees to take any and all reasonable additional actions,
if any, evidencing its intent to be bound by the terms of this Agreement, as may be reasonably requested by the General Partner.
Section 10.10. Power of Attorney. Each Partner hereby irrevocably appoints the General Partner as such Partner’s true
and lawful representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file all instruments,
documents and certificates which, from time to time, may be required to set forth any amendment to this Agreement or may be required by this Agreement or by the laws of the United States of America, the State of Delaware or any other state in which
the Partnership shall determine to do business, or any political subdivision or agency thereof, to execute, implement and continue the valid and subsisting existence of the Partnership. Such power of attorney is coupled with an interest and shall
survive and continue in full force and effect notwithstanding the subsequent Withdrawal from the Partnership of any Partner for any reason and shall survive and shall not be affected by the subsequent disability or incapacity of such Partner.
79
Section 10.11. Partner’s Will. Each Partner and
Withdrawn Partner shall include in his or her will a provision that addresses certain matters in respect of his or her obligations relating to the Partnership that is satisfactory to the General Partner and each such Partner and Withdrawn Partner
shall confirm annually to the Partnership, in writing, that such provision remains in his or her current will. Where applicable, any estate planning trust of such Partner or Withdrawn Partner to which a portion of such Partner’s or Withdrawn
Partner’s Interest is transferred shall include a provision substantially similar to such provision and the trustee of such trust shall confirm annually to the Partnership, in writing, that such provision or its substantial equivalent remains
in such trust. In the event any Partner or Withdrawn Partner fails to comply with the provisions of this Section 10.11 after the Partnership has notified such Partner or Withdrawn Partner of his or her failure to so comply and such failure to
so comply is not cured within 30 days of such notice, the Partnership may withhold any and all distributions to such Partner until the time at which such party complies with the requirements of this Section 10.11.
Section 10.12. Cumulative Remedies. Rights and remedies under this Agreement are cumulative and do not preclude use of other
rights and remedies available under applicable law.
Section 10.13. Legal Fees. Except as more specifically provided
herein, in the event of a legal dispute (including litigation, arbitration or mediation) between any Partner or Withdrawn Partner and the Partnership, arising in connection with any party seeking to enforce Section 4.1(d) or any other provision
of this Agreement relating to the Holdback, the Clawback Amount, the GP-Related Giveback Amount, the Capital Commitment Giveback Amount, the Net GP-Related
Recontribution Amount or the Capital Commitment Recontribution Amount, the “losing” party to such dispute shall promptly reimburse the “victorious party” for all reasonable legal fees and expenses incurred in connection with such
dispute (such determination to be made by the relevant adjudicator). Any amounts due under this Section 10.13 shall be paid within 30 days of the date upon which such amounts are due to be paid and such amounts remaining unpaid after such date
shall accrue interest at the Default Interest Rate.
Section 10.14. Entire Agreement; Modifications. This
Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. Subject to Section 10.4, this Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. Except as provided herein, this Agreement may be
amended or modified at any time by the General Partner in its sole discretion, upon notification thereof to the Limited Partners.
Section 10.15. Section Titles. The headings contained in this Agreement are for convenience and reference purposes only and
shall not be deemed to alter or affect in any way the meaning or interpretation of any provisions of this Agreement.
80
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the day and
year first above written.
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GENERAL PARTNER:
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SPFSA DE L.L.C.
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By:
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/s/ Peter Song
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Name:
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Peter Song
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Title:
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Authorized Person
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LIMITED PARTNERS AND SPECIAL PARTNERS:
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Limited Partners and Special Partners now admitted pursuant to the power of attorney now and hereafter granted to SPFSA DE L.L.C.
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SPFSA DE L.L.C.
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By: Blackstone Holdings II L.P., its managing member
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By: Blackstone Holdings I/II GP L.L.C., its general partner
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By:
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/s/ John G. Finley
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Name:
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John G. Finley
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Title:
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Chief Legal Officer and Secretary
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INITIAL LIMITED PARTNER, solely to reflect his Withdrawal from the Partnership:
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/s/ Peter Song
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Name:
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Peter Song
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Title:
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Initial Limited Partner
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Exhibit 10.15
Execution Version
HIGHLY CONFIDENTIAL & TRADE SECRET
BLACKSTONE CEMA II GP L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
DATED AS OF NOVEMBER 4, 2020
THE LIMITED
PARTNERSHIP INTERESTS (THE “INTERESTS”) OF BLACKSTONE CEMA II GP L.P. (THE “PARTNERSHIP”) HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), THE
SECURITIES LAWS OF ANY STATE IN THE UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY
NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS, AND ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS
AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE INTERESTS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS OF SUCH
INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS
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1
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Section 1.1.
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Definitions
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1
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Section 1.2.
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Terms Generally
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16
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ARTICLE II GENERAL PROVISIONS
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16
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Section 2.1.
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General Partner, Limited Partner, Special Partner
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16
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Section 2.2.
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Formation; Name; Foreign Jurisdictions
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17
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Section 2.3.
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Term
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17
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Section 2.4.
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Purposes; Powers
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17
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Section 2.5.
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Place of Business
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20
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ARTICLE III MANAGEMENT
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20
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Section 3.1.
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General Partner
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20
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Section 3.2.
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Partner Voting, etc.
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21
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Section 3.3.
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Management
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21
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Section 3.4.
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Responsibilities of Partners
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23
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Section 3.5.
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Exculpation and Indemnification
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24
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Section 3.6.
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Representations of Partners
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26
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Section 3.7.
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Tax Representation and Further Assurances
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27
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ARTICLE IV CAPITAL OF THE PARTNERSHIP
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28
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Section 4.1.
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Capital Contributions by Partners
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28
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Section 4.2.
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Interest
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35
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Section 4.3.
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Withdrawals of Capital
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35
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ARTICLE V PARTICIPATION IN PROFITS AND LOSSES
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36
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Section 5.1.
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General Accounting Matters
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36
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Section 5.2.
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GP-Related Capital Accounts
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37
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Section 5.3.
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GP-Related Profit Sharing Percentages
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38
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Section 5.4.
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Allocations of GP-Related Net Income (Loss)
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39
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Section 5.5.
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Liability of Partners
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40
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Section 5.6.
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[Intentionally omitted.]
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40
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Section 5.7.
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Repurchase Rights, etc.
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40
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Section 5.8.
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Distributions
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40
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Section 5.9.
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Business Expenses
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47
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Section 5.10.
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Tax Capital Accounts; Tax Allocations
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48
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ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
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48
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Section 6.1.
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Additional Partners
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48
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Section 6.2.
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Withdrawal of Partners
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50
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Section 6.3.
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GP-Related Partner Interests Not Transferable
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51
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-i-
TABLE OF CONTENTS
(continued)
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Page
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Section 6.4.
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Consequences upon Withdrawal of a Partner
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51
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Section 6.5.
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Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interests
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52
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Section 6.6.
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Dissolution of the Partnership
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57
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Section 6.7.
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Certain Tax Matters
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57
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Section 6.8.
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Special Basis Adjustments
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59
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ARTICLE VII CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS; ALLOCATIONS;
DISTRIBUTIONS
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59
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Section 7.1.
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Capital Commitment Interests, etc.
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59
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Section 7.2.
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Capital Commitment Capital Accounts
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60
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Section 7.3.
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Allocations
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61
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Section 7.4.
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Distributions
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61
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Section 7.5.
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Valuations
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65
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Section 7.6.
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Disposition Election
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66
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Section 7.7.
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Capital Commitment Special Distribution Election
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66
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ARTICLE VIII WITHDRAWAL, ADMISSION OF NEW PARTNERS
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67
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Section 8.1.
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Partner Withdrawal; Repurchase of Capital Commitment Interests
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67
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Section 8.2.
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Transfer of Partner’s Capital Commitment Interest
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72
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Section 8.3.
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Compliance with Law
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73
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ARTICLE IX DISSOLUTION
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73
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Section 9.1.
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Dissolution
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73
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Section 9.2.
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Final Distribution
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73
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Section 9.3.
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Amounts Reserved Related to Capital Commitment Partner Interests
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73
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ARTICLE X MISCELLANEOUS
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74
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Section 10.1.
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Submission to Jurisdiction; Waiver of Jury Trial
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74
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Section 10.2.
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Ownership and Use of the Blackstone Name
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75
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Section 10.3.
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Written Consent
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76
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Section 10.4.
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Letter Agreements; Schedules
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76
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Section 10.5.
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Governing Law; Separability of Provisions
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76
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Section 10.6.
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Successors and Assigns; Third Party Beneficiaries
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76
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Section 10.7.
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Confidentiality
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77
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Section 10.8.
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Notices
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78
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Section 10.9.
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Counterparts
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78
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Section 10.10.
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Power of Attorney
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78
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Section 10.11.
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Partner’s Will
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79
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Section 10.12.
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Cumulative Remedies
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79
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Section 10.13.
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Legal Fees
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79
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Section 10.14.
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Entire Agreement; Modifications
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79
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-ii-
BLACKSTONE CEMA II GP L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of Blackstone CEMA II GP L.P., a Delaware limited partnership (the
“Partnership”), dated as of November 4, 2020, by and among Blackstone CEMA II L.L.C., a Delaware limited liability company, as general partner of the Partnership (in its capacity as general partner of the Partnership (the
“General Partner”), Blackstone Holdings II L.P., a Delaware limited partnership, as limited partner), and such other persons that are admitted to the Partnership as partners after the date hereof in accordance herewith.
W I T N E S S E T H
WHEREAS, the Partnership was formed pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101, et seq., as it may be amended from time to time (the “Partnership Act”), pursuant to a certificate of limited partnership filed in the office of the Secretary of State of the State of
Delaware on August 22, 2019;
WHEREAS, the General Partner and the initial Limited Partner entered into a Limited Partnership
Agreement dated as of August 22, 2019 (the “Original Agreement”);
WHEREAS, the parties hereto desire to enter into
this Agreement, and hereby amend and restate the Original Agreement in its entirety; and
NOW, THEREFORE, in consideration of the mutual
promises and agreements herein made and intending to be legally bound hereby, the parties hereto agree that the Original Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for
purposes of this Agreement:
“Adjustment Amount” has the meaning set forth in Section 8.1(b)(ii).
“Advancing Party” has the meaning set forth in Section 7.1(c).
“Affiliate” when used with reference to another person means any person (other than the Partnership), directly
or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person, which may include, for greater certainty and as the context requires, endowment funds, estate planning vehicles
(including any trusts, family members, family investment vehicles, descendant, trusts and other related persons and entities), charitable programs and other similar and/or related vehicles or accounts associated with or established by Blackstone
and/or its affiliates, partners and current and/or former employees and/or related persons.
“Agreement” means this Amended and Restated Limited
Partnership Agreement, as it may be further amended, supplemented, restated or otherwise modified from time to time.
“Applicable Collateral Percentage” with respect to any Firm Collateral or Special Firm Collateral, has the
meaning set forth in the books and records of the Partnership with respect thereto.
“Associates II” means
Blackstone Core Equity Management Associates II L.P., a Delaware limited partnership and the general partner of BCEP II, or any other entity that serves as the general partner or managing member of a vehicle indicated in the definition of BCEP II.
“Associates II LP Agreement” means the limited partnership agreement, dated as of the date set forth
therein, of Associates II, as it may be amended, supplemented, restated or otherwise modified from time to time.
“Bankruptcy” means, with respect to any person, the occurrence of any of the following events: (i) the
filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his or her assets; (ii) the filing by such person of a voluntary petition in Bankruptcy or the seeking of relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his or her inability to pay his or her debts as they become due; (iii) the failure of such person to pay his or
her debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of an answer admitting the material allegations of, or his or her consenting to, or
defaulting in answering, a Bankruptcy petition filed against him or her in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States Code, as now constituted or as hereafter amended; or (vi) the entry of an order,
judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a trustee or custodian of his or her assets and the continuance of such order, judgment
or decree unstayed and in effect for a period of 60 consecutive days.
“BCEP II” means (i) Blackstone
Core Equity Partners II L.P., a Delaware limited partnership, (ii) any alternative investment vehicles relating to, or formed in connection with, any of the partnerships referred to in clauses (i) and (iii) of this definition,
(iii) any parallel vehicle, managed account or other capital vehicle relating to, or formed in connection with, the partnership referred to in clause (i) of this definition and (iv) any other limited partnership, limited liability
company or other entity (in each case, whether now or hereafter established) of which Associates II or the General Partner serves, directly or indirectly, as the general partner, special general partner, manager, managing member or in a similar
capacity.
“BCEP II Agreements” means the collective reference to (i) the BCEP II Partnership
Agreement and (ii) any other BCEP II partnership, limited liability company or other governing agreements, as each may be amended, supplemented, restated or otherwise modified from time to time.
2
“BCEP II Partnership Agreement” means the partnership
agreement of the limited partnership named in clause (i) of the definition of “BCEP II,” as it may be amended, supplemented, restated or otherwise modified from time to time.
“BE Agreement” means the limited partnership agreement, limited liability company agreement or other governing
document of any limited partnership, limited liability company or other entity referred to in the definition of “Blackstone Entity,” as such limited partnership agreement, limited liability company agreement or other governing document may
be amended, supplemented, restated or otherwise modified to date, and as such limited partnership agreement, limited liability company agreement or other governing document may be further amended, supplemented, restated or otherwise modified from
time to time.
“BE Investment” means any direct or indirect investment by any Blackstone Entity.
“Blackstone” means, collectively, The Blackstone Group Inc., a Delaware corporation, and any successor
thereto, and any Affiliate thereof (excluding any natural persons and any portfolio companies, investments or similar entities of any Blackstone-sponsored fund (or any affiliate thereof that is not otherwise an Affiliate of The Blackstone Group
Inc.)).
“Blackstone Capital Commitment” has the meaning set forth in the BCEP II Partnership Agreement.
“Blackstone Entity” means any partnership, limited liability company or other entity (excluding any
natural persons and any portfolio companies of any Blackstone-sponsored fund) that is an Affiliate of The Blackstone Group Inc., as designated by the General Partner in its sole discretion.
“Business Day” means any day other than a Saturday, Sunday or other day on which banks are authorized or
required by law to be closed in New York, New York.
“Capital Commitment Associates II Partner Interest”
means the interest of the Partnership, if any, as a limited partner of Associates II with respect to any Capital Commitment BCEP II Interest that may be held by Associates II.
“Capital Commitment BCEP II Commitment” means the Capital Commitment (as defined in the BCEP II Partnership
Agreement), if any, of the Partnership or Associates II to BCEP II that relates solely to the Capital Commitment BCEP II Interest, if any.
“Capital Commitment BCEP II Interest” means the Interest (as defined in the BCEP II Partnership
Agreement), if any, of the Partnership or Associates II as a capital partner in BCEP II.
3
“Capital Commitment BCEP II Investment” means the
Partnership’s interest in a specific investment of BCEP II, which interest may be held by the Partnership (i) through the Partnership’s direct interest in BCEP II through the Partnership’s Capital Commitment BCEP II Interest, if
the Partnership holds the Capital Commitment BCEP II Interest, or (ii) through the Partnership’s interest in Associates II and Associates II’s interest in BCEP II through Associates II’s Capital Commitment BCEP II Interest, if
Associates II holds the Capital Commitment BCEP II Interest.
“Capital Commitment Capital Account” means,
with respect to each Capital Commitment Investment for each Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such Capital Commitment Investment and any net
income allocated to such Partner pursuant to Section 7.3 with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment Investment to such Partner and any net losses
allocated to such Partner with respect to such Capital Commitment Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the related Capital Commitment Investment shall be
adjusted as if the asset distributed had been sold in a taxable transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners participating in such Capital Commitment Investment
pursuant to Section 7.3.
“Capital Commitment Class A Interest” has the meaning
set forth in Section 7.4(f).
“Capital Commitment Class B Interest” has the
meaning set forth in Section 7.4(f).
“Capital Commitment Defaulting Party” has the meaning set forth
in Section 7.4(g)(ii)(A).
“Capital Commitment Deficiency Contribution” has the meaning set forth in
Section 7.4(g)(ii)(A).
“Capital Commitment Disposable Investment” has the meaning set forth in
Section 7.4(f).
“Capital Commitment Distributions” means, with respect to each Capital Commitment
Investment, all amounts of distributions received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Capital Commitment BCEP II Interest, if any, less any costs, fees and expenses of the Partnership with
respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of such Capital Commitment
Investment as it may determine in good faith is appropriate.
“Capital Commitment Giveback Amount” has the
meaning set forth in Section 7.4(g)(i).
“Capital Commitment Interest” means the interest of a
Partner in a specific Capital Commitment Investment as provided herein.
4
“Capital Commitment Investment” means any Capital
Commitment BCEP II Investment, but shall exclude any GP-Related Investment.
“Capital Commitment Liquidating Share” means, with respect to each Capital Commitment Investment, in the case
of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with Section 9.3) immediately prior to dissolution.
“Capital Commitment Net Income (Loss)” means, with respect to each Capital Commitment Investment, all amounts
of income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition, in whole or in part, of such Capital Commitment Investment, less any costs, fees and
expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated thereto.
“Capital Commitment Partner Carried Interest” means, with respect to any Partner, the aggregate amount of
distributions or payments received by such Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest.” Capital Commitment Partner Carried Interest includes any amount initially received by
an Affiliate of the Partnership from any fund (including BCEP II, any similar funds formed after the date hereof, and any Other Blackstone Funds (as defined in the BCEP II Partnership Agreement), whether or not in existence as of the date hereof) to
which such Affiliate serves as general partner (or in another similar capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions thereto (or the capital contributions to make
the investment of such fund giving rise to such “carried interest”).
“Capital Commitment Partner
Interest” means a Partner’s interest in the Partnership which relates (i) to any Capital Commitment BCEP II Interest held by the Partnership or (ii) through the Partnership and Associates II, to any Capital Commitment BCEP II
Interest that may be held by Associates II.
“Capital Commitment Profit Sharing Percentage” means, with
respect to each Capital Commitment Investment, the percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the Partnership.
“Capital Commitment Recontribution Amount” has the meaning set forth in Section 7.4(g)(i).
“Capital Commitment-Related Capital Contributions” has the meaning set forth in Section 7.1(b).
“Capital Commitment-Related Commitment” means, with respect to any Partner, such Partner’s commitment to
the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such commitment that may be set forth in such Partner’s Commitment
Agreement or SMD Agreement, if any.
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“Capital Commitment Special Distribution” has the meaning
set forth in Section 7.7(a).
“Capital Commitment Value” has the meaning set forth in
Section 7.5.
“Carried Interest” means (i) “Carried Interest Distributions” as
defined in the BCEP II Partnership Agreement, and (ii) any other carried interest distribution to a Fund GP pursuant to any BCEP II Agreement. In the case of each of (i) and (ii) above, except as determined by the General Partner, the
amount shall not be less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto (in each case which the
General Partner may allocate among all or any portion of the GP-Related Investments as it determines in good faith is appropriate).
“Carried Interest Give Back Percentage” means, for any Partner or Withdrawn Partner, subject to
Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner from the Partnership or any Other Fund GPs or their Affiliates in respect of Carried Interest by
(B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership or any Other Fund GP or any of their Affiliates (in any capacity) in respect of Carried Interest. For purposes of
determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership or any Other Fund GPs on behalf of a Partner or Withdrawn Partner (but not the Trust Income thereon) shall be
deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as members, partners or other equity interest owners of the Partnership or any of the Other Fund GPs or their Affiliates.
“Carried Interest Sharing Percentage” means, with respect to each
GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
“Cause” means the occurrence or existence of any of the following with respect to any Partner, as
determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any non-competition agreement, (x) any material
breach of this Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such Partner’s deliberate failure to perform his or her duties to the Partnership or any of its Affiliates, or
(z) such Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Partnership or any of its Affiliates in a material way as determined by the General Partner; provided, that in the case
of any of the foregoing clauses (w), (x), (y) and (z), the General Partner has given such Partner written notice (a “Notice of Breach”) within 15 days after the General Partner becomes aware of such action and such Partner fails to
cure such breach, failure to perform or conduct or behavior within 15 days after receipt of such Notice of Breach from the General Partner (or such longer period,
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not to exceed an additional 15 days, as shall be reasonably required for such cure; provided, that such Partner is diligently pursuing such cure); (ii) any act of fraud,
misappropriation, dishonesty, embezzlement or similar conduct against the Partnership or any of its Affiliates; or (iii) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony (under U.S. law
or its equivalent in any jurisdiction) or crime (including any misdemeanor charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of
competent jurisdiction, by a regulatory body or by a self-regulatory body having authority with respect to securities laws, rules or regulations of the applicable securities industry, that such Partner individually has violated any applicable
securities laws or any rules or regulations thereunder, or any rules of any such self-regulatory body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such
Partner’s ability to function as a Partner of the Partnership, taking into account the services required of such Partner and the nature of the business of the Partnership and its Affiliates or (B) the business of the Partnership and its
Affiliates or (iv) becoming subject to an event described in Rule 506(d)(1)(i)-(viii) of Regulation D under the Securities Act.
“Clawback Adjustment Amount” has the meaning set forth in Section 5.8(e)(ii)(C).
“Clawback Amount” means the “Clawback Amount”, as defined in the BCEP II Partnership Agreement, and
any other clawback amount payable to the limited partners of BCEP II or to BCEP II pursuant to any BCEP II Agreement, as applicable.
“Clawback Provisions” means paragraph 9.2.8 of the BCEP II Partnership Agreement and any other similar
provisions in any other BCEP II Agreement existing heretofore or hereafter entered into.
“Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any successor statute. Any reference herein to a particular provision of the Code means, where appropriate, the corresponding provision in any successor statute.
“Commitment Agreements” means the agreements between the Partnership or an Affiliate thereof and Partners,
pursuant to which each Partner undertakes certain obligations, including the obligation to make capital contributions pursuant to Section 4.1 and/or Section 7.1. Each Commitment Agreement is hereby incorporated by reference as between the
Partnership and the relevant Partner.
“Contingent” means subject to repurchase rights and/or other
requirements.
The term “control” when used with reference to any person means the power to direct the
management and policies of such person, directly or indirectly, by or through stock or other equity interest ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with one
or more other persons by or through stock or other equity interest ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing.
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“Controlled Entity” when used with reference to another
person means any person controlled by such other person.
“Covered Person” has the meaning set forth in
Section 3.5(a).
“Deceased Partner” means any Partner or Withdrawn Partner who has died or who
suffers from Incompetence. For purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the case may be, that have received such
Deceased Partner’s interest in the Partnership.
“Delaware Arbitration Act” has the meaning set forth
in Section 10.1(d).
“Default Interest Rate” means the lower of (i) the sum of (a) the
Prime Rate and (b) 5%, or (ii) the highest rate of interest permitted under applicable law.
“Electronic
Signature” has the meaning set forth in Section 10.9.
“Estate Planning Vehicle” has the
meaning set forth in Section 6.3(a).
“Excess Holdback” has the meaning set forth in
Section 4.1(d)(v)(A).
“Excess Holdback Percentage” has the meaning set forth in
Section 4.1(d)(v)(A).
“Excess Tax-Related Amount” has the
meaning set forth in Section 5.8(e).
“Existing Partner” means any Partner who is neither a Retaining
Withdrawn Partner nor a Deceased Partner.
“Final Event” means the death, Total Disability, Incompetence,
Bankruptcy, liquidation, dissolution or Withdrawal from the Partnership of any person who is a Partner.
“Firm
Advances” has the meaning set forth in Section 7.1(c).
“Firm Collateral” means a
Partner’s or Withdrawn Partner’s interest in one or more partnerships or limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been
pledged or made available to the Trustee(s) to satisfy all or any portion of the Excess Holdback of such Partner or Withdrawn Partner as more fully described in the Partnership’s books and records; provided, that for all purposes hereof
(and any other agreement (e.g., the Trust Agreement) that incorporates the meaning of the term “Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”, excluding
references to “Firm Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).
“Firm
Collateral Realization” has the meaning set forth in Section 4.1(d)(v)(B).
“Fiscal Year”
means a calendar year, or any other period chosen by the General Partner.
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“Fund GP” means the Partnership (only with respect to the GP-Related BCEP II Interest) and the Other Fund GPs.
“GAAP” means U.S.
generally accepted accounting principles.
“General Partner” means Blackstone CEMA II L.L.C. and any
person admitted to the Partnership as an additional or substitute general partner of the Partnership in accordance with the provisions of this Agreement (until such time as such person ceases to be a general partner of the Partnership as provided
herein or in the Partnership Act).
“Giveback Amount(s)” means the amount(s) payable by partners of BCEP
II pursuant to the Giveback Provisions.
“Giveback Provisions” means paragraph 3.4.3 of the BCEP II
Partnership Agreement and any other similar provisions in any other BCEP II Agreement existing heretofore or hereafter entered into.
“Governmental Entity” has the meaning set forth in Section 10.7(b).
“GP-Related Associates II Interest” means the interest of the
Partnership as a limited partner of Associates II with respect to the GP-Related BCEP II Interest, but does not include any interest of the Partnership in Associates II with respect to any Capital Commitment
BCEP II Interest that may be held by Associates II.
“GP-Related BCEP II
Interest” means the interest of Associates II in BCEP II as general partner of BCEP II, excluding any Capital Commitment BCEP II Interest that may be held by Associates II.
“GP-Related BCEP II Investment” means the Partnership’s indirect
interest in Associates II’s indirect interest in an Investment (for purposes of this definition, as defined in the BCEP II Partnership Agreement) in Associates II’s capacity as general partner of BCEP II, but does not include any Capital
Commitment Investment.
“GP-Related Capital Account” has the
meaning set forth in Section 5.2(a).
“GP-Related Capital
Contributions” has the meaning set forth in Section 4.1(a).
“GP-Related Class A Interest” has the meaning set
forth in Section 5.8(a)(ii).
“GP-Related Class B
Interest” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Commitment”, with respect to any Partner, means such
Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such
commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“GP-Related Defaulting Party” has the meaning set forth in Section 5.8(d)(ii)(A).
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“GP-Related Deficiency
Contribution” has the meaning set forth in Section 5.8(d)(ii)(A).
“GP-Related Disposable Investment” has the meaning set forth in
Section 5.8(a)(ii).
“GP-Related Giveback Amount” has the
meaning set forth in Section 5.8(d)(i)(A).
“GP-Related
Investment” means any investment (direct or indirect) of the Partnership in respect of the GP-Related BCEP II Interest (including, without limitation, any
GP-Related BCEP II Investment, but excluding any Capital Commitment Investment).
“GP-Related Net Income (Loss)” has the meaning set forth in
Section 5.1(b).
“GP-Related Partner Interest” of a Partner
means all interests of such Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect to the GP-Related BCEP II Interest and with respect to all GP-Related Investments.
“GP-Related Profit Sharing Percentage” means the “Carried
Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each Partner; provided, that any references in this Agreement to
GP-Related Profit Sharing Percentages made (i) in connection with voting or voting rights or (ii) GP-Related Capital Contributions with respect to GP-Related Investments (including Section 5.3(b)) means the “Non-Carried Interest Sharing Percentage” of each Partner; provided further, that the
term “GP-Related Profit Sharing Percentage” shall not include any Capital Commitment Profit Sharing Percentage.
“GP-Related Recontribution Amount” has the meaning set forth in
Section 5.8(d)(i)(A).
“GP-Related Required Amounts” has the
meaning set forth in Section 4.1(a).
“GP-Related Unallocated
Percentage” has the meaning set forth in Section 5.3(b).
“GP-Related Unrealized Net Income (Loss)” attributable to any GP-Related BCEP II Investment as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related BCEP II Investment if BCEP II’s entire portfolio of investments were sold on such date for cash in an amount equal to their aggregate value on such date (determined in accordance with
Section 5.1(e)) and all distributions payable by BCEP II to the Partnership (indirectly through the general partner of BCEP II) pursuant to any BCEP II Partnership Agreement with respect to such
GP-Related BCEP II Investment were made on such date. “GP-Related Unrealized Net Income (Loss)” attributable to any other
GP-Related Investment (other than any Capital Commitment Investment) as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with
respect to such GP-Related Investment if such GP-Related Investment were sold on such date for cash in an amount equal to its value on such date (determined in
accordance with Section 5.1(e)).
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“Holdback” has the meaning set forth in
Section 4.1(d)(i).
“Holdback Percentage” has the meaning set forth in Section 4.1(d)(i).
“Holdback Vote” has the meaning set forth in Section 4.1(d)(iv)(A).
“Holdings” means Blackstone Holdings II L.P., a Delaware limited partnership.
“Incompetence” means, with respect to any Partner, the determination by the General Partner in its sole
discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his or her person or his or her property.
“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d)(i).
“Interest” means a partnership interest (as defined in
§17-101(13) of the Partnership Act) in the Partnership, including any interest that is held by a Retaining Withdrawn Partner and including any Partner’s
GP-Related Partner Interest and Capital Commitment Partner Interest.
“Investment” means any investment (direct or indirect) of the Partnership designated by the General Partner
from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments, and (b) Capital Commitment Investments.
“Investor Note” means a promissory note of a Partner evidencing indebtedness incurred by such Partner to
purchase a Capital Commitment Interest, the terms of which were or are approved by the General Partner and which is secured by such Capital Commitment Interest, all other Capital Commitment Interests of such Partner and all other interests of such
Partner in Blackstone Entities; provided, that such promissory note may also evidence indebtedness relating to other interests of such Partner in Blackstone Entities, and such indebtedness shall be prepayable with Capital Commitment Net
Income (whether or not such indebtedness relates to Capital Commitment Investments) as set forth in this Agreement, the Investor Note, the other BE Agreements and any documentation relating to Other Sources; provided further, that
references to “Investor Notes” herein refer to multiple loans made pursuant to such note, whether made with respect to Capital Commitment Investments or other BE Investments, and references to an “Investor Note” refer to one such
loan as the context requires. In no way shall any indebtedness incurred to acquire Capital Commitment Interests or other interests in Blackstone Entities be considered part of the Investor Notes for purposes hereof if the Lender or Guarantor is not
the lender or guarantor with respect thereto.
“Investor Special Partner” means any Special Partner so
designated at the time of its admission by the General Partner as a Partner of the Partnership.
“Issuer”
means the issuer of any Security comprising part of an Investment.
“L/C” has the meaning set forth in
Section 4.1(d)(vi).
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“L/C Partner” has the meaning set forth in
Section 4.1(d)(vi).
“Lender or Guarantor” means Blackstone Holdings I L.P., in its capacity as
lender or guarantor under the Investor Notes, or any other Affiliate of the Partnership that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests or other interests in Blackstone Entities.
“Limited Partner” means each of the parties listed as Limited Partners in the books and records of the
Partnership or any person that has been admitted to the Partnership as a substituted or additional Limited Partner in accordance with the terms of this Agreement, each in its capacity as a limited partner of the Partnership. For the avoidance of
doubt, the term “Limited Partner” does not include the General Partner or any Special Partners (notwithstanding the fact that Special Partners are limited partners of the Partnership).
“Loss Amount” has the meaning set forth in Section 5.8(e)(i)(A).
“Loss Investment” has the meaning set forth in Section 5.8(e).
“Losses” has the meaning set forth in Section 3.5(b)(i).
“Majority in Interest of the Partners” on any date (a “vote date”) means one or more persons
who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date and who, as of the last day of the most recent accounting period ending on or prior to the vote date (or as of such later date on or prior to
the vote date selected by the General Partner as of which the Partners’ capital account balances can be determined), have aggregate capital account balances representing at least a majority in amount of the total capital account balances of all
the persons who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
“Net Carried Interest Distribution” has the meaning set forth in Section 5.8(e)(i)(C).
“Net Carried Interest Distribution Recontribution Amount” has the meaning set forth in Section 5.8(e).
“Net GP-Related Recontribution Amount” has the meaning set forth
in Section 5.8(d)(i)(A).
“Non-Carried Interest” means, with
respect to each GP-Related Investment, all amounts of distributions, other than Carried Interest and other than Capital Commitment Distributions, received by the Partnership with respect to such GP-Related Investment, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with
respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments as it may determine in good faith is appropriate.
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“Non-Carried Interest
Sharing Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Non-Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
“Non-Contingent” means generally not subject to repurchase rights or other requirements.
“Nonvoting Partner” has the meaning set forth in Section 8.2.
“Nonvoting Special Partner” has the meaning set forth in Section 6.1(a).
“Original Agreement” has the meaning set forth in the recitals.
“Other Fund GPs” means Associates II and any other entity (other than the Partnership) through which any
Partner, Withdrawn Partner or any other person directly receives any amounts of Carried Interest, and any successor thereto; provided, that this includes any other entity which has in its organizational documents a provision which indicates
that it is a “Fund GP” or an “Other Fund GP”; provided further, that notwithstanding any of the foregoing, neither Blackstone CEMA II L.L.C. nor Holdings nor any Estate Planning Vehicle established for the benefit
of family members of any Partner or of any member or partner of any Other Fund GP shall be considered an “Other Fund GP” for purposes hereof.
“Other Sources” means (i) distributions or payments of Capital Commitment Partner Carried Interest (which
shall include amounts of Capital Commitment Partner Carried Interest which are not distributed or paid to a Partner but are instead contributed to a trust (or similar arrangement) to satisfy any “holdback” obligation with respect thereto),
and (ii) distributions from Blackstone Entities (other than the Partnership) to such Partner.
“Partner” means any person who is a partner of the Partnership, including the Limited Partners, the General
Partner and the Special Partners. Except as otherwise specifically provided herein, no group of Partners, including the Special Partners and any group of Partners in the same Partner Category, shall have any right to vote as a class on any matter
relating to the Partnership, including, but not limited to, any merger, reorganization, dissolution or liquidation.
“Partner Category” means the General Partner, Existing Partners, Retaining Withdrawn Partners or Deceased
Partners, each referred to as a group for purposes hereof.
“Partnership” has the meaning set forth in the
preamble hereto.
“Partnership Act” has the meaning set forth in the preamble hereto.
“Partnership Affiliate” has the meaning set forth in Section 3.3(b).
“Partnership Affiliate Governing Agreement” has the meaning set forth in Section 3.3(b).
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“Pledgable Blackstone Interests” has the meaning set forth
in Section 4.1(d)(v)(A).
“Prime Rate” means the rate of interest per annum publicly announced from
time to time by JPMorgan Chase Bank, N.A. as its prime rate.
“Qualifying Fund” means any fund designated
by the General Partner as a “Qualifying Fund”.
“Repurchase Period” has the meaning set forth in
Section 5.8(c).
“Required Rating” has the meaning set forth in Section 4.1(d)(vi).
“Retained Portion” has the meaning set forth in Section 7.6(a).
“Retaining Withdrawn Partner” means a Withdrawn Partner who has retained a
GP-Related Partner Interest, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Nonvoting Special Partner for all purposes hereof.
“Securities” means any debt or equity securities of an Issuer and its subsidiaries and other Controlled
Entities constituting part of an Investment, including without limitation common and preferred stock, interests in limited partnerships and interests in limited liability companies (including warrants, rights, put and call options and other options
relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or interests commonly regarded as securities, interests in real
property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as money-market
investments, bank deposits and interests in personal property of all kinds, whether tangible or intangible.
“Securities Act” means the U.S. Securities Act of 1933, as amended from time to time, or any successor
statute.
“Settlement Date” has the meaning set forth in Section 6.5(a).
“SMD Agreements” means the agreements between the Partnership and/or one or more of its Affiliates and certain
of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby incorporated by reference as between the Partnership and the relevant Partner.
“Special Firm Collateral” means interests in a Qualifying Fund or other assets that have been pledged to
the Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the Partnership’s books and records.
“Special Firm Collateral Realization” has the meaning set forth in Section 4.1(d)(viii)(B).
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“Special Partner” means any person shown in the books and
records of the Partnership as a Special Partner of the Partnership, including any Nonvoting Special Partner and any Investor Special Partner.
“S&P” means Standard & Poor’s Ratings Group, and any successor thereto.
“Subject Investment” has the meaning set forth in Section 5.8(e)(i).
“Subject Partner” has the meaning set forth in Section 4.1(d)(iv)(A).
“Successor in Interest” means any (i) shareholder of; (ii) trustee, custodian, receiver or other
person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or receiver, or former officer, director or partner,
or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or assign of, any Partner, whether by operation of law or
otherwise.
“Tax Advances” has the meaning set forth in Section 6.7(d).
“Tax Matters Partner” has the meaning set forth in Section 6.7(b).
“TM” has the meaning set forth in Section 10.2.
“Total Disability” means the inability of a Limited Partner substantially to perform the services required of
such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether arising out of
sickness, accident or otherwise.
“Transfer” has the meaning set forth in Section 8.2.
“Trust Account” has the meaning set forth in the Trust Agreement.
“Trust Agreement” means the Trust Agreement, dated as of the date set forth therein, as amended, supplemented,
restated or otherwise modified from time to time, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time to time.
“Trust Amount” has the meaning set forth in the Trust Agreement.
“Trust Income” has the meaning set forth in the Trust Agreement.
“Trustee(s)” has the meaning set forth in the Trust Agreement.
“Unadjusted Carried Interest Distribution” has the meaning set forth in Section 5.8(e)(i)(B).
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“Unallocated Capital Commitment Interests” has the meaning
set forth in Section 8.1(f).
“U.S.” means the United States of America.
“Withdraw” or “Withdrawal” means, with respect to a Partner, such Partner ceasing to be a
partner of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary), unless the context shall limit the type of withdrawal to
a specific reason, and “Withdrawn” with respect to a Partner means, as aforesaid, such Partner ceasing to be a partner of the Partnership.
“Withdrawal Date” means the date of the Withdrawal from the Partnership of a Withdrawn Partner.
“Withdrawn Partner” means a Limited Partner whose GP-Related Partner
Interest or Capital Commitment Partner Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include, unless the context requires otherwise, the estate or legal
representatives of any such Partner.
“W-8BEN” has the meaning set
forth in Section 3.7.
“W-8BEN-E” has the meaning set
forth in Section 3.7.
“W-8IMY” has the meaning set forth in
Section 3.7.
“W-9” has the meaning set forth in
Section 3.7.
Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to both the singular
and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “person” includes individuals, partnerships (including limited
liability partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions thereof) and other associations and entities. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
ARTICLE II
GENERAL PROVISIONS
Section 2.1. General Partner, Limited Partner, Special Partner. The Partners may be General Partners, Limited Partners or Special
Partners. The General Partner as of the date hereof is Blackstone CEMA II L.L.C. and the Limited Partners as of the date hereof are those persons shown as Limited Partners in the books and records of the Partnership and the Special Partners as of
the date hereof are those persons shown as Special Partners in the books and records of the Partnership as of the date hereof. The books and records of the Partnership contain the GP-Related Profit Sharing
Percentage and GP-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to the GP-Related Investments of the
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Partnership as of the date hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each Partner
(including, without limitation, the General Partner) with respect to the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to time to
reflect additional GP-Related Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by the
Partnership of Capital Commitment Investments, the GP-Related Profit Sharing Percentages of the Partners (including, without limitation, the General Partner), as modified from time to time, the Capital
Commitment Profit Sharing Percentages of the Partners (including, without limitation, the General Partner), as modified from time to time, the admission of additional Partners, the Withdrawal of Partners and the transfer or assignment of interests
in the Partnership pursuant to the terms of this Agreement. At the time of admission of each additional Partner, the General Partner shall determine in its sole discretion the GP-Related Investments and
Capital Commitment Investments in which such Partner shall participate and such Partner’s GP-Related Commitment, Capital Commitment-Related Commitment, GP-Related
Profit Sharing Percentage with respect to each such GP-Related Investment and Capital Commitment Profit Sharing Percentage with respect to each such Capital Commitment Investment. Each Partner may have a GP-Related Partner Interest and/or a Capital Commitment Partner Interest.
Section 2.2.
Formation; Name; Foreign Jurisdictions. The Partnership is hereby continued as a limited partnership pursuant to the Partnership Act and shall conduct its activities on and after the date hereof under the name of Blackstone CEMA II GP L.P.
The certificate of limited partnership of the Partnership may be amended and/or restated from time to time by the General Partner, as an “authorized person” (within the meaning of the Partnership Act). The General Partner is further
authorized to execute and deliver and file any other certificates (and any amendments and/or restatements thereof) necessary for the Partnership to qualify to do business in a jurisdiction in which the Partnership may wish to conduct business.
Section 2.3. Term. The term of the Partnership shall continue until December 31, 2069, unless earlier dissolved and its
affairs wound up in accordance with this Agreement and the Partnership Act.
Section 2.4. Purposes; Powers. (a) The
purposes of the Partnership shall be, directly or indirectly through subsidiaries or Affiliates:
(i) to serve as a limited
partner or general partner of Associates II and perform the functions of a limited partner or general partner of Associates II specified in the Associates II LP Agreement and, if applicable, the BCEP II Agreements;
(ii) if applicable, to serve as, and hold the Capital Commitment BCEP II Interest as, a capital partner (and, if applicable, a
limited partner and/or a general partner) of BCEP II and perform the functions of a capital partner (and, if applicable, a limited partner and/or a general partner) of BCEP II specified in the BCEP II Agreements;
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(iii) to invest in Capital Commitment Investments and/or GP-Related Investments and acquire and invest in Securities or other property directly or indirectly through Associates II and/or BCEP II;
(iv) to make the Blackstone Capital Commitment or a portion thereof, directly or indirectly, and to invest in GP-Related Investments, Capital Commitment Investments and other Investments and acquire and invest in Securities or other property either directly or indirectly through Associates II or another entity;
(v) to serve as a general partner or limited partner of BCEP II and/or other partnerships and perform the functions of a
general partner or limited partner, member, shareholder or other equity interest owner specified in the respective partnership agreement, limited liability company agreement, charter or other governing documents, as amended, supplemented, restated
or otherwise modified from time to time, of any such partnership;
(vi) to serve as a member, shareholder or other equity
interest owner of limited liability companies, other companies, corporations or other entities and perform the functions of a member, shareholder or other equity interest owner specified in the respective limited liability company agreement, charter
or other governing documents, as amended, supplemented, restated or otherwise modified from time to time, of any such limited liability company, company, corporation or other entity;
(vii) to carry on such other businesses, perform such other services and make such other investments as are deemed desirable by
the General Partner and as are permitted under the Partnership Act, the Associates II LP Agreement, the BCEP II Agreements, and any applicable partnership agreement, limited liability company agreement, charter or other governing document referred
to in clause (v) or (vi) above, in each case as the same may be amended, supplemented, restated or otherwise modified from time to time;
(viii) any other lawful purpose; and
(ix) to do all things necessary, desirable, convenient or incidental thereto.
(b) In furtherance of its purposes, the Partnership shall have all powers necessary, suitable or convenient for the accomplishment of its
purposes, alone or with others, as principal or agent, including the following:
(i) to be and become a general partner or
limited partner of partnerships, a member of limited liability companies, a holder of common and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with the making of Investments or the
acquisition, holding or disposition of Securities or other property or as otherwise deemed appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection therewith;
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(ii) to acquire and invest in general partner or limited partner interests,
in limited liability company interests, in common and preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or direct or indirect
interests therein, whether such Investments and Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company interests, stock,
interests, obligations, Investments or Securities or other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or short, options on
futures contracts;
(iii) to buy, sell and otherwise acquire investments, whether such investments are readily marketable
or not;
(iv) to invest and reinvest the cash assets of the Partnership in
money-market or other short-term investments;
(v) to hold, receive, mortgage, pledge, grant security interests over, lease, transfer, exchange or otherwise dispose of, grant
options with respect to, and otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or owned by the Partnership;
(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by mortgage, pledge,
conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and to buy, sell,
pledge or otherwise dispose of any such instrument or evidence of indebtedness;
(vii) to lend any of its property or
funds, either with or without security, at any legal rate of interest or without interest;
(viii) to have and maintain one
or more offices within or without the State of Delaware, and in connection therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection with the
maintenance of such office or offices;
(ix) to open, maintain and close accounts, including margin accounts, with brokers;
(x) to open, maintain and close bank accounts and draw checks and other orders for the payment of moneys;
(xi) to engage accountants, auditors, custodians, investment advisers, attorneys and any and all other agents and assistants,
both professional and nonprofessional, and to compensate any of them as may be necessary or advisable;
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(xii) to form or cause to be formed and to own the stock of one or more
corporations, whether foreign or domestic, to form or cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic and to form or cause to be formed and be a member or manager or both of one or more limited
liability companies;
(xiii) to enter into, make and perform all contracts, agreements and other undertakings as may be
necessary, convenient, advisable or incident to carrying out its purposes;
(xiv) to sue and be sued, to prosecute, settle
or compromise all claims against third parties, to compromise, settle or accept judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection therewith;
(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to the Partners cash or
investments or other property of the Partnership, or any combination thereof; and
(xvi) to take such other actions
necessary, desirable, convenient or incidental thereto and to engage in such other businesses as may be permitted under Delaware and other applicable law.
Section 2.5. Place of Business. The Partnership shall maintain a registered office at c/o Intertrust Corporate Services Delaware
Ltd., 200 Bellevue Parkway, Suite 210, Bellevue Park Corporate Center, Wilmington, Delaware 19809. The Partnership shall maintain an office and principal place of business at such place or places as the General Partner specifies from time to time
and as set forth in the books and records of the Partnership. The name and address of the Partnership’s registered agent is Intertrust Corporate Services Delaware Ltd., 200 Bellevue Parkway, Suite 210, Bellevue Park Corporate Center,
Wilmington, Delaware 19809. The General Partner may from time to time change the registered agent or office by an amendment to the certificate of limited partnership of the Partnership.
ARTICLE III
MANAGEMENT
Section 3.1. General Partner. (a) Blackstone CEMA II L.L.C. is the General Partner as of the date hereof. The General Partner
shall cease to be the General Partner only if (i) it Withdraws from the Partnership for any reason, (ii) it consents in its sole discretion to resign as the General Partner, or (iii) a Final Event with respect to it occurs. The
General Partner may not be removed without its consent. There may be one or more General Partners. In the event that one or more other General Partners is admitted to the Partnership as such, all references herein to the “General Partner”
in the singular form shall be deemed to also refer to such other General Partners as may be appropriate. The relative rights and responsibilities of such General Partners will be as agreed upon from time to time between them.
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(b) Upon the Withdrawal from the Partnership or voluntary resignation of the last remaining
General Partner, all of the powers formerly vested therein pursuant to this Agreement and the Partnership Act shall be exercised by a Majority in Interest of the Partners.
Section 3.2. Partner Voting, etc. (a) Except as otherwise expressly provided herein and except as may be expressly required
by the Partnership Act, Partners (including Special Partners), other than General Partners, as such shall have no right to, and shall not, take part in the management or control of the Partnership’s business or act for or bind the Partnership,
and shall have only the rights and powers granted to Partners of the applicable class herein.
(b) To the extent a Partner is entitled to
vote with respect to any matter relating to the Partnership, such Partner shall not be obligated to abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such Partner (or any
Affiliate thereof) in such matter.
(c) Meetings of the Partners may be called only by the General Partner.
(d) Notwithstanding any other provision of this Agreement, any Limited Partner or Withdrawn Partner that fails to respond to a notice provided
by the General Partner requesting the consent, approval or vote of such Limited Partner or Withdrawn Partner within 14 days after such notice is sent to such Limited Partner or Withdrawn Partner shall be deemed to have given its affirmative consent
or approval thereto.
Section 3.3. Management. (a) The management, control and operation of the Partnership and the
formulation and execution of business and investment policy shall be vested in the General Partner. The General Partner shall, in its discretion, exercise all powers necessary and convenient for the purposes of the Partnership, including those
enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the General Partner pursuant to this Agreement shall be made in its sole discretion, subject
only to the express terms and conditions of this Agreement.
(b) Notwithstanding any provision in this Agreement to the contrary, the
Partnership is hereby authorized, without the need for any further act, vote or consent of any person (directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a
partner of Associates II on Associates II’s own behalf or in Associates II’s capacity as general partner, capital partner and/or limited partner of BCEP II or as general partner or limited partner, member, shareholder or other equity
interest owner of any Partnership Affiliate or, if applicable, in the Partnership’s capacity as a capital partner of BCEP II or as general or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (i)
to execute and deliver, and to perform the Partnership’s obligations under the Associates II LP Agreement, including, without limitation, serving as a partner of Associates II, (ii) to execute and deliver, and to cause Associates II to
perform Associates II’s obligations under, the BCEP II Agreements, including, without limitation, serving as a general partner of BCEP II and, if applicable, a capital partner of BCEP II, (iii) if applicable, to execute and deliver, and to
perform the Partnership’s obligations under, the BCEP II Agreements, including, without limitation, serving as a capital partner of BCEP II, (iv) to execute and deliver, and to perform, or, if applicable, to cause Associates II to perform,
the Partnership’s or Associates
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II’s obligations under, the governing agreement, as amended, supplemented, restated or otherwise modified (each a “Partnership Affiliate Governing Agreement”), of any other
partnership, limited liability company, other company, corporation or other entity (each a “Partnership Affiliate”) of which the Partnership or Associates II is, or is to become, a general partner or limited partner, member,
shareholder or other equity interest owner, including, without limitation, serving as a general partner or limited partner, member, shareholder or other equity interest owner of each Partnership Affiliate, and (v) to take any action, in the
applicable capacity, contemplated by or arising out of this Agreement, the Associates II LP Agreement, the BCEP II Agreements or each Partnership Affiliate Governing Agreement (and any amendment, supplement, restatement and/or other modification of
any of the foregoing).
(c) The General Partner and any other person designated by the General Partner, each acting individually, is hereby
authorized and empowered, as an authorized person of the Partnership within the meaning of the Partnership Act, or otherwise, or as an authorized representative of the General Partner (the General Partner hereby authorizing and ratifying any of the
following actions):
(i) to execute and deliver and/or file (including any such action, directly or indirectly through one
or more other entities, in the name and on behalf of the Partnership, on its own behalf, or in its capacity as a partner of Associates II on Associates II’s own behalf, or in Associates II’s capacity as general partner, special general
partner, capital partner and/or limited partner of BCEP II or as general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate or, if applicable, in the Partnership’s capacity as a capital
partner of BCEP II or as a general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate), any of the following:
(A) any agreement, certificate, instrument or other document of the Partnership, Associates II, BCEP II or any Partnership
Affiliate (and any amendments, supplements, restatements and/or other modifications thereof), including, without limitation, the following: (I) the Associates II LP Agreement, the BCEP II Agreements and each Partnership Affiliate Governing
Agreement, (II) subscription agreements and documents on behalf of BCEP II or Associates II, (III) side letters issued in connection with investments in BCEP II, and (IV) such other agreements, certificates, instruments and other
documents as may be necessary or desirable in furtherance of the purposes of the Partnership, Associates II, BCEP II or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing
referred to in (I) through (IV) above) and for the avoidance of doubt, this Agreement may be amended by the General Partner in its sole discretion;
(B) the certificates of formation, certificates of limited partnership and/or other organizational documents of the
Partnership, Associates II, BCEP II and any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing); and
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(C) any other certificates, notices, applications and other documents (and
any amendments, supplements, restatements and/or other modifications thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Partnership, Associates
II, BCEP II or any Partnership Affiliate to qualify to do business in a jurisdiction in which the Partnership, Associates II, BCEP II or such Partnership Affiliate desires to do business;
(ii) to prepare or cause to be prepared, and to sign, execute and deliver and/or file (including any such action, directly or
indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a partner of Associates II on Associates II’s own behalf or in Associates II’s capacity as general
partner, capital partner and/or limited partner of BCEP II, or as general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate or, if applicable, in the Partnership’s capacity as a capital
partner of BCEP II or as general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (A) any certificates, forms, notices, applications and other documents to be filed with any government or
governmental or regulatory body on behalf of the Partnership, Associates II, BCEP II and/or any Partnership Affiliate, (B) any certificates, forms, notices, applications and other documents that may be necessary or advisable in connection with
any bank account of the Partnership, Associates II, BCEP II or any Partnership Affiliate or any banking facilities or services that may be utilized by the Partnership, Associates II, BCEP II or any Partnership Affiliate, and all checks, notes,
drafts and other documents of the Partnership, Associates II, BCEP II or any Partnership Affiliate that may be required in connection with any such bank account or banking facilities or services and (C) resolutions with respect to any of the
foregoing matters (which resolutions, when executed by any person authorized as provided in this Section 3.3(c), each acting individually, shall be deemed to have been duly adopted by the General Partner, the Partnership, Associates II, BCEP II
or any Partnership Affiliate, as applicable, for all purposes).
(d) The authority granted to any person (other than the General Partner)
in Section 3.3(c) may be revoked at any time by the General Partner by an instrument in writing signed by the General Partner.
Section 3.4. Responsibilities of Partners. (a) Unless otherwise determined by the General Partner in a particular case, each
Limited Partner (other than a Special Partner) shall devote substantially all of his or her time and attention to the businesses of the Partnership and its Affiliates, and each Special Partner shall not be required to devote any time or attention to
the businesses of the Partnership or its Affiliates.
(b) All outside business or investment activities of the Partners (including outside
directorships or trusteeships) shall be subject to such rules and regulations as are established by the General Partner from time to time.
(c) The General Partner may from time to time establish such other rules and regulations applicable to Partners or other employees as the
General Partner deems appropriate, including rules governing the authority of Partners or other employees to bind the Partnership to financial commitments or other obligations.
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Section 3.5. Exculpation and Indemnification.
(a) Liability to Partners. Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent
permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually, a “Covered
Person” and collectively, the “Covered Persons”) shall be liable to the Partnership or any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related document or any transaction or investment
contemplated hereby or thereby) taken or omitted by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable judicial determination and/or determination
of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority granted to such Covered Person by
this Agreement. Each Covered Person shall be entitled to rely in good faith on the advice of legal counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by any Covered Person in reliance on such
advice shall in any event subject such person to any liability to any Partner or the Partnership. To the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to
another Partner, to the fullest extent permitted by law, such Partner acting under this Agreement shall not be liable to the Partnership or to any such other Partner for its good faith reliance on the provisions of this Agreement. The provisions of
this Agreement, to the extent that they expand or restrict the duties and liabilities of a Partner otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by law, to modify to that extent such other duties
and liabilities of such Partner. To the fullest extent permitted by law, the parties hereto agree that the General Partner shall be held to have acted in good faith for the purposes of this Agreement and its duties under the Partnership Act if it
believes that it has acted honestly and in accordance with the specific terms of this Agreement.
(b) Indemnification. (i) To
the fullest extent permitted by law, the Partnership shall indemnify and hold harmless (but only to the extent of the Partnership’s assets (including, without limitation, the remaining capital commitments of the Partners)) each Covered Person
from and against any and all claims, damages, losses, costs, expenses and liabilities (including, without limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and
reasonable expenses of investigating or defending against any claim or alleged claim), joint and several, of any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, for purposes of this Section 3.5(b),
“Losses”), arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the Covered Person may be involved, or threatened to be involved, as a party or
otherwise, by reason of such Covered Person’s management of the affairs of the Partnership or which relate to or arise out of or in connection with the Partnership, its property, its business or affairs (other than claims, demands, actions,
suits or proceedings, civil, criminal, administrative or investigative, arising out of any act or omission of such Covered Person constituting Cause); provided, that a Covered Person shall not be entitled to indemnification under this
Section 3.5(b) with respect to any claim, issue or matter if there is a final and non-appealable
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judicial determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to,
the best interests of the Partnership and within the authority granted to such Covered Person by this Agreement; provided further, that if such Covered Person is a Partner or a Withdrawn Partner, such Covered Person shall bear its share of
such Losses in accordance with such Covered Person’s GP-Related Profit Sharing Percentage in the Partnership as of the time of the actions or omissions that gave rise to such Losses. To the fullest extent
permitted by law, expenses (including legal fees) incurred by a Covered Person (including, without limitation, the General Partner) in defending any claim, demand, action, suit or proceeding may, with the approval of the General Partner, from time
to time, be advanced by the Partnership prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Partnership of a written undertaking by or on behalf of the Covered Person to repay such amount to the
extent that it shall be subsequently determined that the Covered Person is not entitled to be indemnified as authorized in this Section 3.5(b), and the Partnership and its Affiliates shall have a continuing right of offset against such Covered
Person’s interests/investments in the Partnership and such Affiliates and shall have the right to withhold amounts otherwise distributable to such Covered Person to satisfy such repayment obligation. If a Partner institutes litigation against a
Covered Person which gives rise to an indemnity obligation hereunder, such Partner shall be responsible, up to the amount of such Partner’s Interests and remaining capital commitments, for such Partner’s pro rata share of the
Partnership’s expenses related to such indemnity obligation, as determined by the General Partner. The Partnership may purchase insurance, to the extent available at reasonable cost, to cover losses, claims, damages or liabilities covered by
the foregoing indemnification provisions. Partners will not be personally obligated with respect to indemnification pursuant to this Section 3.5(b). The General Partner shall have the authority to enter into separate agreements with any Covered
Person in order to give effect to the obligations to indemnify pursuant to this Section 3.5(b).
(ii) (A)
Notwithstanding anything to the contrary herein, for greater certainty, it is understood and/or agreed that the Partnership’s obligations hereunder are not intended to render the Partnership as a primary indemnitor for purposes of the
indemnification, advancement of expenses and related provisions under applicable law governing BCEP II and/or a particular portfolio entity through which an Investment is indirectly held. It is further understood and/or agreed that a Covered Person
shall first seek to be so indemnified and have such expenses advanced in the following order of priority: first, out of proceeds available in respect of applicable insurance policies maintained by the applicable portfolio entity and/or BCEP II;
second, by the applicable portfolio entity through which such investment is indirectly held; third, by BCEP II and fourth by Associates II (only to the extent the foregoing sources are exhausted).
(B) The Partnership’s obligation, if any, to indemnify or advance expenses to any Covered Person shall be reduced by any
amount that such Covered Person may collect as indemnification or advancement from BCEP II and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained thereby), and to the extent the Partnership (or
any Affiliate thereof) pays or causes to be paid any amounts that should have been paid by Associates II, BCEP II and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained thereby), it is agreed
among the Partners that the
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Partnership shall have a subrogation claim against Associates II and/or BCEP II and/or such portfolio entity in respect of such advancement or payments. The General Partner and the Partnership
shall be specifically empowered to structure any such advancement or payment as a loan or other arrangement (except for a loan to an executive officer of The Blackstone Group Inc. or any of its Affiliates, which shall not be permitted) as the
General Partner may determine necessary or advisable to give effect to or otherwise implement the foregoing.
Section 3.6.
Representations of Partners. (a) Each Limited Partner and Special Partner by execution of this Agreement (or by otherwise becoming bound by the terms and conditions hereof as provided herein or in the Partnership Act) represents and
warrants to every other Partner and to the Partnership, except as may be waived by the General Partner, that such Partner is acquiring each of such Partner’s Interests for such Partner’s own account for investment and not with a view to
resell or distribute the same or any part hereof, and that no other person has any interest in any such Interest or in the rights of such Partner hereunder; provided, that a Partner may choose to make transfers for estate and charitable
planning purposes (pursuant to Section 6.3(a) and otherwise in accordance with the terms hereof). Each Limited Partner and Special Partner represents and warrants that such Partner understands that the Interests have not been registered under
the Securities Act and therefore such Interests may not be resold without registration under the Securities Act or exemption from such registration, and that accordingly such Partner must bear the economic risk of an investment in the Partnership
for an indefinite period of time. Each Limited Partner and Special Partner represents that such Partner has such knowledge and experience in financial and business matters, that such Partner is capable of evaluating the merits and risks of an
investment in the Partnership, and that such Partner is able to bear the economic risk of such investment. Each Limited Partner and Special Partner represents that such Partner’s overall commitment to the Partnership and other investments which
are not readily marketable is not disproportionate to the Partner’s net worth and the Partner has no need for liquidity in the Partner’s investment in Interests. Each Limited Partner and Special Partner represents that to the full
satisfaction of the Partner, the Partner has been furnished any materials that such Partner has requested relating to the Partnership, any Investment and the offering of Interests and has been afforded the opportunity to ask questions of
representatives of the Partnership concerning the terms and conditions of the offering of Interests and any matters pertaining to each Investment and to obtain any other additional information relating thereto. Each Limited Partner and Special
Partner represents that the Partner has consulted to the extent deemed appropriate by the Partner with the Partner’s own advisers as to the financial, tax, legal and related matters concerning an investment in Interests and on that basis
believes that an investment in the Interests is suitable and appropriate for the Partner.
(b) Each Limited Partner and Special Partner
agrees that the representations and warranties contained in paragraph (a) above shall be true and correct as of any date that such Partner (1) makes a capital contribution to the Partnership (whether as a result of Firm Advances made to
such Partner or otherwise) with respect to any Investment, and such Partner hereby agrees that such capital contribution shall serve as confirmation thereof and/or (2) repays any portion of the principal amount of a Firm Advance, and such
Partner hereby agrees that such repayment shall serve as confirmation thereof.
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Section 3.7. Tax Representation and Further Assurances. (a) Each
Limited Partner and Special Partner, upon the request of the General Partner, agrees to perform all further acts and to execute, acknowledge and deliver any documents that may be reasonably necessary to comply with the General Partner’s or the
Partnership’s obligations under applicable law or to carry out the provisions of this Agreement.
(b) Each Limited Partner and Special
Partner certifies that (A) if the Limited Partner or Special Partner is a United States person (as defined in the Code) (x) (i) the Limited Partner or Special Partner’s name, social security number (or, if applicable, employer
identification number) and address provided to the Partnership and its Affiliates pursuant to an IRS Form W- 9, Request for Taxpayer Identification Number Certification
(“W-9”) or otherwise are correct and (ii) the Limited Partner or Special Partner will complete and return a W-9 and (y) (i) the Limited
Partner or Special Partner is a United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days of a change to foreign (non-United
States) status or (B) if the Limited Partner or Special Partner is not a United States person (as defined in the Code) (x) (i) the information on the completed IRS Form W-8BEN, Certificate of Foreign
Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) (“W-8BEN”), IRS Form
W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities) (“W-8BEN-E”), or other applicable form, including but not limited to IRS Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or
Certain U.S. Branches for United States Tax Withholding and Reporting (“W-8IMY”), or otherwise is correct and (ii) the Limited Partner or Special Partner will complete and return the
applicable IRS form, including but not limited to a W-8BEN, W-8BEN-E or W-8IMY, and
(y) (i) the Limited Partner or Special Partner is not a United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days of any change of such status. Each Limited
Partner and Special Partner agrees to provide such cooperation and assistance, including but not limited to properly executing and providing to the Partnership in a timely manner any tax or other documentation or information that may be reasonably
requested by the Partnership or the General Partner.
(c) Each Limited Partner and Special Partner acknowledges and agrees that the
Partnership and the General Partner may release confidential information or other information about the Limited Partner or Special Partner or related to such Limited Partner or Special Partner’s investment in the Partnership if the Partnership
or the General Partner, in its or their sole discretion, determines that such disclosure is required by applicable law or regulation or in order to comply for an exception from, or reduced tax rate of, tax or other tax benefit. Any such disclosure
shall not be treated as a breach of any restriction upon the disclosure of information imposed on any such person by law or otherwise, and a Limited Partner or Special Partner shall have no claim against the Partnership, the General Partner or any
of their Affiliates for any form of damages or liability as a result of actions taken by the foregoing in order to comply with any disclosure obligations that the foregoing reasonably believe are required by law, regulation or otherwise.
(d) Each Limited Partner and Special Partner acknowledges and agrees that if it provides information that is in anyway materially misleading,
or if it fails to provide the Partnership or its agents with any information requested hereunder, in either case in order to satisfy the Partnership’s obligations, the General Partner reserves the right to take any action and pursue any
remedies at its disposal, including (i) requiring such Limited Partner or Special Partner to Withdraw for Cause and (ii) withholding or deducting any costs caused by such Limited Partner’s or Special Partner’s action or inaction
from amounts otherwise distributable to such Limited Partner or Special Partner from the Partnership and its Affiliates.
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ARTICLE IV
CAPITAL OF THE PARTNERSHIP
Section 4.1. Capital Contributions by Partners. (a) Each Partner shall be required to make capital contributions to the
Partnership (“GP-Related Capital Contributions”) at such times and in such amounts (the “GP-Related Required Amounts”) as are required
to satisfy the Partnership’s obligation to make capital contributions to Associates II in respect of the GP-Related Associates II Interest to fund Associates II’s capital contributions with respect
to any GP-Related BCEP II Investment and as are otherwise determined by the General Partner from time to time or as may be set forth in such Limited Partner’s Commitment Agreement or SMD Agreement, if
any, or otherwise; provided, that additional GP-Related Capital Contributions in excess of the GP-Related Required Amounts may be made pro rata among the
Partners based upon each Partner’s Carried Interest Sharing Percentage. GP-Related Capital Contributions in excess of the GP-Related Required Amounts which are to
be used for ongoing business operations (as distinct from financing, legal or other specific liabilities of the Partnership (including those specifically set forth in Section 4.1(d) and Section 5.8(d))) shall be determined by the General
Partner. Special Partners shall not be required to make additional GP-Related Capital Contributions to the Partnership in excess of the GP-Related Required Amounts,
except (i) as a condition of an increase in such Special Partner’s GP-Related Profit Sharing Percentage or (ii) as specifically set forth in this Agreement; provided, that the General
Partner and any Special Partner may agree from time to time that such Special Partner shall make an additional GP-Related Capital Contribution to the Partnership; provided further, that each
Investor Special Partner shall maintain its GP-Related Capital Accounts at an aggregate level equal to the product of (i) its GP-Related Profit Sharing Percentage
from time to time and (ii) the total capital of the Partnership related to the GP-Related BCEP II Interest.
(b) Each GP-Related Capital Contribution by a Partner shall be credited to the appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2, subject to Section 5.10.
(c) The General Partner may elect on a case by case basis to (i) cause the Partnership to loan any Partner (including any additional
Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) the amount of any GP-Related
Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The
Blackstone Group Inc. or any Affiliate thereof) to make a required GP-Related Capital Contribution to the Partnership in installments, in each case on terms determined by the General Partner.
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(d) (i) The Partners and the Withdrawn Partners have entered into the Trust Agreement,
pursuant to which certain amounts of the distributions relating to Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account constituting a
“Holdback”). The General Partner shall determine, as set forth below, the percentage of each distribution of Carried Interest that shall be withheld for any General Partner and/or Holdings and each Partner Category (such withheld
percentage constituting the General Partner’s and such Partner Category’s “Holdback Percentage”). The applicable Holdback Percentages initially shall be 0% for any General Partner, 15% for Existing Partners (other than the
General Partner), 21% for Retaining Withdrawn Partners (other than the General Partner) and 24% for Deceased Partners (the “Initial Holdback Percentages”). Any provision of this Agreement to the contrary notwithstanding, the
Holdback Percentage for the General Partner and/or Holdings shall not be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).
(ii) The Holdback Percentage may not be reduced for any individual Partner as compared to the other Partners in his or her
Partner Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner Categories on a proportionate basis. For example, if the Holdback Percentage for Existing Partners is
decreased to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any reduction in the Holdback Percentage for any Partner shall apply only to distributions relating
to Carried Interest made after the date of such reduction.
(iii) The Holdback Percentage may not be increased for any
individual Partner as compared to the other Partners in his or her Partner Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’ Holdback Percentage beyond 21% unless the
General Partner concurrently increases the Existing Partners’ Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the General Partner increases the Holdback
Percentage for both Existing Partners and Retaining Withdrawn Partners to 24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies equally to all Partner Categories. Any
increase in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner from proportionately increasing the
Holdback Percentage of any Partner Category (following a reduction of the Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For example, if the General Partner reduces
the Holdback Percentages for Existing Partners, Retaining Withdrawn Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the Holdback Percentages to the Initial
Holdback Percentages.
(iv) (A) Notwithstanding anything contained herein to the contrary, the General Partner may
increase or decrease the Holdback Percentage for any Partner in any Partner Category (in such capacity, the “Subject Partner”) pursuant to a majority vote of the Limited Partners (a “Holdback Vote”);
provided, that, notwithstanding anything to the contrary contained herein, the Holdback Percentage applicable to any General Partner shall not be increased or decreased without its prior written consent; provided further, that a
Subject Partner’s Holdback Percentage shall not be (I) increased prior to such time as such
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Subject Partner (x) is notified by the Partnership of the decision to increase such Subject Partner’s Holdback Percentage and (y) has, if requested by such Subject Partner, been
given 30 days to gather and provide information to the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) or (II) decreased unless such decrease occurs subsequent to an increase in a Subject
Partner’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv); provided further, that such decrease shall not exceed an amount such that such Subject Partner’s Holdback Percentage is less than the
prevailing Holdback Percentage for the Partner Category of such Subject Partner; provided further, that a Partner shall not vote to increase a Subject Partner’s Holdback Percentage unless such voting Partner determines, in such
Partner’s good faith judgment, that the facts and circumstances indicate that it is reasonably likely that such Subject Partner, or any of such Subject Partner’s successors or assigns (including such Subject Partner’s estate or heirs)
who at the time of such vote holds the GP-Related Partner Interest or otherwise has the right to receive distributions relating thereto, will not be capable of satisfying any
GP-Related Recontribution Amounts that may become due.
(B) A Holdback Vote shall
take place at a Partnership meeting. Each of the Limited Partners shall be entitled to cast one vote with respect to the Holdback Vote regardless of such Limited Partner’s interest in the Partnership. Such vote may be cast by any such Partner
in person or by proxy.
(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback
Percentage, such Subject Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided, that if the Partnership and the Subject Partner cannot agree
upon a mutually satisfactory arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates;
provided further, that if such candidates fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the
arbitrator. Each Subject Partner that submits the decision of the Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected out-of-pocket expenses relating thereto, and each such party shall, to the satisfaction of the arbitrator and prior to any determination being made by the arbitrator, pay the total of such estimated expenses
(i.e., both the Subject Partner’s and the Partnership’s expenses) into an escrow account. The arbitrator shall direct the escrow agent to pay out of such escrow account all expenses associated with such arbitration (including costs
leading thereto) and to return to the “victorious” party the entire amount of funds such party paid into such escrow account. If the amount contributed to the escrow account by the losing party is insufficient to cover the expenses of such
arbitration, such “losing” party shall then provide any additional funds necessary to cover such costs to such “victorious” party. For purposes hereof, the “victorious” party shall be the Partnership if the Holdback
Percentage ultimately determined by the arbitrator is closer to the percentage determined in the second Holdback Vote than it is to the prevailing Holdback Percentage for the Subject Partner’s Partner Category; otherwise, the Subject Partner
shall be the “victorious” party. The party that is not the “victorious” party shall be the “losing” party.
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(D) In the event of a decrease in a Subject Partner’s Holdback
Percentage (1) pursuant to a Holdback Vote under this clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and distribute to such Subject Partner any Trust
Amounts (and the Trust Income thereon (except as expressly provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance with such Subject Partner’s reduced
Holdback Percentage) as though such reduced Holdback Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).
(v) (A) If a Partner’s Holdback Percentage exceeds 15% (such percentage in excess of 15% constituting the
“Excess Holdback Percentage”), such Partner may satisfy the portion of his or her Holdback obligation in respect of his or her Excess Holdback Percentage (such portion constituting such Partner’s “Excess
Holdback”), and such Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he or she was a Partner), to the extent his or her Excess Holdback obligation has previously been satisfied in cash, may
obtain the release of the Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback
obligation, by pledging, granting a security interest or otherwise making available to the General Partner, on a first priority basis (except as provided below), all or any portion of his or her Firm Collateral in satisfaction of his or her Excess
Holdback obligation. Any Partner seeking to satisfy all or any portion of the Excess Holdback utilizing Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the
General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Partnership to realize on (if required), such Firm Collateral; provided, that, in the case of entities listed in the Partnership’s
books and records in which Partners are permitted to pledge or grant a security interest over their interests therein to finance all or a portion of their capital contributions thereto (“Pledgable Blackstone Interests”), to the
extent a first priority security interest is unavailable because of an existing lien on such Firm Collateral, the Partner or Withdrawn Partner seeking to utilize such Firm Collateral shall grant the General Partner a second priority security
interest therein in the manner provided above; provided further, that (x) in the case of Pledgable Blackstone Interests, to the extent that neither a first priority nor a second priority security interest is available, or
(y) if the General Partner otherwise determines in its good faith judgment that a security interest in Firm Collateral (and the corresponding documents and actions) are not necessary or appropriate, the Partner or Withdrawn Partner shall (in
the case of either clause (x) or (y) above) irrevocably instruct in writing the relevant partnership, limited liability company or other entity listed in the Partnership’s books and records to remit any and all net proceeds resulting from
a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully provided in clause (B) below. The Partnership shall, at the request of any Partner or Withdrawn Partner, assist such Partner or Withdrawn Partner in taking
such action as is necessary to enable such Partner or Withdrawn Partner to use Firm Collateral as provided hereunder.
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(B) If upon a sale or other realization of all or any portion of any Firm
Collateral (a “Firm Collateral Realization”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds otherwise
distributable to such Partner or Withdrawn Partner from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust Account to
fully satisfy such Excess Holdback requirement (allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount necessary
to satisfy such Excess Holdback requirement shall be distributed to such Partner or Withdrawn Partner.
(C) Upon any
valuation or revaluation of Firm Collateral that results in a decreased valuation of such Firm Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including
upon a Firm Collateral Realization, if net proceeds therefrom and the remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the
foregoing to such Partner or Withdrawn Partner and such Partner or Withdrawn Partner shall, within 30 days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his or her
Excess Holdback requirement. If any such Partner or Withdrawn Partner defaults upon his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii)
shall be deemed inapplicable to a default under this clause (C); provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term
“GP-Related Defaulting Party” where such term appears in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the
amount due pursuant to this clause (C).
(vi) Any Partner or Withdrawn Partner may (A) obtain the release of any Trust
Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such Partner or Withdrawn Partner or
(B) require the Partnership to distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit (an “L/C”) for the benefit of the
Trustee(s) in such amounts. Any Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall deliver to the Trustee(s) an unconditional and irrevocable L/C from a commercial
bank whose (x) short-term deposits are rated at least A-1 by S&P or P-1 by Moody’s (if the L/C is for a term of 1 year or less), or (y) long-term
deposits are rated at least A+ by
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S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more) (each a “Required Rating”). If the relevant rating of the commercial bank issuing such L/C drops below
the relevant Required Rating, the L/C Partner shall supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, in lieu of the insufficient
L/C. In addition, if the L/C has a term expiring on a date earlier than the latest possible termination date of BCEP II, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to provide a new L/C from a commercial bank
whose relevant rating is at least equal to the relevant Required Rating, at least 30 days prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to drawing on any L/C. The Trustee(s) may
(as directed by the Partnership in the case of clause (I) below) draw down on an L/C only if (I) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the Partnership’s obligations under the Clawback
Provisions or (II) an L/C Partner has not provided a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash and/or Firm Collateral (to the extent permitted
hereunder)), at least 30 days prior to the stated expiration of an existing L/C in accordance with this clause (vi). The Trustee(s), as directed by the Partnership, shall return to any L/C Partner his or her L/C upon (1) the termination of the
Trust Account and satisfaction of the Partnership’s obligations, if any, in respect of the Clawback Provisions, (2) an L/C Partner satisfying his or her entire Holdback obligation in cash and Firm Collateral (to the extent permitted
hereunder), or (3) the release, by the Trustee(s), as directed by the Partnership, of all amounts in the Trust Account to the Partners or Withdrawn Partners. If an L/C Partner satisfies a portion of his or her Holdback obligation in cash and/or
Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as directed by the Partnership, release a portion of the amounts in the Trust Account to the Partners or Withdrawn Partners in the Partner Category of such L/C Partner, the
L/C of an L/C Partner may be reduced by an amount corresponding to such portion satisfied in cash and/or Firm Collateral (to the extent permitted hereunder) or such portion released by the Trustee(s), as directed by the Partnership; provided,
that in no way shall the general release of any Trust Income cause an L/C Partner to be permitted to reduce the amount of an L/C by any amount.
(vii) (A) Any in-kind distributions by the Partnership relating to Carried
Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose of any in-kind distributions held in the Trust Account at any
time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.
(B) In lieu of the
foregoing, any Existing Partner may pledge or grant a security interest with respect to any in-kind distribution the Special Firm Collateral referred to in the applicable category in the Partnership’s
books and records; provided, that the initial contribution of such Special Firm Collateral shall initially equal 130% of the required Holdback for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback.
Sections 4.1(d)(viii)(C) and (D) shall apply to such Special Firm Collateral. To the extent such Special Firm Collateral exceeds the applicable minimum percentage of the required Holdback specified in the first sentence of this clause (vii)(B),
the related Partner may obtain a release of such excess amount from the Trust Account.
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(viii) (A) Any Limited Partner or Withdrawn Partner may satisfy all or
any portion of his or her Holdback (excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his or her Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by the use of an L/C as
provided herein, obtain a release of Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn Partner’s Holdback
(excluding any Excess Holdback) by pledging or granting a security interest to the Trustee(s) on a first priority basis all of his or her Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or exceed the amount of
the Holdback distributed to the Partner or Withdrawn Partner (as more fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise take such other
action as is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) to realize on (if required), such Special Firm Collateral.
(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or any portion of any Special Firm
Collateral (a “Special Firm Collateral Realization”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in connection with an Excess
Holdback) is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided herein (i.e., cash contributed to the Trust Account or an L/C in the Trust
Account)), then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Special Firm Collateral Realization (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund or
other asset and is being used in connection with an Excess Holdback) shall be paid into the Trust (and allocated to such Partner or Withdrawn Partner) to fully satisfy such Holdback and shall be deemed thereafter to be Trust Amounts for purposes
hereunder. Any net proceeds from such Special Firm Collateral Realization in excess of the amount necessary to satisfy such Holdback (excluding any Excess Holdback) shall be distributed to such Partner or Withdrawn Partner. To the extent a
Qualifying Fund distributes Securities to a Partner or Withdrawn Partner in connection with a Special Firm Collateral Realization, such Partner or Withdrawn Partner shall be required to promptly fund such Partner’s or Withdrawn Partner’s
deficiency with respect to his or her Holdback in cash or an L/C.
(C) Upon any valuation or revaluation of the Special
Firm Collateral and/or any adjustment in the Applicable Collateral Percentage applicable to a Qualifying Fund (as provided in the Partnership’s books and records), if such Partner’s or Withdrawn Partner’s Special Firm Collateral is
valued at less than such Partner’s Holdback (excluding any Excess Holdback) as provided in the Partnership’s books and records, taking into account other permitted means of
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satisfying the Holdback hereunder, the Partnership shall provide notice of the foregoing to such Partner or Withdrawn Partner and, within 10 Business Days of receiving such notice, such Partner
or Withdrawn Partner shall contribute cash or additional Special Firm Collateral to the Trust Account in an amount necessary to make up such deficiency. If any such Partner or Withdrawn Partner defaults upon his or her obligations under this clause
(C), then Section 5.8(d)(ii) shall apply thereto; provided, that the first sentence of Section 5.8(d)(ii)(A) shall be deemed inapplicable to such default; provided further, that for purposes of applying
Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such term appears in such Section 5.8(d)(ii) shall be construed as
“defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution
Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(D) Upon a Partner becoming a Withdrawn Partner, at any time thereafter the General Partner may revoke the ability of such
Withdrawn Partner to use Special Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding anything else in this Section 4.1(d)(viii). In that case the provisions of clause (C) above shall apply to the Withdrawn
Partner’s obligation to satisfy the Holdback (except that 30 days’ notice of such revocation shall be given), given that the Special Firm Collateral is no longer available to satisfy any portion of the Holdback (excluding any Excess
Holdback).
(E) Nothing in this Section 4.1(d)(viii) shall prevent any Partner or Withdrawn Partner from using any
amount of such Partner’s interest in a Qualifying Fund as Firm Collateral; provided, that at all times Section 4.1(d)(v) and this Section 4.1(d)(viii) are each satisfied.
Section 4.2. Interest. Interest on the balances of the Partners’ capital related to the Partners’ GP-Related Partner Interests (excluding capital invested in GP-Related Investments and, if deemed appropriate by the General Partner, capital invested in any other investment
of the Partnership) shall be credited to the Partners’ GP-Related Capital Accounts at the end of each accounting period pursuant to Section 5.2, or at any other time as determined by the General
Partner, at rates determined by the General Partner from time to time, and shall be charged as an expense of the Partnership.
Section 4.3. Withdrawals of Capital. No Partner may withdraw capital related to such Partner’s
GP-Related Partner Interests from the Partnership except (i) for distributions of cash or other property pursuant to Section 5.8, (ii) as otherwise expressly provided in this Agreement or
(iii) as determined by the General Partner.
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ARTICLE V
PARTICIPATION IN PROFITS AND LOSSES
Section 5.1. General Accounting Matters. (a) GP-Related Net Income (Loss) shall be
determined by the General Partner at the end of each accounting period and shall be allocated as described in Section 5.4.
(b)
“GP-Related Net Income (Loss)” means:
(i) from any activity of
the Partnership related to the GP-Related BCEP II Interest for any accounting period (other than GP-Related Net Income (Loss) from
GP-Related Investments described below), (x) the gross income realized by the Partnership from such activity during such accounting period less (y) all expenses of the Partnership, and all other items
that are deductible from gross income, for such accounting period that are allocable to such activity (determined as provided below);
(ii) from any GP-Related Investment for any accounting period in which such GP-Related Investment has not been sold or otherwise disposed of, (x) the gross amount of dividends, interest or other income received by the Partnership from such
GP-Related Investment during such accounting period less (y) all expenses of the Partnership for such accounting period that are allocable to such GP-Related
Investment (determined as provided below); and
(iii) from any GP-Related
Investment for the accounting period in which such GP-Related Investment is sold or otherwise disposed of, (x) the sum of the gross proceeds from the sale or other disposition of such GP-Related Investment and the gross amount of dividends, interest or other income received by the Partnership from such GP-Related Investment during such accounting period less (y) the sum of the cost or other
basis to the Partnership of such GP-Related Investment and all expenses of the Partnership for such accounting period that are allocable to such GP-Related Investment.
(c) GP-Related Net Income (Loss) shall be determined in accordance with the accounting method used
by the Partnership for U.S. federal income tax purposes with the following adjustments: (i) any income of the Partnership that is exempt from U.S. federal income taxation and not otherwise taken into account in computing GP-Related Net Income (Loss) shall be added to such taxable income or loss; (ii) if any asset has a value in the books of the Partnership that differs from its adjusted tax basis for U.S. federal income tax
purposes, any depreciation, amortization or gain resulting from a disposition of such asset shall be calculated with reference to such value; (iii) upon an adjustment to the value of any asset in the books of the Partnership pursuant to
Treasury Regulations Section 1.704-1(b)(2), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (iv) any expenditures of the Partnership not
deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing GP-Related Net Income (Loss) pursuant to this definition shall be treated as
deductible items; (v) any income from a GP-Related Investment that is payable to Partnership employees in respect of “phantom interests” in such
GP-Related Investment awarded by the General Partner to employees shall be included as an expense in the
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calculation of GP-Related Net Income (Loss) from such GP-Related Investment, and (vi) items of income and
expense (including interest income and overhead and other indirect expenses) of the Partnership, Holdings and other Affiliates of the Partnership shall be allocated among the Partnership, Holdings and such Affiliates, among various Partnership
activities and GP-Related Investments and between accounting periods, in each case as determined by the General Partner. Any adjustments to GP-Related Net Income (Loss)
by the General Partner, including adjustments for items of income accrued but not yet received, unrealized gains, items of expense accrued but not yet paid, unrealized losses, reserves (including reserves for taxes, bad debts, actual or threatened
litigation, or any other expenses, contingencies or obligations) and other appropriate items shall be made in accordance with GAAP; provided, that the General Partner shall not be required to make any such adjustment.
(d) An accounting period shall be a Fiscal Year, except that, at the option of the General Partner, an accounting period will terminate and a
new accounting period will begin on the admission date of an additional Partner or the Settlement Date of a Withdrawn Partner, if any such date is not the first day of a Fiscal Year. If any event referred to in the preceding sentence occurs and the
General Partner does not elect to terminate an accounting period and begin a new accounting period, then the General Partner may make such adjustments as it deems appropriate to the Partners’ GP-Related
Profit Sharing Percentages for the accounting period in which such event occurs (prior to any allocations of GP-Related Unallocated Percentages or adjustments to
GP-Related Profit Sharing Percentages pursuant to Section 5.3) to reflect the Partners’ average GP-Related Profit Sharing Percentages during such accounting
period; provided, that the GP-Related Profit Sharing Percentages of Partners in GP-Related Net Income (Loss) from
GP-Related Investments acquired during such accounting period will be based on GP-Related Profit Sharing Percentages in effect when each such GP-Related Investment was acquired.
(e) In establishing
GP-Related Profit Sharing Percentages and allocating GP-Related Unallocated Percentages pursuant to Section 5.3, the General Partner may consider such factors as it
deems appropriate.
(f) All determinations, valuations and other matters of judgment required to be made for accounting purposes under this
Agreement shall be made by the General Partner and approved by the Partnership’s independent accountants. Such approved determinations, valuations and other accounting matters shall be conclusive and binding on all Partners, all Withdrawn
Partners, their successors, heirs, estates or legal representatives and any other person, and to the fullest extent permitted by law no such person shall have the right to an accounting or an appraisal of the assets of the Partnership or any
successor thereto.
Section 5.2. GP-Related Capital Accounts. (a) There shall be
established for each Partner in the books of the Partnership, to the extent and at such times as may be appropriate, one or more capital accounts as the General Partner may deem to be appropriate for purposes of accounting for such Partner’s
interests in the capital of the Partnership related to the GP-Related BCEP II Interest and the GP-Related Net Income (Loss) of the Partnership (each a “GP-Related Capital Account”).
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(b) As of the end of each accounting period or, in the case of a contribution to the
Partnership by one or more of the Partners with respect to such Partner or Partners’ GP-Related Partner Interests or a distribution by the Partnership to one or more of the Partners with respect to such
Partner or Partners’ GP-Related Partner Interests, at the time of such contribution or distribution, (i) the appropriate GP-Related Capital Accounts of each
Partner shall be credited with the following amounts: (A) the amount of cash and the value of any property contributed by such Partner to the capital of the Partnership related to such Partner’s
GP-Related Partner Interest during such accounting period, (B) the GP-Related Net Income allocated to such Partner for such accounting period and (C) the
interest credited on the balance of such Partner’s capital related to such Partner’s GP-Related Partner Interest for such accounting period pursuant to Section 4.2; and (ii) the appropriate
GP-Related Capital Accounts of each Partner shall be debited with the following amounts: (x) the amount of cash, the principal amount of any subordinated promissory note of the Partnership referred to in
Section 6.5 (as such amount is paid) and the value of any property distributed to such Partner during such accounting period with respect to such Partner’s GP-Related Partner Interest and
(y) the GP-Related Net Loss allocated to such Partner for such accounting period.
Section 5.3. GP-Related Profit Sharing Percentages. (a) Prior to the beginning of
each annual accounting period, the General Partner shall establish the profit sharing percentage (the “GP-Related Profit Sharing Percentage”) of each Partner in each category of GP-Related Net Income (Loss) for such annual accounting period pursuant to Section 5.1(a) taking into account such factors as the General Partner deems appropriate; provided, that (i) the General
Partner may elect to establish GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related
Investment acquired by the Partnership during such accounting period at the time such GP-Related Investment is acquired in accordance with paragraph (c) below and
(ii) GP-Related Net Income (Loss) for such accounting period from any GP-Related Investment shall be allocated in accordance with the
GP-Related Profit Sharing Percentages in such GP-Related Investment established in accordance with paragraph (c) below. The General Partner may establish different GP-Related Profit Sharing Percentages for any Partner in different categories of GP-Related Net Income (Loss). In the case of the Withdrawal of a Partner, such former
Partner’s GP-Related Profit Sharing Percentages shall be allocated by the General Partner to one or more of the remaining Partners as the General Partner shall determine. In the case of the admission of
any Partner to the Partnership as an additional Partner, the GP-Related Profit Sharing Percentages of the other Partners shall be reduced by an amount equal to the
GP-Related Profit Sharing Percentage allocated to such new Partner pursuant to Section 6.1(b); such reduction of each other Partner’s GP-Related Profit Sharing
Percentage shall be pro rata based upon such Partner’s GP-Related Profit Sharing Percentage as in effect immediately prior to the admission of the new Partner. Notwithstanding the foregoing, the
General Partner may also adjust the GP-Related Profit Sharing Percentage of any Partner for any annual accounting period at the end of such annual accounting period in its sole discretion.
(b) The General Partner may elect to allocate to the Partners less than 100% of the GP-Related Profit
Sharing Percentages of any category for any annual accounting period at the time specified in Section 5.3(a) for the annual fixing of GP-Related Profit Sharing Percentages (any remainder of such GP-Related Profit Sharing Percentages being called a “GP-Related Unallocated Percentage”); provided, that any
GP-Related Unallocated Percentage in any category of GP-Related Net Income (Loss) for any annual accounting period that is not allocated by the General Partner within 90
days after the end of such accounting period shall be deemed to be allocated among all the Partners (including the General Partner) in the manner determined by the General Partner in its sole discretion.
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(c) Unless otherwise determined by the General Partner in a particular case, (i) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment shall be allocated in
proportion to the Partners’ respective GP-Related Capital Contributions in respect of such GP-Related Investment and
(ii) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from each GP-Related Investment shall be fixed at
the time such GP-Related Investment is acquired and shall not thereafter change, subject to any repurchase rights established by the General Partner pursuant to Section 5.7.
Section 5.4. Allocations of GP-Related Net Income (Loss). (a) Except as provided in
Section 5.4(d), GP-Related Net Income of the Partnership for each GP-Related Investment shall be allocated to the GP-Related
Capital Accounts related to such GP-Related Investment of all the Partners participating in such GP-Related Investment (including the General Partner): first, in
proportion to and to the extent of the amount of Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest
distributed to the Partners; second, to Partners that received Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or
Carried Interest in years prior to the years such GP-Related Net Income is being allocated to the extent such Non-Carried Interest (other than amounts representing a
return of GP-Related Capital Contributions) or Carried Interest exceeded GP-Related Net Income allocated to such Partners in such earlier years; and third, to the
Partners in the same manner that such Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest would have
been distributed if cash were available to distribute with respect thereto.
(b) GP-Related Net
Loss of the Partnership shall be allocated as follows: (i) GP-Related Net Loss relating to realized losses suffered by BCEP II and allocated to the Partnership with respect to its pro rata share
thereof (based on capital contributions made by the Partnership to BCEP II with respect to the GP-Related BCEP II Interest) shall be allocated to the Partners in accordance with each Partner’s Non-Carried Interest Sharing Percentage with respect to the GP-Related Investment giving rise to such loss suffered by BCEP II and
(ii) GP-Related Net Loss relating to realized losses suffered by BCEP II and allocated to the Partnership with respect to the Carried Interest shall be allocated in accordance with a Partner’s
(including a Withdrawn Partner’s) Carried Interest Give Back Percentage (as of the date of such loss) (subject to adjustment pursuant to Section 5.8(e)).
(c) Notwithstanding Section 5.4(a) above, GP-Related Net Income relating to Carried Interest
allocated after the allocation of a GP-Related Net Loss pursuant to clause (ii) of Section 5.4(b) shall be allocated in accordance with such Carried Interest Give Back Percentages until such time as
the Partners have been allocated GP-Related Net Income relating to Carried Interest equal to the aggregate amount of GP-Related Net Loss previously allocated in
accordance with clause (ii) of Section 5.4(b). Withdrawn Partners shall remain Partners for purposes of allocating such GP-Related Net Loss with respect to Carried Interest.
(d) To the extent the Partnership has any GP-Related Net Income (Loss) for any accounting period
unrelated to BCEP II, such GP-Related Net Income (Loss) will be allocated in accordance with GP-Related Profit Sharing Percentages prevailing at the beginning of such
accounting period.
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(e) The General Partner may authorize from time to time advances to Partners (including any
additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) against their allocable shares of GP-Related Net Income (Loss).
(f) Notwithstanding the foregoing, the General Partner may make such
allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems reasonably necessary for this purpose.
Section 5.5. Liability of Partners. Except as otherwise provided in the Partnership Act or as expressly provided in this
Agreement, no Partner shall be personally obligated for any debt, obligation or liability of the Partnership or of any other Partner solely by reason of being a Partner. In no event shall any Partner or Withdrawn Partner (i) be obligated to
make any capital contribution or payment to or on behalf of the Partnership or (ii) have any liability to return distributions received by such Partner from the Partnership, in each case except as specifically provided in Section 4.1(d) or
Section 5.8 or otherwise in this Agreement, as such Partner shall otherwise expressly agree in writing or as may be required by applicable law.
Section 5.6. [Intentionally omitted.]
Section 5.7. Repurchase Rights, etc. The General Partner may from time to time establish such repurchase rights and/or other
requirements with respect to the Partners’ GP-Related Partner Interests relating to GP-Related BCEP II Investments as the General Partner may determine. The General
Partner shall have authority to (a) withhold any distribution otherwise payable to any Partner until any such repurchase rights have lapsed or any such requirements have been satisfied, (b) pay any distribution to any Partner that is
Contingent as of the distribution date and require the refund of any portion of such distribution that is Contingent as of the Withdrawal Date of such Partner, (c) amend any previously established repurchase rights or other requirements from
time to time and (d) make such exceptions thereto as it may determine on a case by case basis.
Section 5.8.
Distributions. (a) (i) The Partnership shall make distributions of available cash (subject to reserves and other adjustments as provided herein) or other property to Partners with respect to such Partners’ GP-Related Partner Interests at such times and in such amounts as are determined by the General Partner. The General Partner shall, if it deems it appropriate, determine the availability for distribution of, and
distribute, cash or other property separately for each category of GP-Related Net Income (Loss) established pursuant to Section 5.1(a). Distributions of cash or other property with respect to Non-Carried Interest shall be made among the Partners in accordance with their respective Non-Carried Interest Sharing Percentages, and, subject to Section 4.1(d) and
Section 5.8(e), distributions of cash or other property with respect to Carried Interest shall be made among Partners in accordance with their respective Carried Interest Sharing Percentages.
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(ii) At any time that a sale, exchange, transfer or other disposition by
BCEP II of a portion of a GP-Related Investment is being considered by the Partnership (a “GP-Related Disposable Investment”), at the election of the
General Partner each Partner’s GP-Related Partner Interest with respect to such GP-Related Investment shall be vertically divided into two separate GP-Related Partner Interests, a GP-Related Partner Interest attributable to the GP-Related Disposable Investment (a Partner’s
“GP-Related Class B Interest”), and a GP-Related Partner Interest attributable to such
GP-Related Investment excluding the GP-Related Disposable Investment (a Partner’s “GP-Related
Class A Interest”). Distributions (including those resulting from a sale, transfer, exchange or other disposition by BCEP II) relating to a GP-Related Disposable Investment (with
respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of GP-Related Class B Interests with respect to such GP-Related Investment in accordance with their GP-Related Profit Sharing Percentages relating to such GP-Related Class B
Interests, and distributions (including those resulting from the sale, transfer, exchange or other disposition by BCEP II) relating to a GP-Related Investment excluding such
GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of
GP-Related Class A Interests with respect to such GP-Related Investment in accordance with their respective GP-Related
Profit Sharing Percentages relating to such GP-Related Class A Interests. Except as provided above, distributions of cash or other property with respect to each category of
GP-Related Net Income (Loss) shall be allocated among the Partners in the same proportions as the allocations of GP-Related Net Income (Loss) of each such category.
(b) Subject to the Partnership’s having sufficient available cash in the reasonable judgment of the General Partner, the Partnership shall
make cash distributions to each Partner with respect to each Fiscal Year of the Partnership in an aggregate amount at least equal to the total U.S. federal, New York State and New York City income and other taxes that would be payable by such
Partner with respect to all categories of GP-Related Net Income (Loss) allocated to such Partner for such Fiscal Year, the amount of which shall be calculated (i) on the assumption that each Partner is an
individual subject to the then prevailing maximum rate of U.S. federal, New York State and New York City and other income taxes (including, without limitation, taxes under Sections 1401 and 1411 of the Code), (ii) taking into account (x) the
limitations on the deductibility of expenses and other items for U.S. federal income tax purposes and (y) the character (e.g., long-term or short-term capital gain or ordinary or exempt) of the applicable income) and (iii) taking into
account any differential in applicable rates due to the type and character of GP-Related Net Income (Loss) allocated to such Partner. Notwithstanding the provisions of the foregoing sentence, the General
Partner may refrain from making any distribution if, in the reasonable judgment of the General Partner, such distribution is prohibited by applicable law.
(c) The General Partner may provide that the GP-Related Partner Interest of any Partner or employee
(including such Partner’s or employee’s right to distributions and investments of the Partnership related thereto) may be subject to repurchase by the Partnership during such period as the General Partner shall determine (a
“Repurchase Period”). Any Contingent distributions from GP-Related Investments subject to repurchase rights will be withheld by the Partnership and will be distributed to the recipient thereof
(together with interest thereon at rates determined by the General Partner from time to time) as the recipient’s rights to such distributions become Non-Contingent (by virtue of the expiration of the
applicable
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Repurchase Period or otherwise). The General Partner may elect in an individual case to have the Partnership distribute any Contingent distribution to the applicable recipient thereof
irrespective of whether the applicable Repurchase Period has lapsed. If a Partner Withdraws from the Partnership for any reason other than his or her death, Total Disability or Incompetence, the undistributed share of any GP-Related Investment that remains Contingent as of the applicable Withdrawal Date shall be repurchased by the Partnership at a purchase price determined at such time by the General Partner. Unless determined
otherwise by the General Partner, the repurchased portion thereof will be allocated among the remaining Partners with interests in such GP-Related Investment in proportion to their respective percentage
interests in such GP-Related Investment, or if no other Partner has a percentage interest in such specific GP-Related Investment, to the General Partner;
provided, that the General Partner may allocate the Withdrawn Partner’s share of unrealized investment income from a repurchased GP-Related Investment attributable to the period after the Withdrawn
Partner’s Withdrawal Date on any basis it may determine, including to existing or new Partners who did not previously have interests in such GP-Related Investment, except that, in any event, each Investor
Special Partner shall be allocated a share of such unrealized investment income equal to its respective GP-Related Profit Sharing Percentage of such unrealized investment income.
(d) (i) (A) If Associates II is obligated under the Clawback Provisions or Giveback Provisions to contribute to BCEP II a Clawback Amount
or a Giveback Amount (other than a Capital Commitment Giveback Amount) and the Partnership is obligated to contribute any such amount to Associates II in respect of the Partnership’s GP-Related Associates
II Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount being herein called a “GP-Related Giveback Amount”), the General Partner shall call for
such amounts as are necessary to satisfy such obligations of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the General
Partner, such an amount of prior distributions by the Partnership (and the Other Fund GPs) with respect to Carried Interest (and/or Non-Carried Interest in the case of a
GP-Related Giveback Amount) (the “GP-Related Recontribution Amount”) which equals (I) the product of (a) a Partner’s or Withdrawn
Partner’s Carried Interest Give Back Percentage and (b) the aggregate Clawback Amount payable by the Partnership in the case of Clawback Amounts and (II) with respect to a GP-Related Giveback
Amount, such Partner’s pro rata share of prior distributions of Carried Interest and/or Non-Carried Interest in connection with (a) the GP-Related BCEP
II Investment giving rise to the GP-Related Giveback Amount, (b) if the amounts contributed pursuant to clause (II)(a) above are insufficient to satisfy such
GP-Related Giveback Amount, GP-Related BCEP II Investments other than the one giving rise to such obligation, but only those amounts received by the Partners with an
interest in the GP-Related BCEP II Investment referred to in clause (II)(a) above, and (c) if the GP-Related Giveback Amount pursuant to an applicable BCEP II Agreement is unrelated to a specific GP-Related BCEP II Investment, all GP-Related BCEP II Investments. Each Partner and Withdrawn Partner shall promptly contribute to the Partnership, along with satisfying his
or her comparable obligations to the Other Fund GPs, if any, upon such call such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount, less the amount paid out of the Trust Account on
behalf of such Partner or Withdrawn Partner by the Trustee(s) pursuant to written instructions from the Partnership, or if applicable, any of the Other Fund GPs with respect to Carried Interest (and/or
Non-Carried Interest in the case of GP-Related Giveback Amounts) (the “Net GP-Related Recontribution Amount”),
irrespective of the fact that the amounts in the Trust Account may be sufficient on an aggregate basis to satisfy the
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Partnership’s and the Other Fund GPs’ obligation under the Clawback Provisions and/or Giveback Provisions; provided, that to the extent a Partner’s or Withdrawn
Partner’s share of the amount paid with respect to the Clawback Amount or the GP-Related Giveback Amount exceeds his or her GP-Related Recontribution Amount, such
excess shall be repaid to such Partner or Withdrawn Partner as promptly as reasonably practicable, subject to clause (ii) below; provided further, that such written instructions from the General Partner shall specify each
Partner’s and Withdrawn Partner’s GP-Related Recontribution Amount. Prior to such time, the General Partner may, in its discretion (but shall be under no obligation to), provide notice that in the
General Partner’s judgment, the potential obligations in respect of the Clawback Provisions or the Giveback Provisions will probably materialize (and an estimate of the aggregate amount of such obligations); provided further, that
any amount from a Partner’s Trust Account used to pay any GP-Related Giveback Amount (or such lesser amount as may be required by the General Partner) shall be contributed by such Partner to such
Partner’s Trust Account no later than 30 days after the Net GP-Related Recontribution Amount is paid with respect to such GP-Related Giveback Amount.
(B) To the extent any Partner or Withdrawn Partner has satisfied any Holdback obligation with Firm Collateral, such Partner or
Withdrawn Partner shall, within 10 days of the General Partner’s call for GP-Related Recontribution Amounts, make a cash payment into the Trust Account in an amount equal to the amount of the Holdback
obligation satisfied with such Firm Collateral, or such lesser amount such that the amount in the Trust Account allocable to such Partner or Withdrawn Partner equals the sum of (I) such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount and (II) any similar amounts payable to any of the Other Fund GPs. Immediately upon receipt of such cash, the Trustee(s) shall take such steps as are necessary to release such
Firm Collateral of such Partner or Withdrawn Partner equal to the amount of such cash payment. If the amount of such cash payment is less than the amount of Firm Collateral of such Partner or Withdrawn Partner, the balance of such Firm Collateral if
any, shall be retained to secure the payment of GP-Related Deficiency Contributions, if any, and shall be fully released upon the satisfaction of the Partnership’s and the Other Fund GPs’ obligation
to pay the Clawback Amount. The failure of any Partner or Withdrawn Partner to make a cash payment in accordance with this clause (B) (to the extent applicable) shall constitute a default under Section 5.8(d)(ii) as if such cash payment
hereunder constitutes a Net GP-Related Recontribution Amount under Section 5.8(d)(ii). Solely to the extent required by the BCEP II Partnership Agreement, each partner of the General Partner shall have
the same obligations as a Partner (which obligations shall be subject to the same limitations as the obligations of a Partner) under this Section 5.8(d)(i)(B) and under Section 5.8(d)(ii)(A) with respect to such partner’s pro rata
share of any Clawback Amount and solely to the extent that the Partnership has insufficient funds to meet the Partnership’s obligations under the BCEP II Partnership Agreement.
(ii) (A) In the event any Partner or Withdrawn Partner (a “GP-Related
Defaulting Party”) fails to recontribute all or any portion of such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount for any reason, the
General Partner shall require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Carried Interest Give Back Percentages in the case of Clawback
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Amounts, and GP-Related Profit Sharing Percentages in the case of GP-Related Giveback Amounts (as more fully
described in clause (II) of Section 5.8(d)(i)(A) above)), such amounts as are necessary to fulfill the GP-Related Defaulting Party’s obligation to pay such
GP-Related Defaulting Party’s Net GP-Related Recontribution Amount (a “GP-Related Deficiency Contribution”)
if the General Partner determines in its good faith judgment that the Partnership (or an Other Fund GP) will be unable to collect such amount in cash from such GP-Related Defaulting Party for payment of the
Clawback Amount or GP-Related Giveback Amount, as the case may be, at least 20 Business Days prior to the latest date that the Partnership, and the Other Fund GPs, if applicable, are permitted to pay the
Clawback Amount or GP-Related Giveback Amount, as the case may be; provided, that, subject to Section 5.8(e), no Partner or Withdrawn Partner shall as a result of such GP-Related Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Net GP-Related Recontribution Amount initially requested from
such Partner or Withdrawn Partner in respect of such default.
(B) Thereafter, the General Partner shall determine in its
good faith judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the
General Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership against the GP-Related Defaulting Party, the cost of which shall be a Partnership expense to the extent
not ultimately reimbursed by the GP-Related Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such GP-Related Defaulting Party
becoming a GP-Related Defaulting Party) to set-off as appropriate and apply against such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount any amounts otherwise payable to the GP-Related Defaulting Party by the Partnership or any Affiliate thereof (including amounts unrelated to
Carried Interest, such as returns of capital and profit thereon). Each Partner and Withdrawn Partner hereby grants to the General Partner a security interest, effective upon such Partner or Withdrawn Partner becoming a
GP-Related Defaulting Party, in all accounts receivable and other rights to receive payment from any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General
Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner and Withdrawn Partner hereby appoints the General Partner as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or Withdrawn Partner or in the name of the General Partner, to take any actions which may be necessary to accomplish the
intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the Net GP-Related Recontribution Amount of a GP-Related
Defaulting Party from the date such Net GP-Related Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(C) Any Partner’s or Withdrawn Partner’s failure to make a GP-Related
Deficiency Contribution shall cause such Partner or Withdrawn Partner to be a GP-Related Defaulting Party with respect to such amount. The Partnership shall first seek any remaining Trust Amounts (and Trust
Income thereon) allocated to such Partner or Withdrawn Partner to satisfy such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution before seeking cash
contributions from such Partner or Withdrawn Partner in satisfaction of such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution.
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(iii) In the event any Partner or Withdrawn Partner initially fails to
recontribute all or any portion of such Partner or Withdrawn Partner’s pro rata share of any Clawback Amount pursuant to Section 5.8(d)(i)(A), the Partnership shall use its reasonable efforts to collect the amount which such Partner
or Withdrawn Partner so fails to recontribute.
(iv) A Partner’s or Withdrawn Partner’s obligation to make
contributions to the Partnership under this Section 5.8(d) shall survive the termination of the Partnership.
(e) The Partners
acknowledge that the General Partner will (and is hereby authorized to) take such steps as it deems appropriate, in its good faith judgment, to further the objective of providing for the fair and equitable treatment of all Partners, including by
allocating Aggregate Net Losses on Writedowns and Losses (each as defined in the BCEP II Agreements) on GP-Related BCEP II Investments (each, a “Loss Investment”) to those Partners who
participated in such Loss Investments based on their Carried Interest Sharing Percentage therein to the extent that such Partners receive or have received Carried Interest distributions from other GP-Related
BCEP II Investments. Consequently and notwithstanding anything herein to the contrary, adjustments to Carried Interest distributions shall be made as set forth in this Section 5.8(e).
(i) At the time the Partnership is making Carried Interest distributions in connection with a
GP-Related BCEP II Investment (the “Subject Investment”) that have been reduced under any BCEP II Agreement as a result of one or more Loss Investments, the General Partner shall calculate
amounts distributable to or due from each such Partner as follows:
(A) determine each Partner’s share of each such
Loss Investment based on his or her Carried Interest Sharing Percentage in each such Loss Investment (which may be zero) to the extent such Loss Investment has reduced the Carried Interest distributions otherwise available for distribution to all
Partners (indirectly through the Partnership from BCEP II) from the Subject Investment (such reduction, the “Loss Amount”);
(B) determine the amount of Carried Interest distributions otherwise distributable to such Partner with respect to the Subject
Investment (indirectly through the Partnership from BCEP II) before any reduction in respect of the amount determined in clause (A) above (the “Unadjusted Carried Interest Distributions”); and
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(C) subtract (I) the Loss Amounts relating to all Loss Investments from
(II) the Unadjusted Carried Interest Distributions for such Partner, to determine the amount of Carried Interest distributions to actually be paid to such Partner (“Net Carried Interest Distribution”).
To the extent that the Net Carried Interest Distribution for a Partner as calculated in this clause (i) is a negative number, the General
Partner shall (I) notify such Partner, at or prior to the time such Carried Interest distributions are actually made to the Partners, of his or her obligation to recontribute to the Partnership prior Carried Interest distributions (a
“Net Carried Interest Distribution Recontribution Amount”), up to the amount of such negative Net Carried Interest Distribution, and (II) to the extent amounts recontributed pursuant to clause (I) are insufficient to
satisfy such negative Net Carried Interest Distribution amount, reduce future Carried Interest distributions otherwise due such Partner, up to the amount of such remaining negative Net Carried Interest Distribution. If a Partner’s (x) Net
Carried Interest Distribution Recontribution Amount exceeds (y) the aggregate amount of prior Carried Interest distributions less the amount of tax thereon, calculated based on the Assumed Tax Rate (as defined in the BCEP II Agreements) in
effect in the Fiscal Years of such distributions (the “Excess Tax-Related Amount”), then such Partner may, in lieu of paying such Partner’s Excess
Tax-Related Amount, defer such amounts as set forth below. Such deferred amount shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced and repaid by the amount of Carried Interest
otherwise distributable to such Partner in connection with future Carried Interest distributions until such balance is reduced to zero. Any deferred amounts shall be payable in full upon the earlier of (i) such time as the Clawback Amount is
determined (as provided herein) and (ii) such time as the Partner becomes a Withdrawn Partner.
To the extent there is an amount of
negative Net Carried Interest Distribution with respect to a Partner remaining after the application of this clause (i), notwithstanding clause (II) of the preceding paragraph, such remaining amount of negative Net Carried Interest Distribution
shall be allocated to the other Partners pro rata based on each of their Carried Interest Sharing Percentages in the Subject Investment.
A Partner who fails to pay a Net Carried Interest Distribution Recontribution Amount promptly upon notice from the General Partner (as
provided above) shall be deemed a GP-Related Defaulting Party for all purposes hereof.
A Partner
may satisfy in part any Net Carried Interest Distribution Recontribution Amount from cash that is then subject to a Holdback, to the extent that the amounts that remain subject to a Holdback satisfy the Holdback requirements hereof as they relate to
the reduced amount of aggregate Carried Interest distributions received by such Partner (taking into account any Net Carried Interest Distribution Recontribution Amount contributed to the Partnership by such Partner).
Any Net Carried Interest Distribution Recontribution Amount contributed by a Partner, including amounts of cash subject to a Holdback as
provided above, shall increase the amount available for distribution to the other Partners as Carried Interest distributions with respect to the Subject Investment; provided, that any such amounts then subject to a Holdback may be so
distributed to the other Partners to the extent a Partner receiving such distribution has satisfied the Holdback requirements with respect to such distribution (taken together with the other Carried Interest distributions received by such Partner to
date).
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(ii) In the case of Clawback Amounts which are required to be contributed to
the Partnership as otherwise provided herein, the obligation of the Partners with respect to any Clawback Amount shall be adjusted by the General Partner as follows:
(A) determine each Partner’s share of any Aggregate Net Losses on Writedowns or Losses (each as defined in the BCEP II
Agreements) in any GP-Related BCEP II Investments which gave rise to the Clawback Amount (i.e., the Losses that followed the last GP-Related BCEP II Investment with
respect to which Carried Interest distributions were made), based on such Partner’s Carried Interest Sharing Percentage in such GP-Related BCEP II Investments;
(B) determine each Partner’s obligation with respect to the Clawback Amount based on such Partner’s Carried Interest
Give Back Percentage as otherwise provided herein; and
(C) subtract the amount determined in clause (B) above from
the amount determined in clause (A) above with respect to each Partner to determine the amount of adjustment to each Partner’s share of the Clawback Amount (a Partner’s “Clawback Adjustment Amount”).
A Partner’s share of the Clawback Amount shall for all purposes hereof be decreased by such Partner’s Clawback Adjustment Amount, to
the extent it is a negative number (except to the extent expressly provided below). A Partner’s share of the Clawback Amount shall for all purposes hereof be increased by such Partner’s Clawback Adjustment Amount (to the extent it is a
positive number); provided, that in no way shall a Partner’s aggregate obligation to satisfy a Clawback Amount as a result of this clause (ii) exceed the aggregate Carried Interest distributions received by such Partner. To the
extent a positive Clawback Adjustment Amount remains after the application of this clause (ii) with respect to a Partner, such remaining Clawback Adjustment Amount shall be allocated to the Partners (including any Partner whose Clawback Amount
was increased pursuant to this clause (ii)) pro rata based on their Carried Interest Give Back Percentages (determined without regard to this clause (ii)).
Any distribution or contribution adjustments pursuant to this Section 5.8(e) by the General Partner shall be based on its good faith
judgment, and no Partner shall have any claim against the Partnership, the General Partner or any other Partners as a result of any adjustment made as set forth above. This Section 5.8(e) applies to all Partners, including Withdrawn Partners.
It is agreed and acknowledged that this Section 5.8(e) is an agreement among the Partners and in no way modifies the obligations of
each Partner regarding the Clawback Amount as provided in the BCEP II Agreements.
Section 5.9. Business Expenses. The
Partnership shall reimburse the Partners for reasonable travel, entertainment and miscellaneous expenses incurred by them in the conduct of the Partnership’s business in accordance with rules and regulations established by the General Partner
from time to time.
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Section 5.10. Tax Capital Accounts; Tax Allocations. (a) For U.S. federal
income tax purposes, there shall be established for each Partner a single capital account combining such Partner’s Capital Commitment Capital Account and GP-Related Capital Account, with such adjustments
as the General Partner determines are appropriate so that such single capital account is maintained in compliance with the principles and requirements of Section 704(b) of the Code and the Treasury Regulations thereunder.
(b) All items of income, gain, loss, deduction and credit of the Partnership shall be allocated among the Partners for U.S. federal, state and
local income tax purposes in the same manner as such items of income, gain, loss, deduction and credit shall be allocated among the Partners pursuant to this Agreement, except as may otherwise be provided herein or by the Code or other applicable
law. In the event there is a net decrease in partnership minimum gain or partner nonrecourse debt minimum gain (determined in accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i)) during any taxable year of the Partnership, each Partner shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to its
respective share of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated
shall be determined in accordance with Treasury Regulations Section 1.704-2(f). In addition, this Agreement shall be considered to contain a “qualified income offset” as provided in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d). Notwithstanding the foregoing, the General Partner in its sole discretion shall make allocations for tax purposes as may be needed to ensure that allocations are
in accordance with the interests of the Partners within the meaning of the Code and the Treasury Regulations.
(c) For U.S. federal, state
and local income tax purposes only, Partnership income, gain, loss, deduction or expense (or any item thereof) for each Fiscal Year shall be allocated to and among the Partners in a manner corresponding to the manner in which corresponding items are
allocated among the Partners pursuant to the other provisions of this Section 5.10; provided, that the General Partner may in its sole discretion make such allocations for tax purposes as it determines are appropriate so that allocations
have substantial economic effect or are in accordance with the interests of the Partners, within the meaning of the Code and the Treasury Regulations thereunder. To the extent there is an adjustment by a taxing authority to any item of income, gain,
loss, deduction or credit of the Partnership (or an adjustment to any Partner’s distributive share thereof), the General Partner may reallocate the adjusted items among each Partner or former Partner (as determined by the General Partner) in
accordance with the final resolution of such audit adjustment.
ARTICLE VI
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS;
SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
Section 6.1. Additional Partners. (a) Effective on the first day of any month (or on such other date as shall be determined
by the General Partner in its sole discretion), the General Partner shall have the right to admit one or more additional or substitute persons into the Partnership as Limited Partners or Special Partners. Each such person shall make the
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representations and certifications with respect to itself set forth in Section 3.6 and Section 3.7. The General Partner shall determine and negotiate with the additional Partner (which
term shall include, without limitation, any substitute Partner) all terms of such additional Partner’s participation in the Partnership, including the additional Partner’s initial GP-Related Capital
Contribution, Capital Commitment-Related Capital Contribution, GP-Related Profit Sharing Percentage and Capital Commitment Profit Sharing Percentage. Each additional Partner shall have such voting rights as
may be determined by the General Partner from time to time unless, upon the admission to the Partnership of any Special Partner, the General Partner shall designate that such Special Partner shall not have such voting rights (any such Special
Partner being called a “Nonvoting Special Partner”). Any additional Partner shall, as a condition to becoming a Partner, agree to become a party to, and be bound by the terms and conditions of, the Trust Agreement. If Blackstone or
another or subsequent holder of an Investor Note approved by the General Partner for purposes of this Section 6.1(a) shall foreclose upon a Limited Partner’s Investor Note issued to finance such Limited Partner’s purchase of his or
her Capital Commitment Interests, Blackstone or such other or subsequent holder shall succeed to such Limited Partner’s Capital Commitment Interests and shall be deemed to have become a Limited Partner to such extent. Any additional Partner may
have a GP-Related Partner Interest or a Capital Commitment Partner Interest, without having the other such interest.
(b) The GP-Related Profit Sharing Percentages, if any, to be allocated to an additional Partner as of
the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’ GP-Related Profit Sharing Percentages as of such date, shall be established by the
General Partner pursuant to Section 5.3. The Capital Commitment Profit Sharing Percentages, if any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all
other Partners’ Capital Commitment Profit Sharing Percentages as of such date, shall be established by the General Partner. Notwithstanding any provision in this Agreement to the contrary, the General Partner is authorized, without the need for
any further act, vote or consent of any person, to make adjustments to the GP-Related Profit Sharing Percentages as it determines necessary in its sole discretion in connection with any additional Partners
admitted to the Partnership, adjustments with respect to other Partners of the Partnership and to give effect to other matters set forth herein, as applicable.
(c) An additional Partner shall be required to contribute to the Partnership his or her pro rata share of the Partnership’s total capital,
excluding capital in respect of GP-Related Investments and Capital Commitment Investments in which such Partner does not acquire any interests, at such times and in such amounts as shall be determined by the
General Partner in accordance with Section 4.1 and Section 7.1.
(d) The admission of an additional Partner will be evidenced by
(i) the execution of a counterpart copy of this Agreement by such additional Partner, or (ii) the execution of an amendment to this Agreement by the General Partner and the additional Partner, as determined by the General Partner, or
(iii) the execution by such additional Partner of any other writing evidencing the intent of such person to become an additional Partner and to be bound by the terms of this Agreement and such writing being acceptable to the General Partner on
behalf of the Partnership. In addition, each additional Partner shall sign a counterpart copy of the Trust Agreement or any other writing evidencing the intent of such person to become a party to the Trust Agreement that is acceptable to the General
Partner on behalf of the Partnership.
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Section 6.2. Withdrawal of Partners. (a) Any Partner may Withdraw
voluntarily from the Partnership subject to the prior written consent of the General Partner, including if such Withdrawal would (i) cause the Partnership to be in default under any of its contractual obligations or (ii) in the reasonable
judgment of the General Partner, have a material adverse effect on the Partnership or its business. Without limiting the foregoing sentence, the General Partner generally intends to permit voluntary Withdrawals on the last day of any calendar month
(or on such other date as shall be determined by the General Partner in its sole discretion), on not less than 15 days’ prior written notice by such Partner to the General Partner (or on such shorter notice period as may be mutually agreed upon
between such Partner and the General Partner); provided, that a Partner may Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest without Withdrawing from the
Partnership with respect to such Partner’s Capital Commitment Partner Interest, and a Partner may Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest without Withdrawing from the Partnership
with respect to such Partner’s GP-Related Partner Interest.
(b) Upon the Withdrawal of any
Partner, including by the occurrence of any withdrawal event under the Partnership Act with respect to any Partner, such Partner shall thereupon cease to be a Partner, except as expressly provided herein.
(c) Upon the Total Disability of a Limited Partner, such Partner shall thereupon cease to be a Limited Partner with respect to such
person’s GP-Related Partner Interest; provided, that the General Partner may elect to admit such Withdrawn Partner to the Partnership as a Nonvoting Special Partner with respect to such
person’s GP-Related Partner Interest, with such GP-Related Partner Interest as the General Partner may determine. The determination of whether any Partner has
suffered a Total Disability shall be made by the General Partner in its sole discretion after consultation with a qualified medical doctor. In the absence of agreement between the General Partner and such Partner, each party shall nominate a
qualified medical doctor and the two doctors shall select a third doctor, who shall make the determination as to Total Disability.
(d) If
the General Partner determines that it shall be in the best interests of the Partnership for any Partner (including any Partner who has given notice of voluntary Withdrawal pursuant to paragraph (a) above) to Withdraw from the Partnership
(whether or not Cause exists) with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, such Partner, upon written notice by
the General Partner to such Partner, shall be required to Withdraw with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest,
as of a date specified in such notice, which date shall be on or after the date of such notice. If the General Partner requires any Partner to Withdraw for Cause with respect to such person’s GP-Related
Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, such notice shall state that it has been given for Cause and shall describe the particulars thereof in reasonable detail.
(e) The Withdrawal from the Partnership of any Partner shall not, in and of itself, affect the obligations of the other Partners to continue
the Partnership during the remainder of its term. A Withdrawn General Partner shall remain liable for all obligations of the Partnership incurred while it was a General Partner and resulting from its acts or omissions as a General Partner to the
fullest extent provided by law.
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Section 6.3. GP-Related Partner Interests
Not Transferable. (a) No Partner may sell, assign, pledge, grant a security interest over or otherwise transfer or encumber all or any portion of such Partner’s GP-Related Partner Interest other
than as permitted by written agreement between such Partner and the Partnership; provided, that this Section 6.3 shall not impair transfers by operation of law, transfers by will or by other testamentary instrument occurring by virtue of
the death or dissolution of a Partner, or transfers required by trust agreements; provided further, that, subject to the prior written consent of the General Partner, which shall not be unreasonably withheld, a Limited Partner may
transfer, for estate planning purposes, up to 25% of his or her GP-Related Profit Sharing Percentage to any estate planning trust, limited partnership, or limited liability company with respect to which a
Limited Partner controls investments related to any interest in the Partnership held therein (an “Estate Planning Vehicle”). Each Estate Planning Vehicle will be a Nonvoting Special Partner. Such Limited Partner and the Nonvoting
Special Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such Nonvoting Special Partner with respect to the Partnership (including the obligation to make additional
GP-Related Capital Contributions), as the case may be. The General Partner may at its sole option exercisable at any time require any Estate Planning Vehicle to Withdraw from the Partnership on the terms of
this Article VI. Except as provided in the second proviso to the first sentence of this Section 6.3, no assignee, legatee, distributee, heir or transferee (by conveyance, operation of law or otherwise) of the whole or any portion of any
Partner’s GP-Related Partner Interest shall have any right to be a Partner without the prior written consent of the General Partner (which consent may be given or withheld in its sole discretion without
giving any reason therefor). Notwithstanding the granting of a security interest in the entire Interest of any Partner, such Partner shall continue to be a Partner of the Partnership.
(b) Notwithstanding any provision hereof to the contrary, no sale or transfer of any GP-Related Partner
Interest in the Partnership may be made except in compliance with all federal, state and other applicable laws, including U.S. federal and state securities laws.
Section 6.4. Consequences upon Withdrawal of a Partner. (a) Subject to the Partnership Act, the General Partner may not
transfer or assign its interest as a General Partner in the Partnership or its right to manage the affairs of the Partnership, except that the General Partner may, subject to the Partnership Act, with the prior written approval of a Majority in
Interest of the Partners, admit another person as an additional or substitute General Partner who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law
or otherwise); provided however, that the General Partner may, in its sole discretion, transfer all or part of its interest in the Partnership to a person who makes such representations with respect to itself as the General Partner
deems necessary or appropriate (with regard to compliance with applicable law or otherwise) and who owns, directly or indirectly, the principal part of the business then conducted by the General Partner in connection with any liquidation,
dissolution or reorganization of the General Partner, and, upon the assumption by such person of liability for all the obligations of the General Partner under this Agreement, such person shall be admitted as the General Partner. A person who is so
admitted as an additional or substitute General Partner shall thereby become a General Partner and shall have the right to manage the affairs of the Partnership and to vote as a Partner to the extent of the interest in the Partnership so acquired.
The General Partner shall not cease to be the general partner of the Partnership upon the collateral assignment of or the pledging or granting of a security interest in its entire Interest in the Partnership.
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(b) Except as contemplated by Section 6.4(a) above, Withdrawal by a General Partner is
not permitted. The Withdrawal of a Partner shall not dissolve the Partnership if at the time of such Withdrawal there are one or more remaining Partners and any one or more of such remaining Partners continue the business of the Partnership (any and
all such remaining Partners being hereby authorized to continue the business of the Partnership without dissolution and hereby agreeing to do so). Notwithstanding Section 6.4(c), if upon the Withdrawal of a Partner there shall be no remaining
Limited Partners, the Partnership shall be dissolved and shall be wound up unless, within 90 days after the occurrence of such Withdrawal, all remaining Special Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of the date of such Withdrawal, of one or more Limited Partners.
(c) The Partnership shall not be dissolved, in
and of itself, by the Withdrawal of any Partner, but shall continue with the surviving or remaining Partners as partners thereof in accordance with and subject to the terms and provisions of this Agreement.
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related
Partner Interests. (a) The terms of this Section 6.5 shall apply to the GP-Related Partner Interest of a Withdrawn Partner, but, except as otherwise expressly provided in this
Section 6.5, shall not apply to the Capital Commitment Partner Interest of a Withdrawn Partner. For purposes of this Section 6.5, the term “Settlement Date” means the date as of which a Withdrawn Partner’s GP-Related Partner Interest in the Partnership is settled as determined under paragraph (b) below. Notwithstanding the foregoing, any Limited Partner who Withdraws from the Partnership, and all or any portion
of whose GP-Related Partner Interest is retained as a Special Partner, shall be considered a Withdrawn Partner for all purposes hereof.
(b) Except where a later date for the settlement of a Withdrawn Partner’s GP-Related Partner
Interest in the Partnership may be agreed to by the General Partner and a Withdrawn Partner, a Withdrawn Partner’s Settlement Date shall be his or her Withdrawal Date; provided, that if a Withdrawn Partner’s Withdrawal Date is not
the last day of a month, then the General Partner may elect for such Withdrawn Partner’s Settlement Date to be the last day of the month in which his or her Withdrawal Date occurs. During the interval, if any, between a Withdrawn Partner’s
Withdrawal Date and Settlement Date, such Withdrawn Partner shall have the same rights and obligations with respect to GP-Related Capital Contributions, interest on capital, allocations of GP-Related Net Income (Loss) and distributions as would have applied had such Withdrawn Partner remained a Partner of the Partnership during such period.
(c) In the event of the Withdrawal of a Partner, with respect to such Withdrawn Partner’s
GP-Related Partner Interest, the General Partner shall promptly after such Withdrawn Partner’s Settlement Date (i) determine and allocate to the Withdrawn Partner’s GP-Related Capital Accounts such Withdrawn Partner’s allocable share of the GP-Related Net Income (Loss) of the Partnership for the period ending on such Settlement Date
in accordance with Article V and (ii) credit the Withdrawn Partner’s GP-Related Capital Accounts with interest in accordance with Section 5.2. In making the foregoing calculations, the General
Partner shall be entitled to establish such reserves (including reserves for taxes, bad debts, unrealized losses, actual or threatened
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litigation or any other expenses, contingencies or obligations) as it deems appropriate. Unless otherwise determined by the General Partner in a particular case, a Withdrawn Partner shall not be
entitled to receive any GP-Related Unallocated Percentage in respect of the accounting period during which such Partner Withdraws from the Partnership (whether or not previously awarded or allocated) or any GP-Related Unallocated Percentage in respect of prior accounting periods that have not been paid or allocated (whether or not previously awarded) as of such Withdrawn Partner’s Withdrawal Date.
(d) From and after the Settlement Date of the Withdrawn Partner, the Withdrawn Partner’s
GP-Related Profit Sharing Percentages shall, unless otherwise allocated by the General Partner pursuant to Section 5.3(a), be deemed to be GP-Related Unallocated
Percentages (except for GP-Related Profit Sharing Percentages with respect to GP-Related Investments as provided in paragraph (f) below).
(e) (i) Upon the Withdrawal from the Partnership of a Partner with respect to such Partner’s
GP-Related Partner Interest, such Withdrawn Partner thereafter shall not, except as expressly provided in this Section 6.5, have any rights of a Partner (including voting rights) with respect to such
Partner’s GP-Related Partner Interest, and, except as expressly provided in this Section 6.5, such Withdrawn Partner shall not have any interest in the Partnership’s GP-Related Net Income (Loss), or in distributions related to such Partner’s GP-Related Partner Interest, GP-Related Investments or
other assets related to such Partner’s GP-Related Partner Interest. If a Partner Withdraws from the Partnership with respect to such Partner’s GP-Related
Partner Interest for any reason other than for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be entitled to receive, at the time or times specified in Section 6.5(i) below, in satisfaction and discharge in full of the
Withdrawn Partner’s GP-Related Partner Interest in the Partnership, (x) payment equal to the aggregate credit balance, if any, as of the Settlement Date of the Withdrawn Partner’s GP-Related Capital Accounts, (excluding any GP-Related Capital Account or portion thereof attributable to any GP-Related Investment)
and (y) the Withdrawn Partner’s percentage interest attributable to each GP-Related Investment in which the Withdrawn Partner has an interest as of the Settlement Date as provided in
paragraph (f) below (which shall be settled in accordance with paragraph (f) below), subject to all the terms and conditions of paragraphs (a)-(r) of this Section 6.5. If the amount determined pursuant to clause (x) above is an
aggregate negative balance, the Withdrawn Partner shall pay the amount thereof to the Partnership upon demand by the General Partner on or after the date of the statement referred to in Section 6.5(i) below; provided, that if the
Withdrawn Partner was solely a Special Partner on his or her Withdrawal Date, such payment shall be required only to the extent of any amounts payable to such Withdrawn Partner pursuant to this Section 6.5. Any aggregate negative balance in the
GP-Related Capital Accounts of a Withdrawn Partner who was solely a Special Partner, upon the settlement of such Withdrawn Partner’s GP-Related Partner Interest in
the Partnership pursuant to this Section 6.5, shall be allocated among the other Partners’ GP-Related Capital Accounts in accordance with their respective
GP-Related Profit Sharing Percentages in the categories of GP-Related Net Income (Loss) giving rise to such negative balance as determined by the General Partner as of
such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the Partnership, no value shall be ascribed to goodwill, the Partnership name or
the anticipation of any value the Partnership or any successor thereto might have in the event the Partnership or any interest therein were to be sold in whole or in part.
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(ii) Notwithstanding clause (i) of this Section 6.5(e), in the
case of a Partner whose Withdrawal with respect to such Partner’s GP-Related Partner Interest resulted from such Partner’s death or Incompetence, such Partner’s estate or legal representative,
as the case may be, may elect, at the time described below, to receive a Nonvoting Special Partner GP-Related Partner Interest and retain such Partner’s GP-Related
Profit Sharing Percentage in all (but not less than all) illiquid investments of the Partnership in lieu of a cash payment (or Investor Note) in settlement of that portion of the Withdrawn Partner’s
GP-Related Partner Interest. The election referred to above shall be made within 60 days after the Withdrawn Partner’s Settlement Date, based on a statement of the settlement of such Withdrawn
Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5.
(f) For purposes of clause (y) of paragraph (e)(i) above, a Withdrawn Partner’s “percentage interest” means his or her GP-Related Profit Sharing Percentage as of the Settlement Date in the relevant GP-Related Investment. The Withdrawn Partner shall retain his or her percentage interest in such
GP-Related Investment and shall retain his or her GP-Related Capital Account or portion thereof attributable to such GP-Related
Investment, in which case such Withdrawn Partner (a “Retaining Withdrawn Partner”) shall become and remain a Special Partner for such purpose (and, if the General Partner so designates, such Special Partner shall be a Nonvoting
Special Partner). The GP-Related Partner Interest of a Retaining Withdrawn Partner pursuant to this paragraph (f) shall be subject to the terms and conditions applicable to
GP-Related Partner Interests of any kind hereunder and such other terms and conditions as are established by the General Partner. At the option of the General Partner in its sole discretion, the General
Partner and the Retaining Withdrawn Partner may agree to have the Partnership acquire such GP-Related Partner Interest without the approval of the other Partners; provided, that the General Partner
shall reflect in the books and records of the Partnership the terms of any acquisition pursuant to this sentence.
(g) The General Partner
may elect, in lieu of payment in cash of any amount payable to a Withdrawn Partner pursuant to paragraph (e) above, to (i) have the Partnership issue to the Withdrawn Partner a subordinated promissory note and/or to (ii) distribute in
kind to the Withdrawn Partner such Withdrawn Partner’s pro rata share (as determined by the General Partner) of any securities or other investments of the Partnership in relation to such Partner’s
GP-Related Partner Interest. If any securities or other investments are distributed in kind to a Withdrawn Partner under this paragraph (g), the amount described in clause (x) of paragraph (e)(i) shall be
reduced by the value of such distribution as valued on the latest balance sheet of the Partnership in accordance with generally accepted accounting principles or, if not appearing on such balance sheet, as reasonably determined by the General
Partner.
(h) [Intentionally omitted.]
(i) Within 120 days after each Settlement Date, the General Partner shall submit to the Withdrawn Partner a statement of the settlement of such
Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5 together with any cash payment, subordinated promissory note and in kind distributions to be made to
such Partner as shall be determined by the General Partner. The General Partner shall submit to the Withdrawn Partner supplemental statements with respect to additional amounts payable to or by the
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Withdrawn Partner in respect of the settlement of his or her GP-Related Partner Interest in the Partnership (e.g., payments in respect of GP-Related Investments pursuant to paragraph (f) above or adjustments to reserves pursuant to paragraph (j) below) promptly after such amounts are determined by the General Partner. To the fullest extent
permitted by law, such statements and the valuations on which they are based shall be accepted by the Withdrawn Partner without examination of the accounting books and records of the Partnership or other inquiry. Any amounts payable by the
Partnership to a Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in right of payment and subject to the prior payment or provision for payment in full of claims of all present or future creditors of the Partnership or any
successor thereto arising out of matters occurring prior to the applicable date of payment or distribution; provided, that such Withdrawn Partner shall otherwise rank pari passu in right of payment (x) with all persons who become
Withdrawn Partners and whose Withdrawal Date is within one year before the Withdrawal Date of the Withdrawn Partner in question and (y) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year after the
Withdrawal Date of the Withdrawn Partner in question.
(j) If the aggregate reserves established by the General Partner as of the
Settlement Date in making the foregoing calculations should prove, in the determination of the General Partner, to be excessive or inadequate, the General Partner may elect, but shall not be obligated, to pay the Withdrawn Partner or his or her
estate such excess, or to charge the Withdrawn Partner or his or her estate such deficiency, as the case may be.
(k) Any amounts owed by
the Withdrawn Partner to the Partnership at any time on or after the Settlement Date (e.g., outstanding Partnership loans or advances to such Withdrawn Partner) shall be offset against any amounts payable or distributable by the Partnership
to the Withdrawn Partner at any time on or after the Settlement Date or shall be paid by the Withdrawn Partner to the Partnership, in each case as determined by the General Partner. All cash amounts payable by a Withdrawn Partner to the Partnership
under this Section 6.5 shall bear interest from the due date to the date of payment at a floating rate equal to the lesser of (x) the Prime Rate or (y) the maximum rate of interest permitted by applicable law. The “due date”
of amounts payable by a Withdrawn Partner pursuant to Section 6.5(i) above shall be 120 days after a Withdrawn Partner’s Settlement Date. The “due date” of amounts payable to or by a Withdrawn Partner in respect of GP-Related Investments for which the Withdrawn Partner has retained a percentage interest in accordance with paragraph (f) above shall be 120 days after realization with respect to such GP-Related Investment. The “due date” of any other amounts payable by a Withdrawn Partner shall be 60 days after the date such amounts are determined to be payable.
(l) At the time of the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the
Partnership pursuant to this Section 6.5, the General Partner may, to the fullest extent permitted by applicable law, impose any restrictions it deems appropriate on the assignment, pledge, grant of security interest, encumbrance or other
transfer by such Withdrawn Partner of any interest in any GP-Related Investment retained by such Withdrawn Partner, any securities or other investments distributed in kind to such Withdrawn Partner or such
Withdrawn Partner’s right to any payment from the Partnership.
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(m) If a Partner is required to Withdraw from the Partnership with respect to such
Partner’s GP-Related Partner Interest for Cause pursuant to Section 6.2(d), then his or her GP-Related Partner Interest shall be settled in accordance with
paragraphs (a)-(r) of this Section 6.5; provided, that the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) In settling the Withdrawn Partner’s interest in any GP-Related Investment in
which he or she has an interest as of his or her Settlement Date, the General Partner may elect to (A) determine the GP-Related Unrealized Net Income (Loss) attributable to each such GP-Related Investment as of the Settlement Date and allocate to the appropriate GP-Related Capital Account of the Withdrawn Partner his or her allocable share of such GP-Related Unrealized Net Income (Loss) for purposes of calculating the aggregate balance of such Withdrawn Partner’s GP-Related Capital Account pursuant to clause
(x) of paragraph (e)(i) above, (B) credit or debit, as applicable, the Withdrawn Partner with the balance of his or her GP-Related Capital Account or portion thereof attributable to each such GP-Related Investment as of his or her Settlement Date without giving effect to the GP-Related Unrealized Net Income (Loss) from such
GP-Related Investment as of his or her Settlement Date, which shall be forfeited by the Withdrawn Partner or (C) apply the provisions of paragraph (f) above; provided, that the maximum amount
of GP-Related Net Income (Loss) allocable to such Withdrawn Partner with respect to any GP-Related Investment shall equal such Partner’s percentage interest of the GP-Related Unrealized Net Income, if any, attributable to such GP-Related Investment as of the Settlement Date (the balance of such
GP-Related Net Income (Loss), if any, shall be allocated as determined by the General Partner). The Withdrawn Partner shall not have any continuing interest in any
GP-Related Investment to the extent an election is made pursuant to (A) or (B) above.
(ii) Any amounts payable by the Partnership to the Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in
right of payment and subject to the prior payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to or on or after the applicable date of payment or
distribution.
(n) The payments to a Withdrawn Partner pursuant to this Section 6.5 may be conditioned on the compliance by such
Withdrawn Partner with any lawful and reasonable (under the circumstances) restrictions against engaging or investing in a business competitive with that of the Partnership or any of its subsidiaries and Affiliates for a period not exceeding two
years determined by the General Partner. Upon written notice to the General Partner, any Withdrawn Partner who is subject to noncompetition restrictions established by the General Partner pursuant to this paragraph (n) may elect to forfeit the
principal amount payable in the final installment of his or her subordinated promissory note, together with interest to be accrued on such installment after the date of forfeiture, in lieu of being bound by such restrictions.
(o) In addition to the foregoing, the General Partner shall have the right to pay a Withdrawn Partner (other than the General Partner) a
discretionary additional payment in an amount and based upon such circumstances and conditions as it determines to be relevant.
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(p) The provisions of this Section 6.5 shall apply to any Investor Special Partner
relating to a Limited Partner or Special Partner and to any transferee of any GP-Related Partner Interest of such Partner pursuant to Section 6.3 if such Partner Withdraws from the Partnership.
(q) (i) The Partnership will assist a Withdrawn Partner or his or her estate or guardian, as the case may be, in the settlement of the
Withdrawn Partner’s GP-Related Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his or her estate.
(ii) The General Partner may reasonably determine in good faith to retain outside professionals to provide the assistance
to Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the case may be, prior to engaging such
professionals. If the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(r) Each Partner (other than the General Partner) hereby irrevocably appoints the General Partner as such Partner’s true and lawful agent,
representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Partner, any and
all agreements, instruments, consents, ratifications, documents and certificates which the General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this Section 6.5, including,
without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force
and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 6.6. Dissolution of the Partnership. The General Partner may dissolve the Partnership prior to the expiration of
its term at any time on not less than 60 days’ notice of the dissolution date given to the other Partners. Upon the dissolution of the Partnership, the Partners’ respective interests in the Partnership shall be valued and settled in
accordance with the procedures set forth in Section 6.5.
Section 6.7. Certain Tax Matters. (a) The General Partner
shall determine all matters concerning allocations for tax purposes not expressly provided for herein in its sole discretion.
(b) The
General Partner shall cause to be prepared all federal, state and local tax returns of the Partnership for each year for which such returns are required to be filed and, after approval of such returns by the General Partner, shall cause such returns
to be timely filed. The General Partner shall determine the appropriate treatment of each item of income, gain, loss, deduction and credit of the Partnership and the accounting methods and conventions under the tax laws of the United States, the
several States and other relevant jurisdictions as to the treatment of
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any such item or any other method or procedure related to the preparation of such tax returns. The General Partner may cause the Partnership to make or refrain from making any and all elections
permitted by such tax laws. Each Partner agrees that he or she shall not, unless he or she provides prior notice of such action to the Partnership, (i) treat, on his or her individual income tax returns, any item of income, gain, loss,
deduction or credit relating to his or her interest in the Partnership in a manner inconsistent with the treatment of such item by the Partnership as reflected on the Form K-1 or other information statement
furnished by the Partnership to such Partner for use in preparing his or her income tax returns or (ii) file any claim for refund relating to any such item based on, or which would result in, such inconsistent treatment. In respect of an income
tax audit of any tax return of the Partnership, the filing of any amended return or claim for refund in connection with any item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership, or any administrative or
judicial proceedings arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, (A) the Tax Matters Partner (as defined below) shall be authorized to act for, and his or her decision shall be
final and binding upon, the Partnership and all Partners except to the extent a Partner shall properly elect to be excluded from such proceeding pursuant to the Code, (B) all expenses incurred by the Tax Matters Partner in connection therewith
(including, without limitation, attorneys’, accountants’ and other experts’ fees and disbursements) shall be expenses of the Partnership and (C) no Partner shall have the right to (1) participate in the audit of any
Partnership tax return, (2) file any amended return or claim for refund in connection with any item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership (unless he or she provides prior notice of such action
to the Partnership as provided above), (3) participate in any administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner arising out of or in connection with any such audit, amended return, claim for refund or
denial of such claim, or (4) appeal, challenge or otherwise protest any adverse findings in any such audit conducted by the Partnership or the Tax Matters Partner or with respect to any such amended return or claim for refund filed by the
Partnership or the Tax Matters Partner or in any such administrative or judicial proceedings conducted by the Partnership or the Tax Matters Partner. The Partnership and each Partner hereby designate any Partner selected by the General Partner as
the “partnership representative” (as defined under the Code) (the “Tax Matters Partner”). To the fullest extent permitted by applicable law, each Partner agrees to indemnify and hold harmless the Partnership and all other
Partners from and against any and all liabilities, obligations, damages, deficiencies and expenses resulting from any breach or violation by such Partner of the provisions of this Section 6.7 and from all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including reasonable attorneys’ fees and disbursements, incident to any such breach or violation.
(c) Each individual Partner shall provide to the Partnership copies of each federal, state and local income tax return of such Partner
(including any amendment thereof) within 30 days after filing such return.
(d) To the extent the General Partner reasonably determines
that the Partnership (or any entity in which the Partnership holds an interest) is or may be required by law to withhold or to make tax payments, including interest and penalties on such amounts, on behalf of or with respect to any Partner,
including pursuant to Section 6225 of the Code (“Tax Advances”), the General Partner may withhold or escrow such amounts or make such tax payments as so required. All Tax Advances made on behalf of a Partner shall, at the
option of the General Partner, (i) be promptly paid to the Partnership by the Partner on whose behalf such Tax Advances were made
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or (ii) be repaid by reducing the amount of the current or next succeeding distribution or distributions which would otherwise have been made to such Partner or, if such distributions are
not sufficient for that purpose, by so reducing the proceeds upon dissolution of the Partnership otherwise payable to such Partner. Whenever the General Partner selects option (ii) pursuant to the preceding sentence for repayment of a Tax
Advance by a Partner, for all other purposes of this Agreement such Partner shall be treated as having received all distributions (whether before or upon dissolution of the Partnership) unreduced by the amount of such Tax Advance. To the fullest
extent permitted by law, each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including, without limitation, any liability for taxes, penalties, additions to tax or
interest) with respect to income attributable to or distributions or other payments to such Partner. The obligations of a Partner set forth in this Section 6.7(d) shall survive the Withdrawal of any Partner from the Partnership or any Transfer
of a Partner’s interest.
Section 6.8. Special Basis Adjustments. In connection with any assignment or transfer of a
Partnership interest permitted by the terms of this Agreement, the General Partner may cause the Partnership, on behalf of the Partners and at the time and in the manner provided in Treasury Regulations
Section 1.754-1(b), to make an election to adjust the basis of the Partnership’s property in the manner provided in Sections 734(b) and 743(b) of the Code.
ARTICLE VII
CAPITAL COMMITMENT
INTERESTS; CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
Section 7.1. Capital Commitment Interests, etc. (a) This Article VII and Article VIII hereof set forth certain terms and
conditions with respect to the Capital Commitment Partner Interests and the Capital Commitment BCEP II Interest and matters related to the Capital Commitment Partner Interests and the Capital Commitment BCEP II Interest. Except as otherwise
expressly provided in this Article VII or in Article VIII, the terms and provisions of this Article VII and Article VIII shall not apply to the GP-Related Partner Interests or the GP-Related BCEP II Interest.
(b) Each Partner, severally, agrees to make contributions of capital to the
Partnership (“Capital Commitment-Related Capital Contributions”) as required to fund the Partnership’s capital contributions to BCEP II or Associates II in respect of the Capital Commitment BCEP II Interest, if any, and the
related Capital Commitment BCEP II Commitment, if any (including, without limitation, funding all or a portion of the Blackstone Capital Commitment). No Partner shall be obligated to make Capital Commitment-Related Capital Contributions to the
Partnership in an amount in excess of such Partner’s Capital Commitment-Related Commitment. The Commitment Agreements and SMD Agreements, if any, of the Partners may include provisions with respect to the foregoing matters. It is understood
that a Partner will not necessarily participate in each Capital Commitment Investment (which may include additional amounts invested in an existing Capital Commitment Investment) nor will a Partner necessarily have the same Capital Commitment Profit
Sharing Percentage with respect to (i) the Partnership’s portion of the Blackstone Capital Commitment or (ii) the making of each Capital Commitment Investment in which such Partner participates; provided, that this in no way
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limits the terms of any Commitment Agreement or SMD Agreement. In addition, nothing contained herein shall be construed to give any Partner the right to obtain financing with respect to the
purchase of any Capital Commitment Interest, and nothing contained herein shall limit or dictate the terms upon which the Partnership and its Affiliates may provide such financing. The acquisition of a Capital Commitment Interest by a Partner shall
be evidenced by receipt by the Partnership of funds equal to such Partner’s Capital Commitment-Related Commitment then due with respect to such Capital Commitment Interest and such appropriate documentation as the General Partner may submit to
the Partners from time to time.
(c) The Partnership or one of its Affiliates (in such capacity, the “Advancing Party”)
may in its sole discretion advance to any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are also executive officers of Blackstone) all or any portion of the Capital
Commitment-Related Capital Contributions due to the Partnership from such Partner with respect to any Capital Commitment Investment (“Firm Advances”). Each such Partner shall pay interest to the Advancing Party on each Firm Advance
from the date of such Firm Advance until the repayment thereof by such Partner. Each Firm Advance shall be repayable in full, including accrued interest to the date of such repayment, upon prior written notice by the Advancing Party. The making and
repayment of each Firm Advance shall be recorded in the books and records of the Partnership, and such recording shall be conclusive evidence of each such Firm Advance, binding on the Partner and the Advancing Party absent manifest error. Except as
provided below, the interest rate applicable to a Firm Advance shall equal the cost of funds of the Advancing Party at the time of the making of such Firm Advance. The Advancing Party shall inform any Partner of such rate upon such Partner’s
request; provided, that such interest rate shall not exceed the maximum interest rate allowable by applicable law; provided further, that amounts that are otherwise payable to such Partner pursuant to Section 7.4(a) shall be used
to repay such Firm Advance (including interest thereon). The Advancing Party may, in its sole discretion, change the terms of Firm Advances (including the terms contained herein) and/or discontinue the making of Firm Advances; provided, that
(i) the Advancing Party shall notify the relevant Partners of any material changes to such terms and (ii) the interest rate applicable to such Firm Advances and overdue amounts thereon shall not exceed the maximum interest rate allowable
by applicable law.
Section 7.2. Capital Commitment Capital Accounts. (a) There shall be established for each Partner in
the books of the Partnership as of the date of formation of the Partnership, or such later date on which such Partner is admitted to the Partnership, and on each such other date as such Partner first acquires a Capital Commitment Interest in a
particular Capital Commitment Investment, a Capital Commitment Capital Account for each Capital Commitment Investment in which such Partner acquires a Capital Commitment Interest on such date. Each Capital Commitment-Related Capital Contribution of
a Partner shall be credited to the appropriate Capital Commitment Capital Account of such Partner on the date such Capital Commitment-Related Capital Contribution is paid to the Partnership. Capital Commitment Capital Accounts shall be adjusted to
reflect any transfer of a Partner’s interest in the Partnership related to his or her Capital Commitment Partner Interest as provided in this Agreement.
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(b) A Partner shall not have any obligation to the Partnership or to any other Partner to
restore any negative balance in the Capital Commitment Capital Account of such Partner. Until distribution of any such Partner’s interest in the Partnership with respect to a Capital Commitment Interest as a result of the disposition by the
Partnership of the related Capital Commitment Investment and in whole upon the dissolution of the Partnership, neither such Partner’s Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption except
with the consent of the General Partner.
Section 7.3. Allocations. (a) Capital Commitment Net Income (Loss) of the
Partnership for each Capital Commitment Investment shall be allocated to the related Capital Commitment Capital Accounts of all the Partners (including the General Partner) participating in such Capital Commitment Investment in proportion to their
respective Capital Commitment Profit Sharing Percentages for such Capital Commitment Investment. Capital Commitment Net Income (Loss) on any Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion which such
Partner’s aggregate Capital Commitment Capital Accounts bear to the aggregate Capital Commitment Capital Accounts of all Partners; provided, that if any Partner makes the election provided for in Section 7.6, Capital Commitment Net
Income (Loss) of the Partnership for each Capital Commitment Investment shall be allocated to the related Capital Commitment Capital Accounts of all the Partners participating in such Capital Commitment Investment who do not make such election in
proportion to their respective Capital Commitment Profit Sharing Percentages for such Capital Commitment Investment.
(b) Any special costs
relating to distributions pursuant to Section 7.6 or Section 7.7 shall be specially allocated to the electing Partner.
(c)
Notwithstanding the foregoing, the General Partner may make such allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems
reasonably necessary for this purpose.
Section 7.4. Distributions.
(a) Each Partner’s allocable portion of Capital Commitment Net Income received from his or her Capital Commitment Investments,
distributions to such Partner that constitute returns of capital, and other Capital Commitment Net Income of the Partnership (including, without limitation, Capital Commitment Net Income attributable to Unallocated Capital Commitment Interests)
during a Fiscal Year of the Partnership will be credited to payment of the Investor Notes to the extent required below as of the last day of such Fiscal Year (or on such earlier date as related distributions are made in the sole discretion of the
General Partner) with any cash amount distributable to such Partner pursuant to clauses (ii) and (vii) below to be distributed within 45 days after the end of each Fiscal Year of the Partnership (or in each case on such earlier date as selected
by the General Partner in its sole discretion) as follows (subject to Section 7.4(c) below):
(i) First, to the
payment of interest then due on all Investor Notes (relating to Capital Commitment Investments or otherwise) of such Partner (to the extent Capital Commitment Net Income and distributions or payments from Other Sources do not equal or exceed all
interest payments due, the selection of those of such Partner’s Investor Notes upon which interest is to be paid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor);
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(ii) Second, to distribution to the Partner of an amount equal to the U.S.
federal, state and local income taxes on income of the Partnership allocated to such Partner for such year in respect of such Partner’s Capital Commitment Partner Interest (the aggregate amount of any such distribution shall be determined by
the General Partner, subject to the limitation that the minimum aggregate amount of such distribution be the tax that would be payable if the taxable income of the Partnership related to all Partners’ Capital Commitment Partner Interests were
all allocated to an individual subject to the then-prevailing maximum rate of U.S. federal, New York State and New York City taxes (including, without limitation, taxes imposed under Section 1411 of the Code), taking into account the character
of such taxable income allocated by the Partnership and the limitations on deductibility of expenses and other items for U.S. federal income tax purposes); provided, that additional amounts shall be paid to the Partner pursuant to this clause
(ii) to the extent that such amount reduces the amount otherwise distributable to the Partner pursuant to a comparable provision in any other BE Agreement and there are not sufficient amounts to fully satisfy such provision from the relevant
partnership or other entity; provided further, that amounts paid pursuant to the provisions in such other BE Agreements comparable to the immediately preceding proviso shall reduce those amounts otherwise distributable to the Partner pursuant to
provisions in such other BE Agreements that are comparable to this clause (ii);
(iii) Third, to the payment in full of the
principal amount of the Investor Note financing (A) any Capital Commitment Investment disposed of during or prior to such Fiscal Year or (B) any BE Investments (other than Capital Commitment Investments) disposed of during or prior to such
Fiscal Year, to the extent not repaid from Other Sources;
(iv) Fourth, to the return to such Partner of (A) all
Capital Commitment-Related Capital Contributions made in respect of the Capital Commitment Interest to which any Capital Commitment Investment disposed of during or prior to such Fiscal Year relates or (B) all capital contributions made to any
Blackstone Entity (other than the Partnership) in respect of interests therein relating to BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal Year (including all principal paid on the related
Investor Notes), to the extent not repaid from amounts of Other Sources (other than amounts of Capital Commitment Partner Carried Interest);
(v) Fifth, to the payment of principal (including any previously deferred amounts) then owing under all other Investor Notes of
such Partner (including those unrelated to the Partnership), the selection of those of such Partner’s Investor Notes to be repaid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor;
(vi) Sixth, up to 50% of any Capital Commitment Net Income remaining after application pursuant to clauses (i) through (v)
above shall be applied pro rata to prepayment of principal of all remaining Investor Notes of such Partner (including those unrelated to the Partnership), the selection of those of such Partner’s Investor Notes to be repaid, the division of
payments among such Investor Notes and the percentage of remaining Capital Commitment Net Income to be applied thereto to be determined by the Lender or Guarantor; and
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(vii) Seventh, to such Partner to the extent of any amount of Capital
Commitment Net Income remaining after making the distributions in clauses (i) through (vi) above, and such amount is not otherwise required to be applied to Investor Notes pursuant to the terms thereof.
To the extent there is a partial disposition of a Capital Commitment Investment or any other BE Investment, as applicable, the payments in
clauses (iii) and (iv) above shall be based on that portion of the Capital Commitment Investment or other BE Investment, as applicable, disposed of, and the principal amount and related interest payments of such Investor Note shall be adjusted
to reflect such partial payment so that there are equal payments over the remaining term of the related Investor Note. For a Partner who is no longer an employee or officer of Holdings or an Affiliate thereof, distributions shall be made pursuant to
clauses (i) through (iii) above, and then, unless the Partnership or its Affiliate has exercised its rights pursuant to Section 8.1 hereof, any remaining income or other distribution in respect of such Partner’s Capital Commitment
Partner Interest shall be applied to the prepayment of the outstanding Investor Notes of such Partner, until all such Partner’s Investor Notes have been repaid in full, with any such income or other distribution remaining thereafter distributed
to such Partner.
Distributions of Capital Commitment Net Income may be made at any other time at the discretion of the General Partner.
At the General Partner’s discretion, any amounts distributed to a Partner in respect of such Partner’s Capital Commitment Partner Interest will be net of any interest and principal payable on his or her Investor Notes for the full period
in respect of which the distribution is made.
(b) [Intentionally omitted.]
(c) To the extent that the foregoing Partnership distributions and distributions and payments from Other Sources are insufficient to satisfy
any principal and/or interest due on Investor Notes, and to the extent that the General Partner in its sole discretion elects to apply this paragraph (c) to any individual payments due, such unpaid interest will be added to the remaining
principal amount of such Investor Notes and shall be payable on the next scheduled principal payment date (along with any deferred principal and any principal and interest due on such date); provided, that such deferral shall not apply to a
Partner that is no longer an employee or officer of Holdings or its Affiliates. All unpaid interest on such Investor Notes shall accrue interest at the interest rate then in effect for such Investor Notes.
(d) [Intentionally omitted.]
(e)
The Capital Commitment Capital Account of each Partner shall be reduced by the amount of any distribution to such Partner pursuant to Section 7.4(a).
(f) At any time that a sale, exchange, transfer or other disposition of a portion of a Capital Commitment Investment is being considered by the
Partnership or BCEP II (a “Capital Commitment Disposable Investment”), at the election of the General Partner each Partner’s Capital Commitment Interest with respect to such Capital Commitment Investment shall be vertically
divided into two separate Capital Commitment Interests, a Capital Commitment Interest attributable to the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment
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Class B Interest”), and a Capital Commitment Interest attributable to such Capital Commitment Investment excluding the Capital Commitment Disposable Investment (a
Partner’s “Capital Commitment Class A Interest”). Distributions (including those resulting from a direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital
Commitment Disposable Investment shall be made only to holders of Capital Commitment Class B Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating
to such Capital Commitment Class B Interests, and distributions (including those resulting from the direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Investment excluding such
Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class A Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages
relating to such Capital Commitment Class A Interests.
(g) (i) If (x) the Partnership is obligated under the Giveback Provisions
to contribute a Giveback Amount to BCEP II in respect of any Capital Commitment BCEP II Interest that may be held by the Partnership or (y) Associates II is obligated under the Giveback Provisions to contribute to BCEP II a Giveback Amount with
respect to any Capital Commitment BCEP II Interest that may be held by Associates II and the Partnership is obligated to contribute any such amount to Associates II in respect of the Partnership’s Capital Commitment Associates II Partner
Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount in the case of either (x) or (y) being herein called a “Capital Commitment Giveback Amount”), the General Partner shall call
for such amounts as are necessary to satisfy such obligation of the Partnership as determined by the General Partner, in which case, each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the General
Partner, such an amount of prior distributions by the Partnership with respect to the Capital Commitment BCEP II Interest (the “Capital Commitment Recontribution Amount”) which equals such Partner’s pro rata share of prior
distributions in connection with (a) the Capital Commitment BCEP II Investment giving rise to the Capital Commitment Giveback Amount, (b) if the amounts contributed pursuant to clause (a) above are insufficient to satisfy such Capital
Commitment Giveback Amount, Capital Commitment BCEP II Investments other than the one giving rise to such obligation, and (c) if the Capital Commitment Giveback Amount pursuant to an applicable BCEP II Agreement is unrelated to a specific
Capital Commitment BCEP II Investment, all Capital Commitment BCEP II Investments. Each Partner shall promptly contribute to the Partnership upon notice thereof such Partner’s Capital Commitment Recontribution Amount. Prior to such time, the
General Partner may, at the General Partner’s discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of the Capital Commitment Giveback Amount will
probably materialize (and an estimate of the aggregate amount of such obligations).
(ii) (A) In the event any Partner
(a “Capital Commitment Defaulting Party”) fails to recontribute all or any portion of such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount for any reason, the General Partner shall require all
other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Capital Commitment Profit Sharing Percentages), such amounts as are necessary to fulfill the Capital Commitment Defaulting Party’s
obligation to pay such Capital Commitment Defaulting Party’s Capital Commitment Recontribution
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Amount (a “Capital Commitment Deficiency Contribution”) if the General Partner determines in its good faith judgment that the Partnership will be unable to collect such amount in
cash from such Capital Commitment Defaulting Party for payment of the Capital Commitment Giveback Amount at least 20 Business Days prior to the latest date that the Partnership is permitted to pay the Capital Commitment Giveback Amount;
provided, that no Partner shall as a result of such Capital Commitment Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Capital Commitment Recontribution Amount initially requested from such
Partner in respect of such default. Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood
of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership against the Capital Commitment Defaulting Party, the cost
of which shall be a Partnership expense to the extent not ultimately reimbursed by the Capital Commitment Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such Capital Commitment Defaulting Party becoming a
Capital Commitment Defaulting Party) to set-off as appropriate and apply against such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount any amounts otherwise payable to the
Capital Commitment Defaulting Party by the Partnership or any Affiliate thereof. Each Partner hereby grants to the General Partner a security interest, effective upon such Partner becoming a Capital Commitment Defaulting Party, in all accounts
receivable and other rights to receive payment from the Partnership or any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General Partner may sell, collect or otherwise realize upon such
collateral. In furtherance of the foregoing, each Partner hereby appoints the General Partner as its true and lawful attorney-in-fact with full irrevocable power and
authority, in the name of such Partner or in the name of the Partnership, to take any actions which may be necessary to accomplish the intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the
Capital Commitment Recontribution Amount of a Capital Commitment Defaulting Party from the date such Capital Commitment Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(B) Any Partner’s failure to make a Capital Commitment Deficiency Contribution shall cause such Partner to be a Capital
Commitment Defaulting Party with respect to such amount.
(iii) A Partner’s obligation to make contributions to the
Partnership under this Section 7.4(g) shall survive the termination of the Partnership.
Section 7.5. Valuations. Capital
Commitment Investments shall be valued annually as of the end of each year (and at such other times as deemed appropriate by the General Partner) in accordance with the principles utilized by Associates II (or any other Affiliate of the Partnership
that is a general partner of BCEP II) in valuing investments of BCEP II or, in the case of investments not held by BCEP II, in the good faith judgment of the General Partner, subject in each case to the second proviso of the immediately succeeding
sentence. The value of any Capital Commitment Interest as of any date (the “Capital Commitment Value”) shall be based on the value
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of the underlying Capital Commitment Investment as set forth above; provided, that the Capital Commitment Value may be determined as of an earlier date if determined appropriate by the
General Partner in good faith; provided further, that such value may be adjusted by the General Partner to take into account factors relating solely to the value of a Capital Commitment Interest (as compared to the value of the
underlying Capital Commitment Investment), such as restrictions on transferability, the lack of a market for such Capital Commitment Interest and lack of control of the underlying Capital Commitment Investment. To the full extent permitted by
applicable law such valuations shall be final and binding on all Partners; provided further, that the immediately preceding proviso shall not apply to any Capital Commitment Interests held by a person who is or was at any time a direct
member or partner of a General Partner of the Partnership.
Section 7.6. Disposition Election. (a) At any time prior to
the date of the Partnership’s execution of a definitive agreement to dispose of a Capital Commitment Investment, the General Partner may in its sole discretion permit a Partner to retain all or any portion of its pro rata share of such
Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such Capital Commitment Investment). If the General Partner so permits, such Partner shall instruct the General Partner in writing
prior to such date (i) not to dispose of all or any portion of such Partner’s pro rata share of such Capital Commitment Investment (the “Retained Portion”) and (ii) either to (A) distribute such Retained Portion
to such Partner on the closing date of such disposition or (B) retain such Retained Portion in the Partnership on behalf of such Partner until such time as such Partner shall instruct the General Partner upon 5 days’ notice to distribute
such Retained Portion to such Partner. Such Partner’s Capital Commitment Capital Account shall not be adjusted in any way to reflect the retention in the Partnership of such Retained Portion or the Partnership’s disposition of other
Partners’ pro rata shares of such Capital Commitment Investment; provided, that such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Retained Portion to such Partner or upon
distribution of proceeds with respect to a subsequent disposition thereof by the Partnership.
(b) No distribution of such Retained Portion
shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or simultaneously with such distribution.
Section 7.7. Capital Commitment Special Distribution Election. (a) From time to time during the term of this Agreement, the
General Partner may in its sole discretion, upon receipt of a written request from a Partner, distribute to such Partner any portion of its pro rata share of a Capital Commitment Investment (as measured by such Partner’s Capital Commitment
Profit Sharing Percentage in such Capital Commitment Investment) (a “Capital Commitment Special Distribution”). Such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Capital Commitment
Special Distribution.
(b) No Capital Commitment Special Distributions shall occur unless any Investor Notes relating thereto shall have
been paid in full prior to or simultaneously with such Capital Commitment Special Distribution.
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ARTICLE VIII
WITHDRAWAL, ADMISSION OF NEW PARTNERS
Section 8.1. Partner Withdrawal; Repurchase of Capital Commitment Interests. (a) Capital Commitment Interests (or a portion
thereof) that were financed by Investor Notes will be treated as Non-Contingent for purposes hereof based upon the proportion of (a) the sum of Capital Commitment-Related Capital Contributions not
financed by an Investor Note with respect to each Capital Commitment Interest and principal payments on the related Investor Note to (b) the sum of the Capital Commitment-Related Capital Contributions not financed by an Investor Note with
respect to such Capital Commitment Interest, the original principal amount of such Investor Note and all deferred amounts of interest which from time to time comprise part of the principal amount of the Investor Note. A Partner may prepay a portion
of any outstanding principal on the Investor Notes; provided, that in the event that a Partner prepays all or any portion of the principal amount of the Investor Notes within nine months prior to the date on which such Partner is no longer an
employee or officer of Holdings or an Affiliate thereof, the Partnership (or its designee) shall have the right, in its sole discretion, to purchase the Capital Commitment Interest that became Non-Contingent
as a result of such prepayment; provided further, that the purchase price for such Capital Commitment Interest shall be determined in accordance with the determination of the purchase price of a Partner’s Contingent Capital
Commitment Interests as set forth in paragraph (b) below. Prepayments made by a Partner shall apply pro rata against all of such Partner’s Investor Notes; provided, that such Partner may request that such prepayments be
applied only to Investor Notes related to BE Investments that are related to one or more Blackstone Entities specified by such Partner. Except as expressly provided herein, Capital Commitment Interests that were not financed in any respect with
Investor Notes shall be treated as Non-Contingent Capital Commitment Interests.
(b) (i) Upon
a Partner ceasing to be an officer or employee of the Partnership or any of its Affiliates, other than as a result of such Partner dying or suffering a Total Disability, such Partner and the Partnership or any other person designated by the General
Partner shall each have the right (exercisable by the Withdrawn Partner within 30 days and by the Partnership or its designee(s) within 45 days after such Partner’s ceasing to be such an officer or employee) or any time thereafter, upon 30
days’ notice, but not the obligation, to require the Partnership (subject to the prior consent of the General Partner, such consent not to be unreasonably withheld or delayed), subject to the Partnership Act, to buy (in the case of exercise of
such right by such Withdrawn Partner) or the Withdrawn Partner to sell (in the case of exercise of such right by the Partnership or its designee(s)) all (but not less than all) such Withdrawn Partner’s Contingent Capital Commitment Interests.
(ii) The purchase price for each such Contingent Capital Commitment Interest shall be an amount equal to (A) the
outstanding principal amount of the related Investor Note plus accrued interest thereon to the date of purchase (such portion of the purchase price to be paid in cash) and (B) an additional amount (the “Adjustment Amount”)
equal to (x) all interest paid by the Partner on the portion of the principal amount of such Investor Note(s) relating to the portion of the related Capital Commitment Interest remaining Contingent and to be repurchased, plus (y) all
Capital Commitment Net Losses allocated to the Withdrawn Partner on such Contingent portion of such Capital
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Commitment Interest, minus (z) all Capital Commitment Net Income allocated to the Withdrawn Partner on the Contingent portion of such Capital Commitment Interest; provided, that, if
the Withdrawn Partner was terminated from employment or his or her position as an officer for Cause, all amounts referred to in clause (x) or (y) of the Adjustment Amount, in the General Partner’s sole discretion, may be deemed to equal
zero. The Adjustment Amount shall, if positive, be payable by the holders of the purchased Capital Commitment Interests to the Withdrawn Partner from the next Capital Commitment Net Income received by such holders on the Contingent portion of such
Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received. If the Adjustment Amount is negative, it shall be payable to the holders of the purchased Capital Commitment Interest by the Withdrawn
Partner (A) from the next Capital Commitment Net Income on the Non-Contingent portion of the Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is
received by the Withdrawn Partner, or (B) if the Partnership or its designee(s) elect to purchase such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, in cash by the Withdrawn
Partner at the time of such purchase; provided, that the Partnership and its Affiliates may offset any amounts otherwise owing to a Withdrawn Partner against any Adjustment Amount owed by such Withdrawn Partner. Until so paid, such remaining
Adjustment Amount will not itself bear interest. At the time of such purchase of the Withdrawn Partner’s Contingent Capital Commitment Interests, his or her related Investor Note shall be payable in full.
(iii) Upon such Partner ceasing to be such an officer or employee, all Investor Notes shall become fully recourse to the
Withdrawn Partner in his or her individual capacity (whether or not the Withdrawn Partner or the Partnership or its designee(s) exercises the right to require repurchase of the Withdrawn Partner’s Contingent Capital Commitment Interests).
(iv) If neither the Withdrawn Partner nor the Partnership nor its designee(s) exercises the right to require repurchase of such
Contingent Capital Commitment Interests, then the Withdrawn Partner shall retain the Contingent portion of his or her Capital Commitment Interests and the Investor Notes shall remain outstanding, shall become fully recourse to the Withdrawn Partner
in his or her individual capacity, shall be payable in accordance with their remaining original maturity schedules and shall be prepayable at any time by the Withdrawn Partner at his or her option, and the Partnership shall apply such prepayments
against outstanding Investor Notes on a pro rata basis.
(v) To the extent that another Partner purchases a portion
of a Capital Commitment Interest of a Withdrawn Partner, the purchasing Partner’s Capital Commitment Capital Account and Capital Commitment Profit Sharing Percentage for such Capital Commitment Investment shall be correspondingly increased.
(c) Upon the occurrence of a Final Event with respect to any Partner, such Partner shall thereupon cease to be a Partner with respect to
such Partner’s Capital Commitment Partner Interest. If such a Final Event shall occur, no Successor in Interest to any such Partner shall for any purpose hereof become or be deemed to become a Partner. The sole right, as against the Partnership
and the remaining Partners, acquired hereunder by, or resulting hereunder to, a
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Successor in Interest to any Partner shall be to receive any distributions and allocations with respect to such Partner’s Capital Commitment Partner Interest pursuant to Article VII and this
Article VIII (subject to the right of the Partnership to purchase the Capital Commitment Interests of such former Partner pursuant to Section 8.1(b) or Section 8.1(d)), to the extent, at the time, in the manner and in the amount otherwise
payable to such Partner had such a Final Event not occurred, and no other right shall be acquired hereunder by, or shall result hereunder to, a Successor in Interest to such Partner, whether by operation of law or otherwise and the Partnership shall
be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations hereunder. Until distribution of any such Partner’s interest in the Partnership upon the dissolution of the
Partnership as provided in Section 9.2, neither his or her Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption without the consent of the General Partner. The General Partner shall be entitled
to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations hereunder with respect to such Partner’s Capital Commitment Partner Interest.
(d) If a Partner dies or suffers a Total Disability, all Contingent Capital Commitment Interests of such Partner shall be purchased by the
Partnership or its designee (within 30 days of the first date on which the Partnership knows or has reason to know of such Partner’s death or Total Disability) (and the purchase price for such Contingent Capital Commitment Interests shall be
determined in accordance with Section 8.1(b) (except that any Adjustment Amount shall be payable by or to such Partner’s estate, personal representative or other Successor in Interest, in cash)), and any Investor Notes financing such
Contingent Capital Commitment Interests shall thereupon be prepaid as provided in Section 8.1(b). Upon such Partner’s death or Total Disability, any Investor Note(s) financing such Contingent Capital Commitment Interests shall become fully
recourse. In addition, in the case of the death or Total Disability of a Partner, if the estate, personal representative or other Successor in Interest of such Partner, so requests in writing within 180 days after the Partner’s death or ceasing
to be an employee or member (directly or indirectly) of the Partnership or any of its Affiliates by reason of Total Disability (such requests shall not exceed one per calendar year), the Partnership or its designee may but is not obligated to
purchase for cash all (but not less than all) Non-Contingent Capital Commitment Interests of such Partner as of the last day of the Partnership’s then current Fiscal Year at a price equal to the Capital
Commitment Value thereof as of the most recent valuation prior to the date of purchase. Each Partner shall be required to include appropriate provisions in his or her will to reflect such provisions of this Agreement. In addition, the Partnership
may, in the sole discretion of the General Partner, upon notice to the estate, personal representative or other Successor in Interest of such Partner, within 30 days of the first date on which the General Partner knows or has reason to know of such
Partner’s death or Total Disability, determine either (i) to distribute Securities or other property to the estate, personal representative or other Successor in Interest, in exchange for such
Non-Contingent Capital Commitment Interests as provided in Section 8.1(e) or (ii) to require sale of such Non-Contingent Capital Commitment Interests to the
Partnership or its designee as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by the General Partner in its sole discretion) for an amount in cash equal to the Capital Commitment Value thereof.
(e) In lieu of retaining a Withdrawn Partner as a Partner with respect to any Non-Contingent Capital
Commitment Interests, the General Partner may, in its sole discretion, by notice to such Withdrawn Partner within 45 days of his or her ceasing to be an employee or officer of the Partnership or any of its Affiliates, or at any time thereafter, upon
30 days written notice,
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determine (1) to distribute to such Withdrawn Partner the pro rata portion of the Securities or other property underlying such Withdrawn Partner’s
Non-Contingent Capital Commitment Interests, subject to any restrictions on distributions associated with the Securities or other property, in satisfaction of his or her
Non-Contingent Capital Commitment Interests in the Partnership or (2) to cause, as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by the General Partner in its
sole discretion), the Partnership or another person designated by the General Partner (who may be itself another Partner or another Affiliate of the Partnership) to purchase all (but not less than all) of such Withdrawn Partner’s Non-Contingent Capital Commitment Interests for a price equal to the Capital Commitment Value thereof (determined in good faith by the General Partner as of the most recent valuation prior to the date of purchase).
The General Partner shall condition any distribution or purchase of voting Securities pursuant to paragraph (d) above or this paragraph (e) upon the Withdrawn Partner’s execution and delivery to the Partnership of an appropriate
irrevocable proxy, in favor of the General Partner or its nominee, relating to such Securities.
(f) The Partnership may subsequently
transfer any Unallocated Capital Commitment Interest or portion thereof which is purchased by it as described above to any other person approved by the General Partner. In connection with such purchase or transfer or the purchase of a Capital
Commitment Interest or portion thereof by the General Partner’s designee(s), Holdings may loan all or a portion of the purchase price of the transferred or purchased Capital Commitment Interest to the Partnership, the transferee or the designee-purchaser(s), as applicable (excluding any of the foregoing who is an executive officer of The Blackstone Group Inc. or any Affiliate thereof). To the extent that a Withdrawn Partner’s Capital
Commitment Interests (or portions thereof) are repurchased by the Partnership and not transferred to or purchased by another person, all or any portion of such repurchased Capital Commitment Interests may, in the sole discretion of the General
Partner, (i) be allocated to each Partner already participating in the Capital Commitment Investment to which the repurchased Capital Commitment Interest relates, (ii) be allocated to each Partner in the Partnership, whether or not already
participating in such Capital Commitment Investment, and/or (iii) continue to be held by the Partnership itself as an unallocated Capital Commitment Investment (such Capital Commitment Interests being herein called “Unallocated Capital
Commitment Interests”). To the extent that a Capital Commitment Interest is allocated to Partners as provided in clause (i) and/or (ii) above, any indebtedness incurred by the Partnership to finance such repurchase shall also be
allocated to such Partners. All such Capital Commitment Interests allocated to Partners shall be deemed to be Contingent and shall become Non-Contingent as and to the extent that the principal amount of such
related indebtedness is repaid. The Partners receiving such allocations shall be responsible for such related indebtedness only on a nonrecourse basis to the extent appropriate as provided in this Agreement, except as otherwise provided in this
Section 8.1 and except as such Partners and the General Partner shall otherwise agree; provided, that such indebtedness shall become fully recourse to the extent and at the time provided in this Section 8.1. If the indebtedness
financing such repurchased interests is not to be non-recourse or so limited, the Partnership may require an assumption by the Partners of such indebtedness on the terms thereof as a precondition to allocation
of the related Capital Commitment Interests to such Partners; provided, that a Partner shall not, except as set forth in his or her Investor Note(s), be obligated to accept any obligation that is personally recourse (except as provided in
this Section 8.1), unless his or her prior consent is obtained. So long as the Partnership itself retains the Unallocated Capital Commitment Interests pursuant to clause (iii) above, such Unallocated Capital Commitment Interests shall
belong to the Partnership and any indebtedness
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financing the Unallocated Capital Commitment Interests shall be an obligation of the Partnership to which all income of the Partnership is subject except as otherwise agreed by the lender of such
indebtedness. Any Capital Commitment Net Income (Loss) on an Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion his or her aggregate Capital Commitment Capital Accounts bear to the aggregate Capital
Commitment Capital Accounts of all Partners; debt service on such related financing will be an expense of the Partnership allocable to all Partners in such proportions.
(g) If a Partner is required to Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest for
Cause, then his or her Capital Commitment Interest shall be settled in accordance with paragraphs (a)-(f) and (j) of this Section 8.1; provided, that if such Partner was not at any time a
direct partner of a General Partner of the Partnership, the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) purchase for cash all of such Withdrawn Partner’s Non-Contingent Capital
Commitment Interests. The purchase price for each such Non-Contingent Capital Commitment Interest shall be the lower of (A) the original cost of such Non-Contingent
Capital Commitment Interest or (B) an amount equal to the Capital Commitment Value thereof (determined as of the most recent valuation prior to the date of the purchase of such Non-Contingent Capital
Commitment Interest);
(ii) allow the Withdrawn Partner to retain such
Non-Contingent Capital Commitment Interests; provided, that the maximum amount of Capital Commitment Net Income allocable to such Withdrawn Partner with respect to any Capital Commitment Investment
shall equal the amount of Capital Commitment Net Income that would have been allocated to such Withdrawn Partner if such Capital Commitment Investment had been sold as of the Settlement Date at the then prevailing Capital Commitment Value thereof;
or
(iii) in lieu of cash, purchase such Non-Contingent Capital Commitment
Interests by providing the Withdrawn Partner with a promissory note in the amount determined in (i) above. Such promissory note shall have a maximum term of ten (10) years with interest at the Federal Funds Rate.
(h) The Partnership will assist a Withdrawn Partner or his or her estate or guardian, as the case may be, in the settlement of the Withdrawn
Partner’s Capital Commitment Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his or her estate.
(i) The General Partner may reasonably determine in good faith to retain outside professionals to provide the assistance to Withdrawn Partners
or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the case may be, prior to engaging such professionals. If the
Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
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(j) Each Partner hereby irrevocably appoints the General Partner as such Partner’s true
and lawful agent, representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on behalf of
such Partner, any and all agreements, instruments, consents, ratifications, documents and certificates which such General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this
Section 8.1, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is coupled with an interest and shall
survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 8.2. Transfer of Partner’s Capital Commitment Interest. Except as otherwise agreed by the General
Partner, no Partner or former Partner shall have the right to sell, assign, mortgage, pledge, grant a security interest over, or otherwise dispose of or transfer (“Transfer”) all or part of any such Partner’s Capital Commitment
Partner Interest in the Partnership; provided, that this Section 8.2 shall in no way impair (i) Transfers as permitted in Section 8.1 above, in the case of the purchase of a Withdrawn Partner’s or Deceased or Totally
Disabled Partner’s Capital Commitment Interests, (ii) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers by a Partner to another Partner of
Non-Contingent Capital Commitment Interests, (iii) Transfers with the prior written consent of the General Partner (which consent may be granted or withheld in its sole discretion without giving any
reason therefor) and (iv) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers of up to 25% of a Limited Partner’s Capital Commitment Partner Interest to an Estate Planning Vehicle (it
being understood that it shall not be unreasonable for the General Partner to condition any Transfer of an Interest pursuant to this clause (iv) on the satisfaction of certain conditions and/or requirements imposed by the General Partner in
connection with any such Transfer, including, for example, a requirement that any transferee of an Interest hold such Interest as a passive, non-voting interest in the Partnership). The General Partner shall
designate that each Estate Planning Vehicle shall not have voting rights (any such Partner being called a “Nonvoting Partner”). Such Partner shall be jointly and severally liable for all obligations of both such Partner and such
Nonvoting Partner with respect to the interest transferred (including the obligation to make additional Capital Commitment-Related Capital Contributions). The General Partner may at its sole option exercisable at any time require such Estate
Planning Vehicle to Withdraw from the Partnership on the terms of Section 8.1 and Article VI. No person acquiring an interest in the Partnership pursuant to this Section 8.2 shall become a Partner of the Partnership, or acquire such
Partner’s right to participate in the affairs of the Partnership, unless such person shall be admitted as a Partner pursuant to Section 6.1. A Partner shall not cease to be a Partner of the Partnership upon the collateral assignment of, or
the pledging or granting of a security interest in, its entire Interest in the Partnership in accordance with the provisions of this Agreement.
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Section 8.3. Compliance with Law. Notwithstanding any provision hereof to the
contrary, no sale or Transfer of a Capital Commitment Interest in the Partnership may be made except in compliance with all U.S. federal, state and other applicable laws, including U.S. federal and state securities laws.
ARTICLE IX
DISSOLUTION
Section 9.1. Dissolution. The Partnership shall be dissolved and subsequently terminated:
(a) pursuant to Section 6.6; or
(b) upon the expiration of the term of the Partnership.
Section 9.2. Final Distribution. Upon the dissolution of the Partnership, and following the payment of creditors of the
Partnership and the making of provisions for the payment of any contingent, conditional or unmatured claims known to the Partnership as required under the Partnership Act:
(a) The Partners’ respective interests in the Partnership shall be valued and settled in accordance with the procedures set forth in
Section 6.5 which provide for allocations to the GP-Related Capital Accounts of the Partners and distributions in accordance with the GP-Related Capital Account
balances of the Partners; and
(b) With respect to each Partner’s Capital Commitment Partner Interest, an amount shall be paid to such
Partner in cash or Securities in an amount equal to such Partner’s respective Capital Commitment Liquidating Share for each Capital Commitment Investment; provided, that if the remaining assets relating to any Capital Commitment
Investment shall not be equal to or exceed the aggregate Capital Commitment Liquidating Shares for such Capital Commitment Investment, to each Partner in proportion to its Capital Commitment Liquidating Share for such Capital Commitment Investment;
and the remaining assets of the Partnership related to the Partners’ Capital Commitment Partner Interests shall be paid to the Partners in cash or Securities in proportion to their respective Capital Commitment Profit Sharing Percentages for
each Capital Commitment Investment from which such cash or Securities are derived.
The General Partner shall be the liquidator. In the
event that the General Partner is unable to serve as liquidator, a liquidating trustee shall be chosen by the affirmative vote of a Majority in Interest of the Partners voting at a meeting of Partners (excluding Nonvoting Special Partners).
Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests. (a) If there are any Securities or other
property or other investments or securities related to the Partners’ Capital Commitment Partner Interests which, in the judgment of the liquidator, cannot be sold, or properly distributed in kind in the case of dissolution, without sacrificing
a significant portion of the value thereof, the value of a Partner’s interest in each such Security or other investment or security may be excluded from the amount distributed to the Partners participating in the related Capital Commitment
Investment pursuant to Section 9.2(b). Any interest of a Partner, including his or her pro rata interest in any gains, losses or distributions, in Securities or other property or other investments or securities so excluded shall not be
paid or distributed until such time as the liquidator shall determine.
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(b) If there is any pending transaction, contingent liability or claim by or against the
Partnership related to the Partners’ Capital Commitment Partner Interests as to which the interest or obligation of any Partner therein cannot, in the judgment of the liquidator, be then ascertained, the value thereof or probable loss therefrom
may be deducted from the amount distributable to such Partner pursuant to Section 9.2(b). No amount shall be paid or charged to any such Partner on account of any such transaction or claim until its final settlement or such earlier time as the
liquidator shall determine. The Partnership may meanwhile retain from other sums due such Partner in respect of such Partner’s Capital Commitment Partner Interest an amount which the liquidator estimates to be sufficient to cover the share of
such Partner in any probable loss or liability on account of such transaction or claim.
(c) Upon determination by the liquidator that
circumstances no longer require the exclusion of any Securities or other property or retention of sums as provided in paragraphs (a) and (b) of this Section 9.3, the liquidator shall, at the earliest practicable time, distribute as
provided in Section 9.2(b) such sums or such Securities or other property or the proceeds realized from the sale of such Securities or other property to each Partner from whom such sums or Securities or other property were withheld.
ARTICLE X
MISCELLANEOUS
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be settled amicably,
including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including
the validity, scope and enforceability of this arbitration provision as well as any and all disputes arising out of, relating to or in connection with the termination, liquidation or winding up of the Partnership), whether arising during the
existence of the Partnership or at or after its termination or during or after the liquidation or winding up of the Partnership, shall be finally settled by arbitration conducted by a single arbitrator in New York, New York U.S.A., in accordance
with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within 30 days of the receipt of the request for arbitration, the International
Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may cause the Partnership to bring, on behalf of
the General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of
an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of paragraph (c) of this Section 10.1 to any such action or
proceeding, (ii) agrees that proof shall not be required that
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monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the General
Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon any such agent, who shall promptly advise such Partner of any such service of process, shall be
deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 10.1, OR ANY JUDICIAL PROCEEDING ANCILLARY TO
AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial
relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the forum(s) designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or
hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 10.1 and such parties agree not to plead or claim the
same.
(d) Notwithstanding any provision of this Agreement to the contrary, this Section 10.1 shall be construed to the maximum extent
possible to comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be
determined by a court of competent jurisdiction that any provision or wording of this Section 10.1, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or other
applicable law, such invalidity shall not invalidate all of this Section 10.1. In that case, this Section 10.1 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the
Delaware Arbitration Act or other applicable law, and, in the event such term or provision cannot be so limited, this Section 10.1 shall be construed to omit such invalid or unenforceable provision.
Section 10.2. Ownership and Use of the Blackstone Name. The Partnership acknowledges that Blackstone TM L.L.C.
(“TM”), a Delaware limited liability company with a principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., (or its successors or assigns) is the sole and exclusive owner of the mark and name BLACKSTONE and
that the ownership of, and the right to use, sell or otherwise dispose of, the firm name or any abbreviation or modification thereof which consists of or includes BLACKSTONE, shall belong exclusively to TM, which company (or its predecessors,
successors or assigns) has licensed the Partnership to use BLACKSTONE in its name. The Partnership acknowledges that TM owns the service mark BLACKSTONE for various services and that the Partnership is using the BLACKSTONE mark and name on a non-exclusive, non-sublicensable and non-assignable basis
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in connection with its business and authorized activities with the permission of TM. All services rendered by the Partnership under the BLACKSTONE mark and name will be rendered in a manner and
with quality levels that are consistent with the high reputation heretofore developed for the BLACKSTONE mark by TM and its Affiliates and licensees. The Partnership understands that TM may terminate its right to use BLACKSTONE at any time in
TM’s sole discretion by giving the Partnership written notice of termination. Promptly following any such termination, the Partnership will take all steps necessary to change its partnership name to one which does not include BLACKSTONE or any
confusingly similar term and cease all use of BLACKSTONE or any term confusingly similar thereto as a service mark or otherwise.
Section 10.3. Written Consent. Any action required or permitted to be taken by a vote of Partners at a meeting may be taken
without a meeting if a Majority in Interest of the Partners consent thereto in writing.
Section 10.4. Letter Agreements;
Schedules. The General Partner may, or may cause the Partnership to, enter or has previously entered into separate letter agreements with individual Partners, officers or employees with respect to
GP-Related Profit Sharing Percentages, Capital Commitment Profit Sharing Percentages, benefits or any other matter. The General Partner may from time to time execute and deliver to the Partners schedules which
set forth the then current capital balances, GP-Related Profit Sharing Percentages and Capital Commitment Profit Sharing Percentages of the Partners and any other matters deemed appropriate by the General
Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever; provided, that this in no way limits the effectiveness of any Commitment Agreement or SMD
Agreement.
Section 10.5. Governing Law; Separability of Provisions. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to principles of conflicts of law. In particular, the Partnership has been formed pursuant to the Partnership Act, and the rights and liabilities of the Partners shall be as provided
therein, except as herein otherwise expressly provided. If any provision of this Agreement shall be held to be invalid, such provision shall be given its meaning to the maximum extent permitted by law and the remainder of this Agreement shall not be
affected thereby.
Section 10.6. Successors and Assigns; Third Party Beneficiaries. This Agreement shall be binding upon and
shall, subject to the penultimate sentence of Section 6.3(a), inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any successor to a trustee of a trust which is or becomes a party hereto;
provided, that no person claiming by, through or under a Partner (whether such Partner’s heir, personal representative or otherwise), as distinct from such Partner itself, shall have any rights as, or in respect to, a Partner (including
the right to approve or vote on any matter or to notice thereof) except the right to receive only those distributions expressly payable to such person pursuant to Article VI and Article VIII. Any Partner or Withdrawn Partner shall remain liable for
the obligations under this Agreement (including any Net GP-Related Recontribution Amounts and any Capital Commitment Recontribution Amounts) of any transferee of all or any portion of such Partner’s or
Withdrawn Partner’s interest in the Partnership, unless waived by the General Partner. The Partnership shall, if the General Partner determines in its good faith judgment, based on the standards set forth in Section 5.8(d)(ii)(A) and
Section 7.4(g)(ii)(A), to pursue such transferee, pursue payment (including any Net GP-Related
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Recontribution Amounts and/or Capital Commitment Recontribution Amounts) from the transferee with respect to any such obligations. Nothing in this Agreement is intended, nor shall anything herein
be construed, to confer any rights, legal or equitable, on any person other than the Partners and their respective legal representatives, heirs, successors and permitted assigns. Notwithstanding the foregoing, solely to the extent required by the
BCEP II Agreements, (x) the limited partners in BCEP II shall be third-party beneficiaries of the provisions of Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any
Clawback Amount (for purpose of this sentence, as defined in paragraph 9.2.8(b) of the BCEP II Partnership Agreement), and (y) the amendment of the provisions of Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions
relating thereto), solely as they relate to any Clawback Amount (for purpose of this sentence, as defined in paragraph 9.2.8(b) of the BCEP II Partnership Agreement), shall be effective against such limited partners only with the 66 2/3% Combined
Limited Partner Consent (as such term is used in the BCEP II Partnership Agreement) unless such amendment does not adversely affect the LPs’ rights under paragraph 9.2.8 of the BCEP II Partnership Agreement.
Section 10.7. Confidentiality. (a) By executing this Agreement, each Partner expressly agrees, at all times during the term
of the Partnership and thereafter and whether or not at the time a Partner of the Partnership, to maintain the confidentiality of, and not to disclose to any person other than the Partnership, another Partner or a person designated by the
Partnership, any information relating to the business, financial structure, financial position or financial results, clients or affairs of the Partnership that shall not be generally known to the public or the securities industry, except as
otherwise required by law or by any regulatory or self-regulatory organization having jurisdiction; provided, that any corporate Partner may disclose any such information it is required by law, rule,
regulation or custom to disclose. Notwithstanding anything in this Agreement to the contrary, to comply with Treasury Regulations Section 1.6011-4(b)(3)(i), each Partner (and any employee, representative
or other agent of such Partner) may disclose to any and all persons, without limitation of any kind, the U.S. federal income tax treatment and tax structure of the Partnership, it being understood and agreed, for this purpose, (1) the name of,
or any other identifying information regarding (a) the Partners or any existing or future investor (or any Affiliate thereof) in any of the Partners, or (b) any investment or transaction entered into by the Partners; (2) any
performance information relating to any of the Partners or their investments; and (3) any performance or other information relating to previous funds or investments sponsored by any of the Partners, does not constitute such tax treatment or tax
structure information.
(b) Nothing in this Agreement shall prohibit or impede any Partner from communicating, cooperating or filing a
complaint on possible violations of U.S. federal, state or local law or regulation to or with any governmental agency or regulatory authority (collectively, a “Governmental Entity”), including, but not limited to, the SEC, FINRA,
EEOC or NLRB, or from making other disclosures to any Governmental Entity that are protected under the whistleblower provisions of U.S. federal, state or local law or regulation; provided, that in each case such communications and disclosures
are consistent with applicable law. Each Partner understands and acknowledges that (a) an individual shall not be held criminally or civilly liable under any U.S. federal or state trade secret law for the disclosure of a trade secret that is
made (i) in confidence to a U.S. federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit
or other proceeding, if such filing is made under seal, and (b) an individual who
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files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in
the court proceeding, if the individual files any document containing the trade secret under seal; and does not disclose the trade secret, except pursuant to court order. Moreover, a Partner shall not be required to give prior notice to (or get
prior authorization from) Blackstone regarding any such communication or disclosure. Except as otherwise provided in this paragraph or under applicable law, under no circumstance is any Partner authorized to disclose any information covered by
Blackstone or its affiliates’ attorney-client privilege or attorney work product or Blackstone’s trade secrets without the prior written consent of Blackstone.
Section 10.8. Notices. Whenever notice is required or permitted by this Agreement to be given, such notice shall be in writing
(including telecopy or similar writing) and shall be given by hand delivery (including any courier service) or telecopy to any Partner at its address or telecopy number shown in the Partnership’s books and records or, if given to the General
Partner, at the address or telecopy number of the Partnership in New York City. Each such notice shall be effective (i) if given by telecopy, upon dispatch, and (ii) if given by hand delivery, when delivered to the address of such Partner,
the General Partner or the Partnership specified as aforesaid.
Section 10.9. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original and all of which together shall constitute a single instrument. For the avoidance of doubt, a person’s execution and delivery of this Agreement by electronic signature and
electronic transmission (jointly, an “Electronic Signature”), including via DocuSign or other similar method, shall constitute the execution and delivery of a counterpart of this Agreement by or on behalf of such person and
shall bind such person to the terms of this Agreement. The parties hereto agree that this Agreement and any additional information incidental hereto may be maintained as electronic records. Any person executing and delivering this Agreement by an
Electronic Signature further agrees to take any and all reasonable additional actions, if any, evidencing its intent to be bound by the terms of this Agreement, as may be reasonably requested by the General Partner.
Section 10.10. Power of Attorney. Each Partner hereby irrevocably appoints the General Partner as such Partner’s true and
lawful representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file all instruments, documents
and certificates which, from time to time, may be required to set forth any amendment to this Agreement or may be required by this Agreement or by the laws of the United States of America, the State of Delaware or any other state in which the
Partnership shall determine to do business, or any political subdivision or agency thereof, to execute, implement and continue the valid and subsisting existence of the Partnership. Such power of attorney is coupled with an interest and shall
survive and continue in full force and effect notwithstanding the subsequent Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the subsequent disability or incapacity of such Partner.
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Section 10.11. Partner’s Will. Each Partner and Withdrawn
Partner shall include in his or her will a provision that addresses certain matters in respect of his or her obligations relating to the Partnership that is satisfactory to the General Partner and each such Partner and Withdrawn Partner shall
confirm annually to the Partnership, in writing, that such provision remains in his or her current will. Where applicable, any estate planning trust of such Partner or Withdrawn Partner to which a portion of such Partner’s or Withdrawn
Partner’s Interest is transferred shall include a provision substantially similar to such provision and the trustee of such trust shall confirm annually to the Partnership, in writing, that such provision or its substantial equivalent remains
in such trust. In the event any Partner or Withdrawn Partner fails to comply with the provisions of this Section 10.11 after the Partnership has notified such Partner or Withdrawn Partner of his or her failure to so comply and such failure to
so comply is not cured within 30 days of such notice, the Partnership may withhold any and all distributions to such Partner until the time at which such party complies with the requirements of this Section 10.11.
Section 10.12. Cumulative Remedies. Rights and remedies under this Agreement are cumulative and do not preclude use of other
rights and remedies available under applicable law.
Section 10.13. Legal Fees. Except as more specifically provided herein,
in the event of a legal dispute (including litigation, arbitration or mediation) between any Partner or Withdrawn Partner and the Partnership, arising in connection with any party seeking to enforce Section 4.1(d) or any other provision of this
Agreement relating to the Holdback, the Clawback Amount, the GP-Related Giveback Amount, the Capital Commitment Giveback Amount, the Net GP-Related Recontribution Amount
or the Capital Commitment Recontribution Amount, the “losing” party to such dispute shall promptly reimburse the “victorious party” for all reasonable legal fees and expenses incurred in connection with such dispute (such
determination to be made by the relevant adjudicator). Any amounts due under this Section 10.13 shall be paid within 30 days of the date upon which such amounts are due to be paid and such amounts remaining unpaid after such date shall accrue
interest at the Default Interest Rate.
Section 10.14. Entire Agreement; Modifications. This Agreement embodies
the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. Subject to Section 10.4, this Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. Except as provided herein, this Agreement may be amended or modified at any
time by the General Partner in its sole discretion, upon notification thereof to the Limited Partners.
*
* *
79
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the day and
year first above written. In the event that it is impracticable to obtain the signature of any one or more of the Partners to this Agreement, this Agreement shall be binding among the other Partners executing the same.
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GENERAL PARTNER:
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BLACKSTONE CEMA II L.L.C.
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By: Blackstone Holdings II L.P., its Managing Member
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By: Blackstone Holdings I/II GP L.L.C., its General Partner
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Name:
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John G. Finley
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Title:
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Chief Legal Officer
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[Signature Page to Amended and Restated Limited Partnership Agreement of Blackstone CEMA II GP L.P.]
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LIMITED PARTNERS AND SPECIAL PARTNERS:
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Limited Partners and Special Partners now admitted pursuant to powers of attorney now and hereafter granted to Blackstone CEMA II L.L.C.
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Blackstone CEMA II L.L.C.
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By: Blackstone Holdings II L.P., its Managing Member
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By: Blackstone Holdings I/II GP L.L.C., its General Partner
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Name:
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John G. Finley
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Title:
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Chief Legal Officer
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[Signature Page to Amended and Restated Limited Partnership Agreement of Blackstone CEMA II GP L.P.]
Exhibit 10.16
Execution Version
HIGHLY CONFIDENTIAL & TRADE SECRET
BREDS IV L.P.
AMENDED AND RESTATED
LIMITED
PARTNERSHIP AGREEMENT
DATED AS OF NOVEMBER 4, 2020
EFFECTIVE AS OF APRIL 3, 2020
THE LIMITED
PARTNERSHIP INTERESTS (THE “INTERESTS”) OF BREDS IV L.P. (THE “PARTNERSHIP”) HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), THE SECURITIES LAWS OF ANY STATE IN THE
UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS, AND ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS AND CONDITIONS OF THIS AMENDED AND
RESTATED LIMITED PARTNERSHIP AGREEMENT. THE INTERESTS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS OF SUCH INTERESTS WILL BE REQUIRED TO BEAR
THE RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS
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1
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Section 1.1. Definitions
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1
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Section 1.2. Terms Generally
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17
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ARTICLE II GENERAL PROVISIONS
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17
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Section 2.1. General Partner, Limited Partner, Special Partner
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17
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Section 2.2. Formation; Name; Foreign Jurisdictions
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18
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Section 2.3. Term
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18
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Section 2.4. Purposes; Powers
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18
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Section 2.5. Place of Business
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21
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Section 2.6. Withdrawal of Initial Limited Partner
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21
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ARTICLE III MANAGEMENT
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21
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Section 3.1. General Partner
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21
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Section 3.2. Partner Voting, etc
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22
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Section 3.3. Management
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22
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Section 3.4. Responsibilities of Partners
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24
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Section 3.5. Exculpation and Indemnification
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25
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Section 3.6. Representations of Partners
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27
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Section 3.7. Tax Representation and Further Assurances
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28
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ARTICLE IV CAPITAL OF THE PARTNERSHIP
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29
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Section 4.1. Capital Contributions by Partners
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29
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Section 4.2. Interest
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36
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Section 4.3. Withdrawals of Capital
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37
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ARTICLE V PARTICIPATION IN PROFITS AND LOSSES
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37
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Section 5.1. General Accounting Matters
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37
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Section 5.2. GP-Related Capital
Accounts
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39
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Section 5.3. GP-Related Profit Sharing
Percentages
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39
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Section 5.4. Allocations of GP-Related Net
Income (Loss)
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40
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Section 5.5. Liability of Partners
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41
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Section 5.6. [Intentionally omitted.]
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41
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Section 5.7. Repurchase Rights, etc.
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41
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Section 5.8. Distributions
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42
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Section 5.9. Business Expenses
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49
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Section 5.10. Tax Capital Accounts; Tax Allocations
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49
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ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND DISCHARGE OF PARTNERSHIP
INTERESTS; TERMINATION
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50
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Section 6.1. Additional Partners
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50
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Section 6.2. Withdrawal of Partners
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51
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Section 6.3. GP-Related Partner Interests Not
Transferable
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52
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Section 6.4. Consequences upon Withdrawal of a Partner
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53
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Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interests
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53
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Section 6.6. Dissolution of the Partnership
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59
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Section 6.7. Certain Tax Matters
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59
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Section 6.8. Special Basis Adjustments
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60
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ARTICLE VII CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS; ALLOCATIONS;
DISTRIBUTIONS
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61
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Section 7.1. Capital Commitment Interests, etc.
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61
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Section 7.2. Capital Commitment Capital Accounts
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62
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Section 7.3. Allocations
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62
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Section 7.4. Distributions.
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63
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Section 7.5. Valuations
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67
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Section 7.6. Disposition Election
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68
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Section 7.7. Capital Commitment Special Distribution Election
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68
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ARTICLE VIII WITHDRAWAL, ADMISSION OF NEW PARTNERS
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69
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Section 8.1. Partner Withdrawal; Repurchase of Capital Commitment Interests
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69
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Section 8.2. Transfer of Partner’s Capital Commitment Interest
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74
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Section 8.3. Compliance with Law
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74
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ARTICLE IX DISSOLUTION
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75
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Section 9.1. Dissolution
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75
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Section 9.2. Final Distribution
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75
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Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests
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75
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ARTICLE X MISCELLANEOUS
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76
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Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial
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76
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Section 10.2. Ownership and Use of the Blackstone Name
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77
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Section 10.3. Written Consent
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78
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Section 10.4. Letter Agreements; Schedules
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78
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Section 10.5. Governing Law; Separability of Provisions
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78
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Section 10.6. Successors and Assigns; Third Party Beneficiaries
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78
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Section 10.7. Confidentiality
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79
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Section 10.8. Notices
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80
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Section 10.9. Counterparts
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80
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Section 10.10. Power of Attorney
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80
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Section 10.11. Partner’s Will
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80
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Section 10.12. Cumulative Remedies
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81
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Section 10.13. Legal Fees
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81
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Section 10.14. Entire Agreement; Modifications
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81
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BREDS IV L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of BREDS IV L.P., a Delaware limited partnership (the “Partnership”),
dated as of November 4, 2020, and effective as of April 3, 2020, by and among BREDS IV GP L.L.C., a Delaware limited liability company, as general partner of the Partnership (in its capacity as general partner of the Partnership (the
“General Partner”), Leon Volchyok, as initial limited partner (the “Initial Limited Partner”), the limited partners listed as Limited Partners in the books and records of the Partnership), and such other persons
that are admitted to the Partnership as partners after the date hereof in accordance herewith.
W I T N
E S S E T H
WHEREAS, the Partnership was formed pursuant to the Delaware Revised Uniform
Limited Partnership Act, 6 Del. C. § 17-101, et seq., as it may be amended from time to time (the “Partnership Act”), pursuant to a certificate of limited partnership filed in the office
of the Secretary of State of the State of Delaware on August 26, 2019;
WHEREAS, the General Partner and the Initial Limited Partner
entered into a Limited Partnership Agreement dated as of August 26, 2019 (the “Original Agreement”); and
WHEREAS,
the parties hereto desire to enter into this Amended and Restated Limited Partnership Agreement, and hereby amend and restate the Original Agreement in its entirety and reflect the withdrawal of the Initial Limited Partner, in each case effective on
April 3, 2020;
NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound
hereby, the parties hereto agree that the Original Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for
purposes of this Agreement:
“Adjustment Amount” has the meaning set forth in Section 8.1(b)(ii).
“Advancing Party” has the meaning set forth in Section 7.1(c).
“Affiliate” when used with reference to another person means any person (other than the Partnership), directly
or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person, which may include, for greater certainty and as the context requires, endowment funds, estate planning vehicles
(including any trusts, family members, family investment vehicles, descendant, trusts and other related persons and entities), charitable programs and other similar and/or related vehicles or accounts associated with or established by Blackstone
and/or its affiliates, partners and current and/or former employees and/or related persons.
“Agreement” means this Amended and Restated Limited
Partnership Agreement, as it may be further amended, supplemented, restated or otherwise modified from time to time.
“Applicable Collateral Percentage” with respect to any Firm Collateral or Special Firm Collateral, has the
meaning set forth in the books and records of the Partnership with respect thereto.
“Associates IV” means
Blackstone Real Estate Debt Strategies Associates IV L.P., a Delaware limited partnership and the general partner of BREDS IV, or any other entity that serves as the general partner, special general partner or managing member of a vehicle indicated
in the definition of BREDS IV.
“Associates IV LP Agreement” means the limited partnership agreement,
dated as of the date set forth therein, of Associates IV, as it may be amended, supplemented, restated or otherwise modified from time to time.
“Bankruptcy” means, with respect to any person, the occurrence of any of the following events: (i) the
filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his or her assets; (ii) the filing by such person of a voluntary petition in Bankruptcy or the seeking of relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his or her inability to pay his or her debts as they become due; (iii) the failure of such person to pay his or
her debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of an answer admitting the material allegations of, or his or her consenting to, or
defaulting in answering, a Bankruptcy petition filed against him or her in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States Code, as now constituted or as hereafter amended; or (vi) the entry of an order,
judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a trustee or custodian of his or her assets and the continuance of such order, judgment
or decree unstayed and in effect for a period of 60 consecutive days.
“BE Agreement” means the limited
partnership agreement, limited liability company agreement or other governing document of any limited partnership, limited liability company or other entity referred to in the definition of “Blackstone Entity,” as such limited partnership
agreement, limited liability company agreement or other governing document may be amended, supplemented, restated or otherwise modified to date, and as such limited partnership agreement, limited liability company agreement or other governing
document may be further amended, supplemented, restated or otherwise modified from time to time.
2
“BE Investment” means any direct or indirect investment by
any Blackstone Entity.
“Blackstone” means, collectively, The Blackstone Group Inc., a Delaware
corporation, and any successor thereto, and any Affiliate thereof (excluding any natural persons and any portfolio companies, investments or similar entities of any Blackstone-sponsored fund (or any affiliate thereof that is not otherwise an
Affiliate of The Blackstone Group Inc.)).
“Blackstone Capital Commitment” has the meaning set forth in
the BREDS IV Partnership Agreement.
“Blackstone Entity” means any partnership, limited liability company
or other entity (excluding any natural persons and any portfolio companies of any Blackstone-sponsored fund) that is an Affiliate of The Blackstone Group Inc., as designated by the General Partner in its sole discretion.
“BREDS IV” means (i) Blackstone Real Estate Debt Strategies IV L.P., a Delaware limited partnership and
Blackstone Real Estate Debt Strategies IV (Lux) SCSp, a Luxembourg special limited partnership (société en commandite spéciale) established under the laws of the Grand Duchy of Luxembourg, (ii) any other Alternative
Vehicles, Parallel Funds or other Supplemental Capital Vehicles (each as defined in the respective partnership agreements for the partnerships referred to in clause (i) of this definition), (iii) any other investment vehicle established
pursuant to Article II of the respective partnership agreements for any of the partnerships referred to in clause (i) of this definition, and (iv) any other limited partnership, limited liability company or other entity (in each case,
whether now or hereafter established) of which Associates IV or the Partnership serves, directly or indirectly, as the general partner, special general partner, manager, managing member or in a similar capacity.
“BREDS IV Agreements” is the collective reference to the BREDS IV Partnership Agreement and any governing
agreement of any of the partnerships or other entities referred to in clauses (ii), (iii) or (iv) of the definition of “BREDS IV.”
“BREDS IV Partnership Agreement” means the Amended and Restated Agreements of Limited Partnership of
Blackstone Real Estate Debt Strategies IV L.P. and Blackstone Real Estate Debt Strategies IV (Lux) SCSp, dated as of the respective dates set forth therein, as each may be amended, supplemented, restated or otherwise modified from time to time.
“Business Day” means any day other than a Saturday, Sunday or other day on which banks are authorized or
required by law to be closed in New York, New York.
“Capital Commitment Associates IV Partner Interest”
means the interest of the Partnership, if any, as a limited partner of Associates IV with respect to any Capital Commitment BREDS IV Interest that may be held by Associates IV.
3
“Capital Commitment BREDS IV Commitment” means the Capital
Commitment (as defined in the BREDS IV Partnership Agreement), if any, of the Partnership or Associates IV to BREDS IV that relates solely to the Capital Commitment BREDS IV Interest, if any.
“Capital Commitment BREDS IV Interest” means the Interest (as defined in the BREDS IV Partnership Agreement),
if any, of the Partnership or Associates IV as a capital partner in BREDS IV.
“Capital Commitment BREDS IV
Investment” means the Partnership’s interest in a specific investment of BREDS IV, which interest may be held by the Partnership (i) through the Partnership’s direct interest in BREDS IV through the Partnership’s Capital
Commitment BREDS IV Interest, if the Partnership holds the Capital Commitment BREDS IV Interest, or (ii) through the Partnership’s interest in Associates IV and Associates IV’s interest in BREDS IV through Associates IV’s Capital
Commitment BREDS IV Interest, if Associates IV holds the Capital Commitment BREDS IV Interest.
“Capital Commitment
Capital Account” means, with respect to each Capital Commitment Investment for each Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such Capital
Commitment Investment and any net income allocated to such Partner pursuant to Section 7.3 with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment Investment to
such Partner and any net losses allocated to such Partner with respect to such Capital Commitment Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the related Capital
Commitment Investment shall be adjusted as if the asset distributed had been sold in a taxable transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners participating in such
Capital Commitment Investment pursuant to Section 7.3.
“Capital Commitment Class A
Interest” has the meaning set forth in Section 7.4(f).
“Capital Commitment
Class B Interest” has the meaning set forth in Section 7.4(f).
“Capital
Commitment Defaulting Party” has the meaning set forth in Section 7.4(g)(ii)(A).
“Capital Commitment
Deficiency Contribution” has the meaning set forth in Section 7.4(g)(ii)(A).
“Capital Commitment
Disposable Investment” has the meaning set forth in Section 7.4(f).
4
“Capital Commitment Distributions” means, with respect to
each Capital Commitment Investment, all amounts of distributions received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Capital Commitment BREDS IV Interest, if any, less any costs, fees and expenses
of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of
such Capital Commitment Investment as it may determine in good faith is appropriate.
“Capital Commitment Giveback
Amount” has the meaning set forth in Section 7.4(g)(i).
“Capital Commitment Interest” means
the interest of a Partner in a specific Capital Commitment Investment as provided herein.
“Capital Commitment
Investment” means any Capital Commitment BREDS IV Investment, but shall exclude any GP-Related Investment.
“Capital Commitment Liquidating Share” means, with respect to each Capital Commitment Investment, in the case
of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with Section 9.3) immediately prior to dissolution.
“Capital Commitment Net Income (Loss)” means, with respect to each Capital Commitment Investment, all amounts
of income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition, in whole or in part, of such Capital Commitment Investment, less any costs, fees and
expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated thereto.
“Capital Commitment Partner Carried Interest” means, with respect to any Partner, the aggregate amount of
distributions or payments received by such Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest.” Capital Commitment Partner Carried Interest includes any amount initially received by
an Affiliate of the Partnership from any fund (including BREDS IV, any similar funds formed after the date hereof, and any Other Blackstone Vehicles (as defined in the BREDS IV Partnership Agreement), whether or not in existence as of the date
hereof) to which such Affiliate serves as general partner (or in another similar capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions thereto (or the capital
contributions to make the investment of such fund giving rise to such “carried interest”).
“Capital
Commitment Partner Interest” means a Partner’s interest in the Partnership which relates (i) to any Capital Commitment BREDS IV Interest held by the Partnership or (ii) through the Partnership and Associates IV, to any
Capital Commitment BREDS IV Interest that may be held by Associates IV.
“Capital Commitment Profit Sharing
Percentage” means, with respect to each Capital Commitment Investment, the percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the
Partnership.
5
“Capital Commitment Recontribution Amount” has the meaning
set forth in Section 7.4(g)(i).
“Capital Commitment-Related Capital Contributions” has the meaning
set forth in Section 7.1(b).
“Capital Commitment-Related Commitment” means, with respect to any
Partner, such Partner’s commitment to the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such commitment that may be
set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“Capital Commitment Special
Distribution” has the meaning set forth in Section 7.7(a).
“Capital Commitment Value” has
the meaning set forth in Section 7.5.
“Carried Interest” means (i) “Carried Interest
Distributions” as defined in the BREDS IV Partnership Agreement, and (ii) any other carried interest distribution to a Fund GP pursuant to any BREDS IV Agreement. In the case of each of (i) and (ii) above, except as determined by the
General Partner, the amount shall not be less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto (in
each case which the General Partner may allocate among all or any portion of the GP-Related Investments as it determines in good faith is appropriate).
“Carried Interest Give Back Percentage” means, for any Partner or Withdrawn Partner, subject to
Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner from the Partnership or any Other Fund GPs or their Affiliates in respect of Carried Interest by
(B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership or any Other Fund GP or any of their Affiliates (in any capacity) in respect of Carried Interest. For purposes of
determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership or any Other Fund GPs on behalf of a Partner or Withdrawn Partner (but not the Trust Income thereon) shall be
deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as members, partners or other equity interest owners of the Partnership or any of the Other Fund GPs or their Affiliates.
“Carried Interest Sharing Percentage” means, with respect to each
GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
6
“Cause” means the occurrence or existence of any of the
following with respect to any Partner, as determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any
non-competition agreement, (x) any material breach of this Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such Partner’s
deliberate failure to perform his or her duties to the Partnership or any of its Affiliates, or (z) such Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Partnership or any of its Affiliates
in a material way as determined by the General Partner; provided, that, in the case of any of the foregoing clauses (w), (x), (y) and (z), the General Partner has given such Partner written notice (a “Notice of Breach”) within 15 days
after the General Partner becomes aware of such action and such Partner fails to cure such breach, failure to perform or conduct or behavior within 15 days after receipt of such Notice of Breach from the General Partner (or such longer period, not
to exceed an additional 15 days, as shall be reasonably required for such cure; provided, that such Partner is diligently pursuing such cure); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the
Partnership or any of its Affiliates; or (iii) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony (under U.S. law or its equivalent in any jurisdiction) or crime (including any misdemeanor
charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of competent jurisdiction, by a regulatory body or by a self-regulatory body
having authority with respect to securities laws, rules or regulations of the applicable securities industry, that such Partner individually has violated any applicable securities laws or any rules or regulations thereunder, or any rules of any such
self-regulatory body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such Partner’s ability to function as a Partner of the Partnership, taking into
account the services required of such Partner and the nature of the business of the Partnership and its Affiliates or (B) the business of the Partnership and its Affiliates or (iv) becoming subject to an event described in Rule
506(d)(1)(i)-(viii) of Regulation D under the Securities Act.
“Clawback Adjustment Amount” has the
meaning set forth in Section 5.8(e)(ii)(C).
“Clawback Amount” means the “Clawback Amount”
and the “Interim Clawback Amount”, each as defined in the BREDS IV Partnership Agreement, and any other clawback amount payable to the limited partners of BREDS IV or to BREDS IV pursuant to any BREDS IV Agreement, as applicable.
“Clawback Provisions” means paragraphs 4.2.9 and 9.2.8 of the BREDS IV Partnership Agreement and any other
similar provisions in any other BREDS IV Agreement existing heretofore or hereafter entered into.
“Code”
means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute. Any reference herein to a particular provision of the Code means, where appropriate, the corresponding provision in any successor statute.
“Commitment Agreements” means the agreements between the Partnership or an Affiliate thereof and Partners,
pursuant to which each Partner undertakes certain obligations, including the obligation to make capital contributions pursuant to Section 4.1 and/or Section 7.1. Each Commitment Agreement is hereby incorporated by reference as between the
Partnership and the relevant Partner.
7
“Contingent” means subject to repurchase rights and/or
other requirements.
The term “control” when used with reference to any person means the power to direct
the management and policies of such person, directly or indirectly, by or through stock or other equity interest ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with
one or more other persons by or through stock or other equity interest ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing.
“Controlled Entity” when used with reference to another person means any person controlled by such other
person.
“Covered Person” has the meaning set forth in Section 3.5(a).
“Deceased Partner” means any Partner or Withdrawn Partner who has died or who suffers from Incompetence. For
purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the case may be, that have received such Deceased Partner’s
interest in the Partnership.
“Default Interest Rate” means the lower of (i) the sum of (a) the
Prime Rate and (b) 5%, or (ii) the highest rate of interest permitted under applicable law.
“Delaware
Arbitration Act” has the meaning set forth in Section 10.1(d).
“Estate Planning Vehicle”
has the meaning set forth in Section 6.3(a).
“Excess Holdback” has the meaning set forth in
Section 4.1(d)(v)(A).
“Excess Holdback Percentage” has the meaning set forth in
Section 4.1(d)(v)(A).
“Excess Tax-Related Amount” has the
meaning set forth in Section 5.8(e).
“Existing Partner” means any Partner who is neither a Retaining
Withdrawn Partner nor a Deceased Partner.
“Final Event” means the death, Total Disability, Incompetence,
Bankruptcy, liquidation, dissolution or Withdrawal from the Partnership of any person who is a Partner.
“Firm
Advances” has the meaning set forth in Section 7.1(c).
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“Firm Collateral” means a Partner’s or Withdrawn
Partner’s interest in one or more partnerships or limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been pledged or made available
to the Trustee(s) to satisfy all or any portion of the Excess Holdback of such Partner or Withdrawn Partner as more fully described in the Partnership’s books and records; provided, that for all purposes hereof (and any other agreement
(e.g., the Trust Agreement) that incorporates the meaning of the term “Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”, excluding references to “Firm
Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).
“Firm Collateral Realization”
has the meaning set forth in Section 4.1(d)(v)(B).
“Fiscal Year” means a calendar year, or any other
period chosen by the General Partner.
“Fund GP” means the Partnership (only with respect to the GP-Related BREDS IV Interest) and the Other Fund GPs.
“GAAP” means U.S.
generally accepted accounting principles.
“General Partner” means BREDS IV GP L.L.C. and any person
admitted to the Partnership as an additional or substitute general partner of the Partnership in accordance with the provisions of this Agreement (until such time as such person ceases to be a general partner of the Partnership as provided herein or
in the Partnership Act).
“Giveback Amount(s)” means the amount(s) payable by partners of BREDS IV
pursuant to the Giveback Provisions.
“Giveback Provisions” means paragraph 3.4.3 of the BREDS IV
Partnership Agreement and any other similar provisions in any other BREDS IV Agreement existing heretofore or hereafter entered into.
“Governmental Entity” has the meaning set forth in Section 10.7(b).
“GP-Related Associates IV Interest” means the interest of the
Partnership as a limited partner of Associates IV with respect to the GP-Related BREDS IV Interest, but does not include any interest of the Partnership in Associates IV with respect to any Capital Commitment
BREDS IV Interest that may be held by Associates IV.
“GP-Related BREDS IV
Interest” means the interest of Associates IV in BREDS IV as general partner of BREDS IV, excluding any Capital Commitment BREDS IV Interest that may be held by Associates IV.
“GP-Related BREDS IV Investment” means the Partnership’s indirect
interest in Associates IV’s indirect interest in an Investment (for purposes of this definition, as defined in the BREDS IV Partnership Agreement) in Associates IV’s capacity as general partner and/or special general partner of BREDS IV,
but does not include any Capital Commitment Investment.
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“GP-Related Capital
Account” has the meaning set forth in Section 5.2(a).
“GP-Related Capital Contributions” has the meaning set forth in
Section 4.1(a).
“GP-Related Class A
Interest” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Class B Interest” has the meaning set
forth in Section 5.8(a)(ii).
“GP-Related Commitment”, with
respect to any Partner, means such Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of the Partnership, including,
without limitation, any such commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“GP-Related Defaulting Party” has the meaning set forth in
Section 5.8(d)(ii)(A).
“GP-Related Deficiency Contribution”
has the meaning set forth in Section 5.8(d)(ii)(A).
“GP-Related
Disposable Investment” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Giveback Amount” has the meaning set forth in Section 5.8(d)(i)(A).
“GP-Related Investment” means any investment (direct or indirect) of
the Partnership in respect of the GP-Related BREDS IV Interest (including, without limitation, any GP-Related BREDS IV Investment, but excluding any Capital Commitment
Investment).
“GP-Related Net Income (Loss)” has the meaning set
forth in Section 5.1(b).
“GP-Related Partner Interest” of a
Partner means all interests of such Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect to the GP-Related BREDS IV Interest and with respect to all GP-Related Investments.
“GP-Related Profit Sharing Percentage” means the “Carried
Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each Partner; provided, that any references in this Agreement to
GP-Related Profit Sharing Percentages made (i) in connection with voting or voting rights or (ii) GP-Related Capital Contributions with respect to GP-Related Investments (including Section 5.3(b)) means the “Non-Carried Interest Sharing Percentage” of each Partner; provided further, that the
term “GP-Related Profit Sharing Percentage” shall not include any Capital Commitment Profit Sharing Percentage.
“GP-Related Recontribution Amount” has the meaning set forth in
Section 5.8(d)(i)(A).
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“GP-Related Required
Amounts” has the meaning set forth in Section 4.1(a).
“GP-Related Unallocated Percentage” has the meaning set forth in
Section 5.3(b).
“GP-Related Unrealized Net Income (Loss)”
attributable to any GP-Related BREDS IV Investment as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related BREDS IV Investment if BREDS IV’s entire portfolio of investments were sold on such date for cash in an amount equal to their aggregate value on such date (determined in accordance with
Section 5.1(e)) and all distributions payable by BREDS IV to the Partnership (indirectly through the general partner of BREDS IV) pursuant to any BREDS IV Partnership Agreement with respect to such
GP-Related BREDS IV Investment were made on such date. “GP-Related Unrealized Net Income (Loss)” attributable to any other
GP-Related Investment (other than any Capital Commitment Investment) as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with
respect to such GP-Related Investment if such GP-Related Investment were sold on such date for cash in an amount equal to its value on such date (determined in
accordance with Section 5.1(e)).
“Holdback” has the meaning set forth in Section 4.1(d)(i).
“Holdback Percentage” has the meaning set forth in Section 4.1(d)(i).
“Holdback Vote” has the meaning set forth in Section 4.1(d)(iv)(A).
“Holdings” means Blackstone Holdings IV L.P., a Québec société en commandite.
“Incompetence” means, with respect to any Partner, the determination by the General Partner in its sole
discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his or her person or his or her property.
“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d)(i).
“Initial Limited Partner” has the meaning set forth in the preamble hereto.
“Interest” means a partnership interest (as defined in
§17-101(13) of the Partnership Act) in the Partnership, including any interest that is held by a Retaining Withdrawn Partner and including any Partner’s
GP-Related Partner Interest and Capital Commitment Partner Interest.
“Investment” means any investment (direct or indirect) of the Partnership designated by the General Partner
from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments, and (b) Capital Commitment Investments.
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“Investor Note” means a promissory note of a Partner
evidencing indebtedness incurred by such Partner to purchase a Capital Commitment Interest, the terms of which were or are approved by the General Partner and which is secured by such Capital Commitment Interest, all other Capital Commitment
Interests of such Partner and all other interests of such Partner in Blackstone Entities; provided, that such promissory note may also evidence indebtedness relating to other interests of such Partner in Blackstone Entities, and such
indebtedness shall be prepayable with Capital Commitment Net Income (whether or not such indebtedness relates to Capital Commitment Investments) as set forth in this Agreement, the Investor Note, the other BE Agreements and any documentation
relating to Other Sources; provided further, that references to “Investor Notes” herein refer to multiple loans made pursuant to such note, whether made with respect to Capital Commitment Investments or other BE Investments,
and references to an “Investor Note” refer to one such loan as the context requires. In no way shall any indebtedness incurred to acquire Capital Commitment Interests or other interests in Blackstone Entities be considered part of the
Investor Notes for purposes hereof if the Lender or Guarantor is not the lender or guarantor with respect thereto.
“Investor Special Partner” means any Special Partner so designated at the time of its admission by the General
Partner as a Partner of the Partnership.
“Issuer” means the issuer of any Security comprising part of an
Investment.
“L/C” has the meaning set forth in Section 4.1(d)(vi).
“L/C Partner” has the meaning set forth in Section 4.1(d)(vi).
“Lender or Guarantor” means Blackstone Holdings I L.P., in its capacity as lender or guarantor under the
Investor Notes, or any other Affiliate of the Partnership that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests or other interests in Blackstone Entities.
“Limited Partner” means each of the parties listed as Limited Partners in the books and records of the
Partnership or any person that has been admitted to the Partnership as a substituted or additional Limited Partner in accordance with the terms of this Agreement, each in its capacity as a limited partner of the Partnership. For the avoidance of
doubt, the term “Limited Partner” does not include the General Partner or any Special Partners (notwithstanding the fact that Special Partners are limited partners of the Partnership).
“Loss Amount” has the meaning set forth in Section 5.8(e)(i)(A).
“Loss Investment” has the meaning set forth in Section 5.8(e).
“Losses” has the meaning set forth in Section 3.5(b)(i).
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“Majority in Interest of the Partners” on any date (a
“vote date”) means one or more persons who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date and who, as of the last day of the most recent accounting period ending on or prior to
the vote date (or as of such later date on or prior to the vote date selected by the General Partner as of which the Partners’ capital account balances can be determined), have aggregate capital account balances representing at least a majority
in amount of the total capital account balances of all the persons who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
“Net Carried Interest Distribution” has the meaning set forth in Section 5.8(e)(i)(C).
“Net Carried Interest Distribution Recontribution Amount” has the meaning set forth in Section 5.8(e).
“Net GP-Related Recontribution Amount” has the meaning set forth
in Section 5.8(d)(i)(A).
“Non-Carried Interest” means, with
respect to each GP-Related Investment, all amounts of distributions, other than Carried Interest and other than Capital Commitment Distributions, received by the Partnership with respect to such GP-Related Investment, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with
respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments as it may determine in good faith is appropriate.
“Non-Carried Interest Sharing Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Non-Carried Interest from such GP-Related Investment set forth in the
books and records of the Partnership.
“Non-Contingent” means
generally not subject to repurchase rights or other requirements.
“Nonvoting Partner” has the
meaning set forth in Section 8.2.
“Nonvoting Special Partner” has the meaning set forth in
Section 6.1(a).
“Original Agreement” has the meaning set forth in the recitals.
“Other Fund GPs” means Associates IV and any other entity (other than the Partnership) through which any
Partner, Withdrawn Partner or any other person directly receives any amounts of Carried Interest, and any successor thereto; provided, that this includes any other entity which has in its organizational documents a provision which indicates
that it is a “Fund GP” or an “Other Fund GP”; provided further, that notwithstanding any of the foregoing, neither BREDS IV GP L.L.C. nor Holdings nor any Estate Planning Vehicle established for the benefit of
family members of any Partner or of any member or partner of any Other Fund GP shall be considered an “Other Fund GP” for purposes hereof.
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“Other Sources” means (i) distributions or payments of
Capital Commitment Partner Carried Interest (which shall include amounts of Capital Commitment Partner Carried Interest which are not distributed or paid to a Partner but are instead contributed to a trust (or similar arrangement) to satisfy any
“holdback” obligation with respect thereto), and (ii) distributions from Blackstone Entities (other than the Partnership) to such Partner.
“Parallel Fund” means any additional collective investment vehicle (or other similar arrangement) formed
pursuant to paragraph 2.8 of the BREDS IV Partnership Agreement.
“Partner” means any person who is a
partner of the Partnership, including the Limited Partners, the General Partner and the Special Partners. Except as otherwise specifically provided herein, no group of Partners, including the Special Partners and any group of Partners in the same
Partner Category, shall have any right to vote as a class on any matter relating to the Partnership, including, but not limited to, any merger, reorganization, dissolution or liquidation.
“Partner Category” means the General Partner, Existing Partners, Retaining Withdrawn Partners or Deceased
Partners, each referred to as a group for purposes hereof.
“Partnership” has the meaning set forth in the
preamble hereto.
“Partnership Act” has the meaning set forth in the preamble hereto.
“Partnership Affiliate” has the meaning set forth in Section 3.3(b).
“Partnership Affiliate Governing Agreement” has the meaning set forth in Section 3.3(b).
“Pledgable Blackstone Interests” has the meaning set forth in Section 4.1(d)(v)(A).
“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank,
N.A. as its prime rate.
“Qualifying Fund” means any fund designated by the General Partner as a
“Qualifying Fund”.
“Repurchase Period” has the meaning set forth in Section 5.8(c).
“Required Rating” has the meaning set forth in Section 4.1(d)(vi).
“Retained Portion” has the meaning set forth in Section 7.6(a).
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“Retaining Withdrawn Partner” means a Withdrawn Partner who
has retained a GP-Related Partner Interest, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Nonvoting Special Partner for all purposes hereof.
“Securities” means any debt or equity securities of an Issuer and its subsidiaries and other Controlled
Entities constituting part of an Investment, including without limitation common and preferred stock, interests in limited partnerships and interests in limited liability companies (including warrants, rights, put and call options and other options
relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or interests commonly regarded as securities, interests in real
property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as money-market
investments, bank deposits and interests in personal property of all kinds, whether tangible or intangible.
“Securities Act” means the U.S. Securities Act of 1933, as amended from time to time, or any successor
statute.
“Settlement Date” has the meaning set forth in Section 6.5(a).
“SMD Agreements” means the agreements between the Partnership and/or one or more of its
Affiliates and certain of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby incorporated by reference as between the Partnership and
the relevant Partner.
“Special Firm Collateral” means interests in a Qualifying Fund or other assets that
have been pledged to the Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the Partnership’s books and records.
“Special Firm Collateral Realization” has the meaning set forth in Section 4.1(d)(viii)(B).
“Special Partner” means any person shown in the books and records of the Partnership as a Special Partner of
the Partnership, including any Nonvoting Special Partner and any Investor Special Partner.
“S&P”
means Standard & Poor’s Ratings Group, and any successor thereto.
“Subject Investment” has
the meaning set forth in Section 5.8(e)(i).
“Subject Partner” has the meaning set forth in
Section 4.1(d)(iv)(A).
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“Successor in Interest” means any (i) shareholder of;
(ii) trustee, custodian, receiver or other person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or
receiver, or former officer, director or partner, or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or
assign of, any Partner, whether by operation of law or otherwise.
“Tax Advances” has the meaning set
forth in Section 6.7(d).
“Tax Matters Partner” has the meaning set forth in Section 6.7(b).
“TM” has the meaning set forth in Section 10.2.
“Total Disability” means the inability of a Limited Partner substantially to perform the services required of
such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether arising out of
sickness, accident or otherwise.
“Transfer” has the meaning set forth in Section 8.2.
“Trust Account” has the meaning set forth in the Trust Agreement.
“Trust Agreement” means the Trust Agreement, dated as of the date set forth therein, as amended, supplemented,
restated or otherwise modified from time to time, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time to time.
“Trust Amount” has the meaning set forth in the Trust Agreement.
“Trust Income” has the meaning set forth in the Trust Agreement.
“Trustee(s)” has the meaning set forth in the Trust Agreement.
“Unadjusted Carried Interest Distribution” has the meaning set forth in Section 5.8(e)(i)(B).
“Unallocated Capital Commitment Interests” has the meaning set forth in Section 8.1(f).
“U.S.” means the United States of America.
“Withdraw” or “Withdrawal” means, with respect to a Partner, such Partner ceasing to be a
partner of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary), unless the context shall limit the type of withdrawal to
a specific reason, and “Withdrawn” with respect to a Partner means, as aforesaid, such Partner ceasing to be a partner of the Partnership.
16
“Withdrawal Date” means the date of the Withdrawal from the
Partnership of a Withdrawn Partner.
“Withdrawn Partner” means a Limited Partner whose GP-Related Partner Interest or Capital Commitment Partner Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include, unless
the context requires otherwise, the estate or legal representatives of any such Partner.
“W-8BEN” has the meaning set forth in Section 3.7.
“W-8BEN-E” has the meaning set forth in Section 3.7.
“W-8IMY” has the meaning set forth in Section 3.7.
“W-9” has the meaning set forth in Section 3.7.
Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to both the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “person” includes individuals, partnerships (including limited liability
partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions thereof) and other associations and entities. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
ARTICLE II
GENERAL PROVISIONS
Section 2.1. General Partner, Limited Partner, Special Partner. The Partners may be General Partners, Limited Partners
or Special Partners. The General Partner as of the date hereof is BREDS IV GP L.L.C. and the Limited Partners as of the date hereof are those persons shown as Limited Partners in the books and records of the Partnership and the Special Partners as
of the date hereof are those persons shown as Special Partners in the books and records of the Partnership as of the date hereof. The books and records of the Partnership contain the GP-Related Profit Sharing
Percentage and GP-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to the GP-Related Investments of the Partnership
as of the date hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to
the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to time to reflect additional GP-Related
Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by the Partnership of Capital Commitment Investments, the GP-Related Profit Sharing Percentages of the Partners (including, without limitation, the General Partner), as modified from time to time, the Capital Commitment Profit
17
Sharing Percentages of the Partners (including, without limitation, the General Partner), as modified from time to time, the admission of additional Partners, the Withdrawal of Partners and the
transfer or assignment of interests in the Partnership pursuant to the terms of this Agreement. At the time of admission of each additional Partner, the General Partner shall determine in its sole discretion the
GP-Related Investments and Capital Commitment Investments in which such Partner shall participate and such Partner’s GP-Related Commitment, Capital
Commitment-Related Commitment, GP-Related Profit Sharing Percentage with respect to each such GP-Related Investment and Capital Commitment Profit Sharing Percentage with
respect to each such Capital Commitment Investment. Each Partner may have a GP-Related Partner Interest and/or a Capital Commitment Partner Interest.
Section 2.2. Formation; Name; Foreign Jurisdictions. The Partnership is hereby continued as a limited partnership
pursuant to the Partnership Act and shall conduct its activities on and after the date hereof under the name of BREDS IV L.P. The certificate of limited partnership of the Partnership may be amended and/or restated from time to time by the General
Partner, as an “authorized person” (within the meaning of the Partnership Act). The General Partner is further authorized to execute and deliver and file any other certificates (and any amendments and/or restatements thereof) necessary for
the Partnership to qualify to do business in a jurisdiction in which the Partnership may wish to conduct business.
Section 2.3. Term. The term of the Partnership shall continue until December 31, 2070, unless earlier dissolved and its
affairs wound up in accordance with this Agreement and the Partnership Act.
Section 2.4. Purposes; Powers. (a) The
purposes of the Partnership shall be, directly or indirectly through subsidiaries or Affiliates:
(i) to serve as a limited partner or
general partner of Associates IV and perform the functions of a limited partner, special general partner or general partner of Associates IV specified in the Associates IV LP Agreement and, if applicable, the BREDS IV Agreements;
(ii) if applicable, to serve as, and hold the Capital Commitment BREDS IV Interest as, a capital partner (and, if applicable, a limited
partner, special general partner and/or a general partner) of BREDS IV and perform the functions of a capital partner (and, if applicable, a limited partner, special general partner and/or a general partner) of BREDS IV specified in the BREDS IV
Agreements;
(iii) to invest in Capital Commitment Investments and/or GP-Related Investments and
acquire and invest in Securities or other property directly or indirectly through Associates IV and/or BREDS IV or otherwise;
(iv) to make
the Blackstone Capital Commitment or a portion thereof, directly or indirectly, and to invest in GP-Related Investments, Capital Commitment Investments and other Investments and acquire and invest in
Securities or other property either directly or indirectly through Associates IV or another entity;
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(v) to serve as a general partner or limited partner of BREDS IV and/or other investment
vehicles and perform the functions of a general partner or limited partner, member, shareholder or other equity interest owner specified in the respective partnership agreement, limited liability company agreement, charter or other governing
documents, as amended, supplemented, restated or otherwise modified from time to time, of any such partnership;
(vi) to serve as a member,
shareholder or other equity interest owner of limited liability companies, other companies, corporations or other entities and perform the functions of a member, shareholder or other equity interest owner specified in the respective limited
liability company agreement, charter or other governing documents, as amended, supplemented, restated or otherwise modified from time to time, of any such limited liability company, company, corporation or other entity;
(vii) to carry on such other businesses, perform such other services and make such other investments as are deemed desirable by the General
Partner and as are permitted under the Partnership Act, the Associates IV LP Agreement, the BREDS IV Agreements, and any applicable partnership agreement, limited liability company agreement, charter or other governing document referred to in clause
(v) or (vi) above, in each case as the same may be amended, supplemented, restated or otherwise modified from time to time;
(viii)
any other lawful purpose; and
(ix) to do all things necessary, desirable, convenient or incidental thereto.
(b) In furtherance of its purposes, the Partnership shall have all powers necessary, suitable or convenient for the accomplishment of its
purposes, alone or with others, as principal or agent, including the following:
(i) to be and become a general partner or
limited partner of partnerships, a member of limited liability companies, a holder of common and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with the making of Investments or the
acquisition, holding or disposition of Securities or other property or as otherwise deemed appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection therewith;
(ii) to acquire and invest in general partner or limited partner interests, in limited liability company interests, in common
and preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or direct or indirect interests therein, whether such Investments and
Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company interests, stock, interests, obligations, Investments or Securities or
other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or short, options on futures contracts;
(iii) to buy, sell and otherwise acquire investments, whether such investments are readily marketable or not;
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(iv) to invest and reinvest the cash assets of the Partnership in money-market or other short-term investments;
(v) to hold, receive, mortgage, pledge, grant security interests over, lease, transfer, exchange or otherwise dispose of, grant
options with respect to, and otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or owned by the Partnership;
(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by mortgage, pledge,
conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and to buy, sell,
pledge or otherwise dispose of any such instrument or evidence of indebtedness;
(vii) to lend any of its property or
funds, either with or without security, at any legal rate of interest or without interest;
(viii) to have and maintain one
or more offices within or without the State of Delaware, and in connection therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection with the
maintenance of such office or offices;
(ix) to open, maintain and close accounts, including margin accounts, with brokers;
(x) to open, maintain and close bank accounts and draw checks and other orders for the payment of moneys;
(xi) to engage accountants, auditors, custodians, investment advisers, attorneys and any and all other agents and assistants,
both professional and nonprofessional, and to compensate any of them as may be necessary or advisable;
(xii) to form or
cause to be formed and to own the stock of one or more corporations, whether foreign or domestic, to form or cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic and to form or cause to be formed and
be a member or manager or both of one or more limited liability companies;
(xiii) to enter into, make and perform all
contracts, agreements and other undertakings as may be necessary, convenient, advisable or incident to carrying out its purposes;
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(xiv) to sue and be sued, to prosecute, settle or compromise all claims
against third parties, to compromise, settle or accept judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection therewith;
(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to the Partners cash or
investments or other property of the Partnership, or any combination thereof; and
(xvi) to take such other actions
necessary, desirable, convenient or incidental thereto and to engage in such other businesses as may be permitted under Delaware and other applicable law.
Section 2.5. Place of Business. The Partnership shall maintain a registered office at c/o Intertrust Corporate Services
Delaware Ltd., 200 Bellevue Parkway, Suite 210, Bellevue Park Corporate Center, Wilmington, Delaware 19809. The Partnership shall maintain an office and principal place of business at such place or places as the General Partner specifies from time
to time and as set forth in the books and records of the Partnership. The name and address of the Partnership’s registered agent is Intertrust Corporate Services Delaware Ltd., 200 Bellevue Parkway, Suite 210, Bellevue Park Corporate Center,
Wilmington, Delaware 19809. The General Partner may from time to time change the registered agent or office by an amendment to the certificate of limited partnership of the Partnership.
Section 2.6. Withdrawal of Initial Limited Partner. Upon the admission of one or more additional Limited Partners to the
Partnership, the Initial Limited Partner shall (a) Withdraw as the Initial Limited Partner of the Partnership and (b) have no further right, interest or obligation of any kind whatsoever as a Partner in the Partnership; provided,
that the effective date of such Withdrawal shall be deemed as between the parties hereto to be April 3, 2020.
ARTICLE III
MANAGEMENT
Section 3.1. General Partner. (a) BREDS IV GP L.L.C. is the General Partner as of the date hereof. The General Partner
shall cease to be the General Partner only if (i) it Withdraws from the Partnership for any reason, (ii) it consents in its sole discretion to resign as the General Partner, or (iii) a Final Event with respect to it occurs. The
General Partner may not be removed without its consent. There may be one or more General Partners. In the event that one or more other General Partners is admitted to the Partnership as such, all references herein to the “General Partner”
in the singular form shall be deemed to also refer to such other General Partners as may be appropriate. The relative rights and responsibilities of the General Partners will be as agreed upon from time to time between them.
(b) Upon the Withdrawal from the Partnership or voluntary resignation of the last remaining General Partner, all of the powers formerly vested
therein pursuant to this Agreement and the Partnership Act shall be exercised by a Majority in Interest of the Partners.
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Section 3.2. Partner Voting, etc. (a) Except as otherwise expressly
provided herein and except as may be expressly required by the Partnership Act, Partners (including Special Partners), other than the General Partner, as such shall have no right to, and shall not, take part in the management or control of the
Partnership’s business or act for or bind the Partnership, and shall have only the rights and powers granted to Partners of the applicable class herein.
(b) To the extent a Partner is entitled to vote with respect to any matter relating to the Partnership, such Partner shall not be obligated to
abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such Partner (or any Affiliate thereof) in such matter.
(c) Meetings of the Partners may be called only by the General Partner.
(d) Notwithstanding any other provision of this Agreement, any Limited Partner or Withdrawn Partner that fails to respond to a notice provided
by the General Partner requesting the consent, approval or vote of such Limited Partner or Withdrawn Partner within 14 days after such notice is sent to such Limited Partner or Withdrawn Partner shall be deemed to have given its affirmative consent
or approval thereto.
Section 3.3. Management. (a) The management, control and operation of the Partnership and the
formulation and execution of business and investment policy shall be vested in the General Partner. The General Partner shall, in its discretion, exercise all powers necessary and convenient for the purposes of the Partnership, including those
enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the General Partner pursuant to this Agreement shall be made in its sole discretion, subject
only to the express terms and conditions of this Agreement.
(b) Notwithstanding any provision in this Agreement to the contrary, the
Partnership is hereby authorized, without the need for any further act, vote or consent of any person (directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in the
Partnership’s capacity as a partner of Associates IV on Associates IV’s own behalf or in Associates IV’s capacity as general partner, special general partner, capital partner and/or limited partner of BREDS IV, a general partner or
limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate or, if applicable, in the Partnership’s capacity as a capital partner of BREDS IV or as general or limited partner, member, shareholder or other
equity interest owner of any Partnership Affiliate (as hereinafter defined)): (i) to execute and deliver, and to perform the Partnership’s obligations under the Associates IV LP Agreement, including, without limitation, serving as a limited
partner or general partner of Associates IV, (ii) to execute and deliver, and to cause Associates IV to perform Associates IV’s obligations under the BREDS IV Agreements, including, without limitation, serving as a general partner or
special general partner of BREDS IV and, if applicable, a capital partner of BREDS IV, (iii) if applicable, to execute and deliver, and to perform the Partnership’s obligations under, the BREDS IV Agreements, including, without limitation,
serving as a capital partner of BREDS IV, (iv) to execute and deliver, and to perform, or, if applicable, to cause Associates IV to perform, the Partnership’s or Associates IV’s obligations under, the governing agreement, as amended,
supplemented, restated or otherwise modified (each a “Partnership Affiliate Governing Agreement”), of any other partnership, limited liability company, other company, corporation or other entity (each a “Partnership
Affiliate”) of
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which the Partnership or Associates IV is, or is to become, a general partner or limited partner, member, shareholder or other equity interest owner, including, without limitation, serving as a
general partner, special general partner or limited partner, member, shareholder or other equity interest owner of each Partnership Affiliate, and (v) to take any action, in the applicable capacity, contemplated by or arising out of this
Agreement, the Associates IV LP Agreement, the BREDS IV Agreements or each Partnership Affiliate Governing Agreement (and any amendment, supplement, restatement and/or other modification of any of the foregoing).
(c) The General Partner, and any other person designated by the General Partner, each acting individually, is hereby authorized and empowered,
as an authorized person of the Partnership or the General Partner (within the meaning of the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq., as amended, or otherwise) (the
General Partner hereby authorizing and ratifying any of the following actions):
(i) to execute and deliver and/or file
(including any such action, directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf, or in its capacity as a limited partner or general partner of Associates IV on Associates
IV’s own behalf, or in Associates IV’s capacity as general partner, special partner, capital partner and/or limited partner of BREDS IV or as general partner or limited partner, member, shareholder or other equity interest owner of any
Partnership Affiliate or, if applicable, in the Partnership’s capacity as a capital partner of BREDS IV or as a general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate), any of the
following:
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(A)
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any agreement, certificate, instrument or other document of the Partnership, Associates IV, BREDS IV or any
Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications thereof), including, without limitation, the following: (I) the Associates IV LP Agreement, the BREDS IV Agreements and each Partnership Affiliate
Governing Agreement, (II) subscription agreements and documents on behalf of BREDS IV or Associates IV, (III) side letters issued in connection with investments in BREDS IV and (IV) such other agreements, certificates, instruments and
other documents as may be necessary or desirable in furtherance of the purposes of the Partnership, Associates IV, BREDS IV or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the
foregoing referred to in (I) through (IV) above) and for the avoidance of doubt, this Agreement may be amended by the General Partner in its sole discretion;
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(B)
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the certificates of formation, certificates of limited partnership and/or other organizational documents of the
Partnership, Associates IV, BREDS IV and any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing); and
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(C)
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any other certificates, notices, applications and other documents (and any amendments, supplements,
restatements and/or other modifications thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Partnership, Associates IV, BREDS IV or any
Partnership Affiliate to qualify to do business in a jurisdiction in which the Partnership, Associates IV, BREDS IV or such Partnership Affiliate desires to do business;
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(ii) to prepare or cause to be prepared, and to sign, execute and deliver and/or file (including any such action, directly or
indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a limited partner or general partner of Associates IV on Associates IV’s own behalf or in Associates IV’s
capacity as general partner, special general partner, capital partner and/or limited partner of BREDS IV, or as general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate or, if applicable, in
the Partnership’s capacity as a capital partner of BREDS IV or as general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (A) any certificates, forms, notices, applications and other
documents to be filed with any government or governmental or regulatory body on behalf of the Partnership, Associates IV, BREDS IV and/or any Partnership Affiliate, (B) any certificates, forms, notices, applications and other documents that may
be necessary or advisable in connection with any bank account of the Partnership, Associates IV, BREDS IV or any Partnership Affiliate or any banking facilities or services that may be utilized by the Partnership, Associates IV, BREDS IV or any
Partnership Affiliate, and all checks, notes, drafts and other documents of the Partnership, Associates IV, BREDS IV or any Partnership Affiliate that may be required in connection with any such bank account or banking facilities or services and
(C) resolutions with respect to any of the foregoing matters (which resolutions, when executed by any person authorized as provided in this Section 3.3(c), each acting individually, shall be deemed to have been duly adopted by the General
Partner, the Partnership, Associates IV, BREDS IV or any Partnership Affiliate, as applicable, for all purposes).
(d) The authority
granted to any person (other than the General Partner) in Section 3.3(c) may be revoked at any time by the General Partner by an instrument in writing signed by the General Partner.
Section 3.4. Responsibilities of Partners.
(a) Unless otherwise determined by the General Partner in a particular case, each Limited Partner (other than a Special Partner) shall devote
substantially all of his or her time and attention to the businesses of the Partnership and its Affiliates, and each Special Partner shall not be required to devote any time or attention to the businesses of the Partnership or its Affiliates.
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(b) All outside business or investment activities of the Partners (including outside
directorships or trusteeships) shall be subject to such rules and regulations as are established by the General Partner from time to time.
(c) The General Partner may from time to time establish such other rules and regulations applicable to Partners or other employees as the
General Partner deems appropriate, including rules governing the authority of Partners or other employees to bind the Partnership to financial commitments or other obligations.
Section 3.5. Exculpation and Indemnification.
(a) Liability to Partners. Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent
permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually, a
“Covered Person” and collectively, the “Covered Persons”) shall be liable to the Partnership or any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related document or any
transaction or investment contemplated hereby or thereby) taken or omitted by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable judicial
determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority
granted to such Covered Person by this Agreement. Each Covered Person shall be entitled to rely in good faith on the advice of legal counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by any
Covered Person in reliance on such advice shall in any event subject such person to any liability to any Partner or the Partnership. To the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities relating
thereto to the Partnership or to another Partner, to the fullest extent permitted by law, such Partner acting under this Agreement shall not be liable to the Partnership or to any such other Partner for its good faith reliance on the provisions of
this Agreement. The provisions of this Agreement, to the extent that they expand or restrict the duties and liabilities of a Partner otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by law, to
modify to that extent such other duties and liabilities of such Partner. To the fullest extent permitted by law, the parties hereto agree that the General Partner shall be held to have acted in good faith for the purposes of this Agreement and its
duties under the Partnership Act if it believes that it has acted honestly and in accordance with the specific terms of this Agreement.
(b) Indemnification. (i) To the fullest extent permitted by law, the Partnership shall indemnify and hold harmless (but only to the
extent of the Partnership’s assets (including, without limitation, the remaining capital commitments of the Partners)) each Covered Person from and against any and all claims, damages, losses, costs, expenses and liabilities (including, without
limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable expenses of investigating or defending against any claim or alleged claim), joint and several, of
any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, for purposes of this Section 3.5(b), “Losses”), arising from any and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which the Covered Person may be involved, or
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threatened to be involved, as a party or otherwise, by reason of such Covered Person’s management of the affairs of the Partnership or which relate to or arise out of or in connection with
the Partnership, its property, its business or affairs (other than claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, arising out of any act or omission of such Covered Person constituting Cause);
provided, that a Covered Person shall not be entitled to indemnification under this Section 3.5(b) with respect to any claim, issue or matter if there is a final and non-appealable judicial
determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority
granted to such Covered Person by this Agreement; provided further, that if such Covered Person is a Partner or a Withdrawn Partner, such Covered Person shall bear its share of such Losses in accordance with such Covered Person’s GP-Related Profit Sharing Percentage in the Partnership as of the time of the actions or omissions that gave rise to such Losses. To the fullest extent permitted by law, expenses (including legal fees) incurred by a
Covered Person (including, without limitation, the General Partner) in defending any claim, demand, action, suit or proceeding may, with the approval of the General Partner, from time to time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by the Partnership of a written undertaking by or on behalf of the Covered Person to repay such amount to the extent that it shall be subsequently determined that the Covered
Person is not entitled to be indemnified as authorized in this Section 3.5(b), and the Partnership and its Affiliates shall have a continuing right of offset against such Covered Person’s interests/investments in the Partnership and such
Affiliates and shall have the right to withhold amounts otherwise distributable to such Covered Person to satisfy such repayment obligation. If a Partner institutes litigation against a Covered Person which gives rise to an indemnity obligation
hereunder, such Partner shall be responsible, up to the amount of such Partner’s Interests and remaining capital commitments, for such Partner’s pro rata share of the Partnership’s expenses related to such indemnity obligation,
as determined by the General Partner. The Partnership may purchase insurance, to the extent available at reasonable cost, to cover losses, claims, damages or liabilities covered by the foregoing indemnification provisions. Partners will not be
personally obligated with respect to indemnification pursuant to this Section 3.5(b). The General Partner shall have the authority to enter into separate agreements with any Covered Person in order to give effect to the obligations to indemnify
pursuant to this Section 3.5(b).
(ii) (A) Notwithstanding anything to the contrary herein, for greater certainty, it is
understood and/or agreed that the Partnership’s obligations hereunder are not intended to render the Partnership as a primary indemnitor for purposes of the indemnification, advancement of expenses and related provisions under applicable law
governing BREDS IV and/or a particular portfolio entity through which an Investment is indirectly held. It is further understood and/or agreed that a Covered Person shall first seek to be so indemnified and have such expenses advanced in the
following order of priority: first, out of proceeds available in respect of applicable insurance policies maintained by the applicable portfolio entity and/or BREDS IV; second, by the applicable portfolio entity through which such
investment is indirectly held; and third, by BREDS IV and fourth by Associates IV (only to the extent the foregoing sources are exhausted).
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(B) The Partnership’s obligation, if any, to indemnify or advance expenses to any
Covered Person shall be reduced by any amount that such Covered Person may collect as indemnification or advancement from BREDS IV and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained thereby),
and to the extent the Partnership (or any Affiliate thereof) pays or causes to be paid any amounts that should have been paid by Associates IV, BREDS IV and/or the applicable portfolio entity (including by virtue of any applicable insurance policies
maintained thereby), it is agreed among the Partners that the Partnership shall have a subrogation claim against Associates IV, BREDS IV and/or such portfolio entity in respect of such advancement or payments. The General Partner and the Partnership
shall be specifically empowered to structure any such advancement or payment as a loan or other arrangement (except for a loan to an executive officer of The Blackstone Group Inc. or any of its Affiliates, which shall not be permitted) as the
General Partner may determine necessary or advisable to give effect to or otherwise implement the foregoing.
Section 3.6. Representations of Partners. (a) Each Limited Partner and Special Partner by execution of this Agreement
(or by otherwise becoming bound by the terms and conditions hereof as provided herein or in the Partnership Act) represents and warrants to every other Partner and to the Partnership, except as may be waived by the General Partner, that such Partner
is acquiring each of such Partner’s Interests for such Partner’s own account for investment and not with a view to resell or distribute the same or any part hereof, and that no other person has any interest in any such Interest or in the
rights of such Partner hereunder; provided, that a Partner may choose to make transfers for estate and charitable planning purposes (pursuant to Section 6.3(a) and otherwise in accordance with the terms hereof). Each Limited Partner and
Special Partner represents and warrants that such Partner understands that the Interests have not been registered under the Securities Act and therefore such Interests may not be resold without registration under the Securities Act or exemption from
such registration, and that accordingly such Partner must bear the economic risk of an investment in the Partnership for an indefinite period of time. Each Limited Partner and Special Partner represents that such Partner has such knowledge and
experience in financial and business matters, that such Partner is capable of evaluating the merits and risks of an investment in the Partnership, and that such Partner is able to bear the economic risk of such investment. Each Limited Partner and
Special Partner represents that such Partner’s overall commitment to the Partnership and other investments which are not readily marketable is not disproportionate to the Partner’s net worth and the Partner has no need for liquidity in the
Partner’s investment in Interests. Each Limited Partner and Special Partner represents that to the full satisfaction of the Partner, the Partner has been furnished any materials that such Partner has requested relating to the Partnership, any
Investment and the offering of Interests and has been afforded the opportunity to ask questions of representatives of the Partnership concerning the terms and conditions of the offering of Interests and any matters pertaining to each Investment and
to obtain any other additional information relating thereto. Each Limited Partner and Special Partner represents that the Partner has consulted to the extent deemed appropriate by the Partner with the Partner’s own advisers as to the financial,
tax, legal and related matters concerning an investment in Interests and on that basis believes that an investment in the Interests is suitable and appropriate for the Partner.
(b) Each Limited Partner and Special Partner agrees that the representations and warranties contained in paragraph (a) above shall be true
and correct as of any date that such Partner (1) makes a capital contribution to the Partnership (whether as a result of Firm Advances made to such Partner or otherwise) with respect to any Investment, and such Partner hereby agrees that such
capital contribution shall serve as confirmation thereof and/or (2) repays any portion of the principal amount of a Firm Advance, and such Partner hereby agrees that such repayment shall serve as confirmation thereof.
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Section 3.7. Tax Representation and Further Assurances.
(a) Each Limited Partner and Special Partner, upon the request of the General Partner, agrees to perform all further acts and to execute,
acknowledge and deliver any documents that may be reasonably necessary to comply with the General Partner’s or the Partnership’s obligations under applicable law or to carry out the provisions of this Agreement.
(b) Each Limited Partner and Special Partner certifies that (A) if the Limited Partner or Special Partner is a United States person (as
defined in the Code) (x) (i) the Limited Partner or Special Partner’s name, social security number (or, if applicable, employer identification number) and address provided to the Partnership and its Affiliates pursuant to an IRS Form W-9, Request for Taxpayer Identification Number Certification (“W-9”) or otherwise are correct and (ii) the Limited Partner or Special Partner
will complete and return a W-9 and (y) (i) the Limited Partner or Special Partner is a United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the
Partnership within 60 days of a change to foreign (non-United States) status or (B) if the Limited Partner or Special Partner is not a United States person (as defined in the Code) (x) (i) the
information on the completed IRS Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)
(“W-8BEN”), IRS Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and
Reporting (Entities) (“W-8BEN-E”), or other applicable form, including but not limited to IRS Form W-8IMY,
Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting (“W-8IMY”), or otherwise is correct and (ii) the
Limited Partner or Special Partner will complete and return the applicable IRS form, including but not limited to a W-8BEN,
W-8BEN-E or W-8IMY, and (y) (i) the Limited Partner or Special Partner is not a United States person (as defined in the
Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days of any change of such status. Each Limited Partner and Special Partner agrees to provide such cooperation and assistance, including but not limited
to properly executing and providing to the Partnership in a timely manner any tax or other documentation or information that may be reasonably requested by the Partnership or the General Partner.
(c) Each Limited Partner and Special Partner acknowledges and agrees that the Partnership and the General Partner may release confidential
information or other information about the Limited Partner or Special Partner or related to such Limited Partner or Special Partner’s investment in the Partnership if the Partnership or the General Partner, in its or their sole discretion,
determines that such disclosure is required by applicable law or regulation or in order to comply for an exception from, or reduced tax rate of, tax or other tax benefit. Any such disclosure shall not be treated as a breach of any restriction upon
the disclosure of information imposed on any such person by law or otherwise, and a Limited Partner or Special Partner shall have no claim against the Partnership, the General Partner or any of their Affiliates for any form of damages or liability
as a result of actions taken by the foregoing in order to comply with any disclosure obligations that the foregoing reasonably believe are required by law, regulation or otherwise.
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(d) Each Limited Partner and Special Partner acknowledges and agrees that if it provides
information that is in anyway materially misleading, or if it fails to provide the Partnership or its agents with any information requested hereunder, in either case in order to satisfy the Partnership’s obligations, the General Partner
reserves the right to take any action and pursue any remedies at its disposal, including (i) requiring such Limited Partner or Special Partner to Withdraw for Cause and (ii) withholding or deducting any costs caused by such Limited
Partner’s or Special Partner’s action or inaction from amounts otherwise distributable to such Limited Partner or Special Partner from the Partnership and its Affiliates.
ARTICLE IV
CAPITAL OF THE
PARTNERSHIP
Section 4.1. Capital Contributions by Partners. (a) Each Partner shall be required to make capital
contributions to the Partnership (“GP-Related Capital Contributions”) at such times and in such amounts (the “GP-Related Required
Amounts”) as are required to satisfy the Partnership’s obligation to make capital contributions to Associates IV in respect of the GP-Related Associates IV Interest to fund Associates IV’s
capital contributions with respect to any GP-Related BREDS IV Investment and as are otherwise determined by the General Partner from time to time or as may be set forth in such Limited Partner’s
Commitment Agreement or SMD Agreement, if any, or otherwise; provided, that additional GP-Related Capital Contributions in excess of the GP-Related Required
Amounts may be made pro rata among the Partners based upon each Partner’s Carried Interest Sharing Percentage. GP-Related Capital Contributions in excess of the
GP-Related Required Amounts which are to be used for ongoing business operations (as distinct from financing, legal or other specific liabilities of the Partnership (including those specifically set forth in
Section 4.1(d) and Section 5.8(d))) shall be determined by the General Partner. Special Partners shall not be required to make additional GP-Related Capital Contributions to the Partnership in excess
of the GP-Related Required Amounts, except (i) as a condition of an increase in such Special Partner’s GP-Related Profit Sharing Percentage or (ii) as
specifically set forth in this Agreement; provided, that the General Partner and any Special Partner may agree from time to time that such Special Partner shall make an additional GP-Related Capital
Contribution to the Partnership; provided further, that each Investor Special Partner shall maintain its GP-Related Capital Accounts at an aggregate level equal to the product of (i) its GP-Related Profit Sharing Percentage from time to time and (ii) the total capital of the Partnership related to the GP-Related BREDS IV Interest.
(b) Each GP-Related Capital Contribution by a Partner shall be credited to the appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2, subject to Section 5.10.
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(c) The General Partner may elect on a case by case basis to (i) cause the Partnership
to loan any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) the amount of any GP-Related Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any
Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) to make a required GP-Related Capital Contribution to the Partnership in installments, in each case on terms
determined by the General Partner.
(d) (i) The Partners and the Withdrawn Partners have entered into the Trust Agreement, pursuant to
which certain amounts of the distributions relating to Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account constituting a
“Holdback”). The General Partner shall determine, as set forth below, the percentage of each distribution of Carried Interest that shall be withheld for any General Partner and/or Holdings and each Partner Category (such withheld
percentage constituting the General Partner’s and such Partner Category’s “Holdback Percentage”). The applicable Holdback Percentages initially shall be 0% for any General Partner, 15% for Existing Partners (other than the
General Partner), 21% for Retaining Withdrawn Partners (other than the General Partner) and 24% for Deceased Partners (the “Initial Holdback Percentages”). Any provision of this Agreement to the contrary notwithstanding, the
Holdback Percentage for the General Partner and/or Holdings shall not be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).
(ii) The Holdback Percentage may not be reduced for any individual Partner as compared to the other Partners in his or her
Partner Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner Categories on a proportionate basis. For example, if the Holdback Percentage for Existing Partners is
decreased to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any reduction in the Holdback Percentage for any Partner shall apply only to distributions relating
to Carried Interest made after the date of such reduction.
(iii) The Holdback Percentage may not be increased for any
individual Partner as compared to the other Partners in his or her Partner Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’ Holdback Percentage beyond 21% unless the
General Partner concurrently increases the Existing Partners’ Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the General Partner increases the Holdback
Percentage for both Existing Partners and Retaining Withdrawn Partners to 24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies equally to all Partner Categories. Any
increase in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner from proportionately increasing the
Holdback Percentage of any Partner Category (following a reduction of the Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For example, if the General Partner reduces
the Holdback Percentages for Existing Partners, Retaining Withdrawn Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the Holdback Percentages to the Initial
Holdback Percentages.
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(iv) (A) Notwithstanding anything contained herein to the contrary, the
General Partner may increase or decrease the Holdback Percentage for any Partner in any Partner Category (in such capacity, the “Subject Partner”) pursuant to a majority vote of the Limited Partners (a “Holdback
Vote”); provided, that, notwithstanding anything to the contrary contained herein, the Holdback Percentage applicable to any General Partner shall not be increased or decreased without its prior written consent; provided
further, that a Subject Partner’s Holdback Percentage shall not be (I) increased prior to such time as such Subject Partner (x) is notified by the Partnership of the decision to increase such Subject Partner’s Holdback
Percentage and (y) has, if requested by such Subject Partner, been given 30 days to gather and provide information to the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) or (II) decreased
unless such decrease occurs subsequent to an increase in a Subject Partner’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv); provided further, that such decrease shall not exceed an amount such that such
Subject Partner’s Holdback Percentage is less than the prevailing Holdback Percentage for the Partner Category of such Subject Partner; provided further, that a Partner shall not vote to increase a Subject Partner’s Holdback
Percentage unless such voting Partner determines, in such Partner’s good faith judgment, that the facts and circumstances indicate that it is reasonably likely that such Subject Partner, or any of such Subject Partner’s successors or
assigns (including such Subject Partner’s estate or heirs) who at the time of such vote holds the GP-Related Partner Interest or otherwise has the right to receive distributions relating thereto, will not
be capable of satisfying any GP-Related Recontribution Amounts that may become due.
(B) A Holdback Vote shall take place at a Partnership meeting. Each of the Limited Partners shall be entitled to cast one vote
with respect to the Holdback Vote regardless of such Limited Partner’s interest in the Partnership. Such vote may be cast by any such Partner in person or by proxy.
(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback Percentage, such Subject
Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided, that if the Partnership and the Subject Partner cannot agree upon a mutually
satisfactory arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates; provided
further, that if such candidates fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the arbitrator. Each Subject
Partner that submits the decision of the Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected
out-of-pocket expenses relating thereto, and each such party shall, to the satisfaction of the arbitrator and prior to any determination being made by the arbitrator,
pay the total of such estimated expenses (i.e., both the Subject Partner’s and the Partnership’s expenses) into an
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escrow account. The arbitrator shall direct the escrow agent to pay out of such escrow account all expenses associated with such arbitration (including costs leading thereto) and to return to the
“victorious” party the entire amount of funds such party paid into such escrow account. If the amount contributed to the escrow account by the losing party is insufficient to cover the expenses of such arbitration, such “losing”
party shall then provide any additional funds necessary to cover such costs to such “victorious” party. For purposes hereof, the “victorious” party shall be the Partnership if the Holdback Percentage ultimately determined by the
arbitrator is closer to the percentage determined in the second Holdback Vote than it is to the prevailing Holdback Percentage for the Subject Partner’s Partner Category; otherwise, the Subject Partner shall be the “victorious” party.
The party that is not the “victorious” party shall be the “losing” party.
(D) In the event of a
decrease in a Subject Partner’s Holdback Percentage (1) pursuant to a Holdback Vote under this clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and
distribute to such Subject Partner any Trust Amounts (and the Trust Income thereon (except as expressly provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance
with such Subject Partner’s reduced Holdback Percentage) as though such reduced Holdback Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).
(v) (A) If a Partner’s Holdback Percentage exceeds 15% (such percentage in excess of 15% constituting the
“Excess Holdback Percentage”), such Partner may satisfy the portion of his or her Holdback obligation in respect of his or her Excess Holdback Percentage (such portion constituting such Partner’s “Excess
Holdback”), and such Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he or she was a Partner), to the extent his or her Excess Holdback obligation has previously been satisfied in cash, may
obtain the release of the Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback
obligation, by pledging, granting a security interest or otherwise making available to the General Partner, on a first priority basis (except as provided below), all or any portion of his or her Firm Collateral in satisfaction of his or her Excess
Holdback obligation. Any Partner seeking to satisfy all or any portion of the Excess Holdback utilizing Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the
General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Partnership to realize on (if required), such Firm Collateral; provided, that, in the case of entities listed in the Partnership’s
books and records in which Partners are permitted to pledge or grant a security interest over their interests therein to finance all or a portion of their capital contributions thereto (“Pledgable Blackstone Interests”), to the
extent a first priority security interest is unavailable because of an existing lien on such Firm Collateral, the Partner or Withdrawn Partner seeking to utilize such Firm Collateral shall grant the
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General Partner a second priority security interest therein in the manner provided above; provided further, that (x) in the case of Pledgable Blackstone Interests, to the
extent that neither a first priority nor a second priority security interest is available, or (y) if the General Partner otherwise determines in its good faith judgment that a security interest in Firm Collateral (and the corresponding
documents and actions) are not necessary or appropriate, the Partner or Withdrawn Partner shall (in the case of either clause (x) or (y) above) irrevocably instruct in writing the relevant partnership, limited liability company or other entity
listed in the Partnership’s books and records to remit any and all net proceeds resulting from a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully provided in clause (B) below. The Partnership shall, at
the request of any Partner or Withdrawn Partner, assist such Partner or Withdrawn Partner in taking such action as is necessary to enable such Partner or Withdrawn Partner to use Firm Collateral as provided hereunder.
(B) If upon a sale or other realization of all or any portion of any Firm Collateral (a “Firm Collateral
Realization”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn
Partner from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust Account to fully satisfy such Excess Holdback
requirement (allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount necessary to satisfy such Excess Holdback
requirement shall be distributed to such Partner or Withdrawn Partner.
(C) Upon any valuation or revaluation of Firm
Collateral that results in a decreased valuation of such Firm Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including upon a Firm Collateral Realization,
if net proceeds therefrom and the remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the foregoing to such Partner or Withdrawn
Partner and such Partner or Withdrawn Partner shall, within 30 days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his or her Excess Holdback requirement. If any such
Partner or Withdrawn Partner defaults upon his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii) shall be deemed inapplicable to a default
under this clause (C); provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such
term appears in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
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(vi) Any Partner or Withdrawn Partner may (A) obtain the release of any
Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such Partner or Withdrawn
Partner or (B) require the Partnership to distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit (an “L/C”) for the
benefit of the Trustee(s) in such amounts. Any Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall deliver to the Trustee(s) an unconditional and irrevocable L/C from
a commercial bank whose (x) short-term deposits are rated at least A-1 by S&P or P-1 by Moody’s (if the L/C is for a term of 1 year or less), or
(y) long-term deposits are rated at least A+ by S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more) (each a “Required Rating”). If the relevant rating of the commercial bank issuing such L/C drops below
the relevant Required Rating, the L/C Partner shall supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, in lieu of the insufficient
L/C. In addition, if the L/C has a term expiring on a date earlier than the latest possible termination date of BREDS IV, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to provide a new L/C from a commercial bank
whose relevant rating is at least equal to the relevant Required Rating, at least 30 days prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to drawing on any L/C. The Trustee(s) may
(as directed by the Partnership in the case of clause (I) below) draw down on an L/C only if (I) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the Partnership’s obligations under the Clawback
Provisions or (II) an L/C Partner has not provided a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash and/or Firm Collateral (to the extent permitted
hereunder)), at least 30 days prior to the stated expiration of an existing L/C in accordance with this clause (vi). The Trustee(s), as directed by the Partnership, shall return to any L/C Partner his or her L/C upon (1) the termination of the
Trust Account and satisfaction of the Partnership’s obligations, if any, in respect of the Clawback Provisions, (2) an L/C Partner satisfying his or her entire Holdback obligation in cash and Firm Collateral (to the extent permitted
hereunder), or (3) the release, by the Trustee(s), as directed by the Partnership, of all amounts in the Trust Account to the Partners or Withdrawn Partners. If an L/C Partner satisfies a portion of his or her Holdback obligation in cash and/or
Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as directed by the Partnership, release a portion of the amounts in the Trust Account to the Partners or Withdrawn Partners in the Partner Category of such L/C Partner, the
L/C of an L/C Partner may be reduced by an amount corresponding to such portion satisfied in cash and/or Firm Collateral (to the extent permitted hereunder) or such portion released by the Trustee(s), as directed by the Partnership; provided,
that in no way shall the general release of any Trust Income cause an L/C Partner to be permitted to reduce the amount of an L/C by any amount.
(vii) (A) Any in-kind distributions by the Partnership relating to Carried
Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose of any in-kind distributions held in the Trust Account at any
time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.
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(B) In lieu of the foregoing, any Existing Partner may pledge or grant a
security interest with respect to any in-kind distribution the Special Firm Collateral referred to in the applicable category in the Partnership’s books and records; provided, that the initial
contribution of such Special Firm Collateral shall initially equal 130% of the required Holdback for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback. Sections 4.1(d)(viii)(C) and (D) shall apply to such
Special Firm Collateral. To the extent such Special Firm Collateral exceeds the applicable minimum percentage of the required Holdback specified in the first sentence of this clause (vii)(B), the related Partner may obtain a release of such excess
amount from the Trust Account.
(viii) (A) Any Limited Partner or Withdrawn Partner may satisfy all or any portion of
his or her Holdback (excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his or her Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by the use of an L/C as provided herein,
obtain a release of Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn Partner’s Holdback (excluding any
Excess Holdback) by pledging or otherwise granting a security interest to the Trustee(s) on a first priority basis all of his or her Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or exceed the amount of the
Holdback distributed to the Partner or Withdrawn Partner (as more fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise take such other action as
is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) to realize on (if required), such Special Firm Collateral.
(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or any portion of any Special Firm
Collateral (a “Special Firm Collateral Realization”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in connection with an Excess
Holdback) is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided herein (i.e., cash contributed to the Trust Account or an L/C in the Trust
Account)), then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Special Firm Collateral Realization (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund or
other asset and is being used in connection with an Excess Holdback) shall be paid into the Trust (and allocated to such Partner or Withdrawn Partner) to fully satisfy such Holdback and shall be deemed thereafter to be Trust Amounts for purposes
hereunder. Any net proceeds from such Special Firm Collateral Realization in excess of the amount necessary to satisfy such Holdback (excluding any Excess Holdback) shall be distributed to such Partner or Withdrawn Partner. To the extent a
Qualifying Fund distributes Securities to a Partner or Withdrawn Partner in connection with a Special Firm Collateral Realization, such Partner or Withdrawn Partner shall be required to promptly fund such Partner’s or Withdrawn Partner’s
deficiency with respect to his or her Holdback in cash or an L/C.
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(C) Upon any valuation or revaluation of the Special Firm Collateral and/or
any adjustment in the Applicable Collateral Percentage applicable to a Qualifying Fund (as provided in the Partnership’s books and records), if such Partner’s or Withdrawn Partner’s Special Firm Collateral is valued at less than such
Partner’s Holdback (excluding any Excess Holdback) as provided in the Partnership’s books and records, taking into account other permitted means of satisfying the Holdback hereunder, the Partnership shall provide notice of the foregoing to
such Partner or Withdrawn Partner and, within 10 Business Days of receiving such notice, such Partner or Withdrawn Partner shall contribute cash or additional Special Firm Collateral to the Trust Account in an amount necessary to make up such
deficiency. If any such Partner or Withdrawn Partner defaults upon his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that the first sentence of Section 5.8(d)(ii)(A) shall be deemed
inapplicable to such default; provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party”
where such term appears in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(D) Upon a Partner becoming a Withdrawn Partner, at any time thereafter the General Partner may revoke the ability of such
Withdrawn Partner to use Special Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding anything else in this Section 4.1(d)(viii). In that case the provisions of clause (C) above shall apply to the Withdrawn
Partner’s obligation to satisfy the Holdback (except that 30 days’ notice of such revocation shall be given), given that the Special Firm Collateral is no longer available to satisfy any portion of the Holdback (excluding any Excess
Holdback).
(E) Nothing in this Section 4.1(d)(viii) shall prevent any Partner or Withdrawn Partner from using any
amount of such Partner’s interest in a Qualifying Fund as Firm Collateral; provided, that at all times Section 4.1(d)(v) and this Section 4.1(d)(viii) are each satisfied.
Section 4.2. Interest. Interest on the balances of the Partners’ capital related to the Partners’ GP-Related Partner Interests (excluding capital invested in GP-Related Investments and, if deemed appropriate by the General Partner, capital invested in any other investment
of the Partnership) shall be credited to the Partners’ GP-Related Capital Accounts at the end of each accounting period pursuant to Section 5.2, or at any other time as determined by the General
Partner, at rates determined by the General Partner from time to time, and shall be charged as an expense of the Partnership.
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Section 4.3. Withdrawals of Capital. No Partner may withdraw capital
related to such Partner’s GP-Related Partner Interests from the Partnership except (i) by way of distributions of cash or other property pursuant to Section 5.8, (ii) as otherwise expressly
provided in this Agreement or (iii) as determined by the General Partner.
ARTICLE V
PARTICIPATION IN PROFITS AND LOSSES
Section 5.1. General Accounting Matters. (a) GP-Related Net Income (Loss) shall
be determined by the General Partner at the end of each accounting period and shall be allocated as described in Section 5.4.
(b)
“GP-Related Net Income (Loss)” means:
(i) from any activity of
the Partnership related to the GP-Related BREDS IV Interest for any accounting period (other than GP-Related Net Income (Loss) from
GP-Related Investments described below), (x) the gross income realized by the Partnership from such activity during such accounting period less (y) all expenses of the Partnership, and all other items
that are deductible from gross income, for such accounting period that are allocable to such activity (determined as provided below);
(ii) from any GP-Related Investment for any accounting period in which such GP-Related Investment has not been sold or otherwise disposed of, (x) the gross amount of dividends, interest or other income received by the Partnership from such
GP-Related Investment during such accounting period less (y) all expenses of the Partnership for such accounting period that are allocable to such GP-Related
Investment (determined as provided below); and
(iii) from any GP-Related
Investment for the accounting period in which such GP-Related Investment is sold or otherwise disposed of, (x) the sum of the gross proceeds from the sale or other disposition of such GP-Related Investment and the gross amount of dividends, interest or other income received by the Partnership from such GP-Related Investment during such accounting period
less (y) the sum of the cost or other basis to the Partnership of such GP-Related Investment and all expenses of the Partnership for such accounting period that are allocable to such GP-Related Investment.
(c) GP-Related Net Income (Loss) shall be
determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (i) any income of the Partnership that is exempt from U.S. federal income taxation and not
otherwise taken into account in computing GP-Related Net Income (Loss) shall be added to such taxable income or loss; (ii) if any asset has a value in the books of the Partnership that differs from its
adjusted tax basis for U.S. federal income tax purposes, any depreciation, amortization or gain resulting from a disposition of such asset shall be calculated with reference to such value; (iii) upon an adjustment to the value of any asset in
the books of the Partnership pursuant to Treasury Regulations Section 1.704-1(b)(2), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (iv) any
37
expenditures of the Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing
GP-Related Net Income (Loss) pursuant to this definition shall be treated as deductible items; (v) any income from a GP-Related Investment that is payable to
Partnership employees in respect of “phantom interests” in such GP-Related Investment awarded by the General Partner to employees shall be included as an expense in the calculation of GP-Related Net Income (Loss) from such GP-Related Investment, and (vi) items of income and expense (including interest income and overhead and other indirect expenses) of
the Partnership, Holdings and other Affiliates of the Partnership shall be allocated among the Partnership, Holdings and such Affiliates, among various Partnership activities and GP-Related Investments and
between accounting periods, in each case as determined by the General Partner. Any adjustments to GP-Related Net Income (Loss) by the General Partner, including adjustments for items of income accrued but not
yet received, unrealized gains, items of expense accrued but not yet paid, unrealized losses, reserves (including reserves for taxes, bad debts, actual or threatened litigation, or any other expenses, contingencies or obligations) and other
appropriate items shall be made in accordance with GAAP; provided, that the General Partner shall not be required to make any such adjustment.
(d) An accounting period shall be a Fiscal Year, except that, at the option of the General Partner, an accounting period will terminate and a
new accounting period will begin on the admission date of an additional Partner or the Settlement Date of a Withdrawn Partner, if any such date is not the first day of a Fiscal Year. If any event referred to in the preceding sentence occurs and the
General Partner does not elect to terminate an accounting period and begin a new accounting period, then the General Partner may make such adjustments as it deems appropriate to the Partners’ GP-Related
Profit Sharing Percentages for the accounting period in which such event occurs (prior to any allocations of GP-Related Unallocated Percentages or adjustments to
GP-Related Profit Sharing Percentages pursuant to Section 5.3) to reflect the Partners’ average GP-Related Profit Sharing Percentages during such accounting
period; provided, that the GP-Related Profit Sharing Percentages of Partners in GP-Related Net Income (Loss) from
GP-Related Investments acquired during such accounting period will be based on GP-Related Profit Sharing Percentages in effect when each such GP-Related Investment was acquired.
(e) In establishing
GP-Related Profit Sharing Percentages and allocating GP-Related Unallocated Percentages pursuant to Section 5.3, the General Partner may consider such factors as it
deems appropriate.
(f) All determinations, valuations and other matters of judgment required to be made for accounting purposes under this
Agreement shall be made by the General Partner and approved by the Partnership’s independent accountants. Such approved determinations, valuations and other accounting matters shall be conclusive and binding on all Partners, all Withdrawn
Partners, their successors, heirs, estates or legal representatives and any other person, and to the fullest extent permitted by law no such person shall have the right to an accounting or an appraisal of the assets of the Partnership or any
successor thereto.
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Section 5.2. GP-Related Capital
Accounts.
(a) There shall be established for each Partner in the books of the Partnership, to the extent and at such times as may be
appropriate, one or more capital accounts as the General Partner may deem to be appropriate for purposes of accounting for such Partner’s interests in the capital of the Partnership related to the
GP-Related BREDS IV Interest and the GP-Related Net Income (Loss) of the Partnership (each a “GP-Related Capital
Account”).
(b) As of the end of each accounting period or, in the case of a contribution to the Partnership by one or more of the
Partners with respect to such Partner or Partners’ GP-Related Partner Interests or a distribution by the Partnership to one or more of the Partners with respect to such Partner or Partners’ GP-Related Partner Interests, at the time of such contribution or distribution, (i) the appropriate GP-Related Capital Accounts of each Partner shall be credited with the
following amounts: (A) the amount of cash and the value of any property contributed by such Partner to the capital of the Partnership related to such Partner’s GP-Related Partner Interest during such
accounting period, (B) the GP-Related Net Income allocated to such Partner for such accounting period and (C) the interest credited on the balance of such Partner’s capital related to such
Partner’s GP-Related Partner Interest for such accounting period pursuant to Section 4.2; and (ii) the appropriate GP-Related Capital Accounts of each
Partner shall be debited with the following amounts: (x) the amount of cash, the principal amount of any subordinated promissory note of the Partnership referred to in Section 6.5 (as such amount is paid) and the value of any property
distributed to such Partner during such accounting period with respect to such Partner’s GP-Related Partner Interest and (y) the GP-Related Net Loss allocated
to such Partner for such accounting period.
Section 5.3. GP-Related Profit Sharing Percentages.
(a) Prior to the beginning of each annual accounting period, the General Partner shall establish the profit sharing percentage (the “GP-Related Profit Sharing Percentage”) of each Partner in each category of GP-Related Net Income (Loss) for such annual accounting period pursuant to
Section 5.1(a) taking into account such factors as the General Partner deems appropriate; provided, that (i) the General Partner may elect to establish GP-Related Profit Sharing Percentages in
GP-Related Net Income (Loss) from any GP-Related Investment acquired by the Partnership during such accounting period at the time such
GP-Related Investment is acquired in accordance with paragraph (c) below and (ii) GP-Related Net Income (Loss) for such accounting period from any GP-Related Investment shall be allocated in accordance with the GP-Related Profit Sharing Percentages in such GP-Related Investment
established in accordance with paragraph (c) below. The General Partner may establish different GP-Related Profit Sharing Percentages for any Partner in different categories of GP-Related Net Income (Loss). In the case of the Withdrawal of a Partner, such former Partner’s GP-Related Profit Sharing Percentages shall be allocated by the General
Partner to one or more of the remaining Partners as the General Partner shall determine. In the case of the admission of any Partner to the Partnership as an additional Partner, the GP-Related Profit Sharing
Percentages of the other Partners shall be reduced by an amount equal to the GP-Related Profit Sharing Percentage allocated to such new Partner pursuant to Section 6.1(b); such reduction of each other
Partner’s GP-Related Profit Sharing Percentage shall be pro rata based upon such Partner’s GP-Related Profit Sharing Percentage as in effect immediately
prior to the admission of the new Partner. Notwithstanding the foregoing, the General Partner may also adjust the GP-Related Profit Sharing Percentage of any Partner for any annual accounting period at the end
of such annual accounting period in its sole discretion.
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(b) The General Partner may elect to allocate to the Partners less than 100% of the GP-Related Profit Sharing Percentages of any category for any annual accounting period at the time specified in Section 5.3(a) for the annual fixing of GP-Related Profit
Sharing Percentages (any remainder of such GP-Related Profit Sharing Percentages being called a “GP-Related Unallocated Percentage”); provided,
that any GP-Related Unallocated Percentage in any category of GP-Related Net Income (Loss) for any annual accounting period that is not allocated by the General Partner
within 90 days after the end of such accounting period shall be deemed to be allocated among all the Partners (including the General Partner) in the manner determined by the General Partner in its sole discretion.
(c) Unless otherwise determined by the General Partner in a particular case, (i) GP-Related Profit
Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment shall be allocated in proportion to the Partners’ respective GP-Related Capital Contributions in respect of such GP-Related Investment and (ii) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from each GP-Related Investment shall be fixed at the time such GP-Related Investment is acquired and
shall not thereafter change, subject to any repurchase rights established by the General Partner pursuant to Section 5.7.
Section 5.4. Allocations of GP-Related Net Income (Loss).
(a) Except as provided in Section 5.4(d), GP-Related Net Income of the Partnership for each GP-Related Investment shall be allocated to the GP-Related Capital Accounts related to such GP-Related Investment of all the Partners
participating in such GP-Related Investment (including the General Partner): first, in proportion to and to the extent of the amount of Non-Carried Interest (other than
amounts representing a return of GP-Related Capital Contributions) or Carried Interest distributed to the Partners; second, to Partners that received Non-Carried
Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest in years prior to the years such GP-Related Net Income is
being allocated to the extent such Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest exceeded GP-Related Net Income allocated to such Partners in such earlier years; and third, to the Partners in the same manner that such Non-Carried Interest (other than amounts
representing a return of GP-Related Capital Contributions) or Carried Interest would have been distributed if cash were available to distribute with respect thereto.
(b) GP-Related Net Loss of the Partnership shall be allocated as follows: (i) GP-Related Net Loss relating to realized losses suffered by BREDS IV and allocated to the Partnership with respect to its pro rata share thereof (based on capital contributions made by the
Partnership to BREDS IV with respect to the GP-Related BREDS IV Interest) shall be allocated to the Partners in accordance with each Partner’s Non-Carried Interest
Sharing Percentage with respect to the GP-Related Investment giving rise to such loss suffered by BREDS IV and (ii) GP-Related Net Loss relating to realized losses
suffered by BREDS IV and allocated to the Partnership with respect to the Carried Interest shall be allocated in accordance with a Partner’s (including a Withdrawn Partner’s) Carried Interest Give Back Percentage (as of the date of such
loss) (subject to adjustment pursuant to Section 5.8(e)).
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(c) Notwithstanding Section 5.4(a) above,
GP-Related Net Income relating to Carried Interest allocated after the allocation of a GP-Related Net Loss pursuant to clause (ii) of Section 5.4(b) shall be
allocated in accordance with such Carried Interest Give Back Percentages until such time as the Partners have been allocated GP-Related Net Income relating to Carried Interest equal to the aggregate amount of GP-Related Net Loss previously allocated in accordance with clause (ii) of Section 5.4(b). Withdrawn Partners shall remain Partners for purposes of allocating such
GP-Related Net Loss with respect to Carried Interest.
(d) To the extent the Partnership has any GP-Related Net Income (Loss) for any accounting period unrelated to BREDS IV, such GP-Related Net Income (Loss) will be allocated in accordance with GP-Related Profit Sharing Percentages prevailing at the beginning of such accounting period.
(e) The
General Partner may authorize from time to time advances to Partners (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc.
or any Affiliate thereof) against their allocable shares of GP-Related Net Income (Loss).
(f)
Notwithstanding the foregoing, the General Partner may make such allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems
reasonably necessary for this purpose.
Section 5.5. Liability of Partners. Except as otherwise provided in the
Partnership Act or as expressly provided in this Agreement, no Partner shall be personally obligated for any debt, obligation or liability of the Partnership or of any other Partner solely by reason of being a Partner. In no event shall any Partner
or Withdrawn Partner (i) be obligated to make any capital contribution or payment to or on behalf of the Partnership or (ii) have any liability to return distributions received by such Partner from the Partnership, in each case except as
specifically provided in Section 4.1(d) or Section 5.8 or otherwise in this Agreement, as such Partner shall otherwise expressly agree in writing or as may be required by applicable law.
Section 5.6. [Intentionally omitted.]
Section 5.7. Repurchase Rights, etc. The General Partner may from time to time establish such repurchase rights and/or other
requirements with respect to the Partners’ GP-Related Partner Interests relating to GP-Related BREDS IV Investments as the General Partner may determine. The
General Partner shall have authority to (a) withhold any distribution otherwise payable to any Partner until any such repurchase rights have lapsed or any such requirements have been satisfied, (b) pay any distribution to any Partner that
is Contingent as of the distribution date and require the refund of any portion of such distribution that is Contingent as of the Withdrawal Date of such Partner, (c) amend any previously established repurchase rights or other requirements from
time to time and (d) make such exceptions thereto as it may determine on a case by case basis.
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Section 5.8. Distributions.
(a) (i) The Partnership shall make distributions of available cash (subject to reserves and other adjustments as provided herein) or other
property to Partners with respect to such Partners’ GP-Related Partner Interests at such times and in such amounts as are determined by the General Partner. The General Partner shall, if it deems it
appropriate, determine the availability for distribution of, and distribute, cash or other property separately for each category of GP-Related Net Income (Loss) established pursuant to Section 5.1(a).
Distributions of cash or other property with respect to Non-Carried Interest shall be made among the Partners in accordance with their respective Non-Carried Interest
Sharing Percentages, and, subject to Section 4.1(d) and Section 5.8(e), distributions of cash or other property with respect to Carried Interest shall be made among Partners in accordance with their respective Carried Interest Sharing
Percentages.
(ii) At any time that a sale, exchange, transfer or other disposition by BREDS IV of a portion of a GP-Related Investment is being considered by the Partnership (a “GP-Related Disposable Investment”), at the election of the General Partner each
Partner’s GP-Related Partner Interest with respect to such GP-Related Investment shall be vertically divided into two separate
GP-Related Partner Interests, a GP-Related Partner Interest attributable to the GP-Related Disposable Investment (a
Partner’s “GP-Related Class B Interest”), and a GP-Related Partner Interest attributable to such
GP-Related Investment excluding the GP-Related Disposable Investment (a Partner’s “GP-Related
Class A Interest”). Distributions (including those resulting from a sale, transfer, exchange or other disposition by BREDS IV) relating to a GP-Related Disposable Investment (with
respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of GP-Related Class B Interests with respect to such GP-Related Investment in accordance with their GP-Related Profit Sharing Percentages relating to such GP-Related Class B
Interests, and distributions (including those resulting from the sale, transfer, exchange or other disposition by BREDS IV) relating to a GP-Related Investment excluding such
GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of
GP-Related Class A Interests with respect to such GP-Related Investment in accordance with their respective GP-Related
Profit Sharing Percentages relating to such GP-Related Class A Interests. Except as provided above, distributions of cash or other property with respect to each category of
GP-Related Net Income (Loss) shall be allocated among the Partners in the same proportions as the allocations of GP-Related Net Income (Loss) of each such category.
(b) Subject to the Partnership’s having sufficient available cash in the reasonable judgment of the General Partner, the Partnership shall
make cash distributions to each Partner with respect to each Fiscal Year of the Partnership in an aggregate amount at least equal to the total U.S. federal, New York State and New York City income and other taxes that would be payable by such
Partner with respect to all categories of GP-Related Net Income (Loss) allocated to such Partner for such Fiscal Year, the amount of which shall be calculated (i) on the assumption that each Partner is an
individual subject to the then prevailing maximum rate of U.S. federal, New York State and New York City and other applicable income taxes (including, without limitation, taxes under Sections 1401 and 1411 of the Code), (ii) taking into account
(x) the limitations on the deductibility of expenses and other items for U.S. federal income tax purposes and (y) the character (e.g., long-term or short-term capital gain or ordinary or exempt)
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of the applicable income) and (iii) taking into account any differential in applicable rates due to the type and character of GP-Related Net Income
(Loss) allocated to such Partner. Notwithstanding the provisions of the foregoing sentence, the General Partner may refrain from making any distribution if, in the reasonable judgment of the General Partner, such distribution is prohibited by
applicable law.
(c) The General Partner may provide that the GP-Related Partner Interest of any
Partner or employee (including such Partner’s or employee’s right to distributions and investments of the Partnership related thereto) may be subject to repurchase by the Partnership during such period as the General Partner shall
determine (a “Repurchase Period”). Any Contingent distributions from GP-Related Investments subject to repurchase rights will be withheld by the Partnership and will be distributed to the
recipient thereof (together with interest thereon at rates determined by the General Partner from time to time) as the recipient’s rights to such distributions become Non-Contingent (by virtue of the
expiration of the applicable Repurchase Period or otherwise). The General Partner may elect in an individual case to have the Partnership distribute any Contingent distribution to the applicable recipient thereof irrespective of whether the
applicable Repurchase Period has lapsed. If a Partner Withdraws from the Partnership for any reason other than his or her death, Total Disability or Incompetence, the undistributed share of any GP-Related
Investment that remains Contingent as of the applicable Withdrawal Date shall be repurchased by the Partnership at a purchase price determined at such time by the General Partner. Unless determined otherwise by the General Partner, the repurchased
portion thereof will be allocated among the remaining Partners with interests in such GP-Related Investment in proportion to their respective percentage interests in such
GP-Related Investment, or if no other Partner has a percentage interest in such specific GP-Related Investment, to the General Partner; provided, that the General
Partner may allocate the Withdrawn Partner’s share of unrealized investment income from a repurchased GP-Related Investment attributable to the period after the Withdrawn Partner’s Withdrawal Date on
any basis it may determine, including to existing or new Partners who did not previously have interests in such GP-Related Investment, except that, in any event, each Investor Special Partner shall be
allocated a share of such unrealized investment income equal to its respective GP-Related Profit Sharing Percentage of such unrealized investment income.
(d) (i) (A) If Associates IV is obligated under the Clawback Provisions or Giveback Provisions to contribute to BREDS IV a Clawback Amount
or a Giveback Amount (other than a Capital Commitment Giveback Amount) and the Partnership is obligated to contribute any such amount to Associates IV, directly or indirectly, in respect of the Partnership’s
GP-Related Associates IV Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount being herein called a “GP-Related
Giveback Amount”), the General Partner shall call for such amounts as are necessary to satisfy such obligations of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to
the Partnership, in cash, when and as called by the General Partner, such an amount of prior distributions by the Partnership (and the Other Fund GPs) with respect to Carried Interest (and/or Non-Carried
Interest in the case of a GP-Related Giveback Amount) (the “GP-Related Recontribution Amount”) which equals (I) the product of (a) a
Partner’s or Withdrawn Partner’s Carried Interest Give Back Percentage and (b) the aggregate Clawback Amount payable by the Partnership in the case of Clawback Amounts and (II) with respect to a
GP-Related Giveback Amount, such Partner’s pro rata share of prior
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distributions of Carried Interest and/or Non-Carried Interest in connection with (a) the GP-Related BREDS IV
Investment giving rise to the GP-Related Giveback Amount, (b) if the amounts contributed pursuant to clause (II)(a) above are insufficient to satisfy such
GP-Related Giveback Amount, GP-Related BREDS IV Investments other than the one giving rise to such obligation, but only those amounts received by the Partners with an
interest in the GP-Related BREDS IV Investment referred to in clause (II)(a) above, and (c) if the GP-Related Giveback Amount pursuant to an applicable BREDS IV
Agreement is unrelated to a specific GP-Related BREDS IV Investment, all GP-Related BREDS IV Investments. Each Partner and Withdrawn Partner shall promptly contribute to
the Partnership, along with satisfying his or her comparable obligations to the Other Fund GPs, if any, upon such call, such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount, less
the amount paid out of the Trust Account on behalf of such Partner or Withdrawn Partner by the Trustee(s) pursuant to written instructions from the Partnership, or if applicable, any of the Other Fund GPs with respect to Carried Interest (and/or Non-Carried Interest in the case of GP-Related Giveback Amounts) (the “Net GP-Related Recontribution Amount”),
irrespective of the fact that the amounts in the Trust Account may be sufficient on an aggregate basis to satisfy the Partnership’s and the Other Fund GPs’ obligation under the Clawback Provisions and/or Giveback Provisions;
provided, that to the extent a Partner’s or Withdrawn Partner’s share of the amount paid with respect to the Clawback Amount or the GP-Related Giveback Amount exceeds his or her GP-Related Recontribution Amount, such excess shall be repaid to such Partner or Withdrawn Partner as promptly as reasonably practicable, subject to clause (ii) below; provided further, that such
written instructions from the General Partner shall specify each Partner’s and Withdrawn Partner’s GP-Related Recontribution Amount. Prior to such time, the General Partner may, in its discretion
(but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of the Clawback Provisions or the Giveback Provisions will probably materialize (and an estimate of the aggregate
amount of such obligations); provided further, that any amount from a Partner’s Trust Account used to pay any GP-Related Giveback Amount (or such lesser amount as may be required by the
General Partner) shall be contributed by such Partner to such Partner’s Trust Account no later than 30 days after the Net GP-Related Recontribution Amount is paid with respect to such GP-Related Giveback Amount.
(B) To the extent any Partner or Withdrawn Partner has satisfied any
Holdback obligation with Firm Collateral, such Partner or Withdrawn Partner shall, within 10 days of the General Partner’s call for GP-Related Recontribution Amounts, make a cash payment into the Trust
Account in an amount equal to the amount of the Holdback obligation satisfied with such Firm Collateral, or such lesser amount such that the amount in the Trust Account allocable to such Partner or Withdrawn Partner equals the sum of (I) such
Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount and (II) any similar amounts payable to any of the Other Fund GPs. Immediately upon receipt of such cash, the Trustee(s) shall
take such steps as are necessary to release such Firm Collateral of such Partner or Withdrawn Partner equal to the amount of such cash payment. If the amount of such cash payment is less than the amount of Firm Collateral of such Partner or
Withdrawn Partner, the balance of such Firm Collateral if any, shall be retained to secure the payment of GP-Related Deficiency Contributions, if any, and shall be fully released upon the satisfaction of the
Partnership’s and the Other Fund GPs’ obligation to pay the Clawback Amount. The failure of any Partner or Withdrawn Partner to make a cash payment in accordance with this clause (B) (to the extent applicable) shall constitute a default
under Section 5.8(d)(ii) as if such cash payment hereunder constitutes a Net GP-Related
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Recontribution Amount under Section 5.8(d)(ii). Solely to the extent required by the BREDS IV Partnership Agreement, each partner of the General Partner shall have the same obligations as a
Partner (which obligations shall be subject to the same limitations as the obligations of a Partner) under this Section 5.8(d)(i)(B) and under Section 5.8(d)(ii)(A) with respect to such partner’s pro rata share of any Clawback Amount
and solely to the extent that the Partnership has insufficient funds to meet the Partnership’s obligations under the BREDS IV Partnership Agreement.
(ii) (A) In the event any Partner or Withdrawn Partner (a “GP-Related
Defaulting Party”) fails to recontribute all or any portion of such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount for any reason, the
General Partner shall require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Carried Interest Give Back Percentages in the case of Clawback Amounts, and GP-Related Profit Sharing Percentages in the case of GP-Related Giveback Amounts (as more fully described in clause (II) of Section 5.8(d)(i)(A) above)), such
amounts as are necessary to fulfill the GP-Related Defaulting Party’s obligation to pay such GP-Related Defaulting Party’s Net
GP-Related Recontribution Amount (a “GP-Related Deficiency Contribution”) if the General Partner determines in its good faith judgment that the
Partnership (or an Other Fund GP) will be unable to collect such amount in cash from such GP-Related Defaulting Party for payment of the Clawback Amount or GP-Related
Giveback Amount, as the case may be, at least 20 Business Days prior to the latest date that the Partnership, and the Other Fund GPs, if applicable, are permitted to pay the Clawback Amount or GP-Related
Giveback Amount, as the case may be; provided, that, subject to Section 5.8(e), no Partner or Withdrawn Partner shall as a result of such GP-Related Deficiency Contribution be required to
contribute an amount in excess of 150% of the amount of the Net GP-Related Recontribution Amount initially requested from such Partner or Withdrawn Partner in respect of such default.
(B) Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should either (1) not
attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all remedies (at law or
equity) available to the Partnership against the GP-Related Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the
GP-Related Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such GP-Related Defaulting Party becoming a GP-Related Defaulting Party) to set-off as appropriate and apply against such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount any amounts otherwise payable to the GP-Related Defaulting Party by the Partnership or any Affiliate thereof (including amounts unrelated to
Carried Interest, such as returns of capital and profit thereon). Each Partner and Withdrawn Partner hereby grants to the General Partner a security interest, effective upon such Partner or Withdrawn Partner becoming a
GP-Related Defaulting Party, in all accounts receivable and other rights to receive payment from any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General
Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner and Withdrawn Partner hereby appoints the General Partner as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of
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such Partner or Withdrawn Partner or in the name of the General Partner, to take any actions which may be necessary to accomplish the intent of the immediately preceding sentence. The General
Partner shall be entitled to collect interest on the Net GP-Related Recontribution Amount of a GP-Related Defaulting Party from the date such Net GP-Related Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(C) Any Partner’s or Withdrawn Partner’s failure to make a GP-Related
Deficiency Contribution shall cause such Partner or Withdrawn Partner to be a GP-Related Defaulting Party with respect to such amount. The Partnership shall first seek any remaining Trust Amounts (and Trust
Income thereon) allocated to such Partner or Withdrawn Partner to satisfy such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution before seeking cash
contributions from such Partner or Withdrawn Partner in satisfaction of such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution.
(iii) In the event any Partner or Withdrawn Partner initially fails to recontribute all or any portion of such Partner or
Withdrawn Partner’s pro rata share of any Clawback Amount pursuant to Section 5.8(d)(i)(A), the Partnership shall use its reasonable efforts to collect the amount which such Partner or Withdrawn Partner so fails to recontribute.
(iv) A Partner’s or Withdrawn Partner’s obligation to make contributions to the Partnership under this
Section 5.8(d) shall survive the termination of the Partnership.
(e) The Partners acknowledge that the General Partner will (and is
hereby authorized to) take such steps as it deems appropriate, in its good faith judgment, to further the objective of providing for the fair and equitable treatment of all Partners, including by allocating Aggregate Net Losses from Writedowns (as
defined in the BREDS IV Agreements) and Losses (as defined in the BREDS IV Agreements) on GP-Related BREDS IV Investments that have been the subject of a writedown and/or Loss (as defined in the BREDS IV
Agreements) (each, a “Loss Investment”) to those Partners who participated in such Loss Investments based on their Carried Interest Sharing Percentage therein to the extent that such Partners receive or have received Carried
Interest distributions from other GP-Related BREDS IV Investments. Consequently and notwithstanding anything herein to the contrary, adjustments to Carried Interest distributions shall be made as set forth in
this Section 5.8(e).
(i) At the time the Partnership is making Carried Interest distributions in connection with a GP-Related BREDS IV Investment (the “Subject Investment”) that have been reduced under any BREDS IV Agreement as a result of one or more Loss Investments, the General Partner shall calculate amounts
distributable to or due from each such Partner as follows:
(A) determine each Partner’s share of each such Loss
Investment based on his or her Carried Interest Sharing Percentage in each such Loss Investment (which may be zero) to the extent such Loss Investment has reduced the Carried Interest distributions otherwise available for distribution to all
Partners (indirectly through the Partnership from BREDS IV) from the Subject Investment (such reduction, the “Loss Amount”);
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(B) determine the amount of Carried Interest distributions otherwise
distributable to such Partner with respect to the Subject Investment (indirectly through the Partnership from BREDS IV) before any reduction in respect of the amount determined in clause (A) above (the “Unadjusted Carried Interest
Distributions”); and
(C) subtract (I) the Loss Amounts relating to all Loss Investments from (II) the
Unadjusted Carried Interest Distributions for such Partner, to determine the amount of Carried Interest distributions to actually be paid to such Partner (“Net Carried Interest Distribution”).
To the extent that the Net Carried Interest Distribution for a Partner as calculated in this clause (i) is a negative number, the General
Partner shall (I) notify such Partner, at or prior to the time such Carried Interest distributions are actually made to the Partners, of his or her obligation to recontribute to the Partnership prior Carried Interest distributions (a
“Net Carried Interest Distribution Recontribution Amount”), up to the amount of such negative Net Carried Interest Distribution, and (II) to the extent amounts recontributed pursuant to clause (I) are insufficient to
satisfy such negative Net Carried Interest Distribution amount, reduce future Carried Interest distributions otherwise due such Partner, up to the amount of such remaining negative Net Carried Interest Distribution. If a Partner’s (x) Net
Carried Interest Distribution Recontribution Amount exceeds (y) the aggregate amount of prior Carried Interest distributions less the amount of tax thereon, calculated based on the Assumed Tax Rate (as defined in the BREDS IV Agreements) in
effect in the Fiscal Years of such distributions (the “Excess Tax-Related Amount”), then such Partner may, in lieu of paying such Partner’s Excess
Tax-Related Amount, defer such amounts as set forth below. Such deferred amount shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced and repaid by the amount of Carried Interest
otherwise distributable to such Partner in connection with future Carried Interest distributions until such balance is reduced to zero. Any deferred amounts shall be payable in full upon the earlier of (i) such time as the Clawback Amount is
determined (as provided herein) and (ii) such time as the Partner becomes a Withdrawn Partner.
To the extent there is an amount of
negative Net Carried Interest Distribution with respect to a Partner remaining after the application of this clause (i), notwithstanding clause (II) of the preceding paragraph, such remaining amount of negative Net Carried Interest Distribution
shall be allocated to the other Partners pro rata based on each of their Carried Interest Sharing Percentages in the Subject Investment.
A Partner who fails to pay a Net Carried Interest Distribution Recontribution Amount promptly upon notice from the General Partner (as
provided above) shall be deemed a GP-Related Defaulting Party for all purposes hereof.
A Partner
may satisfy in part any Net Carried Interest Distribution Recontribution Amount from cash that is then subject to a Holdback, to the extent that the amounts that remain subject to a Holdback satisfy the Holdback requirements hereof as they relate to
the reduced amount of aggregate Carried Interest distributions received by such Partner (taking into account any Net Carried Interest Distribution Recontribution Amount contributed to the Partnership by such Partner).
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Any Net Carried Interest Distribution Recontribution Amount contributed by a Partner,
including amounts of cash subject to a Holdback as provided above, shall increase the amount available for distribution to the other Partners as Carried Interest distributions with respect to the Subject Investment; provided, that any such
amounts then subject to a Holdback may be so distributed to the other Partners to the extent a Partner receiving such distribution has satisfied the Holdback requirements with respect to such distribution (taken together with the other Carried
Interest distributions received by such Partner to date).
(ii) In the case of Clawback Amounts which are required to be
contributed to the Partnership as otherwise provided herein, the obligation of the Partners with respect to any Clawback Amount shall be adjusted by the General Partner as follows:
(A) determine each Partner’s share of any Losses (as defined in the BREDS IV Agreements) in any GP-Related BREDS IV Investments which gave rise to the Clawback Amount (i.e., the Losses that followed the last GP-Related BREDS IV Investment with respect to
which Carried Interest distributions were made), based on such Partner’s Carried Interest Sharing Percentage in such GP-Related BREDS IV Investments;
(B) determine each Partner’s obligation with respect to the Clawback Amount based on such Partner’s Carried Interest
Give Back Percentage as otherwise provided herein; and
(C) subtract the amount determined in clause (B) above from
the amount determined in clause (A) above with respect to each Partner to determine the amount of adjustment to each Partner’s share of the Clawback Amount (a Partner’s “Clawback Adjustment Amount”).
A Partner’s share of the Clawback Amount shall for all purposes hereof be decreased by such Partner’s Clawback Adjustment Amount, to
the extent it is a negative number (except to the extent expressly provided below). A Partner’s share of the Clawback Amount shall for all purposes hereof be increased by such Partner’s Clawback Adjustment Amount (to the extent it is a
positive number); provided, that in no way shall a Partner’s aggregate obligation to satisfy a Clawback Amount as a result of this clause (ii) exceed the aggregate Carried Interest distributions received by such Partner. To the
extent a positive Clawback Adjustment Amount remains after the application of this clause (ii) with respect to a Partner, such remaining Clawback Adjustment Amount shall be allocated to the Partners (including any Partner whose Clawback Amount
was increased pursuant to this clause (ii)) pro rata based on their Carried Interest Give Back Percentages (determined without regard to this clause (ii)).
Any distribution or contribution adjustments pursuant to this Section 5.8(e) by the General Partner shall be based on its good faith
judgment, and no Partner shall have any claim against the Partnership, the General Partner or any other Partners as a result of any adjustment made as set forth above. This Section 5.8(e) applies to all Partners, including Withdrawn Partners.
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It is agreed and acknowledged that this Section 5.8(e) is an agreement among the
Partners and in no way modifies the obligations of each Partner regarding the Clawback Amount as provided in the BREDS IV Agreements.
Section 5.9. Business Expenses. The Partnership shall reimburse the Partners for reasonable travel, entertainment and
miscellaneous expenses incurred by them in the conduct of the Partnership’s business in accordance with rules and regulations established by the General Partner from time to time.
Section 5.10. Tax Capital Accounts; Tax Allocations
(a) For U.S. federal income tax purposes, there shall be established for each Partner a single capital account combining such Partner’s
Capital Commitment Capital Account and GP-Related Capital Account, with such adjustments as the General Partner determines are appropriate so that such single capital account is maintained in compliance with
the principles and requirements of Section 704(b) of the Code and the Treasury Regulations thereunder.
(b) All items of income, gain,
loss, deduction and credit of the Partnership shall be allocated among the Partners for U.S. federal, state and local income tax purposes in the same manner as such items of income, gain, loss, deduction and credit shall be allocated among the
Partners pursuant to this Agreement, except as may otherwise be provided herein or by the Code or other applicable law. In the event there is a net decrease in partnership minimum gain or partner nonrecourse debt minimum gain (determined in
accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i)) during any taxable year of the Partnership, each Partner shall be specially
allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to its respective share of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Treasury Regulations
Section 1.704-2(f). In addition, this Agreement shall be considered to contain a “qualified income offset” as provided in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d). Notwithstanding the foregoing, the General Partner in its sole discretion shall make allocations for tax purposes as may be needed to ensure that allocations are in
accordance with the interests of the Partners within the meaning of the Code and the Treasury Regulations.
(c) For U.S. federal, state and
local income tax purposes only, Partnership income, gain, loss, deduction or expense (or any item thereof) for each Fiscal Year shall be allocated to and among the Partners in a manner corresponding to the manner in which corresponding items are
allocated among the Partners pursuant to the other provisions of this Section 5.10; provided, that the General Partner may in its sole discretion make such allocations for tax purposes as it determines are appropriate so that allocations
have substantial economic effect or are in accordance with the interests of the Partners, within the meaning of the Code and the Treasury Regulations thereunder. To the extent there is an adjustment by a taxing authority to any item of income, gain,
loss, deduction or credit of the Partnership (or an adjustment to any Partner’s distributive share thereof), the General Partner may reallocate the adjusted items among each Partner or former Partner (as determined by the General Partner) in
accordance with the final resolution of such audit adjustment.
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ARTICLE VI
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS;
SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
Section 6.1. Additional Partners.
(a) Effective on the first day of any month (or on such other date as shall be determined by the General Partner in its sole discretion), the
General Partner shall have the right to admit one or more additional or substitute persons into the Partnership as Limited Partners or Special Partners. Each such person shall make the representations and certifications with respect to itself set
forth in Section 3.6 and Section 3.7. The General Partner shall determine and negotiate with the additional Partner (which term shall include, without limitation, any substitute Partner) all terms of such additional Partner’s
participation in the Partnership, including the additional Partner’s initial GP-Related Capital Contribution, Capital Commitment-Related Capital Contribution,
GP-Related Profit Sharing Percentage and Capital Commitment Profit Sharing Percentage. Each additional Partner shall have such voting rights as may be determined by the General Partner from time to time
unless, upon the admission to the Partnership of any Special Partner, the General Partner shall designate that such Special Partner shall not have such voting rights (any such Special Partner being called a “Nonvoting Special
Partner”). Any additional Partner shall, as a condition to becoming a Partner, agree to become a party to, and be bound by the terms and conditions of, the Trust Agreement. If Blackstone or another or subsequent holder of an Investor Note
approved by the General Partner for purposes of this Section 6.1(a) shall foreclose upon a Limited Partner’s Investor Note issued to finance such Limited Partner’s purchase of his or her Capital Commitment Interests, Blackstone or
such other or subsequent holder shall succeed to such Limited Partner’s Capital Commitment Interests and shall be deemed to have become a Limited Partner to such extent. Any additional Partner may have a
GP-Related Partner Interest or a Capital Commitment Partner Interest, without having the other such interest.
(b) The GP-Related Profit Sharing Percentages, if any, to be allocated to an additional Partner as of
the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’ GP-Related Profit Sharing Percentages as of such date, shall be established by the
General Partner pursuant to Section 5.3. The Capital Commitment Profit Sharing Percentages, if any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction
in all other Partners’ Capital Commitment Profit Sharing Percentages as of such date, shall be established by the General Partner. Notwithstanding any provision in this Agreement to the contrary, the General Partner is authorized, without the
need for any further act, vote or consent of any person, to make adjustments to the GP-Related Profit Sharing Percentages as it determines necessary in its sole discretion in connection with any additional
Partners admitted to the Partnership, adjustments with respect to other Partners of the Partnership and to give effect to other matters set forth herein, as applicable.
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(c) An additional Partner shall be required to contribute to the Partnership his or her
pro rata share of the Partnership’s total capital, excluding capital in respect of GP-Related Investments and Capital Commitment Investments in which such Partner does not acquire any interests, at
such times and in such amounts as shall be determined by the General Partner in accordance with Section 4.1 and Section 7.1.
(d)
The admission of an additional Partner will be evidenced by (i) the execution of a counterpart copy of this Agreement by such additional Partner, or (ii) the execution of an amendment to this Agreement by the General Partner and the
additional Partner, as determined by the General Partner, and/or (iii) the execution by such additional Partner of any other writing evidencing the intent of such person to become an additional Partner and to be bound by the terms of this
Agreement and such writing being acceptable to the General Partner on behalf of the Partnership. In addition, each additional Partner shall sign a counterpart copy of the Trust Agreement or any other writing evidencing the intent of such person to
become a party to the Trust Agreement that is acceptable to the General Partner on behalf of the Partnership.
Section 6.2. Withdrawal of Partners.
(a) Any Partner may Withdraw voluntarily from the Partnership subject to the prior written consent of the General Partner, including if such
Withdrawal would (i) cause the Partnership to be in default under any of its contractual obligations or (ii) in the reasonable judgment of the General Partner, have a material adverse effect on the Partnership or its business. Without
limiting the foregoing sentence, the General Partner generally intends to permit voluntary Withdrawals on the last day of any calendar month (or on such other date as shall be determined by the General Partner in its sole discretion), on not less
than 15 days’ prior written notice by such Partner to the General Partner (or on such shorter notice period as may be mutually agreed upon between such Partner and the General Partner); provided, that a Partner may Withdraw from the
Partnership with respect to such Partner’s GP-Related Partner Interest without Withdrawing from the Partnership with respect to such Partner’s Capital Commitment Partner Interest, and a Partner may
Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest without Withdrawing from the Partnership with respect to such Partner’s GP-Related Partner Interest.
(b) Upon the Withdrawal of any Partner, including by the occurrence of any withdrawal event under the Partnership Act with respect to any
Partner, such Partner shall thereupon cease to be a Partner, except as expressly provided herein.
(c) Upon the Total Disability of a
Limited Partner, such Partner shall thereupon cease to be a Limited Partner with respect to such person’s GP-Related Partner Interest; provided, that the General Partner may elect to admit such
Withdrawn Partner to the Partnership as a Nonvoting Special Partner with respect to such person’s GP-Related Partner Interest, with such GP-Related Partner Interest
as the General Partner may determine. The determination of whether any Partner has suffered a Total Disability shall be made by the General Partner in its sole discretion after consultation with a qualified medical doctor. In the absence of
agreement between the General Partner and such Partner, each party shall nominate a qualified medical doctor and the two doctors shall select a third doctor, who shall make the determination as to Total Disability.
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(d) If the General Partner determines that it shall be in the best interests of the
Partnership for any Partner (including any Partner who has given notice of voluntary Withdrawal pursuant to paragraph (a) above) to Withdraw from the Partnership (whether or not Cause exists) with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, such Partner, upon written notice by the General Partner to such Partner, shall be required to Withdraw with
respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, as of a date specified in such notice, which date shall be on or after
the date of such notice. If the General Partner requires any Partner to Withdraw for Cause with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital
Commitment Partner Interest, such notice shall state that it has been given for Cause and shall describe the particulars thereof in reasonable detail.
(e) The Withdrawal from the Partnership of any Partner shall not, in and of itself, affect the obligations of the other Partners to continue
the Partnership during the remainder of its term. A Withdrawn General Partner shall remain liable for all obligations of the Partnership incurred while it was a General Partner and resulting from its acts or omissions as a General Partner to the
fullest extent provided by law.
Section 6.3. GP-Related Partner Interests Not
Transferable.
(a) No Partner may sell, assign, pledge, grant a security interest over or otherwise transfer or encumber all or any
portion of such Partner’s GP-Related Partner Interest other than as permitted by written agreement between such Partner and the Partnership; provided, that this Section 6.3 shall not impair
transfers by operation of law, transfers by will or by other testamentary instrument occurring by virtue of the death or dissolution of a Partner, or transfers required by trust agreements; provided further, that, subject to the prior
written consent of the General Partner, which shall not be unreasonably withheld, a Limited Partner may transfer, for estate planning purposes, up to 25% of his or her GP-Related Profit Sharing Percentage to
any estate planning trust, limited partnership or limited liability company with respect to which a Limited Partner controls investments related to any interest in the Partnership held therein (an “Estate Planning Vehicle”). Each
Estate Planning Vehicle will be a Nonvoting Special Partner. Such Limited Partner and the Nonvoting Special Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such Nonvoting Special Partner with
respect to the Partnership (including the obligation to make additional GP-Related Capital Contributions), as the case may be. The General Partner may at its sole option exercisable at any time require any
Estate Planning Vehicle to Withdraw from the Partnership on the terms of this Article VI. Except as provided in the second proviso to the first sentence of this Section 6.3, no assignee, legatee, distributee, heir or transferee (by conveyance,
operation of law or otherwise) of the whole or any portion of any Partner’s GP-Related Partner Interest shall have any right to be a Partner without the prior written consent of the General Partner (which
consent may be given or withheld in its sole discretion without giving any reason therefor). Notwithstanding the granting of a security interest in the entire Interest of any Partner, such Partner shall continue to be a Partner of the Partnership.
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(b) Notwithstanding any provision hereof to the contrary, no sale or transfer of any GP-Related Partner Interest in the Partnership may be made except in compliance with all federal, state and other applicable laws, including U.S. federal and state securities laws.
Section 6.4. Consequences upon Withdrawal of a Partner. (a) Subject to the Partnership Act, the General Partner may not
transfer or assign its interest as a General Partner in the Partnership or its right to manage the affairs of the Partnership, except that the General Partner may, subject to the Partnership Act, with the prior written approval of a Majority in
Interest of the Partners, admit another person as an additional or substitute General Partner who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law
or otherwise); provided however, that the General Partner may, in its sole discretion, transfer all or part of its interest in the Partnership to a person who makes such representations with respect to itself as the General Partner
deems necessary or appropriate (with regard to compliance with applicable law or otherwise) and who owns, directly or indirectly, the principal part of the business then conducted by the General Partner in connection with any liquidation,
dissolution or reorganization of the General Partner, and, upon the assumption by such person of liability for all the obligations of the General Partner under this Agreement, such person shall be admitted as the General Partner. A person who is so
admitted as an additional or substitute General Partner shall thereby become a General Partner and shall have the right to manage the affairs of the Partnership and to vote as a Partner to the extent of the interest in the Partnership so acquired.
The General Partner shall not cease to be the general partner of the Partnership upon the collateral assignment of or the pledging or granting of a security interest in its entire Interest in the Partnership.
(b) Except as contemplated by Section 6.4(a) above, Withdrawal by a General Partner is not permitted. The Withdrawal of a Partner shall
not dissolve the Partnership if at the time of such Withdrawal there are one or more remaining Partners and any one or more of such remaining Partners continue the business of the Partnership (any and all such remaining Partners being hereby
authorized to continue the business of the Partnership without dissolution and hereby agreeing to do so). Notwithstanding Section 6.4(c), if upon the Withdrawal of a Partner there shall be no remaining Limited Partners, the Partnership shall be
dissolved and shall be wound up unless, within 90 days after the occurrence of such Withdrawal, all remaining Special Partners agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such
Withdrawal, of one or more Limited Partners.
(c) The Partnership shall not be dissolved, in and of itself, by the Withdrawal of any
Partner, but shall continue with the surviving or remaining Partners as partners thereof in accordance with and subject to the terms and provisions of this Agreement.
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s
GP-Related Partner Interests.
(a) The terms of this Section 6.5 shall apply to the
GP-Related Partner Interest of a Withdrawn Partner, but, except as otherwise expressly provided in this Section 6.5, shall not apply to the Capital Commitment Partner Interest of a Withdrawn Partner. For
purposes of this Section 6.5, the term “Settlement Date” means the date as of which a Withdrawn Partner’s GP-Related Partner Interest in the Partnership is settled as determined
under paragraph (b) below. Notwithstanding the foregoing, any Limited Partner who Withdraws from the Partnership, and all or any portion of whose GP-Related Partner Interest is retained as a Special
Partner, shall be considered a Withdrawn Partner for all purposes hereof.
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(b) Except where a later date for the settlement of a Withdrawn Partner’s GP-Related Partner Interest in the Partnership may be agreed to by the General Partner and a Withdrawn Partner, a Withdrawn Partner’s Settlement Date shall be his or her Withdrawal Date; provided, that
if a Withdrawn Partner’s Withdrawal Date is not the last day of a month, then the General Partner may elect for such Withdrawn Partner’s Settlement Date to be the last day of the month in which his or her Withdrawal Date occurs. During the
interval, if any, between a Withdrawn Partner’s Withdrawal Date and Settlement Date, such Withdrawn Partner shall have the same rights and obligations with respect to GP-Related Capital Contributions,
interest on capital, allocations of GP-Related Net Income (Loss) and distributions as would have applied had such Withdrawn Partner remained a Partner of the Partnership during such period.
(c) In the event of the Withdrawal of a Partner, with respect to such Withdrawn Partner’s
GP-Related Partner Interest, the General Partner shall promptly after such Withdrawn Partner’s Settlement Date (i) determine and allocate to the Withdrawn Partner’s GP-Related Capital Accounts such Withdrawn Partner’s allocable share of the GP-Related Net Income (Loss) of the Partnership for the period ending on such Settlement Date
in accordance with Article V and (ii) credit the Withdrawn Partner’s GP-Related Capital Accounts with interest in accordance with Section 5.2. In making the foregoing calculations, the General
Partner shall be entitled to establish such reserves (including reserves for taxes, bad debts, unrealized losses, actual or threatened litigation or any other expenses, contingencies or obligations) as it deems appropriate. Unless otherwise
determined by the General Partner in a particular case, a Withdrawn Partner shall not be entitled to receive any GP-Related Unallocated Percentage in respect of the accounting period during which such Partner
Withdraws from the Partnership (whether or not previously awarded or allocated) or any GP-Related Unallocated Percentage in respect of prior accounting periods that have not been paid or allocated (whether or
not previously awarded) as of such Withdrawn Partner’s Withdrawal Date.
(d) From and after the Settlement Date of the Withdrawn
Partner, the Withdrawn Partner’s GP-Related Profit Sharing Percentages shall, unless otherwise allocated by the General Partner pursuant to Section 5.3(a), be deemed to be GP-Related Unallocated Percentages (except for GP-Related Profit Sharing Percentages with respect to GP-Related Investments as provided
in paragraph (f) below).
(e) (i) Upon the Withdrawal from the Partnership of a Partner with respect to such Partner’s GP-Related Partner Interest, such Withdrawn Partner thereafter shall not, except as expressly provided in this Section 6.5, have any rights of a Partner (including voting rights) with respect to such
Partner’s GP-Related Partner Interest, and, except as expressly provided in this Section 6.5, such Withdrawn Partner shall not have any interest in the Partnership’s GP-Related Net Income (Loss), or in distributions related to such Partner’s GP-Related Partner Interest, GP-Related Investments or
other assets related to such Partner’s GP-Related Partner Interest. If a Partner Withdraws from the Partnership with respect to such Partner’s GP-Related
Partner Interest for any reason other than for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be entitled to receive, at the time or times specified in Section 6.5(i) below, in
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satisfaction and discharge in full of the Withdrawn Partner’s GP-Related Partner Interest in the Partnership, (x) payment equal to the aggregate
credit balance, if any, as of the Settlement Date of the Withdrawn Partner’s GP-Related Capital Accounts, (excluding any GP-Related Capital Account or portion
thereof attributable to any GP-Related Investment) and (y) the Withdrawn Partner’s percentage interest attributable to each GP-Related Investment in which the
Withdrawn Partner has an interest as of the Settlement Date as provided in paragraph (f) below (which shall be settled in accordance with paragraph (f) below), subject to all the terms and conditions of paragraphs (a)-(r) of this
Section 6.5. If the amount determined pursuant to clause (x) above is an aggregate negative balance, the Withdrawn Partner shall pay the amount thereof to the Partnership upon demand by the General Partner on or after the date of the
statement referred to in Section 6.5(i) below; provided, that if the Withdrawn Partner was solely a Special Partner on his or her Withdrawal Date, such payment shall be required only to the extent of any amounts payable to such Withdrawn
Partner pursuant to this Section 6.5. Any aggregate negative balance in the GP-Related Capital Accounts of a Withdrawn Partner who was solely a Special Partner, upon the settlement of such Withdrawn
Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5, shall be allocated among the other Partners’ GP-Related Capital
Accounts in accordance with their respective GP-Related Profit Sharing Percentages in the categories of GP-Related Net Income (Loss) giving rise to such negative balance
as determined by the General Partner as of such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the Partnership, no value shall be
ascribed to goodwill, the Partnership name or the anticipation of any value the Partnership or any successor thereto might have in the event the Partnership or any interest therein were to be sold in whole or in part.
(ii) Notwithstanding clause (i) of this Section 6.5(e), in the case of a Partner whose Withdrawal with respect to
such Partner’s GP-Related Partner Interest resulted from such Partner’s death or Incompetence, such Partner’s estate or legal representative, as the case may be, may elect, at the time described
below, to receive a Nonvoting Special Partner GP-Related Partner Interest and retain such Partner’s GP-Related Profit Sharing Percentage in all (but not less than
all) illiquid investments of the Partnership in lieu of a cash payment (or Investor Note) in settlement of that portion of the Withdrawn Partner’s GP-Related Partner Interest. The election referred to
above shall be made within 60 days after the Withdrawn Partner’s Settlement Date, based on a statement of the settlement of such Withdrawn Partner’s GP-Related Partner Interest in the Partnership
pursuant to this Section 6.5.
(f) For purposes of clause (y) of paragraph (e)(i) above, a Withdrawn Partner’s
“percentage interest” means his or her GP-Related Profit Sharing Percentage as of the Settlement Date in the relevant GP-Related Investment. The Withdrawn
Partner shall retain his or her percentage interest in such GP-Related Investment and shall retain his or her GP-Related Capital Account or portion thereof attributable
to such GP-Related Investment, in which case such Withdrawn Partner (a “Retaining Withdrawn Partner”) shall become and remain a Special Partner for such purpose (and, if the General Partner so
designates, such Special Partner shall be a Nonvoting Special Partner). The GP-Related Partner Interest of a Retaining Withdrawn Partner pursuant to this paragraph (f) shall be subject to the terms and
conditions applicable to GP-Related Partner Interests of any kind hereunder and such other terms and conditions as are established by the General Partner. At the option of the General Partner in its sole
discretion, the General Partner and the Retaining Withdrawn Partner may agree to have the Partnership acquire such GP-Related Partner Interest without the approval of the other Partners; provided, that
the General Partner shall reflect in the books and records of the Partnership the terms of any acquisition pursuant to this sentence.
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(g) The General Partner may elect, in lieu of payment in cash of any amount payable to a
Withdrawn Partner pursuant to paragraph (e) above, to (i) have the Partnership issue to the Withdrawn Partner a subordinated promissory note and/or to (ii) distribute in kind to the Withdrawn Partner such Withdrawn Partner’s
pro rata share (as determined by the General Partner) of any securities or other investments of the Partnership in relation to such Partner’s GP-Related Partner Interest. If any securities or other
investments are distributed in kind to a Withdrawn Partner under this paragraph (g), the amount described in clause (x) of paragraph (e)(i) shall be reduced by the value of such distribution as valued on the latest balance sheet of the
Partnership in accordance with generally accepted accounting principles or, if not appearing on such balance sheet, as reasonably determined by the General Partner.
(h) [Intentionally omitted.]
(i) Within 120 days after each Settlement Date, the General Partner shall submit to the Withdrawn Partner a statement of the settlement of such
Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5 together with any cash payment, subordinated promissory note and in kind distributions to be made to
such Partner as shall be determined by the General Partner. The General Partner shall submit to the Withdrawn Partner supplemental statements with respect to additional amounts payable to or by the Withdrawn Partner in respect of the settlement of
his or her GP-Related Partner Interest in the Partnership (e.g., payments in respect of GP-Related Investments pursuant to paragraph (f) above or adjustments
to reserves pursuant to paragraph (j) below) promptly after such amounts are determined by the General Partner. To the fullest extent permitted by law, such statements and the valuations on which they are based shall be accepted by the
Withdrawn Partner without examination of the accounting books and records of the Partnership or other inquiry. Any amounts payable by the Partnership to a Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in right of payment
and subject to the prior payment or provision for payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to the applicable date of payment or distribution;
provided, that such Withdrawn Partner shall otherwise rank pari passu in right of payment (x) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year before the Withdrawal Date of the Withdrawn
Partner in question and (y) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year after the Withdrawal Date of the Withdrawn Partner in question.
(j) If the aggregate reserves established by the General Partner as of the Settlement Date in making the foregoing calculations should prove,
in the determination of the General Partner, to be excessive or inadequate, the General Partner may elect, but shall not be obligated, to pay the Withdrawn Partner or his or her estate such excess, or to charge the Withdrawn Partner or his or her
estate such deficiency, as the case may be.
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(k) Any amounts owed by the Withdrawn Partner to the Partnership at any time on or after the
Settlement Date (e.g., outstanding Partnership loans or advances to such Withdrawn Partner) shall be offset against any amounts payable or distributable by the Partnership to the Withdrawn Partner at any time on or after the Settlement Date
or shall be paid by the Withdrawn Partner to the Partnership, in each case as determined by the General Partner. All cash amounts payable by a Withdrawn Partner to the Partnership under this Section 6.5 shall bear interest from the due date to
the date of payment at a floating rate equal to the lesser of (x) the Prime Rate or (y) the maximum rate of interest permitted by applicable law. The “due date” of amounts payable by a Withdrawn Partner pursuant to
Section 6.5(i) above shall be 120 days after a Withdrawn Partner’s Settlement Date. The “due date” of amounts payable to or by a Withdrawn Partner in respect of GP-Related Investments for
which the Withdrawn Partner has retained a percentage interest in accordance with paragraph (f) above shall be 120 days after realization with respect to such GP-Related Investment. The “due
date” of any other amounts payable by a Withdrawn Partner shall be 60 days after the date such amounts are determined to be payable.
(l) At the time of the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the
Partnership pursuant to this Section 6.5, the General Partner may, to the fullest extent permitted by applicable law, impose any restrictions it deems appropriate on the assignment, pledge, grant of a security interest, encumbrance or other
transfer by such Withdrawn Partner of any interest in any GP-Related Investment retained by such Withdrawn Partner, any securities or other investments distributed in kind to such Withdrawn Partner or such
Withdrawn Partner’s right to any payment from the Partnership.
(m) If a Partner is required to Withdraw from the Partnership with
respect to such Partner’s GP-Related Partner Interest for Cause pursuant to Section 6.2(d), then his or her GP-Related Partner Interest shall be settled in
accordance with paragraphs (a)-(r) of this Section 6.5; provided, that the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such
settlement:
(i) In settling the Withdrawn Partner’s interest in any
GP-Related Investment in which he or she has an interest as of his or her Settlement Date, the General Partner may elect to (A) determine the GP-Related Unrealized
Net Income (Loss) attributable to each such GP-Related Investment as of the Settlement Date and allocate to the appropriate GP-Related Capital Account of the Withdrawn
Partner his or her allocable share of such GP-Related Unrealized Net Income (Loss) for purposes of calculating the aggregate balance of such Withdrawn Partner’s
GP-Related Capital Account pursuant to clause (x) of paragraph (e)(i) above, (B) credit or debit, as applicable, the Withdrawn Partner with the balance of his or her
GP-Related Capital Account or portion thereof attributable to each such GP-Related Investment as of his or her Settlement Date without giving effect to the GP-Related Unrealized Net Income (Loss) from such GP-Related Investment as of his or her Settlement Date, which shall be forfeited by the Withdrawn Partner or (C) apply
the provisions of paragraph (f) above; provided, that the maximum amount of GP-Related Net Income (Loss) allocable to such Withdrawn Partner with respect to any
GP-Related Investment shall equal such Partner’s percentage interest of the GP-Related Unrealized Net Income, if any, attributable to such GP-Related Investment as of the Settlement Date (the balance of such GP-Related Net Income (Loss), if any, shall be allocated as determined by the General Partner). The
Withdrawn Partner shall not have any continuing interest in any GP-Related Investment to the extent an election is made pursuant to (A) or (B) above.
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(ii) Any amounts payable by the Partnership to the Withdrawn Partner
pursuant to this Section 6.5 shall be subordinate in right of payment and subject to the prior payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to or
on or after the applicable date of payment or distribution.
(n) The payments to a Withdrawn Partner pursuant to this Section 6.5 may
be conditioned on the compliance by such Withdrawn Partner with any lawful and reasonable (under the circumstances) restrictions against engaging or investing in a business competitive with that of the Partnership or any of its subsidiaries and
Affiliates for a period not exceeding two years determined by the General Partner. Upon written notice to the General Partner, any Withdrawn Partner who is subject to noncompetition restrictions established by the General Partner pursuant to this
paragraph (n) may elect to forfeit the principal amount payable in the final installment of his or her subordinated promissory note, together with interest to be accrued on such installment after the date of forfeiture, in lieu of being bound
by such restrictions.
(o) In addition to the foregoing, the General Partner shall have the right to pay a Withdrawn Partner (other than
the General Partner) a discretionary additional payment in an amount and based upon such circumstances and conditions as it determines to be relevant.
(p) The provisions of this Section 6.5 shall apply to any Investor Special Partner relating to a Limited Partner or Special Partner and to
any transferee of any GP-Related Partner Interest of such Partner pursuant to Section 6.3 if such Partner Withdraws from the Partnership.
(q) (i) The Partnership will assist a Withdrawn Partner or his or her estate or guardian, as the case may be, in the settlement of the
Withdrawn Partner’s GP-Related Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his or her estate.
(ii) The General Partner may reasonably determine in good faith to retain outside professionals to provide the assistance to Withdrawn
Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the case may be, prior to engaging such professionals. If
the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s
day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
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(r) Each Partner (other than the General Partner) hereby irrevocably appoints the General
Partner as such Partner’s true and lawful agent, representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make,
execute, sign and file, on behalf of such Partner, any and all agreements, instruments, consents, ratifications, documents and certificates which the General Partner deems necessary or advisable in connection with any transaction or matter
contemplated by or provided for in this Section 6.5, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is
coupled with an interest and shall survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 6.6. Dissolution of the Partnership. The General Partner may dissolve the Partnership prior to the expiration
of its term at any time on not less than 60 days’ notice of the dissolution date given to the other Partners. Upon the dissolution of the Partnership, the Partners’ respective interests in the Partnership shall be valued and settled in
accordance with the procedures set forth in Section 6.5.
Section 6.7. Certain Tax Matters. (a) The General
Partner shall determine all matters concerning allocations for tax purposes not expressly provided for herein in its sole discretion.
(b)
The General Partner shall cause to be prepared all federal, state and local tax returns of the Partnership for each year for which such returns are required to be filed and, after approval of such returns by the General Partner, shall cause such
returns to be timely filed. The General Partner shall determine the appropriate treatment of each item of income, gain, loss, deduction and credit of the Partnership and the accounting methods and conventions under the tax laws of the United States,
the several States and other relevant jurisdictions as to the treatment of any such item or any other method or procedure related to the preparation of such tax returns. The General Partner may cause the Partnership to make or refrain from making
any and all elections permitted by such tax laws. Each Partner agrees that he or she shall not, unless he or she provides prior notice of such action to the Partnership, (i) treat, on his or her individual income tax returns, any item of
income, gain, loss, deduction or credit relating to his or her interest in the Partnership in a manner inconsistent with the treatment of such item by the Partnership as reflected on the Form K-1 or other
information statement furnished by the Partnership to such Partner for use in preparing his or her income tax returns or (ii) file any claim for refund relating to any such item based on, or which would result in, such inconsistent treatment.
In respect of an income tax audit of any tax return of the Partnership, the filing of any amended return or claim for refund in connection with any item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership, or
any administrative or judicial proceedings arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, (A) the Tax Matters Partner (as defined below) shall be authorized to act for, and his or
her decision shall be final and binding upon, the Partnership and all Partners except to the extent a Partner shall properly elect to be excluded from such proceeding pursuant to the Code, (B) all expenses incurred by the Tax Matters Partner in
connection therewith (including, without limitation, attorneys’, accountants’ and other experts’ fees and disbursements) shall be expenses of the Partnership and (C) no Partner shall have the right to (1) participate in the
audit of any Partnership tax return, (2) file any amended return or claim for refund in connection with any item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership (unless he or she provides prior notice
of such action to the Partnership as provided above), (3) participate in any administrative or judicial proceedings conducted by the
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Partnership or the Tax Matters Partner arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, or (4) appeal, challenge or otherwise
protest any adverse findings in any such audit conducted by the Partnership or the Tax Matters Partner or with respect to any such amended return or claim for refund filed by the Partnership or the Tax Matters Partner or in any such administrative
or judicial proceedings conducted by the Partnership or the Tax Matters Partner. The Partnership and each Partner hereby designate any Partner selected by the General Partner as the “partnership representative” (as defined under the Code)
(the “Tax Matters Partner”). To the fullest extent permitted by applicable law, each Partner agrees to indemnify and hold harmless the Partnership and all other Partners from and against any and all liabilities, obligations,
damages, deficiencies and expenses resulting from any breach or violation by such Partner of the provisions of this Section 6.7 and from all actions, suits, proceedings, demands, assessments, judgments, costs and expenses, including reasonable
attorneys’ fees and disbursements, incident to any such breach or violation.
(c) Each individual Partner shall provide to the
Partnership copies of each federal, state and local income tax return of such Partner (including any amendment thereof) within 30 days after filing such return.
(d) To the extent the General Partner reasonably determines that the Partnership (or any entity in which the Partnership holds an interest) is
or may be required by law to withhold or to make tax payments, including interest and penalties on such amounts, on behalf of or with respect to any Partner, including pursuant to Section 6225 of the Code (“Tax Advances”), the
General Partner may withhold or escrow such amounts or make such tax payments as so required. All Tax Advances made on behalf of a Partner shall, at the option of the General Partner, (i) be promptly paid to the Partnership by the Partner on
whose behalf such Tax Advances were made or (ii) be repaid by reducing the amount of the current or next succeeding distribution or distributions which would otherwise have been made to such Partner or, if such distributions are not sufficient
for that purpose, by so reducing the proceeds upon dissolution of the Partnership otherwise payable to such Partner. Whenever the General Partner selects option (ii) pursuant to the preceding sentence for repayment of a Tax Advance by a
Partner, for all other purposes of this Agreement such Partner shall be treated as having received all distributions (whether before or upon dissolution of the Partnership) unreduced by the amount of such Tax Advance. To the fullest extent permitted
by law, each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including, without limitation, any liability for taxes, penalties, additions to tax or interest) with respect to
income attributable to or distributions or other payments to such Partner. The obligations of a Partner set forth in this Section 6.7(d) shall survive the Withdrawal of any Partner from the Partnership or any Transfer of a Partner’s
interest.
Section 6.8. Special Basis Adjustments. In connection with any assignment or transfer of a Partnership
interest permitted by the terms of this Agreement, the General Partner may cause the Partnership, on behalf of the Partners and at the time and in the manner provided in Treasury Regulations
Section 1.754-1(b), to make an election to adjust the basis of the Partnership’s property in the manner provided in Sections 734(b) and 743(b) of the Code.
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ARTICLE VII
CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
Section 7.1. Capital Commitment Interests, etc.
(a) This Article VII and Article VIII hereof set forth certain terms and conditions with respect to the Capital Commitment Partner Interests
and the Capital Commitment BREDS IV Interest and matters related to the Capital Commitment Partner Interests and the Capital Commitment BREDS IV Interest. Except as otherwise expressly provided in this Article VII or in Article VIII, the terms and
provisions of this Article VII and Article VIII shall not apply to the GP-Related Partner Interests or the GP-Related BREDS IV Interest.
(b) Each Partner, severally, agrees to make contributions of capital to the Partnership (“Capital Commitment-Related Capital
Contributions”) as required to fund the Partnership’s capital contributions to BREDS IV or Associates IV, in respect of the Capital Commitment BREDS IV Interest, if any, and the related Capital Commitment BREDS IV Commitment, if any
(including, without limitation, funding all or a portion of the Blackstone Capital Commitment). No Partner shall be obligated to make Capital Commitment-Related Capital Contributions to the Partnership in an amount in excess of such Partner’s
Capital Commitment-Related Commitment. The Commitment Agreements and SMD Agreements, if any, of the Partners may include provisions with respect to the foregoing matters. It is understood that a Partner will not necessarily participate in each
Capital Commitment Investment (which may include additional amounts invested in an existing Capital Commitment Investment) nor will a Partner necessarily have the same Capital Commitment Profit Sharing Percentage with respect to (i) the
Partnership’s portion of the Blackstone Capital Commitment or (ii) the making of each Capital Commitment Investment in which such Partner participates; provided, that this in no way limits the terms of any Commitment Agreement or
SMD Agreement. In addition, nothing contained herein shall be construed to give any Partner the right to obtain financing with respect to the purchase of any Capital Commitment Interest, and nothing contained herein shall limit or dictate the terms
upon which the Partnership and its Affiliates may provide such financing. The acquisition of a Capital Commitment Interest by a Partner shall be evidenced by receipt by the Partnership of funds equal to such Partner’s Capital Commitment-Related
Commitment then due with respect to such Capital Commitment Interest and such appropriate documentation as the General Partner may submit to the Partners from time to time.
(c) The Partnership or one of its Affiliates (in such capacity, the “Advancing Party”) may in its sole discretion advance to any
Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are also executive officers of Blackstone) all or any portion of the Capital Commitment-Related Capital Contributions
due to the Partnership from such Partner with respect to any Capital Commitment Investment (“Firm Advances”). Each such Partner shall pay interest to the Advancing Party on each Firm Advance from the date of such Firm Advance until
the repayment thereof by such Partner. Each Firm Advance shall be repayable in full, including accrued interest to the date of such repayment, upon prior written notice by the Advancing Party. The making and repayment of each Firm Advance shall be
recorded in the books and records of the Partnership, and such recording shall be conclusive evidence of each such Firm Advance, binding on the Partner and
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the Advancing Party absent manifest error. Except as provided below, the interest rate applicable to a Firm Advance shall equal the cost of funds of the Advancing Party at the time of the making
of such Firm Advance. The Advancing Party shall inform any Partner of such rate upon such Partner’s request; provided, that such interest rate shall not exceed the maximum interest rate allowable by applicable law; provided
further, that amounts that are otherwise payable to such Partner pursuant to Section 7.4(a) shall be used to repay such Firm Advance (including interest thereon). The Advancing Party may, in its sole discretion, change the terms of Firm
Advances (including the terms contained herein) and/or discontinue the making of Firm Advances; provided, that (i) the Advancing Party shall notify the relevant Partners of any material changes to such terms and (ii) the interest
rate applicable to such Firm Advances and overdue amounts thereon shall not exceed the maximum interest rate allowable by applicable law.
Section 7.2. Capital Commitment Capital Accounts
(a) There shall be established for each Partner in the books of the Partnership as of the date of formation of the Partnership, or such later
date on which such Partner is admitted to the Partnership, and on each such other date as such Partner first acquires a Capital Commitment Interest in a particular Capital Commitment Investment, a Capital Commitment Capital Account for each Capital
Commitment Investment in which such Partner acquires a Capital Commitment Interest on such date. Each Capital Commitment-Related Capital Contribution of a Partner shall be credited to the appropriate Capital Commitment Capital Account of such
Partner on the date such Capital Commitment-Related Capital Contribution is paid to the Partnership. Capital Commitment Capital Accounts shall be adjusted to reflect any transfer of a Partner’s interest in the Partnership related to his or her
Capital Commitment Partner Interest as provided in this Agreement.
(b) A Partner shall not have any obligation to the Partnership or to
any other Partner to restore any negative balance in the Capital Commitment Capital Account of such Partner. Until distribution of any such Partner’s interest in the Partnership with respect to a Capital Commitment Interest as a result of the
disposition by the Partnership of the related Capital Commitment Investment and in whole upon the dissolution of the Partnership, neither such Partner’s Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or
redemption except with the consent of the General Partner.
Section 7.3. Allocations
(a) Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be allocated to the related Capital
Commitment Capital Accounts of all the Partners (including the General Partner) participating in such Capital Commitment Investment in proportion to their respective Capital Commitment Profit Sharing Percentages for such Capital Commitment
Investment. Capital Commitment Net Income (Loss) on any Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion which such Partner’s aggregate Capital Commitment Capital Accounts bear to the aggregate
Capital Commitment Capital Accounts of all Partners; provided, that if any Partner makes the election provided for in Section 7.6, Capital Commitment Net Income (Loss) of the Partnership for each Capital Commitment Investment shall be
allocated to the related Capital Commitment Capital Accounts of all the Partners participating in such Capital Commitment Investment who do not make such election in proportion to their respective Capital Commitment Profit Sharing Percentages for
such Capital Commitment Investment.
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(b) Any special costs relating to distributions pursuant to Section 7.6 or
Section 7.7 shall be specially allocated to the electing Partner.
(c) Notwithstanding the foregoing, the General Partner may make
such allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems reasonably necessary for this purpose.
Section 7.4. Distributions.
(a) Each Partner’s allocable portion of Capital Commitment Net Income received from his or her Capital Commitment Investments,
distributions to such Partner that constitute returns of capital, and other Capital Commitment Net Income of the Partnership (including, without limitation, Capital Commitment Net Income attributable to Unallocated Capital Commitment Interests)
during a Fiscal Year of the Partnership will be credited to payment of the Investor Notes to the extent required below as of the last day of such Fiscal Year (or on such earlier date as related distributions are made in the sole discretion of the
General Partner) with any cash amount distributable to such Partner pursuant to clauses (ii) and (vii) below to be distributed within 45 days after the end of each Fiscal Year of the Partnership (or in each case on such earlier date as selected
by the General Partner in its sole discretion) as follows (subject to Section 7.4(c) below):
(i) First, to the
payment of interest then due on all Investor Notes (relating to Capital Commitment Investments or otherwise) of such Partner (to the extent Capital Commitment Net Income and distributions or payments from Other Sources do not equal or exceed all
interest payments due, the selection of those of such Partner’s Investor Notes upon which interest is to be paid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor);
(ii) Second, to distribution to the Partner of an amount equal to the U.S. federal, state and local income taxes on income of
the Partnership allocated to such Partner for such year in respect of such Partner’s Capital Commitment Partner Interest (the aggregate amount of any such distribution shall be determined by the General Partner, subject to the limitation that
the minimum aggregate amount of such distribution be the tax that would be payable if the taxable income of the Partnership related to all Partners’ Capital Commitment Partner Interests were all allocated to an individual subject to the
then-prevailing maximum rate of U.S. federal, New York State and New York City taxes (including, without limitation, taxes imposed under Sections 1401 and 1411 of the Code), taking into account the type and character (e.g., long-term or short-term
capital gain or ordinary or exempt) of such taxable income allocated by the Partnership and the limitations on deductibility of expenses and other items for U.S. federal income tax purposes); provided, that additional amounts shall be paid to the
Partner pursuant to this clause (ii) to the extent that such amount reduces the amount otherwise distributable to the
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Partner pursuant to a comparable provision in any other BE Agreement and there are not sufficient amounts to fully satisfy such provision from the relevant partnership or other entity; provided
further, that amounts paid pursuant to the provisions in such other BE Agreements comparable to the immediately preceding proviso shall reduce those amounts otherwise distributable to the Partner pursuant to provisions in such other BE Agreements
that are comparable to this clause (ii);
(iii) Third, to the payment in full of the principal amount of the Investor Note
financing (A) any Capital Commitment Investment disposed of during or prior to such Fiscal Year or (B) any BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal Year, to the extent not repaid
from Other Sources;
(iv) Fourth, to the return to such Partner of (A) all Capital Commitment-Related Capital
Contributions made in respect of the Capital Commitment Interest to which any Capital Commitment Investment disposed of during or prior to such Fiscal Year relates or (B) all capital contributions made to any Blackstone Entity (other than the
Partnership) in respect of interests therein relating to BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal Year (including all principal paid on the related Investor Notes), to the extent not
repaid from amounts of Other Sources (other than amounts of Capital Commitment Partner Carried Interest);
(v) Fifth, to
the payment of principal (including any previously deferred amounts) then owing under all other Investor Notes of such Partner (including those unrelated to the Partnership), the selection of those of such Partner’s Investor Notes to be repaid
and the division of payments among such Investor Notes to be determined by the Lender or Guarantor;
(vi) Sixth, up to 50%
of any Capital Commitment Net Income remaining after application pursuant to clauses (i) through (v) above shall be applied pro rata to prepayment of principal of all remaining Investor Notes of such Partner (including those unrelated to
the Partnership), the selection of those of such Partner’s Investor Notes to be repaid, the division of payments among such Investor Notes and the percentage of remaining Capital Commitment Net Income to be applied thereto to be determined by
the Lender or Guarantor; and
(vii) Seventh, to such Partner to the extent of any amount of Capital Commitment Net Income
remaining after making the distributions in clauses (i) through (vi) above, and such amount is not otherwise required to be applied to Investor Notes pursuant to the terms thereof.
To the extent there is a partial disposition of a Capital Commitment Investment or any other BE Investment, as applicable, the payments in
clauses (iii) and (iv) above shall be based on that portion of the Capital Commitment Investment or other BE Investment, as applicable, disposed of, and the principal amount and related interest payments of such Investor Note shall be adjusted
to reflect such partial payment so that there are equal payments over the remaining term of the related Investor Note. For a Partner who is no longer an employee or officer of
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Holdings or an Affiliate thereof, distributions shall be made pursuant to clauses (i) through (iii) above, and then, unless the Partnership or its Affiliate has exercised its rights pursuant
to Section 8.1 hereof, any remaining income or other distribution in respect of such Partner’s Capital Commitment Partner Interest shall be applied to the prepayment of the outstanding Investor Notes of such Partner, until all such
Partner’s Investor Notes have been repaid in full, with any such income or other distribution remaining thereafter distributed to such Partner.
Distributions of Capital Commitment Net Income may be made at any other time at the discretion of the General Partner. At the General
Partner’s discretion, any amounts distributed to a Partner in respect of such Partner’s Capital Commitment Partner Interest will be net of any interest and principal payable on his or her Investor Notes for the full period in respect of
which the distribution is made.
(b) [Intentionally omitted.]
(c) To the extent that the foregoing Partnership distributions and distributions and payments from Other Sources are insufficient to satisfy
any principal and/or interest due on Investor Notes, and to the extent that the General Partner in its sole discretion elects to apply this paragraph (c) to any individual payments due, such unpaid interest will be added to the remaining
principal amount of such Investor Notes and shall be payable on the next scheduled principal payment date (along with any deferred principal and any principal and interest due on such date); provided, that such deferral shall not apply to a
Partner that is no longer an employee or officer of Holdings or its Affiliates. All unpaid interest on such Investor Notes shall accrue interest at the interest rate then in effect for such Investor Notes.
(d) [Intentionally omitted.]
(e)
The Capital Commitment Capital Account of each Partner shall be reduced by the amount of any distribution to such Partner pursuant to Section 7.4(a).
(f) At any time that a sale, exchange, transfer or other disposition of a portion of a Capital Commitment Investment is being considered by the
Partnership or BREDS IV (a “Capital Commitment Disposable Investment”), at the election of the General Partner each Partner’s Capital Commitment Interest with respect to such Capital Commitment Investment shall be vertically
divided into two separate Capital Commitment Interests, a Capital Commitment Interest attributable to the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class B Interest”), and a
Capital Commitment Interest attributable to such Capital Commitment Investment excluding the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment Class A Interest”). Distributions
(including those resulting from a direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class B Interests
with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class B Interests, and distributions (including those resulting from the
direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Investment excluding such Capital Commitment Disposable Investment shall be made only to holders of Capital Commitment Class A
Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class A Interests.
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(g) (i) If (x) the Partnership is obligated under the Giveback Provisions to contribute
a Giveback Amount to BREDS IV in respect of any Capital Commitment BREDS IV Interest that may be held by the Partnership or (y) Associates IV is obligated under the Giveback Provisions to contribute to BREDS IV a Giveback Amount with respect to
any Capital Commitment BREDS IV Interest that may be held by Associates IV and the Partnership is obligated to contribute any such amount to Associates IV in respect of the Partnership’s Capital Commitment Associates IV Partner Interest (the
amount of any such obligation of the Partnership with respect to such a Giveback Amount in the case of either (x) or (y) being herein called a “Capital Commitment Giveback Amount”), the General Partner shall call for such
amounts as are necessary to satisfy such obligation of the Partnership as determined by the General Partner, in which case, each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the General Partner,
such an amount of prior distributions by the Partnership with respect to the Capital Commitment BREDS IV Interest (the “Capital Commitment Recontribution Amount”) which equals such Partner’s pro rata share of prior
distributions in connection with (a) the Capital Commitment BREDS IV Investment giving rise to the Capital Commitment Giveback Amount, (b) if the amounts contributed pursuant to clause (a) above are insufficient to satisfy such
Capital Commitment Giveback Amount, Capital Commitment BREDS IV Investments other than the one giving rise to such obligation, and (c) if the Capital Commitment Giveback Amount pursuant to the applicable BREDS IV Agreement is unrelated to a
specific Capital Commitment BREDS IV Investment, all Capital Commitment BREDS IV Investments. Each Partner shall promptly contribute to the Partnership upon notice thereof such Partner’s Capital Commitment Recontribution Amount. Prior to such
time, the General Partner may, at the General Partner’s discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of the Capital Commitment Giveback Amount
will probably materialize (and an estimate of the aggregate amount of such obligations).
(ii) (A) In the event any
Partner (a “Capital Commitment Defaulting Party”) fails to recontribute all or any portion of such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount for any reason, the General Partner shall require
all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Capital Commitment Profit Sharing Percentages), such amounts as are necessary to fulfill the Capital Commitment Defaulting
Party’s obligation to pay such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount (a “Capital Commitment Deficiency Contribution”) if the General Partner determines in its good faith judgment
that the Partnership will be unable to collect such amount in cash from such Capital Commitment Defaulting Party for payment of the Capital Commitment Giveback Amount at least 20 Business Days prior to the latest date that the Partnership is
permitted to pay the Capital Commitment Giveback Amount; provided, that no Partner shall as a result of such Capital Commitment Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Capital
Commitment Recontribution Amount initially requested from such Partner in respect of such default. Thereafter, the General Partner shall determine in its good faith judgment that the Partnership should either (1) not attempt to collect such
amount in light
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of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the General Partner or (2) pursue any and all remedies
(at law or equity) available to the Partnership against the Capital Commitment Defaulting Party, the cost of which shall be a Partnership expense to the extent not ultimately reimbursed by the Capital Commitment Defaulting Party. It is agreed that
the Partnership shall have the right (effective upon such Capital Commitment Defaulting Party becoming a Capital Commitment Defaulting Party) to set-off as appropriate and apply against such Capital Commitment
Defaulting Party’s Capital Commitment Recontribution Amount any amounts otherwise payable to the Capital Commitment Defaulting Party by the Partnership or any Affiliate thereof. Each Partner hereby grants to the General Partner a security
interest, effective upon such Partner becoming a Capital Commitment Defaulting Party, in all accounts receivable and other rights to receive payment from the Partnership or any Affiliate of the Partnership and agrees that, upon the effectiveness of
such security interest, the General Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner hereby appoints the General Partner as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or in the name of the Partnership, to take any actions which may be necessary to accomplish the intent of the
immediately preceding sentence. The General Partner shall be entitled to collect interest on the Capital Commitment Recontribution Amount of a Capital Commitment Defaulting Party from the date such Capital Commitment Recontribution Amount was
required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(B) Any Partner’s failure
to make a Capital Commitment Deficiency Contribution shall cause such Partner to be a Capital Commitment Defaulting Party with respect to such amount.
(iii) A Partner’s obligation to make contributions to the Partnership under this Section 7.4(g) shall survive the
termination of the Partnership.
Section 7.5. Valuations. Capital Commitment Investments shall be valued annually as of
the end of each year (and at such other times as deemed appropriate by the General Partner) in accordance with the principles utilized by Associates IV (or any other Affiliate of the Partnership that is a general partner of BREDS IV) in valuing
investments of BREDS IV or, in the case of investments not held by BREDS IV, in the good faith judgment of the General Partner, subject in each case to the second proviso of the immediately succeeding sentence. The value of any Capital Commitment
Interest as of any date (the “Capital Commitment Value”) shall be based on the value of the underlying Capital Commitment Investment as set forth above; provided, that the Capital Commitment Value may be determined as of an
earlier date if determined appropriate by the General Partner in good faith; provided further, that such value may be adjusted by the General Partner to take into account factors relating solely to the value of a Capital Commitment
Interest (as compared to the value of the underlying Capital Commitment Investment), such as restrictions on transferability, the lack of a market for such Capital Commitment Interest and lack of control of the underlying Capital Commitment
Investment. To the full extent permitted by applicable law such valuations shall be final and binding on all Partners; provided further, that the immediately preceding proviso shall not apply to any Capital Commitment Interests held by
a person who is or was at any time a direct member or partner of a General Partner of the Partnership.
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Section 7.6. Disposition Election
(a) At any time prior to the date of the Partnership’s execution of a definitive agreement to dispose of a Capital Commitment Investment,
the General Partner may in its sole discretion permit a Partner to retain all or any portion of its pro rata share of such Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such
Capital Commitment Investment). If the General Partner so permits, such Partner shall instruct the General Partner in writing prior to such date (i) not to dispose of all or any portion of such Partner’s pro rata share of such
Capital Commitment Investment (the “Retained Portion”) and (ii) either to (A) distribute such Retained Portion to such Partner on the closing date of such disposition or (B) retain such Retained Portion in the
Partnership on behalf of such Partner until such time as such Partner shall instruct the General Partner upon 5 days’ notice to distribute such Retained Portion to such Partner. Such Partner’s Capital Commitment Capital Account shall not
be adjusted in any way to reflect the retention in the Partnership of such Retained Portion or the Partnership’s disposition of other Partners’ pro rata shares of such Capital Commitment Investment; provided, that such
Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Retained Portion to such Partner or upon distribution of proceeds with respect to a subsequent disposition thereof by the Partnership.
(b) No distribution of such Retained Portion shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or
simultaneously with such distribution.
Section 7.7. Capital Commitment Special Distribution Election
(a) From time to time during the term of this Agreement, the General Partner may in its sole discretion, upon receipt of a written request from
a Partner, distribute to such Partner any portion of its pro rata share of a Capital Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such Capital Commitment Investment) (a
“Capital Commitment Special Distribution”). Such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Capital Commitment Special Distribution.
(b) No Capital Commitment Special Distributions shall occur unless any Investor Notes relating thereto shall have been paid in full prior to or
simultaneously with such Capital Commitment Special Distribution.
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ARTICLE VIII
WITHDRAWAL, ADMISSION OF NEW PARTNERS
Section 8.1. Partner Withdrawal; Repurchase of Capital Commitment Interests.
(a) Capital Commitment Interests (or a portion thereof) that were financed by Investor Notes will be treated as
Non-Contingent for purposes hereof based upon the proportion of (a) the sum of Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to each Capital Commitment
Interest and principal payments on the related Investor Note to (b) the sum of the Capital Commitment-Related Capital Contributions not financed by an Investor Note with respect to such Capital Commitment Interest, the original principal amount
of such Investor Note and all deferred amounts of interest which from time to time comprise part of the principal amount of the Investor Note. A Partner may prepay a portion of any outstanding principal on the Investor Notes; provided, that
in the event that a Partner prepays all or any portion of the principal amount of the Investor Notes within nine months prior to the date on which such Partner is no longer an employee or officer of Holdings or its Affiliates, the Partnership (or
its designee) shall have the right, in its sole discretion, to purchase the Capital Commitment Interest that became Non-Contingent as a result of such prepayment; provided further, that the
purchase price for such Capital Commitment Interest shall be determined in accordance with the determination of the purchase price of a Partner’s Contingent Capital Commitment Interests as set forth in paragraph (b) below. Prepayments made
by a Partner shall apply pro rata against all of such Partner’s Investor Notes; provided, that such Partner may request that such prepayments be applied only to Investor Notes related to BE Investments that are related to one or
more Blackstone Entities specified by such Partner. Except as expressly provided herein, Capital Commitment Interests that were not financed in any respect with Investor Notes shall be treated as
Non-Contingent Capital Commitment Interests.
(b) (i) Upon a Partner ceasing to be an officer
or employee of the Partnership or any of its Affiliates, other than as a result of such Partner dying or suffering a Total Disability, such Partner and the Partnership or any other person designated by the General Partner shall each have the right
(exercisable by the Withdrawn Partner within 30 days and by the Partnership or its designee(s) within 45 days after such Partner’s ceasing to be such an officer or employee) or any time thereafter, upon 30 days’ notice, but not the
obligation, to require the Partnership (subject to the prior consent of the General Partner, such consent not to be unreasonably withheld or delayed), subject to the Partnership Act, to buy (in the case of exercise of such right by such Withdrawn
Partner) or the Withdrawn Partner to sell (in the case of exercise of such right by the Partnership or its designee(s)) all (but not less than all) such Withdrawn Partner’s Contingent Capital Commitment Interests.
(ii) The purchase price for each such Contingent Capital Commitment Interest shall be an amount equal to (A) the outstanding principal
amount of the related Investor Note plus accrued interest thereon to the date of purchase (such portion of the purchase price to be paid in cash) and (B) an additional amount (the “Adjustment Amount”) equal to (x) all
interest paid by the Partner on the portion of the principal amount of such Investor Note(s) relating to the portion of the related Capital Commitment Interest remaining Contingent and to be repurchased, plus (y) all Capital Commitment Net
Losses allocated to the Withdrawn Partner on such Contingent portion of such Capital Commitment Interest, minus (z) all Capital Commitment Net Income allocated to the Withdrawn Partner on the Contingent portion of such Capital Commitment
Interest; provided, that, if the Withdrawn Partner was terminated from employment or his or her position as an officer for Cause, all amounts referred to in clause (x) or (y) of the Adjustment Amount, in the General Partner’s sole
discretion, may be deemed to equal zero. The Adjustment Amount shall, if positive, be payable by the holders of the purchased Capital
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Commitment Interests to the Withdrawn Partner from the next Capital Commitment Net Income received by such holders on the Contingent portion of such Withdrawn Partner’s Capital Commitment
Interests at the time such Capital Commitment Net Income is received. If the Adjustment Amount is negative, it shall be payable to the holders of the purchased Capital Commitment Interest by the Withdrawn Partner (A) from the next Capital
Commitment Net Income on the Non-Contingent portion of the Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received by the Withdrawn Partner, or
(B) if the Partnership or its designee(s) elect to purchase such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, in cash by the Withdrawn Partner at the time of such purchase;
provided, that the Partnership and its Affiliates may offset any amounts otherwise owing to a Withdrawn Partner against any Adjustment Amount owed by such Withdrawn Partner. Until so paid, such remaining Adjustment Amount will not itself bear
interest. At the time of such purchase of the Withdrawn Partner’s Contingent Capital Commitment Interests, his or her related Investor Note shall be payable in full.
(iii) Upon such Partner ceasing to be such an officer or employee, all Investor Notes shall become fully recourse to the Withdrawn Partner in
his or her individual capacity (whether or not the Withdrawn Partner or the Partnership or its designee(s) exercises the right to require repurchase of the Withdrawn Partner’s Contingent Capital Commitment Interests).
(iv) If neither the Withdrawn Partner nor the Partnership nor its designee(s) exercises the right to require repurchase of such Contingent
Capital Commitment Interests, then the Withdrawn Partner shall retain the Contingent portion of his or her Capital Commitment Interests and the Investor Notes shall remain outstanding, shall become fully recourse to the Withdrawn Partner in his or
her individual capacity, shall be payable in accordance with their remaining original maturity schedules and shall be prepayable at any time by the Withdrawn Partner at his or her option, and the Partnership shall apply such prepayments against
outstanding Investor Notes on a pro rata basis.
(v) To the extent that another Partner purchases a portion of a Capital Commitment
Interest of a Withdrawn Partner, the purchasing Partner’s Capital Commitment Capital Account and Capital Commitment Profit Sharing Percentage for such Capital Commitment Investment shall be correspondingly increased.
(c) Upon the occurrence of a Final Event with respect to any Partner, such Partner shall thereupon cease to be a Partner with respect to such
Partner’s Capital Commitment Partner Interest. If such a Final Event shall occur, no Successor in Interest to any such Partner shall for any purpose hereof become or be deemed to become a Partner. The sole right, as against the Partnership and
the remaining Partners, acquired hereunder by, or resulting hereunder to, a Successor in Interest to any Partner shall be to receive any distributions and allocations with respect to such Partner’s Capital Commitment Partner Interest pursuant
to Article VII and this Article VIII (subject to the right of the Partnership to purchase the Capital Commitment Interests of such former Partner pursuant to Section 8.1(b) or Section 8.1(d)), to the extent, at the time, in the manner and
in the amount otherwise payable to such Partner had such a Final Event not occurred, and no other right shall be acquired hereunder by, or shall result hereunder to, a Successor in Interest to such Partner, whether by operation of law or otherwise
and the
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Partnership shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations hereunder. Until distribution of any such
Partner’s interest in the Partnership upon the dissolution of the Partnership as provided in Section 9.2, neither his or her Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption without the
consent of the General Partner. The General Partner shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations hereunder with respect to such Partner’s Capital
Commitment Partner Interest.
(d) If a Partner dies or suffers a Total Disability, all Contingent Capital Commitment Interests of such
Partner shall be purchased by the Partnership or its designee (within 30 days of the first date on which the Partnership knows or has reason to know of such Partner’s death or Total Disability) (and the purchase price for such Contingent
Capital Commitment Interests shall be determined in accordance with Section 8.1(b) (except that any Adjustment Amount shall be payable by or to such Partner’s estate, personal representative or other Successor in Interest, in cash)), and
any Investor Notes financing such Contingent Capital Commitment Interests shall thereupon be prepaid as provided in Section 8.1(b). Upon such Partner’s death or Total Disability, any Investor Note(s) financing such Contingent Capital
Commitment Interests shall become fully recourse. In addition, in the case of the death or Total Disability of a Partner, if the estate, personal representative or other Successor in Interest of such Partner, so requests in writing within 180 days
after the Partner’s death or ceasing to be an employee or member (directly or indirectly) of the Partnership or any of its Affiliates by reason of Total Disability (such requests shall not exceed one per calendar year), the Partnership or its
designee may but is not obligated to purchase for cash all (but not less than all) Non-Contingent Capital Commitment Interests of such Partner as of the last day of the Partnership’s then current Fiscal
Year at a price equal to the Capital Commitment Value thereof as of the most recent valuation prior to the date of purchase. Each Partner shall be required to include appropriate provisions in his or her will to reflect such provisions of this
Agreement. In addition, the Partnership may, in the sole discretion of the General Partner, upon notice to the estate, personal representative or other Successor in Interest of such Partner, within 30 days of the first date on which the General
Partner knows or has reason to know of such Partner’s death or Total Disability, determine either (i) to distribute Securities or other property to the estate, personal representative or other Successor in Interest, in exchange for such Non-Contingent Capital Commitment Interests as provided in Section 8.1(e) or (ii) to require sale of such Non-Contingent Capital Commitment Interests to the
Partnership or its designee as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by the General Partner in its sole discretion) for an amount in cash equal to the Capital Commitment Value thereof.
(e) In lieu of retaining a Withdrawn Partner as a Partner with respect to any Non-Contingent Capital
Commitment Interests, the General Partner may, in its sole discretion, by notice to such Withdrawn Partner within 45 days of his or her ceasing to be an employee or officer of the Partnership or any of its Affiliates, or at any time thereafter, upon
30 days written notice, determine (1) to distribute to such Withdrawn Partner the pro rata portion of the Securities or other property underlying such Withdrawn Partner’s Non-Contingent Capital
Commitment Interests, subject to any restrictions on distributions associated with the Securities or other property, in satisfaction of his or her Non-Contingent Capital Commitment Interests in the Partnership
or (2) to cause, as of the last day of any Fiscal Year of the Partnership (or earlier
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period, as determined by the General Partner in its sole discretion), the Partnership or another person designated by the General Partner (who may be itself another Partner or another Affiliate
of the Partnership) to purchase all (but not less than all) of such Withdrawn Partner’s Non-Contingent Capital Commitment Interests for a price equal to the Capital Commitment Value thereof (determined in
good faith by the General Partner as of the most recent valuation prior to the date of purchase). The General Partner shall condition any distribution or purchase of voting Securities pursuant to paragraph (d) above or this paragraph
(e) upon the Withdrawn Partner’s execution and delivery to the Partnership of an appropriate irrevocable proxy, in favor of the General Partner or its nominee, relating to such Securities.
(f) The Partnership may subsequently transfer any Unallocated Capital Commitment Interest or portion thereof which is purchased by it as
described above to any other person approved by the General Partner. In connection with such purchase or transfer or the purchase of a Capital Commitment Interest or portion thereof by the General Partner’s designee(s), Holdings may loan all or
a portion of the purchase price of the transferred or purchased Capital Commitment Interest to the Partnership, the transferee or the designee-purchaser(s), as applicable (excluding any of the foregoing who is
an executive officer of The Blackstone Group Inc. or any Affiliate thereof). To the extent that a Withdrawn Partner’s Capital Commitment Interests (or portions thereof) are repurchased by the Partnership and not transferred to or purchased by
another person, all or any portion of such repurchased Capital Commitment Interests may, in the sole discretion of the General Partner, (i) be allocated to each Partner already participating in the Capital Commitment Investment to which the
repurchased Capital Commitment Interest relates, (ii) be allocated to each Partner in the Partnership, whether or not already participating in such Capital Commitment Investment, and/or (iii) continue to be held by the Partnership itself
as an unallocated Capital Commitment Investment (such Capital Commitment Interests being herein called “Unallocated Capital Commitment Interests”). To the extent that a Capital Commitment Interest is allocated to Partners as
provided in clause (i) and/or (ii) above, any indebtedness incurred by the Partnership to finance such repurchase shall also be allocated to such Partners. All such Capital Commitment Interests allocated to Partners shall be deemed to be
Contingent and shall become Non-Contingent as and to the extent that the principal amount of such related indebtedness is repaid. The Partners receiving such allocations shall be responsible for such related
indebtedness only on a nonrecourse basis to the extent appropriate as provided in this Agreement, except as otherwise provided in this Section 8.1 and except as such Partners and the General Partner shall otherwise agree; provided, that such
indebtedness shall become fully recourse to the extent and at the time provided in this Section 8.1. If the indebtedness financing such repurchased interests is not to be non-recourse or so limited, the
Partnership may require an assumption by the Partners of such indebtedness on the terms thereof as a precondition to allocation of the related Capital Commitment Interests to such Partners; provided, that a Partner shall not, except as set forth in
his or her Investor Note(s), be obligated to accept any obligation that is personally recourse (except as provided in this Section 8.1), unless his or her prior consent is obtained. So long as the Partnership itself retains the Unallocated
Capital Commitment Interests pursuant to clause (iii) above, such Unallocated Capital Commitment Interests shall belong to the Partnership and any indebtedness financing the Unallocated Capital Commitment Interests shall be an obligation of the
Partnership to which all income of the Partnership is subject except as otherwise agreed by the lender of such indebtedness. Any Capital Commitment Net Income (Loss) on an Unallocated Capital Commitment Interest shall be allocated to each Partner in
the proportion his or her aggregate Capital Commitment Capital Accounts bear to the aggregate Capital Commitment Capital Accounts of all Partners; debt service on such related financing will be an expense of the Partnership allocable to all Partners
in such proportions.
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(g) If a Partner is required to Withdraw from the Partnership with respect to such
Partner’s Capital Commitment Partner Interest for Cause, then his or her Capital Commitment Interest shall be settled in accordance with paragraphs (a)-(f) and (j) of this Section 8.1;
provided, that if such Partner was not at any time a direct partner of a General Partner of the Partnership, the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) purchase for cash all of such Withdrawn Partner’s Non-Contingent Capital
Commitment Interests. The purchase price for each such Non-Contingent Capital Commitment Interest shall be the lower of (A) the original cost of such Non-Contingent
Capital Commitment Interest or (B) an amount equal to the Capital Commitment Value thereof (determined as of the most recent valuation prior to the date of the purchase of such Non-Contingent Capital
Commitment Interest);
(ii) allow the Withdrawn Partner to retain such
Non-Contingent Capital Commitment Interests; provided, that the maximum amount of Capital Commitment Net Income allocable to such Withdrawn Partner with respect to any Capital Commitment Investment
shall equal the amount of Capital Commitment Net Income that would have been allocated to such Withdrawn Partner if such Capital Commitment Investment had been sold as of the Settlement Date at the then prevailing Capital Commitment Value thereof;
or
(iii) in lieu of cash, purchase such Non-Contingent Capital Commitment
Interests by providing the Withdrawn Partner with a promissory note in the amount determined in (i) above. Such promissory note shall have a maximum term of ten (10) years with interest at the Federal Funds Rate.
(h) The Partnership will assist a Withdrawn Partner or his or her estate or guardian, as the case may be, in the settlement of the Withdrawn
Partner’s Capital Commitment Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his or her estate.
(i) The General Partner may reasonably determine in good faith to retain outside professionals to provide the assistance to Withdrawn Partners
or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the case may be, prior to engaging such professionals. If the
Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
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(j) Each Partner hereby irrevocably appoints the General Partner as such Partner’s true
and lawful agent, representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on behalf of
such Partner, any and all agreements, instruments, consents, ratifications, documents and certificates which such General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this
Section 8.1, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is coupled with an interest and shall
survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 8.2. Transfer of Partner’s Capital Commitment Interest. Except as otherwise agreed by the General Partner, no
Partner or former Partner shall have the right to sell, assign, mortgage, pledge, grant a security interest over, or otherwise dispose of or transfer (“Transfer”) all or part of any such Partner’s Capital Commitment Partner
Interest in the Partnership; provided, that this Section 8.2 shall in no way impair (i) Transfers as permitted in Section 8.1 above, in the case of the purchase of a Withdrawn Partner’s or Deceased or Totally Disabled Partner’s
Capital Commitment Interests, (ii) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers by a Partner to another Partner of Non-Contingent Capital Commitment Interests, (iii) Transfers with the
prior written consent of the General Partner (which consent may be granted or withheld in its sole discretion without giving any reason therefor) and (iv) with the prior written consent of the General Partner, which shall not be unreasonably
withheld, Transfers of up to 25% of a Limited Partner’s Capital Commitment Partner Interest to an Estate Planning Vehicle (it being understood that it shall not be unreasonable for the General Partner to condition any Transfer of an Interest
pursuant to this clause (iv) on the satisfaction of certain conditions and/or requirements imposed by the General Partner in connection with any such Transfer, including, for example, a requirement that any transferee of an Interest hold such
Interest as a passive, non-voting interest in the Partnership). Each Estate Planning Vehicle shall not have voting rights (any such Partner being called a “Nonvoting Partner”). Such Partner shall be jointly and severally liable for
all obligations of both such Partner and such Nonvoting Partner with respect to the interest transferred (including the obligation to make additional Capital Commitment-Related Capital Contributions). The General Partner may at its sole option
exercisable at any time require such Estate Planning Vehicle to Withdraw from the Partnership on the terms of Section 8.1 and Article VI. No person acquiring an interest in the Partnership pursuant to this Section 8.2 shall become a Partner of the
Partnership, or acquire such Partner’s right to participate in the affairs of the Partnership, unless such person shall be admitted as a Partner pursuant to Section 6.1. A Partner shall not cease to be a Partner of the Partnership upon the
collateral assignment of, or the pledging or granting of a security interest in, its entire Interest in the Partnership in accordance with the provisions of this Agreement.
Section 8.3. Compliance with Law. Notwithstanding any provision hereof to the contrary, no sale or Transfer of a Capital
Commitment Interest in the Partnership may be made except in compliance with all U.S. federal, state and other applicable laws, including U.S. federal and state securities laws.
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ARTICLE IX
DISSOLUTION
Section 9.1. Dissolution. The Partnership shall be dissolved and subsequently terminated:
(a) pursuant to Section 6.6; or
(b) upon the expiration of the term of the Partnership.
Section 9.2. Final Distribution. Upon the dissolution of the Partnership, and following the payment of creditors of the
Partnership and the making of provisions for the payment of any contingent, conditional or unmatured claims known to the Partnership as required under the Partnership Act:
(a) The Partners’ respective interests in the Partnership shall be valued and settled in accordance with the procedures set forth in
Section 6.5 which provide for allocations to the GP-Related Capital Accounts of the Partners and distributions in accordance with the GP-Related Capital Account
balances of the Partners; and
(b) With respect to each Partner’s Capital Commitment Partner Interest, an amount shall be paid to such
Partner in cash or Securities in an amount equal to such Partner’s respective Capital Commitment Liquidating Share for each Capital Commitment Investment; provided, that if the remaining assets relating to any Capital Commitment
Investment shall not be equal to or exceed the aggregate Capital Commitment Liquidating Shares for such Capital Commitment Investment, to each Partner in proportion to its Capital Commitment Liquidating Share for such Capital Commitment Investment;
and the remaining assets of the Partnership related to the Partners’ Capital Commitment Partner Interests shall be paid to the Partners in cash or Securities in proportion to their respective Capital Commitment Profit Sharing Percentages for
each Capital Commitment Investment from which such cash or Securities are derived.
(c) The General Partner shall be the liquidator. In the
event that the General Partner is unable to serve as liquidator, a liquidating trustee shall be chosen by the affirmative vote of a Majority in Interest of the Partners voting at a meeting of Partners (excluding Nonvoting Special Partners).
Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests. (a) If there are any Securities or other
property or other investments or securities related to the Partners’ Capital Commitment Partner Interests which, in the judgment of the liquidator, cannot be sold, or properly distributed in kind in the case of dissolution, without sacrificing
a significant portion of the value thereof, the value of a Partner’s interest in each such Security or other investment or security may be excluded from the amount distributed to the Partners participating in the related Capital Commitment
Investment pursuant to Section 9.2(b). Any interest of a Partner, including his or her pro rata interest in any gains, losses or distributions, in Securities or other property or other investments or securities so excluded shall not be
paid or distributed until such time as the liquidator shall determine.
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(b) If there is any pending transaction, contingent liability or claim by or against the
Partnership related to the Partners’ Capital Commitment Partner Interests as to which the interest or obligation of any Partner therein cannot, in the judgment of the liquidator, be then ascertained, the value thereof or probable loss therefrom
may be deducted from the amount distributable to such Partner pursuant to Section 9.2(b). No amount shall be paid or charged to any such Partner on account of any such transaction or claim until its final settlement or such earlier time as the
liquidator shall determine. The Partnership may meanwhile retain from other sums due such Partner in respect of such Partner’s Capital Commitment Partner Interest an amount which the liquidator estimates to be sufficient to cover the share of
such Partner in any probable loss or liability on account of such transaction or claim.
(c) Upon determination by the liquidator that
circumstances no longer require the exclusion of any Securities or other property or retention of sums as provided in paragraphs (a) and (b) of this Section 9.3, the liquidator shall, at the earliest practicable time, distribute as
provided in Section 9.2(b) such sums or such Securities or other property or the proceeds realized from the sale of such Securities or other property to each Partner from whom such sums or Securities or other property were withheld.
ARTICLE X
MISCELLANEOUS
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be settled amicably,
including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including
the validity, scope and enforceability of this arbitration provision as well as any and all disputes arising out of, relating to or in connection with the termination, liquidation or winding up of the Partnership), whether arising during the
existence of the Partnership or at or after its termination or during or after the liquidation or winding up of the Partnership, shall be finally settled by arbitration conducted by a single arbitrator in New York, New York U.S.A., in accordance
with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within 30 days of the receipt of the request for arbitration, the International
Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
(b) Notwithstanding the provisions of paragraph (a), the General Partner may bring, or may cause the Partnership to bring, on behalf of the General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in
any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b),
each Partner (i) expressly consents to the application of paragraph (c) of this Section 10.1 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of
this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the General Partner as such Partner’s agent for service of process in connection with any such action or proceeding
and agrees that service of process upon any such agent, who shall promptly advise such Partner of any such service of process, shall be deemed in every respect effective service of process upon the Partner in any such action or proceeding.
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(c) (i) EACH PARTNER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED
IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 10.1, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF
OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration
award. The parties acknowledge that the forum(s) designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may
have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 10.1 and such parties agree not to plead or claim the same.
(d) Notwithstanding any provision of this Agreement to the contrary, this Section 10.1 shall be construed to the maximum extent possible
to comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be determined by a court of
competent jurisdiction that any provision or wording of this Section 10.1, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or other applicable law, such
invalidity shall not invalidate all of this Section 10.1. In that case, this Section 10.1 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act
or other applicable law, and, in the event such term or provision cannot be so limited, this Section 10.1 shall be construed to omit such invalid or unenforceable provision.
Section 10.2. Ownership and Use of the Blackstone Name. The Partnership acknowledges that Blackstone TM L.L.C.
(“TM”), a Delaware limited liability company with a principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., (or its successors or assigns) is the sole and exclusive owner of the mark and name BLACKSTONE and
that the ownership of, and the right to use, sell or otherwise dispose of, the firm name or any abbreviation or modification thereof which consists of or includes BLACKSTONE, shall belong exclusively to TM, which company (or its predecessors,
successors or assigns) has licensed the Partnership to use BLACKSTONE in its name. The Partnership acknowledges that TM owns the service mark BLACKSTONE for various services and that the Partnership is using the BLACKSTONE mark and name on a non-exclusive, non-sublicensable and non-assignable basis in connection with its business and authorized activities with the permission
of TM. All services rendered by the Partnership under the BLACKSTONE mark and name will be rendered in a manner and with quality levels that are consistent with the high reputation heretofore developed
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for the BLACKSTONE mark by TM and its Affiliates and licensees. The Partnership understands that TM may terminate its right to use BLACKSTONE at any time in TM’s sole discretion by giving
the Partnership written notice of termination. Promptly following any such termination, the Partnership will take all steps necessary to change its partnership name to one which does not include BLACKSTONE or any confusingly similar term and cease
all use of BLACKSTONE or any term confusingly similar thereto as a service mark or otherwise.
Section 10.3. Written
Consent. Any action required or permitted to be taken by a vote of Partners at a meeting may be taken without a meeting if a Majority in Interest of the Partners consent thereto in writing.
Section 10.4. Letter Agreements; Schedules. The General Partner may, or may cause the Partnership to, enter or has previously
entered, into separate letter agreements with individual Partners, officers or employees with respect to GP-Related Profit Sharing Percentages, Capital Commitment Profit Sharing Percentages, benefits or any
other matter, which letter agreements have the effect of establishing rights under, or altering or supplementing, the terms of this Agreement with respect to any such Partner and such matters. The parties hereto agree that any rights established, or
any terms of this Agreement altered or supplemented, in any such separate letter agreement, including any Commitment Agreement or SMD Agreement, shall govern solely with respect to such Partner notwithstanding any other provision of this Agreement.
The General Partner may from time to time execute and deliver to the Partners schedules which set forth the then current capital balances, GP-Related Profit Sharing Percentages and Capital Commitment Profit
Sharing Percentages of the Partners and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever;
provided, that this in no way limits the effectiveness of any Commitment Agreement or SMD Agreement.
Section 10.5. Governing Law; Separability of Provisions. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to principles of conflicts of law. In particular, the Partnership has been formed pursuant to the Partnership Act, and the rights and liabilities of the Partners shall be as
provided therein, except as herein otherwise expressly provided. If any provision of this Agreement shall be held to be invalid, such provision shall be given its meaning to the maximum extent permitted by law and the remainder of this Agreement
shall not be affected thereby.
Section 10.6. Successors and Assigns; Third Party Beneficiaries. This Agreement shall be
binding upon and shall, subject to the penultimate sentence of Section 6.3(a), inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any successor to a trustee of a trust which is or becomes
a party hereto; provided, that no person claiming by, through or under a Partner (whether such Partner’s heir, personal representative or otherwise), as distinct from such Partner itself, shall have any rights as, or in respect to, a
Partner (including the right to approve or vote on any matter or to notice thereof) except the right to receive only those distributions expressly payable to such person pursuant to Article VI and Article VIII. Any Partner or Withdrawn Partner shall
remain liable for the obligations under this Agreement (including any Net GP-Related Recontribution Amounts and any Capital Commitment Recontribution Amounts) of any transferee of all or any portion of such Partner’s
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or Withdrawn Partner’s interest in the Partnership, unless waived by the General Partner. The Partnership shall, if the General Partner determines in its good faith judgment, based on the
standards set forth in Section 5.8(d)(ii)(A) and Section 7.4(g)(ii)(A), to pursue such transferee, pursue payment (including any Net GP-Related Recontribution Amounts and/or Capital Commitment
Recontribution Amounts) from the transferee with respect to any such obligations. Nothing in this Agreement is intended, nor shall anything herein be construed, to confer any rights, legal or equitable, on any person other than the Partners and
their respective legal representatives, heirs, successors and permitted assigns. Notwithstanding the foregoing, solely to the extent required by the BREDS IV Agreements, (x) the limited partners in BREDS IV shall be third-party beneficiaries of
the provisions of Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount or Interim Clawback Amount (for purpose of this sentence, as defined in paragraphs
4.2.9(b) or 9.2.8(b), as applicable, of the BREDS IV Partnership Agreement), and (y) the amendment of the provisions of Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to
any Clawback Amount or Interim Clawback Amount (for purpose of this sentence, as defined in paragraphs 4.2.9(b) or 9.2.8(b), as applicable, of the BREDS IV Partnership Agreement), shall be effective against such limited partners only with a Combined
Limited Partner Consent (as such term is defined in the BREDS IV Partnership Agreement) unless such amendment does not adversely affect such limited partners’ rights under paragraph 9.2.8 of the BREDS IV Partnership Agreement.
Section 10.7. Confidentiality. (a) By executing this Agreement, each Partner expressly agrees, at all times during the
term of the Partnership and thereafter and whether or not at the time a Partner of the Partnership, to maintain the confidentiality of, and not to disclose to any person other than the Partnership, another Partner or a person designated by the
Partnership, any information relating to the business, financial structure, financial position or financial results, clients or affairs of the Partnership that shall not be generally known to the public or the securities industry, except as
otherwise required by law or by any regulatory or self-regulatory organization having jurisdiction; provided, that any corporate Partner may disclose any such information it is required by law, rule,
regulation or custom to disclose. Notwithstanding anything in this Agreement to the contrary, to comply with Treasury Regulations Section 1.6011-4(b)(3)(i), each Partner (and any employee, representative
or other agent of such Partner) may disclose to any and all persons, without limitation of any kind, the U.S. federal income tax treatment and tax structure of the Partnership, it being understood and agreed, for this purpose, (1) the name of,
or any other identifying information regarding (a) the Partners or any existing or future investor (or any Affiliate thereof) in any of the Partners, or (b) any investment or transaction entered into by the Partners; (2) any
performance information relating to any of the Partners or their investments; and (3) any performance or other information relating to previous funds or investments sponsored by any of the Partners, does not constitute such tax treatment or tax
structure information.
(b) Nothing in this Agreement shall prohibit or impede any Partner from communicating, cooperating or filing a
complaint on possible violations of U.S. federal, state or local law or regulation to or with any governmental agency or regulatory authority (collectively, a “Governmental Entity”), including, but not limited to, the SEC, FINRA, EEOC or
NLRB, or from making other disclosures to any Governmental Entity that are protected under the whistleblower provisions of U.S. federal, state or local law or regulation; provided, that in each
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case such communications and disclosures are consistent with applicable law. Each Partner understands and acknowledges that (a) an individual shall not be held criminally or civilly liable
under any U.S. federal or state trade secret law for the disclosure of a trade secret that is made (i) in confidence to a U.S. federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a
suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal, and (b) an individual who files a lawsuit for retaliation by an employer for reporting a
suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal; and does not
disclose the trade secret, except pursuant to court order. Moreover, a Partner shall not be required to give prior notice to (or get prior authorization from) Blackstone regarding any such communication or disclosure. Except as otherwise provided in
this paragraph or under applicable law, under no circumstance is any Partner authorized to disclose any information covered by Blackstone or its affiliates’ attorney-client privilege or attorney work product or Blackstone’s trade secrets
without the prior written consent of Blackstone.
Section 10.8. Notices. Whenever notice is required or permitted by this
Agreement to be given, such notice shall be in writing (including telecopy or similar writing) and shall be given by hand delivery (including any courier service) or telecopy to any Partner at its address or telecopy number shown in the
Partnership’s books and records or, if given to the General Partner, at the address or telecopy number of the Partnership in New York City. Each such notice shall be effective (i) if given by telecopy, upon dispatch and (ii) if given
by hand delivery, when delivered to the address of such Partner, the General Partner or the Partnership specified as aforesaid.
Section 10.9. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original
and all of which together shall constitute a single instrument.
Section 10.10. Power of Attorney. Each Partner hereby
irrevocably appoints the General Partner as such Partner’s true and lawful representative and attorney-in-fact, each acting alone, in such Partner’s name,
place and stead, to make, execute, sign and file all instruments, documents and certificates which, from time to time, may be required to set forth any amendment to this Agreement or may be required by this Agreement or by the laws of the United
States of America, the State of Delaware or any other state in which the Partnership shall determine to do business, or any political subdivision or agency thereof, to execute, implement and continue the valid and subsisting existence of the
Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force and effect notwithstanding the subsequent Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the
subsequent disability or incapacity of such Partner.
Section 10.11. Partner’s Will. Each Partner and
Withdrawn Partner shall include in his or her will a provision that addresses certain matters in respect of his or her obligations relating to the Partnership that is satisfactory to the General Partner and each such Partner and Withdrawn Partner
shall confirm annually to the Partnership, in writing, that such provision remains in his or her current will. Where applicable, any estate planning trust of such Partner or
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Withdrawn Partner to which a portion of such Partner’s or Withdrawn Partner’s Interest is transferred shall include a provision substantially similar to such provision and the trustee
of such trust shall confirm annually to the Partnership, in writing, that such provision or its substantial equivalent remains in such trust. In the event any Partner or Withdrawn Partner fails to comply with the provisions of this
Section 10.11 after the Partnership has notified such Partner or Withdrawn Partner of his or her failure to so comply and such failure to so comply is not cured within 30 days of such notice, the Partnership may withhold any and all
distributions to such Partner until the time at which such party complies with the requirements of this Section 10.11.
Section 10.12. Cumulative Remedies. Rights and remedies under this Agreement are cumulative and do not preclude use of other
rights and remedies available under applicable law.
Section 10.13. Legal Fees. Except as more specifically provided
herein, in the event of a legal dispute (including litigation, arbitration or mediation) between any Partner or Withdrawn Partner and the Partnership, arising in connection with any party seeking to enforce Section 4.1(d) or any other provision
of this Agreement relating to the Holdback, the Clawback Amount, the GP-Related Giveback Amount, the Capital Commitment Giveback Amount, the Net GP-Related
Recontribution Amount or the Capital Commitment Recontribution Amount, the “losing” party to such dispute shall promptly reimburse the “victorious party” for all reasonable legal fees and expenses incurred in connection with such
dispute (such determination to be made by the relevant adjudicator). Any amounts due under this Section 10.13 shall be paid within 30 days of the date upon which such amounts are due to be paid and such amounts remaining unpaid after such date
shall accrue interest at the Default Interest Rate.
Section 10.14. Entire Agreement; Modifications. This
Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. Subject to Section 10.4, this Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. Except as provided herein, this Agreement may be
amended or modified at any time by the General Partner in its sole discretion, upon notification thereof to the Limited Partners.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the day and
year first above written. In the event that it is impracticable to obtain the signature of any one or more of the Partners to this Agreement, this Agreement shall be binding among the other Partners executing the same.
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GENERAL PARTNER:
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BREDS IV GP L.L.C.
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By: Blackstone Holdings IV L.P., as Member
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By: Blackstone Holdings IV GP L.P., its general partner
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By: Blackstone Holdings IV GP Management (Delaware) L.P., its general partner
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By: Blackstone Holdings IV GP Management L.L.C., its general partner
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By:
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/s/ John G. Finley
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Name:
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John G. Finley
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Title:
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Chief Legal Officer and Secretary
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[BREDS IV L.P. –
A&R LPA – Signature Page]
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LIMITED PARTNERS AND SPECIAL PARTNERS:
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Limited Partners and Special Partners now admitted pursuant to powers of attorney now and hereafter granted to BREDS IV GP L.L.C.
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BREDS IV GP L.L.C.
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By: Blackstone Holdings IV L.P., as Member
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By: Blackstone Holdings IV GP L.P., its general partner
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By: Blackstone Holdings IV GP Management (Delaware) L.P., its general partner
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By: Blackstone Holdings IV GP Management L.L.C., its general partner
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By:
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/s/ John G. Finley
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Name:
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John G. Finley
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Title:
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Chief Legal Officer and Secretary
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[BREDS IV L.P. –
A&R LPA – Signature Page]
2
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INITIAL LIMITED PARTNER:
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/s/ Leon Volchyok
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Leon Volchyok, as Initial Limited Partner, to reflect his withdrawal from the Partnership
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[BREDS IV L.P. –
A&R LPA – Signature Page]
Exhibit 10.17
Execution Version
HIGHLY CONFIDENTIAL & TRADE SECRET
BXLS V GP L.P.
AMENDED AND
RESTATED LIMITED PARTNERSHIP AGREEMENT
DATED AS OF NOVEMBER 4, 2020
EFFECTIVE AS OF DECEMBER 31, 2019
THE
LIMITED PARTNERSHIP INTERESTS (THE “INTERESTS”) OF BXLS V GP L.P. (THE “PARTNERSHIP”) HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), THE
SECURITIES LAWS OF ANY STATE IN THE UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY
NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS, AND ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS
AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE INTERESTS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS OF SUCH
INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS
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1
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Section 1.1.
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Definitions
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1
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Section 1.2.
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Terms Generally
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16
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ARTICLE II GENERAL PROVISIONS
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16
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Section 2.1.
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General Partner, Limited Partner, Special Partner
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16
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Section 2.2.
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Formation; Name; Foreign Jurisdictions
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17
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Section 2.3.
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Term
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17
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Section 2.4.
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Purposes; Powers
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17
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Section 2.5.
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Place of Business
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20
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Section 2.6.
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Withdrawal of Initial Limited Partner
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20
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ARTICLE III MANAGEMENT
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20
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Section 3.1.
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General Partner
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20
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Section 3.2.
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Partner Voting, etc.
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21
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Section 3.3.
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Management
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21
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Section 3.4.
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Responsibilities of Partners
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23
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Section 3.5.
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Exculpation and Indemnification
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24
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Section 3.6.
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Representations of Partners
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26
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Section 3.7.
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Tax Representation and Further Assurances
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27
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ARTICLE IV CAPITAL OF THE PARTNERSHIP
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28
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Section 4.1.
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Capital Contributions by Partners
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28
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Section 4.2.
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Interest
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35
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Section 4.3.
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Withdrawals of Capital
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35
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ARTICLE V PARTICIPATION IN PROFITS AND LOSSES
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36
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Section 5.1.
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General Accounting Matters
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36
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Section 5.2.
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GP-Related Capital Accounts
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37
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Section 5.3.
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GP-Related Profit Sharing Percentages
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38
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Section 5.4.
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Allocations of GP-Related Net Income (Loss)
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39
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Section 5.5.
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Liability of Partners
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40
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Section 5.6.
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[Intentionally omitted.]
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40
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Section 5.7.
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Repurchase Rights, etc.
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40
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Section 5.8.
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Distributions
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40
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Section 5.9.
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Business Expenses
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47
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Section 5.10.
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Tax Capital Accounts; Tax Allocations
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48
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ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
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48
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Section 6.1.
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Additional Partners
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48
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Section 6.2.
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Withdrawal of Partners
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50
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-i-
TABLE OF CONTENTS
(continued)
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Page
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Section 6.3.
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GP-Related Partner Interests Not Transferable
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51
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Section 6.4.
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Consequences upon Withdrawal of a Partner
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51
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Section 6.5.
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Satisfaction and Discharge of a Withdrawn Partner’s GP-Related Partner Interests
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52
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Section 6.6.
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Dissolution of the Partnership
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57
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Section 6.7.
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Certain Tax Matters
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57
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Section 6.8.
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Special Basis Adjustments
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59
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ARTICLE VII CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS; ALLOCATIONS;
DISTRIBUTIONS
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59
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Section 7.1.
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Capital Commitment Interests, etc
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59
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Section 7.2.
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Capital Commitment Capital Accounts
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60
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Section 7.3.
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Allocations
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61
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Section 7.4.
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Distributions
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61
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Section 7.5.
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Valuations
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65
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Section 7.6.
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Disposition Election
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66
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Section 7.7.
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Capital Commitment Special Distribution Election
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66
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ARTICLE VIII WITHDRAWAL, ADMISSION OF NEW PARTNERS
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67
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Section 8.1.
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Partner Withdrawal; Repurchase of Capital Commitment Interests
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67
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Section 8.2.
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Transfer of Partner’s Capital Commitment Interest
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72
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Section 8.3.
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Compliance with Law
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72
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ARTICLE IX DISSOLUTION
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73
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Section 9.1.
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Dissolution
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73
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Section 9.2.
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Final Distribution
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73
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Section 9.3.
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Amounts Reserved Related to Capital Commitment Partner Interests
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73
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ARTICLE X MISCELLANEOUS
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74
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Section 10.1.
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Submission to Jurisdiction; Waiver of Jury Trial
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74
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Section 10.2.
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Ownership and Use of the Blackstone Name
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75
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Section 10.3.
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Written Consent
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76
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Section 10.4.
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Letter Agreements; Schedules
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76
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Section 10.5.
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Governing Law; Separability of Provisions
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76
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Section 10.6.
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Successors and Assigns; Third Party Beneficiaries
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76
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Section 10.7.
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Confidentiality
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77
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Section 10.8.
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Notices
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78
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Section 10.9.
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Counterparts
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78
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Section 10.10.
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Power of Attorney
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78
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Section 10.11.
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Partner’s Will
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79
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Section 10.12.
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Cumulative Remedies
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79
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Section 10.13.
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Legal Fees
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79
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Section 10.14.
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Entire Agreement; Modifications
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79
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Section 10.15.
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Section Titles
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79
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-ii-
BXLS V GP L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of BXLS V GP L.P., a Delaware limited partnership
(the “Partnership”), dated as of November 4, 2020, and effective as of December 31, 2019, by and among BXLS V L.L.C., a Delaware limited liability company, as general partner of the Partnership (in its capacity
as general partner of the Partnership (the “General Partner”)), Robert Liptak (the “Initial Limited Partner”), as initial limited partner, and such other persons that are admitted to the Partnership as
partners after the date hereof in accordance herewith.
W I T N E S S E T
H
WHEREAS, the Partnership was formed pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101, et seq., as it may be amended from time to time (the “Partnership Act”), pursuant to a certificate of limited partnership filed in the office of the Secretary of State of
the State of Delaware on May 30, 2019;
WHEREAS, the General Partner and the Initial Limited Partner entered into a Limited
Partnership Agreement, dated as of May 30, 2019 (the “Original Agreement”); and
WHEREAS, the parties
hereto desire to enter into this Agreement, and hereby amend and restate the Original Agreement in its entirety and reflect the withdrawal of the Initial Limited Partner, in each case effective on December 31, 2019.
NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby, the parties
hereto agree that the Original Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1.
Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for purposes of this Agreement:
“Adjustment Amount” has the meaning set forth in Section 8.1(b)(ii).
“Advancing Party” has the meaning set forth in Section 7.1(c).
“Affiliate” when used with reference to another person means any person (other than the Partnership), directly
or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person, which may include, for greater certainty and as the context requires, endowment funds, estate planning vehicles
(including any trusts, family members, family investment vehicles, descendant, trusts and other related persons and entities), charitable programs and other similar and/or related vehicles or accounts associated with or established by Blackstone
and/or its affiliates, partners and current and/or former employees and/or related persons.
“Agreement” means this Amended and Restated Limited
Partnership Agreement, as it may be further amended, supplemented, restated or otherwise modified from time to time.
“Applicable Collateral Percentage” with respect to any Firm Collateral or Special Firm Collateral, has the
meaning set forth in the books and records of the Partnership with respect thereto.
“Associates V” means
Blackstone Life Sciences Associates V L.P., a Delaware limited partnership and the general partner of BXLS V, or any other entity that serves as the general partner or managing member of a vehicle indicated in the definition of BXLS V.
“Associates V LP Agreement” means the limited partnership agreement, dated as of the date set forth therein,
of Associates V, as it may be amended, supplemented, restated or otherwise modified from time to time.
“Bankruptcy” means, with respect to any person, the occurrence of any of the following events: (i) the
filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his or her assets; (ii) the filing by such person of a voluntary petition in Bankruptcy or the seeking of relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his or her inability to pay his or her debts as they become due; (iii) the failure of such person to pay
his or her debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of an answer admitting the material allegations of, or his or her consenting to,
or defaulting in answering, a Bankruptcy petition filed against him or her in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States Code, as now constituted or as hereafter amended; or (vi) the entry of
an order, judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a trustee or custodian of his or her assets and the continuance of such order,
judgment or decree unstayed and in effect for a period of 60 consecutive days.
“BE Agreement” means the
limited partnership agreement, limited liability company agreement or other governing document of any limited partnership, limited liability company or other entity referred to in the definition of “Blackstone Entity,” as such limited
partnership agreement, limited liability company agreement or other governing document may be amended, supplemented, restated or otherwise modified to date, and as such limited partnership agreement, limited liability company agreement or other
governing document may be further amended, supplemented, restated or otherwise modified from time to time.
“BE
Investment” means any direct or indirect investment by any Blackstone Entity.
“Blackstone”
means, collectively, The Blackstone Group Inc., a Delaware corporation, and any predecessor or successor thereto, and any Affiliate thereof (excluding any natural persons and any portfolio companies, investments or similar entities of any
Blackstone-sponsored fund (or any affiliate thereof that is not otherwise an Affiliate of The Blackstone Group Inc.)).
2
“Blackstone Capital Commitment” has the meaning set forth
in the BXLS V Partnership Agreement.
“Blackstone Entity” means any partnership, limited liability company
or other entity (excluding any natural persons and any portfolio companies of any Blackstone-sponsored fund) that is an Affiliate of The Blackstone Group Inc., as designated by the General Partner in its sole
discretion.
“Business Day” means any day other than a Saturday, Sunday or other day on which banks are
authorized or required by law to be closed in New York, New York.
“BXLS V” means (i) Blackstone Life
Sciences V L.P., a Delaware limited partnership, (ii) any alternative investment vehicles relating to, or formed in connection with, any of the partnerships referred to in clauses (i) and (iii) of this definition, (iii) any
parallel fund, managed account or other capital vehicle relating to, or formed in connection with, the partnership referred to in clause (i) of this definition and (iv) any other limited partnership, limited liability company or other
entity (in each case, whether now or hereafter established) of which Associates V or the General Partner serves, directly or indirectly, as the general partner, special general partner, manager, managing member or in a similar capacity.
“BXLS V Agreements” means the collective reference to (i) the BXLS V Partnership Agreement and
(ii) any other BXLS V partnership, limited liability company or other governing agreements, as each may be amended, supplemented, restated or otherwise modified from time to time.
“BXLS V Partnership Agreement” means the partnership agreement of the limited partnership named in clause
(i) of the definition of “BXLS V,” as it may be amended, supplemented, restated or otherwise modified from time to time.
“Capital Commitment Associates V Partner Interest” means the interest of the Partnership, if any, as a limited
partner of Associates V with respect to any Capital Commitment BXLS V Interest that may be held by Associates V.
“Capital Commitment BXLS V Commitment” means the Capital Commitment (as defined in the BXLS V Partnership
Agreement), if any, of the Partnership or Associates V to BXLS V that relates solely to the Capital Commitment BXLS V Interest, if any.
“Capital Commitment BXLS V Interest” means the Interest (as defined in the BXLS V Partnership
Agreement), if any, of the Partnership or Associates V as a capital partner in BXLS V.
3
“Capital Commitment BXLS V Investment” means the
Partnership’s interest in a specific investment of BXLS V, which interest may be held by the Partnership (i) through the Partnership’s direct interest in BXLS V through the Partnership’s Capital Commitment BXLS V Interest, if the
Partnership holds the Capital Commitment BXLS V Interest, or (ii) through the Partnership’s interest in Associates V and Associates V’s interest in BXLS V through Associates V’s Capital Commitment BXLS V Interest, if Associates V
holds the Capital Commitment BXLS V Interest.
“Capital Commitment Capital Account” means, with respect to
each Capital Commitment Investment for each Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such Capital Commitment Investment and any net income allocated
to such Partner pursuant to Section 7.3 with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment Investment to such Partner and any net losses allocated to such
Partner with respect to such Capital Commitment Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the related Capital Commitment Investment shall be adjusted as if the
asset distributed had been sold in a taxable transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners participating in such Capital Commitment Investment pursuant to
Section 7.3.
“Capital Commitment Class A Interest” has the meaning set forth in
Section 7.4(f).
“Capital Commitment Class B Interest” has the meaning set forth
in Section 7.4(f).
“Capital Commitment Defaulting Party” has the meaning set forth in
Section 7.4(g)(ii)(A).
“Capital Commitment Deficiency Contribution” has the meaning set forth in
Section 7.4(g)(ii)(A).
“Capital Commitment Disposable Investment” has the meaning set forth in
Section 7.4(f).
“Capital Commitment Distributions” means, with respect to each Capital Commitment
Investment, all amounts of distributions received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Capital Commitment BXLS V Interest, if any, less any costs, fees and expenses of the Partnership with
respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of such Capital Commitment
Investment as it may determine in good faith is appropriate.
“Capital Commitment Giveback Amount” has the
meaning set forth in Section 7.4(g)(i).
“Capital Commitment Interest” means the interest of a
Partner in a specific Capital Commitment Investment as provided herein.
4
“Capital Commitment Investment” means any Capital
Commitment BXLS V Investment, but shall exclude any GP-Related Investment.
“Capital Commitment Liquidating Share” means, with respect to each Capital Commitment Investment, in the case
of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with Section 9.3) immediately prior to dissolution.
“Capital Commitment Net Income (Loss)” means, with respect to each Capital Commitment Investment, all amounts
of income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition, in whole or in part, of such Capital Commitment Investment, less any costs, fees and
expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated thereto.
“Capital Commitment Partner Carried Interest” means, with respect to any Partner, the aggregate amount of
distributions or payments received by such Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest.” Capital Commitment Partner Carried Interest includes any amount initially received by
an Affiliate of the Partnership from any fund (including BXLS V, any similar funds formed after the date hereof, and any Other Blackstone Funds (as defined in the BXLS V Partnership Agreement), whether or not in existence as of the date hereof) to
which such Affiliate serves as general partner (or in another similar capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions thereto (or the capital contributions to make
the investment of such fund giving rise to such “carried interest”).
“Capital Commitment Partner
Interest” means a Partner’s interest in the Partnership which relates (i) to any Capital Commitment BXLS V Interest held by the Partnership or (ii) through the Partnership and Associates V, to any Capital Commitment BXLS V
Interest that may be held by Associates V.
“Capital Commitment Profit Sharing Percentage” means, with
respect to each Capital Commitment Investment, the percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the Partnership.
“Capital Commitment Recontribution Amount” has the meaning set forth in Section 7.4(g)(i).
“Capital Commitment-Related Capital Contributions” has the
meaning set forth in Section 7.1(b).
“Capital
Commitment-Related Commitment” means, with respect to any Partner, such Partner’s commitment to the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set
forth in the books and records of the Partnership, including, without limitation, any such commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
5
“Capital Commitment Special Distribution” has the meaning
set forth in Section 7.7(a).
“Capital Commitment Value” has the meaning set forth in
Section 7.5.
“Carried Interest” means (i) “Carried Interest Distributions” as
defined in the BXLS V Partnership Agreement, and (ii) any other carried interest distribution to a Fund GP pursuant to any BXLS V Agreement. In the case of each of (i) and (ii) above, except as determined by the General Partner, the amount
shall not be less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto (in each case which the General
Partner may allocate among all or any portion of the GP-Related Investments as it determines in good faith is appropriate).
“Carried Interest Give Back Percentage” means, for any Partner or Withdrawn Partner, subject to
Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner from the Partnership or any Other Fund GPs or their Affiliates in respect of Carried Interest by
(B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership or any Other Fund GP or any of their Affiliates (in any capacity) in respect of Carried Interest. For purposes of
determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership or any Other Fund GPs on behalf of a Partner or Withdrawn Partner (but not the Trust Income thereon) shall be
deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as members, partners or other equity interest owners of the Partnership or any of the Other Fund GPs or their Affiliates.
“Carried Interest Sharing Percentage” means, with respect to each
GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
“Cause” means the occurrence or existence of any of the following with respect to any Partner, as
determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any non-competition agreement, (x) any
material breach of this Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such Partner’s deliberate failure to perform his or her duties to the Partnership or any of its
Affiliates, or (z) such Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Partnership or any of its Affiliates in a material way as determined by the General Partner; provided, that in
the case of any of the foregoing clauses (w), (x), (y) and (z), the General Partner has given such Partner written notice (a “Notice of Breach”) within 15 days after the General Partner becomes aware of such action and such
Partner fails to cure such breach, failure to perform or conduct or behavior within 15 days after receipt of such Notice of Breach from the General Partner (or such longer period,
6
not to exceed an additional 15 days, as shall be reasonably required for such cure; provided, that such Partner is diligently pursuing such cure); (ii) any act of fraud,
misappropriation, dishonesty, embezzlement or similar conduct against the Partnership or any of its Affiliates; or (iii) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony (under U.S. law
or its equivalent in any jurisdiction) or crime (including any misdemeanor charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of
competent jurisdiction, by a regulatory body or by a self-regulatory body having authority with respect to securities laws, rules or regulations of the applicable securities industry, that such Partner
individually has violated any applicable securities laws or any rules or regulations thereunder, or any rules of any such self-regulatory body (including, without limitation, any licensing requirement), if
such conviction or determination has a material adverse effect on (A) such Partner’s ability to function as a Partner of the Partnership, taking into account the services required of such Partner and the nature of the business of the
Partnership and its Affiliates or (B) the business of the Partnership and its Affiliates or (iv) becoming subject to an event described in Rule 506(d)(1)(i)-(viii) of Regulation D
under the Securities Act.
“Clawback Adjustment Amount” has the meaning set forth in
Section 5.8(e)(ii)(C).
“Clawback Amount” means the “Clawback Amount”, as defined in
the BXLS V Partnership Agreement, and any other clawback amount payable to the limited partners of BXLS V or to BXLS V pursuant to any BXLS V Agreement, as applicable.
“Clawback Provisions” means paragraph 9.2.8 of the BXLS V Partnership Agreement and any other similar
provisions in any other BXLS V Agreement existing heretofore or hereafter entered into.
“Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any successor statute. Any reference herein to a particular provision of the Code means, where appropriate, the corresponding provision in any successor statute.
“Commitment Agreements” means the agreements between the Partnership or an Affiliate thereof and Partners,
pursuant to which each Partner undertakes certain obligations, including the obligation to make capital contributions pursuant to Section 4.1 and/or Section 7.1. Each Commitment Agreement is hereby incorporated by reference as between the
Partnership and the relevant Partner.
“Contingent” means subject to repurchase rights and/or other
requirements.
The term “control” when used with reference to any person means the power to direct the
management and policies of such person, directly or indirectly, by or through stock or other equity interest ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with one
or more other persons by or through stock or other equity interest ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing.
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“Controlled Entity” when used with reference to another
person means any person controlled by such other person.
“Covered Person” has the meaning set forth in
Section 3.5(a).
“Deceased Partner” means any Partner or Withdrawn Partner who has died or who
suffers from Incompetence. For purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the case may be, that have received such
Deceased Partner’s interest in the Partnership.
“Default Interest Rate” means the lower of
(i) the sum of (a) the Prime Rate and (b) 5% or (ii) the highest rate of interest permitted under applicable law.
“Delaware Arbitration Act” has the meaning set forth in Section 10.1(d).
“Electronic Signature” has the meaning set forth in Section 10.9.
“Estate Planning Vehicle” has the meaning set forth in Section 6.3(a).
“Excess Holdback” has the meaning set forth in Section 4.1(d)(v)(A).
“Excess Holdback Percentage” has the meaning set forth in Section 4.1(d)(v)(A).
“Excess Tax-Related Amount” has the meaning set forth in
Section 5.8(e).
“Existing Partner” means any Partner who is neither a Retaining Withdrawn Partner
nor a Deceased Partner.
“Final Event” means the death, Total Disability, Incompetence, Bankruptcy,
liquidation, dissolution or Withdrawal from the Partnership of any person who is a Partner.
“Firm
Advances” has the meaning set forth in Section 7.1(c).
“Firm Collateral” means a
Partner’s or Withdrawn Partner’s interest in one or more partnerships or limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been
pledged or made available to the Trustee(s) to satisfy all or any portion of the Excess Holdback of such Partner or Withdrawn Partner as more fully described in the Partnership’s books and records; provided, that for all purposes hereof
(and any other agreement (e.g., the Trust Agreement) that incorporates the meaning of the term “Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”,
excluding references to “Firm Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).
“Firm
Collateral Realization” has the meaning set forth in Section 4.1(d)(v)(B).
“Fiscal Year”
means a calendar year, or any other period chosen by the General Partner.
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“Fund GP” means the Partnership (only with respect to the GP-Related BXLS V Interest) and the Other Fund GPs.
“GAAP” means U.S.
generally accepted accounting principles.
“General Partner” means BXLS V L.L.C. and any person admitted
to the Partnership as an additional or substitute general partner of the Partnership in accordance with the provisions of this Agreement (until such time as such person ceases to be a general partner of the Partnership as provided herein or in the
Partnership Act).
“Giveback Amount(s)” means the amount(s) payable by partners of BXLS V pursuant to the
Giveback Provisions.
“Giveback Provisions” means paragraph 3.4.3 of the BXLS V Partnership Agreement and
any other similar provisions in any other BXLS V Agreement existing heretofore or hereafter entered into.
“Governmental Entity” has the meaning set forth in Section 10.7(b).
“GP-Related Associates V Interest” means the interest of the
Partnership as a limited partner of Associates V with respect to the GP-Related BXLS V Interest, but does not include any interest of the Partnership in Associates V with respect to any Capital Commitment BXLS
V Interest that may be held by Associates V.
“GP-Related BXLS V
Interest” means the interest of Associates V in BXLS V as general partner of BXLS V, excluding any Capital Commitment BXLS V Interest that may be held by Associates V.
“GP-Related BXLS V Investment” means the Partnership’s
indirect interest in Associates V’s indirect interest in an Investment (for purposes of this definition, as defined in the BXLS V Partnership Agreement) in Associates V’s capacity as general partner of BXLS V, but does not include any
Capital Commitment Investment.
“GP-Related Capital
Account” has the meaning set forth in Section 5.2(a).
“GP-Related Capital Contributions” has the meaning set forth in
Section 4.1(a).
“GP-Related Class A
Interest” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Class B Interest” has the
meaning set forth in Section 5.8(a)(ii).
“GP-Related
Commitment”, with respect to any Partner, means such Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of
the Partnership, including, without limitation, any such commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.
“GP-Related Defaulting Party” has the meaning set forth in
Section 5.8(d)(ii)(A).
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“GP-Related
Deficiency Contribution” has the meaning set forth in Section 5.8(d)(ii)(A).
“GP-Related Disposable Investment” has the meaning set forth in Section 5.8(a)(ii).
“GP-Related Giveback Amount” has the meaning set forth in
Section 5.8(d)(i)(A).
“GP-Related Investment” means
any investment (direct or indirect) of the Partnership in respect of the GP-Related BXLS V Interest (including, without limitation, any GP-Related BXLS V Investment, but
excluding any Capital Commitment Investment).
“GP-Related Net
Income (Loss)” has the meaning set forth in Section 5.1(b).
“GP-Related Partner Interest” of a Partner means all interests
of such Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect to the
GP-Related BXLS V Interest and with respect to all GP-Related Investments.
“GP-Related Profit Sharing Percentage” means
the “Carried Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each Partner; provided, that any references in this Agreement to GP-Related Profit Sharing Percentages made (i) in connection with voting or voting rights or (ii) GP-Related Capital Contributions with respect to GP-Related Investments (including Section 5.3(b)) means the “Non-Carried Interest Sharing Percentage” of each Partner; provided further, that
the term “GP-Related Profit Sharing Percentage” shall not include any Capital Commitment Profit Sharing Percentage.
“GP-Related Recontribution Amount” has the meaning set forth in
Section 5.8(d)(i)(A).
“GP-Related Required Amounts”
has the meaning set forth in Section 4.1(a).
“GP-Related
Unallocated Percentage” has the meaning set forth in Section 5.3(b).
“GP-Related Unrealized Net Income (Loss)” attributable to any GP-Related BXLS V Investment as of any date means the
GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related BXLS V Investment if BXLS V’s entire portfolio of investments
were sold on such date for cash in an amount equal to their aggregate value on such date (determined in accordance with Section 5.1(e)) and all distributions payable by BXLS V to the Partnership (indirectly through the general partner of BXLS
V) pursuant to any BXLS V Partnership Agreement with respect to such GP-Related BXLS V Investment were made on such date. “GP-Related Unrealized Net Income
(Loss)” attributable to any other GP-Related Investment (other than any Capital Commitment Investment) as of any date means the GP-Related Net Income (Loss) that
would be realized by the Partnership with respect to such GP-Related Investment if such GP-Related Investment were sold on such date for cash in an amount equal to its
value on such date (determined in accordance with Section 5.1(e)).
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“Holdback” has the meaning set forth in
Section 4.1(d)(i).
“Holdback Percentage” has the meaning set forth in Section 4.1(d)(i).
“Holdback Vote” has the meaning set forth in Section 4.1(d)(iv)(A).
“Holdings” means Blackstone Holdings II L.P., a Delaware limited partnership.
“Incompetence” means, with respect to any Partner, the determination by the General Partner in its sole
discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his or her person or his or her property.
“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d)(i).
“Initial Limited Partner” has the meaning set forth in the preamble hereto.
“Interest” means a partnership interest (as defined in
§17-101(13) of the Partnership Act) in the Partnership, including any interest that is held by a Retaining Withdrawn Partner and including any Partner’s
GP-Related Partner Interest and Capital Commitment Partner Interest.
“Investment” means any investment (direct or indirect) of the Partnership designated by the General Partner
from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments, and (b) Capital Commitment Investments.
“Investor Note” means a promissory note of a Partner evidencing indebtedness incurred by such Partner to
purchase a Capital Commitment Interest, the terms of which were or are approved by the General Partner and which is secured by such Capital Commitment Interest, all other Capital Commitment Interests of such Partner and all other interests of such
Partner in Blackstone Entities; provided, that such promissory note may also evidence indebtedness relating to other interests of such Partner in Blackstone Entities, and such indebtedness shall be prepayable with Capital Commitment Net
Income (whether or not such indebtedness relates to Capital Commitment Investments) as set forth in this Agreement, the Investor Note, the other BE Agreements and any documentation relating to Other Sources; provided further, that
references to “Investor Notes” herein refer to multiple loans made pursuant to such note, whether made with respect to Capital Commitment Investments or other BE Investments, and references to an “Investor Note” refer to one
such loan as the context requires. In no way shall any indebtedness incurred to acquire Capital Commitment Interests or other interests in Blackstone Entities be considered part of the Investor Notes for purposes hereof if the Lender or Guarantor is
not the lender or guarantor with respect thereto.
“Investor Special Partner” means any Special Partner so
designated at the time of its admission by the General Partner as a Partner of the Partnership.
“Issuer”
means the issuer of any Security comprising part of an Investment.
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“L/C” has the meaning set forth in Section 4.1(d)(vi).
“L/C Partner” has the meaning set forth in Section 4.1(d)(vi).
“Lender or Guarantor” means Blackstone Holdings I L.P., in its capacity as lender or guarantor under the
Investor Notes, or any other Affiliate of the Partnership that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests or other interests in Blackstone Entities.
“Limited Partner” means each of the parties listed as Limited Partners in the books and records of the
Partnership or any person that has been admitted to the Partnership as a substituted or additional Limited Partner in accordance with the terms of this Agreement, each in its capacity as a limited partner of the Partnership. For the avoidance of
doubt, the term “Limited Partner” does not include the General Partner or any Special Partners (notwithstanding the fact that Special Partners are limited partners of the Partnership).
“Loss Amount” has the meaning set forth in Section 5.8(e)(i)(A).
“Loss Investment” has the meaning set forth in Section 5.8(e).
“Losses” has the meaning set forth in Section 3.5(b)(i).
“Majority in Interest of the Partners” on any date (a “vote date”) means one or more
persons who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date and who, as of the last day of the most recent accounting period ending on or prior to the vote date (or as of such later date on or
prior to the vote date selected by the General Partner as of which the Partners’ capital account balances can be determined), have aggregate capital account balances representing at least a majority in amount of the total capital account
balances of all the persons who are Partners (including the General Partner but excluding Nonvoting Special Partners) on the vote date.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
“Net Carried Interest Distribution” has the meaning set forth in Section 5.8(e)(i)(C).
“Net Carried Interest Distribution Recontribution Amount” has the meaning set forth in Section 5.8(e).
“Net GP-Related Recontribution Amount” has the meaning set
forth in Section 5.8(d)(i)(A).
“Non-Carried Interest”
means, with respect to each GP-Related Investment, all amounts of distributions, other than Carried Interest and other than Capital Commitment Distributions, received by the Partnership with respect to such GP-Related Investment, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with
respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments as it may determine in good faith is appropriate.
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“Non-Carried Interest
Sharing Percentage” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Non-Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.
“Non-Contingent” means generally not subject to repurchase
rights or other requirements.
“Nonvoting Partner” has the meaning set forth in Section 8.2.
“Nonvoting Special Partner” has the meaning set forth in Section 6.1(a).
“Original Agreement” has the meaning set forth in the recitals.
“Other Fund GPs” means Associates V and any other entity (other than the Partnership) through which any
Partner, Withdrawn Partner or any other person directly receives any amounts of Carried Interest, and any successor thereto; provided, that this includes any other entity which has in its organizational documents a provision which indicates
that it is a “Fund GP” or an “Other Fund GP”; provided further, that notwithstanding any of the foregoing, neither BXLS V L.L.C. nor Holdings nor any Estate Planning Vehicle established for the benefit of
family members of any Partner or of any member or partner of any Other Fund GP shall be considered an “Other Fund GP” for purposes hereof.
“Other Sources” means (i) distributions or payments of Capital Commitment Partner Carried Interest (which
shall include amounts of Capital Commitment Partner Carried Interest which are not distributed or paid to a Partner but are instead contributed to a trust (or similar arrangement) to satisfy any “holdback” obligation with respect thereto),
and (ii) distributions from Blackstone Entities (other than the Partnership) to such Partner.
“Partner” means any person who is a partner of the Partnership, including the Limited Partners, the General
Partner and the Special Partners. Except as otherwise specifically provided herein, no group of Partners, including the Special Partners and any group of Partners in the same Partner Category, shall have any right to vote as a class on any matter
relating to the Partnership, including, but not limited to, any merger, reorganization, dissolution or liquidation.
“Partner Category” means the General Partner, Existing Partners, Retaining Withdrawn Partners or Deceased
Partners, each referred to as a group for purposes hereof.
“Partnership” has the meaning set forth in the
preamble hereto.
“Partnership Act” has the meaning set forth in the preamble hereto.
“Partnership Affiliate” has the meaning set forth in Section 3.3(b).
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“Partnership Affiliate Governing Agreement” has the meaning
set forth in Section 3.3(b).
“Pledgable Blackstone Interests” has the meaning set forth in
Section 4.1(d)(v)(A).
“Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMorgan Chase Bank, N.A. as its prime rate.
“Qualifying Fund” means any fund designated by
the General Partner as a “Qualifying Fund”.
“Repurchase Period” has the meaning set forth
in Section 5.8(c).
“Required Rating” has the meaning set forth in Section 4.1(d)(vi).
“Retained Portion” has the meaning set forth in Section 7.6(a).
“Retaining Withdrawn Partner” means a Withdrawn Partner who has retained a
GP-Related Partner Interest, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Nonvoting Special Partner for all purposes hereof.
“S&P” means Standard & Poor’s Ratings Group, and any successor thereto.
“Securities” means any debt or equity securities of an Issuer and its subsidiaries and other Controlled
Entities constituting part of an Investment, including without limitation, common and preferred stock, interests in limited partnerships and interests in limited liability companies (including warrants, rights, put and call options and other options
relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or interests commonly regarded as securities, interests in real
property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as money-market
investments, bank deposits and interests in personal property of all kinds, whether tangible or intangible.
“Securities Act” means the U.S. Securities Act of 1933, as amended from time to time, or any successor
statute.
“Settlement Date” has the meaning set forth in Section 6.5(a).
“SMD Agreements” means the agreements between the Partnership and/or one or more of its Affiliates and certain
of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby incorporated by reference as between the Partnership and the relevant Partner.
“Special Firm Collateral” means interests in a Qualifying Fund or other assets that have been pledged to
the Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the Partnership’s books and records.
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“Special Firm Collateral Realization” has the meaning set
forth in Section 4.1(d)(viii)(B).
“Special Partner” means any person shown in the books and records
of the Partnership as a Special Partner of the Partnership, including any Nonvoting Special Partner and any Investor Special Partner.
“Subject Investment” has the meaning set forth in Section 5.8(e)(i).
“Subject Partner” has the meaning set forth in Section 4.1(d)(iv)(A).
“Successor in Interest” means any (i) shareholder of; (ii) trustee, custodian, receiver or other
person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or receiver, or former officer, director or partner,
or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or assign of, any Partner, whether by operation of law or
otherwise.
“Tax Advances” has the meaning set forth in Section 6.7(d).
“Tax Matters Partner” has the meaning set forth in Section 6.7(b).
“TM” has the meaning set forth in Section 10.2.
“Total Disability” means the inability of a Limited Partner substantially to perform the services required of
such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether arising out of
sickness, accident or otherwise.
“Transfer” has the meaning set forth in Section 8.2.
“Trust Account” has the meaning set forth in the Trust Agreement.
“Trust Agreement” means the Trust Agreement, dated as of the date set forth therein, as amended, supplemented,
restated or otherwise modified from time to time, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time to time.
“Trust Amount” has the meaning set forth in the Trust Agreement.
“Trust Income” has the meaning set forth in the Trust Agreement.
“Trustee(s)” has the meaning set forth in the Trust Agreement.
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“Unadjusted Carried Interest Distribution” has the meaning
set forth in Section 5.8(e)(i)(B).
“Unallocated Capital Commitment Interests” has the meaning set
forth in Section 8.1(f).
“U.S.” means the United States of America.
“W-8BEN” has the meaning set forth in Section 3.7.
“W-8BEN-E” has
the meaning set forth in Section 3.7.
“W-8IMY” has
the meaning set forth in Section 3.7.
“W-9” has the
meaning set forth in Section 3.7.
“Withdraw” or “Withdrawal” means, with
respect to a Partner, such Partner ceasing to be a partner of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary),
unless the context shall limit the type of withdrawal to a specific reason, and “Withdrawn” with respect to a Partner means, as aforesaid, such Partner ceasing to be a partner of the Partnership.
“Withdrawal Date” means the date of the Withdrawal from the Partnership of a Withdrawn Partner.
“Withdrawn Partner” means a Limited Partner whose GP-Related Partner
Interest or Capital Commitment Partner Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include, unless the context requires otherwise, the estate or legal
representatives of any such Partner.
Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to
both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “person” includes individuals, partnerships
(including limited liability partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions thereof) and other associations and entities. The words
“include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
ARTICLE II
GENERAL PROVISIONS
Section 2.1. General Partner, Limited Partner, Special Partner. The Partners may be General Partners, Limited Partners or
Special Partners. The General Partner as of the date hereof is BXLS V L.L.C. and the Limited Partners as of the date hereof are those persons shown as Limited Partners in the books and records of the Partnership and the Special Partners as of the
date hereof are those persons shown as Special Partners in the books and records of the Partnership
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as of the date hereof. The books and records of the Partnership contain the GP-Related Profit Sharing Percentage and
GP-Related Commitment of each Partner (including, without limitation, the General Partner) with respect to the GP-Related Investments of the Partnership as of the date
hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each Partner (including, without limitation, the General
Partner) with respect to the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to time to reflect additional GP-Related Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by the Partnership of Capital
Commitment Investments, the GP-Related Profit Sharing Percentages of the Partners (including, without limitation, the General Partner), as modified from time to time, the Capital Commitment Profit Sharing
Percentages of the Partners (including, without limitation, the General Partner), as modified from time to time, the admission of additional Partners, the Withdrawal of Partners and the transfer or assignment of interests in the Partnership pursuant
to the terms of this Agreement. At the time of admission of each additional Partner, the General Partner shall determine in its sole discretion the GP-Related Investments and Capital Commitment Investments in
which such Partner shall participate and such Partner’s GP-Related Commitment, Capital Commitment-Related Commitment,
GP-Related Profit Sharing Percentage with respect to each such GP-Related Investment and Capital Commitment Profit Sharing Percentage with respect to each such Capital
Commitment Investment. Each Partner may have a GP-Related Partner Interest and/or a Capital Commitment Partner Interest.
Section 2.2. Formation; Name; Foreign Jurisdictions. The Partnership is hereby continued as a limited partnership pursuant to the
Partnership Act and shall conduct its activities on and after the date hereof under the name of BXLS V GP L.P. The certificate of limited partnership of the Partnership may be amended and/or restated from time to time by the General Partner, as
an “authorized person” (within the meaning of the Partnership Act). The General Partner is further authorized to execute and deliver and file any other certificates (and any amendments and/or restatements thereof) necessary for the
Partnership to qualify to do business in a jurisdiction in which the Partnership may wish to conduct business.
Section 2.3.
Term. The term of the Partnership shall continue until December 31, 2069, unless earlier dissolved and its affairs wound up in accordance with this Agreement and the Partnership Act.
Section 2.4. Purposes; Powers. (a) The purposes of the Partnership shall be, directly or indirectly through subsidiaries or
Affiliates:
(i) to serve as a limited partner or general partner of Associates V and perform the functions of a limited
partner or general partner of Associates V specified in the Associates V LP Agreement and, if applicable, the BXLS V Agreements;
(ii) if applicable, to serve as, and hold the Capital Commitment BXLS V Interest as, a capital partner (and, if applicable, a
limited partner and/or a general partner) of BXLS V and perform the functions of a capital partner (and, if applicable, a limited partner and/or a general partner) of BXLS V specified in the BXLS V Agreements;
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(iii) to invest in Capital Commitment Investments and/or GP-Related Investments and acquire and invest in Securities or other property directly or indirectly through Associates V and/or BXLS V;
(iv) to make the Blackstone Capital Commitment or a portion thereof, directly or indirectly, and to invest in GP-Related Investments, Capital Commitment Investments and other Investments and acquire and invest in Securities or other property either directly or indirectly through Associates V or another entity;
(v) to serve as a general partner or limited partner of BXLS V and/or other partnerships and perform the functions of a general
partner or limited partner, member, shareholder or other equity interest owner specified in the respective partnership agreement, limited liability company agreement, charter or other governing documents, as amended, supplemented, restated or
otherwise modified from time to time, of any such partnership;
(vi) to serve as a member, shareholder or other equity
interest owner of limited liability companies, other companies, corporations or other entities and perform the functions of a member, shareholder or other equity interest owner specified in the respective limited liability company agreement, charter
or other governing documents, as amended, supplemented, restated or otherwise modified from time to time, of any such limited liability company, company, corporation or other entity;
(vii) to carry on such other businesses, perform such other services and make such other investments as are deemed desirable by
the General Partner and as are permitted under the Partnership Act, the Associates V LP Agreement, the BXLS V Agreements, and any applicable partnership agreement, limited liability company agreement, charter or other governing document referred to
in clause (v) or (vi) above, in each case as the same may be amended, supplemented, restated or otherwise modified from time to time;
(viii) any other lawful purpose; and
(ix) to do all things necessary, desirable, convenient or incidental thereto.
(b) In furtherance of its purposes, the Partnership shall have all powers necessary, suitable or convenient for the accomplishment of its
purposes, alone or with others, as principal or agent, including the following:
(i) to be and become a general partner or
limited partner of partnerships, a member of limited liability companies, a holder of common and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with the making of Investments or the
acquisition, holding or disposition of Securities or other property or as otherwise deemed appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection therewith;
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(ii) to acquire and invest in general partner or limited partner interests,
in limited liability company interests, in common and preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or direct or indirect
interests therein, whether such Investments and Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company interests, stock,
interests, obligations, Investments or Securities or other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or short, options on
futures contracts;
(iii) to buy, sell and otherwise acquire investments, whether such investments are readily marketable
or not;
(iv) to invest and reinvest the cash assets of the Partnership in
money-market or other short-term investments;
(v) to hold, receive, mortgage, pledge, grant security interests over, lease, transfer, exchange or otherwise dispose of, grant
options with respect to, and otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or owned by the Partnership;
(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by mortgage, pledge,
conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and to buy, sell,
pledge or otherwise dispose of any such instrument or evidence of indebtedness;
(vii) to lend any of its property or
funds, either with or without security, at any legal rate of interest or without interest;
(viii) to have and maintain one
or more offices within or without the State of Delaware, and in connection therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection with the
maintenance of such office or offices;
(ix) to open, maintain and close accounts, including margin accounts, with brokers
and futures commission merchants;
(x) to open, maintain and close bank accounts and draw checks and other orders for the
payment of moneys;
(xi) to engage accountants, auditors, custodians, investment advisers, attorneys and any and all other
agents and assistants, both professional and nonprofessional, and to compensate any of them as may be necessary or advisable;
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(xii) to form or cause to be formed and to own the stock of one or more
corporations, whether foreign or domestic, to form or cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic and to form or cause to be formed and be a member or manager or both of one or more limited
liability companies;
(xiii) to enter into, make and perform all contracts, agreements and other undertakings as may be
necessary, convenient, advisable or incident to carrying out its purposes;
(xiv) to sue and be sued, to prosecute, settle
or compromise all claims against third parties, to compromise, settle or accept judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection therewith;
(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to the Partners cash or
investments or other property of the Partnership, or any combination thereof; and
(xvi) to take such other actions
necessary, desirable, convenient or incidental thereto and to engage in such other businesses as may be permitted under Delaware and other applicable law.
Section 2.5. Place of Business. The Partnership shall maintain a registered office at c/o Intertrust Corporate Services Delaware
Ltd., 200 Bellevue Parkway, Suite 210, Bellevue Park Corporate Center, Wilmington, Delaware 19809. The Partnership shall maintain an office and principal place of business at such place or places as the General Partner specifies from time to
time and as set forth in the books and records of the Partnership. The name and address of the Partnership’s registered agent is Intertrust Corporate Services Delaware Ltd., 200 Bellevue Parkway, Suite 210, Bellevue Park Corporate Center,
Wilmington, Delaware 19809. The General Partner may from time to time change the registered agent or office by an amendment to the certificate of limited partnership of the Partnership.
Section 2.6. Withdrawal of Initial Limited Partner. Upon the admission of one or more additional Limited Partners to the
Partnership, the Initial Limited Partner shall (a) Withdraw as the Initial Limited Partner of the Partnership, and (b) have no further right, interest or obligation of any kind whatsoever as a Partner in the Partnership; provided, that the
effective date of such Withdrawal shall be deemed as between the parties hereto to be December 31, 2019.
ARTICLE III
MANAGEMENT
Section 3.1.
General Partner. (a) BXLS V L.L.C. is the General Partner as of the date hereof. The General Partner shall cease to be the General Partner only if (i) it Withdraws from the Partnership for any reason, (ii) it consents in its
sole discretion to resign as the General Partner, or (iii) a Final Event with respect to it occurs. The General Partner may not be removed without its consent. There may be one or more General Partners. In the event that one or more other
General Partners is admitted to the Partnership as such, all references herein to the “General Partner” in the singular form shall be deemed to also refer to such other General Partners as may be appropriate. The relative rights and
responsibilities of such General Partners will be as agreed upon from time to time between them.
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(b) Upon the Withdrawal from the Partnership or voluntary resignation of the last remaining
General Partner, all of the powers formerly vested therein pursuant to this Agreement and the Partnership Act shall be exercised by a Majority in Interest of the Partners.
Section 3.2. Partner Voting, etc. (a) Except as otherwise expressly provided herein and except as may be
expressly required by the Partnership Act, Partners (including Special Partners), other than General Partners, as such shall have no right to, and shall not, take part in the management or control of the Partnership’s business or act for or
bind the Partnership, and shall have only the rights and powers granted to Partners of the applicable class herein.
(b) To the extent a
Partner is entitled to vote with respect to any matter relating to the Partnership, such Partner shall not be obligated to abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such
Partner (or any Affiliate thereof) in such matter.
(c) Meetings of the Partners may be called only by the General Partner.
(d) Notwithstanding any other provision of this Agreement, any Limited Partner or Withdrawn Partner that fails to respond to a notice provided
by the General Partner requesting the consent, approval or vote of such Limited Partner or Withdrawn Partner within 14 days after such notice is sent to such Limited Partner or Withdrawn Partner shall be deemed to have given its affirmative consent
or approval thereto.
Section 3.3. Management. (a) The management, control and operation of the Partnership and the
formulation and execution of business and investment policy shall be vested in the General Partner. The General Partner shall, in its discretion, exercise all powers necessary and convenient for the purposes of the Partnership, including those
enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the General Partner pursuant to this Agreement shall be made in its sole discretion, subject
only to the express terms and conditions of this Agreement.
(b) Notwithstanding any provision in this Agreement to the contrary, the
Partnership is hereby authorized, without the need for any further act, vote or consent of any person (directly or indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a
partner of Associates V on Associates V’s own behalf or in Associates V’s capacity as general partner, capital partner and/or limited partner of BXLS V or as general partner or limited partner, member, shareholder or other equity interest
owner of any Partnership Affiliate or, if applicable, in the Partnership’s capacity as a capital partner of BXLS V or as general or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (i) to
execute and deliver, and to perform the Partnership’s obligations under the Associates V LP Agreement, including, without limitation, serving as a partner of Associates V, (ii) to execute and deliver, and to cause Associates V to perform
Associates V’s obligations under, the BXLS V Agreements, including, without limitation, serving as a general
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partner of BXLS V and, if applicable, a capital partner of BXLS V, (iii) if applicable, to execute and deliver, and to perform the Partnership’s obligations under, the BXLS V
Agreements, including, without limitation, serving as a capital partner of BXLS V, (iv) to execute and deliver, and to perform, or, if applicable, to cause Associates V to perform, the Partnership’s or Associates V’s obligations
under, the governing agreement, as amended, supplemented, restated or otherwise modified (each a “Partnership Affiliate Governing Agreement”), of any other partnership, limited liability company, other company, corporation or
other entity (each a “Partnership Affiliate”) of which the Partnership or Associates V is, or is to become, a general partner or limited partner, member, shareholder or other equity interest owner, including, without
limitation, serving as a general partner or limited partner, member, shareholder or other equity interest owner of each Partnership Affiliate, and (v) to take any action, in the applicable capacity, contemplated by or arising out of this
Agreement, the Associates V LP Agreement, the BXLS V Agreements or each Partnership Affiliate Governing Agreement (and any amendment, supplement, restatement and/or other modification of any of the foregoing).
(c) The General Partner and any other person designated by the General Partner, each acting individually, is hereby authorized and empowered,
as an authorized person of the Partnership within the meaning of the Partnership Act, or otherwise, or as an authorized representative of the General Partner (the General Partner hereby authorizing and ratifying any of the following actions):
(i) to execute and deliver and/or file (including any such action, directly or indirectly through one or more other entities,
in the name and on behalf of the Partnership, on its own behalf, or in its capacity as a partner of Associates V on Associates V’s own behalf, or in Associates V’s capacity as general partner, special general partner, capital partner
and/or limited partner of BXLS V or as general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate or, if applicable, in the Partnership’s capacity as a capital partner of BXLS V or as a
general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate), any of the following:
(A) any agreement, certificate, instrument or other document of the Partnership, Associates V, BXLS V or any Partnership
Affiliate (and any amendments, supplements, restatements and/or other modifications thereof), including, without limitation, the following: (I) the Associates V LP Agreement, the BXLS V Agreements and each Partnership Affiliate Governing
Agreement, (II) subscription agreements and documents on behalf of BXLS V or Associates V, (III) side letters issued in connection with investments in BXLS V, and (IV) such other agreements, certificates, instruments and other
documents as may be necessary or desirable in furtherance of the purposes of the Partnership, Associates V, BXLS V or any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing
referred to in (I) through (IV) above) and for the avoidance of doubt, this Agreement may be amended by the General Partner in its sole discretion;
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(B) the certificates of formation, certificates of limited partnership
and/or other organizational documents of the Partnership, Associates V, BXLS V and any Partnership Affiliate (and any amendments, supplements, restatements and/or other modifications of any of the foregoing); and
(C) any other certificates, notices, applications and other documents (and any amendments, supplements, restatements and/or
other modifications thereof) to be filed with any government or governmental or regulatory body, including, without limitation, any such document that may be necessary for the Partnership, Associates V, BXLS V or any Partnership Affiliate to qualify
to do business in a jurisdiction in which the Partnership, Associates V, BXLS V or such Partnership Affiliate desires to do business;
(ii) to prepare or cause to be prepared, and to sign, execute and deliver and/or file (including any such action, directly or
indirectly through one or more other entities, in the name and on behalf of the Partnership, on its own behalf or in its capacity as a partner of Associates V on Associates V’s own behalf or in Associates V’s capacity as general partner,
capital partner and/or limited partner of BXLS V, or as general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate or, if applicable, in the Partnership’s capacity as a capital partner of
BXLS V or as general partner or limited partner, member, shareholder or other equity interest owner of any Partnership Affiliate): (A) any certificates, forms, notices, applications and other documents to be filed with any government or
governmental or regulatory body on behalf of the Partnership, Associates V, BXLS V and/or any Partnership Affiliate, (B) any certificates, forms, notices, applications and other documents that may be necessary or advisable in connection with
any bank account of the Partnership, Associates V, BXLS V or any Partnership Affiliate or any banking facilities or services that may be utilized by the Partnership, Associates V, BXLS V or any Partnership Affiliate, and all checks, notes, drafts
and other documents of the Partnership, Associates V, BXLS V or any Partnership Affiliate that may be required in connection with any such bank account or banking facilities or services and (C) resolutions with respect to any of the foregoing
matters (which resolutions, when executed by any person authorized as provided in this Section 3.3(c), each acting individually, shall be deemed to have been duly adopted by the General Partner, the Partnership, Associates V, BXLS V or any
Partnership Affiliate, as applicable, for all purposes).
(d) The authority granted to any person (other than the General Partner) in
Section 3.3(c) may be revoked at any time by the General Partner by an instrument in writing signed by the General Partner.
Section 3.4. Responsibilities of Partners. (a) Unless otherwise determined by the General Partner in a particular case, each
Limited Partner (other than a Special Partner) shall devote substantially all of his or her time and attention to the businesses of the Partnership and its Affiliates, and each Special Partner shall not be required to devote any time or attention to
the businesses of the Partnership or its Affiliates.
(b) All outside business or investment activities of the Partners (including outside
directorships or trusteeships) shall be subject to such rules and regulations as are established by the General Partner from time to time.
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(c) The General Partner may from time to time establish such other rules and regulations
applicable to Partners or other employees as the General Partner deems appropriate, including rules governing the authority of Partners or other employees to bind the Partnership to financial commitments or other obligations.
Section 3.5. Exculpation and Indemnification.
(a) Liability to Partners. Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent
permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually,
a “Covered Person” and collectively, the “Covered Persons”) shall be liable to the Partnership or any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related
document or any transaction or investment contemplated hereby or thereby) taken or omitted by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable
judicial determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the
authority granted to such Covered Person by this Agreement. Each Covered Person shall be entitled to rely in good faith on the advice of legal counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by
any Covered Person in reliance on such advice shall in any event subject such person to any liability to any Partner or the Partnership. To the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities
relating thereto to the Partnership or to another Partner, to the fullest extent permitted by law, such Partner acting under this Agreement shall not be liable to the Partnership or to any such other Partner for its good faith reliance on the
provisions of this Agreement. The provisions of this Agreement, to the extent that they expand or restrict the duties and liabilities of a Partner otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by
law, to modify to that extent such other duties and liabilities of such Partner. To the fullest extent permitted by law, the parties hereto agree that the General Partner shall be held to have acted in good faith for the purposes of this Agreement
and its duties under the Partnership Act if it believes that it has acted honestly and in accordance with the specific terms of this Agreement.
(b) Indemnification. (i) To the fullest extent permitted by law, the Partnership shall indemnify and hold harmless (but only to the
extent of the Partnership’s assets (including, without limitation, the remaining capital commitments of the Partners)) each Covered Person from and against any and all claims, damages, losses, costs, expenses and liabilities (including, without
limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable expenses of investigating or defending against any claim or alleged claim), joint and several, of
any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, for purposes of this Section 3.5(b), “Losses”), arising from any and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which the Covered Person may be involved, or threatened to be involved, as a party or otherwise, by reason of such Covered Person’s management of the affairs of the Partnership or which relate to or arise out
of or in connection with the Partnership, its property, its business or affairs (other than claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, arising out of any act or omission of such Covered Person
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constituting Cause); provided, that a Covered Person shall not be entitled to indemnification under this Section 3.5(b) with respect to any claim, issue or matter if there is a final
and non-appealable judicial determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed
to, the best interests of the Partnership and within the authority granted to such Covered Person by this Agreement; provided further, that if such Covered Person is a Partner or a Withdrawn Partner, such Covered Person shall bear its share
of such Losses in accordance with such Covered Person’s GP-Related Profit Sharing Percentage in the Partnership as of the time of the actions or omissions that gave rise to such Losses. To the fullest
extent permitted by law, expenses (including legal fees) incurred by a Covered Person (including, without limitation, the General Partner) in defending any claim, demand, action, suit or proceeding may, with the approval of the General Partner, from
time to time, be advanced by the Partnership prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Partnership of a written undertaking by or on behalf of the Covered Person to repay such amount to the
extent that it shall be subsequently determined that the Covered Person is not entitled to be indemnified as authorized in this Section 3.5(b), and the Partnership and its Affiliates shall have a continuing right of offset against such Covered
Person’s interests/investments in the Partnership and such Affiliates and shall have the right to withhold amounts otherwise distributable to such Covered Person to satisfy such repayment obligation. If a Partner institutes litigation against a
Covered Person which gives rise to an indemnity obligation hereunder, such Partner shall be responsible, up to the amount of such Partner’s Interests and remaining capital commitments, for such Partner’s pro rata share of the
Partnership’s expenses related to such indemnity obligation, as determined by the General Partner. The Partnership may purchase insurance, to the extent available at reasonable cost, to cover losses, claims, damages or liabilities covered by
the foregoing indemnification provisions. Partners will not be personally obligated with respect to indemnification pursuant to this Section 3.5(b). The General Partner shall have the authority to enter into separate agreements with any Covered
Person in order to give effect to the obligations to indemnify pursuant to this Section 3.5(b).
(ii) (A)
Notwithstanding anything to the contrary herein, for greater certainty, it is understood and/or agreed that the Partnership’s obligations hereunder are not intended to render the Partnership as a primary indemnitor for purposes of the
indemnification, advancement of expenses and related provisions under applicable law governing BXLS V and/or a particular portfolio entity through which an Investment is indirectly held. It is further understood and/or agreed that a Covered Person
shall first seek to be so indemnified and have such expenses advanced in the following order of priority: first, out of proceeds available in respect of applicable insurance policies maintained by the applicable portfolio entity and/or BXLS V;
second, by the applicable portfolio entity through which such investment is indirectly held; third, by BXLS V; and fourth by Associates V (only to the extent the foregoing sources are exhausted).
(B) The Partnership’s obligation, if any, to indemnify or advance expenses to any Covered Person shall be reduced by any
amount that such Covered Person may collect as indemnification or advancement from BXLS V and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained thereby), and to the extent the Partnership (or any
Affiliate thereof) pays or causes to be paid any amounts that should have been paid by Associates V, BXLS
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V and/or the applicable portfolio entity (including by virtue of any applicable insurance policies maintained thereby), it is agreed among the Partners that the Partnership shall have a
subrogation claim against Associates V and/or BXLS V and/or such portfolio entity in respect of such advancement or payments. The General Partner and the Partnership shall be specifically empowered to structure any such advancement or payment as a
loan or other arrangement (except for a loan to an executive officer of The Blackstone Group Inc. or any of its Affiliates, which shall not be permitted) as the General Partner may determine necessary or advisable to give effect to or otherwise
implement the foregoing.
Section 3.6. Representations of Partners. (a) Each Limited Partner and Special Partner by
execution of this Agreement (or by otherwise becoming bound by the terms and conditions hereof as provided herein or in the Partnership Act) represents and warrants to every other Partner and to the Partnership, except as may be waived by the
General Partner, that such Partner is acquiring each of such Partner’s Interests for such Partner’s own account for investment and not with a view to resell or distribute the same or any part hereof, and that no other person has any
interest in any such Interest or in the rights of such Partner hereunder; provided, that a Partner may choose to make transfers for estate and charitable planning purposes (pursuant to Section 6.3(a) and otherwise in accordance with the
terms hereof). Each Limited Partner and Special Partner represents and warrants that such Partner understands that the Interests have not been registered under the Securities Act and therefore such Interests may not be resold without registration
under the Securities Act or exemption from such registration, and that accordingly such Partner must bear the economic risk of an investment in the Partnership for an indefinite period of time. Each Limited Partner and Special Partner represents
that such Partner has such knowledge and experience in financial and business matters, that such Partner is capable of evaluating the merits and risks of an investment in the Partnership, and that such Partner is able to bear the economic risk of
such investment. Each Limited Partner and Special Partner represents that such Partner’s overall commitment to the Partnership and other investments which are not readily marketable is not disproportionate to the Partner’s net worth and
the Partner has no need for liquidity in the Partner’s investment in Interests. Each Limited Partner and Special Partner represents that to the full satisfaction of the Partner, the Partner has been furnished any materials that such Partner has
requested relating to the Partnership, any Investment and the offering of Interests and has been afforded the opportunity to ask questions of representatives of the Partnership concerning the terms and conditions of the offering of Interests and any
matters pertaining to each Investment and to obtain any other additional information relating thereto. Each Limited Partner and Special Partner represents that the Partner has consulted to the extent deemed appropriate by the Partner with the
Partner’s own advisers as to the financial, tax, legal and related matters concerning an investment in Interests and on that basis believes that an investment in the Interests is suitable and appropriate for the Partner.
(b) Each Limited Partner and Special Partner agrees that the representations and warranties contained in paragraph (a) above shall be true
and correct as of any date that such Partner (1) makes a capital contribution to the Partnership (whether as a result of Firm Advances made to such Partner or otherwise) with respect to any Investment, and such Partner hereby agrees that such
capital contribution shall serve as confirmation thereof and/or (2) repays any portion of the principal amount of a Firm Advance, and such Partner hereby agrees that such repayment shall serve as confirmation thereof.
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Section 3.7. Tax Representation and Further Assurances. (a) Each
Limited Partner and Special Partner, upon the request of the General Partner, agrees to perform all further acts and to execute, acknowledge and deliver any documents that may be reasonably necessary to comply with the General Partner’s or the
Partnership’s obligations under applicable law or to carry out the provisions of this Agreement.
(b) Each Limited Partner and Special
Partner certifies that (A) if the Limited Partner or Special Partner is a United States person (as defined in the Code) (x) (i) the Limited Partner or Special Partner’s name, social security number (or, if applicable, employer
identification number) and address provided to the Partnership and its Affiliates pursuant to an IRS Form W- 9, Request for Taxpayer Identification Number Certification (“W-9”) or otherwise are correct and (ii) the Limited Partner or Special Partner will complete and return a W-9 and (y) (i) the Limited Partner or Special
Partner is a United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days of a change to foreign (non-United States) status or
(B) if the Limited Partner or Special Partner is not a United States person (as defined in the Code) (x) (i) the information on the completed IRS Form W-8BEN, Certificate of Foreign Status
of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) (“W-8BEN”), IRS
Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)
(“W-8BEN-E”), or other applicable form, including but not limited to IRS Form W-8IMY,
Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting
(“W-8IMY”), or otherwise is correct and (ii) the Limited Partner or Special Partner will complete and return the applicable IRS form, including but not limited to a W-8BEN, W-8BEN-E or W-8IMY, and (y) (i) the Limited Partner or Special Partner is not
a United States person (as defined in the Code) and (ii) the Limited Partner or Special Partner will notify the Partnership within 60 days of any change of such status. Each Limited Partner and Special Partner agrees to provide such cooperation
and assistance, including but not limited to properly executing and providing to the Partnership in a timely manner any tax or other documentation or information that may be reasonably requested by the Partnership or the General Partner.
(c) Each Limited Partner and Special Partner acknowledges and agrees that the Partnership and the General Partner may release confidential
information or other information about the Limited Partner or Special Partner or related to such Limited Partner or Special Partner’s investment in the Partnership if the Partnership or the General Partner, in its or their sole discretion,
determines that such disclosure is required by applicable law or regulation or in order to comply for an exception from, or reduced tax rate of, tax or other tax benefit. Any such disclosure shall not be treated as a breach of any restriction upon
the disclosure of information imposed on any such person by law or otherwise, and a Limited Partner or Special Partner shall have no claim against the Partnership, the General Partner or any of their Affiliates for any form of damages or liability
as a result of actions taken by the foregoing in order to comply with any disclosure obligations that the foregoing reasonably believe are required by law, regulation or otherwise.
(d) Each Limited Partner and Special Partner acknowledges and agrees that if it provides information that is in anyway materially misleading,
or if it fails to provide the Partnership or its agents with any information requested hereunder, in either case in order to satisfy the Partnership’s obligations, the General Partner reserves the right to take any action and pursue any
remedies at its disposal, including (i) requiring such Limited Partner or Special Partner to Withdraw for Cause and (ii) withholding or deducting any costs caused by such Limited Partner’s or Special Partner’s action or inaction
from amounts otherwise distributable to such Limited Partner or Special Partner from the Partnership and its Affiliates.
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ARTICLE IV
CAPITAL OF THE PARTNERSHIP
Section 4.1. Capital Contributions by Partners. (a) Each Partner shall be required to make capital contributions to the
Partnership (“GP-Related Capital Contributions”) at such times and in such amounts (the “GP-Related Required
Amounts”) as are required to satisfy the Partnership’s obligation to make capital contributions to Associates V in respect of the GP-Related Associates V Interest to fund Associates V’s
capital contributions with respect to any GP-Related BXLS V Investment and as are otherwise determined by the General Partner from time to time or as may be set forth in such Limited Partner’s Commitment
Agreement or SMD Agreement, if any, or otherwise; provided, that additional GP-Related Capital Contributions in excess of the GP-Related Required Amounts may be
made pro rata among the Partners based upon each Partner’s Carried Interest Sharing Percentage. GP-Related Capital Contributions in excess of the GP-Related
Required Amounts which are to be used for ongoing business operations (as distinct from financing, legal or other specific liabilities of the Partnership (including those specifically set forth in Section 4.1(d) and Section 5.8(d))) shall
be determined by the General Partner. Special Partners shall not be required to make additional GP-Related Capital Contributions to the Partnership in excess of the
GP-Related Required Amounts, except (i) as a condition of an increase in such Special Partner’s GP-Related Profit Sharing Percentage or (ii) as
specifically set forth in this Agreement; provided, that the General Partner and any Special Partner may agree from time to time that such Special Partner shall make an additional GP-Related Capital
Contribution to the Partnership; provided further, that each Investor Special Partner shall maintain its GP-Related Capital Accounts at an aggregate level equal to the product of (i) its GP-Related Profit Sharing Percentage from time to time and (ii) the total capital of the Partnership related to the GP-Related BXLS V Interest.
(b) Each GP-Related Capital Contribution by a Partner shall be credited to the appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2, subject to Section 5.10.
(c) The General Partner may elect on a case by case basis to (i) cause the Partnership to loan any Partner (including any additional
Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) the amount of any GP-Related
Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The
Blackstone Group Inc. or any Affiliate thereof) to make a required GP-Related Capital Contribution to the Partnership in installments, in each case on terms determined by the General Partner.
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(d) (i) The Partners and the Withdrawn Partners have entered into the Trust Agreement,
pursuant to which certain amounts of the distributions relating to Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account constituting
a “Holdback”). The General Partner shall determine, as set forth below, the percentage of each distribution of Carried Interest that shall be withheld for any General Partner and/or Holdings and each Partner Category (such
withheld percentage constituting the General Partner’s and such Partner Category’s “Holdback Percentage”). The applicable Holdback Percentages initially shall be 0% for any General Partner, 15% for Existing Partners (other
than the General Partner), 21% for Retaining Withdrawn Partners (other than the General Partner) and 24% for Deceased Partners (the “Initial Holdback Percentages”). Any provision of this Agreement to the contrary
notwithstanding, the Holdback Percentage for the General Partner and/or Holdings shall not be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).
(ii) The Holdback Percentage may not be reduced for any individual Partner as compared to the other Partners in his or her
Partner Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner Categories on a proportionate basis. For example, if the Holdback Percentage for Existing Partners is
decreased to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any reduction in the Holdback Percentage for any Partner shall apply only to distributions relating
to Carried Interest made after the date of such reduction.
(iii) The Holdback Percentage may not be increased for any
individual Partner as compared to the other Partners in his or her Partner Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’ Holdback Percentage beyond 21% unless the
General Partner concurrently increases the Existing Partners’ Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the General Partner increases the Holdback
Percentage for both Existing Partners and Retaining Withdrawn Partners to 24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies equally to all Partner Categories. Any
increase in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner from proportionately increasing the
Holdback Percentage of any Partner Category (following a reduction of the Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For example, if the General Partner reduces
the Holdback Percentages for Existing Partners, Retaining Withdrawn Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the Holdback Percentages to the Initial
Holdback Percentages.
(iv) (A) Notwithstanding anything contained herein to the contrary, the General Partner may
increase or decrease the Holdback Percentage for any Partner in any Partner Category (in such capacity, the “Subject Partner”) pursuant to a majority vote of the Limited Partners (a “Holdback Vote”);
provided, that, notwithstanding anything to the contrary contained herein, the Holdback Percentage applicable to any General Partner shall
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not be increased or decreased without its prior written consent; provided further, that a Subject Partner’s Holdback Percentage shall not be (I) increased prior to such time as
such Subject Partner (x) is notified by the Partnership of the decision to increase such Subject Partner’s Holdback Percentage and (y) has, if requested by such Subject Partner, been given 30 days to gather and provide information to
the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) or (II) decreased unless such decrease occurs subsequent to an increase in a Subject Partner’s Holdback Percentage pursuant to a Holdback
Vote under this clause (iv); provided further, that such decrease shall not exceed an amount such that such Subject Partner’s Holdback Percentage is less than the prevailing Holdback Percentage for the Partner Category of such
Subject Partner; provided further, that a Partner shall not vote to increase a Subject Partner’s Holdback Percentage unless such voting Partner determines, in such Partner’s good faith judgment, that the facts and
circumstances indicate that it is reasonably likely that such Subject Partner, or any of such Subject Partner’s successors or assigns (including such Subject Partner’s estate or heirs) who at the time of such vote holds the GP-Related Partner Interest or otherwise has the right to receive distributions relating thereto, will not be capable of satisfying any GP-Related Recontribution Amounts that
may become due.
(B) A Holdback Vote shall take place at a Partnership meeting. Each of the Limited Partners shall be
entitled to cast one vote with respect to the Holdback Vote regardless of such Limited Partner’s interest in the Partnership. Such vote may be cast by any such Partner in person or by proxy.
(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback Percentage, such Subject
Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided, that if the Partnership and the Subject Partner cannot agree upon a mutually
satisfactory arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates; provided
further, that if such candidates fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the arbitrator. Each Subject
Partner that submits the decision of the Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected
out-of-pocket expenses relating thereto, and each such party shall, to the satisfaction of the arbitrator and prior to any determination being made by the arbitrator,
pay the total of such estimated expenses (i.e., both the Subject Partner’s and the Partnership’s expenses) into an escrow account. The arbitrator shall direct the escrow agent to pay out of such escrow account all expenses
associated with such arbitration (including costs leading thereto) and to return to the “victorious” party the entire amount of funds such party paid into such escrow account. If the amount contributed to the escrow account by the
losing party is insufficient to cover the expenses of such arbitration, such “losing” party shall then provide any additional funds necessary to cover such costs to such “victorious” party. For purposes hereof,
the “victorious” party shall be the Partnership if the Holdback Percentage ultimately determined by the arbitrator is closer to the percentage determined in the second Holdback Vote than it is to the prevailing Holdback Percentage for
the Subject Partner’s Partner Category; otherwise, the Subject Partner shall be the “victorious” party. The party that is not the “victorious” party shall be the “losing” party.
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(D) In the event of a decrease in a Subject Partner’s Holdback
Percentage (1) pursuant to a Holdback Vote under this clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and distribute to such Subject Partner any
Trust Amounts (and the Trust Income thereon (except as expressly provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance with such Subject Partner’s
reduced Holdback Percentage) as though such reduced Holdback Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).
(v) (A) If a Partner’s Holdback Percentage exceeds 15% (such percentage in excess of 15% constituting
the “Excess Holdback Percentage”), such Partner may satisfy the portion of his or her Holdback obligation in respect of his or her Excess Holdback Percentage (such portion constituting such Partner’s “Excess
Holdback”), and such Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he or she was a Partner), to the extent his or her Excess Holdback obligation has previously been satisfied in cash, may
obtain the release of the Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback
obligation, by pledging, granting a security interest or otherwise making available to the General Partner, on a first priority basis (except as provided below), all or any portion of his or her Firm Collateral in satisfaction of his or her Excess
Holdback obligation. Any Partner seeking to satisfy all or any portion of the Excess Holdback utilizing Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the
General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Partnership to realize on (if required), such Firm Collateral; provided, that, in the case of entities listed in the Partnership’s
books and records in which Partners are permitted to pledge or grant a security interest over their interests therein to finance all or a portion of their capital contributions thereto (“Pledgable Blackstone Interests”), to the
extent a first priority security interest is unavailable because of an existing lien on such Firm Collateral, the Partner or Withdrawn Partner seeking to utilize such Firm Collateral shall grant the General Partner a second priority security
interest therein in the manner provided above; provided further, that (x) in the case of Pledgable Blackstone Interests, to the extent that neither a first priority nor a second priority security interest is available, or
(y) if the General Partner otherwise determines in its good faith judgment that a security interest in Firm Collateral (and the corresponding documents and actions) are not necessary or appropriate, the Partner or Withdrawn Partner shall (in
the case of either clause (x) or (y) above) irrevocably instruct in writing the relevant partnership, limited liability company or other entity listed in the Partnership’s books and records to remit any and all net proceeds resulting
from a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully provided in clause (B) below. The Partnership shall, at the request of any Partner or Withdrawn Partner, assist such Partner or Withdrawn Partner in
taking such action as is necessary to enable such Partner or Withdrawn Partner to use Firm Collateral as provided hereunder.
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(B) If upon a sale or other realization of all or any portion of any Firm
Collateral (a “Firm Collateral Realization”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds otherwise
distributable to such Partner or Withdrawn Partner from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust Account to
fully satisfy such Excess Holdback requirement (allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount necessary
to satisfy such Excess Holdback requirement shall be distributed to such Partner or Withdrawn Partner.
(C) Upon any
valuation or revaluation of Firm Collateral that results in a decreased valuation of such Firm Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including
upon a Firm Collateral Realization, if net proceeds therefrom and the remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the
foregoing to such Partner or Withdrawn Partner and such Partner or Withdrawn Partner shall, within 30 days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his or her
Excess Holdback requirement. If any such Partner or Withdrawn Partner defaults upon his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of Section 5.8(d)(ii)
shall be deemed inapplicable to a default under this clause (C); provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the
term “GP-Related Defaulting Party” where such term appears in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms
“Net GP-Related Recontribution Amount” and “GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be
construed as the amount due pursuant to this clause (C).
(vi) Any Partner or Withdrawn Partner may (A) obtain the
release of any Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such Partner or
Withdrawn Partner or (B) require the Partnership to distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit
(an “L/C”) for the benefit of the Trustee(s) in such amounts. Any Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall deliver to the
Trustee(s) an unconditional and irrevocable L/C from a commercial
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bank whose (x) short-term deposits are rated at least A-1 by S&P or
P-1 by Moody’s (if the L/C is for a term of 1 year or less), or (y) long-term deposits are rated at least A+ by S&P or A1 by Moody’s (if the L/C is
for a term of 1 year or more) (each a “Required Rating”). If the relevant rating of the commercial bank issuing such L/C drops below the relevant Required Rating, the L/C Partner shall supply to the Trustee(s), within 30 days
of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, in lieu of the insufficient L/C. In addition, if the L/C has a term expiring on a date earlier than the latest possible
termination date of BXLS V, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to provide a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, at least 30 days
prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to drawing on any L/C. The Trustee(s) may (as directed by the Partnership in the case of clause (I) below) draw down on an L/C
only if (I) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the Partnership’s obligations under the Clawback Provisions or (II) an L/C Partner has not provided a new L/C from a commercial bank
whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash and/or Firm Collateral (to the extent permitted hereunder)), at least 30 days prior to the stated expiration of an existing L/C in accordance
with this clause (vi). The Trustee(s), as directed by the Partnership, shall return to any L/C Partner his or her L/C upon (1) the termination of the Trust Account and satisfaction of the Partnership’s obligations, if any, in respect of
the Clawback Provisions, (2) an L/C Partner satisfying his or her entire Holdback obligation in cash and Firm Collateral (to the extent permitted hereunder), or (3) the release, by the Trustee(s), as directed by the Partnership, of all
amounts in the Trust Account to the Partners or Withdrawn Partners. If an L/C Partner satisfies a portion of his or her Holdback obligation in cash and/or Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as directed by the
Partnership, release a portion of the amounts in the Trust Account to the Partners or Withdrawn Partners in the Partner Category of such L/C Partner, the L/C of an L/C Partner may be reduced by an amount corresponding to such portion satisfied in
cash and/or Firm Collateral (to the extent permitted hereunder) or such portion released by the Trustee(s), as directed by the Partnership; provided, that in no way shall the general release of any Trust Income cause an L/C Partner to be
permitted to reduce the amount of an L/C by any amount.
(vii) (A) Any in-kind
distributions by the Partnership relating to Carried Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose of any
in-kind distributions held in the Trust Account at any time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.
(B) In lieu of the foregoing, any Existing Partner may pledge or grant a security interest with respect to any in-kind distribution the Special Firm Collateral referred to in the applicable category in the Partnership’s books and records; provided, that the initial contribution of such Special Firm Collateral
shall initially equal 130% of the required Holdback for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback. Sections 4.1(d)(viii)(C) and (D) shall apply to such Special Firm Collateral. To the extent
such Special Firm Collateral exceeds the applicable minimum percentage of the required Holdback specified in the first sentence of this clause (vii)(B), the related Partner may obtain a release of such excess amount from the Trust Account.
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(viii) (A) Any Limited Partner or Withdrawn Partner may satisfy all or
any portion of his or her Holdback (excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his or her Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by the use of an L/C as
provided herein, obtain a release of Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn Partner’s Holdback
(excluding any Excess Holdback) by pledging or otherwise granting a security interest to the Trustee(s) on a first priority basis all of his or her Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or exceed the
amount of the Holdback distributed to the Partner or Withdrawn Partner (as more fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise take such
other action as is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) to realize on (if required), such Special Firm
Collateral.
(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or any portion of any
Special Firm Collateral (a “Special Firm Collateral Realization”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in connection
with an Excess Holdback) is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided herein (i.e., cash contributed to the Trust Account or an
L/C in the Trust Account)), then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Special Firm Collateral Realization (which shall not include the amount of Firm Collateral that consists of a
Qualifying Fund or other asset and is being used in connection with an Excess Holdback) shall be paid into the Trust (and allocated to such Partner or Withdrawn Partner) to fully satisfy such Holdback and shall be deemed thereafter to be Trust
Amounts for purposes hereunder. Any net proceeds from such Special Firm Collateral Realization in excess of the amount necessary to satisfy such Holdback (excluding any Excess Holdback) shall be distributed to such Partner or Withdrawn Partner. To
the extent a Qualifying Fund distributes Securities to a Partner or Withdrawn Partner in connection with a Special Firm Collateral Realization, such Partner or Withdrawn Partner shall be required to promptly fund such Partner’s or Withdrawn
Partner’s deficiency with respect to his or her Holdback in cash or an L/C.
(C) Upon any valuation or revaluation of
the Special Firm Collateral and/or any adjustment in the Applicable Collateral Percentage applicable to a Qualifying Fund (as provided in the Partnership’s books and records), if such Partner’s or Withdrawn Partner’s Special Firm
Collateral is valued at less than such Partner’s Holdback (excluding any Excess Holdback) as provided in the
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Partnership’s books and records, taking into account other permitted means of satisfying the Holdback hereunder, the Partnership shall provide notice of the foregoing to such Partner or
Withdrawn Partner and, within 10 Business Days of receiving such notice, such Partner or Withdrawn Partner shall contribute cash or additional Special Firm Collateral to the Trust Account in an amount necessary to make up such deficiency. If any
such Partner or Withdrawn Partner defaults upon his or her obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided, that the first sentence of Section 5.8(d)(ii)(A) shall be deemed inapplicable to
such default; provided further, that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (I) the term “GP-Related Defaulting Party” where such
term appears in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (II) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).
(D) Upon a Partner becoming a Withdrawn Partner, at any time thereafter the General Partner may revoke the ability of such
Withdrawn Partner to use Special Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding anything else in this Section 4.1(d)(viii). In that case the provisions of clause (C) above shall apply to the Withdrawn
Partner’s obligation to satisfy the Holdback (except that 30 days’ notice of such revocation shall be given), given that the Special Firm Collateral is no longer available to satisfy any portion of the Holdback (excluding any Excess
Holdback).
(E) Nothing in this Section 4.1(d)(viii) shall prevent any Partner or Withdrawn Partner from using any
amount of such Partner’s interest in a Qualifying Fund as Firm Collateral; provided, that at all times Section 4.1(d)(v) and this Section 4.1(d)(viii) are each satisfied.
Section 4.2. Interest. Interest on the balances of the Partners’ capital related to the Partners’ GP-Related Partner Interests (excluding capital invested in GP-Related Investments and, if deemed appropriate by the General Partner, capital invested in any other investment
of the Partnership) shall be credited to the Partners’ GP-Related Capital Accounts at the end of each accounting period pursuant to Section 5.2, or at any other time as determined by the General
Partner, at rates determined by the General Partner from time to time, and shall be charged as an expense of the Partnership.
Section 4.3. Withdrawals of Capital. No Partner may withdraw capital related to such Partner’s
GP-Related Partner Interests from the Partnership except (i) for distributions of cash or other property pursuant to Section 5.8, (ii) as otherwise expressly provided in this Agreement or
(iii) as determined by the General Partner.
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ARTICLE V
PARTICIPATION IN PROFITS AND LOSSES
Section 5.1. General Accounting Matters. (a) GP-Related Net Income (Loss) shall be
determined by the General Partner at the end of each accounting period and shall be allocated as described in Section 5.4.
(b)
“GP-Related Net Income (Loss)” means:
(i) from any
activity of the Partnership related to the GP-Related BXLS V Interest for any accounting period (other than GP-Related Net Income (Loss) from GP-Related Investments described below), (x) the gross income realized by the Partnership from such activity during such accounting period less (y) all expenses of the Partnership, and all other items that
are deductible from gross income, for such accounting period that are allocable to such activity (determined as provided below);
(ii) from any GP-Related Investment for any accounting period in which such GP-Related Investment has not been sold or otherwise disposed of, (x) the gross amount of dividends, interest or other income received by the Partnership from such
GP-Related Investment during such accounting period less (y) all expenses of the Partnership for such accounting period that are allocable to such GP-Related
Investment (determined as provided below); and
(iii) from any GP-Related
Investment for the accounting period in which such GP-Related Investment is sold or otherwise disposed of, (x) the sum of the gross proceeds from the sale or other disposition of such GP-Related Investment and the gross amount of dividends, interest or other income received by the Partnership from such GP-Related Investment during such accounting period
less (y) the sum of the cost or other basis to the Partnership of such GP-Related Investment and all expenses of the Partnership for such accounting period that are allocable to such GP-Related Investment.
(c) GP-Related Net Income (Loss) shall be
determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (i) any income of the Partnership that is exempt from U.S. federal income taxation and not
otherwise taken into account in computing GP-Related Net Income (Loss) shall be added to such taxable income or loss; (ii) if any asset has a value in the books of the Partnership that differs from its
adjusted tax basis for U.S. federal income tax purposes, any depreciation, amortization or gain resulting from a disposition of such asset shall be calculated with reference to such value; (iii) upon an adjustment to the value of any asset in
the books of the Partnership pursuant to Treasury Regulations Section 1.704-1(b)(2), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (iv) any
expenditures of the Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing GP-Related Net Income (Loss) pursuant to this
definition shall be treated as deductible items; (v) any income from a GP-Related Investment that is payable to Partnership employees in respect of “phantom interests” in such GP-Related Investment awarded by the General Partner to employees shall be included as an expense in the
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calculation of GP-Related Net Income (Loss) from such GP-Related Investment, and (vi) items of income and
expense (including interest income and overhead and other indirect expenses) of the Partnership, Holdings and other Affiliates of the Partnership shall be allocated among the Partnership, Holdings and such Affiliates, among various Partnership
activities and GP-Related Investments and between accounting periods, in each case as determined by the General Partner. Any adjustments to GP-Related Net Income (Loss)
by the General Partner, including adjustments for items of income accrued but not yet received, unrealized gains, items of expense accrued but not yet paid, unrealized losses, reserves (including reserves for taxes, bad debts, actual or threatened
litigation, or any other expenses, contingencies or obligations) and other appropriate items shall be made in accordance with GAAP; provided, that the General Partner shall not be required to make any such adjustment.
(d) An accounting period shall be a Fiscal Year, except that, at the option of the General Partner, an accounting period will terminate and a
new accounting period will begin on the admission date of an additional Partner or the Settlement Date of a Withdrawn Partner, if any such date is not the first day of a Fiscal Year. If any event referred to in the preceding sentence occurs and the
General Partner does not elect to terminate an accounting period and begin a new accounting period, then the General Partner may make such adjustments as it deems appropriate to the Partners’ GP-Related
Profit Sharing Percentages for the accounting period in which such event occurs (prior to any allocations of GP-Related Unallocated Percentages or adjustments to
GP-Related Profit Sharing Percentages pursuant to Section 5.3) to reflect the Partners’ average GP-Related Profit Sharing Percentages during such accounting
period; provided, that the GP-Related Profit Sharing Percentages of Partners in GP-Related Net Income (Loss) from
GP-Related Investments acquired during such accounting period will be based on GP-Related Profit Sharing Percentages in effect when each such GP-Related Investment was acquired.
(e) In establishing
GP-Related Profit Sharing Percentages and allocating GP-Related Unallocated Percentages pursuant to Section 5.3, the General Partner may consider such factors as it
deems appropriate.
(f) All determinations, valuations and other matters of judgment required to be made for accounting purposes under this
Agreement shall be made by the General Partner and approved by the Partnership’s independent accountants. Such approved determinations, valuations and other accounting matters shall be conclusive and binding on all Partners, all Withdrawn
Partners, their successors, heirs, estates or legal representatives and any other person, and to the fullest extent permitted by law no such person shall have the right to an accounting or an appraisal of the assets of the Partnership or any
successor thereto.
Section 5.2. GP-Related Capital Accounts. (a) There
shall be established for each Partner in the books of the Partnership, to the extent and at such times as may be appropriate, one or more capital accounts as the General Partner may deem to be appropriate for purposes of accounting for such
Partner’s interests in the capital of the Partnership related to the GP-Related BXLS V Interest and the GP-Related Net Income (Loss) of the Partnership (each
a “GP-Related Capital Account”).
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(b) As of the end of each accounting period or, in the case of a contribution to the
Partnership by one or more of the Partners with respect to such Partner or Partners’ GP-Related Partner Interests or a distribution by the Partnership to one or more of the Partners with respect to such
Partner or Partners’ GP-Related Partner Interests, at the time of such contribution or distribution, (i) the appropriate GP-Related Capital Accounts of each
Partner shall be credited with the following amounts: (A) the amount of cash and the value of any property contributed by such Partner to the capital of the Partnership related to such Partner’s
GP-Related Partner Interest during such accounting period, (B) the GP-Related Net Income allocated to such Partner for such accounting period and (C) the
interest credited on the balance of such Partner’s capital related to such Partner’s GP-Related Partner Interest for such accounting period pursuant to Section 4.2; and (ii) the appropriate
GP-Related Capital Accounts of each Partner shall be debited with the following amounts: (x) the amount of cash, the principal amount of any subordinated promissory note of the Partnership referred to in
Section 6.5 (as such amount is paid) and the value of any property distributed to such Partner during such accounting period with respect to such Partner’s GP-Related Partner Interest and
(y) the GP-Related Net Loss allocated to such Partner for such accounting period.
Section 5.3. GP-Related Profit Sharing Percentages. (a) Prior to the beginning
of each annual accounting period, the General Partner shall establish the profit sharing percentage (the “GP-Related Profit Sharing Percentage”) of each Partner in each category of
GP-Related Net Income (Loss) for such annual accounting period pursuant to Section 5.1(a) taking into account such factors as the General Partner deems appropriate; provided, that (i) the
General Partner may elect to establish GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related
Investment acquired by the Partnership during such accounting period at the time such GP-Related Investment is acquired in accordance with paragraph (c) below and
(ii) GP-Related Net Income (Loss) for such accounting period from any GP-Related Investment shall be allocated in accordance with the
GP-Related Profit Sharing Percentages in such GP-Related Investment established in accordance with paragraph (c) below. The General Partner may establish different GP-Related Profit Sharing Percentages for any Partner in different categories of GP-Related Net Income (Loss). In the case of the Withdrawal of a Partner, such former
Partner’s GP-Related Profit Sharing Percentages shall be allocated by the General Partner to one or more of the remaining Partners as the General Partner shall determine. In the case of the admission of
any Partner to the Partnership as an additional Partner, the GP-Related Profit Sharing Percentages of the other Partners shall be reduced by an amount equal to the
GP-Related Profit Sharing Percentage allocated to such new Partner pursuant to Section 6.1(b); such reduction of each other Partner’s GP-Related Profit Sharing
Percentage shall be pro rata based upon such Partner’s GP-Related Profit Sharing Percentage as in effect immediately prior to the admission of the new Partner. Notwithstanding the foregoing, the
General Partner may also adjust the GP-Related Profit Sharing Percentage of any Partner for any annual accounting period at the end of such annual accounting period in its sole discretion.
(b) The General Partner may elect to allocate to the Partners less than 100% of the GP-Related Profit
Sharing Percentages of any category for any annual accounting period at the time specified in Section 5.3(a) for the annual fixing of GP-Related Profit Sharing Percentages (any remainder of such GP-Related Profit Sharing Percentages being called a “GP-Related Unallocated Percentage”); provided, that any GP-Related Unallocated Percentage in any category of GP-Related Net Income (Loss) for any annual accounting period that is not allocated by the General Partner within 90 days
after the end of such accounting period shall be deemed to be allocated among all the Partners (including the General Partner) in the manner determined by the General Partner in its sole discretion.
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(c) Unless otherwise determined by the General Partner in a particular case, (i) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from any GP-Related Investment shall be allocated in
proportion to the Partners’ respective GP-Related Capital Contributions in respect of such GP-Related Investment and
(ii) GP-Related Profit Sharing Percentages in GP-Related Net Income (Loss) from each GP-Related Investment shall be fixed at
the time such GP-Related Investment is acquired and shall not thereafter change, subject to any repurchase rights established by the General Partner pursuant to Section 5.7.
Section 5.4. Allocations of GP-Related Net Income (Loss). (a) Except as provided in
Section 5.4(d), GP-Related Net Income of the Partnership for each GP-Related Investment shall be allocated to the GP-Related
Capital Accounts related to such GP-Related Investment of all the Partners participating in such GP-Related Investment (including the General Partner): first, in
proportion to and to the extent of the amount of Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest
distributed to the Partners; second, to Partners that received Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or
Carried Interest in years prior to the years such GP-Related Net Income is being allocated to the extent such Non-Carried Interest (other than amounts representing a
return of GP-Related Capital Contributions) or Carried Interest exceeded GP-Related Net Income allocated to such Partners in such earlier years; and third, to the
Partners in the same manner that such Non-Carried Interest (other than amounts representing a return of GP-Related Capital Contributions) or Carried Interest would have
been distributed if cash were available to distribute with respect thereto.
(b) GP-Related Net
Loss of the Partnership shall be allocated as follows: (i) GP-Related Net Loss relating to realized losses suffered by BXLS V and allocated to the Partnership with respect to its pro rata share
thereof (based on capital contributions made by the Partnership to BXLS V with respect to the GP-Related BXLS V Interest) shall be allocated to the Partners in accordance with each Partner’s Non-Carried Interest Sharing Percentage with respect to the GP-Related Investment giving rise to such loss suffered by BXLS V and
(ii) GP-Related Net Loss relating to realized losses suffered by BXLS V and allocated to the Partnership with respect to the Carried Interest shall be allocated in accordance with a Partner’s
(including a Withdrawn Partner’s) Carried Interest Give Back Percentage (as of the date of such loss) (subject to adjustment pursuant to Section 5.8(e)).
(c) Notwithstanding Section 5.4(a) above, GP-Related Net Income relating to Carried Interest
allocated after the allocation of a GP-Related Net Loss pursuant to clause (ii) of Section 5.4(b) shall be allocated in accordance with such Carried Interest Give Back Percentages until such time as
the Partners have been allocated GP-Related Net Income relating to Carried Interest equal to the aggregate amount of GP-Related Net Loss previously allocated in
accordance with clause (ii) of Section 5.4(b). Withdrawn Partners shall remain Partners for purposes of allocating such GP-Related Net Loss with respect to Carried Interest.
(d) To the extent the Partnership has any GP-Related Net Income (Loss) for any accounting period
unrelated to BXLS V, such GP-Related Net Income (Loss) will be allocated in accordance with GP-Related Profit Sharing Percentages prevailing at the beginning of such
accounting period.
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(e) The General Partner may authorize from time to time advances to Partners (including any
additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners who are also executive officers of The Blackstone Group Inc. or any Affiliate thereof) against their allocable shares of GP-Related Net Income (Loss).
(f) Notwithstanding the foregoing, the General Partner may make such
allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems reasonably necessary for this purpose.
Section 5.5. Liability of Partners. Except as otherwise provided in the Partnership Act or as expressly provided in this
Agreement, no Partner shall be personally obligated for any debt, obligation or liability of the Partnership or of any other Partner solely by reason of being a Partner. In no event shall any Partner or Withdrawn Partner (i) be obligated to
make any capital contribution or payment to or on behalf of the Partnership or (ii) have any liability to return distributions received by such Partner from the Partnership, in each case except as specifically provided in Section 4.1(d) or
Section 5.8 or otherwise in this Agreement, as such Partner shall otherwise expressly agree in writing or as may be required by applicable law.
Section 5.6. [Intentionally omitted.]
Section 5.7. Repurchase Rights, etc. The General Partner may from time to time establish such repurchase rights
and/or other requirements with respect to the Partners’ GP-Related Partner Interests relating to GP-Related BXLS V Investments as the General Partner may determine.
The General Partner shall have authority to (a) withhold any distribution otherwise payable to any Partner until any such repurchase rights have lapsed or any such requirements have been satisfied, (b) pay any distribution to any Partner
that is Contingent as of the distribution date and require the refund of any portion of such distribution that is Contingent as of the Withdrawal Date of such Partner, (c) amend any previously established repurchase rights or other requirements
from time to time and (d) make such exceptions thereto as it may determine on a case by case basis.
Section 5.8.
Distributions. (a) (i) The Partnership shall make distributions of available cash (subject to reserves and other adjustments as provided herein) or other property to Partners with respect to such Partners’ GP-Related Partner Interests at such times and in such amounts as are determined by the General Partner. The General Partner shall, if it deems it appropriate, determine the availability for distribution of, and
distribute, cash or other property separately for each category of GP-Related Net Income (Loss) established pursuant to Section 5.1(a). Distributions of cash or other property with respect to Non-Carried Interest shall be made among the Partners in accordance with their respective Non-Carried Interest Sharing Percentages, and, subject to Section 4.1(d) and
Section 5.8(e), distributions of cash or other property with respect to Carried Interest shall be made among Partners in accordance with their respective Carried Interest Sharing Percentages.
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(ii) At any time that a sale, exchange, transfer or other disposition
by BXLS V of a portion of a GP-Related Investment is being considered by the Partnership (a “GP-Related Disposable Investment”), at the
election of the General Partner each Partner’s GP-Related Partner Interest with respect to such GP-Related Investment shall be vertically divided into two separate GP-Related Partner Interests, a GP-Related Partner Interest attributable to the GP-Related Disposable Investment (a Partner’s
“GP-Related Class B Interest”), and a GP-Related Partner Interest attributable to such
GP-Related Investment excluding the GP-Related Disposable Investment (a Partner’s “GP-Related
Class A Interest”). Distributions (including those resulting from a sale, transfer, exchange or other disposition by BXLS V) relating to a GP-Related Disposable Investment (with
respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of GP-Related Class B Interests with respect to such GP-Related Investment in accordance with their GP-Related Profit Sharing Percentages relating to such GP-Related Class B
Interests, and distributions (including those resulting from the sale, transfer, exchange or other disposition by BXLS V) relating to a GP-Related Investment excluding such
GP-Related Disposable Investment (with respect to both Carried Interest and Non-Carried Interest) shall be made only to holders of
GP-Related Class A Interests with respect to such GP-Related Investment in accordance with their respective GP-Related
Profit Sharing Percentages relating to such GP-Related Class A Interests. Except as provided above, distributions of cash or other property with respect to each category of
GP-Related Net Income (Loss) shall be allocated among the Partners in the same proportions as the allocations of GP-Related Net Income (Loss) of each such category.
(b) Subject to the Partnership’s having sufficient available cash in the reasonable judgment of the General Partner, the Partnership shall
make cash distributions to each Partner with respect to each Fiscal Year of the Partnership in an aggregate amount at least equal to the total U.S. federal, New York State and New York City income and other taxes that would be payable by such
Partner with respect to all categories of GP-Related Net Income (Loss) allocated to such Partner for such Fiscal Year, the amount of which shall be calculated (i) on the assumption that each Partner is an
individual subject to the then prevailing maximum rate of U.S. federal, New York State and New York City and other income taxes (including, without limitation, taxes under Sections 1401 and 1411 of the Code), (ii) taking into account
(x) the limitations on the deductibility of expenses and other items for U.S. federal income tax purposes and (y) the character (e.g., long-term or short-term
capital gain or ordinary or exempt) of the applicable income) and (iii) taking into account any differential in applicable rates due to the type and character of GP-Related Net Income (Loss) allocated to
such Partner. Notwithstanding the provisions of the foregoing sentence, the General Partner may refrain from making any distribution if, in the reasonable judgment of the General Partner, such distribution is prohibited by applicable law.
(c) The General Partner may provide that the GP-Related Partner Interest of any Partner or employee
(including such Partner’s or employee’s right to distributions and investments of the Partnership related thereto) may be subject to repurchase by the Partnership during such period as the General Partner shall determine
(a “Repurchase Period”). Any Contingent distributions from GP-Related Investments subject to repurchase rights will be withheld by the Partnership and will be distributed to the recipient
thereof (together with interest thereon at rates determined by the General Partner from time to time) as the recipient’s rights to such distributions become Non-Contingent (by virtue of the expiration of
the applicable
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Repurchase Period or otherwise). The General Partner may elect in an individual case to have the Partnership distribute any Contingent distribution to the applicable recipient thereof
irrespective of whether the applicable Repurchase Period has lapsed. If a Partner Withdraws from the Partnership for any reason other than his or her death, Total Disability or Incompetence, the undistributed share of any GP-Related Investment that remains Contingent as of the applicable Withdrawal Date shall be repurchased by the Partnership at a purchase price determined at such time by the General Partner. Unless determined
otherwise by the General Partner, the repurchased portion thereof will be allocated among the remaining Partners with interests in such GP-Related Investment in proportion to their respective percentage
interests in such GP-Related Investment, or if no other Partner has a percentage interest in such specific GP-Related Investment, to the General Partner;
provided, that the General Partner may allocate the Withdrawn Partner’s share of unrealized investment income from a repurchased GP-Related Investment attributable to the period after the Withdrawn
Partner’s Withdrawal Date on any basis it may determine, including to existing or new Partners who did not previously have interests in such GP-Related Investment, except that, in any event, each Investor
Special Partner shall be allocated a share of such unrealized investment income equal to its respective GP-Related Profit Sharing Percentage of such unrealized investment income.
(d) (i) (A) If Associates V is obligated under the Clawback Provisions or Giveback Provisions to contribute to BXLS V a Clawback Amount or
a Giveback Amount (other than a Capital Commitment Giveback Amount) and the Partnership is obligated to contribute any such amount to Associates V in respect of the Partnership’s GP-Related Associates V
Interest (the amount of any such obligation of the Partnership with respect to such a Giveback Amount being herein called a “GP-Related Giveback Amount”), the General Partner shall
call for such amounts as are necessary to satisfy such obligations of the Partnership as determined by the General Partner, in which case each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the
General Partner, such an amount of prior distributions by the Partnership (and the Other Fund GPs) with respect to Carried Interest (and/or Non-Carried Interest in the case of a
GP-Related Giveback Amount) (the “GP-Related Recontribution Amount”) which equals (I) the product of (a) a Partner’s or
Withdrawn Partner’s Carried Interest Give Back Percentage and (b) the aggregate Clawback Amount payable by the Partnership in the case of Clawback Amounts and (II) with respect to a GP-Related
Giveback Amount, such Partner’s pro rata share of prior distributions of Carried Interest and/or Non-Carried Interest in connection with (a) the
GP-Related BXLS V Investment giving rise to the GP-Related Giveback Amount, (b) if the amounts contributed pursuant to clause (II)(a) above are insufficient to
satisfy such GP-Related Giveback Amount, GP-Related BXLS V Investments other than the one giving rise to such obligation, but only those amounts received by the Partners
with an interest in the GP-Related BXLS V Investment referred to in clause (II)(a) above, and (c) if the GP-Related Giveback Amount pursuant to an applicable BXLS V
Agreement is unrelated to a specific GP-Related BXLS V Investment, all GP-Related BXLS V Investments. Each Partner and Withdrawn Partner shall promptly contribute to the
Partnership, along with satisfying his or her comparable obligations to the Other Fund GPs, if any, upon such call such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount, less the
amount paid out of the Trust Account on behalf of such Partner or Withdrawn Partner by the Trustee(s) pursuant to written instructions from the Partnership, or if applicable, any of the Other Fund GPs with respect to Carried Interest (and/or Non-Carried Interest in the case of GP-Related Giveback Amounts) (the “Net GP-Related Recontribution
Amount”), irrespective of the fact that the amounts in the Trust Account may be sufficient on an aggregate
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basis to satisfy the Partnership’s and the Other Fund GPs’ obligation under the Clawback Provisions and/or Giveback Provisions; provided, that to the extent a Partner’s or
Withdrawn Partner’s share of the amount paid with respect to the Clawback Amount or the GP-Related Giveback Amount exceeds his or her GP-Related Recontribution
Amount, such excess shall be repaid to such Partner or Withdrawn Partner as promptly as reasonably practicable, subject to clause (ii) below; provided further, that such written instructions from the General Partner shall specify
each Partner’s and Withdrawn Partner’s GP-Related Recontribution Amount. Prior to such time, the General Partner may, in its discretion (but shall be under no obligation to), provide notice that in
the General Partner’s judgment, the potential obligations in respect of the Clawback Provisions or the Giveback Provisions will probably materialize (and an estimate of the aggregate amount of such obligations); provided further,
that any amount from a Partner’s Trust Account used to pay any GP-Related Giveback Amount (or such lesser amount as may be required by the General Partner) shall be contributed by such Partner to such
Partner’s Trust Account no later than 30 days after the Net GP-Related Recontribution Amount is paid with respect to such GP-Related Giveback Amount.
(B) To the extent any Partner or Withdrawn Partner has satisfied any Holdback obligation with Firm Collateral, such Partner or
Withdrawn Partner shall, within 10 days of the General Partner’s call for GP-Related Recontribution Amounts, make a cash payment into the Trust Account in an amount equal to the amount of the Holdback
obligation satisfied with such Firm Collateral, or such lesser amount such that the amount in the Trust Account allocable to such Partner or Withdrawn Partner equals the sum of (I) such Partner’s or Withdrawn Partner’s GP-Related Recontribution Amount and (II) any similar amounts payable to any of the Other Fund GPs. Immediately upon receipt of such cash, the Trustee(s) shall take such steps as are necessary to release such
Firm Collateral of such Partner or Withdrawn Partner equal to the amount of such cash payment. If the amount of such cash payment is less than the amount of Firm Collateral of such Partner or Withdrawn Partner, the balance of such Firm Collateral if
any, shall be retained to secure the payment of GP-Related Deficiency Contributions, if any, and shall be fully released upon the satisfaction of the Partnership’s and the Other Fund GPs’ obligation
to pay the Clawback Amount. The failure of any Partner or Withdrawn Partner to make a cash payment in accordance with this clause (B) (to the extent applicable) shall constitute a default under Section 5.8(d)(ii) as if such cash payment
hereunder constitutes a Net GP-Related Recontribution Amount under Section 5.8(d)(ii). Solely to the extent required by the BXLS V Partnership Agreement, each partner of the General Partner shall have the
same obligations as a Partner (which obligations shall be subject to the same limitations as the obligations of a Partner) under this Section 5.8(d)(i)(B) and under Section 5.8(d)(ii)(A) with respect to such partner’s pro rata share
of any Clawback Amount and solely to the extent that the Partnership has insufficient funds to meet the Partnership’s obligations under the BXLS V Partnership Agreement.
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(ii) (A) In the event any Partner or Withdrawn Partner
(a “GP-Related Defaulting Party”) fails to recontribute all or any portion of such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount for any reason, the General Partner shall require all other Partners and Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Carried
Interest Give Back Percentages in the case of Clawback Amounts, and GP-Related Profit Sharing Percentages in the case of GP-Related Giveback Amounts (as more fully
described in clause (II) of Section 5.8(d)(i)(A) above)), such amounts as are necessary to fulfill the GP-Related Defaulting Party’s obligation to pay such
GP-Related Defaulting Party’s Net GP-Related Recontribution Amount (a “GP-Related Deficiency
Contribution”) if the General Partner determines in its good faith judgment that the Partnership (or an Other Fund GP) will be unable to collect such amount in cash from such GP-Related Defaulting
Party for payment of the Clawback Amount or GP-Related Giveback Amount, as the case may be, at least 20 Business Days prior to the latest date that the Partnership, and the Other Fund GPs, if applicable, are
permitted to pay the Clawback Amount or GP-Related Giveback Amount, as the case may be; provided, that, subject to Section 5.8(e), no Partner or Withdrawn Partner shall as a result of such GP-Related Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Net GP-Related Recontribution Amount initially requested from
such Partner or Withdrawn Partner in respect of such default.
(B) Thereafter, the General Partner shall determine in its
good faith judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good faith judgment of the
General Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership against the GP-Related Defaulting Party, the cost of which shall be a Partnership expense to the extent
not ultimately reimbursed by the GP-Related Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such GP-Related Defaulting Party
becoming a GP-Related Defaulting Party) to set-off as appropriate and apply against such GP-Related Defaulting Party’s Net GP-Related Recontribution Amount any amounts otherwise payable to the GP-Related Defaulting Party by the Partnership or any Affiliate thereof (including amounts unrelated to
Carried Interest, such as returns of capital and profit thereon). Each Partner and Withdrawn Partner hereby grants to the General Partner a security interest, effective upon such Partner or Withdrawn Partner becoming a
GP-Related Defaulting Party, in all accounts receivable and other rights to receive payment from any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General
Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each Partner and Withdrawn Partner hereby appoints the General Partner as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or Withdrawn Partner or in the name of the General Partner, to take any actions which may be necessary to accomplish the
intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the Net GP-Related Recontribution Amount of a GP-Related
Defaulting Party from the date such Net GP-Related Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
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(C) Any Partner’s or Withdrawn Partner’s failure to make a GP-Related Deficiency Contribution shall cause such Partner or Withdrawn Partner to be a GP-Related Defaulting Party with respect to such amount. The Partnership shall first
seek any remaining Trust Amounts (and Trust Income thereon) allocated to such Partner or Withdrawn Partner to satisfy such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency
Contribution before seeking cash contributions from such Partner or Withdrawn Partner in satisfaction of such Partner’s or Withdrawn Partner’s obligation to make a GP-Related Deficiency Contribution.
(iii) In the event any Partner or Withdrawn Partner initially fails to recontribute all or any portion of such Partner or
Withdrawn Partner’s pro rata share of any Clawback Amount pursuant to Section 5.8(d)(i)(A), the Partnership shall use its reasonable efforts to collect the amount which such Partner or Withdrawn Partner so fails to recontribute.
(iv) A Partner’s or Withdrawn Partner’s obligation to make contributions to the Partnership under this
Section 5.8(d) shall survive the termination of the Partnership.
(e) The Partners acknowledge that the General Partner will (and is
hereby authorized to) take such steps as it deems appropriate, in its good faith judgment, to further the objective of providing for the fair and equitable treatment of all Partners, including by allocating Aggregate Net Losses from Writedowns (as
defined in the BXLS V Agreements) and Losses (as defined in the BXLS V Agreements) on GP-Related BXLS V Investments that have been the subject of a writedown and/or Net Loss (as defined in the BXLS V
Agreements) (each, a “Loss Investment”) to those Partners who participated in such Loss Investments based on their Carried Interest Sharing Percentage therein to the extent that such Partners receive or have received Carried
Interest distributions from other GP-Related BXLS V Investments. Consequently and notwithstanding anything herein to the contrary, adjustments to Carried Interest distributions shall be made as set forth in
this Section 5.8(e).
(i) At the time the Partnership is making Carried Interest distributions in connection with a GP-Related BXLS V Investment (the “Subject Investment”) that have been reduced under any BXLS V Agreement as a result of one or more Loss Investments, the General Partner shall calculate
amounts distributable to or due from each such Partner as follows:
(A) determine each Partner’s share of each such
Loss Investment based on his or her Carried Interest Sharing Percentage in each such Loss Investment (which may be zero) to the extent such Loss Investment has reduced the Carried Interest distributions otherwise available for distribution to all
Partners (indirectly through the Partnership from BXLS V) from the Subject Investment (such reduction, the “Loss Amount”);
(B) determine the amount of Carried Interest distributions otherwise distributable to such Partner with respect to the Subject
Investment (indirectly through the Partnership from BXLS V) before any reduction in respect of the amount determined in clause (A) above (the “Unadjusted Carried Interest Distributions”); and
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(C) subtract (I) the Loss Amounts relating to all Loss Investments from
(II) the Unadjusted Carried Interest Distributions for such Partner, to determine the amount of Carried Interest distributions to actually be paid to such Partner (“Net Carried Interest Distribution”).
To the extent that the Net Carried Interest Distribution for a Partner as calculated in this clause (i) is a negative number, the General
Partner shall (I) notify such Partner, at or prior to the time such Carried Interest distributions are actually made to the Partners, of his or her obligation to recontribute to the Partnership prior Carried Interest distributions
(a “Net Carried Interest Distribution Recontribution Amount”), up to the amount of such negative Net Carried Interest Distribution, and (II) to the extent amounts recontributed pursuant to clause (I) are insufficient
to satisfy such negative Net Carried Interest Distribution amount, reduce future Carried Interest distributions otherwise due such Partner, up to the amount of such remaining negative Net Carried Interest Distribution. If a Partner’s
(x) Net Carried Interest Distribution Recontribution Amount exceeds (y) the aggregate amount of prior Carried Interest distributions less the amount of tax thereon, calculated based on the Assumed Tax Rate (as defined in the BXLS V
Agreements) in effect in the Fiscal Years of such distributions (the “Excess Tax-Related Amount”), then such Partner may, in lieu of paying such Partner’s Excess Tax-Related Amount, defer such amounts as set forth below. Such deferred amount shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced and repaid by the amount of Carried Interest otherwise
distributable to such Partner in connection with future Carried Interest distributions until such balance is reduced to zero. Any deferred amounts shall be payable in full upon the earlier of (i) such time as the Clawback Amount is determined
(as provided herein) and (ii) such time as the Partner becomes a Withdrawn Partner.
To the extent there is an amount of negative Net
Carried Interest Distribution with respect to a Partner remaining after the application of this clause (i), notwithstanding clause (II) of the preceding paragraph, such remaining amount of negative Net Carried Interest Distribution shall be
allocated to the other Partners pro rata based on each of their Carried Interest Sharing Percentages in the Subject Investment.
A
Partner who fails to pay a Net Carried Interest Distribution Recontribution Amount promptly upon notice from the General Partner (as provided above) shall be deemed a GP-Related Defaulting Party for all
purposes hereof.
A Partner may satisfy in part any Net Carried Interest Distribution Recontribution Amount from cash that is then subject
to a Holdback, to the extent that the amounts that remain subject to a Holdback satisfy the Holdback requirements hereof as they relate to the reduced amount of aggregate Carried Interest distributions received by such Partner (taking into account
any Net Carried Interest Distribution Recontribution Amount contributed to the Partnership by such Partner).
Any Net Carried Interest
Distribution Recontribution Amount contributed by a Partner, including amounts of cash subject to a Holdback as provided above, shall increase the amount available for distribution to the other Partners as Carried Interest distributions with respect
to the Subject Investment; provided, that any such amounts then subject to a Holdback may be so distributed to the other Partners to the extent a Partner receiving such distribution has satisfied the Holdback requirements with respect to such
distribution (taken together with the other Carried Interest distributions received by such Partner to date).
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(ii) In the case of Clawback Amounts which are required to be contributed to
the Partnership as otherwise provided herein, the obligation of the Partners with respect to any Clawback Amount shall be adjusted by the General Partner as follows:
(A) determine each Partner’s share of any Net Losses (as defined in the BXLS V Agreements) in any GP-Related BXLS V Investments which gave rise to the Clawback Amount (i.e., the Losses that followed the last GP-Related BXLS V Investment with respect to which Carried
Interest distributions were made), based on such Partner’s Carried Interest Sharing Percentage in such GP-Related BXLS V Investments;
(B) determine each Partner’s obligation with respect to the Clawback Amount based on such Partner’s Carried Interest
Give Back Percentage as otherwise provided herein; and
(C) subtract the amount determined in clause (B) above from
the amount determined in clause (A) above with respect to each Partner to determine the amount of adjustment to each Partner’s share of the Clawback Amount (a Partner’s “Clawback Adjustment Amount”).
A Partner’s share of the Clawback Amount shall for all purposes hereof be decreased by such Partner’s Clawback Adjustment Amount, to
the extent it is a negative number (except to the extent expressly provided below). A Partner’s share of the Clawback Amount shall for all purposes hereof be increased by such Partner’s Clawback Adjustment Amount (to the extent it is a
positive number); provided, that in no way shall a Partner’s aggregate obligation to satisfy a Clawback Amount as a result of this clause (ii) exceed the aggregate Carried Interest distributions received by such Partner. To the
extent a positive Clawback Adjustment Amount remains after the application of this clause (ii) with respect to a Partner, such remaining Clawback Adjustment Amount shall be allocated to the Partners (including any Partner whose Clawback Amount
was increased pursuant to this clause (ii)) pro rata based on their Carried Interest Give Back Percentages (determined without regard to this clause (ii)).
Any distribution or contribution adjustments pursuant to this Section 5.8(e) by the General Partner shall be based on its good faith
judgment, and no Partner shall have any claim against the Partnership, the General Partner or any other Partners as a result of any adjustment made as set forth above. This Section 5.8(e) applies to all Partners, including Withdrawn Partners.
It is agreed and acknowledged that this Section 5.8(e) is an agreement among the Partners and in no way modifies the obligations of
each Partner regarding the Clawback Amount as provided in the BXLS V Agreements.
Section 5.9. Business Expenses. The
Partnership shall reimburse the Partners for reasonable travel, entertainment and miscellaneous expenses incurred by them in the conduct of the Partnership’s business in accordance with rules and regulations established by the General Partner
from time to time.
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Section 5.10. Tax Capital Accounts; Tax Allocations. (a) For U.S.
federal income tax purposes, there shall be established for each Partner a single capital account combining such Partner’s Capital Commitment Capital Account and GP-Related Capital Account, with such
adjustments as the General Partner determines are appropriate so that such single capital account is maintained in compliance with the principles and requirements of Section 704(b) of the Code and the Treasury Regulations thereunder.
(b) All items of income, gain, loss, deduction and credit of the Partnership shall be allocated among the Partners for U.S. federal, state
and local income tax purposes in the same manner as such items of income, gain, loss, deduction and credit shall be allocated among the Partners pursuant to this Agreement, except as may otherwise be provided herein or by the Code or other
applicable law. In the event there is a net decrease in partnership minimum gain or partner nonrecourse debt minimum gain (determined in accordance with the principles of Treasury Regulations
Sections 1.704-2(d) and 1.704-2(i)) during any taxable year of the Partnership, each Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to its respective share of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(f). In addition, this Agreement shall be
considered to contain a “qualified income offset” as provided in Treasury Regulations Section 1.704-1(b)(2)(ii)(d). Notwithstanding the foregoing, the General Partner in its sole discretion
shall make allocations for tax purposes as may be needed to ensure that allocations are in accordance with the interests of the Partners within the meaning of the Code and the Treasury Regulations.
(c) For U.S. federal, state and local income tax purposes only, Partnership income, gain, loss, deduction or expense (or any item thereof) for
each Fiscal Year shall be allocated to and among the Partners in a manner corresponding to the manner in which corresponding items are allocated among the Partners pursuant to the other provisions of this Section 5.10; provided, that the
General Partner may in its sole discretion make such allocations for tax purposes as it determines are appropriate so that allocations have substantial economic effect or are in accordance with the interests of the Partners, within the meaning of
the Code and the Treasury Regulations thereunder. To the extent there is an adjustment by a taxing authority to any item of income, gain, loss, deduction or credit of the Partnership (or an adjustment to any Partner’s distributive share
thereof), the General Partner may reallocate the adjusted items among each Partner or former Partner (as determined by the General Partner) in accordance with the final resolution of such audit adjustment.
ARTICLE VI
ADDITIONAL PARTNERS;
WITHDRAWAL OF PARTNERS;
SATISFACTION AND DISCHARGE OF
PARTNERSHIP INTERESTS; TERMINATION
Section 6.1. Additional Partners. (a) Effective on the first day of any month (or on such other date as shall be determined
by the General Partner in its sole discretion), the General Partner shall have the right to admit one or more additional or substitute persons into the Partnership as Limited Partners or Special Partners. Each such person shall make the
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representations and certifications with respect to itself set forth in Section 3.6 and Section 3.7. The General Partner shall determine and negotiate with the additional Partner (which
term shall include, without limitation, any substitute Partner) all terms of such additional Partner’s participation in the Partnership, including the additional Partner’s initial GP-Related Capital
Contribution, Capital Commitment-Related Capital Contribution, GP-Related Profit Sharing Percentage and Capital Commitment Profit Sharing Percentage. Each additional
Partner shall have such voting rights as may be determined by the General Partner from time to time unless, upon the admission to the Partnership of any Special Partner, the General Partner shall designate that such Special Partner shall not have
such voting rights (any such Special Partner being called a “Nonvoting Special Partner”). Any additional Partner shall, as a condition to becoming a Partner, agree to become a party to, and be bound by the terms and conditions
of, the Trust Agreement. If Blackstone or another or subsequent holder of an Investor Note approved by the General Partner for purposes of this Section 6.1(a) shall foreclose upon a Limited Partner’s Investor Note issued to finance such
Limited Partner’s purchase of his or her Capital Commitment Interests, Blackstone or such other or subsequent holder shall succeed to such Limited Partner’s Capital Commitment Interests and shall be deemed to have become a Limited Partner
to such extent. Any additional Partner may have a GP-Related Partner Interest or a Capital Commitment Partner Interest, without having the other such interest.
(b) The GP-Related Profit Sharing Percentages, if any, to be allocated to an additional Partner as of
the date such Partner is admitted to the Partnership, together with the pro rata reduction in all other Partners’ GP-Related Profit Sharing Percentages as of such date, shall be established by the
General Partner pursuant to Section 5.3. The Capital Commitment Profit Sharing Percentages, if any, to be allocated to an additional Partner as of the date such Partner is admitted to the Partnership, together with the pro rata reduction in all
other Partners’ Capital Commitment Profit Sharing Percentages as of such date, shall be established by the General Partner. Notwithstanding any provision in this Agreement to the contrary, the General Partner is authorized, without the need for
any further act, vote or consent of any person, to make adjustments to the GP-Related Profit Sharing Percentages as it determines necessary in its sole discretion in connection with any additional Partners
admitted to the Partnership, adjustments with respect to other Partners of the Partnership and to give effect to other matters set forth herein, as applicable.
(c) An additional Partner shall be required to contribute to the Partnership his or her pro rata share of the Partnership’s total capital,
excluding capital in respect of GP-Related Investments and Capital Commitment Investments in which such Partner does not acquire any interests, at such times and in such amounts as shall be determined by the
General Partner in accordance with Section 4.1 and Section 7.1.
(d) The admission of an additional Partner will be evidenced by
(i) the execution of a counterpart copy of this Agreement by such additional Partner, (ii) the execution of an amendment to this Agreement by the General Partner and the additional Partner, as determined by the General Partner and/or
(iii) the execution by such additional Partner of any other writing evidencing the intent of such person to become an additional Partner and to be bound by the terms of this Agreement and such writing being acceptable to the General Partner on
behalf of the Partnership. In addition, each additional Partner shall sign a counterpart copy of the Trust Agreement or any other writing evidencing the intent of such person to become a party to the Trust Agreement that is acceptable to the General
Partner on behalf of the Partnership.
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Section 6.2. Withdrawal of Partners. (a) Any Partner may Withdraw
voluntarily from the Partnership subject to the prior written consent of the General Partner, including if such Withdrawal would (i) cause the Partnership to be in default under any of its contractual obligations or (ii) in the reasonable
judgment of the General Partner, have a material adverse effect on the Partnership or its business. Without limiting the foregoing sentence, the General Partner generally intends to permit voluntary Withdrawals on the last day of any calendar month
(or on such other date as shall be determined by the General Partner in its sole discretion), on not less than 15 days’ prior written notice by such Partner to the General Partner (or on such shorter notice period as may be mutually agreed upon
between such Partner and the General Partner); provided, that a Partner may Withdraw from the Partnership with respect to such Partner’s GP-Related Partner Interest without Withdrawing from the
Partnership with respect to such Partner’s Capital Commitment Partner Interest, and a Partner may Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest without Withdrawing from the Partnership
with respect to such Partner’s GP-Related Partner Interest.
(b) Upon the Withdrawal of any
Partner, including by the occurrence of any withdrawal event under the Partnership Act with respect to any Partner, such Partner shall thereupon cease to be a Partner, except as expressly provided herein.
(c) Upon the Total Disability of a Limited Partner, such Partner shall thereupon cease to be a Limited Partner with respect to such
person’s GP-Related Partner Interest; provided, that the General Partner may elect to admit such Withdrawn Partner to the Partnership as a Nonvoting Special Partner with respect to such
person’s GP-Related Partner Interest, with such GP-Related Partner Interest as the General Partner may determine. The determination of whether any Partner has
suffered a Total Disability shall be made by the General Partner in its sole discretion after consultation with a qualified medical doctor. In the absence of agreement between the General Partner and such Partner, each party shall nominate a
qualified medical doctor and the two doctors shall select a third doctor, who shall make the determination as to Total Disability.
(d) If
the General Partner determines that it shall be in the best interests of the Partnership for any Partner (including any Partner who has given notice of voluntary Withdrawal pursuant to paragraph (a) above) to Withdraw from the Partnership
(whether or not Cause exists) with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, such Partner, upon written notice by
the General Partner to such Partner, shall be required to Withdraw with respect to such person’s GP-Related Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest,
as of a date specified in such notice, which date shall be on or after the date of such notice. If the General Partner requires any Partner to Withdraw for Cause with respect to such person’s GP-Related
Partner Interest and/or with respect to such person’s Capital Commitment Partner Interest, such notice shall state that it has been given for Cause and shall describe the particulars thereof in reasonable detail.
(e) The Withdrawal from the Partnership of any Partner shall not, in and of itself, affect the obligations of the other Partners to continue
the Partnership during the remainder of its term. A Withdrawn General Partner shall remain liable for all obligations of the Partnership incurred while it was a General Partner and resulting from its acts or omissions as a General Partner to the
fullest extent provided by law.
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Section 6.3. GP-Related Partner
Interests Not Transferable. (a) No Partner may sell, assign, pledge, grant a security interest over or otherwise transfer or encumber all or any portion of such Partner’s GP-Related Partner
Interest other than as permitted by written agreement between such Partner and the Partnership; provided, that this Section 6.3 shall not impair transfers by operation of law, transfers by will or by other testamentary instrument
occurring by virtue of the death or dissolution of a Partner, or transfers required by trust agreements; provided further, that, subject to the prior written consent of the General Partner, which shall not be unreasonably withheld, a
Limited Partner may transfer, for estate planning purposes, up to 25% of his or her GP-Related Profit Sharing Percentage to any estate planning trust, limited partnership, or limited liability company with
respect to which a Limited Partner controls investments related to any interest in the Partnership held therein (an “Estate Planning Vehicle”). Each Estate Planning Vehicle will be a Nonvoting Special Partner. Such Limited
Partner and the Nonvoting Special Partner shall be jointly and severally liable for all obligations of both such Limited Partner and such Nonvoting Special Partner with respect to the Partnership (including the obligation to make additional GP-Related Capital Contributions), as the case may be. The General Partner may at its sole option exercisable at any time require any Estate Planning Vehicle to Withdraw from the Partnership on the terms of this
Article VI. Except as provided in the second proviso to the first sentence of this Section 6.3, no assignee, legatee, distributee, heir or transferee (by conveyance, operation of law or otherwise) of the whole or any portion of any
Partner’s GP-Related Partner Interest shall have any right to be a Partner without the prior written consent of the General Partner (which consent may be given or withheld in its sole discretion without
giving any reason therefor). Notwithstanding the granting of a security interest in the entire Interest of any Partner, such Partner shall continue to be a Partner of the Partnership.
(b) Notwithstanding any provision hereof to the contrary, no sale or transfer of any GP-Related Partner
Interest in the Partnership may be made except in compliance with all federal, state and other applicable laws, including U.S. federal and state securities laws.
Section 6.4. Consequences upon Withdrawal of a Partner. (a) Subject to the Partnership Act, the General Partner may not
transfer or assign its interest as a General Partner in the Partnership or its right to manage the affairs of the Partnership, except that the General Partner may, subject to the Partnership Act, with the prior written approval of a Majority in
Interest of the Partners, admit another person as an additional or substitute General Partner who makes such representations with respect to itself as the General Partner deems necessary or appropriate (with regard to compliance with applicable law
or otherwise); provided however, that the General Partner may, in its sole discretion, transfer all or part of its interest in the Partnership to a person who makes such representations with respect to itself as the General Partner
deems necessary or appropriate (with regard to compliance with applicable law or otherwise) and who owns, directly or indirectly, the principal part of the business then conducted by the General Partner in connection with any liquidation,
dissolution or reorganization of the General Partner, and, upon the assumption by such person of liability for all the obligations of the General Partner under this Agreement, such person shall be admitted as the General Partner. A person who is so
admitted as an additional or substitute General Partner shall thereby become a General Partner and shall have the right to manage the affairs of the Partnership and to vote as a Partner to the extent of the interest in the Partnership so acquired.
The General Partner shall not cease to be the general partner of the Partnership upon the collateral assignment of or the pledging or granting of a security interest in its entire Interest in the Partnership.
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(b) Except as contemplated by Section 6.4(a) above, Withdrawal by a General Partner is
not permitted. The Withdrawal of a Partner shall not dissolve the Partnership if at the time of such Withdrawal there are one or more remaining Partners and any one or more of such remaining Partners continue the business of the Partnership (any and
all such remaining Partners being hereby authorized to continue the business of the Partnership without dissolution and hereby agreeing to do so). Notwithstanding Section 6.4(c), if upon the Withdrawal of a Partner there shall be no remaining
Limited Partners, the Partnership shall be dissolved and shall be wound up unless, within 90 days after the occurrence of such Withdrawal, all remaining Special Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of the date of such Withdrawal, of one or more Limited Partners.
(c) The Partnership shall not be dissolved, in
and of itself, by the Withdrawal of any Partner, but shall continue with the surviving or remaining Partners as partners thereof in accordance with and subject to the terms and provisions of this Agreement.
Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s
GP-Related Partner Interests. (a) The terms of this Section 6.5 shall apply to the GP-Related Partner Interest of a Withdrawn Partner, but,
except as otherwise expressly provided in this Section 6.5, shall not apply to the Capital Commitment Partner Interest of a Withdrawn Partner. For purposes of this Section 6.5, the term “Settlement Date” means the
date as of which a Withdrawn Partner’s GP-Related Partner Interest in the Partnership is settled as determined under paragraph (b) below. Notwithstanding the foregoing, any Limited Partner who
Withdraws from the Partnership, and all or any portion of whose GP-Related Partner Interest is retained as a Special Partner, shall be considered a Withdrawn Partner for all purposes hereof.
(b) Except where a later date for the settlement of a Withdrawn Partner’s GP-Related Partner
Interest in the Partnership may be agreed to by the General Partner and a Withdrawn Partner, a Withdrawn Partner’s Settlement Date shall be his or her Withdrawal Date; provided, that if a Withdrawn Partner’s Withdrawal Date is not
the last day of a month, then the General Partner may elect for such Withdrawn Partner’s Settlement Date to be the last day of the month in which his or her Withdrawal Date occurs. During the interval, if any, between a Withdrawn Partner’s
Withdrawal Date and Settlement Date, such Withdrawn Partner shall have the same rights and obligations with respect to GP-Related Capital Contributions, interest on capital, allocations of GP-Related Net Income (Loss) and distributions as would have applied had such Withdrawn Partner remained a Partner of the Partnership during such period.
(c) In the event of the Withdrawal of a Partner, with respect to such Withdrawn Partner’s
GP-Related Partner Interest, the General Partner shall promptly after such Withdrawn Partner’s Settlement Date (i) determine and allocate to the Withdrawn Partner’s GP-Related Capital Accounts such Withdrawn Partner’s allocable share of the GP-Related Net Income (Loss) of the Partnership for the period ending on such Settlement Date
in accordance with Article V and (ii) credit the Withdrawn Partner’s GP-Related Capital Accounts with interest in accordance with Section 5.2. In making the foregoing calculations, the
General Partner shall be entitled to establish such reserves (including reserves for taxes, bad debts, unrealized losses, actual or threatened
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litigation or any other expenses, contingencies or obligations) as it deems appropriate. Unless otherwise determined by the General Partner in a particular case, a Withdrawn Partner shall not be
entitled to receive any GP-Related Unallocated Percentage in respect of the accounting period during which such Partner Withdraws from the Partnership (whether or not previously awarded or allocated) or any GP-Related Unallocated Percentage in respect of prior accounting periods that have not been paid or allocated (whether or not previously awarded) as of such Withdrawn Partner’s Withdrawal Date.
(d) From and after the Settlement Date of the Withdrawn Partner, the Withdrawn Partner’s
GP-Related Profit Sharing Percentages shall, unless otherwise allocated by the General Partner pursuant to Section 5.3(a), be deemed to be GP-Related Unallocated
Percentages (except for GP-Related Profit Sharing Percentages with respect to GP-Related Investments as provided in paragraph (f) below).
(e) (i) Upon the Withdrawal from the Partnership of a Partner with respect to such Partner’s
GP-Related Partner Interest, such Withdrawn Partner thereafter shall not, except as expressly provided in this Section 6.5, have any rights of a Partner (including voting rights) with respect to such
Partner’s GP-Related Partner Interest, and, except as expressly provided in this Section 6.5, such Withdrawn Partner shall not have any interest in the Partnership’s GP-Related Net Income (Loss), or in distributions related to such Partner’s GP-Related Partner Interest, GP-Related Investments or
other assets related to such Partner’s GP-Related Partner Interest. If a Partner Withdraws from the Partnership with respect to such Partner’s GP-Related
Partner Interest for any reason other than for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be entitled to receive, at the time or times specified in Section 6.5(i) below, in satisfaction and discharge in full of the
Withdrawn Partner’s GP-Related Partner Interest in the Partnership, (x) payment equal to the aggregate credit balance, if any, as of the Settlement Date of the Withdrawn Partner’s GP-Related Capital Accounts, (excluding any GP-Related Capital Account or portion thereof attributable to any GP-Related Investment)
and (y) the Withdrawn Partner’s percentage interest attributable to each GP-Related Investment in which the Withdrawn Partner has an interest as of the Settlement Date as provided in
paragraph (f) below (which shall be settled in accordance with paragraph (f) below), subject to all the terms and conditions of paragraphs (a)-(r) of this Section 6.5. If the amount determined
pursuant to clause (x) above is an aggregate negative balance, the Withdrawn Partner shall pay the amount thereof to the Partnership upon demand by the General Partner on or after the date of the statement referred to in Section 6.5(i)
below; provided, that if the Withdrawn Partner was solely a Special Partner on his or her Withdrawal Date, such payment shall be required only to the extent of any amounts payable to such Withdrawn Partner pursuant to this Section 6.5.
Any aggregate negative balance in the GP-Related Capital Accounts of a Withdrawn Partner who was solely a Special Partner, upon the settlement of such Withdrawn Partner’s
GP-Related Partner Interest in the Partnership pursuant to this Section 6.5, shall be allocated among the other Partners’ GP-Related Capital Accounts in
accordance with their respective GP-Related Profit Sharing Percentages in the categories of GP-Related Net Income (Loss) giving rise to such negative balance as
determined by the General Partner as of such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the Partnership, no value shall be
ascribed to goodwill, the Partnership name or the anticipation of any value the Partnership or any successor thereto might have in the event the Partnership or any interest therein were to be sold in whole or in part.
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(ii) Notwithstanding clause (i) of this Section 6.5(e), in the
case of a Partner whose Withdrawal with respect to such Partner’s GP-Related Partner Interest resulted from such Partner’s death or Incompetence, such Partner’s estate or legal representative,
as the case may be, may elect, at the time described below, to receive a Nonvoting Special Partner GP-Related Partner Interest and retain such Partner’s GP-Related
Profit Sharing Percentage in all (but not less than all) illiquid investments of the Partnership in lieu of a cash payment (or Investor Note) in settlement of that portion of the Withdrawn Partner’s
GP-Related Partner Interest. The election referred to above shall be made within 60 days after the Withdrawn Partner’s Settlement Date, based on a statement of the settlement of such Withdrawn
Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5.
(f) For purposes of clause (y) of paragraph (e)(i) above, a Withdrawn Partner’s “percentage interest” means his or her GP-Related Profit Sharing Percentage as of the Settlement Date in the relevant GP-Related Investment. The Withdrawn Partner shall retain his or her percentage interest in such
GP-Related Investment and shall retain his or her GP-Related Capital Account or portion thereof attributable to such GP-Related
Investment, in which case such Withdrawn Partner (a “Retaining Withdrawn Partner”) shall become and remain a Special Partner for such purpose (and, if the General Partner so designates, such Special Partner shall be a Nonvoting
Special Partner). The GP-Related Partner Interest of a Retaining Withdrawn Partner pursuant to this paragraph (f) shall be subject to the terms and conditions applicable to
GP-Related Partner Interests of any kind hereunder and such other terms and conditions as are established by the General Partner. At the option of the General Partner in its sole discretion, the General
Partner and the Retaining Withdrawn Partner may agree to have the Partnership acquire such GP-Related Partner Interest without the approval of the other Partners; provided, that the General Partner
shall reflect in the books and records of the Partnership the terms of any acquisition pursuant to this sentence.
(g) The General Partner
may elect, in lieu of payment in cash of any amount payable to a Withdrawn Partner pursuant to paragraph (e) above, to (i) have the Partnership issue to the Withdrawn Partner a subordinated promissory note and/or to (ii) distribute in
kind to the Withdrawn Partner such Withdrawn Partner’s pro rata share (as determined by the General Partner) of any securities or other investments of the Partnership in relation to such Partner’s
GP-Related Partner Interest. If any securities or other investments are distributed in kind to a Withdrawn Partner under this paragraph (g), the amount described in clause (x) of paragraph (e)(i) shall be
reduced by the value of such distribution as valued on the latest balance sheet of the Partnership in accordance with generally accepted accounting principles or, if not appearing on such balance sheet, as reasonably determined by the General
Partner.
(h) [Intentionally omitted.]
(i) Within 120 days after each Settlement Date, the General Partner shall submit to the Withdrawn Partner a statement of the settlement of such
Withdrawn Partner’s GP-Related Partner Interest in the Partnership pursuant to this Section 6.5 together with any cash payment, subordinated promissory note and in kind distributions to be made to
such Partner as shall be determined by the General Partner. The General Partner shall submit to the Withdrawn Partner supplemental statements with respect to additional amounts payable to or by the
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Withdrawn Partner in respect of the settlement of his or her GP-Related Partner Interest in the Partnership (e.g., payments in respect of GP-Related Investments pursuant to paragraph (f) above or adjustments to reserves pursuant to paragraph (j) below) promptly after such amounts are determined by the General Partner. To the fullest extent
permitted by law, such statements and the valuations on which they are based shall be accepted by the Withdrawn Partner without examination of the accounting books and records of the Partnership or other inquiry. Any amounts payable by the
Partnership to a Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in right of payment and subject to the prior payment or provision for payment in full of claims of all present or future creditors of the Partnership or any
successor thereto arising out of matters occurring prior to the applicable date of payment or distribution; provided, that such Withdrawn Partner shall otherwise rank pari passu in right of payment (x) with all persons who become
Withdrawn Partners and whose Withdrawal Date is within one year before the Withdrawal Date of the Withdrawn Partner in question and (y) with all persons who become Withdrawn Partners and whose Withdrawal Date is within one year after the
Withdrawal Date of the Withdrawn Partner in question.
(j) If the aggregate reserves established by the General Partner as of the
Settlement Date in making the foregoing calculations should prove, in the determination of the General Partner, to be excessive or inadequate, the General Partner may elect, but shall not be obligated, to pay the Withdrawn Partner or his or her
estate such excess, or to charge the Withdrawn Partner or his or her estate such deficiency, as the case may be.
(k) Any amounts owed by
the Withdrawn Partner to the Partnership at any time on or after the Settlement Date (e.g., outstanding Partnership loans or advances to such Withdrawn Partner) shall be offset against any amounts payable or distributable by the Partnership
to the Withdrawn Partner at any time on or after the Settlement Date or shall be paid by the Withdrawn Partner to the Partnership, in each case as determined by the General Partner. All cash amounts payable by a Withdrawn Partner to the Partnership
under this Section 6.5 shall bear interest from the due date to the date of payment at a floating rate equal to the lesser of (x) the Prime Rate or (y) the maximum rate of interest permitted by applicable law. The “due date”
of amounts payable by a Withdrawn Partner pursuant to Section 6.5(i) above shall be 120 days after a Withdrawn Partner’s Settlement Date. The “due date” of amounts payable to or by a Withdrawn Partner in respect of GP-Related Investments for which the Withdrawn Partner has retained a percentage interest in accordance with paragraph (f) above shall be 120 days after realization with respect to such GP-Related Investment. The “due date” of any other amounts payable by a Withdrawn Partner shall be 60 days after the date such amounts are determined to be payable.
(l) At the time of the settlement of any Withdrawn Partner’s GP-Related Partner Interest in the
Partnership pursuant to this Section 6.5, the General Partner may, to the fullest extent permitted by applicable law, impose any restrictions it deems appropriate on the assignment, pledge, grant of security interest, encumbrance or other
transfer by such Withdrawn Partner of any interest in any GP-Related Investment retained by such Withdrawn Partner, any securities or other investments distributed in kind to such Withdrawn Partner or such
Withdrawn Partner’s right to any payment from the Partnership.
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(m) If a Partner is required to Withdraw from the Partnership with respect to such
Partner’s GP-Related Partner Interest for Cause pursuant to Section 6.2(d), then his or her GP-Related Partner Interest shall be settled in accordance with
paragraphs (a)-(r) of this Section 6.5; provided, that the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) In settling the Withdrawn Partner’s interest in any GP-Related Investment in
which he or she has an interest as of his or her Settlement Date, the General Partner may elect to (A) determine the GP-Related Unrealized Net Income (Loss) attributable to each such GP-Related Investment as of the Settlement Date and allocate to the appropriate GP-Related Capital Account of the Withdrawn Partner his or her allocable share of such GP-Related Unrealized Net Income (Loss) for purposes of calculating the aggregate balance of such Withdrawn Partner’s GP-Related Capital Account pursuant to clause
(x) of paragraph (e)(i) above, (B) credit or debit, as applicable, the Withdrawn Partner with the balance of his or her GP-Related Capital Account or portion thereof attributable to each such GP-Related Investment as of his or her Settlement Date without giving effect to the GP-Related Unrealized Net Income (Loss) from such
GP-Related Investment as of his or her Settlement Date, which shall be forfeited by the Withdrawn Partner or (C) apply the provisions of paragraph (f) above; provided, that the maximum amount
of GP-Related Net Income (Loss) allocable to such Withdrawn Partner with respect to any GP-Related Investment shall equal such Partner’s percentage interest of the GP-Related Unrealized Net Income, if any, attributable to such GP-Related Investment as of the Settlement Date (the balance of such
GP-Related Net Income (Loss), if any, shall be allocated as determined by the General Partner). The Withdrawn Partner shall not have any continuing interest in any
GP-Related Investment to the extent an election is made pursuant to (A) or (B) above.
(ii) Any amounts payable by the Partnership to the Withdrawn Partner pursuant to this Section 6.5 shall be subordinate in
right of payment and subject to the prior payment in full of claims of all present or future creditors of the Partnership or any successor thereto arising out of matters occurring prior to or on or after the applicable date of payment or
distribution.
(n) The payments to a Withdrawn Partner pursuant to this Section 6.5 may be conditioned on the compliance by such
Withdrawn Partner with any lawful and reasonable (under the circumstances) restrictions against engaging or investing in a business competitive with that of the Partnership or any of its subsidiaries and Affiliates for a period not exceeding two
years determined by the General Partner. Upon written notice to the General Partner, any Withdrawn Partner who is subject to noncompetition restrictions established by the General Partner pursuant to this paragraph (n) may elect to forfeit the
principal amount payable in the final installment of his or her subordinated promissory note, together with interest to be accrued on such installment after the date of forfeiture, in lieu of being bound by such restrictions.
(o) In addition to the foregoing, the General Partner shall have the right to pay a Withdrawn Partner (other than the General Partner) a
discretionary additional payment in an amount and based upon such circumstances and conditions as it determines to be relevant.
(p) The
provisions of this Section 6.5 shall apply to any Investor Special Partner relating to a Limited Partner or Special Partner and to any transferee of any GP-Related Partner Interest of such Partner
pursuant to Section 6.3 if such Partner Withdraws from the Partnership.
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(q) (i) The Partnership will assist a Withdrawn Partner or his or her estate or
guardian, as the case may be, in the settlement of the Withdrawn Partner’s GP-Related Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will
be borne by the Withdrawn Partner or his or her estate.
(ii) The General Partner may reasonably determine in good faith to
retain outside professionals to provide the assistance to Withdrawn Partners or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or
guardian, as the case may be, prior to engaging such professionals. If the Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to
interfere with the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
(r) Each Partner (other than the General Partner) hereby irrevocably appoints the General Partner as such Partner’s true and lawful agent,
representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on behalf of such Partner, any and
all agreements, instruments, consents, ratifications, documents and certificates which the General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this Section 6.5, including,
without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is coupled with an interest and shall survive and continue in full force
and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 6.6. Dissolution of the Partnership. The General Partner may dissolve the Partnership prior to the expiration of
its term at any time on not less than 60 days’ notice of the dissolution date given to the other Partners. Upon the dissolution of the Partnership, the Partners’ respective interests in the Partnership shall be valued and settled in
accordance with the procedures set forth in Section 6.5.
Section 6.7. Certain Tax Matters. (a) The General Partner
shall determine all matters concerning allocations for tax purposes not expressly provided for herein in its sole discretion.
(b) The
General Partner shall cause to be prepared all federal, state and local tax returns of the Partnership for each year for which such returns are required to be filed and, after approval of such returns by the General Partner, shall cause such returns
to be timely filed. The General Partner shall determine the appropriate treatment of each item of income, gain, loss, deduction and credit of the Partnership and the accounting methods and conventions under the tax laws of the United States, the
several States and other relevant jurisdictions as to the treatment of any such item or any other method or procedure related to the preparation of such tax returns. The
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General Partner may cause the Partnership to make or refrain from making any and all elections permitted by such tax laws. Each Partner agrees that he or she shall not, unless he or she provides
prior notice of such action to the Partnership, (i) treat, on his or her individual income tax returns, any item of income, gain, loss, deduction or credit relating to his or her interest in the Partnership in a manner inconsistent with the
treatment of such item by the Partnership as reflected on the Form K-1 or other information statement furnished by the Partnership to such Partner for use in preparing his or her income tax returns or
(ii) file any claim for refund relating to any such item based on, or which would result in, such inconsistent treatment. In respect of an income tax audit of any tax return of the Partnership, the filing of any amended return or claim for
refund in connection with any item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership, or any administrative or judicial proceedings arising out of or in connection with any such audit, amended return, claim
for refund or denial of such claim, (A) the Tax Matters Partner (as defined below) shall be authorized to act for, and his or her decision shall be final and binding upon, the Partnership and all Partners except to the extent a Partner shall
properly elect to be excluded from such proceeding pursuant to the Code, (B) all expenses incurred by the Tax Matters Partner in connection therewith (including, without limitation, attorneys’, accountants’ and other experts’
fees and disbursements) shall be expenses of the Partnership and (C) no Partner shall have the right to (1) participate in the audit of any Partnership tax return, (2) file any amended return or claim for refund in connection with any
item of income, gain, loss, deduction or credit reflected on any tax return of the Partnership (unless he or she provides prior notice of such action to the Partnership as provided above), (3) participate in any administrative or judicial
proceedings conducted by the Partnership or the Tax Matters Partner arising out of or in connection with any such audit, amended return, claim for refund or denial of such claim, or (4) appeal, challenge or otherwise protest any adverse
findings in any such audit conducted by the Partnership or the Tax Matters Partner or with respect to any such amended return or claim for refund filed by the Partnership or the Tax Matters Partner or in any such administrative or judicial
proceedings conducted by the Partnership or the Tax Matters Partner. The Partnership and each Partner hereby designate any Partner selected by the General Partner as the “partnership representative” (as defined under the Code)
(the “Tax Matters Partner”). To the fullest extent permitted by applicable law, each Partner agrees to indemnify and hold harmless the Partnership and all other Partners from and against any and all liabilities, obligations,
damages, deficiencies and expenses resulting from any breach or violation by such Partner of the provisions of this Section 6.7 and from all actions, suits, proceedings, demands, assessments, judgments, costs and expenses, including reasonable
attorneys’ fees and disbursements, incident to any such breach or violation.
(c) Each individual Partner shall provide to the
Partnership copies of each federal, state and local income tax return of such Partner (including any amendment thereof) within 30 days after filing such return.
(d) To the extent the General Partner reasonably determines that the Partnership (or any entity in which the Partnership holds an interest) is
or may be required by law to withhold or to make tax payments, including interest and penalties on such amounts, on behalf of or with respect to any Partner, including pursuant to Section 6225 of the Code (“Tax Advances”), the
General Partner may withhold or escrow such amounts or make such tax payments as so required. All Tax Advances made on behalf of a Partner shall, at the option of the General Partner, (i) be promptly paid to the Partnership by the Partner on
whose behalf such Tax Advances were made or (ii) be repaid by reducing the amount of the current or next succeeding distribution or
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distributions which would otherwise have been made to such Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds upon dissolution of the Partnership
otherwise payable to such Partner. Whenever the General Partner selects option (ii) pursuant to the preceding sentence for repayment of a Tax Advance by a Partner, for all other purposes of this Agreement such Partner shall be treated as having
received all distributions (whether before or upon dissolution of the Partnership) unreduced by the amount of such Tax Advance. To the fullest extent permitted by law, each Partner hereby agrees to indemnify and hold harmless the Partnership and the
other Partners from and against any liability (including, without limitation, any liability for taxes, penalties, additions to tax or interest) with respect to income attributable to or distributions or other payments to such Partner. The
obligations of a Partner set forth in this Section 6.7(d) shall survive the Withdrawal of any Partner from the Partnership or any Transfer of a Partner’s interest.
Section 6.8. Special Basis Adjustments. In connection with any assignment or transfer of a Partnership interest permitted by the
terms of this Agreement, the General Partner may cause the Partnership, on behalf of the Partners and at the time and in the manner provided in Treasury Regulations Section 1.754-1(b), to make an election
to adjust the basis of the Partnership’s property in the manner provided in Sections 734(b) and 743(b) of the Code.
ARTICLE VII
CAPITAL COMMITMENT INTERESTS; CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
Section 7.1. Capital Commitment Interests, etc. (a) This Article VII and Article VIII hereof set forth certain
terms and conditions with respect to the Capital Commitment Partner Interests and the Capital Commitment BXLS V Interest and matters related to the Capital Commitment Partner Interests and the Capital Commitment BXLS V Interest. Except as otherwise
expressly provided in this Article VII or in Article VIII, the terms and provisions of this Article VII and Article VIII shall not apply to the GP-Related Partner Interests or the GP-Related BXLS V Interest.
(b) Each Partner, severally, agrees to make contributions of capital to the
Partnership (“Capital Commitment-Related Capital Contributions”) as required to fund the Partnership’s capital contributions to BXLS V or Associates V in respect of the Capital
Commitment BXLS V Interest, if any, and the related Capital Commitment BXLS V Commitment, if any (including, without limitation, funding all or a portion of the Blackstone Capital Commitment). No Partner shall be obligated to make Capital Commitment-Related Capital Contributions to the Partnership in an amount in excess of such Partner’s Capital Commitment-Related Commitment. The Commitment Agreements and
SMD Agreements, if any, of the Partners may include provisions with respect to the foregoing matters. It is understood that a Partner will not necessarily participate in each Capital Commitment Investment (which may include additional amounts
invested in an existing Capital Commitment Investment) nor will a Partner necessarily have the same Capital Commitment Profit Sharing Percentage with respect to (i) the Partnership’s portion of the Blackstone Capital Commitment or
(ii) the making of each Capital Commitment Investment in which such Partner participates; provided, that this in no way limits the terms of any Commitment Agreement or SMD Agreement. In addition, nothing
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contained herein shall be construed to give any Partner the right to obtain financing with respect to the purchase of any Capital Commitment Interest, and nothing contained herein shall limit or
dictate the terms upon which the Partnership and its Affiliates may provide such financing. The acquisition of a Capital Commitment Interest by a Partner shall be evidenced by receipt by the Partnership of funds equal to such Partner’s Capital Commitment-Related Commitment then due with respect to such Capital Commitment Interest and such appropriate documentation as the General Partner may submit to the Partners from time to time.
(c) The Partnership or one of its Affiliates (in such capacity, the “Advancing Party”) may in its sole discretion advance
to any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are also executive officers of Blackstone) all or any portion of the Capital
Commitment-Related Capital Contributions due to the Partnership from such Partner with respect to any Capital Commitment Investment (“Firm Advances”). Each such Partner shall pay interest to
the Advancing Party on each Firm Advance from the date of such Firm Advance until the repayment thereof by such Partner. Each Firm Advance shall be repayable in full, including accrued interest to the date of such repayment, upon prior written
notice by the Advancing Party. The making and repayment of each Firm Advance shall be recorded in the books and records of the Partnership, and such recording shall be conclusive evidence of each such Firm Advance, binding on the Partner and the
Advancing Party absent manifest error. Except as provided below, the interest rate applicable to a Firm Advance shall equal the cost of funds of the Advancing Party at the time of the making of such Firm Advance. The Advancing Party shall inform any
Partner of such rate upon such Partner’s request; provided, that such interest rate shall not exceed the maximum interest rate allowable by applicable law; provided further, that amounts that are otherwise payable to such Partner
pursuant to Section 7.4(a) shall be used to repay such Firm Advance (including interest thereon). The Advancing Party may, in its sole discretion, change the terms of Firm Advances (including the terms contained herein) and/or discontinue the
making of Firm Advances; provided, that (i) the Advancing Party shall notify the relevant Partners of any material changes to such terms and (ii) the interest rate applicable to such Firm Advances and overdue amounts thereon shall
not exceed the maximum interest rate allowable by applicable law.
Section 7.2. Capital Commitment Capital Accounts.
(a) There shall be established for each Partner in the books of the Partnership as of the date of formation of the Partnership, or such later date on which such Partner is admitted to the Partnership, and on each such other date as such Partner
first acquires a Capital Commitment Interest in a particular Capital Commitment Investment, a Capital Commitment Capital Account for each Capital Commitment Investment in which such Partner acquires a Capital Commitment Interest on such date. Each
Capital Commitment-Related Capital Contribution of a Partner shall be credited to the appropriate Capital Commitment Capital Account of such Partner on the date such Capital
Commitment-Related Capital Contribution is paid to the Partnership. Capital Commitment Capital Accounts shall be adjusted to reflect any transfer of a Partner’s interest in the Partnership related to his
or her Capital Commitment Partner Interest as provided in this Agreement.
(b) A Partner shall not have any obligation to the Partnership
or to any other Partner to restore any negative balance in the Capital Commitment Capital Account of such Partner. Until distribution of any such Partner’s interest in the Partnership with respect to a Capital Commitment Interest as a result of
the disposition by the Partnership of the related Capital Commitment Investment and in whole upon the dissolution of the Partnership, neither such Partner’s Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal
or redemption except with the consent of the General Partner.
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Section 7.3. Allocations. (a) Capital Commitment Net Income (Loss) of the
Partnership for each Capital Commitment Investment shall be allocated to the related Capital Commitment Capital Accounts of all the Partners (including the General Partner) participating in such Capital Commitment Investment in proportion to their
respective Capital Commitment Profit Sharing Percentages for such Capital Commitment Investment. Capital Commitment Net Income (Loss) on any Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion which such
Partner’s aggregate Capital Commitment Capital Accounts bear to the aggregate Capital Commitment Capital Accounts of all Partners; provided, that if any Partner makes the election provided for in Section 7.6, Capital Commitment Net
Income (Loss) of the Partnership for each Capital Commitment Investment shall be allocated to the related Capital Commitment Capital Accounts of all the Partners participating in such Capital Commitment Investment who do not make such election in
proportion to their respective Capital Commitment Profit Sharing Percentages for such Capital Commitment Investment.
(b) Any special costs
relating to distributions pursuant to Section 7.6 or Section 7.7 shall be specially allocated to the electing Partner.
(c)
Notwithstanding the foregoing, the General Partner may make such allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems
reasonably necessary for this purpose.
Section 7.4. Distributions.
(a) Each Partner’s allocable portion of Capital Commitment Net Income received from his or her Capital Commitment Investments,
distributions to such Partner that constitute returns of capital, and other Capital Commitment Net Income of the Partnership (including, without limitation, Capital Commitment Net Income attributable to Unallocated Capital Commitment Interests)
during a Fiscal Year of the Partnership will be credited to payment of the Investor Notes to the extent required below as of the last day of such Fiscal Year (or on such earlier date as related distributions are made in the sole discretion of the
General Partner) with any cash amount distributable to such Partner pursuant to clauses (ii) and (vii) below to be distributed within 45 days after the end of each Fiscal Year of the Partnership (or in each case on such earlier date as selected
by the General Partner in its sole discretion) as follows (subject to Section 7.4(c) below):
(i) First, to the
payment of interest then due on all Investor Notes (relating to Capital Commitment Investments or otherwise) of such Partner (to the extent Capital Commitment Net Income and distributions or payments from Other Sources do not equal or exceed all
interest payments due, the selection of those of such Partner’s Investor Notes upon which interest is to be paid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor);
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(ii) Second, to distribution to the Partner of an amount equal to the U.S.
federal, state and local income taxes on income of the Partnership allocated to such Partner for such year in respect of such Partner’s Capital Commitment Partner Interest (the aggregate amount of any such distribution shall be determined by
the General Partner, subject to the limitation that the minimum aggregate amount of such distribution be the tax that would be payable if the taxable income of the Partnership related to all Partners’ Capital Commitment Partner Interests were
all allocated to an individual subject to the then-prevailing maximum rate of U.S. federal, New York State and New York City taxes (including, without limitation, taxes imposed under Section 1411 of the
Code), taking into account the character of such taxable income allocated by the Partnership and the limitations on deductibility of expenses and other items for U.S. federal income tax purposes); provided, that additional amounts shall be paid to
the Partner pursuant to this clause (ii) to the extent that such amount reduces the amount otherwise distributable to the Partner pursuant to a comparable provision in any other BE Agreement and there are not sufficient amounts to fully satisfy
such provision from the relevant partnership or other entity; provided further, that amounts paid pursuant to the provisions in such other BE Agreements comparable to the immediately preceding proviso shall reduce those amounts otherwise
distributable to the Partner pursuant to provisions in such other BE Agreements that are comparable to this clause (ii);
(iii) Third, to the payment in full of the principal amount of the Investor Note financing (A) any Capital Commitment
Investment disposed of during or prior to such Fiscal Year or (B) any BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal Year, to the extent not repaid from Other Sources;
(iv) Fourth, to the return to such Partner of (A) all Capital Commitment-Related
Capital Contributions made in respect of the Capital Commitment Interest to which any Capital Commitment Investment disposed of during or prior to such Fiscal Year relates or (B) all capital contributions made to any Blackstone Entity (other
than the Partnership) in respect of interests therein relating to BE Investments (other than Capital Commitment Investments) disposed of during or prior to such Fiscal Year (including all principal paid on the related Investor Notes), to the extent
not repaid from amounts of Other Sources (other than amounts of Capital Commitment Partner Carried Interest);
(v) Fifth,
to the payment of principal (including any previously deferred amounts) then owing under all other Investor Notes of such Partner (including those unrelated to the Partnership), the selection of those of such Partner’s Investor Notes to be
repaid and the division of payments among such Investor Notes to be determined by the Lender or Guarantor;
(vi) Sixth, up
to 50% of any Capital Commitment Net Income remaining after application pursuant to clauses (i) through (v) above shall be applied pro rata to prepayment of principal of all remaining Investor Notes of such Partner (including those unrelated to
the Partnership), the selection of those of such Partner’s Investor Notes to be repaid, the division of payments among such Investor Notes and the percentage of remaining Capital Commitment Net Income to be applied thereto to be determined by
the Lender or Guarantor; and
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(vii) Seventh, to such Partner to the extent of any amount of Capital
Commitment Net Income remaining after making the distributions in clauses (i) through (vi) above, and such amount is not otherwise required to be applied to Investor Notes pursuant to the terms thereof.
To the extent there is a partial disposition of a Capital Commitment Investment or any other BE Investment, as applicable, the payments in
clauses (iii) and (iv) above shall be based on that portion of the Capital Commitment Investment or other BE Investment, as applicable, disposed of, and the principal amount and related interest payments of such Investor Note shall be adjusted
to reflect such partial payment so that there are equal payments over the remaining term of the related Investor Note. For a Partner who is no longer an employee or officer of Holdings or an Affiliate thereof, distributions shall be made pursuant to
clauses (i) through (iii) above, and then, unless the Partnership or its Affiliate has exercised its rights pursuant to Section 8.1 hereof, any remaining income or other distribution in respect of such Partner’s Capital Commitment
Partner Interest shall be applied to the prepayment of the outstanding Investor Notes of such Partner, until all such Partner’s Investor Notes have been repaid in full, with any such income or other distribution remaining thereafter distributed
to such Partner.
Distributions of Capital Commitment Net Income may be made at any other time at the discretion of the General Partner.
At the General Partner’s discretion, any amounts distributed to a Partner in respect of such Partner’s Capital Commitment Partner Interest will be net of any interest and principal payable on his or her Investor Notes for the full period
in respect of which the distribution is made.
(b) [Intentionally omitted.]
(c) To the extent that the foregoing Partnership distributions and distributions and payments from Other Sources are insufficient to satisfy
any principal and/or interest due on Investor Notes, and to the extent that the General Partner in its sole discretion elects to apply this paragraph (c) to any individual payments due, such unpaid interest will be added to the remaining
principal amount of such Investor Notes and shall be payable on the next scheduled principal payment date (along with any deferred principal and any principal and interest due on such date); provided, that such deferral shall not apply to a
Partner that is no longer an employee or officer of Holdings or its Affiliates. All unpaid interest on such Investor Notes shall accrue interest at the interest rate then in effect for such Investor Notes.
(d) [Intentionally omitted.]
(e)
The Capital Commitment Capital Account of each Partner shall be reduced by the amount of any distribution to such Partner pursuant to Section 7.4(a).
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(f) At any time that a sale, exchange, transfer or other disposition of a portion of a
Capital Commitment Investment is being considered by the Partnership or BXLS V (a “Capital Commitment Disposable Investment”), at the election of the General Partner each Partner’s Capital Commitment Interest with respect
to such Capital Commitment Investment shall be vertically divided into two separate Capital Commitment Interests, a Capital Commitment Interest attributable to the Capital Commitment Disposable Investment (a Partner’s “Capital
Commitment Class B Interest”), and a Capital Commitment Interest attributable to such Capital Commitment Investment excluding the Capital Commitment Disposable Investment (a Partner’s “Capital Commitment
Class A Interest”). Distributions (including those resulting from a direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Disposable Investment shall be made
only to holders of Capital Commitment Class B Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment Class B
Interests, and distributions (including those resulting from the direct or indirect sale, transfer, exchange or other disposition by the Partnership) relating to a Capital Commitment Investment excluding such Capital Commitment Disposable Investment
shall be made only to holders of Capital Commitment Class A Interests with respect to such Capital Commitment Investment in accordance with their respective Capital Commitment Profit Sharing Percentages relating to such Capital Commitment
Class A Interests.
(g) (i) If (x) the Partnership is obligated under the Giveback Provisions to contribute a Giveback
Amount to BXLS V in respect of any Capital Commitment BXLS V Interest that may be held by the Partnership or (y) Associates V is obligated under the Giveback Provisions to contribute to BXLS V a Giveback Amount with respect to any Capital
Commitment BXLS V Interest that may be held by Associates V and the Partnership is obligated to contribute any such amount to Associates V in respect of the Partnership’s Capital Commitment Associates V Partner Interest (the amount of any such
obligation of the Partnership with respect to such a Giveback Amount in the case of either (x) or (y) being herein called a “Capital Commitment Giveback Amount”), the General Partner shall call for such amounts as are
necessary to satisfy such obligation of the Partnership as determined by the General Partner, in which case, each Partner and Withdrawn Partner shall contribute to the Partnership, in cash, when and as called by the General Partner, such an amount
of prior distributions by the Partnership with respect to the Capital Commitment BXLS V Interest (the “Capital Commitment Recontribution Amount”) which equals such Partner’s pro rata share of prior distributions in
connection with (a) the Capital Commitment BXLS V Investment giving rise to the Capital Commitment Giveback Amount, (b) if the amounts contributed pursuant to clause (a) above are insufficient to satisfy such Capital Commitment
Giveback Amount, Capital Commitment BXLS V Investments other than the one giving rise to such obligation, and (c) if the Capital Commitment Giveback Amount pursuant to an applicable BXLS V Agreement is unrelated to a specific Capital Commitment
BXLS V Investment, all Capital Commitment BXLS V Investments. Each Partner shall promptly contribute to the Partnership upon notice thereof such Partner’s Capital Commitment Recontribution Amount. Prior to such time, the General Partner may, at
the General Partner’s discretion (but shall be under no obligation to), provide notice that in the General Partner’s judgment, the potential obligations in respect of the Capital Commitment Giveback Amount will probably materialize (and an
estimate of the aggregate amount of such obligations).
(ii) (A) In the event any Partner (a “Capital
Commitment Defaulting Party”) fails to recontribute all or any portion of such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount for any reason, the General Partner shall require all other Partners and
Withdrawn Partners to contribute, on a pro rata basis (based on each of their respective Capital Commitment Profit Sharing Percentages), such
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amounts as are necessary to fulfill the Capital Commitment Defaulting Party’s obligation to pay such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount
(a “Capital Commitment Deficiency Contribution”) if the General Partner determines in its good faith judgment that the Partnership will be unable to collect such amount in cash from such Capital Commitment Defaulting Party for
payment of the Capital Commitment Giveback Amount at least 20 Business Days prior to the latest date that the Partnership is permitted to pay the Capital Commitment Giveback Amount; provided, that no Partner shall as a result of such Capital
Commitment Deficiency Contribution be required to contribute an amount in excess of 150% of the amount of the Capital Commitment Recontribution Amount initially requested from such Partner in respect of such default. Thereafter, the General Partner
shall determine in its good faith judgment that the Partnership should either (1) not attempt to collect such amount in light of the costs associated therewith, the likelihood of recovery and any other factors considered relevant in the good
faith judgment of the General Partner or (2) pursue any and all remedies (at law or equity) available to the Partnership against the Capital Commitment Defaulting Party, the cost of which shall be a Partnership expense to the extent not
ultimately reimbursed by the Capital Commitment Defaulting Party. It is agreed that the Partnership shall have the right (effective upon such Capital Commitment Defaulting Party becoming a Capital Commitment Defaulting Party) to set-off as appropriate and apply against such Capital Commitment Defaulting Party’s Capital Commitment Recontribution Amount any amounts otherwise payable to the Capital Commitment Defaulting Party by the
Partnership or any Affiliate thereof. Each Partner hereby grants to the General Partner a security interest, effective upon such Partner becoming a Capital Commitment Defaulting Party, in all accounts receivable and other rights to receive payment
from the Partnership or any Affiliate of the Partnership and agrees that, upon the effectiveness of such security interest, the General Partner may sell, collect or otherwise realize upon such collateral. In furtherance of the foregoing, each
Partner hereby appoints the General Partner as its true and lawful attorney-in-fact with full irrevocable power and authority, in the name of such Partner or in the name
of the Partnership, to take any actions which may be necessary to accomplish the intent of the immediately preceding sentence. The General Partner shall be entitled to collect interest on the Capital Commitment Recontribution Amount of a Capital
Commitment Defaulting Party from the date such Capital Commitment Recontribution Amount was required to be contributed to the Partnership at a rate equal to the Default Interest Rate.
(B) Any Partner’s failure to make a Capital Commitment Deficiency Contribution shall cause such Partner to be a Capital
Commitment Defaulting Party with respect to such amount.
(iii) A Partner’s obligation to make contributions to the
Partnership under this Section 7.4(g) shall survive the termination of the Partnership.
Section 7.5. Valuations. Capital
Commitment Investments shall be valued annually as of the end of each year (and at such other times as deemed appropriate by the General Partner) in accordance with the principles utilized by Associates V (or any other Affiliate of the Partnership
that is a general partner of BXLS V) in valuing investments of BXLS V or, in the case of investments not held by BXLS V, in the good faith judgment of the General Partner, subject in
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each case to the second proviso of the immediately succeeding sentence. The value of any Capital Commitment Interest as of any date (the “Capital Commitment Value”) shall be
based on the value of the underlying Capital Commitment Investment as set forth above; provided, that the Capital Commitment Value may be determined as of an earlier date if determined appropriate by the General Partner in good faith;
provided further, that such value may be adjusted by the General Partner to take into account factors relating solely to the value of a Capital Commitment Interest (as compared to the value of the underlying Capital Commitment
Investment), such as restrictions on transferability, the lack of a market for such Capital Commitment Interest and lack of control of the underlying Capital Commitment Investment. To the full extent permitted by applicable law such valuations shall
be final and binding on all Partners; provided further, that the immediately preceding proviso shall not apply to any Capital Commitment Interests held by a person who is or was at any time a direct member or partner of a General
Partner of the Partnership.
Section 7.6. Disposition Election. (a) At any time prior to the date of the
Partnership’s execution of a definitive agreement to dispose of a Capital Commitment Investment, the General Partner may in its sole discretion permit a Partner to retain all or any portion of its pro rata share of such Capital
Commitment Investment (as measured by such Partner’s Capital Commitment Profit Sharing Percentage in such Capital Commitment Investment). If the General Partner so permits, such Partner shall instruct the General Partner in writing prior to
such date (i) not to dispose of all or any portion of such Partner’s pro rata share of such Capital Commitment Investment (the “Retained Portion”) and (ii) either to (A) distribute such Retained Portion to
such Partner on the closing date of such disposition or (B) retain such Retained Portion in the Partnership on behalf of such Partner until such time as such Partner shall instruct the General Partner upon 5 days’ notice to distribute such
Retained Portion to such Partner. Such Partner’s Capital Commitment Capital Account shall not be adjusted in any way to reflect the retention in the Partnership of such Retained Portion or the Partnership’s disposition of other
Partners’ pro rata shares of such Capital Commitment Investment; provided, that such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Retained Portion to such Partner or upon distribution of
proceeds with respect to a subsequent disposition thereof by the Partnership.
(b) No distribution of such Retained Portion shall occur
unless any Investor Notes relating thereto shall have been paid in full prior to or simultaneously with such distribution.
Section 7.7. Capital Commitment Special Distribution Election. (a) From time to time during the term of this Agreement, the
General Partner may in its sole discretion, upon receipt of a written request from a Partner, distribute to such Partner any portion of its pro rata share of a Capital Commitment Investment (as measured by such Partner’s Capital Commitment
Profit Sharing Percentage in such Capital Commitment Investment) (a “Capital Commitment Special Distribution”). Such Partner’s Capital Commitment Capital Account shall be adjusted upon distribution of such Capital
Commitment Special Distribution.
(b) No Capital Commitment Special Distributions shall occur unless any Investor Notes relating thereto
shall have been paid in full prior to or simultaneously with such Capital Commitment Special Distribution.
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ARTICLE VIII
WITHDRAWAL, ADMISSION OF NEW PARTNERS
Section 8.1. Partner Withdrawal; Repurchase of Capital Commitment Interests. (a) Capital Commitment Interests (or a portion
thereof) that were financed by Investor Notes will be treated as Non-Contingent for purposes hereof based upon the proportion of (a) the sum of Capital
Commitment-Related Capital Contributions not financed by an Investor Note with respect to each Capital Commitment Interest and principal payments on the related Investor Note to (b) the sum of the Capital
Commitment-Related Capital Contributions not financed by an Investor Note with respect to such Capital Commitment Interest, the original principal amount of such Investor Note and all deferred amounts of
interest which from time to time comprise part of the principal amount of the Investor Note. A Partner may prepay a portion of any outstanding principal on the Investor Notes; provided, that in the event that a Partner prepays all or any
portion of the principal amount of the Investor Notes within nine months prior to the date on which such Partner is no longer an employee or officer of Holdings or an Affiliate thereof, the Partnership (or its designee) shall have the right, in its
sole discretion, to purchase the Capital Commitment Interest that became Non-Contingent as a result of such prepayment; provided further, that the purchase price for such Capital Commitment
Interest shall be determined in accordance with the determination of the purchase price of a Partner’s Contingent Capital Commitment Interests as set forth in paragraph (b) below. Prepayments made by a Partner shall apply pro rata
against all of such Partner’s Investor Notes; provided, that such Partner may request that such prepayments be applied only to Investor Notes related to BE Investments that are related to one or more Blackstone Entities specified by such
Partner. Except as expressly provided herein, Capital Commitment Interests that were not financed in any respect with Investor Notes shall be treated as Non-Contingent Capital Commitment Interests.
(b) (i) Upon a Partner ceasing to be an officer or employee of the Partnership or any of its Affiliates, other than as a result of such
Partner dying or suffering a Total Disability, such Partner and the Partnership or any other person designated by the General Partner shall each have the right (exercisable by the Withdrawn Partner within 30 days and by the Partnership or its
designee(s) within 45 days after such Partner’s ceasing to be such an officer or employee) or any time thereafter, upon 30 days’ notice, but not the obligation, to require the Partnership (subject to the prior consent of the General
Partner, such consent not to be unreasonably withheld or delayed), subject to the Partnership Act, to buy (in the case of exercise of such right by such Withdrawn Partner) or the Withdrawn Partner to sell (in the case of exercise of such right by
the Partnership or its designee(s)) all (but not less than all) such Withdrawn Partner’s Contingent Capital Commitment Interests.
(ii) The purchase price for each such Contingent Capital Commitment Interest shall be an amount equal to (A) the
outstanding principal amount of the related Investor Note plus accrued interest thereon to the date of purchase (such portion of the purchase price to be paid in cash) and (B) an additional amount (the “Adjustment Amount”)
equal to (x) all interest paid by the Partner on the portion of the principal amount of such Investor Note(s) relating to the portion of the related Capital Commitment Interest remaining Contingent and to be repurchased, plus (y) all
Capital Commitment Net Losses allocated to the Withdrawn Partner on such Contingent portion of such Capital
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Commitment Interest, minus (z) all Capital Commitment Net Income allocated to the
Withdrawn Partner on the Contingent portion of such Capital Commitment Interest; provided, that, if the Withdrawn Partner was terminated from employment or his or her position as an officer for Cause, all amounts referred to in clause
(x) or (y) of the Adjustment Amount, in the General Partner’s sole discretion, may be deemed to equal zero. The Adjustment Amount shall, if positive, be payable by the holders of the purchased Capital Commitment Interests to the
Withdrawn Partner from the next Capital Commitment Net Income received by such holders on the Contingent portion of such Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received. If the
Adjustment Amount is negative, it shall be payable to the holders of the purchased Capital Commitment Interest by the Withdrawn Partner (A) from the next Capital Commitment Net Income on the
Non-Contingent portion of the Withdrawn Partner’s Capital Commitment Interests at the time such Capital Commitment Net Income is received by the Withdrawn Partner, or (B) if the Partnership or its
designee(s) elect to purchase such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, in cash by the Withdrawn Partner at the time of such purchase; provided, that the Partnership and
its Affiliates may offset any amounts otherwise owing to a Withdrawn Partner against any Adjustment Amount owed by such Withdrawn Partner. Until so paid, such remaining Adjustment Amount will not itself bear interest. At the time of such purchase of
the Withdrawn Partner’s Contingent Capital Commitment Interests, his or her related Investor Note shall be payable in full.
(iii) Upon such Partner ceasing to be such an officer or employee, all Investor Notes shall become fully recourse to the
Withdrawn Partner in his or her individual capacity (whether or not the Withdrawn Partner or the Partnership or its designee(s) exercises the right to require repurchase of the Withdrawn Partner’s Contingent Capital Commitment Interests).
(iv) If neither the Withdrawn Partner nor the Partnership nor its designee(s) exercises the right to require repurchase of such
Contingent Capital Commitment Interests, then the Withdrawn Partner shall retain the Contingent portion of his or her Capital Commitment Interests and the Investor Notes shall remain outstanding, shall become fully recourse to the Withdrawn Partner
in his or her individual capacity, shall be payable in accordance with their remaining original maturity schedules and shall be prepayable at any time by the Withdrawn Partner at his or her option, and the Partnership shall apply such prepayments
against outstanding Investor Notes on a pro rata basis.
(v) To the extent that another Partner purchases a portion
of a Capital Commitment Interest of a Withdrawn Partner, the purchasing Partner’s Capital Commitment Capital Account and Capital Commitment Profit Sharing Percentage for such Capital Commitment Investment shall be correspondingly increased.
(c) Upon the occurrence of a Final Event with respect to any Partner, such Partner shall thereupon cease to be a Partner with respect to
such Partner’s Capital Commitment Partner Interest. If such a Final Event shall occur, no Successor in Interest to any such Partner shall for any purpose hereof become or be deemed to become a Partner. The sole right, as against the Partnership
and the remaining Partners, acquired hereunder by, or resulting hereunder to, a
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Successor in Interest to any Partner shall be to receive any distributions and allocations with respect to such Partner’s Capital Commitment Partner Interest pursuant to Article VII and
this Article VIII (subject to the right of the Partnership to purchase the Capital Commitment Interests of such former Partner pursuant to Section 8.1(b) or Section 8.1(d)), to the extent, at the time, in the manner and in the amount
otherwise payable to such Partner had such a Final Event not occurred, and no other right shall be acquired hereunder by, or shall result hereunder to, a Successor in Interest to such Partner, whether by operation of law or otherwise and the
Partnership shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations hereunder. Until distribution of any such Partner’s interest in the Partnership upon the
dissolution of the Partnership as provided in Section 9.2, neither his or her Capital Commitment Capital Accounts nor any part thereof shall be subject to withdrawal or redemption without the consent of the General Partner. The General Partner
shall be entitled to treat any Successor in Interest to such Partner as the only person entitled to receive distributions and allocations hereunder with respect to such Partner’s Capital Commitment Partner Interest.
(d) If a Partner dies or suffers a Total Disability, all Contingent Capital Commitment Interests of such Partner shall be purchased by the
Partnership or its designee (within 30 days of the first date on which the Partnership knows or has reason to know of such Partner’s death or Total Disability) (and the purchase price for such Contingent Capital Commitment Interests shall be
determined in accordance with Section 8.1(b) (except that any Adjustment Amount shall be payable by or to such Partner’s estate, personal representative or other Successor in Interest, in cash)), and any Investor Notes financing such
Contingent Capital Commitment Interests shall thereupon be prepaid as provided in Section 8.1(b). Upon such Partner’s death or Total Disability, any Investor Note(s) financing such Contingent Capital Commitment Interests shall become fully
recourse. In addition, in the case of the death or Total Disability of a Partner, if the estate, personal representative or other Successor in Interest of such Partner, so requests in writing within 180 days after the Partner’s death or ceasing
to be an employee or member (directly or indirectly) of the Partnership or any of its Affiliates by reason of Total Disability (such requests shall not exceed one per calendar year), the Partnership or its designee may but is not obligated to
purchase for cash all (but not less than all) Non-Contingent Capital Commitment Interests of such Partner as of the last day of the Partnership’s then current Fiscal Year at a price equal to the Capital
Commitment Value thereof as of the most recent valuation prior to the date of purchase. Each Partner shall be required to include appropriate provisions in his or her will to reflect such provisions of this Agreement. In addition, the Partnership
may, in the sole discretion of the General Partner, upon notice to the estate, personal representative or other Successor in Interest of such Partner, within 30 days of the first date on which the General Partner knows or has reason to know of such
Partner’s death or Total Disability, determine either (i) to distribute Securities or other property to the estate, personal representative or other Successor in Interest, in exchange for such
Non-Contingent Capital Commitment Interests as provided in Section 8.1(e) or (ii) to require sale of such Non-Contingent Capital Commitment Interests to the
Partnership or its designee as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by the General Partner in its sole discretion) for an amount in cash equal to the Capital Commitment Value thereof.
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(e) In lieu of retaining a Withdrawn Partner as a Partner with respect to any Non-Contingent Capital Commitment Interests, the General Partner may, in its sole discretion, by notice to such Withdrawn Partner within 45 days of his or her ceasing to be an employee or officer of the Partnership
or any of its Affiliates, or at any time thereafter, upon 30 days written notice, determine (1) to distribute to such Withdrawn Partner the pro rata portion of the Securities or other property underlying such Withdrawn Partner’s Non-Contingent Capital Commitment Interests, subject to any restrictions on distributions associated with the Securities or other property, in satisfaction of his or her
Non-Contingent Capital Commitment Interests in the Partnership or (2) to cause, as of the last day of any Fiscal Year of the Partnership (or earlier period, as determined by the General Partner in its
sole discretion), the Partnership or another person designated by the General Partner (who may be itself another Partner or another Affiliate of the Partnership) to purchase all (but not less than all) of such Withdrawn Partner’s Non-Contingent Capital Commitment Interests for a price equal to the Capital Commitment Value thereof (determined in good faith by the General Partner as of the most recent valuation prior to the date of purchase).
The General Partner shall condition any distribution or purchase of voting Securities pursuant to paragraph (d) above or this paragraph (e) upon the Withdrawn Partner’s execution and delivery to the Partnership of an appropriate
irrevocable proxy, in favor of the General Partner or its nominee, relating to such Securities.
(f) The Partnership may subsequently
transfer any Unallocated Capital Commitment Interest or portion thereof which is purchased by it as described above to any other person approved by the General Partner. In connection with such purchase or transfer or the purchase of a Capital
Commitment Interest or portion thereof by the General Partner’s designee(s), Holdings may loan all or a portion of the purchase price of the transferred or purchased Capital Commitment Interest to the Partnership, the transferee or the designee-purchaser(s), as applicable (excluding any of the foregoing who is an executive officer of The Blackstone Group Inc. or any Affiliate thereof). To the extent that a Withdrawn Partner’s Capital
Commitment Interests (or portions thereof) are repurchased by the Partnership and not transferred to or purchased by another person, all or any portion of such repurchased Capital Commitment Interests may, in the sole discretion of the General
Partner, (i) be allocated to each Partner already participating in the Capital Commitment Investment to which the repurchased Capital Commitment Interest relates, (ii) be allocated to each Partner in the Partnership, whether or not already
participating in such Capital Commitment Investment, and/or (iii) continue to be held by the Partnership itself as an unallocated Capital Commitment Investment (such Capital Commitment Interests being herein called “Unallocated Capital
Commitment Interests”). To the extent that a Capital Commitment Interest is allocated to Partners as provided in clause (i) and/or (ii) above, any indebtedness incurred by the Partnership to finance such repurchase shall also be
allocated to such Partners. All such Capital Commitment Interests allocated to Partners shall be deemed to be Contingent and shall become Non-Contingent as and to the extent that the principal amount of such
related indebtedness is repaid. The Partners receiving such allocations shall be responsible for such related indebtedness only on a nonrecourse basis to the extent appropriate as provided in this Agreement, except as otherwise provided in this
Section 8.1 and except as such Partners and the General Partner shall otherwise agree; provided, that such indebtedness shall become fully recourse to the extent and at the time provided in this Section 8.1. If the indebtedness
financing such repurchased interests is not to be non-recourse or so limited, the Partnership may require an assumption by the Partners of such indebtedness on the terms thereof as a precondition to allocation
of the related Capital Commitment Interests to such Partners; provided, that a Partner shall not, except as set forth in his or her Investor Note(s), be obligated to accept any obligation that is personally recourse (except as provided in
this Section 8.1), unless his or her prior consent is obtained. So long as the Partnership itself retains the Unallocated Capital Commitment Interests pursuant to clause (iii) above, such Unallocated Capital Commitment Interests shall
belong to the
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Partnership and any indebtedness financing the Unallocated Capital Commitment Interests shall be an obligation of the Partnership to which all income of the Partnership is subject except as
otherwise agreed by the lender of such indebtedness. Any Capital Commitment Net Income (Loss) on an Unallocated Capital Commitment Interest shall be allocated to each Partner in the proportion his or her aggregate Capital Commitment Capital Accounts
bear to the aggregate Capital Commitment Capital Accounts of all Partners; debt service on such related financing will be an expense of the Partnership allocable to all Partners in such proportions.
(g) If a Partner is required to Withdraw from the Partnership with respect to such Partner’s Capital Commitment Partner Interest for
Cause, then his or her Capital Commitment Interest shall be settled in accordance with paragraphs (a)-(f) and (j) of this Section 8.1; provided, that if such Partner was not at any time a
direct partner of a General Partner of the Partnership, the General Partner may elect (but shall not be required) to apply any or all the following terms and conditions to such settlement:
(i) purchase for cash all of such Withdrawn Partner’s Non-Contingent Capital
Commitment Interests. The purchase price for each such Non-Contingent Capital Commitment Interest shall be the lower of (A) the original cost of such Non-Contingent
Capital Commitment Interest or (B) an amount equal to the Capital Commitment Value thereof (determined as of the most recent valuation prior to the date of the purchase of such Non-Contingent Capital
Commitment Interest);
(ii) allow the Withdrawn Partner to retain such
Non-Contingent Capital Commitment Interests; provided, that the maximum amount of Capital Commitment Net Income allocable to such Withdrawn Partner with respect to any Capital Commitment Investment
shall equal the amount of Capital Commitment Net Income that would have been allocated to such Withdrawn Partner if such Capital Commitment Investment had been sold as of the Settlement Date at the then prevailing Capital Commitment Value thereof;
or
(iii) in lieu of cash, purchase such Non-Contingent Capital Commitment
Interests by providing the Withdrawn Partner with a promissory note in the amount determined in (i) above. Such promissory note shall have a maximum term of ten (10) years with interest at the Federal Funds Rate.
(h) The Partnership will assist a Withdrawn Partner or his or her estate or guardian, as the case may be, in the settlement of the Withdrawn
Partner’s Capital Commitment Partner Interest in the Partnership. Third party costs incurred by the Partnership in providing this assistance will be borne by the Withdrawn Partner or his or her estate.
(i) The General Partner may reasonably determine in good faith to retain outside professionals to provide the assistance to Withdrawn Partners
or their estates or guardians, as referred to above. In such instances, the General Partner will obtain the prior approval of a Withdrawn Partner or his or her estate or guardian, as the case may be, prior to engaging such professionals. If the
Withdrawn Partner (or his or her estate or guardian) declines to incur such costs, the General Partner will provide such reasonable assistance as and when it can so as not to interfere with the Partnership’s day-to-day operating, financial, tax and other related responsibilities to the Partnership and the Partners.
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(j) Each Partner hereby irrevocably appoints the General Partner as such Partner’s true
and lawful agent, representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file, on behalf of
such Partner, any and all agreements, instruments, consents, ratifications, documents and certificates which such General Partner deems necessary or advisable in connection with any transaction or matter contemplated by or provided for in this
Section 8.1, including, without limitation, the performance of any obligation of such Partner or the Partnership or the exercise of any right of such Partner or the Partnership. Such power of attorney is coupled with an interest and shall
survive and continue in full force and effect notwithstanding the Withdrawal from the Partnership of any Partner for any reason and shall not be affected by the death, disability or incapacity of such Partner.
Section 8.2. Transfer of Partner’s Capital Commitment Interest. Except as otherwise agreed by the General
Partner, no Partner or former Partner shall have the right to sell, assign, mortgage, pledge, grant a security interest over, or otherwise dispose of or transfer (“Transfer”) all or part of any such Partner’s Capital Commitment
Partner Interest in the Partnership; provided, that this Section 8.2 shall in no way impair (i) Transfers as permitted in Section 8.1 above, in the case of the purchase of a Withdrawn Partner’s or Deceased or Totally
Disabled Partner’s Capital Commitment Interests, (ii) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers by a Partner to another Partner of
Non-Contingent Capital Commitment Interests, (iii) Transfers with the prior written consent of the General Partner (which consent may be granted or withheld in its sole discretion without giving any
reason therefor) and (iv) with the prior written consent of the General Partner, which shall not be unreasonably withheld, Transfers of up to 25% of a Limited Partner’s Capital Commitment Partner Interest to an Estate Planning Vehicle (it
being understood that it shall not be unreasonable for the General Partner to condition any Transfer of an Interest pursuant to this clause (iv) on the satisfaction of certain conditions and/or requirements imposed by the General Partner in
connection with any such Transfer, including, for example, a requirement that any transferee of an Interest hold such Interest as a passive, non-voting interest in the Partnership). The General Partner shall
designate that each Estate Planning Vehicle shall not have voting rights (any such Partner being called a “Nonvoting Partner”). Such Partner shall be jointly and severally liable for all obligations of both such Partner and
such Nonvoting Partner with respect to the interest transferred (including the obligation to make additional Capital Commitment-Related Capital Contributions). The General Partner may at its sole option
exercisable at any time require such Estate Planning Vehicle to Withdraw from the Partnership on the terms of Section 8.1 and Article VI. No person acquiring an interest in the Partnership pursuant to this Section 8.2 shall become a
Partner of the Partnership, or acquire such Partner’s right to participate in the affairs of the Partnership, unless such person shall be admitted as a Partner pursuant to Section 6.1. A Partner shall not cease to be a Partner of the
Partnership upon the collateral assignment of, or the pledging or granting of a security interest in, its entire Interest in the Partnership in accordance with the provisions of this Agreement.
Section 8.3. Compliance with Law. Notwithstanding any provision hereof to the contrary, no sale or Transfer of a Capital
Commitment Interest in the Partnership may be made except in compliance with all U.S. federal, state and other applicable laws, including U.S. federal and state securities laws.
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ARTICLE IX
DISSOLUTION
Section 9.1.
Dissolution. The Partnership shall be dissolved and subsequently terminated:
(a) pursuant to Section 6.6; or
(b) upon the expiration of the term of the Partnership.
Section 9.2. Final Distribution. Upon the dissolution of the Partnership, and following the payment of creditors of the
Partnership and the making of provisions for the payment of any contingent, conditional or unmatured claims known to the Partnership as required under the Partnership Act:
(a) The Partners’ respective interests in the Partnership shall be valued and settled in accordance with the procedures set forth in
Section 6.5 which provide for allocations to the GP-Related Capital Accounts of the Partners and distributions in accordance with the GP-Related Capital Account
balances of the Partners; and
(b) With respect to each Partner’s Capital Commitment Partner Interest, an amount shall be paid to such
Partner in cash or Securities in an amount equal to such Partner’s respective Capital Commitment Liquidating Share for each Capital Commitment Investment; provided, that if the remaining assets relating to any Capital Commitment
Investment shall not be equal to or exceed the aggregate Capital Commitment Liquidating Shares for such Capital Commitment Investment, to each Partner in proportion to its Capital Commitment Liquidating Share for such Capital Commitment Investment;
and the remaining assets of the Partnership related to the Partners’ Capital Commitment Partner Interests shall be paid to the Partners in cash or Securities in proportion to their respective Capital Commitment Profit Sharing Percentages for
each Capital Commitment Investment from which such cash or Securities are derived.
The General Partner shall be the liquidator. In the
event that the General Partner is unable to serve as liquidator, a liquidating trustee shall be chosen by the affirmative vote of a Majority in Interest of the Partners voting at a meeting of Partners (excluding Nonvoting Special Partners).
Section 9.3. Amounts Reserved Related to Capital Commitment Partner Interests. (a) If there are any Securities or other
property or other investments or securities related to the Partners’ Capital Commitment Partner Interests which, in the judgment of the liquidator, cannot be sold, or properly distributed in kind in the case of dissolution, without sacrificing
a significant portion of the value thereof, the value of a Partner’s interest in each such Security or other investment or security may be excluded from the amount distributed to the Partners participating in the related Capital Commitment
Investment pursuant to Section 9.2(b). Any interest of a Partner, including his or her pro rata interest in any gains, losses or distributions, in Securities or other property or other investments or securities so excluded shall not be
paid or distributed until such time as the liquidator shall determine.
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(b) If there is any pending transaction, contingent liability or claim by or against the
Partnership related to the Partners’ Capital Commitment Partner Interests as to which the interest or obligation of any Partner therein cannot, in the judgment of the liquidator, be then ascertained, the value thereof or probable loss therefrom
may be deducted from the amount distributable to such Partner pursuant to Section 9.2(b). No amount shall be paid or charged to any such Partner on account of any such transaction or claim until its final settlement or such earlier time as the
liquidator shall determine. The Partnership may meanwhile retain from other sums due such Partner in respect of such Partner’s Capital Commitment Partner Interest an amount which the liquidator estimates to be sufficient to cover the share of
such Partner in any probable loss or liability on account of such transaction or claim.
(c) Upon determination by the liquidator that
circumstances no longer require the exclusion of any Securities or other property or retention of sums as provided in paragraphs (a) and (b) of this Section 9.3, the liquidator shall, at the earliest practicable time, distribute as
provided in Section 9.2(b) such sums or such Securities or other property or the proceeds realized from the sale of such Securities or other property to each Partner from whom such sums or Securities or other property were withheld.
ARTICLE X
MISCELLANEOUS
Section 10.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes which cannot be settled amicably,
including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including
the validity, scope and enforceability of this arbitration provision as well as any and all disputes arising out of, relating to or in connection with the termination, liquidation or winding up of the Partnership), whether arising during the
existence of the Partnership or at or after its termination or during or after the liquidation or winding up of the Partnership, shall be finally settled by arbitration conducted by a single arbitrator in New York, New York U.S.A., in accordance
with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) days of the
receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if
reasonably possible during any arbitration proceedings.
(b) Notwithstanding the provisions of paragraph (a), the General Partner may
bring, or may cause the Partnership to bring, on behalf of the General Partner or the Partnership or on behalf of one or more Partners, an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to
arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Partner (i) expressly consents to the application of paragraph
(c) of this Section 10.1 to any such action or proceeding, (ii) agrees that proof shall not be required that
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monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate and (iii) irrevocably appoints the General
Partner as such Partner’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon any such agent, who shall promptly advise such Partner of any such service of process, shall be
deemed in every respect effective service of process upon the Partner in any such action or proceeding.
(c) (i) EACH PARTNER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 10.1, OR ANY JUDICIAL PROCEEDING ANCILLARY TO
AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial
relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the forum(s) designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or
hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 10.1 and such parties agree not to plead or claim the
same.
(d) Notwithstanding any provision of this Agreement to the contrary, this Section 10.1 shall be construed to the maximum extent
possible to comply with the laws of the State of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it
shall be determined by a court of competent jurisdiction that any provision or wording of this Section 10.1, including any rules of the International Chamber of Commerce, shall be invalid or unenforceable under the Delaware Arbitration Act, or
other applicable law, such invalidity shall not invalidate all of this Section 10.1. In that case, this Section 10.1 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of
the Delaware Arbitration Act or other applicable law, and, in the event such term or provision cannot be so limited, this Section 10.1 shall be construed to omit such invalid or unenforceable provision.
Section 10.2. Ownership and Use of the Blackstone Name. The Partnership acknowledges that Blackstone TM L.L.C.
(“TM”), a Delaware limited liability company with a principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., (or its successors or assigns) is the sole and exclusive owner of the mark and name BLACKSTONE and
that the ownership of, and the right to use, sell or otherwise dispose of, the firm name or any abbreviation or modification thereof which consists of or includes BLACKSTONE, shall belong exclusively to TM, which company (or its predecessors,
successors or assigns) has licensed the Partnership to use BLACKSTONE in its name. The Partnership acknowledges that TM owns the service mark BLACKSTONE for various services and that the Partnership is using the BLACKSTONE mark and name on a non-exclusive, non-sublicensable and non-assignable basis
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in connection with its business and authorized activities with the permission of TM. All services rendered by the Partnership under the BLACKSTONE mark and name will be rendered in a manner and
with quality levels that are consistent with the high reputation heretofore developed for the BLACKSTONE mark by TM and its Affiliates and licensees. The Partnership understands that TM may terminate its right to use BLACKSTONE at any time in
TM’s sole discretion by giving the Partnership written notice of termination. Promptly following any such termination, the Partnership will take all steps necessary to change its partnership name to one which does not include BLACKSTONE or any
confusingly similar term and cease all use of BLACKSTONE or any term confusingly similar thereto as a service mark or otherwise.
Section 10.3. Written Consent. Any action required or permitted to be taken by a vote of Partners at a meeting may be taken
without a meeting if a Majority in Interest of the Partners consent thereto in writing.
Section 10.4. Letter Agreements;
Schedules. The General Partner may, or may cause the Partnership to, enter, or has previously entered, into separate letter agreements with individual Partners, officers or employees with respect to
GP-Related Profit Sharing Percentages, Capital Commitment Profit Sharing Percentages, benefits or any other matter, which letter agreements have the effect of establishing rights under, or altering or
supplementing, the terms of this Agreement with respect to any such Partner and such matters. The parties hereto agree that any rights established, or any terms of this Agreement altered or supplemented, in any such separate letter agreement,
including any Commitment Agreement or SMD Agreement, shall govern solely with respect to such Partner notwithstanding any other provision of this Agreement. The General Partner may from time to time execute and deliver to the Partners schedules
which set forth the then current capital balances, GP-Related Profit Sharing Percentages and Capital Commitment Profit Sharing Percentages of the Partners and any other matters deemed appropriate by the
General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever; provided, that this in no way limits the effectiveness of any Commitment Agreement or SMD
Agreement.
Section 10.5. Governing Law; Separability of Provisions. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to principles of conflicts of law. In particular, the Partnership has been formed pursuant to the Partnership Act, and the rights and liabilities of the Partners shall be as provided
therein, except as herein otherwise expressly provided. If any provision of this Agreement shall be held to be invalid, such provision shall be given its meaning to the maximum extent permitted by law and the remainder of this Agreement shall not be
affected thereby.
Section 10.6. Successors and Assigns; Third Party Beneficiaries. This Agreement shall be binding upon and
shall, subject to the penultimate sentence of Section 6.3(a), inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any successor to a trustee of a trust which is or becomes a party hereto;
provided, that no person claiming by, through or under a Partner (whether such Partner’s heir, personal representative or otherwise), as distinct from such Partner itself, shall have any rights as, or in respect to, a Partner (including
the right to approve or vote on any matter or to notice thereof) except the right to receive only those distributions expressly payable to such person pursuant to Article VI and Article VIII. Any Partner or Withdrawn Partner shall remain
liable for the obligations under this Agreement (including any
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Net GP-Related Recontribution Amounts and any Capital Commitment Recontribution Amounts) of any transferee of all or any portion of such Partner’s or
Withdrawn Partner’s interest in the Partnership, unless waived by the General Partner. The Partnership shall, if the General Partner determines in its good faith judgment, based on the standards set forth in Section 5.8(d)(ii)(A) and
Section 7.4(g)(ii)(A), to pursue such transferee, pursue payment (including any Net GP-Related Recontribution Amounts and/or Capital Commitment Recontribution Amounts) from the transferee with respect to
any such obligations. Nothing in this Agreement is intended, nor shall anything herein be construed, to confer any rights, legal or equitable, on any person other than the Partners and their respective legal representatives, heirs, successors and
permitted assigns. Notwithstanding the foregoing, solely to the extent required by the BXLS V Agreements, (x) the limited partners in BXLS V shall be third-party beneficiaries of the provisions of
Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount (for purpose of this sentence, as defined in paragraph 9.2.8(b) of the BXLS V Partnership Agreement), and
(y) the amendment of the provisions of Section 5.8(d)(i)(A) and Section 5.8(d)(ii)(A) (and the definitions relating thereto), solely as they relate to any Clawback Amount (for purpose of this sentence, as defined in paragraph 9.2.8(c)
of the BXLS V Partnership Agreement), shall be effective against such limited partners only with the 66 2/3% Combined Limited Partner Consent (as such term is used in the BXLS V Partnership Agreement) unless such amendment does not adversely affect
such limited partners’ rights under paragraph 9.2.8 of the BXLS V Partnership Agreement.
Section 10.7. Confidentiality.
(a) By executing this Agreement, each Partner expressly agrees, at all times during the term of the Partnership and thereafter and whether or not at the time a Partner of the Partnership, to maintain the confidentiality of, and not to disclose
to any person other than the Partnership, another Partner or a person designated by the Partnership, any information relating to the business, financial structure, financial position or financial results, clients or affairs of the Partnership that
shall not be generally known to the public or the securities industry, except as otherwise required by law or by any regulatory or self-regulatory organization having jurisdiction; provided, that any
corporate Partner may disclose any such information it is required by law, rule, regulation or custom to disclose. Notwithstanding anything in this Agreement to the contrary, to comply with Treasury Regulations
Section 1.6011-4(b)(3)(i), each Partner (and any employee, representative or other agent of such Partner) may disclose to any and all persons, without limitation of any kind, the U.S. federal income tax
treatment and tax structure of the Partnership, it being understood and agreed, for this purpose, (1) the name of, or any other identifying information regarding (a) the Partners or any existing or future investor (or any Affiliate
thereof) in any of the Partners, or (b) any investment or transaction entered into by the Partners; (2) any performance information relating to any of the Partners or their investments; and (3) any performance or other information
relating to previous funds or investments sponsored by any of the Partners, does not constitute such tax treatment or tax structure information.
(b) Nothing in this Agreement shall prohibit or impede any Partner from communicating, cooperating or filing a complaint on possible violations
of U.S. federal, state or local law or regulation to or with any governmental agency or regulatory authority (collectively, a “Governmental Entity”), including, but not limited to, the SEC, FINRA, EEOC or NLRB, or from making
other disclosures to any Governmental Entity that are protected under the whistleblower provisions of U.S. federal, state or local law or regulation; provided, that in each case such communications and disclosures are consistent with
applicable law. Each Partner
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understands and acknowledges that (a) an individual shall not be held criminally or civilly liable under any U.S. federal or state trade secret law for the disclosure of a trade secret that
is made (i) in confidence to a U.S. federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a
lawsuit or other proceeding, if such filing is made under seal, and (b) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual
and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal; and does not disclose the trade secret, except pursuant to court order. Moreover, a Partner shall not be
required to give prior notice to (or get prior authorization from) Blackstone regarding any such communication or disclosure. Except as otherwise provided in this paragraph or under applicable law, under no circumstance is any Partner authorized to
disclose any information covered by Blackstone or its affiliates’ attorney-client privilege or attorney work product or Blackstone’s trade secrets without the prior written consent of Blackstone.
Section 10.8. Notices. Whenever notice is required or permitted by this Agreement to be given, such notice shall be in
writing (including telecopy or similar writing) and shall be given by hand delivery (including any courier service) or telecopy to any Partner at its address or telecopy number shown in the Partnership’s books and records or, if given to the
General Partner, at the address or telecopy number of the Partnership in New York City. Each such notice shall be effective (i) if given by telecopy, upon dispatch, and (ii) if given by hand delivery, when delivered to the address of such
Partner, the General Partner or the Partnership specified as aforesaid.
Section 10.9. Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be an original and all of which together shall constitute a single instrument. For the avoidance of doubt, a Person’s execution and delivery of this Agreement by electronic signature
and electronic transmission (jointly, an “Electronic Signature”), including via DocuSign or other similar method, shall constitute the execution and delivery of a counterpart of this Agreement by or on behalf of such Person and
shall bind such Person to the terms of this Agreement. The parties hereto agree that this Agreement and any additional information incidental hereto may be maintained as electronic records. Any Person executing and delivering this Agreement by an
Electronic Signature further agrees to take any and all reasonable additional actions, if any, evidencing its intent to be bound by the terms of this Agreement, as may be reasonably requested by the General Partner.
Section 10.10. Power of Attorney. Each Partner hereby irrevocably appoints the General Partner as such Partner’s true and
lawful representative and attorney-in-fact, each acting alone, in such Partner’s name, place and stead, to make, execute, sign and file all instruments, documents
and certificates which, from time to time, may be required to set forth any amendment to this Agreement or may be required by this Agreement or by the laws of the United States of America, the State of Delaware or any other state in which the
Partnership shall determine to do business, or any political subdivision or agency thereof, to execute, implement and continue the valid and subsisting existence of the Partnership. Such power of attorney is coupled with an interest and shall
survive and continue in full force and effect notwithstanding the subsequent Withdrawal from the Partnership of any Partner for any reason and shall survive and shall not be affected by the subsequent disability or incapacity of such Partner.
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Section 10.11. Partner’s Will. Each Partner and Withdrawn
Partner shall include in his or her will a provision that addresses certain matters in respect of his or her obligations relating to the Partnership that is satisfactory to the General Partner and each such Partner and Withdrawn Partner shall
confirm annually to the Partnership, in writing, that such provision remains in his or her current will. Where applicable, any estate planning trust of such Partner or Withdrawn Partner to which a portion of such Partner’s or Withdrawn
Partner’s Interest is transferred shall include a provision substantially similar to such provision and the trustee of such trust shall confirm annually to the Partnership, in writing, that such provision or its substantial equivalent remains
in such trust. In the event any Partner or Withdrawn Partner fails to comply with the provisions of this Section 10.11 after the Partnership has notified such Partner or Withdrawn Partner of his or her failure to so comply and such failure to
so comply is not cured within 30 days of such notice, the Partnership may withhold any and all distributions to such Partner until the time at which such party complies with the requirements of this Section 10.11.
Section 10.12. Cumulative Remedies. Rights and remedies under this Agreement are cumulative and do not preclude use of other
rights and remedies available under applicable law.
Section 10.13. Legal Fees. Except as more specifically provided herein,
in the event of a legal dispute (including litigation, arbitration or mediation) between any Partner or Withdrawn Partner and the Partnership, arising in connection with any party seeking to enforce Section 4.1(d) or any other provision of this
Agreement relating to the Holdback, the Clawback Amount, the GP-Related Giveback Amount, the Capital Commitment Giveback Amount, the Net GP-Related Recontribution Amount
or the Capital Commitment Recontribution Amount, the “losing” party to such dispute shall promptly reimburse the “victorious party” for all reasonable legal fees and expenses incurred in connection with such dispute
(such determination to be made by the relevant adjudicator). Any amounts due under this Section 10.13 shall be paid within 30 days of the date upon which such amounts are due to be paid and such amounts remaining unpaid after such date shall
accrue interest at the Default Interest Rate.
Section 10.14. Entire Agreement; Modifications. This Agreement
embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set
forth or referred to herein. Subject to Section 10.4, this Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. Except as provided herein, this Agreement may be amended or
modified at any time by the General Partner in its sole discretion, upon notification thereof to the Limited Partners.
Section 10.15. Headings. The headings contained in this Agreement are for convenience and reference purposes only and shall not be
deemed to alter or affect in any way the meaning or interpretation of any provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the day and
year first above written.
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GENERAL PARTNER:
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BXLS V L.L.C.
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By: Blackstone Holdings II L.P., its managing member
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By: Blackstone Holdings I/II GP LLC, its general partner
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By:
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/s/ John G. Finley
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Name:
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John G. Finley
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Title:
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Chief Legal Officer and Secretary
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[Signature Page to
Amended and Restated Limited Partnership Agreement of BXLS V GP L.P.]
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LIMITED PARTNERS AND SPECIAL PARTNERS:
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Limited Partners and Special Partners now admitted pursuant to powers of attorney now and hereafter granted to BXLS V L.L.C.
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BXLS V L.L.C.
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By: Blackstone Holdings II L.P., its managing member
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By: Blackstone Holdings I/II GP LLC, its general partner
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By:
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/s/ John G. Finley
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Name:
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John G. Finley
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Title:
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Chief Legal Officer and Secretary
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[Signature Page to
Amended and Restated Limited Partnership Agreement of BXLS V GP L.P.]
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INITIAL LIMITED PARTNER, solely to reflect his Withdrawal from the Partnership
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ROBERT LIPTAK
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By:
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/s/ Robert Liptak
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[Signature Page to
Amended and Restated Limited Partnership Agreement of BXLS V GP L.P.]
Exhibit 31.1
Chief Executive Officer Certification
I, Stephen A.
Schwarzman, certify that:
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1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 of The Blackstone
Group Inc.;
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|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
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4.
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The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
|
|
|
b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
d)
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Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred
during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control
over financial reporting; and
|
|
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
Registrant’s internal control over financial reporting.
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Date: November 6, 2020
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/s/ Stephen A. Schwarzman
|
|
Stephen A. Schwarzman
|
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Chief Executive Officer
|
Exhibit 31.2
Chief Financial Officer Certification
I, Michael S.
Chae, certify that:
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 of The Blackstone
Group Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
|
4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
|
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred
during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control
over financial reporting; and
|
|
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
Registrant’s internal control over financial reporting.
|
Date: November 6, 2020
|
|
|
|
|
/s/ Michael S. Chae
|
|
Michael S. Chae
|
|
Chief Financial Officer
|
Exhibit 32.1
Certification of the Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of The Blackstone Group Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2020 as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen A. Schwarzman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section § 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
|
Date: November 6, 2020
|
|
|
|
|
/s/ Stephen A. Schwarzman
|
|
Stephen A. Schwarzman
|
|
Chief Executive Officer
|
|
*
|
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as
part of the Report or as a separate disclosure document.
|
Exhibit 32.2
Certification of the Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of The Blackstone Group Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2020 as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael S. Chae, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section § 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that, to my knowledge:
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
|
Date: November 6, 2020
|
|
|
|
|
/s/ Michael S. Chae
|
|
Michael S. Chae
|
|
Chief Financial Officer
|
|
*
|
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as
part of the Report or as a separate disclosure document.
|
